The drug and pharmaceutical sector has a direct link with the health care system. Drugs are used to protect, maintain, and restore the health of people. The pharmaceuticals industry therefore, plays an important role in the provision of health care. The Global & Indian pharmaceutical industry is growing and there is increased demand for Indian bulk drugs and generics in other countries. This sector has a long history of internal reforms and has also been affected by general reforms in other sectors.4

global pharma

1991 Budget, the day that changed India forever. The major happening was economic liberalization of 1991 which brought India in limelight & the stage was set for fast growth & development. The phenomenon of economic liberalization set the Indian drug market free to expand & US quickly become the largest market for India’s large generic drug companies.3

Dr Reddy ‘s Laboratories became the first Indian Company to receive 180-day marketing exclusivity in the US generics market. The company received the final USFDA approval to market its fluoxetine 40 mg capsules on August 2, 2001.The profits were really good with this launch & it attracted other Indian Drugs companies to US. 2nd major happening occurred in the same year when with the concept of “None Shall be Denied”, Cipla in 2001, introduced the world’s first ever recommended 3-in-1 fixed dose combination (Stavudine + Lamivudine + Nevirapine) to fight AIDS. It was made available at less than $1 per day compared to over $12,000 per patient per year prevailing in most countries throughout the world.7 

triviaPF1-compressed

Let’s see a Snapshot how Indian Pharma Industry has evolved2

1970-1990

 Indian Patent Act passed in 1970

Several domestic companies start operations

Development of production infrastructure

Export initiatives taken

1990-2010

Liberalized market

Indian companies increasingly launch operations in foreign countries

India a major destination for generic drug manufacturing

Approval of Patents (Amendment) Act 2005, which led to adoption of product patents in India

2010

Increased patent filings by pharma players

 Likely adoption of newer sales models such as channel management, KAM(Key Account        Management) and CSO( Contract Sales Organization)

The National Pharmaceutical Pricing Policy, 2012 (NPPP-2012)

2010- 2015

 In 2013: New Drug Pricing Control Order issued by Directorate of Food and Drugs this will reduce the prices of drugs by 80 per cent

2014: 100 per cent FDI allowed in medical device industry. The investment will be routed through automatic route. Leading Indian pharma companies are raising funds aggressively to fund acquisition in domestic as well as international market to increase their product portfolios.

 2015: India has 10,500 manufacturing units and over 3,000 pharma companies

 National Health Policy Draft 2015 to increase expenditure in health care sector

 Patent Act Amendment 2015, it includes amendments in Patent Act 2002.

2016 onwards

In Union Budget, 2016, FDI increased to 74 per cent in existing pharmaceutical companies.  The Government of India unveiled ‘Pharma 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.

Data to understand current scenario of Pharma Industry 

Active Pharmaceutical Ingredients (APIs): 3rd  largest global generic API merchant market by 2016, 7.2% market share.  2nd largest number of Abbreviated New Drug Applications (ANDAs), is the world’s leader in Drug Master Files (DMFs) applications with the US.

Formulations: Largest exporter of formulations in volume, 14% market share and 12th in terms of export value. Domestic market size valued at US$ 11.2 billion. Double-digit growth expected over the next 05 years. 

Biosimilars: Domestic market is expected to reach US$ 40 billion by 2030.

Contract Research and Manufacturing Services (CRAMS):  More than 1,000 players. This subset of Indian pharma sector is estimated to reach US$ 18 billion in 2018 and expected   CAGR of 18-20% between 2013-2018.

Growth Trends of Indian Pharma Sector: The Indian pharmaceuticals market had growth at a CAGR of 5.64% during 2011-16. The industry’s revenues are estimated to have grown by 7.4 per cent in Fiscal year 2017.

2_Indianpharmagrowthpf

 

Growth Potential: By 2020, India is likely to be among the top three pharmaceutical markets by incremental growth.

World pharma market

USP of Indian Pharma Sector in current scenario2

 API is the largest segment of the Indian pharmaceuticals sector

– India’s cost of production is significantly lower than that of the US and almost half of that of Europe. It gives a competitive edge to India over others.

– Robust growth in Biotech industry: Constitute 800 companies with potential to achieve market size of US$ 100 billion by 2025.

– Bio-pharma accounts for majority market share and witnesses fastest growth in FY16

– Generic drugs form the largest segment of Indian pharma market: With 70 per cent of market share (in terms of revenues), generic drugs form the largest segment of the Indian pharmaceutical sector. India supplies 20% of global generic medicines market exports, in terms of volume, making the country the largest provider of generic medicines globally and expected to expand even further in coming years.

– Anti-infective drugs lead the pharma market is 16% & Cardiovascular segment 13%.

– Pharma export to continue witnessing high growth:  In FY17, India exported pharmaceutical products worth US$ 16.8 billion, with the number expected to reach US$ 40 billion by 2020. Indian drugs are exported to more than 200 countries in the world, with the US as the key market.

– Pharma giants putting more money in R&D spending: Sun & Lupin R & D spending 7.6% & 13.5% of Sales in FY17.

 

There are a few things that are to be looked out for in 2017 for Indian Pharma Market8

  • DPCO control on pricing
  • China’s perspective on API
  • Generics pricing ambiguity in US.
  • Mergers & Acquisitions
  • Patent Rules & IPR (Intellectual Property Rights) decisions
  • Regulatory inspections & their outcomes
  • Biosimilar market & Biotech infrastructure development by Government.

 

References:

  1. Indian Pharma 2020: Propelling access & acceptance, realizing true potential
  2. IBEF report-Sept,2017 report on Pharmaceutical industry India
  3. http://www.livemint.com/Industry/FsuFVKI1dNC30O4TyWeOGO/Fading-glory-Indian-pharma-industry-in-uncharted-terrain.html/accessed
  4. http://www.iipa.org.in/common/pdf/PAPER%202_Economic%20Reforms%20and%20Drug%20Policy.pdf
  5. http://www.evaluategroup.com/Universal/View.aspx?type=Story&id=29606
  6. The Indian Pharmaceutical Industry: Collaboration for Growth. KPMG report.
  7. http://www.cipla.com/en/therapies/hiv-aids.html
  8. http://www.moneycontrol.com/news/business/economy/5-trends-to-watch-out-forthe-pharma-sector2017-939567.html

 

 

 

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