AAKASH DATTA

8/8/2019 AAKASH DATTA

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Pharmaceutical industry in India.

yBy-

AAKASH DATTA

S-102

FYBMS.


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The Indian pharmaceutical industry has

come a long way from waiting for imports

of bulk drugs from global players for re-

processing to becoming an industry whichis driving the product development and is

breaking new grounds in medical research

worldwide.


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INTRODUCTION

Pharmaceutical Industryin Indiais one ofthelargestand mostadvanced amongthedevelopingcountries.( Itisranked 4thinvolumetermsand 11thin valuetermsglobally.)

Fromsimple pain killersto sophisticatedantibioticsand complexcardiaccompounds,almosteverytype of drugis nowmadeindigenously.(70% ofthecountry's demand met

by Indian pharmaceuticalindustry) industrytraditionallyrelied on reverseengineering


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INDUSTRY STRUCTURE estimated worth $ 4.5 billion, growing at about 8 to

9 percent annually

over 3,000 small/medium sized genericpharmaceutical manufacturers

The leading 250 pharmaceutical companies control70% of the market (market leader holdingnearly 7% of the market share)

5 Central Public Sector Units that manufacturedrugs

over 60,000 formulations manufactured in India inmore than 60 therapeutic segments

DRUG SYSTEM IN INDIA(Ayurveda, Siddha,Unani, Homeopathy, Naturopathy)


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Top ten pharmaceutical companies in India

Ranbaxy Laboratories: By sales India's largest pharma firm with the returns touching Rs4,198.96 crore (Rs 41.989 billion) in 2007

Dr Reddy's Laboratories:With a turnover of Rs 4,162.25 crore (Rs 41.622 billion) in2007, Dr Reddy's lab is second largest drug firm in India by sales .

Cipla: Cipla generated an annual revenue of Rs 3,763.72 crore (Rs 37.637 billion) in 2007making itself the third largest pharmaceutical firms.

Sun Pharma Industries: Sun Pharma Industries had an overall earnings of Rs 2,463.59 crore(Rs 24.635 billion) in 2007.

Lupin Labs: Lupin Labs yielded total profit of Rs 2,215.52 crore (Rs 22.155 billion) in 2007.

Aurobindo Pharma: India's sixth largest pharma company by sales, Aurobindo posted Rs2,080.19 crore (Rs 20.801 billion) annual returns in 2007.

GlaxoSmithKline Pharma:With 2007 turnover touching Rs 1,773.41 crore (Rs 17.734billion, GSK is India's seventh largest pharma firm.

Cadila Healthcare: Cadila's earnings was Rs 1,613.00 crore (Rs 16.13 billion) in the fiscalyear 2007, establishing itself as India's eight largest drug company.

Aventis Pharma:With an annual revenue of Rs 983.80 crore (Rs 9.838 billion) in 2007,Aventis Pharma has made a place for itself in the top ten pharma companies in India

Ipca Laboratories: Ipca is India's 10th largest pharma company by sales and in 2007 it had aturnover of Rs 980.44 crore (Rs 9.804 billion)


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Other pharmaceutical companies in India Baidyanath group

Biocon

Cadila Healthcare

Dabur

Dey's Medical

Hamdard (Wakf)Laboratories

Hetero Drugs

Hindustan Antibiotics Limited

Medisys Biotech

Nectar Lifesciences

y Nicholas Piramal

y Panacea Biotec

y Pharmaceuticals in India

yG. V. Prasad

y RPG Life Sciences

y Serum Institute of India

y Strides Arcolab

y TTK Groupy Torrent Pharmaceuticals

y Wockhardt


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INDUSTRY SEGMENTATION

Indian pharmaceutical industry can be

widely classified into

y bulk drugs,y formulations and

y contract research


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DOMESTICEXPORTS

YEAR EXPORT (Rs. in Crores)

1998-1999 6256.06

1999-2000 7230.16

2000-2001 8757.47

2001-2002 9751.20

2002-2003 12826.10

2003-2004 15213.24

2004-2005 17857.80

2005-2006 22578.98

2006-2007 24942.00

Pharmaceutical exports touched a

level of Rs. 24942 crores during

2006-07. The formulations

contribute nearly 55% of the total

exports and the rest 45% comesfrom bulk drugs. Pharmaceutical

exports clocked $7.2 billion in

2007-08, accounting for six per

cent of the countrys total exports,

according toPharmexcil, the Pharmaceutical

Export Promotional Council.(Source:-Directorate General of CommercialIntelligence and Statistics - DGCIS, Kolkata)


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SWOTANALYSISSTRENGTHS-

1. India with a population of over a billion is a largely untappedmarket.(In fact the penetration of modern medicine is less than 30% inIndia.)

2.Thegrowth of middle class in the country has resulted in fastchanging lifestyles in urban and to some extent rural centres.

3. Indian manufacturers are one of the lowest cost producers of

drugsin the world.

4.Indian pharmaceutical industry possesses excellent chemistryand process reengineering skills.


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WEAKNESS

y price regulation.

y lack of product patent

y least penetrated in the world.

y Due to very low barriers to entry, Indian

pharma industry is highly fragmented (300large manufacturing units and about 18,000small units spread across the country. )


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OPPORTUNITIES

The migration into a product patent based regime islikely to transform industry fortunes in the long term.

Large number of drugs going off-patent in Europeand in the US between 2005 to 2009 offers a big

opportunity for the Indian companies to capture thismarket.

Opening up of health insurance sector and theexpected growth in per capita income are key growth

drivers from a long-term perspective. Being the lowest cost producer combined with FDA

approved plants; Indian companies can become aglobal outsourcing hub for pharmaceutical products.


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THREATS

There are certain concerns over the patent regime regarding its

current structure. It might be possible that the new government

may change certain provisions of the patent act formulated by the

preceding government.

Threats from other low cost countries like China and Israel exist.

However, on the quality front, India is better placed relative to

China. So, differentiation in the contract manufacturing side maywane.


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PORTERS FIVE FORCES MODEL


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INDUSTRYCOMPETITION

y 10,000 different players (High growth prospects make itattractive for new players to enter in the industry)

y entry barriers to pharmaceutical industry are very low.

y

small players that are focussed on a particular region have abetter hang of the distribution channel, making it easier to

succeed


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BARGAININGPOWEROF

BUYERS

unique feature of pharmaceutical industry -end

user of the product is different from the

influencer (read doctor).

In pharmaceutical industry, the buyers arescattered and they as such do not wield much

power in the pricing of the products.

However, govt with its policies, plays an important

role in regulating pricing through the NPPA(national pharmaceutical pricing authority).


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BARGAINING POWER OF

SUPPLIERS

The suppliers have very low bargaining power and the

companies in the pharmaceutical industry can switch from

their suppliers without incurring a very high cost.

Supplier can go for forward integration to become apharmaceutical company.(companies like Orchid Chemicals

and Sashun Chemicals were basically chemical companies

who turned themselves into pharmaceutical companies.)


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BARRIERSTOENTRY

The capital requirement for the industry is very low; creating a

regional distribution network is easy, since the point of sales is

restricted in this industry in India.

However, creating brand awareness and franchisee among

doctors is the key for long term survival.

Also, quality regulations by the government may put some

hindrance for establishing new manufacturing operations.

The new patent regime has raised the barriers to entry.

But it is unlikely to discourage new entrants, as market forgenerics will be as huge.


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THREAT OF SUBSTITUTES

Whatever happens, demand for pharmaceutical productscontinues and the industry thrives.

One of the key reasons for high competitiveness in the industry is

that as an ongoing concern, pharmaceutical industry seems to

have an infinite future. However, in recent times the advances made in thee field of

biotechnology, can prove to be a threat to the synthetic

pharmaceutical industry.

Yoga and neuropathy


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INDIAN PHARMACEUTICAL SECTOR: FUTURESCENARIO

marking presence globally and competing with thepharmaceutical companies from the developed countries like

Europe, Japan, and United States

generic drug sales to promote drug discovery projects and new

delivery technologies. Contract research in India is also growingat the rate of 20-25% per year and was valued at US$ 10-

120millio

We can expect a significant level of consolidation- a major

portion of small players are likely to be wiped out


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ISSUES ANDCHALLENGES

y Mergers andAcquisitions


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y Attracting and retaining a skilled workforce

y Controlling operating costs

y Infrastructure

y Impact of new patent law


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BIBLIOGRAPHY

www.oppi.com www.capitaline.com www.google.com www.wikipedia.com www.altavista.com

www.site.securities.com www.pharmainfo.com www.etintelligence.com www.pharmainfo.net www.kpmg.de www.info.shine.com www.equitymaster.com www.expresspharmaonline.com


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THANK

YOU.

AAKASH DATTA

S

-102FYBMS

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