Ranbaxy Laboratories, Sun Pharma, Dr Reddy’s Laboratories to venture into US skincare market through acquisitions
The Global market for aesthetic dermatologicals and specialty physician-dispensed drugs to treat conditions associated with deficits in physical image and form. These drugs are botulinum toxins, retinoids, acid peels, 5-alpha reductase and lipase inhibitors associated with cutaneous ageing, photodamage, pigmentation defects, alopecia, and the lipodermal disorders of obesity and gynoid lipodystroph.
The US dermatology market value is estimated at $10 billion and is growing at 10% annually, against 5%-6% growth for the overall US pharma industry. Many skincare products are cosmetics products and are sold as over-the-counter which is also a growing market.
Indian drug makers who are looking at the inorganic route to consolidate their presence in fast growing segment are Ranbaxy Laboratories, Sun Pharma, Dr Reddy’s Laboratories. A strong presence in this segment will allow all the companies to widen their product portfolio in the US market.
Ranbaxy has acquired the rights to sell 13 dermatology drugs from Bristol-Myers Squibb in the US a few months ago. According to Ranbaxy executive director and COO Atul Sobti Dermatology market is a growing segment in the US. Dermatology drugs also have a wide spectrum of therapy. There is limited competition and doctors for dermatology in the US and these drugs also provide a decent margin.
Sun Pharma is set to acquire Israel-based Taro Pharma, which is a leading manufacturer and supplier of tropical dermatological drugs in the US. This buyout of Taro will help the company to foray in the dermatology drug segment in the US market.
Dr Reddy’s Laboratories is reported to have made a non-binding bid to acquire US-based Bradley, which has a strong presence in dermatology segment. According to Dr Reddy’s chief financial officer Saumen Chakrabarty as the number of players are less in the segment, there is less competition. Unlike other segments, one needs a smaller sales and marketing team to compete in the dermatology segment.
For Ranbaxy, the acquisition will enable the company to establish an immediate presence in the high value segments of dermatitis, psoriasis, anti-fungal and scabies. Ranbaxy already has a strong presence in the acne segment with its best-selling product, Sotret Isotretinoin which enjoys 36% market share in the Isotretinoin brand segment.
All major domestic companies have been focusing on niche profitable segments such as dermatology, oncology, narcotics to beat the price erosion according to PriceWaterhouse Coopers associate director.
Last year, Glenmark had entered into a royalty deal with US-based healthcare investment fund, Paul Capital Partners’ Royalty Fund to develop 16 dermatological products worth $1 billion for the US market. Paul Capital Partners had agreed to invest $27 million and will receive royalties on net sales when the drugs are launch in the US.