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Pharmaceuticals

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Pharmaceuticals

February, 2012

The Indian pharmaceutical market is expected to touch US$ 74 billion sales by 2020 from US$ 11 billion now, according to a PricewaterhouseCoopers (PwC) report. India's pharmaceutical market grew at 15.7 per cent during December 2011, with growth in key therapy areas, including anti-diabetics, derma and vitamins outperformed the market, according to data compiled by market research firm All India Organisation of Chemists and Druggists (AIOCD).

India has every chance to capitalise the opportunity to become a pharmaceutical Superpower in 2020 and a hub for all pharmaceutical manufacturing & research needs, according to Subodh Priolkar, President, 63rd IPC, and regional Managing Director, Colorcon Asia.

Sector Structure/ Market Size

Fitch Ratings' outlook on the Indian pharmaceutical sector for 2012 or the financial year to end-March 2013 (FY13) is stable. The agency expects credit profiles to remain stable, should long-term earnings and profitability prospects remain intact with moderate capex.

"Aggregate disclosed value of merger & acquisitions (M&A) deals in the pharmaceuticals sector surged from a meagre US$ 1.2 billion in FY10 to US$ 4 billion in FY11, reflecting a jump of more than 230 per cent," as per an Ernst & Young (E&Y) report. M&A has emerged as one of the key strategies in the last two to three years to gain a foothold in emerging markets with several big ticket acquisitions, the report added.

Domestic pharmaceutical retail market clocked a robust 15 per cent growth during 2011, mainly driven by therapies like anti-diabetic, vitamin, anti-infectives and dermatology. The domestic pharmaceutical retail reached a new milestone by recording overall sales of Rs 60,000 crore (US$ 12.20 billion) for the year 2011.

Exports

The Ministry of Commerce has proposed an ambitious Strategy Plan to double pharmaceutical exports from US$ 10.4 billion in 2009-10 to US$ 25 billion by 2013-14. The Government has also planned a 'Pharma India' brand promotion action plan spanning over a three-year period to give an impetus to generic exports.

India has world renowned capacity in producing low cost, high quality bulk and generic drugs. Supply of such drugs and investment in producing pharmaceutical products in Belarus through joint venture (JV) by Indian companies will provide win-win situation for both countries. Presently US$ 700 million is the size of pharma market in Belarus and about 70 per cent of the total requirement of Belarus is imported.

Growth

The drugs and pharmaceuticals sector attracted foreign direct investments (FDI) worth US$ 5.03 billion between April 2000 and November 2011, according to the latest data published by Department of Industrial Policy and Promotion (DIPP).

The Indian pharmaceutical market is poised to grow to US$ 55 billion by 2020 from the 2009 levels of US$ 12.6 billion, as per a McKinsey & Company report titled "India Pharma 2020: Propelling access and acceptance realising true potential". The industry further holds potential to reach US$ 70 billion, at a compound annual growth rate (CAGR) of 17 per cent.

India's pharmaceutical sector is gaining a global leadership position and Indian generics today constitute nearly a fifth of global supplies. Our pharmaceutical companies can be of immense value in providing affordable healthcare which is much needed in a country of Japan's demographic profile. India also has a vast pool of trained pharmaceutical scientists, doctors and researchers, which opens up avenues for joint collaborative research for new drug discoveries along with joint intellectual property rights (IPRs).

Generics

Generics will continue to dominate the market while patent-protected products are likely to constitute 10 per cent of the pie till 2015, according to McKinsey report 'India Pharma 2015 - Unlocking the potential of Indian Pharmaceuticals market'.

Avesthagen, India's leading integrated systems biology platform company, has signed a memorandum of understanding (MoU) with Kutlo-Nitt, a Niigata-based consortium of 11 Japanese universities and two technology licensing organisations. The partnership is expected to bring important diagnostics and therapies to patients throughout the world. Avesthagen continues its commitment to deliver the best therapeutic and diagnostics solutions.