Globally, the Indian pharmaceutical industry is ranked third largest in volume terms and 10th largest in value terms. The sector is highly knowledge-based and its steady growth is positively affecting the Indian economy. The organised nature of the Indian pharmaceutical industry is attracting several companies that are finding it viable to increase their operations in the country.
The Indian pharmaceutical industry is highly fragmented with about 24,000 players (330 in the organised sector). The top ten companies make up for more than a third of the market.
Indian pharma companies have a large chunk of their revenues coming from exports. While some are focusing on the generics market in the US, Europe and semi-regulated markets, others are turning their attention to custom manufacturing for innovator companies. Biopharmaceuticals is also increasingly becoming an area of interest given the complexity in manufacture and limited competition.
India's drugs and pharmaceuticals industry is expected to grow at a compound annual growth rate (CAGR) of 14 per cent to reach a turnover of Rs 2.91 trillion (US$ 47.06 billion) by 2018.
The domestic drugs industry, which is valued at Rs 1.6 trillion (US$ 25.87 billion) at present, according to Care Ratings, is also expected to grow in the local market with aggressive rural penetration by drug makers, increased government spending on health, and growing health awareness among people.
India exports pharmaceutical products to more than 200 countries. Pharmaceutical exports are expected to cross the Rs 1 trillion (US$ 16.17 billion) mark this year. "The growth would be around 15 per cent and is driven by formulation exports," said Dr PV Appaji, Director-General, Pharmaceutical Export Promotion Council (Pharmexcil). During 2013-14, pharma exports stood at Rs 90,000 crore (US$ 14.55 billion). Out of this, the share of formulations was 71 per cent.
India currently exports drug intermediates, Active Pharmaceutical Ingredients (APIs), Finished Dosage Formulations (FDFs), bio-pharmaceuticals, and clinical services across the globe.
The allowance of foreign direct investment (FDI) in India's pharma sector has been well received by foreign investors. According to data released by the Department of Industrial Policy and Promotion (DIPP), the drugs and pharmaceutical sector attracted FDI worth US$ 12,688.71 million between April 2000 and September 2014.
Some of the major investments in the Indian pharmaceutical sector are as follows:
The Government of India has unveiled 'Pharma Vision 2020' aimed at making India a global leader in end-to-end drug manufacture. It has reduced approval time for new facilities to boost investments. Further, the government has also put in place mechanisms such as the Drug Price Control Order and the National Pharmaceutical Pricing Authority to address the issue of affordability and availability of medicines.
Some of the major initiatives taken by the government to promote the pharmaceutical sector in India are as follows:
Indian generic drug makers are exploring all options to get a foot in the door to Japan's lucrative but difficult-to-crack US$ 111 billion drug industry. The penetration of generic drugs in Japan, the world's largest drug market after the US and Europe, is a little more than 30 per cent.
The domestic market will also see a significant growth in sales on the back of increasing affluence, changing lifestyles resulting in higher incidence of lifestyle-related diseases, increasing government expenditure on healthcare through schemes like the Central Government Health Scheme (CGHS), National Programme for Healthcare of the Elderly (NPHCE), Rashtriya Arogya Nidhi (RAN) and Janani Suraksha Yojana (JSY) in the next three years, according to Care analysis.
The rise of pharmaceutical outsourcing and investments by multinational companies (MNCs), allied with the country's growing economy, committed health insurance segment and improved healthcare facilities, is expected to drive the market's growth.
Exchange rate used INR 1= US$ 0.016 as on November 27, 2014
References: Consolidated FDI Policy, Department of Industrial Policy & Promotion (DIPP), Press Information Bureau (PIB), Media Reports, Pharmaceuticals Export Promotion Council