The document provides an overview of the medicines segment of the healthcare industry in India. It discusses that India has over 3,000 pharmaceutical companies and is among the top six global producers. The industry is growing at a CAGR of 12.79% and is expected to reach a turnover of $47.06 billion by 2018. Affordability will be a key driver of growth, however there are also barriers to entry for new companies including extensive patents, large manufacturing capabilities of top firms, and regulatory hurdles. Existing distribution is concentrated in major cities but online channels may help new entrants. Success requires achieving economies of scale, better distribution access, and technological progress.

1. MARKET ANALYSIS REPORT ON
MEDICINES SEGMENT OF
HEALTHCARE INDUSTRY
-Ruchit Kaplesh

2. CONTENTS
I. Overview of the Sector
II. Market Trends
III. Market Opportunity
IV. Barriers to Entry
V. Existing Distribution Channels
VI. Success Factors

3. Overview of the sector
• India is among the top six global
pharmaceutical producers in the world.
• Presently there are 10,500 manufacturing
units and over 3,000 pharmaceutical
companies in India.

4. Overview of the sector
• The price of drugs is very low. While India is
10th globally in terms of value, it is 3rd in
term of volume of drugs produced.
• The industry is growing at a CAGR of 12.79%
(as of 2015)

5. Market Trends
• The medicine industry is expected to grow at a
CAGR of 14% to reach a turnover of 47.06 billion
$ by 2018
• The domestic drugs industry, which is valued at
(US$ 25.87 billion) at present, is also expected to
grow in the local market with aggressive rural
penetration by drug makers, increased
government spending on health, urbanization
and growing health awareness among people.

6. Market Opportunity
• Affordability will drive most of the demand
growth in the coming years.

7. Barriers to entry
• The medicine industry has many barriers to entry,
which prevents new companies from entering
into the market. Some of them are:-
– Extensive patents that give rival firms the right to be
the sole producer
– Many of the top firms have "significant manufacturing
capabilities that are hard to replicate“.
– Regulatory policies – new companies have to get a
significant amount of permissions and approvals from
the government to set up shop.
– First – mover advantage (brand loyalty) – quality of a
substitute generic drug is largely unknown

8. Existing Distribution Channels
• Brick and mortar stores are highly
concentrated in Tier 1 and Tier 2 cities.
• New forms of distribution (eg:- having
virtual/online presence only) can be made use
of new entrants into the sector.

9. Success factors
• The key to success in the industry can be:-
– Achieving Economies of Scale
Finding ways to cut down on costs and improving
production
– Achieving better access to distribution channels
– Technological progress