Indian Pharmaceuticals - We Trust

Economic Footprint of Pharma Industry –

Indian pharmaceutical industry is a research based industry that makes a significant

contribution to the prosperity of the Indian economy. This is a robust sector that contributes
to employment, trade (exports & imports), R&D spending, technological capacity-building
and is a key global player in generic drugs. The pharma companies are susceptible to
economic fallouts wherein the capital dries up in the market, consumer spends less and the
government also pulls the plug of spending. On the contrary, medicine is also an essential
consumer product that is critical for the health of everyone and the demand for medicines
are always on a rise irrespective of economic pressures. The investors are prudent in
investing in pharma stocks for long term because the earnings from pharma stocks are
usually uncertain accompanied with risks. Their stocks outperform or come close by their 52
week highs for a shorter period of time followed by another long slack period.

A Snapshot of Pharma -

 Indian pharma industry is worth $ 50 billion in 2020.

 Healthcare expenditure is 4.6% of GDP.
 India meets 20% of global demand for generic drugs in terms of volume production.
 India is heavily dependent on US pharmacy industry.
 India generates nearly 40 million jobs.
 US imports 40% of its generic drug production from India.
 India exports 33% of its pharma sales to US, followed by South Africa, Russia, and
United Kingdom being nearly 3.9%.

Demand and supply drivers in industry:

 Demand Sided: World-wide accessibility of generic drugs, increasing expenditure on

medical infrastructure, rising levels of education to spread acceptability of
preventive medicines, skilled work force, affordability of drugs in increasing
population. All this adds up to the rising demand necessary for growth.
 Supply Sided: Low cost of production, skilled manpower, approved plants by USFDA.

Covid-19 impact:

 India has high dependency on China and prolonged shutdown will linger on the
supply of API of antibiotics, vitamins, steroids and would hurt Indian pharma exports.
 Prices of Active Pharma Ingredients have jumped since last 1 month.
 Due to labour availability crunch, the plants would continue functioning on low
capacity.
SWOT Analysis of Indian Pharma:

Future of Industry:

 The pharma industry has much greater scope to grow due to the rising population of
India. As the GDP increases, the expenditure on healthcare will also rise hence
pharma will pick up once again.
 Well diversified pharma companies can fetch long term opportunities from Covid-19
by building up new capacities and work for backward integration. Backward
integration is a competitive strategy in which the drug manufacturing companies can
either merge with another company or acquire a subsidiary that supplies its products
thereby moving backwards in the supply chain. With this the companies can control
the entire distribution process bringing enhanced capability to bring down their costs
and guarantee access to raw materials.
 Digital engagement between the doctors and patients will be the need of the hour.
E-pharmacies will improve the overall health of the people in this country.
 High skilled labour and large base of raw materials along with modern infrastructure,
advanced technology used to treat epidemics, will continue to attract a healthy
growth for Indian pharmaceutical industry.