Definition:

Indian Pharma Market is the total value of Pharmaceutical Formulations in India sold at the retail level to the final consumers.

Why we should know?

To know the pharmaceutical market potential, therapeutic category wise, products, major competitors, so that we can make appropriate choices and decisions to achieve company objectives.

Main features of Indian Pharma Market

India is the potential market for MNCs. This is because India’s population is growing rapidly and its economy – creating a large middle class with the resources to afford Western medicines. Moreover the changing epidemiological profile of India shall increase the demand for drugs used to treat cardio-vascular problems, disorders of the central nervous system and other chronic diseases.

India’s growing pharmaceutical industry is likely could be a competitor and potential partner in many key areas of global Pharma. India has considerable manufacturing expertise and as such Indian producers are likely to partner with global Pharma companies to market their wares outside of India.

India will be the most populous country in the world by 2050, will make its mark as a growing market, potential competitor or partner in manufacturing and R&D, as a location for clinical trials and partner with MNCs.

India is a fast growing economy. The Indian economy is rapidly getting bigger. The real GDP growth reached 9% in March 2008. In the year to March 2009, growth eased to 6.7%. Reserve Bank of India (RBI) anticipates growth improving to 6% in the year ending March 2010, and expects robust growth of 7.8% p.a for the next ten years. Forecasts such as those of Goldman Sachs suggest that India will be the only emerging economy to maintain such an outstanding pace over the longer term, i.e. to 2050.

India is forecast to grow by at least 5% a year for the next 41 years

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India’s therapeutic needs are changing

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Government-provided healthcare is improving, but private healthcare dominates. The Indian Government is currently in the throes of a much needed program to reform the health care system.

The factors that propel growth in sales volumes are increased buying power and epidemiological changes yet India remains a price-sensitive market. While India’s healthcare system is struggling to meet the needs of its vast population, government programs and reforms in the health insurance industry should improve the situation.

India’s Pharma domestic market was worth around US$11 billion in March 2009 and expected to reach US$30 billion by 2020.

Indian Pharmaceutical manufacturers produce more than 20% of the world’s generic products. As US$70 billion worth of drugs are expected to go off patent in the US over the next three years, Indian manufacturers are positioned to take a substantial share of the resulting new generics market.

Till February 2009, Indian companies account for 35% of the Abbreviated New Drug Application (ANDA) approvals granted by the US Food and Drug Administration (FDA). Indian Pharma manufacturers are entering into strategic alliances globally to jointly market the generics in the world resulting in major market share of generics by Indian companies.

In spite of global recession in 2008, Mergers & Acquisitions in the Pharma sector in India more than doubled compared to the previous year. There were 57 M&A, a 128% increase. Investment in Pharmaceutical, healthcare and biotech was of US$5.57 billion, the second among industry.

In 2009, India’s pharmaceutical exports reached US$8 billion and by 2020, it is estimated to attain approximately US$20 billion.

The reverse engineering manufacturing experience of generics helped Indian Pharma companies to stream line the costs to two-fifths of the cost in the west. This also widened the scope of contract manufacturing facilities with enhanced scrutiny of quality issues resulting in significant improvement in quality standards.

The US FDA has already approved over 100 manufacturing sites – more than in any country except the US. The Indian contract manufacturing segment worth US$605 million in 2008 is expected to reach US$916 million in 2010.

India has more US FDA-approved manufacturing plants than any country except the US

 US FDA approved_manufacturing_plants

 

India is one of the largest vaccine producers in the world, with many new vaccines set to be launched in the next five years. In March 2008, vaccines market is estimated to be US$780 million, growing at a compounded annual growth rate (CAGR) of 15%. India not only exports vaccines to about 150 countries but also meets 40-70% of the World Health Organization (WHO) demand.

The OTC market in India valued at US$1.8 billion in 2009, is expected to grow at 18% a year to reach about US$3 billion in 2012 as the Government is now considering to expand the list of OTC drugs which can be sold outside pharmacies, since many common household remedies are more difficult to obtain in India than in other developing countries. Hence OTC sales are on the increase, offering opportunities to achieve high volumes of OTC Pharma brands in India.

Though urban markets remain in focus for short term goals, getting treatment to the remaining 70% of the rural population shall be the next volume driver.

Growing Research & Development

India’s top 10 largest drug firms spent US$480 million on R&D in 2008 and is expected to reach around US$1 billion in 2010.

Clinical trials in India offer 50% of cost savings:

Even though insufficient regulatory oversight is currently a barrier, yet India’s overall costs which are only 50% of the US-based programs should spur dramatic growth in clinical testing in the next 2-5 years. Indian clinical trials market could reach US$2 billion by 2012, up from just US$300 million in 2008.

Biotech and biosimilars on track for growth

In 2008-09, Biotech and Biosimilar products generated sales of US$2.64 billion with a CAGR of 26 and expected to achieve revenues of US$5 billion by 2010 -11. India’s developing biotech industry and cost advantages should drive significant growth in local development of biosimilars for the global market.

India’s top 10 biotech firms:
Company

Revenues
(US$ million)
2008-2009

Serum Institute of India

242.12

Biocon

198.29

Panacea Biotech

129.79

Rasi Seeds

81.63

Nuziveedu Seeds

79.11

Novo Nordisk

71.72

Siro Clinpharm

60.86

Novozymes South Asia

54.34

Shantha Biotech

53.58

Jubilant

52.6

 

Source: Biospectrum – ABLE, 2009 95

Bioinformatics in India:

India’s existing IT knowledge capital provides a natural base for the development of bioinformatics research and operations. As of March 2009, revenues for the Indian bioinformatics industry were around US$48 million out of which US$37 million from overseas and the remaining US$11 million from domestic market.

Stem cell research:

In India 40 institutions and hospitals are involved in stem cell research progressing from a few institutions. India’s considerable progress in stem cell research has positioned it to take leverage of growing capabilities in this area.

Medical devices

India’s medical devices market is new and estimated to be US$2.75 billion in 2008 and is expected to double by 2012 to US$5 billion. Global Medical Devices market is around US$220 billion in 2008 and India’s market share is just 1.25%.

Global Pharma’s evolving business models and options in India

Varieties of options are available for Global Pharma players who can maximize their investment in India. Indian companies too are willing to play increasingly partnership roles.

Following are the examples of evolving business models in India.

evolving_pharma_business_models_india

 

Export-oriented business: CRAMS

Low costs, availability of skilled talent and a large patient pool are the driving factors for MNCs increasing interest in India not only for manufacturing but also for research and clinical trials

Licensing

Multinationals are increasingly entering into licensing agreements to get a share of the Indian Pharma market. For example, Elder Pharmaceuticals has entered into an exclusive in-licensing deal with Israel’s Enzymotec to sell the latter’s cholesterol-reducing dietary supplement, CardiaBeat, in India.

Franchising

The master franchisee of US-based Medicine Shoppe International has already forayed the market and plans to expand 1,000 stores by 2010. Fortis Healthcare plans to open a chain of 1,000 stores by 2012, of which the US$200 million has been committed.

Joint Ventures Joint ventures (JVs)

are becoming a more prevalent option for companies looking to capitalise on the opportunities presented in India. Foreign companies are increasingly looking at local partners to work with in order to increase their presence in India. R&D joint ventures are also growing in popularity. Some Indian companies are collaborating with overseas players to enhance their vaccine development capabilities. Requirements of a JVForeign companies forming a JV in India can invest directly via the automatic route i.e. no prior approval of the Government is required. Foreign direct investment up to 100% is permitted in pharmaceutical sector under the automatic route. In cases where the foreign investor has an existing venture or tie-up in India in the same field as on 12 January 2005, prior Foreign Investment Promotion Board (FIPB) approval is required. The FIPB generally grants its approval on the basis of a no objection certificate (NOC) from the existing JV partner.

Partnerships

Some multinational companies have also increased their stake in their Indian subsidiaries to take advantage of the India opportunity. Pfizer has been able to increase its stake in its Indian arm, Pfizer India, from 41.2% to around 72%.128 Similarly, Novartis AG has hiked its stake to 76.42% in its Indian subsidiary Novartis India from 50.9%.

Infrastructure

Insufficient energy infrastructure and inadequate transport infrastructure has historically posed challenges for companies operating in India. The situation is definitely improving, as the Government focuses attention on infrastructure needs.

Tax environment India is expected to implement a new Direct Tax Code, pending approval, by April 2011, which should simplify the existing tax structure. The new tax code proposes a reduction in the corporate tax rate from the current 30% to 25% and an unlimited carry forward of business losses. India offers some attractive tax benefits for Pharma companies and reductions in customs duties should also help global manufacturers compete in the price-sensitive Indian market.

Counterfeiting

Counterfeit drugs have been a serious issue in India. The Organization of Pharmaceutical Producers of India (OPPI) has spearheaded various initiatives to combat the problem. It found the prevalence of spurious drugs at 0.046% of all medicines sold to customers, in contrast to results of an earlier survey funded by the WHO and undertaken by the International Pharmaceutical Federation, which concluded that 3.1% of drugs in India were counterfeit.

Intellectual Property Rights

The federal Government introduced product patents for all industrial sectors under the Patents (Amendment) Act, 2005 – in line with the commitment India made when it signed up to the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Accord in 1995. This regulation aims to balance the interests of domestic and multinational drug makers. It represents a major improvement on the previous rules, but some issues remain. Firstly, it does not apply to drugs patented before 1995.137 Copies of drugs patented between 1995 and the introduction of the law will probably not be withdrawn.

(Source: “Global Pharma looks to India: Prospects for growth” – PriceWaterHouseCooper

http://www.pwc.com/gx/en/pharma-life-sciences/publications/india-growth.jhtml)

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(Source: Indian Pharma 2015: Unlocking the potential of the Indian Pharmaceutical Market –McKinsey&Company. http://www.mckinsey.com/locations/india/mckinseyonindia/pdf/India_Pharma_2015.pdf)

 

Indian Pharma Market Overview

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