A seminar Report on

Impact Of Covid-19 on Pharmaceutical

Industry

By

Nikit Dhuppad
Roll No. 20-S-025
Semester I
MMS- I (2020-21)
Deadline Date- 30/06/2021

Jamnalal Bajaj Institute of Management Studies,

Mumbai
University of Mumbai

1|Page
 Table of Contents

Abstract: ....................................................................................................................................... 3
Introduction: ................................................................................................................................ 3
Objectives: ................................................................................................................................... 4
Research Methodology: ........................................................................................................... 4
Literature review: ....................................................................................................................... 4
Top Pharmaceutical Companies in India: ........................................................................... 5
Sun Pharmaceuticals: .......................................................................................................... 5
Impact of Covid 19 & Response: .................................................................................... 5
Aurobindo Pharma Ltd: ....................................................................................................... 5
Impact of Covid 19 & Response ..................................................................................... 5
Lupin ......................................................................................................................................... 6
Impact of Covid 19 & Response ..................................................................................... 6
Challenges: .................................................................................................................................. 6
Dependence of Indian pharma industry on imported active pharmaceutical
ingredients (APIs)................................................................................................................... 6
Low healthcare coverage in India ...................................................................................... 6
Supply chain infrastructure ................................................................................................. 7
Opportunities: ............................................................................................................................. 7
Pharmaceutical Infrastructure ............................................................................................ 7
The Role of the FDI ................................................................................................................ 8
Contract Pharma Industry: .................................................................................................. 9
Global Exposure: .................................................................................................................. 10
Digitization:................................................................................................................................ 11
Conclusion: ............................................................................................................................... 12
References:................................................................................................................................ 13

2|Page
Abstract:
Pharma business is one in all the biggest components of world industrial domain that
serves to the human race. it's associate business with terribly moneymaking investment
avenue. Indian Pharmaceutical business is world’s third largest pharmaceutical
business by volume and 14th by worth. it's world’s largest supplier of generic medication
globally. Indian pharmaceutical sector provides over 50% of world demand for
numerous vaccines, 40% of generic demand within the U.S.A. and 25% of all
medication within the UK. The domestic pharmaceutical business includes a network of
3000 drug firms and around 10,500 producing units. The Indian pharmaceutical sector
is a very important element of the worldwide health care infrastructure and is
instrumental in saving countless lives each year. However, the internment triggered by
corona virus pandemic (COVID-19) has caused disruptions all told sectors. This
analysis paper talks concerning this state of affairs and numerous opportunities of drug
company firms throughout COVID-19. The Pandemic has its obvious challenges and
therefore the industries area unit perpetually trying to find the solution, thus is that the
drug company business.

Introduction:
The Novel Coronavirus pandemic (Covid 19) was characterized as a world pandemic by
WHO on 11 March, 2020. This Pandemic had a significant impact on the worldwide
health market, the pharmaceutical sector and was related to outstanding impacts; which
can seem within the short-run and long-term horizon and identification and acceptable
about to scale back their socio-economic burden. This seminar paper can place some
light on pharmaceutical market crisis covid-19 era; discussing short and long-term
impacts of pandemic on prescribed drugs business. we'll cover the topics, demand
changes, analysis and development method changes, the shift towards,
telecommunications and telemedicine. Additionally, business growth slow-down,
approval delays, moving towards independence in pharma-production supply chain and
trend changes in consumption of health market merchandise in each international
moreover as native level. The analysis paper will dig deeper into, provide chain
disruption, drug development opportunities, impact on bureau, the role of management
in adapting to new traditional. The pharmaceutical sector has started developing
digitization of the industry. the future of digitalization of the pharmaceutical business are
mentioned during this analysis paper.

3|Page
Objectives:

Objectives of seminar paper are to:

1. To look at the current situation of Indian Pharmaceutical companies during
COVID – 19 situations
2. To understand the Opportunities for Pharma companies & Indian economy to
expand and gain maximum advantage during this situation

Research Methodology:
The study of impact of Covid-19 Pandemic on Indian Pharmaceutical industry is an
exploratory study conducted with the help of Secondary Data. The aim of conducting
this study is to understand short-term and long-term opportunities which have arisen
and will arise in the future in the Indian Pharmaceutical industry due to Covid-19
pandemic. In the section of Literature Survey, I’ve given reference of some articles
which will throw some light on current scenario of Indian Pharmaceutical Industry,
challenges they are facing and solutions or future strategies various stakeholders are
proposing to overcome these challenges.

Literature review:
The Indian Pharmaceutical Industry is the 3rd largest in terms of volume and ranked 14th
in terms of value. Pharmaceutical export from India during April 2020 to February 2021
was US$22.15Bn, which was roughly 10% increment from last year, where export stood
at US$20.70Bn. By exporting 20-22% of global volume, India is the largest supplier of
Generic Medicine. Also, India has one of the lowest manufacturing costs in the world. It
is lower than that of USA and almost half of Europe. Despite all these advantages, India
is faces major problem of over-dependency on other countries for the raw materials.
India is hugely dependent om other countries, by importing almost 60% of total
Pharmaceutical APIs required for the manufacturing of important drugs. From which,
import from China accounts for 65-70%.
The country's pharma industry produces 60% of all vaccines worldwide. This amounts
to 40-70% of the supply needed to meet WHO need for Diphtheria, Tetanus, and
Pertussis (DPT) and Bacillus Calmette Guerin (BCG) vaccinations, as well as 90% of
global demand for the measles vaccine. After the Pandemic brought to fore the
dependence of Indian Pharma industry on Imported Pharmaceutical Ingredients (APIs)
and rising tension between India and China, Government of India and Indian
Pharmaceutical companies comes together to boost manufacturing of APIs in India.
Government of India even introduced schemes like, Production Linked Incentives (PLI)
to promote domestic manufacturer to manufacture critical Key Starting Materials (KSMs)
and APIs in India, and a scheme for the promotion of Bulk drug Parks. Under the
Production Linked Incentives (PLI) scheme, Indian Government announced the support

4|Page
package of ₹10,000 crore. From this package, Government is going to provide
incentive of ₹10 crore for the Indian companies to set up manufacturing plants to
manufacturer crucial APIs in India for which India is currently dependent on China.

Top Pharmaceutical Companies in India:

1. Sun Pharmaceuticals:

It is an Indian pharmaceutical company Headquartered in Mumbai, Maharashtra

that manufactures and sells pharmaceutical formulations and active
pharmaceutical ingredients (APIs) primarily in India and USA. It is the largest
pharma company in India by Market Cap and Revenue. The company has total
sales of ₹ 29066 Cr.

Impact of Covid 19 & Response:

Sun Pharma was no exception to industry trend, as it was also affected badly by
covid 19 Pandemic. Their sales dropped down drastically during the 1 st quarter of
Pandemic. But Sun Pharma responded it pretty well by partnering with Global
suppliers to provide necessary raw materials to provide Covid 19 drugs. They
partnered with MSD, known as Merck in USA and Canada to accelerate access
to Molnupiravir, an investigational oral therapeutic for treatment of Covid-19.
Also, Sun Pharma has entered into royalty-free, non-exclusive voluntary licensing
agreement with Eli Lilly and Company for expanding access to Lilly’s drug,
barcitinib in India. Barcitinib is used in combination with remdesivir for the
treatment of suspected or laboratory confirmed COVID-19 in hospitalized adults
requiring supplemental oxygen.

2. Aurobindo Pharma Ltd:

Aurobindo Pharma is 35 years old pharmaceutical company founded by Mr. P. V.

Ramprasad Reddy, Mr. K. Nityananda Reddy and a small group of highly
committed professionals. They have 2nd largest market cap in Indian
Pharmaceutical industry with ₹ 19564 Cr.

Impact of Covid 19 & Response

Aurobindo Pharma is presently working on ‘multiple’ vaccines for Covid-19

pandemic. Aurobindo also entered into an exclusive license agreement with
Covaxx, a US based company to develop, commercialise and manufacture UB-
612, first Multitope Peptide-based Vaccine for Covid-19 in India.

5|Page
 3. Lupin
Lupin is a global pharmaceutical company offering a wide range of products such
as branded and generic formulations, Biotechnology products, Active
Pharmaceutical Ingredients (APIs) and Specialty. The company has total sales of
Rs.16718Cr. Lupin’s world-class manufacturing facilities are spread across India,
Japan, USA, Mexico, and Brazil.

Impact of Covid 19 & Response

During covid 19 pandemic, as the prices of APIs shoot up, it became really
difficult for Lupin and other pharmaceutical companies to continue their
production as per the demand. Lupin is trying to get mRNA vaccines in India at
affordable pricing. For this, they are in the talk with Global leader of mRNA
vaccines Pfizer and Moderna. They have already tied up with Eli Lilly for the
barictinib which is being prescribed along with Remdesivir to hospitalized Covid-
19 patients.

Challenges:
When majority of the industries faced difficulties to stay along with the projections and
market expectations during Covid 19, Pharmaceutical industry on the other hand, is one
of the few sectors that has benefitted and expected to emerge stronger in the wake of
Covid 19 pandemic. The industry has already overcome short-term impacts faced due
to pandemic, such as medication shortage and concurrent supply shortage on account
of disruption in the raw material supply chains. However, the pandemic has highlighted
some key challenges for the Indian pharma industry.

Dependence of Indian pharma industry on imported active pharmaceutical

ingredients (APIs)

Today, 60% of India’s API requirement is imported. In commonly used APIs, such as
cephalosporins, azithromycin, and penicillin, the dependence is as high as 90%. Of the
total imports of APIs and intermediates into India, China accounts for 65–70%.

Low healthcare coverage in India

In terms of healthcare spend, India has one of the lowest healthcare budgets with just
1.26% of GDP being spent on healthcare. India ranks 155th out of the 167 countries in
terms of hospital bed availability (as per the Human Development Report 2020) with just
five beds available for every 10,000 Indians. Moreover, when daily new cases crossed

6|Page
the one lakh mark, there was a major concern on the availability of laboratory testing
infrastructure and hospital beds.

The COVID-19 outbreak brought a change in the consumption pattern of Indian

customers with respect to changing habits related to consumption and refilling
prescriptions, especially in case of chronic diseases, increased first-time use of online
ordering, e-consultations, etc.

Supply chain infrastructure

Despite being regarded as the “Pharmacy of the World”, during the times when
Pandemic struck, industry has been hit by domestic and international restrictions and
impediments to reach the customers with expectations to operate and supply drugs to
those in India and globally. Inefficient vaccine storage facilities, transportation system,
demand exceeding supply of vaccines and important medicines were the major
problems faced by industry right from the start of the pandemic.

Opportunities:
The pandemic has shown industries that reducing dependence on a single geographic
area, such as China, is critical to survival. As a result, the Indian pharmaceutical
industry should consider diversifying the supply chain to prevent a repeat of this
scenario. Amid the pandemic's raging second round, the government has lined up
guaranteed prepaid bulk procurement of Covid-19 vaccines for a combined cost of Rs
4,500 crore. While Indian Pharmaceutical industry has responded very well to the
problems faced during pandemic. The Serum Institute of India (SII), which is currently
producing the Oxford-AstraZeneca vaccine, has agreed to supply bulk vaccines worth
Rs 3,000 crore out of the 4500 crores. For the Indian Covid-19 vaccine - Covaxin - a
similar amount worth Rs 1,500 crore will be given to Bharat Biotech.

Pharmaceutical Infrastructure

Different representatives from the pharmaceutical industry along with NITI Aayog
suggests that it is important to promote approvals of pharmaceutical infrastructure and
development, get clearance from the environment ministry and offer subsidies and tax
exemptions to offer the much-needed boost to the Indian pharma industry. Also, post-
pandemic there will be increased spending on personal hygiene and healthcare which
the pharma sector can capitalize on to further strengthen its prospects.

Given the present opportunity, India has the potential to emerge as a dominant player in
the Pharma supply chain. The industry is expected to make higher investments and
focus on improving internal standards such as data integrity, compliance. Also, the
pandemic has boosted many good public healthcare infrastructures, such as patients’

7|Page
records. The government has already proposed to increase the healthcare expenditure
by 137% to INR 2,23,846 crore from INR 94,452 crore spent in the previous year.

The Role of the FDI

According to the report, Indian Pharma sector is expected to attract good amount of
Foreign Direct Investment despite the global pandemic. FDI has played a significant role
in developing the Indian Pharma sector. FDI has contributed considerably in setting
India as the “Pharmacy of the World”. The old & new FDI policy of India. According to
the old policy, 100% of FDI was permitted in Pharma sector in Greenfield Pharma
projects under automatic route and 74% of FDI was permitted in brown field projects
under automatic and approval route. But now with the new FDI policy which came into
effect on April 2020, government has now mandated the GOI approval for investment
from bordering countries. This has caused lot of inconvenience to Indian investee
companies including the Pharma sector. Also, Government has pushing forward
Pharma sector with the initiatives such as Make In India, Self Reliance, Ayushman
Bharat scheme, National Digital Health Mission. With this, largest consumer market in
the world, generation of new employment opportunities, increase in research and
development, almost 33% lower manufacturing rates in compare with USA, are the
major reasons which are attracting Foreign Direct Investments and Indian as well as
foreigners are betting big on this industry. Indian Pharma industry is expected to reach
US$ 130 billion by 2030. Many global players opting to move their operations out of
China, and therefore India with its growing market and economical workforce, offers to
be a strong alternative contender. India has a distinct advantage in this area and the
Indian government is also pushing for reforms and rolling out the red carpet for
businesses looking to invest in India.

FDI EQUITY INFLOWS IN THE PHARMACEUTICAL

SECTOR IN INDIA FROM 2015-20
1600 1498

1400
1246
1200
1010
AMT IN US$ MN

1000 857
754
800

600 518

400 266
200

0
FY 2015 FY2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
FINANCIAL YEARS

8|Page
It is clearly visible in the chart, that post pandemic, FDI inflows in pharmaceutical sector
in India has tremendously increased. In FY 2020, it increased by 95%, whereas in 2021,
it increased by 140%. India has planned to set up Rs. one lakh crore fund for boosting
the pharma sector to manufacture pharmaceutical ingredients domestically by 2023.
The Government has approved extension/renewal of extant pharmaceutical purchase
policy adding one additional product alcoholic hand disinfectant to the existing list of 103
medicines.

Contract Pharma Industry:

Contract manufacturing, also known as third-party manufacturing, refers to a process in

which a company outsources certain manufacturing activates to a third-party firm called
contract manufacturer. In contract manufacturing, the two companies enter into a
contract wherein a company manufacturers product of other company under the latter’s
brand name. The outsourcing company sells the products manufactured by the contract
manufacturer.

contract manufacturing is quite popular in the pharmaceutical sector. One of the main
reasons for the popularity of contract manufacturing in the pharma sector is, huge
investments required to setup pharma manufacturing plant. Another reason why a lot of
companies in the pharmaceutical sector go for contract manufacturing is, it is not quite
easy to get all the required licenses from government authorities to start the pharma
manufacturing business. The global pharmaceutical contract manufacturing market was
USD 109.67 billion in 2019 will become USD 162.1 billion by 2025, growing at a CAGR
of 6%. the Indian contract manufacturing market (CMO market) which was valued at
USD 10.51 billion in 2020 is expected to cross USD 27.80 billion mark by 2026, growing
at a CAGR of 17.6% between the year 2020 and 2026. The growing demand for
injectable drugs which offer higher ROI, particularly in cancer research, easy availability
of skilled workforce at cost-effective prices are driving the Indian contract manufacturing
in pharma industry. The rapid growth in the presence of global pharmaceutical
companies in India which outsource manufacturing to small third-party firms is helping
the domestic contract manufacturing.
Serum Institute is world’s largest manufacturer of vaccines. Serum Institute has
partnered with AstraZeneca, which has developed Covishield, indigenous vaccine for
Covid 19. Serum institute is manufacturing 5000 vaccines per minute. Serum Institute
has started manufacturing another pathbreaking vaccine Novavax. They had
manufacturing agreement with USA based Novavax Inc.

9|Page
Global Exposure:

In the last few years, since 2014 the frequency of people visiting India for medical
treatment has increased at about 55 per cent. The Government has relaxed the rules for
promoting India as a better medical tourist destination by issuing fast-track medical
visas, rapid airport clearances for those visiting as medical tourists. The key players in
medical tourism are in private sector. The government agencies could do better by
opening new avenues in the years ahead. India unveiled plans to collaborate with
Netherlands with an aim to provide digital health facilities. Six generic drug makers
signed MoUs with Hidalgo (Mexico) to establish a large pharma cluster for the
production and logistics in Mexico. The Jubilant Generics Ltd has entered into a non-
exclusive licensing agreement with Gilead Sciences Inc for the manufacture and sale of
potential Covid drug Remdesivir in 127 countries, including India.

India is the largest exporter of drugs and medicines in terms of dollar value worth in the
world with the global market share of 16.8% of total drugs and medicine export, during
2018-2021. India exported US$62.3 billion of drugs and medicines during 2018-21.

Global Export of Drugs and medicine

17%

29%

8%

7%
6%

5% 7%

5% 6%
6% 6%

India Belgium Germany France USA Spain Ireland UK Italy Netherlands Others

During Pandemic, India supplied medicines like Hydroxychloroquine, Paracetamol and

other relevant drugs to more than 150 countries, amid spiking requirement.

During the FY’20, India has exported pharmaceuticals to 202 destinations. Major export
destinations for India Pharma Inc.:
➢ North America: First largest exporting region for Indian Pharma with 34 per cent
share. Overall exports to North America have recorded 15.11 per cent growth
➢ USA: Pharma products worth $ 6.7 billion were exported to the US with 15.8 per
cent growth. This has constituted almost 32.74 per cent of our total exports.

10 | P a g e
 ➢ Africa: Second largest exporting region with 17 per cent share. Exports to the
Africa region has grown up at 2.24 per cent growth. Tanzania has recorded the
very best rate of growth of 30.18 per cent growth.
➢ Europe: Third largest exporting region with 15 per cent share. 4.54 per cent rate
of growth recorded in exports to the EU region. Netherlands has recorded the
very best rate of growth of 55 per cent.
➢ CIS: Indian exports to the CIS region have grown at 14.8 per cent growth.
Russia, the fourth largest importing partner, has recorded 13.8 per cent growth
➢ Middle East: Exports to Turkey have grown at 31.6 per cent and to Iran at 13.15
per cent
➢ Asia (Excluding Middle East): Exports to the present region have had
significant growth of 11.51 per cent. Exports to Bangladesh recorded 29.37 per
cent growth, touching $251 million.
➢ China: Last year, it had been $230 million in FY19 with 14.8 per cent growth.
This fiscal year, during Apr-Dec 19 India exported $228 million with almost 35.8
per cent growth. For FY 20 (Apr-Mar), Indian exports to China are $288 million
with 25 per cent growth
➢ Japan: India exported $196 million Pharma products in FY 2020 with 11.66 per
cent growth

Digitization:
Online pharmacies have become a force to reckon with. Some of India’s largest
business houses and global e-commerce firms are viewing this as a huge opportunity
and attempting to make a foray within this domain. For an example, Tata-Pharmeasy
deal, Reliance-Netmeds deal. This can lead to further consolidation among existing
players.
Integrated healthcare platforms with allied services, such as online consultations,
diagnostics, and medicine delivery is also expected to emerge. The Covid-19 pandemic
has pushed the pharmaceutical industry to innovate with the use of digitization which
would help it collaborate better with medical professionals.
A digital wave is sweeping across the $17 billion. Indian pharmaceutical industry and
companies are dumping old ways of marketing for newer technology. This new
technology ranges from scientific detailing to doctors to using newer algorithms for
better insights into issues like patient compliance. The trend matches a similar switch
which has been observed in China over past few years.
Mobile apps and social media are set to play a bigger role in this growth. The pharma
industry’s marketing spends through digital platforms is estimated to shoot up nearly
50% in the next two years to touch Rs 220 crore. this will help India catch up with tech-
savvy emerging markets peers like China, where nearly half the companies are
expected to allocate more than a fifth of their marketing budget to digital marketing by
2018. Large companies are adopting this change-

11 | P a g e
 ➢ Sun Pharma launched a mobile app called RespiTrack earlier this year for
patient awareness on asthma. The company reportedly plans to make similar
apps for other ailments as well
➢ GlaxoSmithKline’s local unit believes companies will have to hone their digital
skills because a large portion of their customers will operate in that space. At
least 20%-30% of GSK’s own customers are already in the digital world.
➢ Abbott Healthcare see India as a ground for introducing tech innovations that
can be replicated worldwide. It introduced several tools like Knowledge Genie, a
heart and liver app and another one for vertigo exercises. Some of these build on
augmented and virtual reality to engage with both doctors and patients.
➢ Alkem Laboratories has launched online consultation portal. Doctors can
consult their patients without paying a single penny as operating cost to the
Alkem.

Also, the digital pharmaceutical sector has seen a huge jump in the number of
companies working in this field during Covid 19.

Conclusion:
COVID-19 has pushed the whole ecosystem five years ahead of time. What seemed
impossible yesterday is now an innovative theory applied across the field. This
pandemic has already given a sign for us to face the challenges which are uncounted
by our industries. We need to be ready for this kind of situation in future. Pharma has
been through most difficult situation as most of the APIs were produced depends on
sources for China. The government and the industry must implement in unison the
innovations and mandates feasible for all stakeholders. The current scenario has also
paved the way for Indian pharma companies to become the hub of API (Active
Pharmaceutical Ingredients) supply for the global markets in the near future. Going
through all this we can understand the relation between global pharmaceutical market
and Indian Pharma companies. The study related to impact of COVID-19 on Indian
Pharma companies can be conducted with the help of secondary data which was
collected from websites like express Pharma, reports from Deloitte, EY, KPMG, FICCI,
investindia.gov etc. Pharmaceutical exports of India from 2012 to 2021 have steadily
grown from $10 Billion to $24.4 Billion. The government should invest in more Research
and Development from Pharma Research. Medical training and technical expertise
should be provided to many other developing nations whose condition is much worse
than India.

12 | P a g e
References:
• https://www.ey.com/en_in/health/how-the-indian-pharmaceutical-industry-may-
transform-post-pandemic
• https://www.ibef.org/exports/pharmaceutical-exports-from-india.aspx
• investindia.gov.in/schemes-for-pharmaceuticals-
manufacturing#:~:text=The%20Production%20Linked%20Incentive%20(PLI,6%2
C940%20crores%20have%20been%20approved.
• https://home.kpmg/in/en/home/insights/2021/04/indian-pharma-industry-boom-
mantra.html
• https://www2.deloitte.com/in/en/pages/risk/articles/in-ra-covid-19-response-for-
pharma-companies.html
• https://www.businesstoday.in/latest/economy-politics/story/india-dependence-on-
china-for-apis-exposes-vulnerabilities-in-pharma-jairam-ramesh-270518-2020-
08-19

13 | P a g e