PHARMACEUTICAL SECTOR

The pharmaceutical industry develops, produces, and markets drugs or pharmaceutical

companies may deal in generic or brand medications and medical devices.

Leading Pharmaceutical producer

Indian pharmaceutical sector account s for about 2.4 % of the global pharmaceutical industry in
value terms 10% in volume terms.

One of the highest exports

India accounts for 20% of global export in generics.

Among fastest growing industries

The countrys pharmaceutical industry is expected expand at a CAGR of 22.42 % over 2015
20 batch to reach USD 250 billion.

Rapidly growing healthcare sector

Indian healthcare sector, On of the fastest growing sectors, is expected to advance at a CAGR of
17 % to reach USD 250 billion over 2008 20 .

Growing generics market

The generics market is expected to grow to USD 26.2 billion by 2016 from USD 14.2 billion in
2015; Indias generics market has immense potential for growth.

Ranked 5th in terms of attracting FDI

Attracted 5.19 % of the total FDIs into India from April 2000 to May 15.
Cumulative FDI inflows worth USD 13.3 billion from April 2000 to May 15.

STRUCTURE OF PHARMA SECTOR IN INDIA

PHARMA INDUTRIES
The pharma industries divided in four major parts

Active Pharmaceutical Ingredients

Contract Research and Manufacturing Services

Formulations

Biosimilars

API is the largest Pharmaceutical segment of the Indian pharma sector.

Active Pharmaceutical Ingredients

India is expected be the third largest global generic API merchant market by 2016 , with a 7.2%
market share .
The Indian pharmaceutical industry accounts for the second largest number of Abbreviated New
Drug Applications is the worlds leader in Drug Master Files applications with the US.

Contract Reasearch and Manufacturing Services

Fragmented market with more than 1,000 players.
CRAMS Industry is estimated to reach USD 18 billion in 2018 up from USD 7.6 -7.8 billion in
2013.

Formulations
Largest exporter of formulations in terms of volume, with 14 % market share and 12th in terms of
export value.
Domestic market size currently valued at USD 11.2 billion.
Double digit growth expected over the next five years.

Biosimilars
Biosimilars sector is expected to touch USD 1.4 billion by 2016 from USD 580 million in 2013
The government plans to allocate USD 70 million for local players to develop biosimilars.

INDIAN PHARMA SECTOR REVENUES TRENDING

NORTH
The Indian pharmaceutical market increased at a CAGR of 12.79 % in 2015 from USD 6 billion
in 2005 , and is expected to expand at a CAGR of 15.92 % to USD 55 billion by 2020 .
By 2020 , India is likely to be among the top three pharmaceutical markets by incremental
growth and sixth largest market globally in absolute size.
Indias cost of production is significantly lower than that of the US and almost half of that of
Europe. It gives a competitive edge to India overs others.
Increase in the size of middle class households coupled with the improvement in medical
infrastructure and increase in the penetration of health insurance in the country will also
influence in the growth of pharmaceutical sector.

GENERICS DRUGS FROM TH LARGEST SEGMENT OF INDIAN

PHARMA MARKET
With 71 % of market share (in terms of revenues ) , generic drugs form the largest segment of the
Indian pharmaceutical sector .
India supply 20 % of global generic medicines globally and expected to expand even further in
coming years.
Over the Counter medicines and Patented drugs constitute 19 % and 10 % , respectively , of total
market revenues of USD 20 billion .

ANTI INFECTIVE DRUGS LEAD THE PHARMA MARKET

Anti infective drugs command the largest share (16 % ) in the Indian pharma market .
The cardiovascular segment represents 13 % of the market share; its contribution is likely to rise
due to the growing number of cardiac cases in India .
Gastro intestinal contributes around 11 % of the total value of pharma industry in India. With
increasing number of research in gastroenterology, segment is going to grow at significant pace
in coming years.
Top five segments contribute nearly 57 % to the total drugs consumption.

PHARMA EXPORT TO CONTINUE WITH NESSING HIGH

GROWTH
Indian pharma companies are capitalising on export opportunities in regulated and semi
regulated markets.
The Ministry of Commerce targets to export USD 25 billion worth of pharmaceutical in 2016.
Indian drugs are exported to more than 200 countries in the world, with the US as the key
market.
India is the worlds largest provider of generic medicines; the countrys generic drugs account for
20% of global generic drug exportsa .
In terms of value, exports of pharmaceutical products increased at a CAGR of 26.1 % to USD
10.1 billion during FY 06 13 .
The Americas accounted for around 34 % of Indian pharma exports in FY 13 followed by
Europe (26 % ) and Asia ( 20 % ) .
Exports to Africa increased at a CAGR of 21 % from FY 09 to FY 13, contributed mainly by
export of anti- malarial and anti retro-viral drugs.
During the same period imports of pharmaceutical products rise at a CAGR of 25.4 % to USD
1.8 billion.

COMPETITIVE MARKET ; TOP FOUR FIRMS ACCOUNT FOR

OVER 20 % MARKET SHARE
Dr Reddys has the largest share ( 24.45 % ) in the Indian pharma market with sales of USD 1.66
billion during March 2015 .
Lupin has the second largest share of 23.71 % in the Indian pharma market with sales of USD
1.55 billion for march 2015 sales , ranks third in the market .
Aurobindo ranks fourth in the market with a revenue base of USD 1.17 billion for March 2015
sales .
While these top fours companies collect 20 % market share , top 10 companies comprise nearly
39 % of the market share .

NOTABLE TRENDS IN THE INDIAN PHARMACEUTICAL

SECTOR
RESEARCH AND DEVELOPMENT
Indian pharma companies spend 8-11 % of their total turnover on R & D .
Expenditure on R & D is likely to increase due to the introduction of product patents ; companies
need to develop new drugs to boost sales .

EXPORT REVENUE
Indias pharmaceutical export market is thriving due to strong presence in the generics space .
Pharmaceuticals Exports Promotion Council expects pharma exports to reach USD 25 billion in
2015 .

JOINT VENTURES
Multinational companies are collaborating with Indian pharma firms to develop new drugs .
Pfizer partnered with Aurobindo Phama to develop generic medicines .
Six leading pharmaceutical companies have formed an alliance LAZOR to share their best
practices , so as to improve efficiency and reduce operating costs .

EXPANSION BY INDIAN PLAYERS ABROAD

Cipla , the largest supplier of anti malarial drugs to Africa . set up a USD 32 billion plant in
Africa for the production of anti retroviral and anti malarial drugs .
Ranbaxy , become the world fifth largest company worldwide with having 45 manufacturing
sites more than 3000 marketed product .

PATENTS ACT
Increased incetives to domestics firms to conduct R & D .
Increased likehood of technology transfer from developed nations .

PRODUCT PATENTS
The introduction of product patents in India 2005 gave a boost to the discovery of new drugs .
India reiterated its commitment to IP projection following the introduction of product patents .

STRATEGIES ADOPTED
COST LEADERSHIP

Players in the sector are trying to acheive cost leadership in various ways . for eg sunpharma is
trying to acheive the same by
Vertical integration : Complex API , which requires special skills and technology , are developed
and scaled up for both API and dosage forms .

DIFFERNTIATION
Players in the sector are trying to differntiate themselves by investing heavily on R & D efforts .
for example Sun Pharma is trying to develop technically complex APIs , such as steroids , sex
hormones , peptides , carbohydrates and taxanes , which special skills and technology .
Dr. Reddy is technology platforms. It accquired Octoplus N.V , a netherland based company to
get access to Poly Lactic - Co- Glycolic acid technology for formulation of complex injectables.

FOCUS ON NEW MARKET

Certain players in the sector are focussing on entering new market with new opportunities .
for example Lupin is making inroads into new market such as latin america , Russia and other
East European companies.

LEVERS FOR SUCCESS

SUPPLY SIDE DRIVERS OF INDIAN PHARMA SECTOR

LAUNCHED OF PATENTED DRUG
Following the introduction of patent products , several multinational companies are expected to
launched patented drug in India .
Growth number of lifestyle deaseses in India could boost the sale of the drug in this segment .

MEDICAL INFRASTRUCTURE
Pharma companies have increased spending to tap rural markets and develop better medical
infrastructure .
Hospitals market size is expected to increase by USD 200 billion by 2024

SCOPE IN GENERICS MARKET

Indias generic drug account for 20 % of global export in terms of volume making the country
the largest provider generics medicines globally .
Indias generic market is expected to reach USD 26.1 billion by 2016 by USD 11.1 billion in
2011 . the countrys generics market has immense potential for growth .

OVER THE COUNTER DRUGS ( OTC DRUGS )

Indias OTC drug market is expected to rise at a CAGR 16.6 % to USD 6.6 billion over 2008 to
2016 .
Increased penetration of chemists , especially in rural region , would increase the availability of
OTC drugs in the country .

PATENT EXPIRY
Between 2010 and 2015 patent drugs worth USD 171 billion are estimated to go off patent ,
leading to huge surge in generic product .
The newly available market will be filled by generics productwhich would provide great
opportunity to Indian companies .

FAVOURABLE POLICY MEASURES SUPPORT GROWTH

REDUCTION IN APPROVAL TIME FOR NEW FACILITIES
Steps taken to reduce approval time for new facilities .
NOC for export licence issued in 2 weeks compared to 12 weeks earlier .

COLLABORATIONS
MOUs with USFDA , WHO , Health Canada etc. to boost growth in the Indian Pharma sector by
benefitting by their experts .

SUPPORT FOR TECHNOLOGY UPGRADES AND FDIs

Zero duty for technology upgrades in the pharmaceutical sector through the Export Promotion
Capital Goods ( EPCG ) scheme .
Permission for 100% Foreign Direct Investment (FDC)
Government is planning to relax the FDI morms in pharmaceutical sector .

INDUSTRY INFRASTRUCTURE
Government of India is plan to set up USD 640 million venture capital fund to boost drug
discovery strengthen pharma infrastructure .

PHARMA VISION 2020

Pharma vision 2020 by governments department of pharmaceutical aims to make India a major
hub for end to end discovery .

EXCEPTIONS
Full exemption from excise duty is being provided for HIV/ AIDS drugs and diagnostic kits
supplied under National AIDS Control Programme funded by the Global Fund to fight AIDS ,
TB and Malaria ( GFATM ) .
The customs duty on the said drugs are also being exempted .