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.

The Indian pharmaceuticals market stood at Rs 1.39 lakh crore (US$ 19.89 billion) for the year ending November 2019 with Lupin, Mankind Pharma, Intas Pharmaceuticals and Alkem Laboratories leading the growth. Indian pharma companies received a total of 415 product approvals in 2018 and 73 tentative approvals. Affordable medicines under the Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) have led to savings of Rs 1,000 crore (US$ 143.08 million) for Indian citizens in FY19.

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$ 10.8 billion in FY20 (up to November 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. Healthcare sector witnessed private equity investment of US$ 1.1 billion with 27 deals in first half of 2019.

Medical devices industry in India has been growing 15.2 per cent annually and was valued at US$ 5.2 billion in 2018 and expected to grow US$ 8.16 billion by 2020 and reach US$ 25 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$ 16.27 billion between April 2000 and September 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. In November 2019, Cabinet approved the extension/renewal of the extant Pharmaceuticals Purchase Policy (PPP) with the same terms and conditions while adding one additional product namely, Alcoholic Hand Disinfectant (AHD) to the existing list of 103 medicines till the final closure/strategic disinvestment of the Pharma CPSUs.

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 22.4 per cent and medical devices market is expected to grow to US$ 55 billion by 2020. FDI increased to 74 per cent in existing pharmaceutical companies and 100 per cent for new projects.