Presented by:

Group 7

Apurva Gupta
Garima Kumari
Neel Jain
Prashant Choraria
Preya Shah
Outline
Objectives
Introduction
Global Scenario
Structure:
HHI, concentration ratio
Macro environmental
analysis
Competitive analysis
Conduct:
R & D intensity
Pricing

Performance:
Profitability
Future Outlook
Budget 2013 Impact

Objectives
To assess
the industrys growth potential
The profitability of industry
Major market players and type of market
R & D spending and pricing strategies


Introduction
India-among top five countries by
volume
Accounts for 10% of global
production
Over 10,000 manufacturers
Growth has been fuelled by exports
Meets 70% of countrys demand for
bulk drugs

Source: planningcommission.nic.in
Year: FY 2011-12
Key manufacturing clusters
Key R&D Clusters
Exports/Imports
Exports/Imports
FDI Inflows:
GLOBAL SCENARIO
From highly fragmented to consolidated
Structure- Reduced R & D costs, achieve
economies of scale, strengthen marketing
network.
total world pharmaceutical market is covered
mainly by US, Japan, France, Germany, UK, Italy,
China, Canada,
Spain, Brazil etc
world pharmaceuticals market is forecast to
grow with 11% percent or more from up till
2020


Percent of rating category as innovative
among currently available products:
Industrial sectors(category) % INNOVATIONS
Electronic equipment 54 %
Computer equipment 53 %
Cameras and video equipment 50 %
Household products 32 %

Pharmaceuticals

29 %
Food and Beverages 28 %
Daily use products 24 %
HHI: Determines existence of monopoly
HHI Index for Indian Pharma Industry: 707.25529
Analysis:
monopolistic competition.
Less concentration

Four Firm Concentration Ratio: Calculates the
market share of top 4 companies.
4 firm concentration ratio of Pharma: 28.50060775
Analysis:
Monopolistic Competition




MACRO ENVIRONMENTAL
ANALYSIS
Political
Political uncertainty
Minister of Pharma:
More stringent price
control rules
DPCO works contrary to
the stated objectives
PSU segment-
chronically sick and
highly inefficient.


Economical
Small portion of GDP to
healthcare
Per capita income low
The incidence of Taxes are
very high.
Adequate storage and
transportation facilities
for special drugs is
lacking.
India is a high interest
rate regime.

MACRO ENVIRONMENTAL
ANALYSIS
Socio-cultural
Poverty and associated
malnutrition
Poor Sanitation and
polluted water sources
using household
treatments for
common ailments.
Smoking, gutka,
drinking and poor oral
hygiene
Early child bearing

Technological
Advanced automated
machines
Computerization has
increased the efficiency
Newer medication,
molecules and active
ingredients are being
discovered.
more than 10,000
substances for patenting.






Strengths
1. Vast market growth potential
2. Innovative manpower
3. Cheap Labour force
4. Increasing FDI in industry
5. Governmental focus and
investment in R & D Area







Weaknesses
1. Under developed healthcare
infrastructure
2. Low Pharma consumption levels per
capita
3. Biased drug pricing
4. Vast regional disparities in
healthcare coverage
5. MNCs supplying at lower
prices

Opportunities
1.Large and growing population
2.Rising demand for generic drugs
globally
3.Increasing R&D activity by domestic
firms
4.Increased demand for
pharmaceutical ingredients
Threats

1.indias patent laws threatened by
litigation
2. Government imposing further price
control over essential medicines
3. Weak copyright policies threatening
legal entities
4. Failure to enforce WTO patent
legislation for drugs

SWOT
Analysis
R & D Intensity:
India- among the top four emerging markets in Pharma
industry
seen growth at a CAGR of about 12% since the start of
11th Five Year Plan.
positive approach towards product patent
Global expenditure on R&D has dropped to an
estimated
$68 billion from the $70 billion spent in each of 2008
and 2009.



Pricing Strategy: Indian drugs considered to be
amongst the lowest priced internationally

DRUGS UNDER DPCO:
The Govt. may fix from time to time by
notification in the Official Gazette, Maximum
Sale Price at which such Bulk Drugs shall be sold
Scheduled Drugs:
DPCO, 1995 empowers the Government to fix
from time to time retail price and ceiling prices
of scheduled formulations.
prices are fixed/revised from time to time and
notified in official gazette.


Pricing Strategy:
Non-Scheduled Drugs:
manufacturers fix the prices by themselves
without seeking
approval of Government
prices are normally fixed depending on various
factors like the cost of bulk drugs used in the
formulation, cost of excipients, cost of R&D,
cost of utilities/ packing material, sales
promotion costs, trade margins, quality
assurance cost, landed cost of imports etc.


Pricing Strategy:
Non-Scheduled Drugs:
NPPA regularly examines the movement in prices of nonscheduled
formulations on the basis of monthly reports of ORGIMS (now
IMS Health) and the information furnished by individual
manufacturers in following conditions
(i) Increase in price ofmore than 10% in one year
(ii) Ifthe annualturnover ofthe formulation pack exceeds Rs.1 crores.
(iii) The share of formulations in that segment of the formulation is
required to
be at least 20% of the market or the medicine is one of the top 3 brands
of
that group.

Expansion Strategy
acquisitions played a vital role for Indian
companies in establishing their presence in
international markets
Investments in generic space have been aimed
at gaining presence in newer markets, access to
technologies or even acquiring marketing and
distribution front-end.
preference towards forming JVs/alliances with
focus on specific markets or therapy segments is
gaining importance.
PERFORMANCE
Profitability Ratios of Key Players
The total turnover of the Indian Pharma sector is estimated to be close to
US$ 21 bn of which around US$ 9 bn comes from exports while the rest
comes from domestic sales.
Data for the year: 2011-12)
Future Outlook
Projected to show double digit growth owing to :
Rise in Pharmaceutical outsourcing
Rise in investments by MNCs
Focus will shift in capitalizing the potential of rural areas
Emerging sectors, such as bio-generics and Pharma
packaging will also pave way for the pharmaceutical market
to continue its upward trend during the forecast period (FY
2012- FY 2014).

Budget 2013 Implications
The sharp increase in the rate of surcharge from 5%
to 10%
increase in tax withholding rates while making
payments to non-resident companies in the nature
of royalty or fees for technical services from 10% to
25%
additional deduction of 15% for investment in plant
& machinery (exceeding Rs 100 crore) is a welcome
move
References:
www.capitaline.com
www.moneycontrol.com
www.planningcommission.nic.in
http://wtocentre.iift.ac.in
http://www.icra.in
www.pharmaceuticals.gov.in