Indian Pharmaceutical Industry

Presented by : Group 6

Overview

India currently represents U.S $10.04 billion of the $550 billion global pharmaceutical industry CAGR of about 12% in the last 5 years compared to 7 percent annual growth for the world market. 3rd largest in the world in terms of volume & 14th in terms of value. Highly fragmented with more than 20,000 registered units.

The leading 250 pharmaceutical companies control 70% of the market

Leading Players
Rank 1 2 3 4 5 6 Company Ranbaxy Laboratories Dr. Reddy's Laboratories Cipla Sun Pharmaceutical Lupin Ltd Aurobindo Pharma Revenue 2010(Rs crore) 4,198.96 4,162.25 3,763.72 2,463.59 2,215.52 2,081.19 Revenue 2010(Rs billion) 41.989 41.622 37.637 24.635 22.155 20.801

7
8 9

GlaxoSmithKline
Cadila Healthcare Aventis Pharma Ipca Laboratories

1,773.41
1,613 983.80

17.734
16.13 9.838

10

980.44

9.8044

Porter’s Five Forces
Power of Suppliers - 50 % contribution of the raw materials towards cost - Numerous Suppliers; low switching cost

Barriers to Entry - Low barriers as Govt policy is supportive - Production of Drugs listed on Govt’s Drugs List without any Patent

Industry competition

Threat of substitution - No substitute for medicine yet - Biotechnology is a threat to synthetic pharma products

- Highly competitive; top five players control just 18% of the market

Power of Buyers - End consumers do not have bargaining power - Brand identity exists but is in hands of influencer (Dr, seller) - Less price discrimination

Factors in favor of India

Abundance of skilled manpower: India has a pool of personnel with high managerial and technical competence as also skilled workforce.  Experts in process chemistry  Long history of reverse engineering Cost-effective chemical synthesis: Its track record of development, particularly in the area of improved cost-beneficial chemical synthesis for various drug molecules is excellent. Ageing Population: People of this age group spends around 3 to 4 times more on drugs than people in younger age groups. Unmatched cost competitiveness ◦ Lower cost of infrastructure and skilled manpower ◦ Vertical integration

Future Prospects
As predicted by the FICCI-Ernst & Young India study:  Consumer spending on healthcare services and products has increased in India due to the increasing affordability, shifting disease patterns and modest healthcare reforms. Healthcare budget of an average Indian household is expected to grow from 7% in 2005 to 13% in 2025.

Indian pharmaceutical off-shoring industry is predicted to be a US$ 2.5 billion opportunity by 2012 all because of low cost of R&D. Patented drugs are predicted to capture up to a 10% share of the total Indian pharmaceutical industry by 2015 with a market size of US$2 billion. The branded generics market will continue to dominate the Indian pharmaceutical industry. The growing lifestyle disorders drugs will gain considerable significance.

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