The Indian pharmaceuticals market is the third largest in terms of volume and thirteenth largest in terms of value, as per a report by Equity Master. India is the largest provider of generic drugs globally with the Indian generics accounting for 20 per cent of global exports in terms of volume. Of late, consolidation has become an important characteristic of the Indian pharmaceutical market as the industry is highly fragmented.
India enjoys an important position in the global pharmaceuticals sector. The country also has a large pool of scientists and engineers who have the potential to steer the industry ahead to an even higher level. Presently over 80 per cent of the antiretroviral drugs used globally to combat AIDS (Acquired Immuno Deficiency Syndrome) are supplied by Indian pharmaceutical firms.
Indian pharmaceutical industry is divided into two categories as bulk drugs and formulations by its physical properties and marketing point of view ethical, generic and OTC and line of treatment the industry is further divided as Allopathic, Ayurveda, Homeopathy, Unani etc.
In our context Allopathic is more relevant as it occupies more than 80% of market share. Furthermore Indian pharmaceutical sector has successfully crossed all phases from monopolistic phase to multi-brand phase to emerging market phase and now commoditisation phase stepping ahead to give a new shape for pharmaceutical marketing.
It is observed that Infrastructure base of Indian pharmaceutical industry comprises of more than 3.9 lakhs allopathic practicing doctors with 15 thousands hospitals and 1.6 lakhs primary health centres and with a highest doctor chemist ratio of 2: 3 i.e. of around 3.5 lakh chemist. Also 9 thousand pharmaceutical companies are operating their network with brand in lakhs through 60 thousand medical representatives.
The history of Indian pharmaceutical market in 1970's was almost non-existent. Today, India has gained immense importance and carved a niche for itself in the pharmaceutical domain. In fact, it has emerged as a big mart for the pharmaceutical industry. In today's world, Indian pharmaceutical industry ranks 4th in terms of volume and 13th in terms of value. For example it might be anything like formulations, bulk drugs, generics, Novel Drug Delivery Systems, New Chemical Entities, or Biotechnology, etc. Indian companies are dominating in the marketplace which was traditionally manned by MNC's. In 1930, in Calcutta the first pharmaceutical company called Bengal Chemicals and Pharmaceutical Works, which still is today as one of 5 government-owned drug manufacturers was started.
Today in India, Pharma Industry rank's first of India's science-based industries with wide ranges of capabilities in the complex field of drug manufacture and technology. The industry is estimated to be worth $4.5 billion, which is growing at 8-9% annually. It is one of the best and highly organized sectors. The sector specializes in term of technology, quality and range of medicines manufactured. The product of the industry ranges from simple headache pills to sophisticated antibiotics and also complex cardiac compounds.
Pharma industry promotes the sustainable development in the vital field of medicines by boosting the quality producers and many units approved by regulatory authorities in USA and UK. The companies associated with this sectors which are international have stimulated, assisted and spearheaded the dynamic development in the past 53 years and helped to put India on the pharmaceutical map of the world. The growth of Indian Pharma Industry has grown tremendously since 2008-09 in terms of exports. The Indian pharmaceutical industry has grown from a humble Rs 1,500 crore turnover in 1980 to approximately Rs 1,00611 in 2009-10.
The Indian pharma industry, which is expected to grow over 15 per cent per annum between 2015 and 2020, will outperform the global pharma industry, which is set to grow at an annual rate of 5 per cent between the same period!. The market is expected to grow to US$ 55 billion by 2020, thereby emerging as the sixth largest pharmaceutical market globally by absolute size, as stated by Mr Arun Singh, Indian Ambassador to the US. Branded generics dominate the pharmaceuticals market, constituting nearly 80 per cent of the market share (in terms of revenues). The sector is expected to generate 58,000 additional job opportunities by the year 2025. *
India's pharmaceutical exports stood at US$ 16.4 billion in 2016-17 and are expected to grow by 30 per cent over the next three years to reach US$ 20 billion by 2020, according to the Pharmaceuticals Export Promotion Council of India (PHARMEXCIL).
Indian companies received 55 Abbreviated New Drug Application (ANDA) approvals and 16 tentative approvals from the US Food and Drug Administration (USFDA) in Q1 of 2017. The USFDA approvals are expected to cross 700 ANDA in 2017, thereby recording a year-on-year growth of 17 per cent. The country accounts for around 30 per cent (by volume) and about 10 per cent (value) in the US$ 70-80 billion US generics market.
India's biotechnology industry comprising bio-pharmaceuticals, bio-services, bio-agriculture, bio-industry and bioinformatics is expected grow at an average growth rate of around 30 per cent a year and reach US$ 100 billion by 2025. Biopharma, comprising vaccines, therapeutics and diagnostics, is the largest sub-sector contributing nearly 62 per cent of the total revenues at Rs 12,600 crore (US$ 1.89 billion).
The drugs and pharmaceuticals sector attracted cumulative FDI inflows worth US$ 14.71 billion between April 2000 and March 2017, according to data released by the Department of Industrial Policy and Promotion (DIPP).
The implementation of the Goods and Services Tax (GST) is expected to be a game-changer for the Indian Pharmaceuticals industry. It will lead to tax-neutral inter-state transactions between two dealers, thereby reducing the dependency on multiple states and increasing the focus on regional hubs. It is expected to result in an efficient supply chain management, which is expected to reduce its cost considerably. The cost of technology and investment is expected to reduce on account of tax credit which can be availed now on the duties levied on import of costly machinery and equipment.Some of the initiatives taken by the government to promote the pharmaceutical sector in India are as follows:
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.
The government introduced mechanisms such as the Drug Price Control Order and the National Pharmaceutical Pricing Authority to deal with the issue of affordability and availability of medicines.
The Indian pharmaceutical market size is expected to grow to US$ 100 billion by 2025, driven by increasing consumer spending, rapid urbanisation, and raising healthcare insurance among others.
Going forward, better growth in domestic sales would also depend on the ability of companies to align their product portfolio towards chronic therapies for diseases such as such as cardiovascular, anti-diabetes, anti-depressants and anti-cancers that are on the rise.
The Indian government has taken many steps to reduce costs and bring down healthcare expenses. Speedy introduction of generic drugs into the market has remained in focus and is expected to benefit the Indian pharmaceutical companies. In addition, the thrust on rural health programmes, lifesaving drugs and preventive vaccines also augurs well for the pharmaceutical companies.