1he markeL research reporL "Ind|an harma Sector Ana|ys|s" by 8nCCS ls deLalled sLudy of Lhe lndlan

pharmaceuLlcal markeL lL does an exhausLlve lnvesLlgaLlon on Lhe sLrucLure of Lhe domesLlc

pharmaceuLlcal markeL and glves a Lhorough analysls of Lhe drlvlng and resLralnlng forces operaLlng
agalnsL lL

lndla has one of Lhe fasLesL growlng pharmaceuLlcal markeLs ln Lhe world ln 200607 Lhls markeL was
valued aL over uS$ 7 8llllon urlven by a huge paLlenL base lncreaslng lncomes lmprovlng healLhcare
lnfrasLrucLure and sLrong peneLraLlon of healLh lnsurance Lhe pharmaceuLlcal markeL ls expecLed Lo
grow more Lhan double lLs slze ln Lhe nexL flve years urugs for acuLe dlseases presenLly domlnaLe Lhls
markeL however Lhe lncreaslng peneLraLlon of llfesLylerelaLed dlseases ls expecLed Lo fuel Lhe growLh
of drugs LargeLlng chronlc dlseases

1he lndlan pharmaceuLlcal markeL aL presenL ls hlghly fragmenLed wlLh Lhe Lop Lhree companles havlng
a markeL share of around 3 each Powever lnLroducLlon of Lhe producL paLenL reglme ls llkely Lo resulL
ln heavy consolldaLlon ln fuLure

key I|nd|ngs

1he domesLlc pharmaceuLlcal markeL ln lndla has grown aL a CAC8 of nearly 12 ln Lhe lasL flve
years
AL presenL drugs for mass Lheraples domlnaLe however drlven by an lncreaslng prevalence of
llfesLyleassoclaLed dlseases drugs for speclalLy Lheraples are expecLed Lo remaln buoyanL ln fuLure
Around 67 Mllllon lndlans are expecLed Lo be above 67 years of age by 2011 1hls age group spends
around 3 Lo 4 Llmes more on drugs Lhan Lhose ln younger age groups Lhus fuelllng Lhe markeL growLh
aLenLed drugs whlch had no share ln Lhe pharmaceuLlcal markeL are expecLed Lo have a
10 markeL share ln 2010
Around 64 lndlans are noL covered under by healLh lnsurance and pay expenses for pharmaceuLlcals
ouL of pockeL
urlven by facLors such as rlslng rural lncomes and a sLrong dlsLrlbuLlon neLwork lndla's rural
pharmaceuLlcal markeL ls experlenclng a sLrong growLh
1he producL paLenL reglme wlll encourage Lhe lndlan companles Lo lnvesL more ln
8esearch and uevelopmenL

key Issues Iacts Ana|yzed

LvaluaLlon of pasL currenL and fuLure markeL Lrends
LvaluaLlon of Lhe markeL by segmenL
ulscusslon abouL Lhe ma[or drlvers of Lhe pharmaceuLlcal markeL
Analysls of Lhe opporLunlLles creaLed by Lhe markeL
8evlew on Lhe governmenL regulaLlons on Lhe markeL
Analysls of Lhe ma[or challenges faced by Lhe markeL
CompeLlLlve landscape of Lhe markeL

key |ayers Ana|yzed

1hls secLlon provldes Lhe overvlew key facLs and flnanclal lnformaLlon of promlnenL players ln Lhe
lndlan pharmaceuLlcal markeL Llke 8anbaxy LaboraLorles LlmlLed Clpla LlmlLed ClaxoSmlLhkllne
harmaceuLlcals LlmlLed nlcholas lramal lndla LlmlLed and Zydus Cadlla

kesearch Methodo|ogy Used

Informat|on Sources
lnformaLlon has been sourced from books newspapers Lrade [ournals and whlLe papers lndusLry
porLals governmenL agencles Lrade assoclaLlons monlLorlng lndusLry news and developmenLs and
Lhrough access Lo more Lhan 3000 pald daLabases

Ana|ys|s Methods
1he analysls meLhods lnclude raLlo analysls hlsLorlcal Lrend analysls llnear regresslon analysls uslng
sofLware Lools [udgmenLal forecasLlng and cause and effecL analysls

The Pharmaceutical sector in India is highly Iragmented with more than 10,000 listed and
unlisted companies. India is one oI the Iastest-growing pharmaceutical markets in the world, and
its market size has nearly doubled since 2005. The total turnover oI the Indian Pharma sector is
estimated to be close to US$ 21 bn oI which around US$ 9 bn comes Irom exports while the rest
comes Irom domestic sales. US is the topmost destination Ior Indian Pharma exports Iollowed by
Russia, Germany and Austria. A region-wise segregation oI Indian exports has been shown
below.
The domestic pharma market is currently US $ 10 bn in size and is expected to reach ~US$ 20
billion by 2015 and establish its presence amongst the world`s leading 10 markets Currently,
India is the 4th largest market in the world in terms oI volume and 1th in terms oI value.
Based on the diIIerent therapeutic areas, the Pharmaceutical market can be broadly divided into 2
categories Acute and Chronic.
1. cute Segment It includes diseases that usually last Ior a short duration and includes
therapies like anti-inIectives, pain-killers or analgesics etc.
2. hronic segment It includes diseases that are recurring in nature and include
liIestyle diseases. This includes therapies like anti-diabetics, cardiovascular (CVS),
cancer etc.
In most cases, ailments in the chronic segment ensure regular consumption oI medicines Ior the
liIetime oI the patient. Thus, chronic segment is expected to grow much Iaster than the acute
segment going Iorward. urrently, the Indian Pharmaceutical Market is more than 60
acute with the rest being chronic The share oI chronic is expected to increase going Iorward.
Anti-inIectives is the largest contributor (17) to the domestic sales Iollowed by Cardiovascular
and Gastrointestinal. The highest growth has been shown by Anti-diabetics Iollowed by
Neurology (CNS) and Cardiovascular.
So, how does the Pharma sector work? Here is the analysis
The working oI the Pharma sector has been explained pictorially below:

Inputs:
The major inputs required Ior the Pharma sector are basic chemicals, labours and Research and
Development (R&D). The sector is a research-driven industry with the Iocus being on
discovering and launching new and innovative drugs. Companies spend millions oI
dollars/rupees on research and get the competitive advantage of patents iI they are successIul
in launching drugs. In India, R&D costs as a oI revenues are around 5-8 on an average. This
is very low compared to the companies in developed countries like US, UK etc. where the
average R&D spend is close to 17-20 oI the revenues.
Products/Services:
The Pharmaceutical products/services can be broadly divided into 3 segments
O ctive Pharmaceutical Ingredients (PIs) These are substances which are
responsible Ior medicinal activity. For e.g. Paracetamol is an API which is present in
drugs like Crocin, Anacin etc. and is responsible Ior relieving the pain. APIs (also called
as bulk drugs) are the raw material Ior the Iinal drug that we consume. Well known API
manuIacturers include Orchid hemicals, Elder Pharma etc
O ormulations While APIs are responsible Ior the medicinal eIIect oI a drug, we cannot
directly consume an API due to diIIerent reasons like stability, taste, odour etc. Hence
APIs are combined with certain substances called excipients to Iorm the Iinal drugs or
Iormulations which are suitable Ior human consumption. Continuing the example given
above, Crocin is a Iormulation. Companies like Sun Pharma, ipla, Dr Reddy`s etc.
are examples oI companies manuIacturing Iormulations.
O ontract Research and Manufacturing Services (RMS) Just like IT, major
Pharma companies outsource their manuIacturing work to low-cost centres like India to
reduce cost while Iocusing on drug-discovery and marketing themselves. Further, they
also outsource part oI their research activities to some oI the Indian pharma companies.
Over the last Iew years CRAMS has emerged as a major Iocus area Ior many oI the
Indian Pharma companies. Examples include companies like Divi`s Labs, 1ubilant
Life Sciences etc
As mentioned above, companies Irom developed countries spend a large amount on R&D and
are responsible Ior discovering and launching a number oI innovative drugs/Iormulations.
Companies like PIizer, Merck, Novartis, Roche etc are some oI the biggest innovator
companies` globally. Compared to this, Indian companies have established their presence in the
generics segment.
So, what are generics? Generics are low-cost versions oI branded drugs and have the same
medicinal eIIect as the branded or original drug. Once the patent period Ior a drug expires,
companies can come in with generic versions oI a drug which provides aIIordable medicines Ior
consumers. Indian companies have developed an expertise in reverse-engineering and
developing generics.
Users:
Pharmaceutical products reach the end users through diIIerent mechanisms. There have emerged
2 diIIerent types oI markets globally:
1. randed Markets: Countries like India, Brazil, Russia, Mexico, etc. are branded in
nature. Consider the mechanism in India. In India, our doctor prescribes us the medicine
Ior a particular disease. The prescription is usually a brand name oI a drug Ior that
disease. We also tend to purchase the exact brand prescribed by the doctor even iI the
chemist oIIers a diIIerent/generic version available at a low cost.
2. Unbranded Markets: Developed countries like US, UK and some European countries
are known as unbranded markets. Here, instead oI prescribing the brand, the doctors
prescribe the molecule or API (with the dosage) Ior a particular disease. In these
countries, a large percentage oI the population (~95) has medical insurance. Hence, the
insurance companies decide which generic drugs will be covered by the insurance;
understandably these will be the ones which are sold at the lowest costs. When
consumers approach the chemist, they are given the drug as per the prescription and their
insurer.
What does the Past say? Here`s the review of the Pharma
Sector
As seen in the above table, Dr Reddy`s Laboratories Ltd. has clocked the highest Net Sales
R of ~31 over the last 6 years. Its Net ProIit has also grown strongly with a 5 year
R of close to 84 However, its Net ProIit margin is quite low at 7. In terms oI volume,
Cipla is the market leader with a 5.3 market share in India.
Sun Pharma enjoys the highest Net Profit margins with a 6 year average of 365 This is
because oI the strong brand it has created and its strong presence especially in the CNS therapy
area.
Porter`s 5 forces nalysis
What are the growth drivers of the Pharma sector? Here`s
the analysis.
1) Increasing incomes & healthcare spends to spur domestic growth
With increasing aIIordability, shiIting disease patterns and healthcare reIorms, the total
consumer spending on healthcare products and services in India has grown at a CAGR oI more
than 14 since 2000. According to a research report by the Mckinsey Global Institute, spending
on healthcare in India will witness the highest growth rate among all spending categories over
the next two decades. Healthcare spend is expected to grow to 13 oI average household income
by 2025 Irom 7 in 2005. This will be driven largely by increase in per capita disposable
income which is expected to increase to US$765 in 2015 Irom US$463 in 2005.
The domestic pharma market will thus continue to grow rapidly (~15 sales CAGR over 2009-
13) buoyed Iurther by stronger penetration oI semi-urban/rural areas and rising share oI chronic
therapies. McKinsey estimates the domestic pharmaceutical market will more than double to
achieve sales worth US$ 20bn by 2015.
)Significant patent expiries in developed markets present good growth opportunities for
Indian generic companies:
A slew oI patents will expire in the US and EU over 2011-15, including top-selling brands
Lipitor, Nexium, Zyprexa and Plavix. Over this period, products with estimated annual sales oI
~US$ 80 bn in the US alone will lose patent exclusivity, and this will translate into an
estimated incremental generic sales opportunity of US$ 18 billion (~60 of current US
generic drug market); a similar incremental opportunity in developed European markets exists
as well. A big share oI this revenue will go to companies that secure high-margin Iirst-to-Iile
(FTF) sales which oIIer marketing exclusivity Ior 180 days. It is estimated that Indian
companies can take about 0 of this S18 bn new market
3) Emerging markets to become the next destinations for pharma companies
'Pharmerging markets, including the BRIC countries, South AIrica, Mexico, Turkey, Poland,
Indonesia and Romania, are growing Iaster than developed markets. According to IMS, a well-
known industry research Iirm, 'Pharmerging markets will increase their share in global pharma
Irom 16 in 2009 to around 25 in 2014-15. Indian generics are replicating their domestic
success in markets like Russia, Brazil and Mexico which like India are branded in nature.
4) M& a potential catalyst
With higher growth prospects in emerging markets, many multinational branded drug companies
are trying to expand their presence in generic pharmaceuticals. This has increased their interest
in generic companies with an established product portIolio and sales/distribution network in
emerging countries including India. The acquisitions oI Ranbaxy (by Daiichi Sankyo) and
Piramal (by Abbott) are a case in point This is expected to continue
5) iosimilars - potentially a big long-term driver
Biosimilars are reproductions oI biotechnologically manuIactured biopharmaceuticals that
partially mimic proteins naturally present in the body. Biosimilars could potentially become an
important long-term growth driver Ior the generic pharmaceuticals industry, with the global
annual sales opportunity rising to as much as US$ 10bn by 2015 (once patents Ior several
biologics expire). Indian generic companies still trail overseas rivals in biosimilars. Success will
depend on building manuIacturing capacity and the emergence oI Iavourable regulatory reIorms
in the US and EU.
So, is there anything to be concerned about?
1) Product pipeline drying up
Innovative drugs by Big Pharma companies which is the liIeblood oI generic drug makers, has
been on the decline Ior the past several years. Some branded drug companies are also cutting
R&D budgets. This trend may pressure growth in generics (over time) as competition Ior a
dwindling number oI new molecules intensiIies. Besides, Big Pharma is Iocusing more on
biologics and diIIicult-to-make niche products, which in turn is compelling generic drug makers
to also Iocus in that direction.
) Patent expiries could cannibalise other generic molecules in India
There is a risk that some oI the growth Irom new generic drugs will come at the expense oI lower
sales Irom existing generic products. As some oI the largest brands in the industry come oII
patent in coming years, their generic uptake will be at the expense oI other generic molecules in
similar therapeutic categories.
3) ig Pharma moving into generics
Recent deals in emerging markets and an increasing number oI tie-ups with generic Iirms
indicate that branded pharma companies are moving into the generic space. Companies like
PIizer, GSK, SanoIi, AstraZeneca and Abbott have already made moves in this direction and this
could result in increased pricing pressure.
4) D delays, compliance issues
The US Food and Drug Administration (FDA) approval timelines have lengthened Irom an
average oI 16 months during 2006-07 to 26 months in 2009-10. This is negative Ior the whole
industry and can have painIul consequences Ior individual companies. In addition, ongoing FDA
issues related to current good manuIacturing practice (cGMP) compliance have been a concern
Ior companies like Ranbaxy and Sun Pharma (via US subsidiary Caraco).
5) National Pharmaceuticals Policy 006
Currently the Government controls prices oI 74 bulk drugs which are mainly liIe savers under
cost- based price control and eIIective monitoring oI the National List oI Essential Medicines
(NLEM). But the new National Pharmaceuticals Policy 2006, which is still in draIt stage,
proposes to increase the price control to 354 drugs. This regressive policy threatens the growth oI
the industry. With 100 FDI and a proposed policy like NPP creates conIusions about the Iuture
oI the industry.
What is the future Outlook for the Pharma sector in India?
The Pharma sector in India is expected to show robust growth in the next Iew years driven by
growth in all 3 segments viz.
1. Domestic Formulations which are expected to grow at ~15
2. Exports which will see huge growth due to the patent cliII in 2012 and emerging markets
like Brazil, Mexico, South AIrica driving growth
3. CRAMS which is expected to grow at a rate oI around 13 globally.
Indian companies have the largest number oI US FDA (Food and Drug Administration)
approved Iacilities outside US. They have made regulatory Iilings Ior around 70 oI the drugs
that are going oII patent in 2012. Besides many companies have sizable US exposure in their
overall revenue. The big pharma companies also seem to have acknowledged capability oI Indian
companies with many tie-ups, acquisitions and product speciIic deals happening over the last 2
years.
The companies that will benefit the most are those which have a robust pipeline of products
in the regulated markets, a favourable geographic mix (strong presence in India and US
with some presence in emerging markets) and potential in biosimilars/niche products
These companies will be best positioned for sustainable growth
Thus, considering all these factors, we can say that in the long term the Indian Pharma
sector is poised for robust growth and is shifting from a defensive to a growth sector
It is very important that while investing in a company, an investor selects an industry, where the
long-term Iuture prospects are bright. We have seen that in the long run the Indian Pharma sector
is expected to have good growth.
lso, it is equally important that the company has an excellent financial track record( ie
reen 10 Year X-Ray) and its long-term future prospects are reen (Very ood)
*The 10 YEAR X-RAY Iacilitates analysis oI the Iinancial perIormance oI the company
considering the Iive most important parameters. A 10 Year period will normally encompass an
entire business cycle. Analysing the perIormance over this time Irame is essential to understand
how a company has Iared during the good as well as bad times. The Iive most important
parameters that one needs to look at are Net Sales Growth Rate, EPS Growth Rate, Book Value
Per Share (BVPS) Growth Rate, Return on Invested Capital (ROIC) and Debt to Net ProIit
Ratio.
iven below is the business model and the MoneyWorks4me assessment for a few Pharma
companies: At MoneyWorks4me we have assigned colour codes to the 10 YEAR X-RAY and
Future Prospects oI the companies, as Green (Very Good), Orange (Somewhat Good`) and Red
(Not Good).
While investing, one must always invest in the stocks oI a company that operates in an industry
with bright long-term prospects. Further, the company`s 10 YEAR X-RAY and Iuture prospects
should also be Green. The table given above gives you a list oI Iew companies Irom the Pharma
Industry that you could consider investing in. But, you need to invest in these stocks at the right
price (i.e. when the market oIIers an attractive discount). To Iind out the right price to invest in
these companies, become a member oI MoneyWorks4me.com.
Disclaimer. This publication has been prepared solely for information purpose and does not
constitute a solicitation to any person to buy or sell a security. It does not constitute a personal
recommendation or take into account the particular investment obfectives, financial situations or
needs of an individual client or a corporate/s or any entity/ies. The person should use his/her
own fudgment while taking investment decisions
. SWUT Analysis of Pbarma Sector
SLrengLhs
O CosL effecLlve Lechnology
O SLrong and welldeveloped manufacLurlng base
O Cllnlcal research and Lrlals
O knowledge based low cosL manpower ln sclence Lechnology
O roflclency ln paLhbreaklng research
O PlghquallLy formulaLlons and drugs
O Plgh sLandards of purlLy
O nonlnfrlnglng processes of AcLlve harmaceuLlcal lngredlenLs (Als)
O uLure growLh drlver
O Jorldclass process developmenL labs
O LxcellenL cllnlcal Lrlal cenLers
O Chemlcal and process developmenL compeLencles
Jeaknesses
O Low lndlan share ln world pharmaceuLlcal markeL (abouL 2)
O Lack of sLraLeglc plannlng
O ragmenLed capaclLles
O Low 8u lnvesLmenLs
O Absence of assoclaLlon beLween lnsLlLuLes and lndusLry
O Low healLhcare expendlLure
O roducLlon of dupllcaLe drugs

CpporLunlLles
O lncredlble exporL poLenLlal
O lncreaslng healLh consclousness
O new lnnovaLlve LherapeuLlc producLs
O CloballzaLlon
O urug dellvery sysLem managemenL
O lncreased lncomes
O roducLlon of generlc drugs
O ConLracL manufacLurlng
O Cllnlcal Lrlals research
O urug molecules

1hreaLs
O Small number of dlscoverles
O CompeLlLlon from MnCs
O 1ransformaLlon of process paLenL Lo producL paLenL (18lS)
O CuLdaLed Sales and markeLlng meLhods
O nonLarlff barrlers lmposed by developed counLrles
4. ndian pharma industry has always been a leading industrial sector of the country,
with a paralleled dominance of both domestic and foreign pharma companies. As a
result of the vast potential held by the domestic industry, it was estimated to have
generated revenue worth NR 655.5 Billion (US$ 13.1 Billion) in FY 2011. Growth of the
industry can be attributed to prominent factors, such as growing middle class
population, rapid urbanization, increase in lifestyle-related diseases, and increasing
issuance of health insurance. Besides, the product patent regime has provided ample
support to the industry to sustain its growth pace, despite the global economic
downturn. Further, generic is emerging as one of the leading segments to be benefited
by many drugs going off patent in due course of time.
According to our new research report "Indian Pharma Sector Forecast 2014, ndian
pharmaceutical industry is projected to show double-digit growth in near future owing to
a rise in pharmaceutical outsourcing and rising investments by multinational companies.
A large percentage of pharma products produced in ndia are exported, which has led
the leading players to expand their reach into the Western nations. Due to the
investments in R&D and the quest for more and more ANDA filings, the clinical trials
market is expected to grow at blistering pace in coming years. For comprehensive
outlook of the industry, we have done extensive research on various segments of the
ndian pharma industry, such as the domestic & export market, branded & generics
drugs, formulations & bulk drugs, etc.
%he baseline for optimistic future outlook of the pharmaceutical market is improvement
in the access to medicines to the ndian population. %he focus of the industry will shift
towards capitalizing the potential of tier- and rural areas. Emerging sectors, such as
bio-generics and pharma packaging will also pave way for the pharmaceutical market to
continue its upward trend during the forecast period (FY 2012- FY 2014).
%he report provides thorough statistical and analytical overview of the ndian
pharmaceutical market. t contains information about past, present, and future trends,
with focus on entire structure, composition, and working of the pharmaceutical market.
%he report extensively discusses opportunities and challenges expected to arise within
and outside the pharmaceutical market. %he report also analyzes emerging sectors,
regulatory environment, and distribution system to identify strengths and weaknesses of
the pharmaceutical market. t has thoroughly examined current market trends, industrial
developments, and competitive landscape to enable clients understand the market
structure and its progress in coming years. t also presents a brief overview of the
demographics and healthcare profile to adjudge the pharmaceutical market in terms of
demand, expenditure, and possible future direction
. Indian Pbarmaceutical Industry
uomesLlc LxLernal 1rade uLure rospecLs 8esearch uevelopmenL

1be loJloo pbotmoceotlcol loJostty ls o soccess stoty ptovlJloq employmeot fot mlllloos ooJ eosotloq
tbot esseotlol Jtoqs ot offotJoble ptlces ote ovolloble to tbe vost popolotloo of tbls sobcootloeot
k|chard Gerster

1he Ind|an harmaceut|ca| Industry Loday ls ln Lhe fronL rank of lndla's sclencebased lndusLrles wlLh
wlde ranglng capablllLles ln Lhe complex fleld of drug manufacLure and Lechnology lL ranks very hlgh ln
Lhe Lhlrd world ln Lerms of Lechnology quallLy and range of medlclnes manufacLured rom slmple
headache pllls Lo sophlsLlcaLed anLlbloLlcs and complex cardlac compounds almosL every Lype of
medlclne ls now made lndlgenously

laylng a key role ln promoLlng and susLalnlng developmenL ln Lhe vlLal fleld of medlclnes Ind|an
harma Industry boasLs of quallLy producers and many unlLs approved by regulaLory auLhorlLles ln uSA
and uk lnLernaLlonal companles assoclaLed wlLh Lhls secLor have sLlmulaLed asslsLed and spearheaded
Lhls dynamlc developmenL ln Lhe pasL 33 years and helped Lo puL lndla on Lhe pharmaceuLlcal map of
Lhe world
rowth Scenario in 010
lndlas pharmaceuLlcal lndusLry ls now Lhe Lhlrd largesL ln Lhe world ln Lerms of volume lLs rank ls 14Lh
ln Lerms of value 8eLween SepLember 2008 and SepLember 2009 Lhe LoLal Lurnover of lndlas
pharmaceuLlcals lndusLry was uS$ 2104 bllllon 1he domesLlc markeL was worLh uS$ 1226 bllllon 1hls
was reporLed by Lhe ueparLmenL of harmaceuLlcals MlnlsLry of Chemlcals and erLlllzers As per a
reporL by lMS PealLh lndla Lhe lndlan pharmaceuLlcal markeL reached uS$ 1004 bllllon ln slze ln !uly
2010 A hlghly organlzed secLor Lhe lndlan harma lndusLry ls esLlmaLed Lo be worLh $ 43 bllllon
growlng aL abouL 8 Lo 9 percenL annually know more ouL Lhls ln our arLlcle on lndlan harmaceuLlcal
lndusLry uLure 1rends Also check ouL harmaceuLlcal MarkeL 1rends 2010
Leading Pharmaceutical ompanies
ln Lhe domesLlc markeL Clpla reLalned lLs leadershlp poslLlon wlLh 327 per cenL share 8anbaxy
followed nexL 1he hlghesL growLh was for Manklnd harma (372) CLher leadlng companles ln Lhe
lndlan pharma markeL ln 2010 are
O Sun harma (237)
O AbboLL (23)
O Zydus Cadlla (241)
O Alkem LaboraLorles (233)
O flzer (236 )
O CSk lndla (19)
O lramal PealLhcare (186 )
O Lupln (188 )
or deLalls check ouL LlsL of 1op 10 harmaceuLlcal Companles ln lndla
uture Prospects
1he lndlan pharmaceuLlcals markeL ls expecLed Lo reach uS$ 33 bllllon ln 2020 from uS$ 126 bllllon ln
2009 1hls was sLaLed ln a reporL LlLle lndla harma 2020 ropelllng access and accepLance reallslng
Lrue poLenLlal by Mcklnsey Company ln Lhe same reporL lL was also menLloned LhaL ln an aggresslve
growLh scenarlo Lhe pharma markeL has Lhe furLher poLenLlal Lo reach uS$ 70 bllllon by 2020

uue Lo lncrease ln Lhe populaLlon of hlgh lncome group Lhere ls every llkellhood LhaL Lhey wlll open a
poLenLlal uS$ 8 bllllon markeL for mulLlnaLlonal companles selllng cosLly drugs by 2013 1hls was
esLlmaLed ln a reporL by LrnsL ?oung 1he domesLlc pharma markeL ls esLlmaLed Lo Louch uS$ 20
bllllon by 2013 1he healLhcare markeL ln lndla Lo reach uS$ 3139 bllllon by 2020 1he sale of all Lypes of
pharmaceuLlcal drugs and medlclnes ln Lhe counLry sLands aL uS$ 961 bllllon whlch ls expecLed Lo
reach around uS$ 1922 bllllon by 2012 1hus lndla would really become a lucraLlve desLlnaLlon for
cllnlcal Lrlals for global glanLs

1here was anoLher reporL by 8nCCS LlLled 8oomlng harma SecLor ln lndla ln whlch lL was pro[ecLedL
LhaL Lhe pharmaceuLlcal formulaLlons lndusLry ls expecLed Lo prosper ln Lhe same manner as Lhe
pharmaceuLlcal lndusLry 1he domesLlc formulaLlons markeL wlll grow aL an annual raLe of around 17
ln 201011 owlng Lo lncreaslng mlddle class populaLlon and rapld urbanlsaLlon
haracteristics of Indian Pharmaceutical Industry
1he lndlan harmaceuLlcal secLor ls hlghly fragmenLed wlLh more Lhan 20000 reglsLered unlLs lL has
expanded drasLlcally ln Lhe lasL Lwo decades 1he leadlng 230 pharmaceuLlcal companles conLrol 70 of
Lhe markeL wlLh markeL leader holdlng nearly 7 of Lhe markeL share lL ls an exLremely fragmenLed
markeL wlLh severe prlce compeLlLlon and governmenL prlce conLrol

1he pharmaceuLlcal lndusLry ln lndla meeLs around 70 of Lhe counLrys demand for bulk drugs drug
lnLermedlaLes pharmaceuLlcal formulaLlons chemlcals LableLs capsules orals and ln[ecLlbles 1here are
abouL 230 large unlLs and abouL 8000 Small Scale unlLs whlch form Lhe core of Lhe pharmaceuLlcal
lndusLry ln lndla (lncludlng 3 CenLral ubllc SecLor unlLs) 1hese unlLs produce Lhe compleLe range of
pharmaceuLlcal formulaLlons le medlclnes ready for consumpLlon by paLlenLs and abouL 330 bulk
drugs le chemlcals havlng LherapeuLlc value and used for producLlon of pharmaceuLlcal formulaLlons

ollowlng Lhe dellcenslng of Lhe pharmaceuLlcal lndusLry lndusLrlal llcenslng for mosL of Lhe drugs and
pharmaceuLlcal producLs has been done away wlLh ManufacLurers are free Lo produce any drug duly
approved by Lhe urug ConLrol AuLhorlLy 1echnologlcally sLrong and LoLally selfrellanL Lhe
pharmaceuLlcal lndusLry ln lndla has low cosLs of producLlon low 8u cosLs lnnovaLlve sclenLlflc
manpower sLrengLh of naLlonal laboraLorles and an lncreaslng balance of Lrade 1he harmaceuLlcal
lndusLry wlLh lLs rlch sclenLlflc LalenLs and research capablllLles supporLed by lnLellecLual roperLy
roLecLlon reglme ls well seL Lo Lake on Lhe lnLernaLlonal markeL
Why India?
ompetent workforce lndla has a pool of personnel wlLh hlgh managerlal and Lechnlcal compeLence as
also skllled workforce lL has an educaLed work force and Lngllsh ls commonly used rofesslonal
servlces are easlly avallable

osteffect|ve chem|ca| synthes|s lLs Lrack record of developmenL parLlcularly ln Lhe area of lmproved
cosLbeneflclal chemlcal synLhesls for varlous drug molecules ls excellenL lL provldes a wlde varleLy of
bulk drugs and exporLs sophlsLlcaLed bulk drugs

Lega| I|nanc|a| Iramework lndla has a 33 year old democracyand hence has a solld legal framework
and sLrong flnanclal markeLs 1here ls already an esLabllshed lnLernaLlonal lndusLry and buslness
communlLy

Informat|on 1echno|ogy lL has a good neLwork of worldclass educaLlonal lnsLlLuLlons and esLabllshed
sLrengLhs ln lnformaLlon 1echnology

G|oba||sat|on 1he counLry ls commlLLed Lo a free markeL economy and globallzaLlon Above all lL has a
70 mllllon mlddle class markeL whlch ls conLlnuously growlng

onso||dat|on or Lhe flrsL Llme ln many years Lhe lnLernaLlonal pharmaceuLlcal lndusLry ls flndlng
greaL opporLunlLles ln lndla 1he process of consolldaLlon whlch has become a generallzed phenomenon
ln Lhe world pharmaceuLlcal lndusLry has sLarLed Laklng place ln lndla
Steps to strengthen the Industry
lndlan companles need Lo aLLaln Lhe rlghL producLmlx for susLalned fuLure growLh Core compeLencles
wlll play an lmporLanL role ln deLermlnlng Lhe fuLure of many lndlan pharmaceuLlcal companles ln Lhe
posL producLpaLenL reglme afLer 2003 lndlan companles ln an efforL Lo consolldaLe Lhelr poslLlon wlll
have Lo lncreaslngly look aL merger and acqulslLlon opLlons of elLher companles or producLs 1hls would
help Lhem Lo offseL loss of new producL opLlons lmprove Lhelr 8u efforLs and lmprove dlsLrlbuLlon Lo
peneLraLe markeLs

8esearch and developmenL has always Laken Lhe back seaL amongsL lndlan pharmaceuLlcal companles
ln order Lo sLay compeLlLlve ln Lhe fuLure lndlan companles wlll have Lo refocus and lnvesL heavlly ln
8u

1he lndlan pharmaceuLlcal lndusLry also needs Lo Lake advanLage of Lhe recenL advances ln
bloLechnology and lnformaLlon Lechnology 1he fuLure of Lhe lndusLry wlll be deLermlned by how well lL
markeLs lLs producLs Lo several reglons and dlsLrlbuLes rlsks lLs forward and backward lnLegraLlon
capablllLles lLs 8u lLs consolldaLlon Lhrough mergers and acqulslLlons comarkeLlng and llcenslng
agreemenLs