Pharmaceuticals Sector Overview

Indian pharmaceutical industry is third largest in the world and is one of the most developed
industries.
Technologically strong and totally self-reliant, the pharmaceutical industry in India has low costs of
production, low R&D costs, innovative scientific manpower, strength of national laboratories and an
increasing balance of trade. Indian pharmaceutical industry today is ranked world class, in terms of
technology, quality and range of medicines manufactured. From simple headache pills to
sophisticated antibiotics and complex cardiac compounds, almost every type of medicine is now made
indigenously.
The industry today can boast of producing the entire range of pharmaceutical formulations, i.e.,
medicines ready for consumption by patients and about 350 bulk drugs, i.e., chemicals having
therapeutic value and used for production of pharmaceutical formulations.
The pharmaceutical industry in India is stated to be valued at approximately US$ 12.26 billion as per
industry estimates. This industry is growing @ 10-11% per annum on compounded growth rate basis.
Although total turnover of pharmaceutical industry is estimated at 21.04 billion, about 65% of this
revenue is from exports. It spends around 18 % of this revenue on research and development (R&D)
activities. Additionally, Indias clinical research industry is estimated to be a US$ 2.2 billion with a
high growth rate of 23%. Moreover, Indian pharmaceutical off-shoring industry is slated to become a
US$ 2.5 billion opportunity by 2012, due to low R&D costs and a high-talent pool.
Through the introduction of a system of product patents since 2005, Indian industry has today
become very a worldwide exporter of high quality generic drugs. India exports pharmaceuticals to
many countries across the world, including the U.S., Germany, France, Russia and UK.
Investment Policy
The Indian Government is very proactive for boosting growth and investment in Indian
pharmaceutical sector. It allows 100 per cent FDI under the automatic route in the drugs and
pharmaceuticals sector.
The DIPP data suggests that the drugs and pharmaceuticals sector has attracted an impressive level of
FDI worth US$ 1,882.76 million during April 2000 to March 2011. Industrial licenses are not required
in India for most of the drugs and pharmaceutical products. Manufacturers are free to produce any
drug duly approved by the Drug Control Authority.
This patent regime has led to the investment from many pharmaceutical multinationals in India. Now
they are looking at India not only for its traditional strengths in contract manufacturing but also as a
highly attractive location for research and development (R&D), particularly in the conduct of clinical
trials and other services. Indian and foreign companies are continuing with patented drug launches in
India and between 2005 and 2010, the Indian Patent Office has granted 3,488 product patents, as per
a KPMG report.
Indian Governments Initiatives

The Department of Pharmaceuticals has prepared a "Pharma Vision 2020" document for making India
one of the leading destinations for end-to-end drug discovery and innovation. Through this, the government
provides support by way of world class infrastructure, internationally competitive scientific manpower for
pharma R&D and venture fund for research in the public and private domain.

The Government is also embarking on a major multi-billion dollar initiative with 50 per cent public
funding through a public-private partnership (PPP) model to harness Indias innovation capability. The vision is
to catapult India into one of the top five pharmaceutical innovation hubs by 2020, targeting to achieve a global
niche with one out of every five to ten drugs discovered worldwide by 2020 originating from India.

The Government has also been taking various policy initiatives for the pharmaceutical sector. These
include tax-breaks to the pharmaceutical sector and weighted tax deduction at 150% for the R&D expenditure
incurred. Steps have also been taken to streamline procedures covering development of new drug molecules,
clinical research etc. Indian Government has launched two schemesNew Millennium Indian Technology
Leadership Initiative and the Drugs and Pharmaceuticals Research Programmespecially targeted at drugs and
pharmaceutical research.

The Central Drug Standard Control Organisation (CDSCO), which falls under the purview of the
Ministry of Health and Family Welfare, is the primary pharma regulatory body in India. The Drug Controller
General of India (DCGI) presides over the CDSCO at both the central and state levels.

The Goverment also plans to set up a Pharmacopeial Commission to support Ayurveda,Yoga and
Naturopathy, Unani, Siddha and Homoeopathy (AYUSH) through guidelines laid down in the review of the
Eleventh Plan.

Market Highlights
Multinational companies that have entered the market seek out the domestic industry's skills and
infrastructures to boost their research and manufacturing activities in the subcontinent and also open
up this vast, virtually untapped market.
Indias largest pharmaceutical companies are attaining global-player status as existing markets
expand, and new ones open up, for high quality, affordable generic drugs. Indian firms have embarked
on an unprecedented shopping spree of overseas acquisitions to establish themselves in these highly
lucrative markets and boost their capacities, as demand continues to grow.
In 2009, India had more than 120 US Food and Drug Administration (FDA) approved plants and
approximately 84 UK Medicines and Healthcare products Regulatory Agency (MHRA)-approved
plants, with capabilities to manufacture products with exceptional quality standards.
Most of these plants have multiple approvals from regulatory authorities in Canada, Australia,
Germany and South Africa.
Indian government has promoted development of special economic zone (SEZ) for pharma sector.
There are 19 dedicated SEZs in India at various stages of development. Functional pharmaceutical
SEZs in India include Jawaharlal Nehru Pharma City (JNPC) in Visakhapatnam (Andhra Pradesh),
PHARMEZ (Gujarat) developed by Zydus Infrastructure and PhaEZ Park (Gujarat) developed by
Cadila Pharma.
Major Players
India has a total of 24,000 pharmaceutical companies, of which around 250 fall under the organised
category. These 250 organised units control nearly 70 per cent of the market. About 8,000 small scale
units together form the core of the pharmaceutical industry in India, including 5 Central Public Sector
Units. About 75% of the top 20 pharma companies are Indian owned.
Some of the major Indian private companies are Alembic Chemicals, Aurobindo Pharma, Ambalal
Sharabhai Limited, Cadila Healthcare, Cipla, Dr. Reddys, IPCA Laboratories, Kopran, Lupin Labs,
Lyka Labs, Nicholas Piramal, Matrix Laboratories, Orchid Chemical and Pharmaceuticals, Sun
Pharmaceuticals, Ranbaxy Laboratories, Torrent Pharma, TTK Healthcare, Unichem Labs, and
Wockhardt. The foreign companies in India include Abott India, Astra Zeneca India, Aventis Pharma
India, Burrough-Wellcome, Glaxo SmithKline, Merck India, Novartis, Pfizer Limited, and Wyeth
Ledele India.
Sector Outlook
India's pharmaceutical sector is slated to grow to US $ 55 billion by 2020, based on projections by a
McKinsey report on Pharma 2020.
While pharmaceutical MNCs already present in India are further consolidating their presence through
acquisitions, many MNCs have staged a re-entry after 2005. The share of pharmaceutical MNCs in the
domestic pharmaceutical market is estimated to increase to 35 per cent by 2015.
India rates higher than other countries on cost efficiency. This is visibly reflected in the manufacturing
costs of US FDA-approved plants in India, wherein the costs are 65 per cent lower than that in the US
and 50 per cent lower than that in Europe.
Going forward, there is immense scope for growth. The per capita consumption of drugs in India,
stands at US$3, is amongst the lowest in the world, as compared to Japan- US$412, GermanyUS$222 and USA- US$191. Apparently, this huge gap indicates the underlying opportunities.
Outsourcing in the fields of R&D and manufacturing is the next best event in the pharmaceutical
industry. Spiraling cost, expiring patents, low R&D cost and market dynamics are driving the MNCs to
outsource both manufacturing and research activities. India with its apt chemistry skills and low cost
advantages, both in research and manufacturing coupled with skilled manpower will attract a lot of
business in the days to come.
Sources:

http://www.cci.in/pdf/surveys_reports/indias_pharmaceutical_industry.pdf

http://www.clustercollaboration.eu/documents/10147/101938/Biotechnology+...

http://www.ibef.org/industry/pharmaceuticals.aspx

http://dipp.nic.in/fdi_statistics/india_FDI_April2011.pdf

http://www.in.kpmg.com/pdf/Indian%20pharma%20outlook.pdf

http://www.clustercollaboration.eu/documents/10147/101938/Biotechnology+...

http://online.wsj.com/public/resources/documents/McKinseyPharma2020Execu...

Credit Suisse upgrades Sun Pharma to 'outperform'

from 'neutral'
ET Bureau May 5, 2016, 01.55PM IST

(Credit Suisse has upgraded)

By Sanam Mirchandani
MUMBAI: Credit Suisse has upgraded shares of Sun Pharmaceutical Industries to 'outperform' from
'neutral' and raised target price to Rs 925 from Rs 775 stating that checks suggest the company has
taken a price increase in all branded products in the US.
Sun Pharma has taken a price increase in branded portfolioacross Taro, Ranbaxy and Dusa products
which should raise the company's EBITDA by $35 million on an annualised basis, Credit Suisse said
in a note today.