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Indian Pharma Industry
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Indian Pharmaceutical Industry

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An insight into the nuances of Indian Pharmaceutical Industry

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Indian Pharmaceutical Industry

  1. 1. INDIAN PHARMACEUTICAL INDUSTRY
  2. 2. PHARMA INDUSTRY $6 Bn $18 Bn $45 Bn 2005 2012 2020E Pharma Revenues (US$ bn) The Indian pharmaceuticals market is expected to grow at a CAGR of 12.1 per cent to reach US$ 45 billion in 2020 72% 19% 9% Revenue share of Indian pharmaceutical sub- segments Generic Drugs OTC Medicines Patented Drugs With 72 per cent of market share (in terms of revenues), generic drugs form the largest segment of the Indian pharmaceutical sector $2.4 Bn $3.2 Bn $4.2 Bn $5.1 Bn $5.2 Bn $6.7 Bn $8.5 Bn $10.1 Bn 0 2 4 6 8 10 12 FY6 FY7 FY8 FY9 FY10 FY11 FY12 FY13 Pharma Exports (CAGR 26.1%) In terms of value, pharmaceutical products exports have increased at a CAGR of 26.1 per cent to US$ 10.1 billion during FY06–13 17.8% 12.3% 11.4% 8.9%7.6% 7.4% 34.6% Indian pharmaceutical market segments by value Anti-infectives Cardiac Gastro Intestinal Vitamins/Minerals/Nu trients Respiratory Pain/Analgesics Others Anti-infective drugs command the largest share (17.8 per cent) in the Indian pharma market 33.33% 31.25% 21.43% 1.96% 28.85% 26.87% 18.82%
  3. 3. API IS THE LARGEST SEGMENT OF THE INDIAN PHARMACEUTICAL INDUSTRYPharmaceuticalIndustry Active Pharmaceutical Ingredients (APIs) Contract Research and Manufacturing Services (CRAMs) Formulations Biosimilars • India is expected to be the third largest global generic API merchant market by 2016, with a 7.2 per cent market share • Drug companies from India filed 49 per cent of the overall Drug Master Filings (DMF) filed in the US in 2012 • Fragmented market with more than 1,000 players • CRAMS industry is estimated to have reached USD8.0 billion in 2015, up from USD4.0 - 4.5 billion in 2012 • Largest exporter of formulations in terms of volume with 14 percent market share and 12th in terms of export value • Domestic market size is currently valued at USD11.2 billion • Double-digit growth expected over the next five years • Biosimilar’s sector is expected to touch USD1.4 billion by 2016 from USD482 million in 2011 • The government plans to allocate USD70 million for local players to develop biosimilars
  4. 4. MAJOR PLAYERS Sun Pharma 641.1 Cipla 649.6 Glaxo 596.2Ranbaxy 542.2 Zudus Cadila 524.4 Abbott HC 498.2 Mankind 472.1 Lupin 398.1 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% RevenueGrowth Market Share Note: The bubbles denote MAT March 2013 sales in USD million Market share is in terms of revenue MAT - Moving Annual Total Source: All Indian Origin Chemists & Distributors, Equity Master, BMI, Aranca Research
  5. 5. CRITICAL SUCCESS FACTORS • Focused expertise and resources, “trends” toward a higher probability of success. • Industry metrics for predicting the probabilities associated with each stage of drug development are useful but may not be reliable. • Life cycle management is essential. • Licensing and acquisition talent needs to be “best in class”. • The ability to generate meaningful free cash flow is the ultimate predictor of sustainability.
  6. 6. KEY DRIVERS • Growing orientation towards Research and Development (R&D) – The introduction of product patent in India has brought some fundamental changes in strategies of Indian pharmaceutical companies, with focus shifting more towards R&D. • Leveraging CRAMs opportunities – India is emerging as the global hub for contract research and manufacturing services (CRAMs) due to its low cost advantage and world class quality standards • Growing exports - Exports have been the major growth enabler of the Indian pharmaceutical industry in recent years. India exports pharmaceutical products, APIs and intermediates to more than 200 countries across the world • Expanding presence in regulated market – Over the years, India has shown better regulatory awareness and superior technical skills, which has enabled Indian companies to penetrate the high-value markets like the US and EU. Exports of pharmaceutical products (finished products as classified under heading 30 of ITC-HS code) to the US grew by an impressive 33% to Rs 23 bn and by a whopping 62% to Rs 35 bn to the EU during FY04-FY06. Regulated markets, though difficult to penetrate due to stringent regulations, are known to give better value and margin to exporters • Rise in new product launches – New products launched since 2005 accounted for around 12% of the overall market growth. These launches have been done by both domestic and international players and some of them are first time launch of new chemical entity (NCE)
  7. 7. SECTOR DRIVEN BY CONFLUENCE OF DEMAND, CAPABILITIES AND POLICY Growth Drivers Demand Side Drivers Policy Supports Supply Side Drivers • Accessibility of drugs to greatly improve • Increasing penetration of health insurance • Growing number of stress-related diseases due to change in lifestyle • Better diagnostic facility • Reduction in approval time for new facilities • Focus on specialized pharma education • Improved accessibility to locations • Cost Advantage • India a major manufacturing hub for generics • 546 sites registered at USFDA
  8. 8. KEY ISSUES AND CHALLENGES • Price Controls – Price controlled drugs are essential medicines, such as antibiotics and painkillers, and drugs used for the treatment of diseases such as cancer and asthma. Such medicines contain bulk drugs, or raw materials, whose prices are controlled by the NPPA - manufacturers cannot hike prices on their own. 10% of drugs fall in this category • Infrastructure – . Poor energy and transport infrastructure has traditionally posed a problem for companies. Some areas lack basic hotel facilities, preventing reach and penetration • Labour – There is an increasing concern in the domestic industry regarding a shortage of skilled labour in critical areas. This causes a demand-supply imbalance, and has led to an increased rate of wage inflation. • Regulatory Control – Indian drug companies have attracted the highest number of enforcements from the American drug regulator in 2013, a year that has seen the US Food and Drug Administration (FDA) turning stricter to ensure compliance levels and quality of medicines. As many as 19 drug manufacturing factories across India were barred from supplying medicines to the US, the world’s largest drug market • Intellectual Property Concerns

An insight into the nuances of Indian Pharmaceutical Industry

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