India’s pharma industry accounts for about 1.4 per cent of the global pharma industry in value terms and 10 per cent in volume terms. Among the fastest growing pharma industries in the world, India’s pharmaceutical sector is expected to expand at a compound annual growth rate (CAGR) of 12.1 per cent during 2012–2020 and reach US$ 45 billion.
The Indian pharmaceuticals market grew at a CAGR of 17 per cent in 2012. By 2020, the country is expected to be within the top three pharmaceutical markets by incremental growth and sixth largest market globally in absolute size. Currently, Indian drugs are exported to more than 200 countries in the world, with the US as the key market.
The Government of India’s expenditure on health increased from US$ 14 billion in 2008 to US$ 23 billion in 2011. The expenditure is projected to expand at a CAGR of 18 per cent during 2008–16 to touch US$ 53 billion, thereby increasing the share of government expenditure towards total healthcare spending from 27.6 per cent to 39.9 per cent during the same period.
With 70 per cent of India’s population residing in rural areas, pharma companies have immense opportunities to tap this market. Demand for generic medicines in these regions has seen a sharp growth, and various companies are investing in the distribution network in rural areas. The share of generic drugs is expected to continue increasing; it could represent about 90 per cent of the prescription drug market by 2016.