Indian Pharmaceuticals Industry Analysis

Indian pharmaceutical sector industry supplies over 50 per cent of global demand for various vaccines, 40 per cent of generic demand in the US and 25 per cent of all medicine in UK. India contributes the second largest share of pharmaceutical and biotech workforce in the world. The pharmaceutical sector in India was valued at US$ 33 billion in 2017. India’s domestic pharmaceutical market turnover reached Rs 1,29,015 crore (US$ 18.12 billion) in 2018, growing 9.4 per cent year-on-year (in Rs) from Rs 1,16,389 crore (US$ 17.87 billion) in 2017. In February 2019, the Indian pharmaceutical market grew by 10 per cent year-on-year and market stood at Rs 11,244 crores (US$ 1.61 billion) for the month of May 2019.

With 71 per cent market share, generic drugs form the largest segment of the Indian pharmaceutical sector. Based on moving annual turnover, Anti-Infectives (13.6 per cent), Cardiac (12.4 per cent), Gastro Intestinals (11.5 per cent) had the biggest market share in the Indian pharma market in 2018.

Indian drugs are exported to more than 200 countries in the world, with the US as the key market. Generic drugs account for 20 per cent of global exports in terms of volume, making the country the largest provider of generic medicines globally and expected to expand even further in coming years. Pharmaceutical exports from India, which include bulk drugs, intermediates, drug formulations, biologicals, Ayush & herbal products and surgicals reached US$ 19.14 billion in FY19 and US$ 5.17 billion in FY20 (up to August 2019). The exports are expected to reach US$ 20 billion by 2020. In FY18, 31 per cent of these exports from India went to the US.

Medical devices industry in India has been growing 15.2 per cent annually and was valued at US$ 5.2 billion in 2018 and is expected to reach US$ 50 billion by 2025.

The ‘Pharma Vision 2020’ by the government’s Department of Pharmaceuticals aims to make India a major hub for end-to-end drug discovery. The sector has received cumulative FDI worth US$ 15.98 billion between April 2000 and March 2019. Under Budget 2019-20, total allocation to the Ministry of Health and Family Welfare is Rs 62,599 crore (US$ 8.96 billion). Rs 6,400 crore (US$ 915 million) has been allocated to health insurance scheme Ayushman Bharat- Pradhan Mantri Jan Arogya Yojana (AB-PMJAY). As per Union Budget 2019-20, Rs 1,900 crore (US$ 0.27 billion) have been set aside for research of the total amount and Rs 62,659 crore (US$ 8.96 billion) allocated for Ministry of Health and Family Welfare.

As per Economic Survey 2018-19, government expenditure (as a percentage of GDP) increased to 1.5 per cent in 2018-19 from 1.2 per cent in 2014-15 for health. Indian pharmaceutical sector is expected to grow at a CAGR of 15 per cent soon and medical device market expected to grow US$ 50 billion by 2025.