Mumbai : Trade generics is seeing a lot of action in recent times with the entry of large domestic pharmaceutical companies, who want to expand beyond metros and other top cities where they see potential growth in years to come.

Trade generics are branded medicines that are not promoted to physicians but are directly sold through retailers and distributors. In India, trade generics have a market share of 20% by volume and 5-6% by value, according to data and analytics firm IQVIA. The segment is growing around 14-15% per annum.

Dr Reddy’s Laboratories became the latest entrant to test waters in trade generics. The Hyderabad-based drug maker aims to roll out its trade generics across cities and towns in India as well as rural areas. The company said it will work closely with its channel partners to ensure availability of the products.

“The feedback that we got from the market is that patients and the consumers are looking for high-quality medicines. Retailers are looking forward to companies like Dr Reddy’s to enter the space,” said MV Ramana, chief executive of branded markets (India and emerging markets) at the drug maker. “Today we represent with our portfolio about 50% of the market, so there is a large part of the market we don’t have representation. We feel that we want to get into the space with high-quality generics,” he added.

Other large companies with a domestic formulation footprint, like Glenmark, Abbott, Torrent Pharma and Mankind are also trying to get a toehold in the trade generics segment. Cipla and Alkem are two large companies that have successfully made inroads into trade generics.

Trade generics contributed about 21% of Alkem’s India business in FY23. Cipla doesn’t give a breakup, but it is significant. At least eight brands of Cipla in trade generics have over 50 crore of annual sales each. Cipla is widening its portfolio offerings in injectables and chronic segments.

“Trade generics is a growing market, but it’s a low gross margin business,” Sandeep Singh, managing director of Alkem Laboratories, said, adding: “Lot of companies therefore shied away from it, now, things are changing … it’s not going to be easy.”

Trade generics is a misnomer in India, Singh added.

“Trade generics in India is not like the West, where it comes in a bottle and you don’t know the brand. The brand does matter in India even in trade generics; the relationship with the stockist is paramount,” Singh said. Trade generic brands like pain and fever medication Sumo have become over-the-counter brands, he said.

Cipla MD and CEO Umang Vohra called trade generics a very critical business for the company. “I don’t think the story of India plus Bharat is complete without significant emphasis on trade generics business,” he said.

According to Vohra, Cipla has an 8-10% market share in trade generics. Trade generics is getting a push from the government as well.

To reduce out-of-pocket expenses on medicines, the government is selling affordable generic medicines through Jan Aushadhi Kendras (retail outlets). In addition, essential generic drugs are available free of cost in public health facilities across India.

Jan Aushadhi stores have achieved sales of Rs 1,236 crore in FY23, growing 38% year-on-year.

The government has urged state medical councils to ensure prescription of generic drugs and conduct regular prescription audits in public health facilities.