Table of contents
3. MARKET ANALYSIS
3.2 DIABETES PHARMACEUTICALS IN THE INDIAN MARKET
4. COMPETITION ANALYSIS
4.1 POWER OF SUPPLIERS
4.2 ENTRY BARRIERS
4.3 THREAT OF SUBSTITUTES
4.4 POWER OF BUYERS
4.5 INDUSTRY COMPETITION
5. RECOMMENDATIONS FOR THE MARKET ENTRY PLANNING
LIST OF TABLES
LIST OF FIGURES
The following paper analyzes the Indian pharmaceutical market in terms of drugs against diabetes in India and the market entry of the Swiss Start-up Glycemicon. In order to fulfill the given tasks, the target market will be analyzed and a brief recommendation for a possible market entry of Glycemicon will be given. The results of the paper are that the combination of the innovative product of the Swiss Start-up and the opportunities the Indian market offers, make a market entry through the form of an Alliance or an Joint Venture very promising.
The Indian population and the economy are growing rapidly, with a growth rate averaging 8.7 percent, India has even become one of the fastest growing economies In the world. A large middle class with the needed resources to buy Western medicine Is coming up (Kosh, 2010, s. 17). Additionally the epidemiological structure In the country Is changing and the demand for drugs for cardlo-vascular problems, disorders of the central nervous systems and other chronic diseases like diabetes are likely to rise. The combination of the epidemiological structure changing and the Increasing buyer power In the country make India an attractive market for global pharmaceutical manufacturers (Kosh, 2010, s. 27).
The focus of this paper will be set on the market potential of a medicament for the treatment of diabetes developed by the Swiss Start Up Glycemlcon and a possible entry Into the Indian market. Entries Into new markets must be well planned and therefore an analysis of the target market Is unalterable. Subsequently the key finding of the analysis will be used to evaluate possible entry modes In order to draft a brief recommendation for the market entry.
Finally, It Is necessary to mention, that this paper will not be able to consider the Important step of building up a network on the root of trust, which Is essential for succeeding In India (Fernando, 2010, s. 15).
2. G lyce mi con
In the year 2013 Glycemicon was officially registered as a spin-off company of the Swiss Institute of Technology In Zurich (ETHZ). In September 2015, It was even chosen as one of the Top 10 Swiss Startups (Venturelab, 2013). The name Glycemicon stands for "glycémie control", which embodies the company's core value to aim a healthy blood sugar level, the objective of every patient suffering from diabetes. Especially obese people with big fat cells have a high risk to sicken to type 2 diabetes (Glycemicon, 2013).
The company's goals are the discovery, development and commercialization of "Innovative and novel products to prevent and treat elevations In blood sugar levels, the hallmark of type 2 diabetes and pre-diabetes" (Glycemicon, 2013). The next objectives are a funding of over a million dollars and a market entry In 2017. The product developed by Glycemicon has the potential to transform big, Insulin resistant fat cells Into smaller fat cells (Riiegg, 2013). A first outcome of the company uses a substance naturally occurring In bile found In humans and different nutrition. It Is under the form of medical food, which has to be prescribed and monitored by a physician (Glycemicon, 2013).
Being a spin-off company of the ETH Zurich enables the company to combine the expertise of different subject areas, of the Institute and "fuel their pipeline with Innovative new approaches and molecules to tackle the epidemic obesity and type 2 diabetes" (Riiegg, 2013). They are planning collaborations with other academic sections of the ETH, Including potential pharmaceutical drug candidates (Glycemicon, 2013). Furthermore, the company has a well- diversified executive team. It consists of highly competent people from medical and economical field
At the actual stage, the company might have difficulties finding a business partner and persisting against the concurrence In India. Also Is the startup still looking for funds. Furthermore, the research and development In Switzerland can be expensive, even with the support of the ETH (Venturelab, 2013).
3. Market Analysis
In order to give an adequate entry recommendation into the Indian pharmaceutical market further looks into the Indian pharmaceutical market are needed. Therefore this section will give information about the pharmaceutical market in general before the market for diabetes drugs in particular will be analyzed.
The Indian pharmaceutical market has an astonishing growth of yearly 15% and by 2020 it is considered to be part of the ten biggest markets in the world. Actually, in terms of volume, it ranks on the 4th and in terms of value on the 13th place (Maier, 2016). The industry is characterized by rapid growth and dynamic changing trends. Multinationals are increasing their local presence by establishing strategic alliances or direct presences. In addition, the Indian Government enhances the local accessibility and affordability for qualitatively good health care and reinforces regulations for a better transparency in order to appeal to further investments (EY, 2014, s. 35). Despite the presence of big foreign pharmaceutical companies, the industry is still dominated by cheap, domestically produced generics which explains the, compared to the big volume, modest turnover in terms of value (ESI International Study, 2010, s. 2).
The Pharmaceutical sector involves:
Prescription, generic and OTC drugs Nutritional supplements
Diagnostic substances and drug delivery systems
Related products, equipment and services (ESI International Study, 2010, s. 3)
As shown in the figure 1, anti-infective, gastrointestinal, cardiac and respiratory drugs dominate the market. Diabetes drugs represent only 4% of the Indian pharmaceutical market.
— Gastroinestinal Cardiac
— Vit./Minerals/Nutrients Pain/Analgesics
— Gynaecology Neuro psychatry Antidiabetics Opthologicals Others
illustration not visible in this excerpt
Figure 1: The Total Pharmaceutical Market share India (Kumar & Biswas, 2013)
Regarding 300 medical colleges and over 20000 hospitals, India has an astonishing potential for foreign pharmaceutical companies to perform their research and development in the country. Additionally the low costs for clinical trials, which are mandatory for the release of new drugs, make the Indian market very attractive (ESI International Study, 2010, s. 4).
On the other side, there are also concerns regarding the Indian market. First, practical concerns like infrastructural problems and the counterfeiting of drugs must be taken into account. Then, the imposing of further price controls on essential medicine as poor protection of Intellectual Rights must be seen as non-negligible threats, too (PWC, 2010, s. 26-28). Further dangers and deficits of the Indian pharmaceutical market are going to be analyzed in the context of the competition analysis in chapter 4.
3.2 Diabetes pharmaceuticals in the Indian market
The recent transformation of India's population and economy have led to a modification of the epidemiological profile and "lifestyle" diseases like diabetes, that were more common in Western markets, have come up in India (Kuchenreuther & Sackman, 2014). According to the World Health Organization, (WHO) over 50 million, or 17% of the worldwide affected people to diabetes, are Indians. 10% of Indian town dwellers and 5% of people living in rural areas are suffering from the disease which. 53% of all death in India are caused by diabetes and other not transmittable diseases as cardiovascular or respiratory problems and cancer (Merten, 2013).
The number of diabetics in India is estimated to rise to 73.5 million till 2025. The yearly treatment costs of such patients are around 420 us$ per person per year which is tantamount to total expenditures around 30 billion us$ by 2025. But as the Indian economy grows rapidly, its wealth and care standards improve and the treatment costs are expected to rise. In the US for example, the yearly spending for each diabetes patient per year is over 10000 us$. A rise of the India's per capita spending to just one-tenth of the US level would be synonymous to total treatment costs of nearly 80 billion us$ by 2025 and the Indian government is likely to be interested in the value of prophylaxis a product like the one of Glycemicon can create (PWC, 2010, s. 4-7).