indian Pharmaceutical industry export import overview


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Pharmaceutical Industry-EXPORT IMPORT INDIA
The pharmaceutical industry develops, produces, and markets drugs or pharmaceuticals licensed for use as medications. Pharmaceutical companies are allowed to deal in generic and/or brand medications and medical devices

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  • Tuornover to be tallied with the data later
  • Nutraceutical is the food product which is benefitial for health
  • Compound Annual Growth Rate - CAGR’ Total exports during the last four years have grown by 15% Cagr, growth during the last financial year, 2011-12 was23.34% in USD terms.North America continues to be our best destination with a CAGr of 25% and 33% growth during 2011-12.Exports to EU has grown exceptionally well during 2011-12 with 28% considering the fact that a single digit CAGR was recorded during the last four years.Exports to Oceania have also grown well with a gr of 43% but the overall turnover is small and considering the fact that Australia and Newzeland are not yet fully tapped, higher growth rates can be expected. Exports to LAC have also grown well at 19% more than the double the rate of Cagr of last four years and also higher than 2010-11, but below the year’s growth.Exports to Africa, Asean and Asia(Excluding middle east) have grown better than last year excepting Africa but only at overall year’s growth.Exports to Middle East have grown during the year at half the pace of overall exports growth of the year (23.45) and slightly better than last year’s region’s growth.Exports to CIS countries have grown negative by 3.5%, It had an exceptional growth of over 36% during 2010-11.
  • Exports of formulations contribution to Pharma exports has grown from 58.6% to 62.5% during the last four years.Exports of formulations during 2011-12 have grown by 25% and have a cagr of 17%.Exports of formulations to North America have been consistently growing at 37% and 31% of our formulations exports are to this region. During 2011-12 exports of formulations to EU has been exceptional with a growth rate of 30% as against Cagr of 9% during the last four years.Exports of Formulations to Asia(excluding middle east have grown at 60% during 2011-12 as against a CAGR of 9% during the last four years. Main contributor in this region is , exports to Japan which has gone up from 16 USD mn in 2010-11 to USD 48 mn in 2011-12.Exports to Oceania is also growing at higher pace of 37%.
  • Minimum alternate tax
  • Indian trade classifcation.Harmonised system
  • indian Pharmaceutical industry export import overview

    1. 1. Pharmaceutical Industry
    2. 2. Overview The pharmaceutical industry develops, produces, and markets drugs or pharmaceuticals licensed for use as medications. Pharmaceutical companies are allowed to deal in generic and/or brand medications and medical devices The Pharmaceutical industry has grown from mere US$ 0.3 billion turnover in 1980 to about US$ 13.22 billion in 2011-12. Globally, India ranks 3rd in terms of volume of production (10 per cent of global share) and 14th largest by value (1.5 per cent of global share). The reason for lower value share is the lowest cost of drugs in India ranging from 5 per cent to 50 per cent less as compared to developed countries The total turnover of India's pharmaceuticals industry between 2011 and 2012 was US$13.22 billion.
    3. 3. The various categories under pharmaceuticals are: Bulk Drugs (APIs) Drug Intermediates Drug Formulations Biotechnology Biological Products Herbal Products (Ayurveda, Siddha & Unani ) Medicinal Plants Homeopathy Nutraceuticals and Physiochemical Diagnostics Clinical Research Surgical
    4. 4. Along with Brazil & PR China, India has carved a niche for itself by being a top generic Pharma player. Major share of Indian Pharma exports going to highly developed western countries bears testimony to not only the excellent quality of Indian pharmaceuticals but also its price competitiveness. More than 50 per cent share of exports is by way of dosage forms. Indian companies are now seeking more Abbreviated New Drug Approvals (ANDAs) in USA in specialized segments like anti- infective, cardio vascular and central nervous system groups Around 15% of Indian Pharmaceutical scientists are in USA, hence good network
    5. 5. SWOT Analysis Strengths Cost Effective Strong Manufacturing Base Low cost of innovation, manufacturing and operations Availability of high quality skilled workforce. Low cost of skilled manpower and proven track record in design of high technology manufacturing devices Excellent marketing and distribution network Diverse ecosystem
    6. 6. Weakness Lack of coordination between industry and academia. Negligible expenditure on healthcare in the country. Manufacture of fake and low quality medicines Stringent pricing regulations affecting the profitability of pharma companies Presence of more unorganized players versus the organized ones, resulting in an increasingly competitive environment, characterized by stiff price competition.
    7. 7. Opportunities Increased export potential Opening of the health insurance sector and increase in per capita income - the growth drivers for the pharmaceutical industry Marketing tie ups with multinational companies to sell their products in domestic market. Immense scope to position India as a centre for international clinical trials. Key player in global pharmaceutical R&D. Export of generic drugs to developed markets
    8. 8. Threats Product patent regime is a major threat to domestic industry unless the industry takes up R&D initiative aggressively. Drug Price Control Order puts undue pressure on product prices, affecting the profitability of the pharmaceutical companies. The new MRP based excise duty regime threatens the business of smaller pharmaceutical companies. 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
    9. 9. Production Centres State wise Source- annual report of pharmexcil 2011-12 State No. of Manufacturing Unit Total Formulations Bulk Drugs Maharashtra 1928 1211 3139 Gujarat 1129 397 1526 West Bengal 694 62 756 Andhra Pradesh 528 199 727 Tamil Nadu 472 98 570 Others 3423 422 3845 Total 8174 2389 10563
    10. 10. Gujarat- Ahmedabad, Ankleshwar, Vapi, Vadodara Maharashtra - Mumbai, Tarapur, Aurangabad, Pune Andhra Pradesh - Hyderabad, Medak Tamil Nadu – Chennai, Pondicherry
    11. 11. Trends in Export The Pharmaceutical industry has grown from mere US $0.3 billion turnover in 1980 to about US$ 21.73 billion in 2011-12. The industry is making adequate returns from the domestic sales but bulk of its profits come from the export of generics and active pharmaceutical ingredients to the developed markets. The industry has been exporting more than half of its total production, which is estimated to be more than 20 billion dollars currently. In 2011, India exported $10.3 billion worth of pharmaceutical products, registering 17.5% growth over 2011. By March 2012, pharmaceutical exports from the country have touched a growth of 45%. The largest export destination continues to be the US, followed by the UK, Germany, South Africa, and Russia. Segment wise, generic drugs account for 58% of total exports, APIs account for 40% and traditional medicines account for the remaining 2%. The country’s commerce ministry has set an ambitious export target of $25 billion by 2013–2014.
    12. 12. Trends in Exports Year Exports (in billion US $) Growth % 2008 to 2009 6.3 14.4. 2009 to 2010 8.6 36.5 2010 to 2011 9.1 5.81 2011 to 2012 13.22 45.6 SOURCE- ANNUAL REPORT OF PHARMEXCIL 2011-12
    13. 13. Major Export Destinations India’s largest export destination for Pharma products is still the USA, followed by the UK, Germany, South Africa and Russia. More than 50 per cent share of exports is by way of dosage forms. The exports to US accounts for more than 40% of the total exports of pharmaceuticals from India. The trigger for the development of the generics market in the US came in the form of legislative action initiated in the first half of the 1980s . Europe is emerging as a key market and a potential growth driver. The size of its market in 2006 was US $14.2 billion with Germany, France, the UK and Italy accounting for more than 50% of the market. The governments in Europe are trying to reduce Healthcare costs by embracing generic drug companies. India has had a unique position among the countries in the developing world for it has a strong generic pharmaceutical industry, which has been able to provide medicines at prices that were amongst the lowest in the world.
    14. 14. Top Ten Destinations Sr. No. The Country of Import Amount (US $ million) 1 USA 1791 2 UK 263.9 3 Germany 243.6 4 South Africa 226.8 5 Russia 221.4 6 Brazil 165 7 Nigeria 154.1 8 Kenya 137.3 9 Netherlands 131.7 10 Turkey 119 Source – DGCIS, Pharmexcil Research
    15. 15. Following is the table of India’s exports of pharmaceuticals during the last four years Region wise. *Only 11 months statistics of the year 2011-12 has been received. Hence the formulations figures for the year 2011-12 include a moth’s estimates. Source: CMIE/DGCIS
    17. 17. Major Competitors of Pharmaceutical industry The domestic market is very competitive with a large number of players comprising of pure generics; branded generics, formulations, with varying degrees of combinations and permutations among large players and small players. The main anti-competitive issues in the pharmaceutical sector are centered on anti-competitive agreements and collusive practices along the supply and distribution chains. There was an international cartel of bulk vitamins present for quite some time and cost in India about US$25mn, in the 1990s, as a result of overcharging. Although no domestic cartel in pharmaceuticals have been detected so far. Most pharmacy owners in India are members of a trade association, All India Organization of Chemists and Druggists (AIOCD).
    18. 18. 2011 2009 Country Rank US $ (in billion) Growth % Rank US $ (in billion) Growth % USA 1 322.3 3 1 301.1 6 Japan 2 111.64 16 2 89.86 17 China 3 66.8 22 3 45.26 24 Germany 4 44.92 7 4 41.28 -2 France 5 41.19 6 5 40.45 -5 Brazil 6 28.46 23 10 17.63 8 Italy 7 28.36 7 6 27.08 -1 Spain 8 22.68 2 7 22.72 1 Canada 9 22.29 3 9 19.14 0 UK 10 21.56 6 8 19.83 -11 Source – DGCIS, Pharmexcil Research
    19. 19. BIO-TECHNOLOGY PARKS BTP units are entitled to following Exemption from Income Tax as per section 10A and 10B of Income Tax Act, 1961 Exemption from Industrial Licensing for manufacture of items reserved for SSI sector Export proceeds will be realized within 12 months Units will be allowed to retain 100% of its export earnings in EEFC account 100% FDI permitted through automatic route 19
    20. 20. Units will not be required to furnish any bank guarantee at the time of import or going for job work in DTA where unit has – Turnover of Rs. 5 cr Unit is in existence for at least three years Unit has achieved positive NFE Unit has not been issued a show cause notice during the preceding 3 years on grounds other than procedural violations under the penal provisions of the customs act, Central Excise Act, Foreign Trade (Development & Regulation) Act, Foreign Exchange Management Act, Finance Act, 1994 BIO-TECHNOLOGY PARKS
    21. 21. Contd.. • Procurement and Supply of Export promotion material like brochure/literature, pamphlets, hoardings etc. up to a maximum value limit of 1.5% of FOB value of previous years shall be allowed. • A BTP unit may procure goods from DTA or bonded warehouses without payment of duty, all types of goods, including capital goods, required for its activities, provided they are not prohibited items of import in the ITC (HS). Goods imported by the unit shall be on with actual user condition and shall be utilized for export production. 21
    22. 22. Quality Standards Major Regulatory Bodies The Central Drug Standards and Control Organization (CDSCO) is located under the Ministry of Health and Family Welfare. It prescribes standards and measures for ensuring the safety, efficacy and quality of drugs, cosmetics, diagnostics and devices in the country; Regulates the market authorization of new drugs and clinical trials standards; supervises drug imports and approves licenses to manufacture. The National Pharmaceutical Pricing Authority (NPPA), instituted in 1997 under the Department of Chemicals and Petrochemicals, It fixes or revises the prices of decontrolled bulk drugs and formulations at judicious intervals; Periodically updates the list under price control through inclusion and exclusion of drugs in accordance with established guidelines It maintains data on production, exports and imports and market share of pharmaceutical firms and imparting inputs to Parliament in issues pertaining to drug pricing.
    23. 23. The main aspects of pharmaceutical regulation are thus divided between the above two ministries. The Ministry of Health and Family Welfare - examines pharmaceutical issues within the larger context of public health Ministry of Chemicals and Fertilizers focuses on industrial policy. Other ministries Ministry of Environment and Forests, Ministry of Finance, Ministry of Commerce and Industry Ministry of Science and Technology.
    24. 24. Various Acts governing the regulation of quality standards Drugs and Cosmetics Act of 1940 and Rules 1945 regulates drug manufacturing, quality and marketing. Pharmacy Act of 1948, The Drugs and Magic Remedies Act of 1954 Drug Prices Control Order (DPCO) 1995 Various other policies instituted by the Department of Chemicals and Petrochemicals.
    25. 25. International standard of pharmaceutical machinery Standardization Pharmaceutical Quality System ISO-9001 Every pharmaceutical company needs to meet the latest GMP compliance GMP would want the machinery manufacturers to follow a set of procedures and rules with proper documentation in the manufacturing.
    26. 26. Provision in Indian Foreign Trade Policy for Pharmaceuticals Budget proposal in 2011-2102 Budget Proposal Impact Proposal to extend weighted deduction of 200% for R&D expenditure in an In-house facility for further period of 5 years beyond 31st March, 2012 Positive for all Indian Pharmaceuticals companies. Allocation of NRHM proposed to be increased from Rs 18,115 cr. in FY 2011-2012 to Rs. 20,822 cr. in FY 2012-13. Positive for all Indian Pharmaceuticals companies. Proposal to continue to allow repatriation of dividends from foreign subsidiaries of Indian Company at a lower tax rate of 15% up to march 2013. Positive for all Indian Pharmaceuticals companies., mainly Indian companies as they generate the highest revenue from the export market. Introduced MAT on partnership firms. Would negatively impact organizations like Cadila Healthcare and Sun Pharmaceutical.
    27. 27. Focused Product Scheme The exports of the products notified in Appendix 37D of HBPv1 are entitled for Duty Credit Scrip equivalent to 2% of FOB value of exports for exports made from 21.8.2009 onwards.
    28. 28. Pharmaceutical products in Table (New Focus Products) of Appendix 37D entitled to this benefit are: 30039090 Other Medicaments not put up in measured doses or in packing 30041030 Amoxycyllin in Capsules, injections etc. 30049029 Other Anthelmintics Drugs; Antiamoebic and Other Antiprotozoal / Antifungal Drugs 30049079 Other Antihypertensive Drugs 30049034 Omeprazole And Lansoprazole 30022029 Other Mixed Vaccine 30049011 Medicaments of Ayurvedic System 29420090 Other - Bulk Drug Loratadine 30066020 Contraceptive Base on Other Products of Heading
    29. 29. Market Linked Focus Product Scheme Pharmaceutical has been included in Market linked Focus Product Scheme. Thus exports made to 13 identified markets (Algeria, Egypt, Kenya, Nigeria, South Africa and Tanzania, Brazil, Mexico, Ukraine, Vietnam, Cambodia, A ustralia, New Zealand) will be eligible for benefit under this Scheme.
    30. 30. ZERO DUTY EPCG SCHEME Zero duty EPCG scheme allows import of capital goods for preproduction, production and post-production at zero Customs duty, subject to an export obligation equivalent to 6 times of duty saved on capital goods imported under EPCG scheme, to be fulfilled in 6 years reckoned from Authorization issue-date. The scheme will be available for exporters of chemicals & pharmaceuticals However, zero duty EPCG Scheme shall not be available for import of capital goods relating to export of products covered under following chapters / headings of ITC(HS) classification:. Zero duty scheme shall also not be available for units who are currently availing any benefits under Technology Upgradation Fund Scheme (TUFS) administered by Ministry of Textiles, Government of India. Available for exporters of chemicals & pharmaceuticals
    31. 31. Problems faced by the Exporter Internal factors – Local Low investments in innovative R&D continue to be a major problem for exporters of Indian pharmaceutical industry Majority of companies lack the ability to compete with MNCs for New Drug Discovery, Research and commercialization of molecules on a worldwide basis due to lack of resources The country has at times shown inadequate regulatory framework or compliance and enforcement regime, reflected in occurrences such a production of spurious or low quality drugs Rapidly increasing costs of skilled manpower such as scientists/ regulatory compliance personnel / pharmaceutical lawyers/ international business development personnel is pushing up the cost of innovation.
    32. 32. International Threats China’s massive expansion of Bulk Drug industry is flooding Asian and African countries. Russia’s self sufficiency in the Pharmaceutical sector. China’s expansion into formulations caused a decline in the exports to Vietnam in FY2011. A few countries like Argentina, Bangladesh, Egypt and Gulf countries do not recognize India as a major manufacturing hub. Exporter to Brazil and Mexico complains about recent increase in Import Tax to 14%, prohibitive registration charges of about $20,000 for each product and waiting period of 18 months. Nigeria has banned some specific drugs and formulations to protect domestic industry. Countries in Europe have started importing Hops (Humulus Lupulus Extract).
    33. 33. Pharma Export Promotion Council (Pharmexcil) A. Creation of Functional Desks Legal - Help Indian pharmaceutical organizations to understand intricacies in international contracts for international sale of goods, agency/distributor agreements, JVs, Technical tie-ups Marketing - Develop information base on each country with respect to the structure of the market, environment, SWOT analysis, registration requirements, etc. Learning and Development (L&D) - Providing L&D in marketing areas especially distribution, pricing, packaging, promotion, etc., knowledge about market environment in relevant countries to members • B. Intellectual Property Rights • Help organisations in API process development and formulation 
    34. 34. C. Regulatory Research Desk Helping organizations in understanding regulatory procedures of various countries. Developing useful information base on regulatory requirements ,guidelines and facilitate learning modules to understand the process of registration and understanding intricate issues involved in drug registrations • D. Advisory Services Centre • Providing guidance and inputs to financial institutions with respect to R&D.
    35. 35. References: Periodic Analysis of Export of Drugs, Pharmaceuticals and Fine Chemicals; Available at; Version – April 2011 to February 2011; Pharmexcil; Accessed on 31st December 2012 Department of Pharmaceuticals - National Pharmaceutical Pricing Authority - Ministry of Health - Department of Chemicals and Petrochemicals - Directorate General of Foreign Trade - CDSCO – Drugs Controller General (India) - Central Borad of Excise and Customs - Portal for all Central and State Government websites - India Patent Office links -,, Patent Facilitating Centre - World Health Organization - World Trade Organization - US Patents Office - European Patents Office Links -, World Intellectual Property Organisation (WIPO) -
    36. 36. Thank You By Bipin