INDIAN PHARMA INDUSTRY IS HIGHLY FRAGMENTED:

The Indian pharma industry is highly fragmented and has grown enormously in the last 20 years.
This industry is highly dependent on science and technology. It is assumed that there are around
24000 players in this segment and around 330 in the organised sector.
The organised pharma industry has been growing at about eight to nine per cent annually. India is
among the top five pharma emerging markets. There are provisions for phase II clinical trials and
new drug launches in the coming year. Continued growth in therapies and expansion in rural
market, the Indian pharma industry is expecting a growth of 1314 per cent. The domestic
pharma market is expected to grow because of increasing population of the higher income group.
It is estimated that the healthcare industry in India may touch $31.59 billion by 2020.
Source: http://www.financialexpress.com/article/pharma/management-pharma/impact-of-it-onindian-pharma-industry/56552/
GROWTH DRIVERS:
The market size ofo inidan pharme industry was USD 12.6 billion in 2009 and has the potential
to grow upto USD 55 billion in 2020. Even in the pessimistic scenario it is expected to reach
USD 35 billionn in the year 2020. In aggressive growth scenario the industry has potential to
reach USD 70 billion dollars by 2020.
The following are the growth drivers of indian pharma industry:
1. Population growth at around 1.3 percent every year and a steady rise in disease
prevalence will increase the patient poolby nearly by 20% in the year 2020.
2. The affordability of drugs will increase due to steady increase in the incomes and
increase in insurance coverage. Rising incomes will drive 73 million households into
middle and upper income segment. By 2020 nearly 650 million people will enjoy health
insurance coverage.
3. Accessability of drugs will expand due to growth in medical infrastructure, new business
models for tier-II towns and rural areas, launches of patents and products, and a greater
government spending on healthcare. Medical infrastructure will experience draatic
growth over the next decade, with over USD 200 billion being investeed in creating and
upgrading medical infrastructure.
4. The acceptability of modern medicine and newer therapies will increase due to aggressive
market creation by players, an increased acceptance of biologics and preventive

medicines, and a greater propencity to self medicate. In the base case scenario, all the
important growth drivers will witness robust progress.
More details about growth of indian pharma industry - https://www.google.co.in/url?
sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CB0QFjAAahUK
Ewjv5fir_ufHAhWSc44KHe2oCIE&url=http%3A%2F%2Fwww.mckinsey.com%2F~
%2Fmedia%2Fmckinsey%2520offices%2Findia%2Fpdfs
%2Findia_pharma_2020_propelling_access_and_acceptance.as&usg=AFQjCNFfHpmTs
8dkEkLXWiaQHDAbZjpK3w&bvm=bv.102022582,d.c2E
The above link contains mc Kinsey report on the indian pharma industry growth. All the
above facts are taken from the report.
ALL THE MAJOR PLAYERS IN INDIAN PHARMA SECTOR ARE LISTED:
Some of the major players are dr. reddys, cipla, GSK, Jubilant life sciences, aurobindo, ipca
laboratories, lupin, etc.
P/E RATIO OF PHARMA INDUSTRY
According to craytheon.com the average p/e ratio of pharma industry is 71.84 (not long term).
According to edelweiss, the pharmaceutical PE ratio is 37.99. which is growing at 3 year CAGR
of 27.6 %.
The pharma industry in india is currently over weighted/ over valued as the PE ratios is high.
MY DECISION:
Considering the fact that pharma industry has a huge growth potential in india, I would like to
invest in pharma sector. But as the market is currently overvalued, I would like to enter this
sector when there is a correction in the stock prices of the companie in this sector.
Except for PE ratio, all other external conditions are favorable for this industry to grow.