Indian drugmakers are increasingly focusing on niche segments like testing kits and skincare.

Domestic firms such as Piramal, Lupin, Dr Reddy’s Laboratories and Mankind, which traditionally make low–cost generic medicines for wide–ranging conditions like fever, cough, hypertension and cancer, are now making kits to test blood sugar, blood pressure (BP) and pregnancy, and products to treat acne and other skin allergies.

Industry experts say firms are realising the importance of "branching out"into ancillary areas like home–testing kits, skin creams and ointments to get an edge over competitors.

Jacob Mathew, founder of investment banking firm MAPE Advisory Group, said since products in these segments are mostly sold over–the–counter (OTC), they are quite profitable.

"Margins for such products can range between 18% and 20%. Testing kits and derma products are initially launched in metros and Tier I cities and later in smaller towns. The potential for growth is tremendous,"said Mathew.

Advertising costs associated with OTC products mean that the 18–20% margins are a little less than 22–25% margins that prescription drugs command. But factors like growing awareness and affordability amongst consumers are aiding growth of testing kits and derma products.

Experts said testing kits for BP and blood sugar have huge potential in India where an estimated 16% of people over 20 years suffer from BP. Similarly, there are around 61.3 million diabetics in India, according to the International Diabetes Federation. Ankur Bharti, senior consultant on the PricewaterhouseCoopers healthcare team, said testing kits are growing by nearly 100% each year.

Agreed Kedar Rajadnye, president, consumer products division, Piramal Enterprises. The company’s products which include kits for testing pregnancy and skin lotions, currently reach 481 towns with a population of one lakh or more, he said. By 2014, Piramal wants to take its products to 800 smaller towns having a population of 50,000–60,000 each.

Likewise, the dermatology segment in India (2011 sales: `3,700 crore), which includes everything from specialised conditions like psoriasis and eczema to cosmetic requirements like botox and acne, is another key area for drugmakers.

According to Amit Bangia, dermatologist at the Asian Institute of Medical Sciences, Faridabad, derma problems are on the rise due to rising stress, pollution and change in lifestyle.

Shakti Chakraborty, group president, India region formulations for Lupin, said the company would bring out products in both specialised and cosmetic segments. "Derma is growing annually at 17%. So the opportunities are tremendous."