Pharmaceutical industry in India.

By-
AAKASH DATTA
S-102
FYBMS.
 ”The Indian pharmaceutical
industry has come a long way from
waiting for imports of bulk drugs
from global players for re-processing
to becoming an industry which is
driving the product development and
is breaking new grounds in medical
research worldwide.”
INTRODUCTION
• Pharmaceutical Industry in India is one of the
largest and most advanced among the developing
countries.( It is ranked 4th in volume terms and
11th in value terms globally.)
• From simple pain killers to sophisticated
antibiotics and complex cardiac compounds,
almost every type of drug is now made
indigenously.(70% of the country's demand met
by Indian pharmaceutical industry)
• industry traditionally relied on “reverse
engineering”
 INDUSTRY STRUCTURE
• estimated worth $ 4.5 billion, growing at about 8 to
9 percent annually
• over 3,000 small/medium sized generic
pharmaceutical manufacturers
• The leading 250 pharmaceutical companies control
70% of the market (market leader holding
nearly 7% of the market share)
• 5 Central Public Sector Units that manufacture
drugs
• over 60,000 formulations manufactured in India in
more than 60 therapeutic segments
• DRUG SYSTEM IN INDIA(Ayurveda, Siddha,
Unani, Homeopathy, Naturopathy)
 Top ten pharmaceutical companies in India
• Ranbaxy Laboratories: By sales India's largest pharma firm with the returns
touching Rs 4,198.96 crore (Rs 41.989 billion) in 2007
• Dr Reddy's Laboratories: With a turnover of Rs 4,162.25 crore (Rs 41.622 billion)
in 2007, Dr Reddy's lab is second largest drug firm in India by sales .
• Cipla: Cipla generated an annual revenue of Rs 3,763.72 crore (Rs 37.637 billion) in
2007 making itself the third largest pharmaceutical firms.
• Sun Pharma Industries: Sun Pharma Industries had an overall earnings of Rs
2,463.59 crore (Rs 24.635 billion) in 2007.
• Lupin Labs: Lupin Labs yielded total profit of Rs 2,215.52 crore (Rs 22.155 billion)
in 2007.
• Aurobindo Pharma: India's sixth largest pharma company by sales, Aurobindo
posted Rs 2,080.19 crore (Rs 20.801 billion) annual returns in 2007.
• GlaxoSmithKline Pharma: With 2007 turnover touching Rs 1,773.41 crore (Rs
17.734 billion, GSK is India's seventh largest pharma firm.
• Cadila Healthcare: Cadila's earnings was Rs 1,613.00 crore (Rs 16.13 billion) in the
fiscal year 2007, establishing itself as India's eight largest drug company.
• Aventis Pharma: With an annual revenue of Rs 983.80 crore (Rs 9.838 billion) in
2007, Aventis Pharma has made a place for itself in the top ten pharma companies in
India
• Ipca Laboratories: Ipca is India's 10th largest pharma company by sales and in 2007
it had a turnover of Rs 980.44 crore (Rs 9.804 billion)
 Other pharmaceutical companies in India
• Baidyanath group Nicholas Piramal
• Biocon Panacea Biotec
• Cadila Healthcare Pharmaceuticals in India
• Dabur G. V. Prasad
• Dey's Medical RPG Life Sciences
• Hamdard (Wakf) Serum Institute of India
Laboratories Strides Arcolab
• Hetero Drugs TTK Group
• Hindustan Antibiotics Torrent Pharmaceuticals
Limited Wockhardt
• Medisys Biotech
• Nectar Lifesciences
INDUSTRY SEGMENTATION
Indian pharmaceutical industry can be widely
classified into

bulk drugs,
 formulations and
 contract research
 DOMESTIC EXPORTS

YEAR EXPORT (Rs. in Crores)

Pharmaceutical exports touched a
1998-1999 6256.06
level of Rs. 24942 crores during
1999-2000 7230.16
2006-07. The formulations
2000-2001 8757.47
contribute nearly 55% of the total
2001-2002 9751.20
exports and the rest 45% comes
2002-2003 12826.10
from bulk drugs. Pharmaceutical
2003-2004 15213.24
exports clocked $7.2 billion in
2004-2005 17857.80
2007-08, accounting for six per
2005-2006 22578.98
cent of the country’s total exports,
according to
2006-2007 24942.00
“Pharmexcil,” the Pharmaceutical
(Source:-Directorate General of Commercial Export Promotional Council.
Intelligence and Statistics - DGCIS, Kolkata)
 SWOT ANALYSIS
 
STRENGTHS-
 
1. India with a population of over a billion is a largely untapped
market.(In fact the penetration of modern medicine is less than
30% in India.)

2. The growth of middle class in the country has resulted in

fast changing lifestyles in urban and to some extent rural centres.

3. Indian manufacturers are one of the lowest cost producers of

drugs in the world.

4. Indian pharmaceutical industry possesses excellent

chemistry and process reengineering skills.
WEAKNESS
price regulation.
lack of product patent
least penetrated in the world.
Due to very low barriers to entry, Indian
pharma industry is highly fragmented (300
large manufacturing units and about 18,000
small units spread across the country. )
 OPPORTUNITIES
 
• The migration into a product patent based regime is likely
to transform industry fortunes in the long term.
• Large number of drugs going off-patent in Europe and in
the US between 2005 to 2009 offers a big opportunity for
the Indian companies to capture this market.
• Opening up of health insurance sector and the expected
growth in per capita income are key growth drivers from a
long-term perspective.
• Being the lowest cost producer combined with FDA
approved plants; Indian companies can become a global
outsourcing hub for pharmaceutical products.
  
THREATS
 
• There are certain concerns over the patent regime
regarding its current structure. It might be possible that the
new government may change certain provisions of the
patent act formulated by the preceding government.

• Threats from other low cost countries like China and

Israel exist. However, on the quality front, India is better
placed relative to China. So, differentiation in the contract
manufacturing side may wane.
PORTER’S FIVE FORCES MODEL
 
INDUSTRY COMPETITION

10,000 different players (High growth prospects make it

attractive for new players to enter in the industry)
entry barriers to pharmaceutical industry are very low.
small players that are focussed on a particular region
have a better hang of the distribution channel, making
it easier to succeed
BARGAINING POWER OF
BUYERS
• unique feature of pharmaceutical industry -end
user of the product is different from the
influencer (read doctor).
• In pharmaceutical industry, the buyers are
scattered and they as such do not wield much
power in the pricing of the products.
• However, govt with its policies, plays an important
role in regulating pricing through the NPPA
(national pharmaceutical pricing authority).
BARGAINING POWER OF
SUPPLIERS
• The suppliers have very low bargaining power and the
companies in the pharmaceutical industry can switch
from their suppliers without incurring a very high cost.
• Supplier can go for forward integration to become a
pharmaceutical company.(companies like Orchid
Chemicals and Sashun Chemicals were basically
chemical companies who turned themselves into
pharmaceutical companies.)
 BARRIERS TO ENTRY
• The capital requirement for the industry is very low;
creating a regional distribution network is easy, since the
point of sales is restricted in this industry in India.
• However, creating brand awareness and franchisee among
doctors is the key for long term survival.
• Also, quality regulations by the government may put some
hindrance for establishing new manufacturing operations.
• The new patent regime has raised the barriers to entry.
• But it is unlikely to discourage new entrants, as market for
generics will be as huge.
THREAT OF SUBSTITUTES
• Whatever happens, demand for pharmaceutical products
continues and the industry thrives.
• One of the key reasons for high competitiveness in the
industry is that as an ongoing concern, pharmaceutical
industry seems to have an infinite future.
• However, in recent times the advances made in thee field
of biotechnology, can prove to be a threat to the synthetic
pharmaceutical industry.
• Yoga and neuropathy
 INDIAN PHARMACEUTICAL SECTOR: FUTURE
SCENARIO

• marking presence globally and competing with the

pharmaceutical companies from the developed countries
like Europe, Japan, and United States
• generic drug sales to promote drug discovery projects and
new delivery technologies. Contract research in India is
also growing at the rate of 20-25% per year and was
valued at US$ 10-120millio
• We can expect a significant level of consolidation- a
major portion of small players are likely to be wiped out
 ISSUES AND CHALLENGES
Mergers and Acquisitions
Attracting and retaining a skilled workforce
Controlling operating costs
Infrastructure
Impact of new patent law
BIBLIOGRAPHY
  
• www.oppi.com
• www.capitaline.com
• www.google.com
• www.wikipedia.com
• www.altavista.com
• www.site.securities.com
• www.pharmainfo.com
• www.etintelligence.com
• www.pharmainfo.net
• www.kpmg.de
• www.info.shine.com
• www.equitymaster.com
• www.expresspharmaonline.com
THANK
YOU.
AAKASH
DATTA
S-102
FYBMS