pharma: the FMCG is spicing up, pharma is launching into diagnostics
While spices appear to be the chosen path for horizontal product category expansion for consumer products, diagnostics appear to offer similar opportunities for big pharma.
Ahmedabad-based drug major
is reportedly set to make a foray into diagnostics, although an official announcement is awaited. Last year, its Mumbai-based counterpart made an organic foray into the ₹70,000 crore sector. Mankind Pharma and Life Sciences are other big players that have entered the industry.
As competition intensifies, consumer goods and pharmaceutical companies are looking for easy-to-grab, low-investment, non-traditional opportunities in a largely unorganized industry with low barriers to entry and compliances. regulations. The spice and diagnostics industries, with their many small local players, fit the bill. The opportunities for growth are enormous in both sectors. The expansion of the export market in the case of spices and the increased domestic penetration for diagnostics are great assets.
However, existing established players in these two sectors are poised to intensify competition from the entry of large companies that have pan-India distribution, deep pockets, management expertise and an existing consumer base. It’s no wonder that several existing players in both industries are seen as natural acquisition targets for new entrants.
The Indian spice industry has old established players such as Everest, MDH, Badshah, Rajesh Masala and Priya Masala. Organized players nevertheless represent approximately 25 to 30% of the total market.
Similarly, the diagnostics industry in India has existing large listed players such as
, and , and unlisted players such as SRL Diagnostics, Suburban Diagnostics (now acquired by Dr. Lal PathLabs) and Neuberg Diagnostics. These, along with a few others, make up only 15-20% of the industry dominated by unorganized players.
In the short to medium term, the arrival of well-established companies in largely unorganized sectors bodes well for consumers. They can most likely expect improved quality and service at affordable rates as well as new product offerings. Organized actors benefit from economies of scale in supply, manufacturing or service and distribution network – factors that can potentially exclude small, unorganized local actors.
In a poorly regulated sector such as diagnostics, the entry of organized players can bring improvements to standard operating methods and increase the reliability of results. It should also prompt the government to come up with comprehensive regulations for the industry.