http://en.wikipedia.org/wiki/Pharmaceutical_industry_in_India http://articles.economictimes.indiatimes.com/2012-06-03/news/32006555_1_price-increases-drugprice-control-order-ceiling-price http://www.moneycontrol.com/news/brokerage-recos-sector-report/india-will-remainbranded-drugmarket-for-many-more-yrs_727714.

html

Pharmaceutical industry in India

From Wikipedia, the free encyclopedia

This article may require cleanup to meet Wikipedia's quality standards. No cleanup reason has been specified. Please help improve this article if
you can. (July 2010)

This article may contain original research. Please improve it by verifying the
claims made and adding references. Statements consisting only of original research may be removed. (February 2012)
The Pharmaceutical industry in India is the world's third-largest in terms of volume and stands 14th in terms of value.[1] According to Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, the total turnover of India's pharmaceuticals industry between 2008 and September 2009 was US$21.04 billion.[2] While the domestic market was worth US$12.26 billion. Sale of all types of medicines in the country is expected to reach around US$19.22 billion by 2012. Exports of pharmaceuticals products from India increased from US$6.23 billion in 2006-07 to US$8.7 billion in 2008-09 a combined annual growth rate of 21.25%.[2] According to PricewaterhouseCoopers (PWC) in 2010, India joined among the league of top 10 global pharmaceuticals markets in terms of sales by 2020 with value reaching US$50 billion.[3] Some of the major pharmaceutical firms including Sun Pharmaceutical, Cadila Healthcare and Piramal Healthcare.[2] The government started to encourage the growth of drug manufacturing by Indian companies in the early 1960s, and with the Patents Act in 1970.[4] However, economic liberalization in 90s by the former Prime Minister P.V. Narasimha Rao and the then Finance Minister, Dr. Manmohan Singh enabled the industry to become what it is today. This patent act removed composition patentsfrom food and drugs, and though it kept process patents, these were shortened to a period of five to seven years. The lack of patent protection made the Indian market undesirable to the multinational companies that had dominated the market, and while they streamed out. Indian companies carved a niche in both the Indian and world markets with their expertise in reverse-engineering new processes for manufacturing drugs at low costs. Although some of the larger companies have taken baby steps towards drug innovation, the industry as a whole has been following this business model until the present.[5]

India's biopharmaceutical industry clocked a 17 percent growth with revenues of Rs.137 billion ($3 billion) in the 2009-10 financial year over the previous fiscal. Bio-pharma was the biggest contributor generating 60 percent of the industry's growth at Rs.8,829 crore, followed by bio-services at Rs.2,639 crore and bio-agri at Rs.1,936 crore.[6]
Contents
[hide]

1 Pharmaceutical Statistics

1.1 Pharmaceutical industry today

2 Biotechnology Statistics

o o o o o

2.1 Patents 2.2 Product development 2.3 Small and medium enterprises 2.4 Challenges 2.5 R&D

3 Corporate Catalyst 4 Biopharmaceuticals

o o o o o o

4.1 Relationship between pharmaceuticals and biotechnology 4.2 Comparison with the U.S. 4.3 Relationship with IT 4.4 Government support 4.5 Foreign investment 4.6 Challenges

5 See also 6 References 7 External links

[edit]Pharmaceutical

Statistics

Top 20 Publicly Listed Life Science companies in India, as of 2010[7]

Rank

Company

Revenue 2011(USD millions)

Revenue 2011(Rs crore)

Cipla

1348.51

Ranbaxy

1327.56

Dr. Reddy's Laboratories

1178

Lupin Ltd

929.84

Aurobindo Pharma

865.19

Dabur

700.3

Sun Pharmaceutical

673.99

Cadila Healthcare

629.45

Jubilant Lifesciences

561.03

10

Piramal Healthcare

480.26

11

GlaxoSmithKline Pharmaceuticals Ltd

475.8

12

Ipca Laboratories

390

13

Wockhardt

381.23

14

Torrent Pharmaceuticals

380.2

15

Sterling Bio

358.1

16

Biocon

340.38

17

Orchid Chemicals & Pharmaceuticals Limited

320.62

18

Alembic

270.62

19

Aventis Pharma

263.75

20

Glenmark Pharmaceuticals

260.14

[edit]Pharmaceutical

industry today

The number of purely Indian pharma companies is fairly low. Indian pharma industry is mainly operated as well as controlled by dominant foreign companies having subsidiaries in India due to availability of cheap labour in India at lowest cost. In 2002, over 20,000 registered drug manufacturers in India sold $9 billion worth of formulations and bulk drugs. 85% of these formulations were sold in India while over 60% of the bulk drugs were exported, mostly to the United States and Russia[25]. Most of the players in the market are small-tomedium enterprises; 250 of the largest companies control 70% of the Indian market.[8] Thanks to the 1970 Patent Act, multinationals represent only 35% of the market, down from 70% thirty years ago[20]. Most pharma companies operating in India, even the multinationals, employ Indians almost exclusively from the lowest ranks to high level management. Mirroring the social structure, firms are very hierarchical. Homegrown pharmaceuticals, like many other businesses in India, are often a mix of public and private enterprise. Although many of these companies are publicly owned, leadership passes from father to son and the founding family holds a majority share. In terms of the global market, India currently holds a modest 1-2% share, but it has been growing at approximately 10% per year[27]. India gained its foothold on the global scene with its innovatively engineered generic drugs and active pharmaceutical ingredients (API), and it is now seeking to become a major player in outsourced clinical research as well as contract manufacturing and research. There are 74 U.S. FDA-approved manufacturing facilities in India, more than in any other country outside the U.S, and in 2005, almost 20% of all Abbreviated New Drug Applications (ANDA) to the FDA are expected to be filed by Indian companies[21,27]. Growth in other fields notwithstanding, generics are still a large part of the picture. London research company Global Insight estimates that Indias share of the global generics market will have risen from 4% to 33% by 2007[27]. The Indian pharmaceutical industry has become the third largest producer in the world and is poised to grow into an industry of $ 20 billion in 2015 from the current turnover of $ 12 billion.[9]

[edit]Biotechnology

Statistics

Top 20 Biopharmaceutical & Biotechnology companies in India, as of 2011[10]

Rank

Company

Revenue 2011(Rs crore)

Revenue 2011(USD millions)

Biocon

1483

Serum Institute of India

1041

Panacea Biotec

928.41

Nuziveedu Seeds Private Limited

610

Reliance Life Sciences

490

Quintiles

476.25

Novo Nordisk

462

Rasi Seeds

371.88

Mahyco

364.9

10

Trans Asia

350

11

Ankur Seeds

325

12

Syngene International

318

13

Bharat Biotech International

298.34

14

Indian Immunologicals Limited

283

15

Krishidhan Seeds

276.13

16

Shantha Biotechnics

272

17

Novozymes

242

18

Bharat Serums

226

19

Jubilant Lifesciences

210

20

Eli Lilly and Company

204

[edit]Patents
As it expands its core business, the industry is being forced to adapt its business model to recent changes in the operating environment. The first and most significant change was the January 1, 2005 enactment of an amendment to Indias patent law that reinstated product patents for the first time since 1972. The legislation took effect on the deadline set by the WTOs Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, which mandated patent protection on both products and processes for a period of 20 years. Under this new law, India will be forced to recognize not only new patents but also any patents filed after January 1, 1995.[11] Indian companies achieved their status in the domestic market by breaking these product patents, and it is estimated that within the next few years, they will lose $650 million of the local generics market to patentholders[42]. In the domestic market, this new patent legislation has resulted in fairly clear segmentation. The multinationals narrowed their focus onto high-end patients who make up only 12% of the market, taking advantage of their newly bestowed patent protection. Meanwhile, Indian firms have chosen to take their existing product portfolios and target semi-urban and rural populations[45].

[edit]Product

development

Indian companies are also starting to adapt their product development processes to the new environment. For years, firms have made their ways into the global market by researching generic competitors to patented drugs and following up with litigation to challenge the patent. This approach remains untouched by the new patent regime and looks to increase in the future. However, those that can afford it have set their sights on an even higher goal: new molecule discovery. Although the initial investment is huge, companies are lured by the promise of hefty profit margins and thas a legitimate competitor in the global industry. Local firms have slowly been investing more money into their R&D programs or have formed alliances to tap into these opportunities.

[edit]Small

and medium enterprises

As promising as the future is for a whole, the outlook for small and medium enterprises (SME) is not as bright. The excise structure changed so that companies now have to pay a 16% tax on the maximum retail price (MRP) of their products, as opposed to on the ex-factory price. Consequently, larger companies are cutting back on outsourcing and what business is left is shifting to companies with facilities in the four tax-free states Himachal Pradesh, Jammu & Kashmir, Uttaranchal and Jharkhand.[12]Consequently a large number of pharmaceutical manufacturers shifted their plant to these states, as it became almost impossible to continue operating in non tax free zones. But in a matter of a couple of years the excise duty was revised on two occasions, first it was reduced to 8% and then to 4%. As a result the benefits of shifting to a tax free zone was negated. This resulted in, factories in the tax free zones, to start up third party manufacturing. Under this these factories produced goods under the brand names of other parties on job work basis. As SMEs wrestled with the tax structure, they were also scrambling to meet the July 1 deadline for compliance with the revised Schedule M Good Manufacturing Practices (GMP). While this should be beneficial to consumers and the industry at large, SMEs have been finding it difficult to find the funds to upgrade their manufacturing plants, resulting in the closure of many facilities. Others invested the money to bring their facilities to compliance, but these operations were located in non-tax-free states, making it difficult to compete in the wake of the new excise tax.

[edit]Challenges
All of these changes are ultimately good for the Indian pharmaceutical industry, which suffered in the past from inadequate regulation and large quantities of spurious drugs. They force the industry to reach a level necessary for global competitiveness. However, they have also exposed some of the inadequacies in the industry today. Its main weakness is an underdeveloped new molecule discovery program. Even after the increased investment, market leaders such as Ranbaxy and Dr. Reddys Laboratories spent only 5-10% of their revenues on R&D, lagging behind Western pharmaceuticals like Pfizer, whose research budget last year was greater than the combined revenues of the entire Indian pharmaceutical industry[13, 37]. This disparity is too great to be explained by cost differentials, and it comes when advances in genomics have made research equipment more expensive than ever. The drug discovery process is further hindered by a dearth of qualified molecular

biologists. Due to the disconnect between curriculum and industry, pharmas in India also lack the academic collaboration that is crucial to drug development in the West[13].

[edit]R&D
Both the Indian central and state governments have recognized R&D as an important driver in the growth of their pharma businesses and conferred tax deductions for expenses related to research and development. They have granted other concessions as well, such as reduced interest rates for export financing and a cut in the number of drugs under price control. Government support is not the only thing in Indian pharmas favor, though; companies also have access to a highly developed IT industry that can partner with them in new molecule discovery in r&d.

[edit]Corporate

Catalyst

Multinational Pharmaceutical Companies ranked as per active presence of sales, marketing and business in India [12] 1. 2. 3. 4. 5. 6. 7. 8. 9. Pfizer GlaxoSmithKline Sanofi Aventis Merck Johnson and Johnson Amgen Novartis Roche Bristol-Myers Squibb

10. Wyeth 11. Eli Lilly 12. Schering-Plough 13. Abbott 14. Takeda 15. Boehringer Ingelheim 16. Astellas

[edit]Biopharmaceuticals [edit]Relationship

between pharmaceuticals and biotechnology

Unlike in other countries, the difference between biotechnology and pharmaceuticals remains fairly defined in India. Bio-tech there still plays the role of pharmas little sister, but many outsiders have high expectations for the future. India accounted for 2% of the $41 billion global biotech market and in 2003 was ranked 3rd in the Asia-Pacific region and 11th in the world in number of biotechs.[45] In 2004-5, the Indian biotech industry saw its revenues grow 37% to $1.1 billion.[2,9] The Indian biotech market is dominated by biopharmaceuticals; 75% of 2004-5 revenues came from biopharmaceuticals, which saw 30% growth last year. Of the revenues from biopharmaceuticals, vaccines led the way, comprising 47% of sales[46]. Biologics and large-molecule drugs tend to be more expensive than small-molecule drugs, and India hopes to sweep the market in biogenerics and contract manufacturing as drugs go off patent and Indian companies upgrade their manufacturing capabilities. Most companies in the biotech sector are extremely small, with only two firms breaking 100 million dollars in revenues. At last count there were 265 firms registered in India, over 75% of which were incorporated in the last five years.[2,47] The newness of the companies explains the industrys high consolidation in both physical and financial terms. Almost 50% of all biotechs are in or around Bangalore, and the toop ten companies capture 47% of the market. The top five companies were homegrown; Indian firms account for 62% of the biopharma sector and 52% of the industry as a whole.[4,46] The Association of Biotechnology-Led Enterprises (ABLE) is aiming to grow the industry to $5 billion in revenues generated by 1 million employees by 2009, and data from the Confederation of Indian Industry (CII) seem to suggest that it is possible.[7,47]

[edit]Comparison

with the U.S.

The Indian biotech sector parallels that of the U.S. in many ways. Both are filled with small start-ups while the majority of the market is controlled by a few powerful companies. Both are dependent upon government grants and venture capitalists for funding because neither will be commercially viable for years. Pharmaceutical companies in both countries have recognized the potential effect that biotechnology could have on their pipelines and have responded by either investing in existing start-ups or venturing into the field themselves.[36] In both India and the U.S., as well as in much of the globe, biotech is seen as a hot field with a lot of growth potential.

[edit]Relationship

with IT

Many analysts have observed that the hype around the biotech sector mirrors that of the IT sector. Biotech colleges have been popping up around the country eager to service the pools of students that want to take advantage of a growing industry.[7] The International Finance Commission, the private investment arm of the World Bank, called India the centerpiece of IFCs global biotech strategy. Of the $110 million invested in 14 biotech projects investment globally, the IFC has given $43 million to 4 projects in India.[29] According to Dr. Manju Sharma, former director of the Department of Biotechnology, the biotech industry could become the single largest sector for employment of skilled human resource in the years to come.[5] British Prime Minister Tony Blair was similarly impressed, citing the success of Indias biotech industry as the reason for his own

countrys own biotech opportunities.[22] Malaysia is also looking to India as an example for growing its own biotech industry.[41]

[edit]Government

support

The Indian government has been very supportive. It established the Department of Biotechnology in 1986 under the Ministry of Science and Technology.[47] Since then, there have been a number of dispensations offered by both the central government and various states to encourage the growth of the industry. Indias science minister launched a program that provides tax incentives and grants for biotech start-ups and firms seeking to expand and establishes the Biotechnology Parks Society of India to support ten biotech parks by 2010. Previously limited to rodents, animal testing was expanded to include large animals as part of the ministers initiative.[10] States have started to vie with one another for biotech business, and they are offering such goodies as exemption from VAT and other fees, financial assistance with patents and subsidies on everything ranging from investment to land to utilities[19].

[edit]Foreign

investment

The government has also taken steps to encourage foreign investment in its biotech sector. An initiative passed earlier this year allowed 100% foreign direct investment without compulsorylicensing from the government. In April, a delegation headed by the Kapil Sibal, the minister of science and technology and ocean development, visited five cities in the U.S. to encourage investment in India, with special emphasis on biotech. Just two months later, Sibal returned to the U.S. to unveil Indias biotech growth strategy at the BIO2005 conference in Philadelphia. 100%of fdi is allowed in India.

[edit]Challenges
The biotech sector faces some major challenges in its quest for growth. Chief among them is a lack of funding, particularly for firms that are just starting out. The most likely sources of funds are government grants and venture capital, which is a relatively young industry in India. Government grants are difficult to secure, and due to the expensive and uncertain nature of biotech research, venture capitalists are reluctant to invest in firms that have not yet developed a commercially viable product.[26] As previously mentioned, India hopes to solve its funding problem by attracting overseas investors and partners. Before these potential saviors will invest significant sums in the industry, however, there needs to be better scientific and financial accountability. India is slowly working towards these goals, but it will be a while before they are up to the standards of Western investors. Indias biotech firms share another problem with their pharmaceutical cousins: a lack of qualified employees. Biotech has the additional disadvantage of competing against IT for ambitious, science-minded students but not being able to guarantee the same compensation. An aspiring researcher in India needs 710 years of education covering a range of specialties in order to qualify to work in biotech. Even if a student does choose to

go on the biotech path, the ineffectual curriculum at many universities makes it doubtful as to whether he will be qualified to work in the field once finished. One estimate shows that 10% of upper-echelon biotech recruits have come from foreign countries. While this is not a problem, per se, it drives up cost in a country whose competitive advantage is based on cheap, high-quality labor. Far from ending with scientists, there is also a shortage of people with a knowledge of biotechnology in related fields: doctors, lawyers, programmers, marketing personnel and others.[7,15,17] While little has been done about the latter half of the employee crunch, the government has addressed the problem of educated but unqualified candidates in its Draft National Biotech Development Strategy. This plan included a proposal to create a National Task Force that would work with the biotech industry to revise the curriculum for undergraduate and graduate study in life sciences and biotechnology. The governments strategy also stated intentions to increase the number of PhD Fellowships awarded by the Department of Biotechnology to 200 per year. These human resources will be further leveraged with a Bio-Edu-Grid that will knit together the resources of the academic and scientific industrial communities, much as they are in the U.S.[5]

[edit]See

also

Pharmaceutical marketing Pharmaceutical industry National pharmaceuticals policy Opium and Alkaloid Works Contract Research Organization Genome Valley

[edit]References

1.

^ "Pharma to topple IT as big paymaster". The Economic Times. 8 June 2010. Retrieved 8 Jun 2010.

2.

a b c

Its India Calling for global pharmaceutical companies, says a

PricewaterhouseCoopers report 3. 4. 5. 6. ^ A BRIEF REPORT PHARMACEUTICAL INDUSTRY IN INDIA ^ http://www.ircc.iitb.ac.in/IPcourse/patent.html ^ academic research ^ "Indian biotech industry grew 17 percent in 2009-10: Survey". Economic Times. 21 June 2010. Retrieved 21 Jun 2010. 7. ^ "Indian Life Sciences Sector statistics in 2010 as per Biospectrum survey". Biospectrum. Retrieved December, 2011.

8. 9.

^ http://www.pharmaceutical-drug-manufacturers.com/ ^ "The Indian pharmaceutical industry". Engineeringfromindia.com.

10. ^ "Indian Biotech Sector Surges to US $4 bn in 2011 as per Biospectrum ABLE survey". Biospectrum. Retrieved November, 2011. 11. ^ "Understanding the WTO - Intellectual property: protection and enforcement". WTO. Retrieved 2010-07-27. 12. ^ http://www.cci.in/pdf/surveys_reports/indias_pharmaceutical_industry.pd f

[edit]External

links
1. "50% of country's biotech firms based in Karnataka." The Economic Times 23 April 2005 2. Biotech sector to be single largest job churner: expert. Global Newswire Asia Africa Intelligence Wire 21 February 2005. 3. Dyer, Jeff and Khozem Merchant. An experiment in globalization: how India hopes to reshape the world drugs industry. Financial Times 18 August 2004: 15. 4. Ghatak, Lopamudra. Fat pay, yuppie lifestyle - join biotech, not IT." Asia Africa Intelligence Wire 15 March 2005. 5. Government to allow 100% FDI in Biotech (Biotech will be exempted from the requirement of compulsory licensing) India Business Insight - Global Newswire Asia Africa Intelligence Wire 31 May 2005. 6. Hector, Darlington Jose. "NRIs, expats fuel biotech boom in India." The Economic Times 20 April 2005. 7. Hoovers Company Records In-Depth Records: Cipla. 26 July 2005. Lexis-Nexis Academic Universe. 28 July 2005. 8. "Incentives for bio-tech units." Asia Africa Intelligence Wire 2 July 2005. 9. India industry: Desperate for quality healthcare services. Economist Intelligence Unit: Country ViewsWire. 24 June 2005. 10. Indiainfoonline.com. Indian Pharmaceutical Sector: Big Pharma Opportunity. By Atul Rastogi and Abhimanyu Verma. 28 August 2003.

11. Indias biotech strides prompts UK to hike funds in sector. Nationwide International News (The Press Trust of India) 7 March 2005. 12. Intellectual property: protection and enforcement. WTO: Understanding the WTO. World Trade Organization. 1 August 2005 13. Jarvis, Lisa. "NPIL sets ambitious growth targets." Chemical Market Reporter 267:16 (18 April 2005): 32-33. 14. Joshi, Hemant N. Analysis of the Indian pharmaceutical industry: with emphasis on opportunities in 2005. Pharmaceutical Technology 27:1 (2003): 74-84. 15. Kathuria, Vinish & Vandita Tewari. "Venture capitalists and biotech sector: Discovering the potential." Asia Africa Intelligence Wire 29 December 2004. 16. Kripalani, Manjeet. "Pharma Karma; Tougher patent protection laws are spurring rapid growth in new drug research across India." Business Week 39:29 (18 April 2005): 20. 17. Krishnan, Unni. India enters a new era. Manufacturing Chemist 76:2 (2005): 27-29. 18. Ludwina, Joseph. IFC Committed to Support Indian Biotech Sector. International Finance Corporation: Press Releases South Asia. 20 June 2005. 19. Malhotra, Prabodh & Lofgren, Hans. India's pharmaceutical industry: hype or high tech take-off? Australian Health Review 28:2 (2004): 182-193. 20. Mazumdar, Sudip. First Lady; In Asia: Indias top biotech CEO begs to differ with those who say Singapore leads the field. Newsweek International 11 October 2004: 39. 21. Na, K. Oanh. "India's sales pitch to Silicon Valley." San Jose Mercury News 12 April 2005. 22. NPIL buys Rhodia business for 7m [pounds sterling]. ACN: Asian Chemical News 11:475 (17 January 2005). 23. Prasad, Girish Chandra. "Outlook improves for India's biotechnology sector." The Economic Times 31 December 2004. 24. R and D spend of top 5 Indian pharmaceutical companies touches Rs1,000 crore. Asia Africa Intelligence Wire 17 February 2005.

25. Ranbaxy Laboratories Ltd. Annual Report. Gurgaon, India: Ranbaxy Laboratories Ltd. (2004). 26. Singh, Karamjit. Net value: Tapping biotech know-how. The Edge Malaysia 16 May 2005. 27. Singh, Seema. India kicks the habit; local drugmakers have built a thriving industry on pilfering patents. The party ends in January. Newsweek International (22 November. 2004): 56. 28. Sridharan, R. et al. Indian pharmas mid-life crisis. Business Today 27 February. 2005: 50. 29. Tanzer, Andrew. Pill factory to the world. Forbes (internet) 10 December 2001. 29 July 2005. 30. Unnikrishnan, C H. Patents carve up drug market. Business Standard 29 July 2005. 31. Vaccines push BioPharma sales. BioSpectrum 3:6 (June 2005): 7071. 32. Wilkie, Dana. India wants to be your biotech source. The Scientist 25 October 2004: 51-53. 33. Haley, George T. and Haley, Usha C. V. The effects of patent law changes on innovation: The case of India's pharmaceutical industry", Technological Forecasting and Social Change, in press, 2011.
[show]

Pharmaceutical industry by country

View page ratings

Rate this page

What's this? Trustworthy Objective Complete Well-written

I am highly knowledgeable about this topic (optional) Submit ratings Categories:

Create account Log in

Health in India Pharmacy in India Pharmaceutical industry of India

Article Talk Read Edit View history

Main page Contents Featured content Current events Random article Donate to Wikipedia

Interaction Help About Wikipedia Community portal Recent changes Contact Wikipedia

Toolbox Print/export Languages Catal

Deutsch Franais

This page was last modified on 16 July 2012 at 12:56. Text is available under the Creative Commons Attribution-ShareAlike License; additional terms may apply. See Terms of use for details. Wikipedia is a registered trademark of the Wikimedia Foundation, Inc., a non-profit organization.

Contact us Privacy policy

About Wikipedia Disclaimers Mobile view

http://www.business-standard.com/india/news/indian-pharma-market-to-grow-at-15-cagr-byfy14/166615/on

Indian pharma market to grow at 15% CAGR by FY14

Factors like new product launches and favourable pricing environment will contribute to the growth
Press Trust of India / Mumbai Jun 03, 2012, 14:21 IST

The growth rate for the domestic Indian pharmaceutical market is set to rise over medium-term, according to a research report. The revenue CAGR (compund annual growth rate) over the past three years had been 12.4%, but it is expected to be up at 15.3% from FY12 to FY14, Barclays Capital Equity Research said here in its report -- India Healthcare & Pharmaceuticals.

Also Read
Related Stories News

Now

- Millionaire households in India

swell amid slowdown

- India Inc's sales growth rate at

10-qtr low

- 'State's fish production growth

among highest'

- KIT: Lingerie market in India - Pirojsha Godrej's trial by fire - Book your table The growth is expected due to factors like new product launches, focus on improving effectiveness of field force additions and favourable pricing environment, it said. Most of the pharma companies are expecting to continue with product launches in India over the next 2-3 years. The pricing environment in the Indian market has been a favourable one, and past growth has in part been driven by price increases of 2-4% annually. The National Pharmaceutical Pricing Authority (NPPA), which monitors and controls pricing in the Indian market for essential medicines, through the Drug Price Control Order (DPCO), could pose a potential headwind to industry growth, Barclay's Balaji Prasad said. The DPCO currently controls pricing for around 25-30% of the pharma market. The current revised proposal, called the Draft National Pharmaceutical Pricing Policy (NPPP) 2011, seeks to use the average price of the top three brands as a ceiling price, and this is bringing significant uncertainty to the pricing environment. The current pricing mechanism is cost-based. However, uncertainty prevails about the final form of the policy, the extent of the medicines being price-controlled and the potential impact it could have on revenues, it said. Indian domestic pharma market growth has shown a strong recovery after a weak 2011 in the past two quarters, posting high-teens q/q revenue growth. The latest March and April revenue growth data shows growth rates in excess of 20% for the overall domestic market.

Indian pharma's growth story has been a largely export-oriented one to date, with the critical market of US generics driving growth since 2005. Since 2005, Indian pharma companies have capitalised on the generics expiries and demand for lower-cost drugs, and have grown revenues at an impressive CAGR of 20.4% over FY2005-12. While previously there were no Indian companies in the top-20 generics firms in the US, currently 4-5 of Indian firms are present in this list, according to 2011 prescription trends (IMS data). While the net revenue CAGR from Indian coverage group has been 20% over FY2005-12, the US revenue CAGR for the group has been 24.5%, accounting for a large portion of the growth. After the "big bang" expansion of Indian pharma into the global markets that started in 2003-04 turned challenging to handle, companies toned down their expansion plans. Instead, most companies focused on the profitable and easier US market. "However, we believe, the time is right for Indian firms to focus on the other markets with greater intensity, especially since growth from the US market may begin to taper from 2015," Prasad said.