Market Value

The Indian Pharma Industry is valued at 72069 crore INR in 2013 as

against 65654 crore INR in 2012 with an incremental value of 6416
crore INR.
Market Share
The top 10 companies contributed to 41% of total industry sales up
while the top most company contributed to nearly 7% of total industry
sales.
Fragmented Market
The total no. of stockists in India is around 65,000 and the total no. of
pharmacies is about 550,000.
These stockists are spread all across the length and breadth of India
which poses a huge logistical challenge.
Town Class
Penetration
Town - Class
% of the Indian Pharma
Industry
Metros 30
Class I Towns 31
Class II to VI Towns 19
Rural 20
Major contributor to
global pharma market
The countrys pharma industry accounts for about 1.4 per cent of the
global pharma industry in value terms and 10 per cent in volume terms
Fast growing industry
The Indian pharmaceutical industry revenue is expected to expand at a
CAGR of 17.8 per cent during 200816 and reach USD36 billion
Rapidly growing
healthcare sector
The healthcare sector in India is expected to reach USD100 billion by
2015
Growing generics
market
The generics market is expected to grow to USD26.1 billion by 2016
Source: India Biz, PharmaBiz, Frost and Sullivan report on Indian Pharmaceutical Market, Aranca Research
Ranked 5
th
in terms of
attracting FDI
Attracted 5 per cent of the total FDIs into India from April 2000 to March
2013
Cumulative FDI inflows worth USD10.3 billion from April 2000 to March
2013
Fast growth to continue in domestic segment
The Indian pharmaceuticals industry
revenues are expected to rise at a CAGR of
17.8 per cent to USD36 billion during
200816


9.7
11.2
13.8
15.6
17.4
20.8
25
30
35.9
0 10 20 30 40
2008
2010
2012F
2014F
2016F
Domestic Segment
Sales in USD billion
Fast growth to continue in exports segment
Pharma exports from India are forecasted
to increase more than two folds over the
next five years

The trade surplus in the pharma sector is
likely to expand to USD16.5 billion by
2016
4.9
4.9
6
7
8
9.8
12
14.7
18.2
0 5 10 15 20
2008
2010
2012F
2014F
2016F
Exports Segment
Sales in USD billion
Source: Business Monitor International, Aranca Research
India is primarily a branded generics (molecular copy of an off-patent drug with a trade name) market.
However, it is important to note that generic versions of molecules which still had patent protection in
the rest of the world were produced and marketed in India by domestic market participants until 2005,
since India did not follow any patent protection laws up to 2005.
With best-selling patented drugs worth $67.5 billion losing protection in the United States in 2010,
Indian companies such as Sun, Lupin, Aurobindo, Dr.Reddys, Cipla and Ranbaxy have been aggressive
with regard to Drug Master Filings (DMF) and Abbreviated New Drug Applications (ANDA) filings over
the last few years, representing 25.0 per cent of the total approvals granted in 2007 and 30.0 per cent
in 2008.

National
Pharmaceutical
Pricing Policy 2012
The implementation of the National Pharmaceutical Pricing Policy 2012
by the government eroded margins from 20 per cent and 10 per cent to
16 per cent and 8 per cent for retailers and stockists respectively.

This decrease in the stockist margins led to a significant uncertainty
among many stockists regarding the feasibility of staying in business
due to lower profitability post the margin reduction.
The FDI Policy
The FDI policy, however, gives confusing signals. 100% FDI in greenfield
investments is allowed by the automatic route but after November
2011, the brownfield investments require the approval of the Foreign
Investment Promotion Board (FIPB) which often comes with conditions.

The time consumed in this process also acts a deterrent.
Uniform code on
sales and marketing
The Department of Pharma (DoP) has issued guidelines on a uniform
code on sales and marketing practices which is different from the MCI
guidelines.

Tax authorities use the Central Board of Direct Taxes (CBDT) circular
based on MCI guidelines to decide on permissible sales and marketing
expenses.
RM / PM
410 Nos
1 Own, 11 LL,
77 TP, Imported FG
4 Nos
Carry 7 day Stock
23 Nos
Carry 30 days stock
5,000 Nos
Avg 35 days stock
500,000 Nos
Avg. 15 day stocks
Suppliers Factories HUB
Stockiest
CFA
Retailers
Fast Moving
SKUs
Stock Transfer
Sale booked in HCS books
Credit Terms 7 & 21 days
20%, 30% & 50% sales skew
Secondary Sale
Basis for MRs sales
incentive
Office
Secondary Sale
Monthly reporting.
Manually
Sale & Stocks
Daily reporting.
Automated
Daily Dispatch
Plan
Production Plan
Every 10 days
Automated PR based
on Stock Norm or Plan
Bulky Material
Call on / off
Stock Transfer
Lead time Avg 10 days
Daily replenishment,
subject to truck load
How it is different from US or Canada.
Big Retail/ Pharmacies in Canada/US.
Climatic variations
during the year
Diversity gets reflected to a large extent in Indias climate too. India has
eight climatic zones.
Climatic variations
across the country

The wide difference of climate in India can be adjudged from a
comparative analysis of two different geographical areas - The chilling
air of the mountains can be well combated by the burning dry heat of
the Rajasthan Desert in a couple of hours only.

Challenges for supply
chain
But this large scale variation poses a huge challenge for our supply
chain.
The long channel of distribution and high incidence of brand
substitution makes it mandatory for a company to make all its stock
keeping units (SKUs) available at all levels at all times.
Types of warehouses
Trends: Indian Warehousing
Sector
Warehousing was traditionally
used as godowns to store
goods from the time of
production till the time of
consumption.
Over time the traditional
warehouses have transformed
to collection and storage
points, where raw material,
intermediate and
manufactured goods are
collected, assorted, stored
and distributed to the point
of consumption/sale.
Almost 92% of the market is
dominated by unorganised
players, while 70 to 75% of
the organised market is being
controlled by PSUs.




Growth Drivers
The warehousing market in
India is expected to grow at a
rate of 35 to 40% annually.
The growth in warehousing in
India is primarily being driven
by the burgeoning
manufacturing activity,
increasing international trade
and the emergence of
organized retail in the
country.
Policy reforms from the
government including the
establishment of logistics
parks in the PPP model, the
implementation of the
Warehousing and
Development Act 2007 and
serious attempts to roll out
Goods and Services Tax (GST)
are added reasons for the
expected expansion in the
warehousing sector.
Literal Meaning
Transportation (American English) is the movement of people and goods
from one place to another.
Functions

Transport contributes in growth of industries whose product requires
quick marketing.
Transport helps to create demand for goods.
Transport creates place utility. Transport bridges the gap between
production and consumption centers.
Transport creates time utility. It helps the product to be distributed in
the minimum possible time.
Transport helps in stabilization of price by moving commodities from
surplus to deficit areas.

Importance Transport Infrastructure has a share of 6.4 per cent of GDP

Transport of freight by road forms an important component of freight movements within India,
with a large chunk of goods, over 65 percent, being moved by road.
With narrow and congested highways, poor surface quality of roads and 40 percent of villages
not having access to all-weather roads, the efficiency of the transport system is severely
affected.
Roads

The existing port infrastructure is insufficient to handle trade flows effectively.
The current capacity at major ports is overstretched and their infrastructural upgrades are being
made at very slowly pace.
Interesting Fact: While Shanghais ports can turnaround a container ship in 8 hours, the same
ship in Mumbai takes 3 days.
Sea

The failure in augmenting the freight carrying capacity and efficiency of the railways has denied
the logistics sector cheaper and efficient mode of transport.
Railways

Air cargo handling facilities at mini metros and towns are negligible as to be non-existent.
Comprehensive inland waterway systems, which India has in plenty and can act as auxiliary
mode of transport, has been neglected.

Others
High freight cost
Freight cost forms 11% of the landed costs, as compared to 6% in the
developed countries.
Bottlenecks
Delayed documentation processes
Vast areas & complex locations to cover
Delays due to lack of connectivity in multi-modal logistics
Very few service providers offer skilled expertise, etc.
Visibility Lack of visibility in the entire chain.
Idle time
Complex and time consuming requirements of various government
departments.
Few big players 85% unorganized sector, very few national players.
What is OPPI?
The Organization of Pharmaceutical Producers of India (OPPI) established in 1965
is a premier association of research and innovation driven pharmaceutical
companies in India and is also a scientific and professional body.

BUT OPPI does not have the authority to lay down legislations for pharmaceutical
regulation.
Who sets the
standards in
India?
The office of the Drugs Controller General of India (DCGI) has the primary
responsibility for approving new drugs, molecules and standards, Vaccines &
Sera, new usage and claims, new method of administration, clinical research and
trials, introductions of a new unique formulation and granting import and export
licenses.

It oversees the activities of the Central Drugs Standard Control Organization
(CDSCO).
GDP?
Good Distribution Practices (GDP) lays down the guidelines to be followed by
every entity involved in the distribution of pharma products so as to maintain its
original quality.

These guidelines have been issued by the Central Drugs Standard Control
Organization (CDSCO).

Cold Chain is a system of storing and transporting vaccine at the recommended temperature range
from the point of manufacture to point of use.

Personnel: to manage storage and distribution.
Equipment: to store and transport.
Procedures: to ensure that drugs are stored and transported at appropriate temperatures.
Key elements of cold chain

Walk in Freezers: They maintain a temperature around (-) 20*C. An alarm system is also
provided. As soon as the temperature crosses the safe range a hooter hoots loudly.
Walk in Coolers: They maintain a temperature of +2*C to +8*C. They are also provided with
temperature recorder and alarm systems. Once the temperature of WIC is more than the safe
range, alarm system gets activated.
Deep Freezers: The cabinet temperature is maintained between -15*C to -25*C. This is used for
storing of drugs and also for freezing ice packs.
Ice Lined Refrigerator: These type of refrigerators are top opening because they can hold the
cold air inside better than a refrigerator with a front opening.
Cold Boxes: Cold boxes are big insulated boxes. These are of different sizes and are used with
requisite number of ice packs.
Cold chain equipments
Retailer
Manufacturer HUB Stockist
2-8*C 2-8*C
2-8*C
Insulated vans/refrigerated vans are
used for the transportation of cold
chain products by roads in bulk
quantity.

The cold chain products are
transported in cold boxes with
desired number of frozen/conditioned
ice packs.

Transportation
Walk in Coolers are used for the
storage of cold chain products in the
warehouses in bulk quantity.

The temperature of the Walk in
Coolers is captured through the data
loggers.

Power backup is maintained
considering the erratic supply of
power in India.
Warehousing
Human capital and domain skills
Lack of logistical support
Costs involved
Power supply is erratic

Temperature of the storage device must be recorded thrice daily. These records should be checked
during supervisory visits.

It is an electronic device placed with the drug which records the drug temperature for 30 days.
It has an alarm system and as soon as the temperature of the equipment storing the drug
crosses the safe range alarm alerts the handlers.
This device assists in temperature monitoring through following features:
It shows temperature in digital LCD screen at all the time.
It indicates if there was any alarming situation during the past 30 days.
It shows the duration of temperature violation for every alarming situation happened in
past 30 days.
It has a shelf life of two years from the date of activation of device. The device once
activated, cannot be stopped through-out its operational life. Hence, it provides round the
clock monitoring.
It has been specifically designed to be used with Walk-in-Coolers.
Data Loggers