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Tuesday, February 16, 2010


Indian Pharmaceutical Industry

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.
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.
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