India's pharmaceutical sector is gaining its position as a global leader. The pharma market in India is expected to touch US$ 74 billion in sales by 2020 from the current US$ 11 billion, according to a PricewaterhouseCoopers (PwC) report.
Growth of Indian pharma companies will be driven by the fastest growing molecules in the diabetes, skincare and eye care segment, as per a report by research firm, Credit Suisse. The market share of a drug company is directly related to the number of fast growing molecules in the company's pipeline, the report highlighted.
The Indian pharmaceutical market is poised to grow to US$ 55 billion by 2020 from the 2009 levels of US$ 12.6 billion, as per a McKinsey & Company report titled "India Pharma 2020: Propelling access and acceptance realising true potential". The industry further holds potential to reach US$ 70 billion, at a compound annual growth rate (CAGR) of 17 per cent.
Sector Structure/ Market Size
The Indian pharmaceutical market is expected to grow at a CAGR of 15.3 per cent during 2011-12 to 2013-14, according to a Barclays Capital Equity Research report on India Healthcare & Pharmaceuticals.
The outlook on the Indian pharmaceutical industry remains favourable, according to a report by ICRA and Moody's. Domestic formulation market stood at Rs 58,300 crore (US$ 10.54 billion) and has been ranked third in terms of volume and tenth in terms of value, globally. From 2011, trends are changing, MNCs are focusing on chronics, branded generics and launching patented products, besides expanding their field force and focusing on tier-II as well as tier-IV towns. Domestic market grew at 15 per cent, while pharma multinational companies (MNCs) revenue grew at 18.7 per cent.
Exports
India's exports of drugs, pharmaceutical and fine chemicals grew by 27 per cent to Rs 60,000 crore (US$ 10.85 billion) for the year ended March 2012, according to data compiled by Pharmaceutical Exports Council of India (Pharmexcil). Moreover, the size of the Indian formulations market, which currently stands at around Rs 62,000 crore (US$ 11.21 billion), is growing at 15-20 per cent annually.
"India-Brazil health and pharmaceutical collaboration holds the potential of being key contributor for assuring affordable healthcare for our people," as per Mr Anand Sharma, Union Minister for Commerce, Industry and Textiles. Mr Sharma further called for better understanding between the pharmaceutical regulatory regimes in the two countries.
The Export-Import (Exim) Bank of India has agreed to provide loans to fund the setting up of common infrastructure facilities at Sriperumbudur, Tamil Nadu, which will help boost exports of medicine products from India.
Growth
India will see the largest number of merger and acquisitions (M&As) in the pharmaceutical and healthcare sector, according to consulting firm Grant Thornton. A survey conducted across 100 companies has revealed that one-fourth of the respondents were optimistic about acquisitions in the pharmaceutical sector.
The cumulative drugs and pharmaceuticals sector attracted foreign direct investments (FDI) worth US$ 9,596 million between April 2000 to May 2012, according to the latest data published by Department of Industrial Policy and Promotion (DIPP).
Generics
India tops the world in exporting generic medicines worth US$ 11 billion. Currently, the Indian pharmaceutical industry is one of the world's largest and most developed, according to Mr Srikant Kumar Jena, Union Minister of State for Chemicals and Fertilisers.
Generics will continue to dominate the market while patent-protected products are likely to constitute 10 per cent of the pie till 2015, according to McKinsey report 'India Pharma 2015 - Unlocking the potential of Indian Pharmaceuticals market'. Hyderabad-based generic drug maker, Natco Pharma Ltd has launched a cheaper generic version of Bristol Myers Squibb's blood cancer drug Sprycel at a fraction of the innovator pricing. Natco launched Dasatinib at a pricing of Rs 9,000 (US$ 162.75) for a month's supply against Bristol pricing of around Rs 160,000 (US$ 2,893.31).
Multinational drug companies are showing a healthy growth in the Indian market setting a new trend. Out of 25 top medicine brands by sales last year, 13 were global drug major such as Pfizer, GSK and Novartis. Brand-building exercise is fast becoming more evident in a predominantly generic Indian medicine market, as per a market research entity AIOCD AWACS' report.
Diagnostics Outsourcing/ Clinical Trials
"The Indian healthcare devices market is part of our focus on emerging markets. The Hyderabad centre will enable us to improve product time to market and create valued-innovation," highlighted Robert Frechette, Vice-President (Engineering Services), Covidien. The value of the Indian medical devices market is estimated at US$ 4 billion, and is clocking a growth rate of 15 per cent annually, he added.
The Indian pharmaceutical companies can be of immense value in providing affordable healthcare, especially in countries such as Japan. India also has a vast pool of trained pharmaceutical scientists, doctors and researchers, which opens up avenues for joint collaborative research for new drug discoveries along with joint intellectual property rights (IPRs).
The clinical pharmacology unit of GVK Biosciences at Ahmedabad has cleared an audit conducted by US Food and Drug Administration (FDA). The facility carries out important scientific studies related to drug development for pharma customers (drug companies, research institutes, etc).
Investments
- Suven Life Sciences Ltd has got four product patents one each from Australia, Canada, Korea and New Zealand for their new drug molecules (New Chemical Entities). The new drug molecules are used for disorder treatment related to Neuro-degenerative diseases
- Aurobindo Pharma has received USFDA approval to manufacture and market montelukast sodium tablets and montelukast sodium chewable tablets for treatment of asthma in the US market
- US-based drug development player, CritiTech Inc has joined hands with Hyderabad-based formulation development services company, Finoso Pharma Pvt Ltd to set up a 50:50 joint venture (JV) - Finotech Pharma. The JV company is being set up with an initial investment of US$ 1 million
- Venus Remedies has secured its third US patent for its novel antibiotic product Potentox. The new drug is an antibiotic adjuvant entity and is considered effective in case of hospital acquired pneumonia and febrile neutropenia infections
- Israel's Teva Pharmaceutical Industries and Procter & Gamble (P&G) plan to enter India through a joint venture (JV) by setting up their first manufacturing facility at Sanand, Gujarat, with an initial investment of Rs 250 crore (US$ 45.21 million)
- Onco Therapies, a wholly owned subsidiary of Strides Arcolab, has received two USFDA approvals for 'Fluorouracil Injection USP'. Fluorouracil is a chemotherapy drug which interferes with cells making DNA and RNA, and stops the growth of cancer cells
- Mankind Pharma Ltd is set for a major turnaround over the next two to three years. "We are planning to launch 15-16 products in the chronic therapy segment this financial year", as per R C Juneja, CEO and Chairman, Mankind Pharma
- Venus Remedies Ltd has launched a nanotechnology based 'ready-to-use' single vial Docetaxel in the domestic market. The medicine will be an important tool in the cancer drug industry
Government Initiatives
The Union Budget for 2012-13 was announced by Mr Pranab Mukherjee, the Union Finance Minister. Highlights of Union Budget 2012-13:
- It is proposed to extend concessional basic customs duty of 5 per cent with full exemption from excise duty/CVD to six specified life-saving drugs/ vaccines. These are used for the treatment or prevention of ailments such as HIV-AIDS, renal cancer, etc
- Probiotics are a cost-effective means of combating bacterial infections. It is proposed to reduce the basic customs duty on this item from 10 per cent to 5 per cent
- Basic customs duty and excise duty reduced on Soya products to address protein deficiency among women and children. Basic customs duty and excise duty reduced on Iodine
Furthermore, a 'Pharma Vision 2020' has been prepared by the Department of Pharmaceuticals, for making India one of the leading destinations for end-to-end drug discovery and innovation and for that purpose, the department will provide requisite support by way of world class infrastructure, internationally competitive scientific manpower for pharma research and development (R&D), venture fund for research in the public and private domain and such other measures.
Road Ahead
On the back of increasing middle-class population base, improvements in medical infrastructure and the establishment of IP rights, the Indian pharma industry is estimated to grow manifolds.
"India is a unique market, always very intriguing. India presents challenging paradigms and gives tremendous opportunities. I see the healthcare sector as one of the biggest business opportunities," as per Terri Bresenham, President and CEO, GE Healthcare India, and MD, Wipro GE Healthcare. India is the first country to have a large number of multinational healthcare providers, added Bresenham.
Pharmaceutical companies such as Cipla, Ranbaxy, Dr Reddy's Labs and Lupin might soon be part of the government's ambitious 'Jan Aushadhi' project. In an attempt to commercialise the project, the government is likely to rope in the private sector to bulk-procure generic drugs from them. There are 117 Jan Aushadhi stores across the country and the plan is to expand to at least 600 in the next two years and 3,000 by 2016.
Exchange rate used INR 1= US$ 0.01808 as on August, 2012
References: Consolidated FDI Policy, Department of Industrial Policy & Promotion (DIPP), Press Information Bureau (PIB), Media Reports, McKinsey Report, Pharmaceuticals Export Promotion Council
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