Pharmaceuticals

Industry
Introduction
 The first Indian pharmaceutical company
-Bengal Chemicals and Pharmaceutical
Works -Calcutta in 1930
 It still exists today as one of 5 government-
owned drug manufacturers
 For the next 60 years, most of the drugs in
India were imported by multinationals either
in fully-formulated or bulk form
 The government started to encourage the growth of drug
manufacturing by Indian companies in the early 1960s
 The Patents Act in 1970
 removed composition patents from food and drugs,
and kept process patents
 these were shortened to a period of five to seven year

 The lack of patent protection made the Indian market

undesirable to the multinational companies that had
dominated the market, and while they streamed out,
Indian companies started to take their places
 They carved a niche in both the Indian and world
markets with their expertise in reverse-engineering new
processes for manufacturing drugs at low costs
 Although some of the larger companies have taken baby
steps towards drug innovation, the industry as a whole
has been following this business model until the
present.
 The Indian pharmaceutical industry has witnessed a
growth rate of about 10% over the last few years and is
expected to touch US$ 12 billion by 2010.
 Pharmaceutical industry has given employment to
approximately 2.86 million people and has around
20,053 units.
 Indian pharmaceutical industry manufactures over 400
bulk drugs and roughly 60,000 finished medicines used
in different formulations.
Classification of Indian
pharmaceutical industry
 organized and unorganized sectors
 Accounting for over 70% of total sales, the organized
sector has about 250 manufacturing and formulation units
 On the basis of management control, the organized sector
can be further classified into MNCs and Indian companies.

 On the basis of the product manufactured

 Bulk drugs
 Formulations
 Formulations constitute nearly 81% and bulk drugs account for
the remaining 19%.
 Indian pharmaceutical industry has about 2400 licensed
manufacturers and more than 100,000 drugs.

 On the basis of formulations

 Prescription medicines

 Over-the-counter medicines

 On the basis of formulations patent

 Branded formulations

 Generics
SWOT Analysis of Pharma
Sector
 Strengths
 Cost effective technology
 Strong and well-developed manufacturing base
 Clinical research and trials
 Knowledge based, low- cost manpower in science & technology
 Proficiency in path-breaking research
 High-quality formulations and drugs
 High standards of purity
 Non-infringing processes of Active Pharmaceutical Ingredients
(APIs)
 Future growth driver
 World-class process development labs
 Excellent clinical trial centers
 Chemical and process development competencies
 Weaknesses

 Low Indian share in world pharmaceutical market

(about 2%)
 Lack of strategic planning
 Fragmented capacities
 Low R&D investments
 Absence of association between institutes and
industry
 Low healthcare expenditure
 Production of duplicate drugs
 Opportunities

 Incredible export potential

 Increasing health consciousness
 New innovative therapeutic products
 Globalization
 Drug delivery system management
 Increased incomes
 Production of generic drugs
 Contract manufacturing
 Clinical trials & research
 Drug molecules
 Threats

 Small number of discoveries

 Competition from MNCs
 Transformation of process patent to product patent
(TRIPS)
 Outdated Sales and marketing methods
 Non-tariff barriers imposed by developed countries
Key Opportunities Segments

Manufacturing
opportunities
Indian
Clinical
Research Pharmaceutical Contract
Research
Aldorado

opportunities
Innovation

e
Research & Development
 Government has taken various policy initiatives to
strengthen R & D in the pharma sector.

 Fiscal incentives are awarded to R & D units towards the

development of new drug molecules, clinical research,
new drug delivery systems, new R & D set ups and
infrastructure provision.

 Certain leading R & D companies have increased their

Research and Development spending to over 5 percent of
their turnover in comparison to an average spending of 2
per cent.
 Pharma units interested in obtaining Income Tax
Exemption under Section 35(2AB) need to get
their Research and Development unit
recognized by CSIR.

 A Pharmaceutical R & D Promotion Fund to the

tune of Rs150 crore has been established for
promoting R & D in the pharma sector.
India’s Cost Competitiveness key advantage

Western companies able to provide a step down of 30-

40% in cost by a mere site transfer to India

Low cost Companies in India able to reduce the upfront capital

heaven India cost of setting up a project by 25-50%

Indian companies have been able to establish USFDA

Lower Filing approved plants at about 50% lower capital costs

Cost
Benefit of continuous cost reduction through process re-

Process Innovation engineering.

India’s huge resource of skilled scientists, available at a

Manpower Cost Advantage
fraction of the cost in developed countries

Capital efficiency

e
 Current Scenario
 There now exists a whole new world of markets for Indian
pharma companies

 Innovation, through more value to the user, through

efficiencies in distribution, logistics and product promotion

 The Indian pharmaceutical industry ranks

 4th in terms of volume (with an 8 per cent share in global sales)
 13th in terms of value (with a share of 1 per cent in global sales)
 Produces 20-24 per cent of the world's generic drugs (in terms of
value
 17th in terms of pharmaceutical export value
 Drugs worth $ 190 billion in annual revenues would be
vulnerable to generics

 The global generics market is expected to grow at

about 15 percent to reach $ 70 billion in the year
2008.

 The rise in generics gives way to specialty products

such as hormones, steroids, peptides and biosimilars.

 Global pharma industry would see revenue growth of

only 5% to reach $ 735 billion in the year 2008.
 Top 10 Pharmaceuticals in India, 2008
Revenue 2008 ,
Rank Company Revenue 2008 (USD millions)
(Rs crore)
1 Ranbaxy 4,461 1,026
Dr.Reddy’s
2 1,933 444
Laboratories
3 Cipla 1,842 423

4 Ashwin Dalvi India 1,387 319

5 Aurobindo Pharma 1,260 290

6 GlaxoSmithKline 1,228 282

7 Lupin Laboratories 1,180 271

8 Sun Pharmaceutical Industries Mar 2007 2,375 550

9 Cadila Healthcare 1,091 251

10 Wockhardt 980 225
Source: Pharmaceutical Sales Busters
Future of the Pharmaceutical
Industry
 For the first time, the seven largest markets will contribute to just
50 percent of growth, while seven emerging markets—Brazil,
China, India, Mexico, Russia, Indonesia, and Turkey—will
contribute to nearly 25 percent of growth worldwide.

 With market value of about US$ 45billion in 2005, the generic

sector is expected to grow to US$ 100billion in the next few years.

 Clinical Research Outsourcing (CRO), a budding industry valued

over US$ 118 million per year in India, is estimated to grow to US$
380 million by 2010
 The future of Indian pharmaceutical sector is very
bright because of the following factors:
 Clinical trials in India cost US$ 25 million each, whereas in US they
cost between US$ 300-350 million each.
 Indian pharmaceutical companies are spending 30-50% less on
custom synthesis services as compared to its global costs.
 In India investigational new drug stage costs around US$ 10-15
million, which is almost 1/10th of its cost in US (US$ 100-150million)
 Treatment to prevention, from generalised to personalised
medicine, from distribution chain to direct consumer sales and
from multilateral to unilateral regulatory regime.
Conclusion
India has the capability to become a global pharma
hub by exporting domestically produced generic
products and positioning itself as an off shoring
destination for clinical and pre-clinical research and
other support services. There is tremendous
potential in the Indian pharma market itself.
Consumer spending on healthcare went up from 4
per cent of GDP in 1995 to 7 per cent in 2007. That
number is expected to rise to 13 per cent of GDP by
2015.
 Thank You!

1-C

Aakash Acharya , 01
Aruna Krishnamurthy , 11
Ishita Bhagat , 21
Manas Majumdar, 31
Rakesh Roy, 41
Diksha Rai, 61