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Eli Lilly's Shot

Having crashed prices in the Indian market for Huminsulin, Eli Lilly strengthens itself amongst the diabetic.

By Suveen Kumar Sinha

Playing the price card

Eli Lilly. The name was not very well-known in India beyond medical circles. But now, a year after the break-up of its joint venture with Ranbaxy, the domestic unit of this US-based pharma major has decided to send out a loud rumble. A rumble of ambition.

Eli Lilly's first object of attention: India's growing diabetes market. Some weeks ago, the company shook up the Indian sub-market (defined by product) for human insulin, or huminsulin (as opposed to insulin extracted from other animals), by reducing the price of its offering from Rs 218 to Rs 145 for a 10 ml vial. This will come as relief to acute diabetics who need to inject themselves with this stuff to keep their blood sugar in control (their own bodies having quit insulin production).

Now, regular animal insulin has always been easily available in urban India (through a cold chain delivery mechanism, since it needs to be refrigerated). But huminsulin has been a different story altogether, with imported vials being available only at the biggest chemists in India's top metros. Till as late as 2001, it was seen as a 'special order' product - with diabetics needing to ask their chemists for a special regular supply (it's a lifelong daily-dose requirement).

Eli Lilly, though, was keen to revolutionise the market. And by doing so, establish its brand as the brand to be trusted by the Indian diabetic - trusted to ensure supply, wherever the patient were to go. It's a specialised market. Word-of-mouth counts for a lot, and taking the minor trouble of maintaining a global database of users, and then jetting a huminsulin vial to a far-off patient just-in-time for the shot (if need be), goes a long way towards a life-long customer relationship. The whole point is to be there for an emergency - as a brand one can rely on, consistently, come what may.

That's service differentiation. That's branding. But to assume market leadership, a player needs to assume the role of the prime mover in restructuring the market for the future. And that's what Eli Lilly has now done, with its price cuts. The company no longer imports huminsulin from France. It has started formulating it right here in India.

The insulin market is estimated at Rs 200 crore, and Eli Lilly reckons that huminsulin could also become big, if made more affordable. More and more Indian diabetics are expected to upgrade from animal to huminsulin - a superior product, medically speaking (better compatibility).

The largest huminsulin player in India, at the moment, though, is Novo Nordisk, another multinational (with a claimed 72 per cent of India's huminsulin market). How has it responded to Eli Lilly's rumble? By doing the obvious. Nordisk has cut its price from Rs 197 to Rs 145 a vial.

As the papers report the story, a 'price war' has begun. Mumbai-based US Vitamins India and other local insulin marketers have also brought down their prices. Meanwhile, two other Indian players, Wockhardt and Biocon-Shantha, have announced that they will also launch huminsulin later this year. The ensuing action is likely to see a sharp growth in usage, there's little doubt.

But who will be the eventual gainer?

The price game, remember, is just one aspect of it. India's high net-worth diabetics are not budget-constrained, and they seek other forms of value as well - which requires brand differentiation one way or another. Wockhardt, for example, is talking about recombinant technology (which Biocon has also been stressing, though not in this market). The upper-end huminsulin user is tuned in. Is Eli Lilly tuned in too?

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