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TYPE OF MARKET -
Oligopoly Market is a market in which there are a few number of players that dominate the
market. They control the price, production and supply up to a large extent after which the
government intervene.
Oligopoly Market is also characterized by barriers to the entry of new companies, product
differentiation (homogeneous) and non price competition.
There are only a few major players and acquisition of smaller companies by dominant players
has made the pharmacy industry more of oligopoly.
Indian market players are- Sun Pharmacy, DRL, Cipla, Lupin etc
Global ones are- Pfizer, Novartis, Merck, GSK etc
Because of high cost of research and development of new drugs and patent, it is very difficult
for new companies to enter the pharmaceutical market
Like an oligopoly market firms are interdependent. Every company considers the move and
reaction of other players before making any decision.
Market Size -
The Indian pharmaceutical industry, which is expected to grow over 15 per cent per annum
between 2015 and 2020, will outperform the global pharmacy industry, which is set to grow
at an annual rate of 5 per cent between the same periods! The market is expected to grow to
US$ 55 billion by 2020, thereby emerging as the sixth largest pharmaceutical market globally
by absolute size, as stated by Mr Arun Singh, Indian Ambassador to the US. Branded
generics dominate the pharmaceuticals market, constituting nearly 80 per cent of the market
share (in terms of revenues). The sector is expected to generate 58,000 additional job
opportunities by the year 2025. *
India’s pharmaceutical exports stood at US$ 16.4 billion in 2016-17 and are
expected to grow by 30 per cent over the next three years to reach US$ 20 billion
by 2020, according to the Pharmaceuticals Export Promotion Council of India
(PHARMEXCIL).
Indian companies received 55 Abbreviated New Drug Application (ANDA)
approvals and 16 tentative approvals from the US Food and Drug Administration
(USFDA) in Q1 of 2017. The USFDA approvals are expected to cross 700 ANDA
in 2017, thereby recording a year-on-year growth of 17 per cent. The country
accounts for around 30 per cent (by volume) and about 10 per cent (value) in the
US$ 70-80 billion US generics market.
India's biotechnology industry comprising bio-pharmaceuticals, bio-services, bio-
agriculture, bio-industry and bioinformatics is expected grow at an average
growth rate of around 30 per cent a year and reach US$ 100 billion by 2025.
Biopharma, comprising vaccines, therapeutics and diagnostics, is the largest sub-
sector contributing nearly 62 per cent of the total revenues at Rs 12,600 crore
(US$ 1.89 billion).
1) Sun pharma –
Mr. Dilip Shanghvi founded Sun Pharmacy in 1983 in Vapi with five products for the
Treatment of mental disorders. Cardiovascular products were introduced in 1987 which were
drawn by articles of gastroenterology in 1989. Today, it is the largest Organization of eternal
remedies in India and pioneer of the market of psychiatry, Neurology, cardiology, orthopedics,
ophthalmology, gastroenterology and Nephrology.
Supply -
Sales
Year Revenue
2008 34,606
2009 43,751
2010 38,086
2011 57,279
2012 80,195
2013 112,999
2014 160,804
2015 273,920
2016 282,697
2017 302642.3
350,000
Sales Revenue in Millions
300,000
250,000
200,000
150,000
100,000
50,000
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
The graph and the data clearly depicts that there has been a constant increase that is upward
trend in the supply of sun pharmaceuticals. The rate of increase in supply varies from period to
period.
Interpretation – Here the sales has increased year on year and in 2017 it is
600% from the year 2008 which shows Sun Pharma has grown rapidly and at the
same time we can interpret that market demand has also increased year on year
with high pace.
2) Aurobindo Pharma –
Supply
10
5
0
Jun-07 Jan-08 Aug-08 Feb-09 Sep-09 Mar-10 Oct-10 Apr-11
Supply curve of Syrups ('000 litres)
14,000.00
12,000.00
10,000.00
8,000.00
Supply curve of Syrups ('000
6,000.00 litres)
4,000.00
2,000.00
0.00
Jun-07 Jan-08 Aug-08 Feb-09 Sep-09 Mar-10 Oct-10 Apr-11
9,000.00
8,900.00
8,800.00
8,500.00
8,400.00
8,300.00
Jun-07 Jan-08 Aug-08 Feb-09 Sep-09 Mar-10 Oct-10 Apr-11
Supply curve of Capsules and Tablets (Million No.)
10,000.00
9,000.00
8,000.00
7,000.00
6,000.00
3,000.00
2,000.00
1,000.00
0.00
Jun-07 Jan-08 Aug-08 Feb-09 Sep-09 Mar-10 Oct-10 Apr-11
Interpretation – From graph we can clearly see that supply of Bulk Drugs
and syrup have increased sharply. Besides this capsules and tablets have
increased gradually and regularly which means demand has also been increased
for bulk drug very sharply due to invention of drugs for different diseases.
12000
Sales (In Rs Cr.)
10000
8000
6000
4000
2000
0
2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Lupin was founded in 1968 by Desh Bandhu Gupta then an Associate Professor
at BITS-Pilani, Rajasthan. Named after the Lupin flower because of its inherent
qualities and what it personifies and stands for, the company was created with a vision
to fight life-threatening infectious diseases and to manufacture drugs of the highest
social priority.
Founder and Chairman Deshbandhu Gupta passed away on 26th Jun. 2017. After his
demise, Mrs. Manju Deshbandhu Gupta wife of late Shri Desh Bandhu Gupta has
been appointed as the chairman of the company.
Lupin first gained recognition when it became one of the world’s largest
manufacturers of tuberculosis drugs.[20] The company today has a significant market
share in key markets in the cardiovascular (prils and
statins), Dialectology, asthma, pediatrics, CNS, GI, anti-infective and NSAIDs
therapy segments.
5) Cipla
Cipla’s turnover growth was affected by a 3.4% decline in formulation exports due to
non-availability of a key raw material in its respiratory product segment. A high base
effect was also at work. Formulation exports have risen by 6% over the June quarter.It
stepped up bulk drug exports to compensate, which rose by 37.5%. But domestic sales
growth, too, was disappointing at 6.8%. Cipla did not participate in some large anti-
retroviral tenders due to lower anticipated price realizations. Sales also declined due
to lower anti-infective product sales, owing to a poor monsoon. On the positive side,
fee income from technological services rose significantly, providing a buffer from
falling sales.
While Cipla’s sales growth may have slowed, its product mix improved during the
quarter. That’s one of the reasons why its operating costs grew at just half the level of
revenue growth, leading to a 3 percentage point increase in operating margins to
25.9%. Cipla’s depreciation and interest costs rose and its other income declined,
which should have normally affected profits. But a gain of Rs7.5 crore due to forex
fluctuations in the September quarter, compared with a loss of Rs104.5 crore in the
year-ago period, helped. Its net profit rose by 82% to Rs276 crore over a year ago to
Rs5 crore and by 14% over the previous quarter.
Supply -
Market Share of top 5 selected companies –
1) Lupin Pharma –
Total Sales
Company Year of firm Market Share Industry sales
Lupin Pharma 2002 10084.9 3.00 336493.4
2003 11973 3.02 396347.1
2004 12185.8 2.77 439211.1
2005 17174.3 3.30 520824.1
2006 20517 3.25 631398.7
2007 26616.2 3.55 749829.4
2008 29938.5 3.40 880352.9
2009 37284.1 3.71 1005902.1
2010 45018 3.77 1194111.2
2011 54105.2 3.88 1395730.2
2012 71507.8 4.62 1547437.6
2013 89775.7 4.77 1881985.4
2014 98447.1 4.75 2073694.4
2015 112841.4 5.23 2157392.6
2016 112841.4 5.50 2051530.5
4.00
0.00
2000 2005 2010 2015 2020
2) Cipla –
Total Sales of
Company Year firm Market Share Industry sales
Cipla 2002 15729.8 4.67 336493.4
2003 20556.6 5.19 396347.1
2004 24011.7 5.47 439211.1
2005 31038.1 5.96 520824.1
2006 36579.5 5.79 631398.7
2007 42952.4 5.73 749829.4
2008 53091.3 6.03 880352.9
2009 56786.2 5.65 1005902
2010 64003.8 5.36 1194111
2011 70775.6 5.07 1395730
2012 82973.8 5.36 1547438
2013 95587.2 5.08 1881985
2014 102277.9 4.93 2073694
2015 121876.4 5.65 2157393
2016 121876.4 5.94 2051531
Market share of Cipla
8.00
6.00
4.00
Market share of Cipla
2.00
0.00
2000 2005 2010 2015 2020
3) Aurobindo –
Total Sales of Market Share
Company Year firm (%) Industry sales
Aurobindo 2002 11927.4 3.54 336493.4
2003 13413.7 3.38 396347.1
2004 11618.3 2.65 439211.1
2005 14757.3 2.83 520824.1
2006 19910.3 3.15 631398.7
2007 24092.8 3.21 749829.4
2008 28852.5 3.28 880352.9
2009 33196 3.30 1005902.1
2010 42299.9 3.54 1194111.2
2011 43787.3 3.14 1395730.2
2012 55695 3.60 1547437.6
2013 72699.7 3.86 1881985.4
2014 82583.5 3.98 2073694.4
2015 93442.8 4.33 2157392.6
2016 93442.8 4.55 2051530.5
Market share of Aurobindo pharma
5.00
4.00
3.00
Market share of Aurobindo
2.00 pharma
1.00
0.00
2000 2005 2010 2015 2020
6.00
5.00
4.00
2.00
1.00
0.00
2000 2005 2010 2015 2020
6.00
5.00
4.00
Market share of
3.00 Glaxosmithkline Pharma
2.00
1.00
0.00
2000 2002 2004 2006 2008 2010 2012 2014 2016
Political focus over pharmacy industry has been growing as government is willing to
maximize revenue taxes and savings from every company. Trade restrictions have been
imposed by government to make sure that the drugs available in the market are the best. In
many countries, stringent policies regarding control over the prices of the pharmaceutical
industries have been imposed. Hence, many investment plans in the industry have been thrown
into ejections.
Economic factor
The pharmaceutical industry is ranked among the fastest growing in many parts of the world
and brings in a lot of income and revenue taxes. In case of any economic threats, the growth of
the industry may also decline. The growth of the pharmaceutical sector has been increasing due
to the economic pressure exerted in the market as certain buying groups are pushed to drop
down their rates. A decrease in consumer disposable income will also affect other clients in
need of best health insurance models where certain amount of money is required.
Technological factors
Legal factor
Legally pharmaceutical industry is highly controlled as there are vast legal and regulatory
disbursements. The legal and compliance overheads have help curb any external challenges in
the market.
Other factors
Prices for most of the services in managed care and insurance industry are set by a free market
system. Consumers therefore pay full prices in rare occasions for prescription drugs and most
of them are paid for by third party insurers. This affects pharmaceutical industry in the sense
that third party insures or payers often negotiate for lower prices for the medication. It
depresses prices of drugs and lowers pharmaceutical industry profit margins significantly.
HOMEOPATHEIC MEDICIENS
The global demand for Homeopathic Products has growth by remarkable lengths over the past
few years, thanks to the massive interest shown by developed economies. The recognized
forms of delivery in the global homeopathy product market include tablets, ointments,
biochemicals, dilutions, and tinctures. Each form has found its own range of success in
different regions based on the type of treatment in demand. The global homeopathy product
market currently claims to cater to several applications, including treatments in dermatology,
gastroenterology, immunology, neurology, respiratory, and antipyretic systems.
The global Homeopathy Product Market is expected to reach US$ 17,486 million by the end of
2024. It is projected at an astounding CAGR of 18.2% within a forecast period from 2016 to
2024. This market was calculated at US$ 386 million in 2015. Several factors are working in
favour of - and in opposition to - the global homeopathy product market.
AYURVEDIC MEDICINES
GOVERNMENT POLICIES
Government Initiatives
The implementation of the Goods and Services Tax (GST) is expected to be a game-changer
for the Indian Pharmaceuticals industry. It will lead to tax-neutral inter-state transactions
between two dealers, thereby reducing the dependency on multiple states and increasing the
focus on regional hubs. It is expected to result in an efficient supply chain management, which
is expected to reduce its cost considerably. The cost of technology and investment is expected
to reduce on account of tax credit which can be availed now on the duties levied on import of
costly machinery and equipment.
Some of the initiatives taken by the government to promote the pharmaceutical sector in India
are as follows:
The Government of India unveiled 'Pharmacy Vision 2020' aimed at making India a global
leader in end-to-end drug manufacture. Approval time for new facilities has been reduced to
boost investments.
The government introduced mechanisms such as the Drug Price Control Order and the
National Pharmaceutical Pricing Authority to deal with the issue of affordability and
availability of medicines.
Mr. Ananth Kumar, Union Minister of Chemicals and Petrochemicals, has announced setting
up of chemical hubs across the country, early environment clearances in existing clusters,
adequate infrastructure, and establishment of a Central Institute of Chemical Engineering and
Technology.
Drugs Price Control Order (DPCO): Drugs and formulations have been subjected to price
control from a very long time, almost 3 decades now. The economic reforms presented by the
Government of India in July 1991, targeted the Pharmaceutical Industry only in 1994 and that
too partially. Price control in a large number of industries has already been abolished.
Pharmaceutical Policy 2002: The basic objectives of Government's Policy relating to the drugs
and pharmaceutical sector were enumerated in the Drug Policy of 1986. Check in details
the pharmaceutical policy 2002.
The Narendra Modi govt is planning to bring law to make doctors compulsorily prescribe
generic drugs to make health care affordable in the country, the Narendra Modi-led central
government is looking to make it mandatory for doctors to prescribe generic drugs. As reported
earlier, the health ministry, in line with Finance Minister Arun Jaitley’s Union Budget
announcement, has started work on amending the Drugs and Cosmetics Act.