Pharmaceutical Sector in India

Pharmaceutical Sector in India

The pharmaceutical industry in India ranks 3rd in the world terms of volume and 14th in terms of value.

The Indian pharmaceuticals market witnessed growth at a CAGR of 5.64 percent, during FY11-16, with the market increasing from US$ 20.95 billion in FY11 to US$ 27.57 billion in FY16. The industry’s revenues are estimated to have grown by 7.4 percent in FY17.

Indian pharmaceutical market grew 5.5 percent in CY 2017 in terms of moving annual turnover. In March 2018, the market grew at 9.5 percent year-on-year with sales of Rs 10,029 crore (US$ 1.56 billion).

By 2020, India is likely to be among the top three pharmaceutical markets by incremental growth and 6th largest market globally in absolute size.

Increase in the size of middle-class households coupled with the improvement in medical infrastructure and an increase in the penetration of health insurance in the country will also influence the growth of the pharmaceuticals sector.

The drug and pharmaceutical sector has a direct link with the health care system. Drugs are used to protect, maintain, and restore the health of people. The pharmaceuticals industry, therefore, plays an important role in the provision of health care. The Global & Indian pharmaceutical industry is growing and there is an increased demand for Indian bulk drugs and generics in other countries. This sector has a long history of internal reforms and has also been affected by general reforms in other sectors

Evolution of Pharma Industry in India

1970-1990 :

Indian Patent Act passed in 1970

Several domestic companies start operations

Development of production infrastructure

Export initiatives were taken

1990-2010 :

Liberalized market

Indian companies increasingly launch operations in foreign countries

India a major destination for generic drug manufacturing

Approval of Patents (Amendment) Act 2005, which led to the adoption of product patents in India

2010 :

Increased patent filings by pharma players

Likely adoption of newer sales models such as channel management, KAM(Key Account Management) and CSO( Contract Sales Organization)

The National Pharmaceutical Pricing Policy, 2012 (NPPP-2012)

2010- 2015:

In 2013: New Drug Pricing Control Order issued by Directorate of Food and Drugs this will reduce the prices of drugs by 80 percent

2014: 100 percent FDI allowed in the medical device industry. The investment will be routed through the automatic route. Leading Indian pharma companies are raising funds aggressively to fund an acquisition in domestic as well as international market to increase their product portfolios.

2015: India has 10,500 manufacturing units and over 3,000 pharma companies

National Health Policy Draft 2015 to increase expenditure in the healthcare sector

Patent Act Amendment 2015, it includes amendments in Patent Act 2002.

2016 onwards

In Union Budget, 2016, FDI increased to 74 percent in existing pharmaceutical companies.  The Government of India unveiled ‘Pharma Vision 2020’ aimed at making India a global leader in end-to-end drug manufacture. Approval time for new facilities has been reduced to boost investments.

Main USP of Indian Pharma Sector in current scenario:

API is the largest segment of the Indian pharmaceuticals sector

India’s cost of production is significantly lower than that of the US and almost half of that of Europe. It gives a competitive edge to India over others.

Robust growth in the Biotech industry: Constitute 800 companies with the potential to achieve the market size of US$ 100 billion by 2025.

Bio-pharma accounts for majority market share and witnesses the fastest growth in FY16

Generic drugs form the largest segment of the Indian pharma market: With 70 percent of market share (in terms of revenues), generic drugs form the largest segment of the Indian pharmaceutical sector. India supplies 20% of global generic medicines market exports, in terms of volume, making the country the largest provider of generic medicines globally and expected to expand even further in the coming years.

Anti-infective drugs lead the pharma market is 16% & Cardiovascular segment 13%.

Pharma export to continue witnessing high growth:  In FY17, India exported pharmaceutical products worth US$ 16.8 billion, with the number expected to reach US$ 40 billion by 2020. Indian drugs are exported to more than 200 countries in the world, with the US as the key market. Pharma giants putting more money in R&D spending: Sun & Lupin R & D spending 7.6% & 13.5% of Sales in FY17.

Top 9 Publicly Listed pharmaceutical companies in India by Market Capitalization as of 2017.

Current Export Situation:

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%. Some of the major pharmaceutical firms include Sun Pharmaceutical, Cadila Healthcare, and Piramal Enterprises.

India exported $11.7 billion worth of pharmaceuticals in 2014. Pharmaceutical export from India stood at US$ 17.27 billion in 2017-18 and is expected to grow by 30 percent to reach US$ 20 billion by the year 2020.

The 10 countries below imported 56.5% of that total: