Pharmaceutical industry in indiaDocument Transcript
PHARMACEUTICAL INDUSTRY IN INDIA
The Pharmaceutical industry in India is the world's third-largest in terms of volume.
According to Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, the
total turnover of India's pharmaceuticals industry between 2008 and September 2009
was US$21.04 billion. While the domestic market was worth US$12.26 billion. The
industry holds a market share of $14 billion in the United States.
According to Brand India Equity Foundation, the Indian pharmaceutical market is likely
to grow at a compound annual growth rate (CAGR) of 14-17 per cent in between 2012-
16. India is now among the top five pharmaceutical emerging markets of the world.
Exports of pharmaceuticals products from India increased from US$6.23 billion in 2006–
07 to US$8.7 billion in 2008–09 a combined annual growth rate of 21.25%. According to
PricewaterhouseCoopers (PWC) in 2010, India joined among the league of top 10
global pharmaceuticals markets in terms of sales by 2020 with value reaching US$50
The government started to encourage the growth of drug manufacturing by Indian
companies in the early 1960s, and with the Patents Act in 1970. However, economic
liberalization in 90s by the former Prime Minister P.V. Narasimha Rao and the then
Finance Minister, Dr. Manmohan Singh enabled the industry to become what it is today.
This patent act removed composition patents from food and drugs, and though it kept
process patents, these were shortened to a period of five to seven years.
The lack of patent protection made the Indian market undesirable to the multinational
companies that had dominated the market, and while they streamed out. Indian
companies carved a niche in both the Indian and world markets with their expertise in
reverse-engineering new processes for manufacturing drugs at low costs. Although
some of the larger companies have taken baby steps towards drug innovation, the
industry as a whole has been following this business model until the present.
India's biopharmaceutical industry clocked a 17 percent growth with revenues of Rs.
137 billion ($3 billion) in the 2009–10 financial year over the previous fiscal. Bio-pharma
was the biggest contributor generating 60 percent of the industry's growth at Rs. 88.29
billion, followed by bio-services at Rs. 26.39 billion and bio-agri at Rs. 19.36 billion.
In 2013, there were 4,655 pharmaceutical manufacturing plants in all of India,
employing over 345 thousand workers.
PHARMACEUTICAL INDUSTRY TODAY
The number of purely Indian pharma companies is fairly less. Indian pharma industry is
mainly operated as well as controlled by dominant foreign companies having
subsidiaries in India due to availability of cheap labor in India at lowest cost. In 2002,
over 20,000 registered drug manufacturers in India sold $9 billion worth of formulations
and bulk drugs. 85% of these formulations were sold in India while over 60% of the bulk
drugs were exported, mostly to the United States and Russia. Most of the players in the
market are small-to-medium enterprises; 250 of the largest companies control 70% of
the Indian market. Thanks to the 1970 Patent Act, multinationals represent only
35% of the market, down from 70% thirty years ago.
Most pharma companies operating in India, even the multinationals, employ Indians
almost exclusively from the lowest ranks to high level management. Homegrown
pharmaceuticals, like many other businesses in India, are often a mix of public and
In terms of the global market, India currently holds a modest 1–2% share, but it has
been growing at approximately 10% per year. India gained its foothold on the global
scene with its innovatively engineered generic drugs and active pharmaceutical
ingredients (API), and it is now seeking to become a major player in outsourced clinical
research as well as contract manufacturing and research. There are 74 US FDA-
approved manufacturing facilities in India, more than in any other country outside the
U.S, and in 2005, almost 20% of all Abbreviated New Drug Applications (ANDA) to the
FDA are expected to be filed by Indian companies. Growth in other fields
notwithstanding, generics are still a large part of the picture. London research company
Global Insight estimates that India’s share of the global generics market will have risen
from 4% to 33% by 2007. The Indian pharmaceutical industry has become the third
largest producer in the world and is poised to grow into an industry of $20 billion in 2015
from the current turnover of $12 billion.
Product development:Indian companies are also starting to adapt their product
development processes to the new environment. For years, firms have made their ways
into the global market by researching generic competitors to patented drugs and
following up with litigation to challenge the patent. This approach remains untouched by
the new patent regime and looks to increase in the future. However, those that can
afford it have set their sights on an even higher goal: new molecule discovery. Although
the initial investment is huge, companies are lured by the promise of hefty profit margins
and has a legitimate competitor in the global industry. Local firms have slowly been
investing more money into their R&D programs or have formed alliances to tap into
Ranbaxy Laboratories Ltd. is a research based International pharmaceutical company
with its headquarters in India. It manufactures a range of high quality, affordable generic
drugs. The company has manufacturing facilities in around 9 countries. It has strong
presence in around 49 countries, products available in around 125 countries globally. It
has dedicated workforce of about 10,500 employees representing 51 different countries.
Ranbaxy was started by Ranbir Singh and Gurbax Singh in 1937 as a distributor for a
Japanese company Shionogi. The name Ranbaxy is a portmanteau word from the
names of its first owners Ranbir and Gurbax. Bhai Mohan Singh bought the company in
1952 from his cousins Ranbir Singh and Gurbax Singh. After Bhai Mohan Singh's son
Parvinder Singh joined the company in 1967, the company saw a significant
transformation in its business and scale. His sons Malvinder Mohan Singh and
Shivinder Mohan Singh sold the company to the Japanese company Daiichi Sankyo in
Ranbaxy was established in 1961 and went public in the year 1973. It has global sales
of US $1340 million for the year ended on 31st December, 2006. It has the largest
market in USA (sales appx. US $380 million); then come Europe and BRICS (Brazil,
Russia, India, China, South Africa).
Type - Public
Founded - 1961
Headquarters- Gurgaon, Haryana, India
Employees - 1100 in R&D
Website - www.ranbaxy.com
MISSION VISION &VALUES
Ranbaxy's mission is „Enriching lives globally, with quality and affordable
Achieve significant business in proprietary prescription products by 2012 with a strong
presence in developed markets.
a) Achieving customer satisfaction is fundamental to our business
b) Provide products and services of the highest quality
c) Practice dignity and equity in relationships and provide opportunities
for our people to realize their full potential
d) Ensure profitable growth and enhance wealth of the shareholders
e) Foster mutually beneficial relations with all our business partners
f) Manage our operations with high concern for safety and environment
g) Be a responsible corporate citizen
Ranbaxy has a strong R&D competence that provides a sustainable competitive
advantage to the company. It has scholarly pool of about 1100 scientists, engaged in
out-of-box researches. Ranbaxy spends over 7% of its sales on R&D. Licensing of
once-a-day Ciprofloxacin formulation, using NDDS (Novel Drug Delivery System) on a
worldwide basis, was the first international success for the company.
Ranbaxy is focused on Discovery and development of drugs on anti-infectives, urology,
respiratory/ inflammatory and metabolic diseases.
Top 20 Molecules:
• Simvastatin • AmoxiClav Potassium • Isotretinoin • Amoxycillin and Combinations
• Ciprofloxacin and Combinations • Ketorolac Tromethamine • Omeprazole and
• Cefuroxime Axetil • Cephalexin • Loratadine and Combinations • Clarithromycin •
• Diclofenac and Combinations • Ranitidine • Cefaclor • CefpodoximeProxetil • Efavirenz
• Atorvastatin and Combinations • Fenofibrate • Ofloxacin and Combinations
Ranbaxy Laboratories Limited encompasses the entire pharmaceutical value chain from
manufacturing to marketing generic pharmaceuticals; value added generic
pharmaceuticals, branded generics, Active Pharmaceuticals Ingredients (API) and
intermediates. As a research driven company, over 6% of it's revenues are invested in
R&D, amongst the pharmaceutical companies in India, Ranbaxy has the largest R&D
budget with an R&D spend of over US $ 100Mn. In 2008 it demerged its New Drug
Discovery Research division into a separate entity, Ranbaxy Life Science Research
The company has manufacturing operations in eight countries with a ground presence
in 49 countries, and its products are available in over 125 countries. It has been
aggressively entering into joint ventures and strategically acquiring companies in past
few years. Besides concluding its acquisition of Be-Tabs in South Africa, which makes
Ranbaxy the 5th largest generic pharmaceutical company in South Africa, the Company
acquired 13 Dermatology products from Bristol-Myers Squibb in the USA in 2007.
Ranbaxy made an acquisition of RPG Aventis, France which has since been renamed
as Ranbaxy PharmacieGeneriques SAS. It also has subsidiaries in Spain, Netherlands,
Russia and Australia.
Anti-infectivesamoxycillin, ciprofloxacin, and simvastatin are in Ranbaxy's top selling
class of medications. In 2007, the company entered the specialty and niche therapeutic
areas of Bio-generics, Oncology,Penems, Limuses, Peptides,etc. The company also
has a groundbreaking anti-malarial candidate in late-phase trials.
Emerging Markets:During 1QCY2009, the CIS region de-grew by 8% yoy to Rs86.5cr
primarily on account of currency devaluation and stringent credit management adopted
by the company. The Asia-Pacific region recorded Sales of Rs109.2cr growing at 9%
yoy. In India, the company’s Sales during the quarter stood at Rs325.8cr, a yoy growth
of 9% as the company continues to maintain its second rank in the domestic market
with 4.8% marketshare. The company also launched the first product Olvance from
Daiichi’s product portfolio. The company also plans to scale up Daiichi’s products in
India and other Emerging markets.
There are three basic business divisions: pharmaceutical dosage forms, active
pharmaceuticals ingredients (API) and allied business which comprises of animal
healthcare, diagnostics and a range of other products. Of these, the pharmaceutical
dosage forms division is the largest sector, accounting for two thirds of annual sales.
Dosage Form Sales (94% of total revenue) the dosage form sales grew from 91% of
global sales in 2006 to 94% of global sales in 2007. It comprises the majority of
Ranbaxy’s sales, including sales of generic pharmaceuticals, value added generic
pharmaceuticals and branded generics.
API (Active Pharmaceutical Ingredients & Others) (6%) Ranbaxy supplies API to leading
generic companies in more than 50 countries. The API division has in its portfolio over
50 products covering a wide therapeutic range such as Cardio-vasculars, Anti-
infectives, Anti-ulcerants, Anti-diabetics, Anti-depressants, Anti-virals and others. In
2001 Ranbaxy identified Consumer Healthcare as its new business area with the launch
of 4 brands: Revital, Pepfiz, Gesdyp& Garlic Pearls. During 2006, the business
registered sales of US $ 19 Mn registering a growth of 19%.
On June 11 2008, Daiichi-Sankyo acquired a 34.8% stake in Ranbaxy, for a value $2.4
billion. In November 2008, Daiichi-Sankyo completed the takeover of the company from
the founding Singh family in a deal worth $4.6 billion by acquiring a 63.92% stake in
The addition of Ranbaxy Laboratories extends Daiichi-Sankyo's operations - already
comprising businesses in 21 countries. For Ranbaxy, the deal frees up its debt and
imparts more flexibility into its growth plans. The combined company is worth about $30
The pharmaceutical industry is characterized by rapid advances in scientific knowledge
and ability to discover new drugs. The industry is therefore led by large manufacturers
and marketers of drugs investing heavily in research & development, having clinical
testing, marketing and distributing capabilities. Some of the main competitors of
Sun PharamceuticalsIndustires - It is No. 1 in India in speciality therapy areas
like psychiatry, neurology, cardiology, gastroenterology, diabetology and
respiratory.It has brands in 30 markets worldwide and also has a generic
presence in the U.S. with Caraco Pharm Labs, Sun Pharmaceutical Industries
Cipla - Cipla is a leader in the domestic retail pharmaceutical market. It also
exports raw materials, intermediates, prescription drugs, over-the-counter
products, and veterinary products to some 180 countries around the world.
GlaxoSmithKline - It is one of the oldest pharma companies in India and with a
turnover of Rs. 1500 crore is one of the market leaders(market share) in India
with a share of 6.2 per cent. Its main portfolios consist of anti- infectives,
dermatologicals and pain management drugs.
Dr. Reddy's Laboratories - It is a global pharmaceutical company with it's headquarters
in India and a presence in more than 100 countries.
Marketing Strategies : Increase sales
Reduce R&D costs.
Opening own exclusive Retail Outlets.
Any Time Medicines (ATM).
Outsourcing by forming alliance with companies like Pfizer, which is the market
leader in drug manufacturing globally.
Outsourcing saves a lot of money when done in countries like India as it has
many scientists and thus very cost effective.
Forming local mergers with companies like Alkem laboratories which meet the
requirements for forming an alliance with this company in terms of the drugs that
Tie ups with multimedia companies as they play a huge role in the marketing of
the products which involves advertising, signboards etc.
Come out with exclusive drugs to tackle epidemic diseases, like H1N1,
Developing drugs for Cancer, Brain Tumor and AIDS.
Development of Hospitals: Fortis and expanding its centers.
Tie-ups with Government: Government Hospitals.
Exclusive Medical Representatives.