Sector structure/Market size

India's pharmaceutical industry is now the third largest in the world in terms of volume and accounts for 10 per cent of the world’s production. According to the Mr Srikant Kumar Jena, Minister of State for Chemicals and Fertilisers, the Indian pharmaceutical industry is now over US$ 20 billion.

India ranks fourteenth in terms of value. The country ranks fourth in terms of generic production and seventeenth in terms of export value of bulk actives and dosage forms, according to Mr Jena.

According to a detailed research by Angel Broking, by 2015, India is expected to rank among the top 10 global pharmaceutical markets. The industry is typically growing at around 1.5-1.6 times the country’s gross domestic product (GDP) growth.

Moreover, according to a FICCI-Ernst & Young study, the increasing population of the higher-income group in the country will, by 2015, open a potential US$ 8 billion market for multinational companies selling costly drugs. Besides, the report said the domestic pharma market is likely to touch US$ 20 billion by 2015, making India a lucrative destination for clinical trials for global giants.

The Indian pharmaceutical offshoring industry is slated to become a US$ 2.5 billion opportunity by 2012, thanks to lower R&D costs and a high-talent pool in India.

Exports

India's exports of drugs, pharmaceuticals and fine chemicals grew by 29 per cent in 2008-09 to US$ 8.25 billion compared to 2007-08.

According to Mr Anand Sharma, Union Minister of Commerce and Industry, the Indian pharmaceutical sector has emerged as one of the major contributors to Indian exports with export earnings rising from a negligible amount in the early 1990s to US$ 6.08 billion by 2007-08.

A report by industry research firm, RNCOS, forecasts that pharmaceutical exports will grow at a compound annual growth rate (CAGR) of 18.5 per cent between 2007-08 and 2011-12. This growth will be fuelled by multi-billion dollar patent expirations and growth in the global generics market.

Growth

The domestic pharma market will outshine the global market, growing at a compounded annual rate of 12-15 per cent as against a global average of 4-7 per cent during 2008-2013, according to a study by market research firm IMS.

According to detailed research by Angel Broking, socio-economic factors such as rising income levels, increasing affordability, gradual penetration of health insurance and the rise in chronic diseases would see the Indian formulation market touch US$ 13.7 billion by 2013, at a CAGR of 12.2 per cent over the period from fiscal year 2008 to 2013 (estimated).

Denmark-based world leader in diabetes care, Novo Nordisk, is looking at making India the hub for manufacturing insulin for the sub-continent. The company has set up a dedicated facility with a capacity of 26 million vials per annum in partnership with Ahmedabad-based Torrent Pharmaceuticals Ltd.

Rural Market

According to estimates, rural areas account for 21 per cent of the country's pharmaceuticals market. In 2006-07, the rural Indian pharmaceuticals market was estimated at around US$ 1.4 billion, having grown at about 40 per cent in 2006-07 against 21 per cent in the previous year.

French company Aventis Pharma has launched a rural market division with 10 products and a sales team of 300 people as it eyes a bigger share of the fast growing Indian rural market.

Pharmaceutical Retail

The Indian drug retail market grew by a 29.24 per cent in value terms in October 2009 over the same period a year ago. This is more than double the average monthly revenue growth rate of 13-14 per cent posted in the recent past, as per market research firm ORG IMS.