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PHARMACEUTICAL INDUSTRY

Mufaddal Nullwala Business Environment - Sem III MIM - 15-I-131

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• The Indian pharmaceuticals market is the third largest in terms of volume and thirteenth largest in terms of value.

• 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.

• 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.

• The UN-backed Medicines Patent Pool has signed six sub-licences with Aurobindo, Cipla, Desano, Emcure, Hetero Labs and Laurus Labs, allowing them to make generic anti-AIDS medicine Tenofovir Alafenamide (TAF) for 112 developing countries.

• 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.

Introduction

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Advantage: INDIA

Leading pharma producer

One of the highest exports

Rapidly growing healthcare sector

Growing generics market

Ranked 5th in terms of attracting FDI

Among fastest growing industries

• Indian pharmaceutical sector accounts for about 2.4 per cent of the global pharmaceutical industry in value terms and 10 per cent in volume terms

• India accounts for 20 per cent of global exports in generics. In FY15, pharmaceuticals industry of India exported products worth USD15 billion and the exports are expected to reach USD40 billion by 2020

• Indian healthcare sector, one of the fastest growing sectors, is expected to advance at a CAGR of 17 per cent to reach USD250 billion over 2008–20

• The generics market is expected to grow to USD26.1 billion by 2016 from USD21 billion in 2015. India’s generics market has immense potential for growth

• Attracted 5 per cent of the total FDIs into India from April 2000 to September 15• Cumulative FDI inflows worth USD13.32 billion from April 2000 to September 15

• The country’s pharmaceutical industry is expected to expand at a CAGR of 12.89 per cent over 2015–20 to reach USD55 billion

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2015

Market size:

USD30billion

2020F

Market size:

USD55billion

Advantage: INDIA

• India’s cost of production is approximately 60 per cent lower than that of the US and almost half of that of Europe

• Due to lower cost of treatment, India is emerging as a leading destination for medical tourism

Economic drivers• Economic prosperity to improve drug

affordability

• Increasing penetration of health insurance

• With increasing penetration of chemists, especially in rural India, OTC drugs will be readily available

• Government unveiled ‘Pharma Vision 2020’ aimed at making India a global leader in end-to-end drug manufacture

• Reduced approval time for new facilities to boost investments

• In this sector, 100 per cent FDI is allowed under automatic route

• Over 60,000 generic brands across 60 therapeutic categories. Manufactures more than 500 different APIs

• 49 per cent of all drug master filings from India is registered in the USA

Policy supportDiversified portfolio•Accounts for over 10 per cent of the global pharmaceutical production

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Chronic Acute

Structure of Pharma Sector

Pharmaceuticals

Active Pharmaceutical Ingredients/Bulk drugs

Formulations

Branded Generics

• Cardiovascular• Anti-diabetes• Gastro-intestinal• Neurological

• Anti-infectives• Respiratory• Pain• Gynaecology

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Evolution of Pharma in India

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API is the Largest Segment in India

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Revenue in India

The Indian pharmaceuticals market increased at a CAGR of17.46 per cent in 2015 from USD6 billion in 2005 and is expected to expand at a CAGR of 15.92 per cent to USD55 billion by 2020

Increase in the size of middle class households coupled with the improvement in medical infrastructure and increase in the penetration of health insurance in the country will also influence in the growth of pharmaceuticals sector.

By 2020, India is likely to be among the top three pharmaceutical markets by incremental growth and sixth largest market globally in absolute size

30

India’s cost of production is significantly lower than that of the US and almost half of that of Europe. It gives a competitive edge to India over others.

Revenue of Indian pharmaceutical sector (USD billion)

2005 2013 2015 2020F

6

12

55

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Market Share

Revenue share of Indian pharmaceutical sub-segments in 2015 (%)

With 70 per cent of market share (in terms of revenues), generic drugs form the largest segment of the Indian pharmaceutical sector

India supply 20 per cent of global generic medicines market exports in terms of volume, making the country the largest provider of generic medicines globally and expected to expand even further in coming years

Over the Counter (OTC) medicines and patented drugs constitute 21 per cent and 9 per cent, respectively, of total market revenues of USD20 billion

70%

9%9%

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Porters Five Force Analysis

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Opportunities in India Pharma Industry

High-end drugs

• Due to increasing population and income levels, demand for high-end drugs is expected to rise

• Demand for high-end drugs could reached USD7.5 billion in 2015

• Growing demand could open up the market for production of high-end drugs in India

Penetration in rural market

• With 70 per cent of India’s population residing in rural areas, pharma companies have immense opportunities to tap this market

• Demand for generic medicines in rural markets has seen a sharp growth. Various companies are investing in the distribution network in rural areas

CRAMS

• The Contract Research and Manufacturing Services industry (CRAMS) – estimated at USD8 billion in 2015, up from USD3.8 billion in 2012 has a huge potential for investments

• The market has morethan 1,000 players

Clinical trials market

• India is among the leaders in the clinical trial market

• Due to a genetically diverse population and availability of skilled doctors, India has the potential to attract huge investments to its clinical trial market

• From 2009 to 2015, 3043 clinical trial has been carried out in India

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Industry Showcase

Serum Institute of India Ltd is the world's largest vaccine manufacturer by number of doses produced and sold globally (more than 1.3 billion doses) which includes Polio vaccine as well as Diphtheria, Tetanus, Pertussis, Hib, BCG, r-Hepatitis B, Measles, Mumps and Rubella vaccines.

Biocon, India's largest biotech company is focused on delivering affordable innovation. The company is committed to reduce therapy costs of chronic diseases like diabetes, cancer and autoimmune diseases by leveraging India's cost advantage to deliver affordable healthcare solutions to patients, partners and healthcare systems across the globe

Established in 1977, Mumbai-based Glenmark Pharmaceuticals Ltd is a leading player in the discovery of new molecules, both NCEs (new chemical entity) and NBEs (new biological entity). The company has a significant presence in branded generics markets across emerging economies, including India. Glenmark’s business is currently organized around the world

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Industry Showcase

Cipla is a global pharmaceutical company whose goal is ensuring no patient shall be denied access to high quality & affordable medicine and support. Cipla’s journey began in 1935 when its founder, Dr K A Hamied, set up an enterprise with the vision to make India self-sufficient in healthcare. Over the past 77 years, they have emerged as one of the most recognized brands in the world.

Ranbaxy Laboratories was established in 1961. It is a research-based international pharmaceutical company serving customers in over 150 countries and has experience of more than 50 years in providing high quality, affordable medicines trusted by healthcare professionals and patients. Ranbaxy is a member of the Daiichi Sankyo Group which is a leading pharmaceutical brand in the world.

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BCG Matrix for Pharma Industry

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Policy Measure by Goverment

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Pharma in Nutshell

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• 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.

Road Ahead

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PHARMACEUTICAL INDUSTRY

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