BACKGROUND ANALYSIS OF THE INDIAN PHARMACEUTICAL SECTOR :
The Indian pharmaceutical industry was estimated at US $16.6 billion (including exports) in2007-08. India’s healthcare spending is around 6 per cent of the total gross domestic product(GDP) of India.
Formulations (drugs) are the end products administeredto consumers i.e. the diseased population. Bulk drugs are the raw materials used to makeformulations which are ready-to-use forms of bulk drugs and include capsules, tablets,syrups and injections.
Bulk drugs or APIs are made of two or more chemicals or intermediaries. Bulk drugs areintended to have a direct effect on the diagnosis, cure, mitigation, treatment or prevention of adisease. Out of the total Indian pharmaceutical market in 2007-08, formulations account for around 70 per cent and bulk drugs for the balance 30 per cent in value terms. India produces 22 per cent of the world’s generic drugs (in terms of value) and is also one of the top five API producers (with a share of about 6.5 per cent).
Highly fragmented formulation industry:
The formulations industry is highly fragmented both in terms of the number of manufacturers aswell as the variety of products. There are about 300-400 units in the organized sector and around15,000 units in the unorganised (small scale) sector that form the core of the industry. Theindustry has a wide range of over 100,000 drugs spanning across various therapeutic categories.
Supremacy of the Indian companies vis-à-vis multinational players:
Indian companies dominate the formulations market as seven out of the top ten players areIndian. The formulation market in India is quite concentrated. The top five formulationscompanies, Cipla, Ranbaxy, GlaxoSmithKline, Cadila Healthcare, and Piramal Healthcare,accounted for about 22.3 per cent of the domestic formulation market in 2007-08. The market isconcentrated at the top with top 10 players controlling about 36% of the total formulaton sales.
Concentrated Manufacturing :
In geographical terms manufacturing operations are largely concentrated in Maharashtra, AndhraPradesh. However, many players have shifted their manufacturing bases to excise free zones like