Market research for Indian Pharmaceutical Market switching over from prescribed to OTC products. Scope of Indian Pharmaceutical OTC market, opportunities and challenges.

2. 1. Industry Overview
2. Executive Summary
3. Favorable Macro Environment for Indian Pharmaceuticals
4. Pharmaceutical OTC Markets (International & Domestic)
5. Market Segmentation
6. Market Leaders & Market Share
7. Key Marketing Strategies of Indian Pharmaceutical OTC companies
8. Key recent Merger & Acquisition
9. Industry – SWOT Analysis
10. Graphical Presentation - Opportunities & Challenges for Pharmaceutical Industry
11. Summary
12. Acknowledgement
Index

3. The global Pharma industry is under serious pressure from a large number of innovator molecules facing patent
expiration, a thin pipeline of new drugs, regulatory challenges and pricing pressures. This has led to a directional
shift towards the emerging markets of Asia, Australia, Africa and Latin America, which are growing three times
faster than the current growth rates experienced in the industry’s leading markets of North America, Japan and
Europe. It is expected that over 40% of the global Pharma industry’s incremental growth over the next
decade to come from the emerging markets.
The Indian Pharma industry is on the threshold of becoming a major global market by 2020. Many experts believe
that the Industry has the potential to grow at an accelerated 15 to 20% CAGR for the next 10 years to reach
between US$49 billion to US$74 billion in 2020.
The Indian pharmaceuticals market is witnessing dynamic changing trends such as large acquisitions by
multinational companies in India, increasing investment by domestic and international players in India, deeper
penetration into the rural markets, growth and availability of healthcare and incentives for setting up special
economic zones (SEZ’s). We believe these trends combined with increased purchasing power and access to good
quality medical care will continue to propel the domestic pharmaceutical industry to new heights.
Industry overview

4. The paradigm faced by the leading economies of the US, Europe and Japan are significantly different from those in
the emerging markets of India, China, South America and Russia. According to IMS Health, the emerging
markets of Asia/Africa/Australia grew at a rate of 15.9% in 2009, as compared to much slower growth
rates in North America (5.5%), Japan (7.6%) and Europe (4.8%).
The immense potential of India’s domestic Pharma market, which was valued at approximately US$12 billion in
2010, and showed a strong growth of 21.3% for the twelve months ending September 2010. The estimates
growth of domestic market for over the next 10 years, will grow to US$49 billion - a compounded annual growth
rate (CAGR) of 15%, with the potential to reach US$74 billion – a CAGR of 20%, if aggressive growth drivers kick
in.
Executive Summary

5. The reasons behind this expected growth rate is that India’s pharmaceutical
industry has a favorable macro-environment to grow in.
The Indian economy has rebounded from the global economic downturn, with real gross domestic product
(GDP) growth reaching 9.66% in 2010.
The Indian middle class is also expanding rapidly, with affordability of medicines increasing, and an increased
percentage of disposable income being spent on healthcare.
The government has made public healthcare one of its top priorities by launching policies and programmes that
are aimed at making healthcare more affordable and accessible, especially in rural markets.
The industry is witnessing trends such as acquisition activity, increasing investment, deeper penetration into the
tier I to tier VI and rural markets, growth in insurance coverage and innovation in healthcare delivery.
The OTC segment to be a strong growth driver for the industry. Currently, around 67% of India’s population,
or 742 million people live in rural areas, but rural markets contribute to only 17% of the overall market’s
sales. This represents a huge opportunity for pharmaceutical companies, as we expect these markets to be the
future growth drivers for the industry.
Top Indian and foreign companies will look to increase their market share by entering into strategic alliances,
strengthening their sales forces and increasing penetration into newer markets.
Executive Summary..

6. IMS Health and other sources suggest that emerging markets (China, India, Brazil,
Russia, Turkey, Mexico and South Korea) will contribute to over 40% of the incremental
growth of the global Pharmaceutical industry over the next decade.
Back grounds, Strong macroeconomics over the next decade:
Source: IMS Health market prognosis, March 2010

7. The Growing Indian Economy
Macro factors pushing the industry:

8. India has a huge middle class population (households with annual incomes of US$4762 to US$23,810 at 2001-02
prices), which has grown rapidly, from 25 million people in 1996 to 153 million people in 2010.
If the economy continues to grow fast and literacy rates keep rising, around a third of the population (34%) is
expected to join the middle class in the near future. The middle class population is rapidly acquiring the
purchasing power necessary to afford quality western medicine due to an increase in disposable income. The
Indian population spent 7% of its disposable income on healthcare in 2005; this number is expected to
nearly double, to 13%, by 2025
Growing middle class with higher purchasing power
Macro factors pushing the industry:

9. The Indian population is experiencing a shift in
disease profiles (Figure 8).
Traditionally, the acute disease segment held a
significant share of the Indian pharmaceutical market.
This segment will continue to grow at a steady rate,
due to issues relating to public hygiene and sanitation.
But, with increase in affluence, rise in life expectancy
and the onset of lifestyle related conditions, the
disease profile is gradually shifting towards a growth
in the chronic diseases segment.
Changing Disease Profile
Macro factors pushing the industry:

10. The Indian government has been making efforts to improve nationwide provision of healthcare. It has launched
policies that are aimed at:
building more hospitals,
boosting local access to healthcare,
improving the quality of medical training,
increasing public expenditure on healthcare to 2-3% of GDP, up from a current low of 1%.
Some of the significant government allocations on healthcare spend include a five year tax break for opening
hospitals anywhere in India, with an added focus on tier II and tier III markets, both in the 2008-09 Union
Budget.
Plans to spend US$293 million on the promotion of healthcare through programmes for the prevention and
cure of diseases such as cancer, diabetes, heart ailments and stroke in 2011-12.
Diabetes, hypertension and non-communicable disease patients will be screened under the National Programme
for Prevention and Control of Cancer, Diabetes, Cardiovascular Diseases and Stroke (NPCDCS). The programme is
likely to cover more than 70 million adults across 100 districts in 15 states and union territories of the country.
Government policies
Macro factors pushing the industry:

11. India’s healthcare insurance industry is currently very small and limited, but is expected to grow at a CAGR of
15% till 2015. Around 80% of India’s healthcare expenditure is financed out of pocket. This limits the propensity
of Indians to spend on healthcare, particularly in lower and middle income groups which comprise
around 95% of population.
Healthcare Insurance
Macro factors pushing the industry:
Source: ISI Analytics, Healthcare industry(2010)

12. Healthcare Insurance Industry Penetration
Macro factors pushing the industry:
Source: ISI Analytics, Healthcare industry(2010), General Insurance Council of India (2010)

13. OTC Drug Market:
Global OTC Market:
The global market for over-the-counter (OTC) drugs is expected to surpass $70 billion by the end of 2015.
According to Consumer Healthcare Products Association it is estimates that the retail sales of OTC drugs in the US
in 2010 were worth $17 billion, which is unchanged from the preceding year, and showing an increase over more
than $3 billion over a ten-year period.
Indian OTC Drug Market:
India is currently ranked 11th in the global OTC market in size, with an expectation that it will get to the 9th
position within five years. Currently the Indian OTC market (i.e. non-prescription advertised medicines) is
estimated to represent approximately Rs.104 Billion growing at roughly 8-9%. It is expected to grow at a
CAGR of approximately 18% till 2013- 14.

14. From a market size of US$ 12.6 billion in 2009, the Indian pharmaceutical market will grow to US$ 55
billion by 2020, with the potential to reach US$ 70 billion in an aggressive growth scenario. In a pessimistic
scenario characterized by regulatory controls and economic slowdown, the market will be depressed but is still
expected to reach US$ 35 billion.
Indian Pharmaceuticals
Market Size – Indian Pharmaceutical
Figure 11

15. India currently exports drug intermediates, Active Pharmaceutical Ingredients (APIs), Finished Dosage
Formulations (FDFs), Bio-Pharmaceuticals, and Clinical Services across the globe. The exports of pharmaceuticals
from India grew to US$ 14.6 billion in 2012-13 from US$ 6.23 billion in 2006-07, registering a compound annual
growth rate (CAGR) of around 15.2 per cent.
Indian Pharmaceuticals
Market Segmentation by value
Figure 12

16. Branded Generics
Generic Generics
Over-The-Counter Products
Patented Products
Retail vs. Institutional sales
A market dominated by branded generics
Indian Pharma Market Segments
It is difficult to track and estimate the exact composition of India’s domestic Pharma market; but industry experts
believe that this market is largely dominated by branded generics. This segment contributes around 90% of total
sales, and represents one of the key strengths of the market, encompassing the OTC segment as well. Only about
10% of the market constitutes commodity generics sold through institutional sales and innovator products. The
branded generics segment is expected to grow at a CAGR of 15% - 20% for the next decade.
Figure 13

17. There are different categories comes under OTC, out of which there are few categories which have spent
maximum in brand building through on TV are as follows:
1.Rubs/ Balm - Moov, Iodex, Emami Mentho Plus, Himani Fast Relief, Amrujanjan Joint Ache Cream
2.Analgesic/ Cold Tablet - Dcold, Disprin, Stopache, Crocin.
3.Digestives - Eno, Hajmola, Dabur Hingoli, Pudin Hara.
4.Medicated Skin Treatment - Itch Guard, Krack, Ring guard.
5.Cough Lozenges - Strepsils, Halls
6.Vitamin/ Tonic/ Heath Supplements - Horlicks, Chawanprash– Dabur, Complan, Boost, Sona Chandi, Calcium
Sandoz.
7.Antiseptic Cream/ Liquids - Borosoft, Boroplus, Dettol.
Indian OTC Pharmaceutical Market Segmentation
Market Leaders
11.5
13.1
13.4
20.77.6
11.2
3.4
10.1
4.9
18.2
Dabur Chyvanprash
Vicks
Boroplus
Revital
Zandu Balm
Detol
Liv 52
Becasule
Hajmola
Iodex
Growth
Figure 14

18. General Marketing Strategies: These set the direction for all marketing efforts by
describing, in general terms, how marketing will achieve its objectives.
Getting existing customers to buy more;
Getting potential customers to buy (i.e., those who have yet to buy); or
Selling current products in new markets.
Advertising and promotion strategies
An organization’s promotional strategy
Marketing Strategies

19. Raise your game - Expand your horizons in the Indian OTC market.
A snapshot of the dynamics of the Indian OTC market and various opportunities.
The new pharma pricing policy is being perceived as a dampener by the industry with concerns regarding
erosion of profitability. Reports are already pouring in regarding wholesalers’ refusal to stock essential
medicines due to lower margins, although the policy has been touted to be beneficial from consumers’ /
patients’ point of view.
The industry is already plagued with challenges of market saturation and lack of new molecules to offer to
healthcare professionals.
In this scenario, sustaining brand growth is difficult, prodding the need for alternate avenues for increasing
a brand’s market share. Since the battle will eventually become a level playing field as far as pricing is
concerned and consumers are evidently wielding more power .
Indian pharma marketers may have to shape their business models in light of this power shift. Indian
marketers would have to now put the consumer at the centre and explore OTx/OTC strategies, thus expanding
the horizon beyond Rx.
Marketing Strategies: Indian OTC Market
Source: Nicholas Hall's 24th European OTC Conference & Action Workshop held earlier this year in London

20. Raise your game - Expand your horizons in the Indian OTC market.
A snapshot of the dynamics of the Indian OTC market and various opportunities.
Marketing Strategies: Indian OTC Market
Source: Nicholas Hall's 24th European OTC Conference & Action Workshop held earlier this year in London
Dynamics of the Indian OTC Market :
The global OTC market has been valued at $ 121 billion at
the end of 2012, having recorded modest growth of four
per cent . Emerging markets, chiefly BRIC nations, were
the key contributors to the overall growth of the global
OTC market.
The Indian OTC market recorded sales of $ 2.3 billion in
2012, having recorded growth of 13 per cent over 2011.
The Indian OTC market has maintained its momentum of
double-digit growth over the last few years.

21. Raise your game - Expand your horizons in the Indian OTC market.
A snapshot of the dynamics of the Indian OTC market and various opportunities.
Marketing Strategies: Indian OTC Market
Source: Nicholas Hall's 24th European OTC Conference & Action Workshop held earlier this year in London
Vitamins, minerals and supplements (VMS) and
Gastrointestinals (GI) together contributed nearly half
(49 per cent) the total sales to the total Indian OTC
market.
In terms of growth drivers, apart from VMS, analgesics
and dermatologicals too posted over $ 50 million
incremental sales in 2012 (over 2011). However, the
contribution from the major categories has been
constant.

22. Raise your game - Expand your horizons in the Indian OTC market.
A snapshot of the dynamics of the Indian OTC market and various opportunities.
Marketing Strategies: Indian OTC Market
Source: Nicholas Hall's 24th European OTC Conference & Action Workshop held earlier this year in London
Battle of illness and wellness:
The growth of the Indian OTC market has been driven by sub-categories which fall under the 'illness' domain.
Majority of these sub-categories were from dermatologicals, followed closely by gastrointestinals and cough,
cold and allergy. Topical as well as systemic analgesics, both recorded higher growth, as compared to the total
Indian OTC market. Since the prime focus of most companies is catering to illness needs, it is a highly
competitive segment. However, brands positioned on the wellness platform are likely to witness long-term
sustenance as consumers are looking out for products that enhance health and wellness. There is a clear trend
towards health and prevention in developed markets as well.

23. Raise your game - Expand your horizons in the Indian OTC market.
A snapshot of the dynamics of the Indian OTC market and various opportunities.
Marketing Strategies: Indian OTC Market
Source: Nicholas Hall's 24th European OTC Conference & Action Workshop held earlier this year in London
Treasure of hidden OTC gems
Over 60 per cent of the sales of the Indian OTC market has been contributed by deemed OTC brands. Huge
untapped opportunities exist for these brands to extend their life-cycle as well as to expand their respective
markets.
Heritage Rx brands like Revital and Crocin have cashed upon their doctor equity and consumer
popularity to reap success in the OTC market. Latest addition to the list includes Otrivin (topical decongestant),
growing at CAGR of 22 per cent over the past five years (2008-2012).
Rx to OTC switches (ingredients as well as promotional switches) are expected to drive the global OTC market,
providing the much-needed boost to the market growth. In the Indian pharma market too, immense
opportunities exist for promotional switches.

24. Raise your game - Expand your horizons in the Indian OTC market.
A snapshot of the dynamics of the Indian OTC market and various opportunities.
Marketing Strategies: Indian OTC Market
Source: Nicholas Hall's 24th European OTC Conference & Action Workshop held earlier this year in London
Domination of natural remedies
Ayurvedic formulations or brands registered as ayurvedic products (like Vicks and Eno) dominate the list of star
OTC brands. Seven of the top ten OTC brands are ayurvedic in nature - a strong indication of consumer
preferences for natural products. In case of Volini, (parent brand has Diclofanac as its active ingredient), a herbal
variant, Volini Activ, too has been launched.
Globally as well, the benefits of natural products are being recognised. Higher demands are being voiced for
'made by nature' remedies and thus products like nasal saline could witness new niches such as preventive
therapy for environmental or seasonal changes. This puts us in an advantageous position, considering our rich
heritage in Ayurveda.
Indian marketers can benefit from in-licensing innovative products while out-licensing natural remedies.
However, concerns in terms of safety profile need to be alleviated through well-defined quality protocols.

25. Raise your game - Expand your horizons in the Indian OTC market.
A snapshot of the dynamics of the Indian OTC market and various opportunities.
Marketing Strategies: Indian OTC Market
Source: Nicholas Hall's 24th European OTC Conference & Action Workshop held earlier this year in London
Line extensions adding to brand saliency:
In the Indian OTC market, a notable trend has been the launch
of line extensions of existing brands, as compared to absolutely
new brands.
The line extensions have largely revolved around
expansion of usage occasions (Moov spray, Hajmola) and
indication adjacencies (Crocin n’ Flu, Crocin Pain Relief,
D’cold). Although hardly any extensions have surpassed the
performance of the parent brand, they add significant value to
the overall brand’s saliency.
This is evident from ENO’s success, which has recorded
CAGR over 30 per cent.

26. Raise your game - Expand your horizons in the Indian OTC market.
A snapshot of the dynamics of the Indian OTC market and various opportunities.
Marketing Strategies: Indian OTC Market
Source: Nicholas Hall's 24th European OTC Conference & Action Workshop held earlier this year in London
Changing competitive landscape:
Key players like Emami (Boroplus and Zandu balm), Dabur (Dabur Chyawanprash and Hajmola), Ranbaxy
(Revital and Volini) and Reckitt Benckiser (Dettol and Moov) have two brands each in the list of top ten leading
OTC brands. However, with the increasing focus of FMCG companies on health and wellness, competitive
landscape is widening. FMCG/FMHG companies are making a mark steadily, by introducing novel concepts and
positioning the products based on deep understanding of consumer behaviour. Pharma companies have the
upper hand due to their focus on scientific backing and formulations that provide the required therapeutic or
prophylactic doses.

27. Key Recent Mergers & Acquisitions
Source: Centrum. Pharmaceuticals update, (June 2010)

28. Industry SWOT
Source: PwC analysis, Industry & Company interviews
SWOT analysis of Indian Pharmaceutical Industry

29. Opportunities to Pharma Industry
Source: Business Monitor International
In some respects, pharma’s never had it so good. The tools to develop remarkable new
medicines are materializing, demand for its products is escalating and Trade is getting
easier.
Figure 16

30. Opportunities to Pharma Industry
Source: Business Monitor International
Demand for its products is escalating and Trade is getting easier.
Figure 17

31. Opportunities to Pharma Industry
Source: PwC
Outcomes impact
Figure 18

32. Challenges to Pharma Industry
Source: Pharma annual member servey, 2011 and PwC research.
Rising customer expectations
Figure 19

33. Challenges to Pharma Industry
Source: EvaluatePharma, ‘World Preview 2018 ’ (June 2012)
Flateline Productivity of Pharma R&D
Figure 20

34. Challenges to Pharma Industry
Source: Public Citizen. Note: Figure for 2012 cover period up to 18 July 2012
Frequent Financial Penalties
Figure 21

35. Challenges to Pharma Industry
Source: Evaluate Pharma & PcW analysis
Frequent Financial Penalties
Figure 22

36. Key points - Summary
It is expected that over 40% of the global Pharma industry’s incremental growth over the next decade to come
from the emerging markets of Asia/Africa/Australia .
The Indian Pharma industry will grow at an accelerated 15 to 20% CAGR for the next 10 years to reach between
US$49 billion to US$74 billion in 2020.
The estimates growth of domestic market for over the next 10 years, will grow to US$49 billion - a compounded
annual growth rate (CAGR) of 15%, with the potential to reach US$74 billion – a CAGR of 20%, if aggressive
growth drivers kick in.
India is currently ranked 11th in the global OTC market in size, with an expectation that it will get to the 9th
position within five years. Currently the Indian OTC market is estimated to represent approximately Rs.104 Billion
growing at roughly 8-9%. It is expected to grow at a CAGR of approximately 18% till 2013- 14.
The industry is witnessing trends such as acquisition activity, increasing investment, deeper penetration into the
tier I to tier VI and rural markets, growth in insurance coverage and innovation in healthcare delivery.
Currently, around 67% of India’s population, or 742 million people live in rural areas, but rural markets
contribute to only 17% of the overall market’s sales.
India has a huge middle class population (households with annual incomes of US$4762 to US$23,810 at 2001-02
prices), which has grown rapidly, from 25 million people in 1996 to 153 million people in 2010.
Some of the significant government allocations on healthcare spend include a five year tax break for opening
hospitals anywhere in India, with an added focus on tier II and tier III markets, both in the 2008-09 Union
Budget.

37. All the information shared in the presentation are procured from the secondary data
available on internet, research papers, survey reports and the information provided by
industry specific research agencies.
Sincere gratitude for all of them and many congratulations for their success to
accomplishment the objective to find out crucial information for the betterment of
pharmaceutical business & marketing endeavors!
Acknowledgement:
Important:
The information shared in the presentation are based on secondary data analysis and
may not be 100% authentic.

38. Thank You!
Presentation prepared by
Hitesh Pal
Marketing Professional
MBA, Marketing & Pharmaceutical Business Management
Associated with
Sydler Group of Companies
www.sydlerindia.com