2. Industry Overview:
The Indian pharmaceuticals market is third largest in terms of volume and thirteen largest
in terms of value, as per a pharmaceuticals sector analysis
Over 2012â20, total healthcare spending is expected to rise at a CAGR of 20 per cent to
US$ 280 billion from US$ 65 billion
Industry revenues are expected to expand at a CAGR of 12.1 per cent during 2012-20 and
reach US$ 45 billion
Pharmaceutical sales, as a percentage of total healthcare spending, are expected to
increase to 27 per cent by 2016 from 18.9 per cent in 2008
Gujarat clocked the highest growth rate in pharmaceuticals market at 22.4 percent during
November 2014, surpassing the industry growth rate, which grew by 10.9 per cent
Indian pharmaceutical sector accounts for about 2.4 per cent of the global pharmaceutical
industry in value terms and 10 per cent in volume terms and is expected to expand at a
Compound Annual Growth Rate (CAGR) of 15.92 per cent to US$ 55 billion by 2020 from
US$ 20 billion in 2015.
Indian drugs are exported to more than 200 countries in the world, with the US as the key
market. Generic drugs account for 20 per cent of global exports in terms of volume,
making the country the largest provider of generic medicines globally and expected to
expand even further in coming years.
3. Healthcare Market Segments:
Healthcare Market
Hospitals
Government Hospitals â Includes
Healthcare
centers, district hospitals and
general Hospitals
Private Hospitals â Includes
nursing homes, midtier,
and top-tier private hospitals
Pharmaceuticals
Includes the manufacturing,
extraction and packaging
of chemical materials to be used
as medicines for
human & animals
Diagnostics
Comprises of businesses and
laboratories that offer
analytic or diagnostic services
including body fluid /
blood analysis
Medical
Equipments
Includes establishments primarily
engaged in
manufacturing medical
equipment and supplies, such
as surgical, dental, laboratory
instruments, etc
Medical
Insurance
Covers an individualâs
hospitalization expenses and
medical care bills incurred due to
sickness
5. Top 10 publicly listed pharmaceutical companies in India by Market
Capitalization as of July 2015
Rank Company
Market Capitalization
2015(INR crores)
1 Sun Pharmaceutical 2,17,636
2 Lupin Ltd 84,193
3 Dr. Reddy's Laboratories 63,779
4 Cipla 52,081
5 Aurobindo Pharma 42,454
6 Cadila Healthcare 38,677
7 Glenmark Pharmaceuticals 29,047
8 GlaxoSmithKline Pharmaceuticals Ltd 28,587
9 Divis Laboratories 24,847
10 Torrent Pharmaceuticals 22,320
6. SWOT Analysis:
S
â˘Cost Competitiveness
â˘Low-cost, highly
skilled set of English
speaking labour force
â˘Growing treatment
naive patient
population
â˘Diverse ecosystem
â˘Good marketing and
distribution system
W
â˘Stringent price
controls
â˘Lack of data
protection
â˘Poor all-round
infrastructure is a
major challenge
â˘Low investment in
R&D
â˘Lack of coordination
between the industry
and academia
O
â˘Global demand
for generics rising
â˘Increased
penetration in
non-metro
markets
â˘Significant
investments from
MNCs
â˘Prescription
Drugs
â˘Online Drug
Retailing
T
â˘Labor Shortage
â˘Spurious Drugs
â˘Wage inflation
â˘Competition from
other emerging
economies
â˘Product patent
regime is a major
threat to the
domestic industry
7. Demand
-side
drivers
⢠Accessibility of drugs to
greatly improve
⢠Increasing penetration of
health insurance
⢠Growing number of
stressrelated diseases due
to changing lifestyle
Supplyside
drivers
⢠Cost Advantage
⢠India is a major hub for
the manufacturing of
generics
⢠Over 120USFDA-approved
facilities
Policy
Support
⢠Reduction in approval
time for new facilities
⢠Focus on specialized
pharma education
⢠Improved accessibility for
economically challenged
section of the society
Growth Drivers:
Growth
Drivers
8. Challenges in the Industry:
Growth in the domestic formulations market is slowing down and the domestic bulk drugs
industry is facing intense competition due to cheap imports
Price wars between regional and local pharma companies are driving down prices,
exerting pressure on margins and creating a downward spiral (âAirline industry syndrome)
Till today there is exists tremendous confusion in the grant of EMR (Exclusive Marketing
Rights) due to lack of transparency in the process and regulations are getting more
stringent and in some areas it is obscure, as with regenerative medicine and bio-similar
Multinational pharma companies are getting more aggressive in protecting their patents
and defending their market share, even after patent expiry and are taking the generics
and local brands head-on
Attracting and retaining talent and the ability to leverage technology remain key
challenges for the industry
The support and infrastructure around the pharma industry still continues to be poor and
several billions of dollars of investment is required in the warehousing and cold-storage
logistics networks for medicines
Government Initiatives:
The Department of Pharmaceuticals is mulling the creation of Drug research facilities
which can be used by private companies for R&D who cannot afford independent facilities
The government is also contemplating the creation of special purpose vehicles with an
insurance cover to be used for funding new drug research
Establishment of new mechanisms to promote public private partnership in R&D and to
support new drug-development by way of providing soft loans to the Pharma Industry
The government has introduced additional tax deductions for R&D expenses
Two new schemes - New Millennium Indian Technology Leadership Initiative and the Drugs
and Pharmaceuticals Research Program have been started
The government has also initiated the recognition of the pharmaceutical industry as a
knowledge base industry
9. Road Ahead:
The Indian pharma market size is expected to grow to US$ 85 billion by 2020. The growth
in Indian domestic market will be on back of increasing consumer spending, rapid
urbanization, and raising healthcare insurance and so on.
Going forward, better growth in domestic sales will depend on the ability of companies to
align their product portfolio towards chronic therapies for diseases such as such as
cardiovascular, anti-diabetes, anti-depressants and anti-cancers are on the rise.
Moreover, the government has been taking several cost effective measures in order to
bring down healthcare expenses. Thus, governments are focusing on speedy introduction
of generic drugs into the market. This too will benefit Indian pharma companies. In
addition, the thrust on rural health programmes, life saving drugs and preventive vaccines
also augurs well for the pharma companies.