10/7/2016

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Indianpharmatobecomea$55billionmarketby2020:IBEF
MoneycontrolBureau
TheIndianpharmaceuticalindustryisexpectedtobeamongthetop3pharmamarketsby2020onbackofincrementalgrowth,
saysanIndianBrandEquityFoundation(IBEF)report.
Theindustry,currentlyvaluedatnearUSD26billion,isexpectedtoreachUSD55billioninthenextfouryears.From200516,
theindustryhasseenagrowthof17.90percentCAGR.ThemarketsizehasexpandedtoUSD36.7billionin2016fromUSD6
billionin2005.Indiaisthelargestproviderofgenericdrugsandhas20percentglobalexportsintermsofvolume.
Inrecenttimes,thepharmaceuticalsectorhadtakenabeatingoverthestricterregulatoryactionsfromtheUnitedStatesFood&
DrugAssociation(USFDA)andasubduedglobaleconomy.Consolidationhassetintothesector.
Outlook
Thereportsaysthattotalhealthcarespendingisexpectedtoincreaseatacompoundedannualgrowthrateof12.70percentto
USD133billionduringthe20102016period.
Domesticpharmaindustryisexpectedtooutperformtheglobalgrowthinnext45years.Whilepharmasectorwillgrowat15
percenteveryyear,globalmarketisexpectedtogrowat5percentperannum.
Pharmaceuticalsales,too,areexpectedtoriseonbackofincreaseinresearchanddevelopment(R&D)spendofcompanies,
whichisapproximated811percentofturnover.
Economicprosperitywouldimproveaffordabilityforgenericdrugsinthemarketandimprovepercapitasalesof
pharmaceuticalsinIndia,itsays.
USFDAapprovalshavedoubledforIndiancompaniesto201inFY1516asagainst109seeninFY201415.Exportstooare
expectedtoimproveandwilltouchUSD16.89billionin2016,believesthePharmaceuticalsExportsPromotionCouncil.
Indiancompaniesarealsogettingintonewermarketstoexpandbusiness.Forexample,pharmamajorLupinisentering
marketslikeRussiaandLatinAmerica.
TheGovernmentofIndiatooisconcentratingonmakingthecountryagloballeaderinthespacewithitsPharmaVision2020.
Theyareworkingtoreduceapprovaltimeandremoveredtapismfortheindustrytoboostinvestments.
WhatwillworkforIndia?
Thereportstatesthatcostefficiencyandcompetencyarethepharmasectorsmainadvantagesoverothercountries.Indias
costofproductionisnearly60percentlowerthanthatoftheUSandalmosthalfofthatofEurope,itsays.
Addingtothisischeaplabouravailableinthecountry.Labourcostisalmost5055percentlowerthanwesterncountriesand
costofsettingupaplanttooislowerbyabout40percent.CostefficiencycontinuestocreateopportunitiesforIndian
companiesinemergingmarketsandAfrica,thereportsays.
TheotherbenefitIndiahasisskilledworkforceandcompetenttechnicalexpertiseincomparisontoitspeers.Indiahasthe
secondlargestnumberofUSFDAapprovedmanufacturingplantoutsidetheUSandhas2,633FDAapproveddrugs,thereport
mentions.
Challenges
Whilegrowthopportunitiesforthesectorareexpectedtorise,growingcompetitionandentranceofnewplayerswillbeamajor
challengeforpharmaceuticalcompanies.Thebiggerplayerswithstrongfinancialholdtoowillbeaconcern.
Also,tighteningofnormsbyregulatorybodieswillbeachallenegeasthecompanieswillhavetoimproveandremainatthetop
oftheirgame.

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