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Indian Pharma Market Overview

De nition:

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Indian Pharma Market is the total value of Pharmaceutical

Formulations in India sold at the retail level to the nal consumers.

Recent Posts

Why we should know?

Are We Health 3.0 Ready?

To know the pharmaceutical market potential, therapeutic category

wise, products, major competitors, so that we can make appropriate
choices and decisions to achieve company objectives.

Main features of Indian Pharma Market

India is the potential market for MNCs. This is because Indias
population is growing rapidly and its economy creating a large
middle class with the resources to afford Western medicines.
Moreover the changing epidemiological pro le of India shall increase
the demand for drugs used to treat cardio-vascular problems,
disorders of the central nervous system and other chronic diseases.
Indias growing pharmaceutical industry is likely could be a
competitor and potential partner in many key areas of global Pharma.
India has considerable manufacturing expertise and as such Indian
producers are likely to partner with global Pharma companies to
market their wares outside of India.
India will be the most populous country in the world by 2050, will
make its mark as a growing market, potential competitor or partner in
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manufacturing and R&D, as a location for clinical trials and partner

with MNCs.
India is a fast growing economy. The Indian economy is rapidly getting
bigger. The real GDP growth reached 9% in March 2008. In the year
to March 2009, growth eased to 6.7%. Reserve Bank of India (RBI)
anticipates growth improving to 6% in the year ending March 2010,
and expects robust growth of 7.8% p.a for the next ten years.
Forecasts such as those of Goldman Sachs suggest that India will be
the only emerging economy to maintain such an outstanding pace
over the longer term, i.e. to 2050.
India is forecast to grow by at least 5% a year for the next 41 years

Indias therapeutic needs are changing

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Government-provided healthcare is improving, but private healthcare

dominates. The Indian Government is currently in the throes of a
much needed program to reform the health care system.
The factors that propel growth in sales volumes are increased buying
power and epidemiological changes yet India remains a pricesensitive market. While Indias healthcare system is struggling to
meet the needs of its vast population, government programs and
reforms in the health insurance industry should improve the situation.
Indias Pharma domestic market was worth around US$11 billion in
March 2009 and expected to reach US$30 billion by 2020.
Indian Pharmaceutical manufacturers produce more than 20% of the
worlds generic products. As US$70 billion worth of drugs are
expected to go off patent in the US over the next three years, Indian
manufacturers are positioned to take a substantial share of the
resulting new generics market.
Till February 2009, Indian companies account for 35% of the
Abbreviated New Drug Application (ANDA) approvals granted by the
US Food and Drug Administration (FDA). Indian Pharma
manufacturers are entering into strategic alliances globally to jointly
market the generics in the world resulting in major market share of
generics by Indian companies.
In spite of global recession in 2008, Mergers & Acquisitions in the
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Pharma sector in India more than doubled compared to the previous

year. There were 57 M&A, a 128% increase. Investment in
Pharmaceutical, healthcare and biotech was of US$5.57 billion, the
second among industry.
In 2009, Indias pharmaceutical exports reached US$8 billion and by
2020, it is estimated to attain approximately US$20 billion.
The reverse engineering manufacturing experience of generics helped
Indian Pharma companies to stream line the costs to two- fths of the
cost in the west. This also widened the scope of contract
manufacturing facilities with enhanced scrutiny of quality issues
resulting in signi cant improvement in quality standards.
The US FDA has already approved over 100 manufacturing sites
more than in any country except the US. The Indian contract
manufacturing segment worth US$605 million in 2008 is expected to
reach US$916 million in 2010.
India has more US FDA-approved manufacturing plants than any
country except the US

India is one of the largest vaccine producers in the world, with many
new vaccines set to be launched in the next ve years. In March 2008,
vaccines market is estimated to be US$780 million, growing at a
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compounded annual growth rate (CAGR) of 15%. India not only

exports vaccines to about 150 countries but also meets 40-70% of the
World Health Organization (WHO) demand.
The OTC market in India valued at US$1.8 billion in 2009, is expected
to grow at 18% a year to reach about US$3 billion in 2012 as the
Government is now considering to expand the list of OTC drugs which
can be sold outside pharmacies, since many common household
remedies are more dif cult to obtain in India than in other developing
countries. Hence OTC sales are on the increase, offering
opportunities to achieve high volumes of OTC Pharma brands in India.
Though urban markets remain in focus for short term goals, getting
treatment to the remaining 70% of the rural population shall be the
next volume driver.

Growing Research & Development

Indias top 10 largest drug rms spent US$480 million on R&D in
2008 and is expected to reach around US$1 billion in 2010.

Clinical trials in India offer 50% of cost savings:

Even though insuf cient regulatory oversight is currently a barrier,
yet Indias overall costs which are only 50% of the US-based programs
should spur dramatic growth in clinical testing in the next 2-5 years.
Indian clinical trials market could reach US$2 billion by 2012, up from
just US$300 million in 2008.

Biotech and biosimilars on track for growth

In 2008-09, Biotech and Biosimilar products generated sales of
US$2.64 billion with a CAGR of 26 and expected to achieve revenues
of US$5 billion by 2010 -11. Indias developing biotech industry and
cost advantages should drive signi cant growth in local development
of biosimilars for the global market.

Indias top 10 biotech rms:

Company

Revenues
(US$ million)
2008-2009

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Serum Institute of India

242.12

Biocon

198.29

Panacea Biotech

129.79

Rasi Seeds

81.63

Nuziveedu Seeds

79.11

Novo Nordisk

71.72

Siro Clinpharm

60.86

Novozymes South Asia

54.34

Shantha Biotech

53.58

Jubilant

52.6

Source: Biospectrum ABLE, 2009 95

Bioinformatics in India:
Indias existing IT knowledge capital provides a natural base for the
development of bioinformatics research and operations. As of March
2009, revenues for the Indian bioinformatics industry were around
US$48 million out of which US$37 million from overseas and the
remaining US$11 million from domestic market.

Stem cell research:

In India 40 institutions and hospitals are involved in stem cell research
progressing from a few institutions. Indias considerable progress in
stem cell research has positioned it to take leverage of growing
capabilities in this area.

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Medical devices
Indias medical devices market is new and estimated to be US$2.75
billion in 2008 and is expected to double by 2012 to US$5 billion.
Global Medical Devices market is around US$220 billion in 2008 and
Indias market share is just 1.25%.

Global Pharmas evolving business models and

options in India
Varieties of options are available for Global Pharma players who can
maximize their investment in India. Indian companies too are willing
to play increasingly partnership roles.
Following are the examples of evolving business models in India.

Export-oriented business: CRAMS

Low costs, availability of skilled talent and a large patient pool are the
driving factors for MNCs increasing interest in India not only for
manufacturing but also for research and clinical trials

Licensing
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Multinationals are increasingly entering into licensing agreements to

get a share of the Indian Pharma market. For example, Elder
Pharmaceuticals has entered into an exclusive in-licensing deal with
Israels Enzymotec to sell the latters cholesterol-reducing dietary
supplement, CardiaBeat, in India.

Franchising
The master franchisee of US-based Medicine Shoppe International
has already forayed the market and plans to expand 1,000 stores by
2010. Fortis Healthcare plans to open a chain of 1,000 stores by 2012,
of which the US$200 million has been committed.

Joint Ventures Joint ventures (JVs)

are becoming a more prevalent option for companies looking to
capitalise on the opportunities presented in India. Foreign companies
are increasingly looking at local partners to work with in order to
increase their presence in India. R&D joint ventures are also growing
in popularity. Some Indian companies are collaborating with overseas
players to enhance their vaccine development capabilities.
Requirements of a JVForeign companies forming a JV in India can
invest directly via the automatic route i.e. no prior approval of the
Government is required. Foreign direct investment up to 100% is
permitted in pharmaceutical sector under the automatic route. In
cases where the foreign investor has an existing venture or tie-up in
India in the same eld as on 12 January 2005, prior Foreign
Investment Promotion Board (FIPB) approval is required. The FIPB
generally grants its approval on the basis of a no objection certi cate
(NOC) from the existing JV partner.

Partnerships
Some multinational companies have also increased their stake in their
Indian subsidiaries to take advantage of the India opportunity. P zer
has been able to increase its stake in its Indian arm, P zer India, from
41.2% to around 72%.128 Similarly, Novartis AG has hiked its stake to
76.42% in its Indian subsidiary Novartis India from 50.9%.

Infrastructure
Insuf cient energy infrastructure and inadequate transport
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infrastructure has historically posed challenges for companies

operating in India. The situation is de nitely improving, as the
Government focuses attention on infrastructure needs.
Tax environment India is expected to implement a new Direct Tax
Code, pending approval, by April 2011, which should simplify the
existing tax structure. The new tax code proposes a reduction in the
corporate tax rate from the current 30% to 25% and an unlimited
carry forward of business losses. India offers some attractive tax
bene ts for Pharma companies and reductions in customs duties
should also help global manufacturers compete in the price-sensitive
Indian market.

Counterfeiting
Counterfeit drugs have been a serious issue in India. The Organization
of Pharmaceutical Producers of India (OPPI) has spearheaded various
initiatives to combat the problem. It found the prevalence of spurious
drugs at 0.046% of all medicines sold to customers, in contrast to
results of an earlier survey funded by the WHO and undertaken by
the International Pharmaceutical Federation, which concluded that
3.1% of drugs in India were counterfeit.

Intellectual Property Rights

The federal Government introduced product patents for all industrial
sectors under the Patents (Amendment) Act, 2005 in line with the
commitment India made when it signed up to the Trade-Related
Aspects of Intellectual Property Rights (TRIPS) Accord in 1995. This
regulation aims to balance the interests of domestic and multinational
drug makers. It represents a major improvement on the previous
rules, but some issues remain. Firstly, it does not apply to drugs
patented before 1995.137 Copies of drugs patented between 1995
and the introduction of the law will probably not be withdrawn.
(Source: Global Pharma looks to India: Prospects for growth
PriceWaterHouseCooper
http://www.pwc.com/gx/en/pharma-life-sciences/publications/indiagrowth.jhtml)

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(Source: Indian Pharma 2015: Unlocking the potential of the Indian

Pharmaceutical Market McKinsey&Company.
http://www.mckinsey.com/locations/india/mckinseyonindia/pdf/India
_Pharma_2015.pdf)

Vishy

July 14, 2015

Pharma

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