Kolkata, March 16 (IANS): Indian pharmaceuticals companies need to diversify their product range and focus on evolving as innovators as growth in generic market is expected to slow down over the next decade, a study by industry body Assocham said on Monday.

According to the Assocham study, revenues of innovative large global drug companies depend on the performance of their unique new discoveries which help them bag a patent.

"Hence, the research and development (R and D) productivity of such players is of critical importance and accordingly, they invest heavily in R and D," it said.

While new drug formulations are said to be leading the growth, the study said drug development costs have escalated.

"The cost for developing a New Molecular Entity (NME) has more than doubled to $1.5 billion over the past 5 years. During the same period, the number of NMEs approved by the US FDA continued to hover around 15-20 with an occasional rise to over 20 as seen in 2004 and 2008," it said.

Interestingly, the study revealed that none of the new drugs approved over the past 2-3 years have been blockbusters with sales over $1 billion or even greater than $750 million.

"This decline in sales is primarily due to the availability of substitutes (generic as well as patented) for existing diseases. Rising emphasis on usage of generics has also steadily reduced the prescription of patented molecules," it said.

According to the study's findings, over the last 40 years, the Indian pharmaceutical industry has thrived on the "generic modela of drugs by leveraging on its process chemistry skills and low cost manufacturing advantage. This has enabled players to tap the huge generic opportunity abroad.

"However, the R and D productivity of large global pharmaceutical players (innovators) has considerably slowed down over the past few years and the lack of new drug launches between 2010 and 2015 onwards will mean that the generic opportunity set to open up in the next decade (post 2020) is likely to be significantly lower," it said.

This trend in the global pharmaceutical landscape may cause a slowdown in the generics segment and hence, the Indian pharma industry will be forced to look at newer avenues for growth, it said.

Indian formulation exports recorded close to 17 percent CAGR between 2009-10 and 2013-14 (in dollar terms). The increase in growth was led by exports to both regulated markets, which grew by 22 percent, and also aided by exports to semi-regulated markets, which grew by 13 percent CAGR over the same period.

The association estimated the size of the Indian medicinal drugs industry at $34 billion (including exports) in 2013-14 which is expected to increase to $48 billion by 2017-18 at a CAGR of 14 percent.