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Pharmaceutical industry
- 1. INDUSTRY ANALYSIS- PHARMACEUTICAL INDUSTRY SUBMITTED BY: GauravAitwani Jayashree Kapoor Krishna Rhea Nayyar Rohit Chaudhary Shubham Mittal Trishala Gautam
- 2. CONTENTS • Introduction • Snapshot •Evolution • Structure • Industrial analysis technique-PESTEL & SWOT (Rhea & Rohit) • Micro analysis of the industry –interview method (Krishna, Shubham & Jayashree) • Comparison between micro and macro (Jayashree) • Company profile 1. Sun pharma 2. Lupin 3. Dr Reddy Gaurav Aitwani Trishala Gautam
- 3. INTRODUCTION • The IndiaPharmaceutical Industry is developing, producing and marketing drugs. • The pharmaceutical companies are generally dealing in generic or brand medications and medical device. • Indian Pharmaceutical Industry today is in the front rank of India’s science-based industries with wide ranging capabilities in the complex field of drug manufacture and technology. • India enjoys a important position in the global pharmaceutical market. The Indian pharmaceuticals market is the third largest in terms of volume and thirteenth largest in terms of value. • It ranks very high in the third world, in terms of technology, quality and range of medicines manufactured.
- 4. SNAP SHOT S.no. MetricValue 1 Turnover USD36.7 billion 2 Employees 29 MILLION 3 % of GDP 2% 4 FX earning USD 16.8 billion 5 Tax (contribution) 25% 6 Imports 254.57 USD Million 7 Exports US$ 16.4 billion
- 5. BEFORE THE PASSING OFTHE INDIAN PATENT ACT OF 1970 the indian pharmaceutical industry was dominated by foregin companies with little domestic participation The INDIAN PATENT ACT was passed in 1970 and led to the development of production infrastructure.The period beween1970- 1990 led to the operation of several domestic companies during this period as well as export initiatives were also taken during this period. THE 3rdSTAGE(1990- 2010)-During this period the liberalization led Indian components to launch operations in foreign countries. The Patents Act was amended in the year 2005 which led to adoption to product patents in India. During this period India became a major generic drug manufacturing country In 2013 New Drug Pricing Control Order were issued by Directorate of Food and Drugs that were expected reduce the prices of drugs by 80%. Further in 2014,100% FDI was allowed in medical device industry. . In 2015, the patent was amended which included the amendments done in the PATENT ACT 2002. EVOLUTION
- 6. PHARMACEUTICALS Active pharmaceuticals ingredients/ Bulk drugs Branded Generic Formulation ChronicAcute • Cardiovascular • Anti-diabetes • Gastro-intestinal • Neurological • Anti-infectives • Respiratory • Pain STRUCTURE
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- 9. POLITICAL • Governments • Developing countries ECONOMIC •The reduction in consumer disposable income. • These economic pressures leading to increase startergic buying • Increased pressure from shareholders SOCIAL It includes cultural change, health problem, population growth rate etc. TECHNOLOGICAL 1. New info and Communications technologies. 2. Social Media for Healthcare. 3. Customized Treatments. 4. Direct to Patient Advertising. 5. Direct to patient communications.
- 10. LEGISLATION Factors includeconsumer law, employment law, and health and safety law. ENVIRONMENTAL • Business and marketing plans link in with the environmental issues. • Corporate Social Responsibility programmes. • Eco opportunities
- 11. STRENGTH • Competitive Productioncost and drug quality • Speedy Clinical Trials • Strong Focus by the Government WEAKNESS • Volatile Foreign Exchange • Low R&D investment • Import dependence for Bulk drugs
- 12. Opportunities • Patent Cliff •Optimistic targets by Government • New markets- Rural Penetration • Increasing global demand for generics Threat • High Dependence on US market • Growing threats from China API’s market • IP regulations by developed countries are getting tougher
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- 15. PESTEL ANALYSIS •Effect ofGST •Maintenance of stock •Preference in regard to generic or branded medicines •Profit margin in regard to different customers •Seasonal Variations
- 16. •Dealing with competitors •Licensingformalities •Disposal of expired medicines •Number of workers in your shop •Application of technology
- 17. STRENGTH • Licensing andauthorization • Variety of products • Inelastic demand • Approach to all sections of society WEAKNESS • High level of competition • Shelf life of stock is low • Regulatory changes • Unskilled manpower
- 18. Opportunities • Wider marketcoverage , eg : selling of both generic and non generic drugs • Tie up with upcoming pharma brands Threat •Competition from ancillary markets •Threat of substitutes •Threat of new entrants
- 19. COMPARISION DESCRIPTION MICRO MACRO ENTRYBARRIERS LOW HIGH SUBSTITUTES HIGH LOW COMPETITORS HIGH HIGH SEASONAL VARIATIONS LOW HIGH DEMAND CHAIN COMPLEX SIMPLE POLITICAL DIRECT EFFECT INDIRECT EFFECT
- 20. COMPARISION DESCRIPTION MICRO MACRO ECONOMICALEXPECTED TO GROW IN FUTURE STEADY GROWTH SOCIAL LOW CORPORTAE SOCIAL RESPONSIBILITY HIGH CORPORATE SOCIAL RESPONSIBILITY TECHNOLOGICAL WIDE USAGE LESS USAGE STRENGTHS COMPETITIVE PRODUCTION COST, DRUG QUALITY INELASTIC DEMAND, VARIETY OF PRODUCTS WEAKNESS LOW R & D INVESTMENT HIGH COMPETITION, LESS SHELF LIFE OPPORTUNITY INCREASING GLOBAL DEMAND WIDER MARKET COVERAGE THREATS CHANGES IN REGULATORY ENVIRONMENT COMPETITION FROM ANCILLARY MARKETS, THREAT OF SUBSTITUTES
- 21. Dr Reddy LupinSunPharma Aurbindo Cipla TOP 5 LEADING COMPANIES
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Editor's Notes
- #10 POLITICAL Governments often have great purchasing power and affect the industry most in political way and control the prices of the product in the industry. ' have dominate on manufacturing and increasing R&D investment. Those organizations tend to sell their product to high demand developing countries in higher prices ECONOMIC 1. The reduction in consumer disposable income will have an impact on those countries using health insurance models particularly where part payment is required. 2. These economic pressures are seeing an increased growth in strategic buying groups who are forcing down prices. 3. Increased pressure from shareholders has caused a consolidation of the industry: more mergers and acquisitions will take place over the coming years. SOCIAL 1. It includes cultural change, health problem, population growth rate etc. Social factors affect the demand of a company's products and how it operates. According to the case, ageing population and Medicare is reformed, extended drug coverage for elderly. 2. As population is becoming older, it means the demand of medicine also increases. Nowadays, population raise, also require more medicine. TECHNOLOGICAL Technological advancements will create new business prospects both in terms of new therapy systems and service provisions. The online opportunities will see the growth in: New info and Communications technologies. Social Media for Healthcare. Customized Treatments. Direct to Patient Advertising. Direct to patient communications
- #11 LEGISLATION Factors include consumer law, employment law, and health and safety law. Pharmaceutical industry is subjected to regulatory and the department will examine all the data to support the safety, efficacy and stability. Pharmaceutical promotion is subjected to self-regulation. Representative requires passing all the examination testing of medical knowledge. Some countries, government require the agency to check if the promotional claim is consistency with the data. ENVIRONMENTAL There is a growing environmental agenda and the key stake holders are now becoming more aware of the need for businesses to be more proactive in this field. Pharma companies need to see how their business and marketing plans link in with the environmental issues. There is also an opportunity to incorporate it within their Corporate Social Responsibility programmes. Marketing and new product development should identify eco opportunities to promote as well.
- #12 WEAKNESS 1) The Indian pharmaceuticals industry is export oriented, and it contributes to over 50% of pharma revenues. Hence, any fluctuation in currency leads to instability in receivables. In the last one year, Indian currency has depreciated by over 20% in a year against major currencies which has led to renegotiation by the importers. 2) Global pharma industry is highly driven by the amount of R&D made by the firms and companies spend over 15% of their annual revenue on R&D. However, Indian pharma companies invest just 4% of the revenue for R&D. 3) Although India represents over 30% of global generic drug consumption, over 80% of the required APIs are imported from China.
- #13 OPPORTUNITIES As pointed out by a credit rating company, drug patent expiry in the USA will create new opportunity for Indian pharmaceutical industry in the coming years. ‘Patent Cliff’, a term used to describe the phenomenon of drugs approaching theirpatent expiration date, resulting in steep decline in sales of the branded drug as cheaper generics enter the market place to replace the branded drugs. Indian pharmaceutical companies have the opportunity to capitalize on the patent cliff and gain a greater share of the growing generics market. The Indian pharmaceutical sector is targeting a 5% share of the global pharmaceutical market by the end of the Twelfth Five Year Plan. India currently has 2.4% market share globally. Some of the key expectations outlined in the Plan are: Exports should be at USD 20 billion by the end of the Twelfth Five Year Plan (year 2017) The sector should employ 1.5 million people by 2015, 1.898 million people by 2018 and 2.464 million people by 2022. Domestic R&D should be internationally competitive Improve domestic content in medical devices. THREATS The bulk drug industry in china is expanding rapidly and Indian exporters are finding it difficult to get a foothold in the Chinese market. Chinese APIs are approximately 1520 per cent cheaper compared to Indian APIs, and over 50 per cent of bulk drugs used in the industry for making formulations are imported from China The U.S. is the top destination for Indian pharma exports followed by the UK. India’s pharmaceutical exports registered a sluggish growth offlate because of the growing tension with the US authorities over intellectual property rights related issues. Key developed nation export destinations like US, EU region has increased scrutiny and import alerts on Indian facilities and products over the recent past. This has adversely affected exports of several large medicine manufacturers.