HOME     CONTACT     BACK

  
 

INDIAN PHARMACEUTICAL MARKET

 

Turning Vision to Reality: The Indian Pharmaceuticals market is expected to grow to US$ 32 billion by 2015 at CAGR of 18-19%

 

The pharmaceutical industry in India is in the forefront of the country's science-based industries with wide ranging capabilities in the complex field of drug manufacture and technology. Lifestyle drugs have become the leading segment of the Indian pharmaceutical industry.
 

Indian Pharmaceutical Market
As per the Department of Pharmaceuticals, Government of India, the Indian pharmaceutical industry is one of the world's largest, ranking 3rd in terms of volume and 14th in terms of value in the global pharmaceutical market. The ranking in value terms may also be a reflection of the low prices at which medicines are sold in the country.

 
The Indian domestic pharmaceutical market size is estimated to touch US$ 20 billion by 2015 from an estimated size of US$11.72 billion in 2009 and is expected to grow at a CAGR of 9.5%. As per the recent study conducted by an Industry body, the increasing population of the higher-income group in the country will open a potential US$ 8 billion market for multinational companies selling costly drugs by 2015.
 

The industry has seen tremendous progress in terms of infrastructure development, technology base and the wide range of products manufactured. Demand from the exports market has been growing rapidly owing to the capability of Indian players to produce cost-effective drugs with world-class manufacturing facilities. Bulk drugs of all major therapeutic groups, requiring complicated manufacturing processes, are now being produced in India. Pharma companies have developed Good Manufacturing Practices (GMP) compliant facilities for the production of different dosage forms.

 

 
Major Therapeutic Segments
Therapeutic segments in pharmaceutical industry are broadly defined on the basis of therapeutic application. Some of these segments are low-volume, high-margin segments, while the others are high-volume with relatively low margins.The key therapeutic segments include anti-infectives, cardiovascular and central nervous system drugs, respiratory and pain/analgesics. The upcoming segment is anti-diabetic with 4.9% contribution.

 
Among the acute therapies, anti-infective is the major contributing segment accounting for 17.7% of the total pharma sales market in India. This segment, being the largest, consists of five sub-segments: antibiotics, anti-protozoals, anti-helmintics, anti-malarials, and anti-tuberculosis.

 
Gastrointestinal drugs are the next major therapeutic segment which includes anti-hypertensives, statins and anticoagulants.
 

Major Players
The top 20 list is crowded with Indian companies; MNCs are behind major domestic players because of selective focus on domestic market. MNCs have maintained a low key presence in Indian market due to absence of product patents and price controls.

 
Export
The Indian pharmaceutical industry ranks 17th with respect to exports value of bulk actives and dosage. India is emerging as a global hub for pharmaceutical exports. The exports constitute almost 40% of the total production of pharmaceuticals in India with formulations contributing 55% and bulk drugs 45%.

 

 
The pharmaceutical exports in 2008-09 were valued at Rs 394.59 billion as compared to Rs 302.73 billion in 2007-08, thus growing 30.34% higher over 2007-08. region-wise exports of the pharmaceuticals comprising of America, Europe Asia (Excl. Middle east) and Africa. America tops the list of export destination followed by Asia and Europe. The US and Europe remains the biggest export destinations for Indian generic manufacturers.

 
However, Indian companies are also increasing their presence in emerging markets such as those in Central and Eastern Europe, Latin America and Africa, owing to lower competition and low entry barriers. Export growth is driven by growing dependence on generics across the world to contain health expenditure, acceptance of Indian generic drugs, aggressive expansion of Indian companies in international markets and entry of smaller companies into exports. India has the highest number of USFDA-approved (175) manufacturing facility outside the US and this puts India in a good position to export to regulated markets.

 

 
Mergers and Acquisitions/ Licensing Deals
Merger and acquisition strategies of Indian companies are gaining sophistication; they are making acquisitions for very specific objectives like diversifying lines of business, entering a sub-segment, acquiring patents and diversifying product portfolio (acquiring a brand or its distribution). The stage is set for collaboration rather than confrontation between the pharma majors and Indian drug companies.

 
l Orchid Chemicals & Pharmaceuticals Ltd, a Chennai-based pharmaceutical company, has entered into an agreement to acquire US-based generic marketing company Karalex Pharma LLC, in an all-cash deal.

 


l In May 2010, Glenmark Pharmaceuticals licensed its chronic pain molecule to Sanofi Aventis for a cumulative deal of US$ 321.7 million.
l Dr Reddy Laboratories has signed an agreement with Alchemia, an Australian Pharmaceutical company, for marketing Fondaparinux sodium (which is used for the treatment and prevention of deep vein thrombosis (DVTs)) in all markets outside of North America. According to the agreement, Dr Reddy's will pay to Alchemia a royalty on sales at an agreed proportion.

 
Super Religare Laboratories (SRL), a diagnostic chain has signed a definitive agreement to buy Piramal Healthcare's diagnostic chain for US$ 128.6 million, making it the country's largest diagnostic player.

 
Turning Vision to Reality: The Government Initiatives
The Global pharmaceutical Industry is witnessing a growing importance of generics. Global pharmaceutical market intelligence company IMS Health believes the Indian generic manufacturers will grow at a faster rate as drugs worth approximately US$20 billion in annual sales will face patent expiry in 2011. In fact, with nearly US$105 billion worth of patent-protected drugs to go off-patent (including 30 of the best selling US patent-protected drugs) by 2012, Indian generic manufacturers are positioning themselves to offer generic versions of these drugs. With drugs going off patent each year, generics represent a major outsourcing opportunity for pharmaceutical producers in India. The global pharmaceutical outsourcing market is rapidly growing.

 
The Government plans to set up a US$ 639.56 million venture capital (VC) fund to give a boost to drug discovery and strengthen the pharma infrastructure in the country. 100 per cent foreign direct investment (FDI) is allowed under the automatic route in the drugs and pharmaceuticals sector including those involving use of recombinant technology. The Drugs and Pharmaceuticals Manufacturers Association has received an in-principle approval for its proposed special economic zone (SEZ) for pharmaceuticals, bulk drugs, active pharmaceutical ingredients (APIs) and formulations to be located at Nakkapalli mandal in Visakhapatnam district, according to a government press release. Also, the Department of Pharmaceuticals has prepared a "Pharma Vision 2020" for making India one of the leading destinations for end-to-end drug discovery and innovation and for that purpose provides requisite support by way of world class infrastructure, internationally competitive scientific manpower for pharma research and development (R&D), venture fund for research in the public and private domain and such other measures.

 

 
Turning Vision to Reality: Opportunities

  1. New chemical entities (NCEs)

    • Indian pharmaceutical companies are ascending the value chain with a focus on innovation.

    • The level of investments in R&D capabilities and infrastructure has been enhanced by both the industry and the government.

    • Dr Reddy's Laboratories' NCE Balaglitazone is India's first indigenously-developed molecule to enter the Phase III trial.

    • The growing R&D pipeline of Indian companies presents significant in-licensing opportunities for global companies.

  2. Contract manufacturing

    • The Indian CRAMS market was valued at US$2.5 billion in 2009 and is expected to reach US$7.6 billion by 2012, growing at a CAGR of 47.2% (2007-2012).

    • APIs/intermediate outsourcing is more prevalent in India than formulation outsourcing - The contract manufacturing segment of CRAMS market was at US$1.6 billion in 2009 accounting for the major share (approximately 64%) of the total Indian CRAMS market.

  3. Clinical Trials

    • Indian clinical trials market in 2009 was worth US$ 320 million and is expected to reach US$630 million ; growing at a CAGR of 34% for the last 5 years (2005-09).

    • The cost of conducting clinical trials in India is 20 to 60 per cent of the cost in developed countries.

    • India has become a favourite location for global pharmaceutical and biotech companies for clinical trials in new products due to huge patient base, low cost advantage; can complete clinical trials on time; is improving its infrastructure with a strong government support.

    • Currently, there are more than 150 CROs in India, out of which 20 comply with ICH-GCP guidelines. The leading players in India include Clinigene International, Vimta

  4. Bio-similars

    • The increasing use of biologics in disease areas such as cancer, auto-immune and orphan diseases, in addition to healthcare cost containment, has driven the growth of bio-similars.

Future Outlook
The Indian economy is expected to emerge as the fastest growing economy by 2013 and to be the 3rd largest economy by 2050 (Source: BRICs Report, Goldman Sachs). The GDP growth will be driven by both exports and domestic consumption. Driven by increasing affordability, shifting disease patterns and modest healthcare reforms, the total consumer spending on healthcare products and services in India has grown significantly. The current spending on healthcare (public and private) is estimated at 6% of GDP and expected to increase to 10% of GDP by 2016. The market remains dominated by acute therapies; however chronic segments such as Cardio Vascular, Diabetes, Central Nervous System and specialty segments like Oncology are growing faster than the market. India is also emerging as a low-cost, high quality option for outsourcing of research, manufacturing and other services. This offers a great opportunity for the Indian pharmaceutical industry and Indian pharma companies.

 
The Indian pharmaceutical industry will create 1.8m additional employment, US$12-13 billion exports and US$4-6 billion investment for the country. The Indian pharmaceutical industry maintained its momentum in the recovery period of recession and registered a growth of about 18% and is poised for a growth of 18-19% in next three years as per Cygnus estimates.

cygnus
Cygnus Business Consulting & Research
4th & 5th Floor, Astral Heights
Road No. 1, Banjara Hills,
Hyderabad-500034 India
www.cygnusindia.com
 

 
 

 Copyright © 2008. KONGPOSH PUBLICATIONS Pvt. Ltd.