A critical analysis of concentration and competition in the Indian pharmaceutical market
Open accessAbstract
OBJECTIVES: It can be argued that with several players marketing a large number of brands, the pharmaceutical market in India is competitive. However, the pharmaceutical market should not be studied as a single market but, as a sum total of a large number of individual sub-markets. This paper examines the methodological issues with respect to defining the relevant market involved in studying concentration in the pharmaceutical market in India. Further, we have examined whether the Indian pharmaceutical market is competitive. METHODS: Indian pharmaceutical market was studied using PharmaTrac, the sales audit data from AIOCD-AWACS, that organises formulations into 5 levels of therapeutic classification based on the EphMRA system. The Herfindahl-Hirschman Index (HHI) was used as the indicator of market concentration. We calculated HHI for the entire pharmaceutical market studied as a single market as well as at the five different levels of therapeutic classification. RESULTS AND DISCUSSION: Whereas the entire pharmaceutical market taken together as a single market displayed low concentration (HHI = 226.63), it was observed that if each formulation is defined as an individual sub-market, about 69 percent of the total market in terms of market value displayed at least moderate concentration. Market should be defined taking into account the ease of substitutability. Since, patients cannot themselves substitute the formulation prescribed by the doctor with another formulation with the same indication and therapeutic effect, owing to information asymmetry, it is appropriate to study market concentration at the narrower levels of therapeutic classification.
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The study used PharmaTrac, a national-level private-sector drug sales audit dataset created by AIOCD Ltd., used by government agencies for policy decisions, including price regulation, and by researchers.
“We used PharmaTrac, a national-level private-sector drug sales audit dataset created by the All-Indian Origin Chemists and Distributors Ltd. (AIOCD Ltd.), used by government agencies for policy decisions, including price regulation, and by researchers.13,14,17, 18, 19”
From Consumption of systemic antibiotics in India in 2019 (2022) · cites this paper as [17]
The Methods section (page unavailable) says the study used PharmaTrac, a sales audit dataset sampled across India and projected to represent national private-sector sales. It identifies the provider as AIOCD-AWACS, a joint venture involving AIOCD Ltd., rather than AIOCD Ltd. alone. The copy supports use by these researchers but does not say government agencies use PharmaTrac for policy decisions or price regulation. (LLM, conf=0.87)
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Consumption of systemic antibiotics in India in 2019
Koya, S. F., Ganesh, S., Selvaraj, S., Wirtz, V. J., Galea, S., & Rockers, P. C. (2022) · The Lancet Regional Health - Southeast Asia · doi:10.1016/j.lansea.2022.100025 · Cited by 93 · see citing works
Self-citationFarooqui, H. H., Selvaraj, S., Mehta, A., & Heymann, D. L. (2018) · PLoS ONE · doi:10.1371/journal.pone.0204805 · Cited by 96 · see citing works
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- Authors
- Mehta, A., Hasan Farooqui, H., & Selvaraj, S.
- Affiliations
- Public Health Foundation of India (IN)
- Corresponding author
- Mehta, Aashna
- Venue
- PLoS ONE
- Publisher
- Public Library of Science (PLoS)
- Published
- 2016-02-19
- Volume
- 11
- Issue
- 2
- Pages
- e0148951
- ISSN
- 1932-6203 (ISSN-L)
- PMC
- PMC4760714
- OpenAlex
- W2274779517
- Cited by
- 16
- References
- 7
- Citations by year
- 2026: 1 · 2022: 4 · 2021: 3 · 2020: 2 · 2019: 3 · 2018: 3
- FWCI
- 3.89
- Type
- journal article
- Language
- en
- Open access
- gold
- doi.org
- Licence
- Locations
- PLoS ONE (publishedVersion, cc-by)
- Europe PMC (PubMed Central) (publishedVersion, cc-by)
- PubMed Central (publishedVersion, cc-by)
- PubMed (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- DOAJ (DOAJ: Directory of Open Access Journals) (submittedVersion, cc-by-sa)
- Funders
- European Commission (612889)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Pharmaceutical Economics and Policy
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Merger and Competition Analysis
- Life Sciences › Pharmacology, Toxicology and Pharmaceutics › Pharmacology › Pharmaceutical industry and healthcare
- Keywords
- market competition, Indian pharmaceutical industry, Herfindahl-Hirschman index, therapeutic classification, market definition, substitutability, information asymmetry
- MeSH terms
- Drug Industry, Economic Competition, India
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