Domestic companies even improved their performance by cornering a record 80 per cent share of the domestic prescription sales in 2006. The domestic sales grew by 19 per cent, both in value as well as in volume and was worth Rs 21,797 crore (Rs 217.97 billion).

According to ORG-IMS, the Indian prescription drug market in 2006 was worth Rs 27,333 crore (Rs 273.33 billion), up 18 per cent as compared to Rs 23,243 crore (Rs 232.43 billion) in 2005. Bulk of this business came from the sale of drugs that do not enjoy patent protection, a reason for the dominance of domestic companies.

With only 30-40 per cent Indians having access to modern medicines, domestic pharmaceutical companies, with a deep trenched distribution network, are likely to continue the growth trends, experts said.

The jump in domestic pharmaceutical business is significant in the context of the declining growth trends happening in prescription markets world over.

It is known that the growth rate of pharma sales has been on the decline since 2002. With fewer new drug launches expected, and developed nations looking forward to increase the supply of low cost generic drugs, the value is projected to come down further.

However, ORG-IMS figures indicate that domestic players grew 19 per cent in 2006. Multinational drug firms have also done good business, though on a smaller scale.

Foreign multinational companies could manage only Rs 5,535 crore (Rs 55.35 billion), registering 11 per cent value growth and 8 per cent volume growth as compared to 2005.

GSK Pharma, the only foreign multinational among the top 10 players in domestic drug business, had a net sales of Rs 1,648.76 crore (Rs 16.48 billion) for the year ended December 31, 2006, a six per cent increase from Rs 1550.94 crore (Rs 15.50 billion) of the previous year.

The re-emergence of multinational players as a significant force in Indian drug market space was one of expected fallout of the re-scripted Indian patent law, which provides for patenting drugs as products, instead of the earlier system of recognising all different manufacturing processes (that allowed Indian companies to copy drugs).

Says Shailesh Gadre, managing director ORG-IMS Research "We believe that the performance of the domestic drug companies was driven by increased penetration to smaller towns and villages. The therapeutic segments that contributed to more than proportionate growth were acute segments like antibiotics and NSAIDs. There cannot be no major change in this trend in immediate future".

Indicating that the pace of the shift was for long been favouring domestic companies, he added that this "pace has been slowed down". As the IPR progresses and we find new patented products coming in, there could be gradual change, he said.

Indian pharmaceutical market is expected to continue its growth at 12 -14 per cent over three to five years.