INDIAN PHARMACEUTICAL

INDUSTRY

1|Page
 CONTENT PAGE NO
INTRODUCTION 3-4
MARKET SIZE
ADVANTAGES
SWOT ANAYSIS 5
 STRENGTHS 6-7
 WEAKNESS
 OPPORTUNITIES
 THREATS
PESTAL ANALYSIS 8
 POLITICAL 9-10
ENVIRONMENT
 ECONOMICAL
ENVIRONMENT
 SOCIOLOGICAL
ENVIRONMENT
 TECHNOLOGICAL
ENVIRONMENT
 ECOLOGICAL
ENVIRONMENT
 LEGAL ENVIRONMENT

PORTER’S 5 FORCES 11
 THE THREAT OF NEW 12
ENTRANT
 THE THREAT OF
SUBSTITUTES
 BARGAINING POWER
OF BUYERS
 BARGAINING POWER
OF SUPPLIERS
 THE INTENSITY OF THE
COMPETITIVE RIVAL
BCG Matrix 14
 CASH COWS 15
 STARS
 QUESTION MARKS
 DOGS

2|Page
3|Page
INTRODUCTION
 India is the largest provider of generic drugs globally. Indian pharmaceutical
sector industry supplies over 50 per cent of global demand for various
vaccines, 40 per cent of generic demand in the US and 25 per cent of all
medicine in UK.

 India enjoys an important position in the global pharmaceuticals sector. The

country also has a large pool of scientists and engineers who have the
potential to steer the industry ahead to an even higher level. Presently over
80 per cent of the antiretroviral drugs used globally to combat AIDS
(Acquired Immune Deficiency Syndrome) are supplied by Indian
pharmaceutical firms.

Market Size

 The pharmaceutical sector was valued at US$ 33 billion in 2017. The

country’s pharmaceutical industry is expected to expand at a CAGR of 22.4
per cent over 2015–20 to reach US$ 55 billion. India’s pharmaceutical
exports stood at US$ 17.27 billion in FY18 and have reached US$ 10.80
billion in FY19 (up to October 2018).

 Pharmaceutical exports include bulk drugs, intermediates, drug

formulations, biological, Ayush & herbal products and surgicals.

 Indian companies received 304 Abbreviated New Drug Application (ANDA)

approvals from the US Food and Drug Administration (USFDA) in 2017. The
country accounts for around 30 per cent (by volume) and about 10 per cent
(value) in the US$ 70-80 billion US generics market.

4|Page
ADVANTAGES
 Low cost of production and increasing expenditure on R&D has led to
competitivepharma exports from with exports reaching US$ 17.27 billion in
FY18.

 High economic growth along with increasing penetration of health

insurance pushes expenditure on healthcare and medicine in India.

 Government of India's Pharma Vision 2020 aims to make India a global

leader in end-to-end drug manufacturing.

 Increasing private sector investments in R&D and acquisitions are driving

the sector’s growth in F418, Indian pharmacy companies invested 8.B per
cent of their sales in R&D.

5|Page
SWOT ANALYSIS
 The SWOT analysis of the industry reveals the position of the Indian
pharmaceutical industry in respect to its internal and external environment.

1) Strengths

2) Weaknesses

3) Opportunities

4) Threats

6|Page
 Strengths

• Higher GDP growth leading to increased disposable income in the hands

of general public and their positive attitude towards spending on
healthcare.
• Low-cost, highly skilled set of English speaking labor force and proven
track record in design of high technology manufacturing devices.
• Growing treatment naive patient population.
• Low cost of innovation, manufacturing and operations.

Weaknesses
• Stringent pricing regulations affecting the profitability of pharmacy
companies.
• Poor all-round infrastructure is a major challenge.
• Presence of more unorganized players versus the organized ones,
resulting in an increasingly competitive environment, characterized by stiff
price competition.
• Poor health insurance coverage.

Opportunities
• Global demand for generics rising.
• Rapid OTC and generic market growth.
• Increased penetration in the non - metro markets.
• Large demand for quality diagnostic services.
• Significant investment from MNCs.
• Public-Private Partnerships for strengthening Infrastructure.
• Opening of the health insurance sector and increase in per capita income
- the growth drivers for the pharmaceutical industry.
• India, a potentially preferred global outsourcing hub for pharmaceutical
products due to low cost of skilled labor.

7|Page
 Threats
• Wage inflation.
• Government expanding the umbrella of the Drugs Price Control Order
(DPCO).
• Other low-cost countries such as China and Israel affecting outsourcing
demand for Indian pharmaceutical products.
• Entry of foreign players (well equipped technology-based products) into
the Indian market.

PESTEL ANALYSIS
P – Political Environment

E – Economical Environment

S – Sociological Environment
8|Page
T – Technological Environment

E – Ecological Environment

L – Legal Environment

Political Environment
 It the country is having a good and business friendly environment, our
pharmacy industry will develop more. As our Prime Minister Narendra
Modiji is having a schemes like Make in India, Start up India loan facilities at

9|Page
 lower interest rates which will definitely makes a positive effects on a
pharmacy industry

Economical Environment
 If the economy is in a good way, it makes better opportunity to grow. As
2015-16 budget is concerned our growth rate is accelerated to 7.6%, this is
going to be a good sign for the pharmacy industry. MODI’s govt. has allowed
FDI in ParmaIndustry (Start up India)  It the economy is not good then it
will be negative effect on Parma Industry.

Sociological Environment
 Each and every business is totally depends on Sociological Environment.
Due to lack of knowledge among the people the pharmacy industry is
lacking behind. Knowledge society leads to the better business for the
Pharmaceutical industry. Social norms also influences its business  Higher
the population leads to higher the business

Technological Environment
 As a technology go on increasing, the pharmacy industry will get a lot of
opportunities to do well business .As it can get orders through online and it
can have better cum low costly transactions. The Payments and receivables
will be much easier to give and get on time. Technology helps pharmacy
industry to produce or create new drugs.

Ecological Environment
 MONSOON is a best season for the pharmaceutical industry as so many
deceases comes in MONSOON and Winter Season. If the nature is balanced
it is going to be a bad sign for the Parma Industry. Cool climate is better for
the Pharmacy Industry to store its products in a safer manner
10 | P a g e
Legal Environment
 Legal environment also affects a lot on Pharmacyindustry. As of now Indian
Government has banned some of the drugs which are composed of
Nimuslide.

POTER’S 5 FORCES
The Threat of New Entrant

The Threat of Substitutes

Bargaining Power of Buyers

11 | P a g e
Bargaining Power of Suppliers

The Intensity of the Competitive Rivalry

12 | P a g e
The Threat of New Entrant
 Threat of new entrants is low.
 Huge initial investment and high gestation period makes survival difficult.
 Strict government regulations create compliance burden.

The Threat of Substitutes

 It is low, on account of following factors.
 Alternative remedies like homeopathy and Ayurvedic medicines can be
used as substitutes; however, they have their own limitations

Bargaining Power of Buyers

 It is moderate.
 In case of innovative drugs, customers do not possess any bargaining power,
due to monopoly of the drug producing company. However, in case of
generic drugs, bargaining power of customers is significant.

Bargaining Power of Suppliers

 This is moderate.
 In case of patented drugs, which are difficult to manufacture, bargaining
power of suppliers is high.
 However, for generic drugs, where replicating the product is easy,
bargaining power of the supplier is low.

The Intensity of the Competitive Rivalry

 Competitive rivalry is high in the pharmaceutical industry.
 Indian pharmacy companies will continue to face competition from global
pharmacy giants, with easing of FDI norms.

13 | P a g e
BCG MATRIXS
CASH COWS

Cash cows have a low market growth but a high market share. Product that
fall into this category should be harvested. The cash generated from this
category should be used to invest in Question Marks and Stars. As the
market growth for these products is generally low, Pharmaceuticals should
invest just enough to maintain the products market share and avoid
overinvesting in these products.
In my opinion, pharmaceuticals should stop investing in Liquemin. Though
Liquemin is currently dominating the marketing, the market for liquemin is
shrinking. So there is little point investing a product that goings out of data.
So as long as investing a product that goings out of date. So as long as the
market exists. Liquemin will continue to make profit for pharmaceuticals.

STARS

Stars generate large amounts of cash because of their strong relative

market share, but also consume large amounts of cash because of their
high growth rate; therefore, the cash in each direction approximately nets
out. Pharmaceuticals should definitely focus on developing star products. If
a star can maintain its large market share, it will become a cash cow when
the market growth rate declines.

QUESTION MARKS

Question marks are growing rapidly and thus consume large amountsof cash, but
because they have low market share they do not generate much cash. The result
is a large net cash consumption. Products with high market growth like invirase,
Aurorix and Neotigason have the potential to gain market share and become stars,
and eventually cash cows. These products deserve investments. Pharmaceuticals
should think twice before investing other question markets with lower market
growth.

14 | P a g e
 DOGS

Dogs have lot market share and low growth rate and thus neither generated nor
consume a large amount of cash. These products are the weaknesses for
Pharmaceuticals. Out of all the 26 products, 6 fall in that category. Most of these
products (Apranax, Tilcotil, Atrium, Dalmadorm and Rocephin) are cash traps
because of the money tied up in a business that has little potential. Such products
are candidates for divestiture. But products like Lexotan and Dormicum have
relatively higher market share, in my opinion these two products should be kept.

15 | P a g e