The
pharmaceutical industry in India is among the most highly organized sectors.
This industry plays an important role in promoting and sustaining development
in the field of global medicine. Due to the presence of low cost manufacturing
facilities, educated and skilled manpower and cheap labor force among others,
the industry is set to scale new heights in the fields of production,
development, manufacturing and research. In 2008, the domestic pharma market in
India was expected to be US$ 10.76 billion and this is likely to increase at a
compound annual growth rate of 9.9 per cent until 2010 and subsequently at 9.5
per cent till the year 2015.
Industry Trends
- The
pharma industry generally grows at about 1.5-1.6 times the Gross Domestic
Product growth
- Globally,
India ranks third in terms of manufacturing pharma products by volume
- The
Indian pharmaceutical industry is expected to grow at a rate of 9.9 % till
2010 and after that 9.5 % till 2015
- In
2007-08, India exported drugs worth US$7.2 billion in to the US and Europe
followed by Central and Eastern Europe, Africa and Latin America
- The
Indian vaccine market which was worth US$665 million in 2007-08 is growing
at a rate of more than 20%
- The
retail pharmaceutical market in India is expected to cross US$ 12-13
billion by 2012
- The
Indian drug and pharmaceuticals segment received foreign direct investment
to the tune of US$ 1.43 billion from April 2000 to December 2008
Challenges
Every
industry has its own sets of advantages and disadvantages under which they have
to work; the pharmaceutical industry is no exception to this. Some of the
challenges the industry faces are:
- Regulatory
obstacles
- Lack
of proper infrastructure
- Lack
of qualified professionals
- Expensive
research equipments
- Lack
of academic collaboration
- Underdeveloped
molecular discovery program
- Divide
between the industry and study curriculum
Government Initiatives
The
government of India has undertaken several including policy initiatives and tax
breaks for the growth of the pharmaceutical business in India. Some of the
measures adopted are:
- Pharmaceutical
units are eligible for weighted tax reduction at 150% for the research and
development expenditure obtained.
- Two
new schemes namely, New Millennium Indian Technology Leadership Initiative
and the Drugs and Pharmaceuticals Research Program have been launched by
the Government.
- The
Government is contemplating the creation of SRV or special purpose
vehicles with an insurance cover to be used for funding new drug research
- The
Department of Pharmaceuticals is mulling the creation of drug research
facilities which can be used by private companies for research work on
rent
Pharma Export
In
the recent years, despite the slowdown witnessed in the global economy, exports
from the pharmaceutical industry in India have shown good buoyancy in growth.
Export has become an important driving force for growth in this industry with
more than 50 % revenue coming from the overseas markets. For the financial year
2008-09 the export of drugs is estimated to be $8.25 billion as per the
Pharmaceutical Export Council of India, which is an organization, set up by the
Government of India. A survey undertaken by FICCI, the oldest industry chamber
in India has predicted 16% growth in the export of India's pharmaceutical
growth during 2009-2010.
Key
players in Indian Pharmaceutical Industry
There are several national and international pharmaceutical companies that operate in India. Most of the country's requirements for pharmaceutical products are met by these companies. Some of them are briefly described below:
- Ranbaxy
Laboratories Limited is the biggest pharmaceutical
manufacturing company in India. The company is ranked at the 8th position
among the global generic pharmaceutical companies and has presence in 48
countries including world class manufacturing facilities in 10 countries
and serves to customers from over 125 countries. Ranbaxy Laboratories
2009-2010 Q3 Net Profit Results showed a profit of Rs 116.6 crore as
compared to Rs 394.5 crore deficit, recorded during the corresponding
period last fiscal.
- Dr.
Reddy's Laboratories manufactures and markets a
wide range of pharmaceuticals both in India and abroad. The company has 60
active pharmaceutical ingredients to manufacture drugs, critical care
products, diagnostic kits and biotechnology products. The company has 6
FDA plants that produce active pharma ingredients and 7 FDA inspected and
ISO 9001 and ISO 14001 certified plants. Dr. Reddy's Q1 FY10 result shows
the revenues of the company at Rs. 18,189 million which is up by 21%.
During this quarter the company introduced 24 new generic products,
applied for 22 new generic product registrations and filed 4 DMFs.
- Cipla
is an Indian pharmaceutical company renowned for the manufacture of low
cost anti AIDS drugs. The company's product range comprises of
anthelmintics, oncology, anti-bacterials, cardiovascular drugs,
antibiotics, nutritional supplements, anti-ulcerants, anti-asthmatics and
corticosteroids. Cipla also offers other services like quality control,
engineering, project appraisal, plant supply, consulting, commissioning
and know-how transfer, support. For the financial year 2008-09 the company
registered an increase of 22% in sales and other income over the previous
year.
- Nicholas
Piramal is the second largest pharmaceutical
healthcare company in India. The brands manufactured by the company
include Gardenal, Ismo, Stemetil, Rejoint, Supradyn, Phensedyl and
Haemaccel. Nicholas Piramal has entered into join ventures and alliances
with several international corporations like Cheissi, Italy; IVAX Corp;
UK, F. Hoffmann-La Roche Ltd., Allergan Inc., USA etc.
- Glaxo
Smithkline (GSK) is a United Kingdom based
pharma company; it is the world's second largest pharmaceutical company.
The company's portfolio of pharma products consist of central nervous
system, respiratory, oncology, vaccines, anti-infectives and
gastro-intestinal/metabolic products among others. On November 2009, the
FDA had announced that the H1N1 vaccine manufactured by GSK would join the
list of the four vaccines approved.
- Zydus
Cadila also known as Cadila Healthcare is an
Indian pharmaceutical company located in Gujarat. The company's 1QFY2010
results show the net sales at Rs880.3cr which is higher than the estimated
Rs773cr. The net profit was Rs124.8cr which was increase of 39%; the
increase was on account of higher sales and improvement in the OPM.
India's
Domestic Pharmaceutical Market (12 Months Ended January 2009)
|
Company
|
Size
($ Billion)
|
Market
Share (%)
|
Growth
Rate (%)
|
|
Total
Pharma Market
|
6.9
|
100.0
|
9.9
|
|
Cipla
|
.36
|
5.3
|
13.4
|
|
Ranbaxy
|
.34
|
5.0
|
11.5
|
|
Glaxo
Smithkline
|
.29
|
4.3
|
-1.2
|
|
Piramal
Healthcare
|
.27
|
3.9
|
11.7
|
|
Zydus
Cadila
|
.24
|
3.6
|
6.8
|
|
Source:
ORG IMS
|
|||
Future Scenario
With
several companies slated to make investments in India, the future scenario of
the pharmaceutical industry in looks pretty promising. The country's
pharmaceutical industry has tremendous potential of growth considering all the
projects that are in the pipeline. Some of the future initiatives are:
- According
to a study by FICCI-Ernst & Young India will open a probable US$ 8
billion market for MNCs selling expensive drugs by 2015
- The
study also says that the domestic pharma market is likely to reach US$ 20
billion by 2015
- The
Minister of Commerce estimates that US$ 6.31 billion will be invested in
the domestic pharmaceutical sector
- Public
spending on healthcare is likely to raise from 7 per cent of GDP in 2007
to 13 per cent of GDP by 2015
- Dr
Reddy's Laboratories has tied up with GlaxoSmithKline to develop and
market generics and formulations in upcoming markets overseas
- Lupin,
a Mumbai based pharmaceutical company is looking to tap opportunities of
about US$ 200 million in the US oral contraceptives market
- Due
to the low cost of R&D, the Indian pharmaceutical off-shoring industry
is designated to turn out to be a US$ 2.5 billion opportunity by 2012