Society of Business Research

Marketing Track
Nashville 2013
Siva Prasad Karnati
Overview of Market for Foreign
Overview of Market for Foreign
Investment: Pharmaceutical
Industry in India

Karnati, Siva Prasad
The University of Findlay

Ghose, Nabarun
The University of Findlay
ghose@findlay.edu

Introduction
India is the second highest population country in
the world. (Over 1.2 billion).
400 million middle class people are able to afford
western medicine.
14
th
place in Global league table.
US $19 billion in 2009 and estimated to rise US
$50 billion by 2020.
Opportunities
India offers limited capabilities in preclinical and
complex biological research.

Some Industries engaged with multinational
companies for developing new molecules.

Example: Novartis with DRL and Torrent.
Piramal Healthcare with Eli Lilly.
Patents
Before 1970: Recognized product patent and
term lasts for 14 years.
1970-2005: Excluded product patent coverage
and limited process patent 5-7 years.
2005 onwards: Recognized product patent and
term lasts for 20 years.
Quality Control
Pharmaceutical Quality Management System
Analysis of raw products,
Finished products,
Packing and labeling of products,
Observation of storage systems
Quality Assurance and Quality Control
departments.


Licenses

Licensing is the main platform for multinational
companies to gain shares from Indian
Pharmaceutical companies.
Franchising.
Joint venture.
Partially or wholly owned subsidiaries.

India's First Compulsory License Implications

In 2008, It is issued to Natco Pharma Ltd to
produce and market Nexavar.
Reasons:
If requirement of the public have not been met.
Not reasonably affordable
Patented invention has not been worked in India.

Changing Laws

1947-1970: Patent legislation.
1970: DPCO and amendment Patent Act.
1994: WTO.
1997: National Pharmaceutical Pricing Authority.

Operating Environment

Infrastructure: Insufficient energy and road
transport facilities
In 2009, government focused on infrastructure
and allocated funds from foreign exchange
reserves for infrastructure development.
UMH, Family Welfare, GVK and GSK established
Cargo zones.
Operating Environment
Tax Environment: New Direct Tax Code as 25%
corporate tax rate.
Tax incentives.
Counterfeiting: The Organization of
Pharmaceutical Producers of India (OPPI).
Corruption.


Conclusion

India is a emerging market for global
pharmaceutical industry.
Strategic alliances and multiple-step entries are in
the best interests of the entering and operating
foreign corporations in these markets.
References
Primorac, M. (2010) Emerging Markets Drive Global Recovery. Retrieved from
http://www.imf.org/external/pubs/ft/survey/so/2010/new120910a.htm

Kedron, P. and Bagchi-Sen, S. (2012). Foreign direct investment in Europe by
multinational pharmaceutical companies from India. Journal of Economic
Geography. Jan. 19. Retrieved from
http://joeg.oxfordjournals.org/content/early/2012/01/18/jeg.lbr044.full

PricewaterhouseCoopers. 2013. Global pharma looks to India: Prospects for
growth. (n.d.). Retrieved from http://www.pwc.com/en_GX/gx/pharma-life-
sciences/pdf/global-pharma-looks-to-india-final.pdf

Vepachadu, S., and Rumore, M. (2004). Patent protection and the
pharmaceutical industry in the Indian union. Intellectual Property Today. October.
Pp. 44-46. Retrieved from http://www.vepachedu.com/ipind.pdf

Patent Daily (Pharma). (n.d.). Indian Patent Act Brief. Retrieved from
http://patentdaily.wordpress.com/indian-patent-act-and-pharmaceutical-
substances-patenting-in-india/


References
Dubey, N. (2011). Pharmaceutical quality management system: Current
concept. Journal of Advanced Pharmacy Education & Research, 2, Retrieved
from
http://www.japer.in/Issue/Issu 2 august/32.pdf

KPMG. (2013). Indias first compulsory license Implications. Retrieved from

http://www.kpmg.com/in/en/issuesandinsights/articlespublications/kbuzz/pages/p
harma.aspx

Chandran, S., Roy A., and Jain, L. (2005). Implications of New Patent Regime on
Indian Pharmaceutical Industry: Challenges and Opportunities. Journal of
Intellectual Property Rights, Vol. 10, July. Pp.269-280. Retrieved from
http://nopr.niscair.res.in/bitstream/123456789/3661/1/JIPR 10(4) 269-280.pdf

Cohen, Jillian Clare. (2006). Pharmaceuticals and corruption: a risk assessment.
GC2006 01 part1. Pp. 77-85. Retrieved from
http://www1.worldbank.org/publicsector/anticorrupt/corecourse2007/Pharmaceuti
cals.pdf