Indian Pharmaceutical Sector

By : Atul nair Bhakti vadhavkar Bijesh Sah kanu Cherubin Ebenezer Chinmoyee Nag Dayawarshani Subramaniyam Devika Salvi Dharshana Iswera Dhiraj kalyanker

Index
Intoduction Statistics Major players Comparative study between two major players Logistics Distribution SWOT analysis Current affairs Recommendation to this sector

Introduction
Indian pharmaceutical industry can be defined as a success story providing employment for millions and ensuring that essential drugs are available at affordable prices to the vast population of Indian sub-continent. The Indian pharmaceutical industry is the world's third-largest by volume and is likely to lead the manufacturing sector of India. The Indian pharmaceutical industry has witnessed a growth rate of about 10% over the last few years and has reached to US$ 12 billion in 2010. The highly fragmented Indian pharmaceutical industry has around 30,000 players, out of which 330 are in organized . India is the preferred nation for pharmaceutical generation, with low charges for research and development as well as production of drugs. The pharmaceutical industry in India meets around 70% of the country's demand for bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and injectibles.

Statistics
Annual Turnover Rs. 226 billion Growth rate 5.2% Exports Rs. 141 billion. Share of World Pharmaceutical market 1.0% in value 8% in volume terms. Global ranking 14th in value terms 3rd in volume terms . Number of Generic Brands over 60,000 in 60 therapeutic categories. Number of units - 10,000 out of which approximately 300 in organized sector . OTC market Rs. 35 b growth 18-20%. Alternative medicine - Herbal / Ayurvedic market Rs. 38 billion. Per capita drug expenditure Rs. 220 per annum.

india's Domestic Pharmaceutical Market (12 Months Ended January 2009)

Major Players
Ranbaxy Laboratories -Arun Puri, Chairman Ranbaxy is the leader in the Indian pharmaceutical market, taking in $ 1,026 million in revenues. It was the first Indian pharmaceutical to have a proprietary drug (extended-release ciprofloxacin, marketed by Bayer) approved by the U.S. FDA, its offices in 44 countries manage manufacturing in 7 countries and distribution in over 100.

 Dr. Reddy's Laboratories- K. Anji Reddy, Chairman

Founded in 1984 with $160,000, Dr. Reddy s was the first Asia-Pacific pharmaceutical outside of Japan and the sixth Indian company to be listed on the New York Stock Exchange.

Cipla- Dr. Yusuf K. Hamied, Chairman and Managing Director

Cipla burst into the international consciousness in 2000 with Triomune, an AIDS treatment costing between $300 and $800 per year that infringed upon patents held by several companies who were selling the cocktail for $12,000 per year. Long before this news, Cipla had been building a strong global presence, and it now distributes its 800-odd products in over 140 countries.

 Biocon - Dr. Kiran Mazumdar -Shaw, Chairman and Managing Director Originally an extension to an Irish chemicals company seeking to break into the Indian market, Biocon is now the leading biotech in India, bringing in Rs 646.36 crore (almost $150 million) in revenue for fiscal year 2004. It initially made its money by producing enzymes, but Biocon recently decided to become a research-oriented company with the goal of bringing a proprietary new drug to market.

 Serum Institute of India Dr. Cyrus Poonawalla, Chairman

The Serum Institute of India can make the enviable claim that 2 out of every 3 children in the world are immunized with one of their vaccines. It is the world s largest producer of measles and DTP vaccines, and its portfolio includes other vaccines, antisera, plasma products and anticancer compounds. The Serum Institute sells mainly to UN agencies and to the Indian government. The Serum Institute is part of the Poonawalla Group, whose holdings include a horse stud farm and manufacturers of industrial equipment and components.1,4,40

Comparative study between to major players

Major two players in Indian pharmaceutical sector

 Ranbaxy is the largest Indian pharmaceutical company (in terms of revenues). While Cipla is among the top three companies in the domestic retail market (ORG survey) and has presence in formulations and bulk drugs manufacturing.
Company Price Market capital 24,420.85 19,049.03 Sales turnover 5,624.91 5,672.10 Net profit Total asset

Cipla Ranbaxy Labs

304.15 452.20

1,081.49 1,148.73

5,919.16 7,482.99

 The company manufactures and markets generic formulations and APIs in India and geographies across the world namely the US, Europe, Japan, Latin America, Asia, Africa and Russia among others. All the bulk drug manufacturing facilities of the company have been approved by the US FDA and the formulation facilities have been approved by regulatory authorities in the UK, South Africa and Australia and other international agencies. Cipla has strategic alliances with major global generic companies.

Logistics
Logistics is regarded as a crucial part of the pharmaceutical industry since the activities are highly time sensitive. In addition, pharma products need temperature-controlled storage and distribution. From the beginning of its evolution, the pharmaceutical industry in India has been focusing on the development of innovative activities like high quality products, research and development, etc. In course of time, the industry has given importance to logistics by focusing on supply chain and logistic level activities such as delivering the product to the end-customer at the right time, right place, in a secure mode and at a competitive operational cost. The most important supply chain factors in pharmaceutical industry are inventory reduction and reduction of order cycle time. This is because, operational performance could be directly linked to logistics costs, while inventory reduction and the demand to decrease order cycle time are related to just-in-time deliveries and supply chain speed.

Distribution
Drug distribution in India has witnessed a paradigm shift. Before 1990, pharmaceutical companies used a different distribution system, in which they established their own depots and warehouses that now have been replaced by clearing and forwarding agents (CFAs). Drug distribution in India is layered and regulated. Distribution in India is proportionally much more costly than it is in the US or EU THE FUTURE OF INDIA'S DISTRIBUTION SYSTEMS is Organized Retail. Products flow through company warehouses, wholesale distributors, retail pharmacies, medical institutions, and finally to consumers. However, manufacturers are increasingly realizing the importance of an effective distribution system, all the way to the end-customer.

Channel of distribution

SWOT Analysis

Strengths
Low labour cost as well as high educated people. People of india are a great asset. Well-established network of laboratories and R&D infrastructure. Well developed and diverese education system. Colabration between software and pharmaceutical industry.

 Weakness
Low investments in innovative R&D. Availability of fund is a major weakness. Lack of effort to gain FDA approval of drug. Low barrier to entry in pharma market. Lack of experience and low level of strategic planning in international market.

 0pportunities
Largest democratic country with high GDP growth rate. Indian policy of of open to foreign investment Huge middle class people having a vigorous buying capacity. Licensing deals with MNCs for NCEs & NDDS Expenses per patient for clinical trial in India is much less compared with that in US. Lowest cost producer with FDA approval plant.

 Threats
Product patent regime poses serious challenge to domestic industry unless it invests in R&D Dumping of bulk drugs and formulations by neighboring countries. Threats from other low cost countries like china and Israel Lowering of tariff protection

Current Affairs
CIPI concern over proposed India-China free trade. Budget allocation goes up for jan aushadhi technical upgradation of pharma unit. 285 lakh doses of BCG Lab vaccines wasted after suspension of its licence, February 24, 2011 Dr Reddy s to transform itself to innovator company in ten years, says Anji Reddy, February 24, 2011 Pharmexcil may cancel Pharma India brand promotion programme in Egypt due to political unrest, February 22, 2011

 Health Ministry issues final draft knowledge management policy for health. Mumbai retailer may stop purchase of multi power xtra dettol product soon. IPA hospital pharmacy division urges to create new clause to MCI to generate new jobs. NRHM gets boost as allocation for health sector goes by 20% in the new budget. Cipla introduces NTBS a new pain free screening technology for early detection of breast cancer in India.

Recommendation to this sector

Using the Incredible export potential and New innovative therapeutic products we can increases the pharmaceutical market. The sector need to improve on their strategic planning. The sector need to increase their R&D investments in order to Compete other MNC s Try to remove Production of duplicate drugs. The sector should use the opportunity of globalization Increase in the population of high income group the rates of the drugs can adjusted to obtain more profit there by using this profit to increase the R&D margins.

Thank You