Growing at 9%p.a.

, Pharmaceutical Industry in India is

Well Set for Rapid Expansion, Research and Markets

The recent regulatory and much awaited patent law changes have lead the Indian Pharmaceutical
Industry towards exploring newer avenues of drug development, thus, promising higher capital investment
in the pharmaceutical industry in the near future. The Indian Pharmaceutical Research is backed by
strong Government support and availability of surplus skilled technical workers at lower costs.

At a growth rate of 9 per cent per year, the pharmaceutical industry in India is well set for rapid expansion.
As a result of the expansion, the Indian pharmaceutical and healthcare market is undergoing a spurt of
growth in its coverage, services, and spending in the public and private sectors. The healthcare market
has opened a window of opportunities in the medical device field and has boosted clinical trials in India.

Many multinational companies have penetrated into India with an aim to market drugs and conduct
clinical trails. Thus, Indian pharmaceutical research, manufacturing, and outsourcing have received an
impetus, thereby, creating an image of a potential healthcare market and a land of opportunities in
pharmaceuticals. The economic liberalization policies coming to force in the 1990s and the strong
emergence of private sector in the Indian economy has heightened the pace of development of the
pharmaceutical industry and will continue to do so.

"Indian Pharmaceutical and Healthcare Market-Annual Review (2005)" presents the latest information on
the Indian pharmaceutical research. It highlights the important factors that draw the foreign investors
towards the Indian pharmaceutical market to establish themselves. This report is indispensable for the
manufacturers, investors and all those involved in the pharmaceutical industry and healthcare market to
have an in-depth analysis of the business prospects. It interprets the key issues that influence the
success of a pharmaceutical company involved in research and development of drugs.

Report Highlights:

- Assessing the market potential and opportunities with pharmaceuticals and drug discovery

- Study of the key economic factors that form the source of revenue growth and opportunities

- Recent and Future trends in Pharmaceutical Investments, by sector and business for F.Y. 2002-2008

- Advantages of conducting clinical trials in India and factors that propel multinational companies to form
new business ties with India

- Advantages of outsourcing as a new business maneuver in Pharmaceutical and healthcare Industry

- Continued shifting of business model towards the development of high- value new chemical entities
responsible at Indian R&D facilities

- Assessing the Imports and Export of Bulk Drugs, intermediaries and formularies for the F.Y. 2002-2008

- New Pathways in the Indian pharmaceutical research and development.

- Future Outlook and Key Drivers to Market growth

- Analytical Snapshot on the Performance indicator by Key Pharmaceutical Companies in India

This report provides a review of the pharmaceutical industry as a whole. It provides an insight into the
current market size, developments in pharmaceutical research, challenges faced by the pharmaceutical
industry as well as the future outlook. Chapter 3 and 4 give the global coverage of the heath care market,
growth status across the country, challenges and potential areas along with the total production and
consumption of life-saving and generic drugs. Chapter 6 deals with the regulatory matters including the
Indian Patent Law. Chapter 7 and 8 present the issue of bio-informatics, e- commerce, and research and
development. Chapter 11 provides information on the key players of this industry.

India Economic Analysis

About India economic analysis
India economic analysis provides various inputs on economic condition of this south-east Asian
country. It can be done both at a microeconomic as well as a macroeconomic level. India economic
analysis could also be described as being an explanation of various economic phenomena going on in
this country.

Recent macroeconomic developments in India

In April 2008, industrial sector in India had recorded a growth of 7 percent. However, this figure
is lesser than 11 percent development, which had been achieved in April 2007. Much of this
critical condition could be attributed to an increase in prices of oil. Measures that have been
taken by Reserve Bank of India, like upward revision of repo rate and CRR, have also contributed
to decrease in industrial production.

Manufacturing and electric sector have suffered as well in recent times. Their growth rates have
come down too. For manufacturing sector it was 7.5 percent and for electricity sector, rate of
development stood at 1.4 percent in April 2008. This rate is significantly low when compared to
statistics of April 2007, when rates of development for manufacturing and electricity were 12.4
percent and 8.7 percent respectively.

In case of manufacturing sector much of this slump could be attributed to increase in input costs
like expenses of oil, raw materials, rates of interest and prices of goods and services. Mining
sector has been comparatively better off as it has managed to grow at a rate of 8 percent in April
2008 compared to 2.6 percent that was achieved in April 2007.

In core infrastructural industries, there has been deceleration as well, but it is still better off
compared to non infrastructural industries in India. Growth in April 2008 has been around 3.6
percent, which is less than 5.9 percent achieved in April 2007. Industries like crude oil
production, electricity and petroleum refinery have been performing below expectations but coal,
finished steel and cement have performed better than April 2007.
 Inflation in India
In financial year 2007-08, average inflation in India was around 4.66 percent. This rate was
lower than average inflation of financial year 2006-07. In 2007-08, fiscal high prices of food
items were primary cause behind high rates of inflation. That high rate of inflation had to be
controlled by banning a number of necessary commodities as well as various financial steps. High
prices of oil were responsible for proportionately high rate of inflation in 2008-09.

Indian Pharmaceutical Market, 2006-2011

The Indian pharmaceutical market is the 15th largest individual market by sales, but the 4th by
volume of product. With domestic drug sales of almost $5 billion, Indian companies have also
developed a considerable service industry for the global pharmaceutical market. However the
Indian pharmaceutical market looks set for considerable change.

For many years the Indian pharmaceutical market has been seen as a no go area for the R&D
based MNCs. The market became dominated by copied generic drugs produced at low-cost by
Indian companies. One full year after the introduction of the WTO TRIPS and in the midst of the
practical implications of ensuring compliance with product patents, how is the Indian
pharmaceutical industry facing up to new regulations to its market?

Indian pharmaceutical companies are able to provide FDA approved facilities for the complete
range of services for drug development. R&D services, API sourcing, finished formulation
manufacture and clinical trials can all be completed in India, at less cost than in many developed
markets. The leading Indian pharmaceutical companies are also beginning to increase market
presence and market share in the US and EU markets.

Pivotal period of change…

The Indian pharmaceutical market is entering a pivotal period of change. Although it is unlikely
to see significant growth before 2011, visiongain expects extensive company activity as the
leading Indian pharmaceutical companies strive towards international competitiveness. Global
pharmaceutical companies have already begun to take advantage of the changing regulatory and
economic conditions in India. The following five years will see further merger and acquisition
activity, including key overseas acquisitions.

The Leading Pharmaceutical Companies Within India

Rank Company
1. Ranbaxy Laboratories
2. Cipla
3. Dr Reddy's Laboratories
4. Sun Pharmaceuticals
5. Nicholas Piramal
6. Zydus Cadila
7. Biocon
8. Glenmark Pharmaceuticals
9. Wockhardt Ltd
10. Orchid Chemicals

Why you should buy this report

 Significant change is imminent within and from the Indian pharmaceutical market.
Global MNCs cannot afford to ignore the cost advantages that the Indian market offers.
 Key companies are examined, recent histories summarised and strategies outlined to
provide indications of potential strengths.
 The key IP changes resulting from the acceptance of the WTO TRIPS are outlined.
 This report considers the latest financial and anecdotal information from the Indian
pharmaceutical market to enable the most accurate assessment of the medium-term future
potential of this $5 billion market.

Table of Contents

 1. Executive Summary

o 1.1 The Indian Pharmaceutical Market Will Be Worth $7.58 Billion By 2011

o 1.2 Aims, Scope and Format of the Report
o 1.3 Research Methodology

 2. Introduction
 3. The Indian Healthcare System
 3.1 Organisation of the Indian Healthcare System

o 3.2 Emphasis on Local Participation

o 3.3  State Financed Research and Technology
o 3.4  Clean Water and Sewage Disposal
o 3.5  Finance and Resources
o 3.6  Physical infrastructure
o 3.7 Indian Healthcare Neglects the Poor
o 3.8 The Indian Market for Healthcare
o 3.9 Indian Healthcare Statistics
o 3.10 India's Healthcare Market Has a High Potential
 o 3.11 The High Price of Being Ill in India
o 3.12 The Disease Burden in India
o 3.13 HIV Will Grow
o 3.14 TB Is the Biggest cause of Death in India
o 3.15 Maternal, Perinatal and Childhood Conditions Have the Highest Burden of
Disease
o 3.16 Malaria is Still Highly Prevalent in India
o 3.17  Non-communicable Conditions and the Rise of  Western Diseases in India
o 3.18 Cardiovascular Disease is On the Rise
o 3.19 Diabetes Will Increase
o 3.20 Incidence of Cancer Will Increase
o 3.21 Mental Health Disorders
o 3.22 Asthma and COPD
o 3.23 Blindness Prevalence Will Remain Unchanged
o 3.24  The Drug Price Control Order (DPCO)
o 3.25 A List of the Key Pharmaceutical Organisations in India

 4. The Indian Economy

 4.1 IMF Forecasts Continuing Positive Economic Growth

o 4.2 Life Expectancy is Still Low in India Compared to the West

o 4.3 Technical Labour Force Remains Important
o 4.4 Indian Agriculture Is Inefficient
o 4.5 Indian Industry is Set for High Growth Levels
o 4.6 The Services Sector Will Also Grow
o 4.7 The Indian Rupee
o 4.8 India's Growing Future
o 4.9 Poverty Is Still High in India
o 4.10 Steps Taken to Reduce Bureaucracy and Corruption 4.11 Occupation and
Unemployment

 5. Indian IP, WTO and TRIPS

o 5.1  Anticipation of an Open Indian Market

o 5.2  Indian Patent Act Allowed Only Process  Patents
o 5.3  TRIPS Agreement Changes Format of the Indian Pharma Market
o 5.4 Intermediary Measures Should Smooth Transition
o 5.5 The Mailbox System
o 5.6 Does the Drug Price Control Order Help or Hinder?
o 5.7 Predicted Consequences of India's New Pharmaceutical IP System
 5.7.1 Potential Advantages for the Indian Pharmaceutical Market
 5.7.2  Potential Disadvantages for the Indian Pharmaceutical Market
 6. The Indian Pharmaceutical Market
o 6.1  The Indian Pharmaceutical Market Has Shown Historical Growth
 o 6.2  Generics Dominate Branded Products on the Indian Pharmaceutical Market
 6.2.1  Antibiotics Lead the Indian Market
 6.2.2  Volume Greater Driver than New Products
o 6.3 India's OTC Market
o 6.4  Infrastructure Weak - Distribution Vital
o 6.5 Counterfeiting
o 6.6  The Future of the Indian Pharmaceutical Market Looks Positive
o 6.7  The Localised Nature of the Indian Pharmaceutical Market Will Alter

 7. The Impact of Indian Companies on the World Pharma Market

o 7.1  Contract Manufacturing and R&D Activity

o 7.2  API Sourcing

 8. Clinical Trials Industry

o 8.1  A SWOT Analysis of Outsourcing Clinical Trials to India

o 8.2  Many Factors are Considered When Deciding Clinical Trial Location but
Quality of Data Should Be Paramount
o 8.3 India as a Model for Rapid Growth in the Clinical Trials Industry
o 8.4  Expanding Pharmaceutical Investment in India  is Led by Clinical Trials
o 8.5  Changes to the Law Have Caused Rapid Growth of Clinical Research  
o 8.6  Rapid Recruitment Is Driven by a Large Patient Population and an Organised
Healthcare System
o 8.7  Ethical Considerations in India
o 8.8  What Is India Doing to Promote Clinical Research?
o 8.9 Forecast: What Is the Future of Indian Clinical Research?

 9. SWOT Analysis of the Indian Pharmaceutical Market

 10. An Overview of the Leading Indian Pharmaceutical Companies

INDIAN ECONOMIC SURVEY

The President of India released the Economic Survey 2009 in the parliament, and it has evoked
mixed reaction. In this report we will bring you some of the important numbers and charts that
will are important to India from the point of view of Economic growth.

Before we go into numbers let us look at the key points that came out the of the Economic
Report 2009 released yesterday.

Bear in mind that Monday is the Budget day and quite a few people are looking at it as a
Landmark Budget and probably a game changer for India from economic reforms perspective.
Based on my understanding, the Economic survey points towards disinvestment and heavy tax
reforms, which is a great sign and a need of the hour.

Even the Indian stock Market has been range-bound over last week and just waiting in the wings
for budget to be announced.

So here are some of the key points that have been suggested by the India Economy Survey
2009.

 Economy can grow around 7 percent in 2009/10. This off course, is largely dependent on
how the US Economy recovers over next few months. If US economy bottoms out
around December, as many analysts are expecting, India can easily look at 7% upwards
growth.
 The Economy will get back to its growth path of around 9% in medium term.
 The government has shown its eagerness for Fiscal consolidation. The Fiscal deficit
target is suggested to be set at 3 percent of GDP at the earliest.
 Inflation is suggested to be a non-issue moving forward.
 The Economic Survey suggested allowing the public to hold greater equity in public
sector banks and aligning of voting rights in banks with equity holdings.
 Calibrated monetary policy approach is suggested for early return to high growth path.
 The Economic Survey has suggested that quality Foreign Direct Investment should be
allowed to seek regulatory reforms in higher education.

I for one am having very high expectations from this year’s budget and now the with this
economic survey 2009, my hopes are bolstered.

Having won a resounding victory in the Indian elections, we predicted that Prime Minister
Manmohan Singh would enact sweeping reforms.

Having won a resounding victory in the Indian elections, we predicted that Prime Minister
Manmohan Singh would enact sweeping reforms.

Nothing stops Manmohan Singh and other people at helm to announce sweeping reforms in this
budget, they now dont have the left to worry about !

Following are the full PDF documents of the the Economic Survey Released yesterday.

State of the Economy

 Introduction
 Economic growth during 2008-09
 Aggregate demand and its composition
 Globalization of the Indian economy
 Summing-up
 Key Indicators
Challenges, Policy Response and Medium-Term Prospects

 Introduction
 Global developments and the Indian economy, 2008-09
 Some aspects of India’s recent growth dynamics and prospects
 Sustaining the growth momentum-some aspects of the policy agenda
 Summing-up

Fiscal Developments and Public Finance

 Introduction
 Central Government finances
 Economic and functional classification of Central Government Budget
 Performance of departmental enterprises of the Central Government
 Finances of State Governments
 Challenges and outlook

Prices and Monetary Management

 Introduction
 Prices
 Domestic and global scenarios
 GDP consumption deflator
 Housing price index
 Monetary developments
 Challenges and outlook

Financial Intermediation and Markets

 Introduction
 Bank credit
 Rural infrastructure development fund
 Credit to agriculture
 Financial performance of banks
 Financial institutions
 Capital and commodity markets
 Insurance and pension funds
 Challenges and outlook

External Sector

 Introduction
 Balance of payments
 Current account
  Capital account
 World merchandise trade
 India’s merchandise trade
 Services trade
 Foreign exchange reserves
 Foreign exchange rate policy
 External debt
 Direction and composition of trade
 Trade policy
 WTO negotiations and India
 Bilateral and regional cooperation
 Challenges and outlook

Agriculture and Food Management

 Introduction
 Allied sectors
 Marketing and extension
 Challenges and outlook
 Industry
 Introduction
 Developments that impacted the industrial sector
 Industrial growth by sectors
 Growth by product groups
 Sector-wise growth profile
 Central public sector enterprises
 Financial and investment by sectors
 Policy developments and programmes
 Some critical dimensions of industrial development
 Challenges and outlook

Energy, Infrastructure and Communications

 Introduction
 Overview of performance
 Transmission, trading, access and exchange
 Reforms in distribution
 Petroleum and gas
 Coal
 Railways
 Roads
 Civil aviation
 Ports
 Telecommunications
  Posts
 Urban Infrastructure
 Financing of infrastructure
 Challenges outlook

Human Development, Poverty and Public Programmes

 Introduction
 Human Development and gender situation
 Poverty and inclusive growth
 Hunger and malnutrition
 Employment
 Trend in social sector expenditure
 Social sector initiatives
 Education
 Health
 Women and child development
 Social welfare
 Social security and related programmes
 Climate change
 Outlook and challenges

The Indian Pharmaceutical

Industry
India currently represents just U.S. $6 billion of the $550 billion global pharmaceutical
industry but its share is increasing at 10 percent a year, compared to 7 percent annual
growth for the world market overall.1 Also, while the Indian sector represents just 8 percent
of the global industry total by volume, putting it in fourth place worldwide, it accounts for
13 percent by value,2 and its drug exports have been growing 30 percent annually.3
The “organized” sector of India's pharmaceutical industry consists of 250 to 300 companies,
which account for 70 percent of products on the market, with the top 10 firms representing
30 percent. However, the total sector is estimated at nearly 20,000 businesses, some of
which are extremely small. Approximately 75 percent of India's demand for medicines is
met by local manufacturing.4
According to the German Chemicals Association, in 2005, India's top 10 pharmaceutical
companies were Ranbaxy, Cipla, Dr. Reddy's Laboratories, Lupin, Nicolas Piramal,
Aurobindo Pharma, Cadila Pharmaceuticals, Sun Pharma, Wockhardt Ltd. and Aventis
Pharma.5 Indian-owned firms currently account for 70 percent of the domestic market, up
from less than 20 percent in 1970. In 2005, nine of the top 10 companies in India were
domestically owned, compared with just four in 1994.6
India's potential to further boost its already-leading role in global generics production, as
well as an offshore location of choice for multinational drug manufacturers seeking to curb
the increasing costs of their manufacturing, R&D and other support services, presents an
opportunity worth an estimated $48 billion in 2007.7
Over-the-Counter Medicines
The Indian market for over-the-counter medicines (OTCs) is worth about $940 million and
is growing 20 percent a year, or double the rate for prescription medicines.8 The government
is keen to widen the availability of OTCs to outlets other than pharmacies, and the
Organisation of Pharmaceutical Producers of India (OPPI) has called for them to be sold in
post offices.
Developing an innovative new drug, from discovery to worldwide marketing, now involves
investments of around $1 billion,9 and the global industry's profitability is under constant
attack as costs continue to rise and prices come under pressure. Pharmaceutical production
costs are almost 50 percent lower in India than in Western nations, while overall R&D costs
are about one-eighth and clinical trial expenses around one-tenth of Western levels. India's
long-established manufacturing base also offers a large, well-educated, English-speaking
workforce, with 700,000 scientists and engineers graduating every year, including
122,000 chemists and chemical engineers, with 1,500 PhDs.10 The industry provides the
highest intellectual capital per dollar worldwide, says OPPI

The industry's exports were worth more than $3.75 billion in 2004-05 and they have been
growing at a compound annual rate of 22.7 percent over the last few years, according to the
government's draft National Pharmaceuticals Policy for 2006, published in January 2006.
The Policy estimates that, by the year 2010, the industry has the potential to achieve
$22.40 billion in formulations, with bulk drug production going up from $1.79 billion to
$5.60 billion: “India's rich human capital is believed to be the strongest asset for this
knowledge-led industry. Various studies show that the scientific talent pool of 4 million
Indians is the second-largest English-speaking group worldwide, after the USA

The Indian Pharmaceutical Industry in 2004

Turnover: $6.02 billion, up 6.4 percent year over year
Exports: $3.72 billion
Imports: $985.3 million
Bulk drug production: $2.10 billion, with over 400 bulk drugs produced. Over 60,000
formulations produced, in 60 therapeutic categories
Capital investment: up 14.8 percent to $1.16 billion
Employment: 5 million direct, 24 million indirect
Indian Companies as
Global Players
6
© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a
coordinating entity for a network
of independent firms operating under the KPMG name. KPMG International provides no
services to clients. Each member
firm of KPMG International is a legally distinct and separate entity and each describes
itself as such. All rights reserved.
Collaboration for Growth 26
Notable developments during 2005 were Dr Reddy's acquisition of Roche's
API business
for $59.6 million; Nicholas Piramal's buying Avecia Custom Drug Synthesis
of the UK for
$16.7 million; Ranbaxy's acquisition of a 40 percent stake in Japan's Nihon
Pharmaceutical
Industry; and Sun Pharma's completion of its buy of ICN Hungary for an
undisclosed sum.
Then in February 2006, the largest-ever acquisition by an Indian
pharmaceutical company
was announced, when Dr Reddy's bought Germany's fourth-largest generics
company,
Betapharm Arzneimittel, from UK-based 3i for $573.6 million. Betapharm
Chief Executive
Wolfgang Niedermaier commented, “Dr Reddy's impressive pipeline of
generic and innovative
products and its high-quality standards, combined with competitive
manufacturing
costs, will help further develop our position in the German market and offer
an entry platform
for the European market.”
Outlook
Price competition in generics markets is not unexpected or shocking; it is the
nature of the
business, and the important thing is to focus on the right product mix and
optimal production
processes, says Pankaj Patel of Zydus Cadila.
He foresees huge new potential for the company from the upcoming patent
expiries in its
main regulated markets-the U.S. and Europe, particularly France. The firm
also has a high
profile in Brazil, South Africa and Russia.
In terms of the role of Indian firms on the global stage, Ranjit Shahani of
Novartis India
points to Ranbaxy, Dr Reddy's, Nicholas Piramal, Wockhardt and Lupin as
having already
achieved this status; many of these firms' international sales are higher than
their domestic
turnover, he says.
In terms of competition with other major emerging economies, India offers
the competitive
advantages of an abundance of English-speaking scientific and technical
staff, globally
competitive IT capabilities, a sound judicial system and a vibrant democracy,
which fosters
innovation, creativity and cost competitiveness. The country can use these
advantages
strategically to beat any international competition, he says, but he believes
that India's real
focus should be on becoming a developed nation by 2020, and its goals
should be to
eradicate poverty, illiteracy and disease, rather than competing with any
country.
India offers the international pharmaceutical industry very high levels of
expertise, but
manufacturers will not go all out to invest in the country until it also offers
the right
regulatory framework, warns Kewal Handa of Pfizer India.
Nevertheless, he is very hopeful that India will develop into a very good
market for Pfizer.
The company looks forward to being able to launch new products in the
country
© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a
coordinating entity for a network
of independent firms operating under the KPMG name. KPMG International provides no
services to clients. Each member
firm of KPMG International is a legally distinct and separate entity and each describes
itself as such. All rights reserved.
27 Collaboration for Growth
simultaneously with its global introductions, and to creating value for Pfizer
globally
through Indian manufacturing of formulations and APIs, enhanced clinical
research and biometrics.
Within the next four or five years, the first new drug discovery made by an
Indian company
could arrive on the market, forecasts Ajay Piramal of Nicholas Piramal.
He hopes that his company will have, by that time, not only launched its own
in-house
developed product, but also increased the share of revenues accounted for by
its international
business from 30 percent at present to 50 percent, and increased its position
in the
domestic market, where it is currently fourth in the league of leading
manufacturers.

CONCLUSION
There has never been a more important time for India's government and its drug producers,
both multinational and domestic, to work together in partnership for the good of the
industry and the nation. With its enormous advantages, including a large, well-educated,
skilled and English-speaking workforce, low operational costs and improving regulatory
infrastructure, India has the potential to become the region's hub for pharmaceutical and
biotechnology discovery research, manufacturing, exporting and health care services
within the next decade.
However, in order for this to happen, it is imperative that the regulatory environment
continues to improve. Otherwise, India needs to look to the achievements of China, where
the government's strong commitment pro-industry policies have produced a positive
environment that not only offers drug manufacturers a product patent regime but also, and
crucially, data protection. India's continuing failure to do so needs to be urgently rectified.
The goals set out in the Indian government's draft National Pharmaceuticals Policy for
2006 in terms of domestic market development are ambitious, and will require a positive
pricing environment if the country's 1 billion people are to be able to access the life-saving
and innovative medicines they need. Again, partnership is key: industry leaders are keen to
work with government on issues of affordability and point out that price controls will do
nothing to increase access to new and effective treatments.
For foreign investors, collaborations with India present a huge opportunity both in terms of
joint production for the global market and supply of the growing domestic market.