PHARMACEUTICAL

SECTOR : INDIA
GROUP: 6
Agya Pal Singh
Bharathwaj S
Gurudas KR
Indu Bagchandani
Parnika Chaurasia
 PHARMACEUTICAL SECTOR : INDIA

OVERVIEW
 Accounting for 2 % of the world's pharmaceutical market, the Indian pharmaceutical sector
has an estimated market value of about US $8 billion. It's at 4th rank in terms of total
pharmaceutical production and 13th in terms of value. It is growing at an average rate of 7.2
% and is expected to grow to US $ 12 billion by 2010.
 Over the last two years the pharmaceutical market value has increased to about US $ 355
million because of the launch of new products. According to an estimate, 3900 new generic
products have been launched in the past two years. These have been by and large launched
by big brands in the pharma sector. And in the year 2005 Indian pharmaceutical companies
captured around 70% of the domestic market. As in the present scenario, only a few people
can afford costly drugs, which have increased price sensitivity in the pharmaceutical market.
Now the companies are trying to capture the market by introducing high quality and low price
medicines and drugs.

 With the Product Patent Act, which came into action in January 2005, this industry is able to
attract big MNCs to India. Earlier these big firms had apprehensions in launching new drugs
in the Indian market

 At present, a large number of Indian pharmaceuticals companies are looking for tie-ups with
foreign firms for in-license drugs. GlaxoSmithKline is among the top choices for the firms that
wish to launch their product in India, but do not have any branch over here.

 Contract research and pharmaceutical outsourcing are the new avenues in the
pharmaceutical market. Contract manufacturing is growing at a very fast pace and is
estimated to grow to US $30billion, whereas contract research is estimated to reach US$6-10
billion

 Indian multinational companies like Dr.Reddy's Lab, Cipla, Ranbaxy, etc have created
awareness about the Indian market prospects in the international pharmaceutical market.
Approvals given by Foods and Drugs Administration (FDA) and ANDA (Abbreviated New
Drug Application)/DMF (Drug Master File) have played an important role in making India a
cost-effective and high quality product manufacturer. Furthermore, the changes that took
place in the patent law, change of process patent to product patent, have helped in reducing
the risk of loss for intellectual property

 Industry Strengths:

Capital Investment in Technology: Owing to the availability of advanced technology at low

costs, the companies can produce drugs at lower costs.

Cost Effective: The filing cost of ANDAS and DMFs is comparatively low for the Indian
companies.

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 Manpower: There is a large pool of technical experts available at modest salaries.
Contract Research & Contract Manufacturing: There is a good scope for contract research
and contract manufacturing

Infrastructure: There is a well-developed infrastructure for the pharmaceutical industry.

Generic Drugs: In the last few years, the generic drug-manufacturing segment has received

huge investments, in the process making it more competitive and efficient

PHARMACEUTICAL INDUSTRY
 The Indian Pharmaceutical Industry is capable to meet the country's demand for every drug.
The manufacturing units within the country are meeting about 80% of the country's drug
requirements. The drug production sector is equipped with technology and researched
knowledge base. The industry produces drugs worth rupees 18000 crores and is growing at 9
per cent every year. It offers quality products with internationally accepted quality standards.
There are about 20,000 production units in India with products sold at competitive lower
prices than international drug prices.

 India has various competitive advantages in Pharma production over western world. It has a
large pool of educated manpower with technical and managerial skills.

 It has a well-developed research and development base equipped with advanced technology.
Low cost of research over the Western countries gives India a potential advantage for future
developments. The country has an open market policy where foreign capital investment is
permitted. Restriction on capital investment has been removed in the recent years with a view
to make new investments profitable. Also, the country has a strong legal framework, an
essential for pharmaceutical industry. The most promising fact about India is a 70 million
middle class population with good consumption power

SCOPE AND IMPORTANCE

 Over the years pharmacy has grown in the form of pharmaceuticals sciences through
research and development processes. It is related to product as well as to services. The
various drugs discovered and developed are its products and the healthcare it provides
comes under the category of services.

 Pharmacy involves all the stages that are associated with the drugs i.e. discovery,
development, action, safety, formulation, use, quality control, packaging, storage, marketing,

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 etc. This profession has a large socio-economic relevance to the Indian economy. In India this
sector is among the future economy drivers. It is committed to deliver high quality drugs and
formulations at an affordable price, so that majority of people can afford them.

 This profession has a large socio-economic relevance to the Indian economy. In India this
sector is among the future economy drivers. It is committed to deliver high quality drugs and
formulations at an affordable price, so that majority of people can afford them. The
transformation of the sector from conventional pharmacy to drug experts, which is both
desired and necessary to reach the global standards, has already made commendable
progress.

 Liberalization, privatization and globalization (LPG) have helped the Indian pharmaceutical
companies to achieve international recognition. It's remarkable to note that today several
Indian pharma companies are approved by US FDA and are listed at NASDAQ

 The multibillion-dollar pharma industry grows mainly through knowledge wealth creation. This
sector has transformed a lot over the years. The big pharma companies that were there about

15-20 years back are not in picture these days.

 The analysis of Indian pharmaceutical sector shows that the innovative products, product life
cycle management and marketing management steps taken by the pharma companies have
led them to flourish. And the companies that refused to change their strategy lost the race.
Cipla and Sun Pharma are two companies that are focused on new product development
and have grown tremendously.

Top players in pharma industry

 Ranbaxy Laboratories Limited is the biggest pharmaceutical manufacturing company in

India. The company is ranked at the 8th position among the global generic pharmaceutical
companies and has presence in 48 countries including world class manufacturing facilities in
10 countries and serves to customers from over 125 countries. Ranbaxy Laboratories 2009-
2010 Q3 Net Profit Results showed a profit of Rs 116.6 crore as compared to Rs 394.5 crore
deficit, recorded during the corresponding period last fiscal.

 Dr. Reddy's Laboratories manufactures and markets a wide range of pharmaceuticals both
in India and abroad. The company has 60 active pharmaceutical ingredients to manufacture
drugs, critical care products, diagnostic kits and biotechnology products. The company has 6
FDA plants that produce active pharma ingredients and 7 FDA inspected and ISO 9001 and
ISO 14001 certified plants. Dr. Reddy's Q1 FY10 result shows the revenues of the company
at Rs. 18,189 million which is up by 21%. During this quarter the company introduced 24 new
generic products, applied for 22 new generic product registrations and filed 4 DMFs.

 Cipla is an Indian pharmaceutical company renowned for the manufacture of low cost anti
AIDS drugs. The company's product range comprises of anthelmintics, oncology, anti-
bacterials, cardiovascular drugs, antibiotics, nutritional supplements, anti-ulcerants, anti-
asthmatics and corticosteroids. Cipla also offers other services like quality control,
engineering, project appraisal, plant supply, consulting, commissioning and know-how

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 transfer, support. For the financial year 2008-09 the company registered an increase of 22%
in sales and other income over the previous year.

 Nicholas Piramal is the second largest pharmaceutical healthcare company in India. The
brands manufactured by the company include Gardenal, Ismo, Stemetil, Rejoint, Supradyn,
Phensedyl and Haemaccel. Nicholas Piramal has entered into join ventures and alliances with
several international corporations like Cheissi, Italy; IVAX Corp; UK, F. Hoffmann-La Roc Ltd.,
Allergan Inc., USA etc.

 Glaxo Smithkline (GSK) is a United Kingdom based pharma company; it is the world's
second largest pharmaceutical company. The company's portfolio of pharma products consist
of central nervous system, respiratory, oncology, vaccines, anti-infectives and gastro-
intestinal/metabolic products among others. On November 2009, the FDA had announced
that the H1N1 vaccine manufactured by GSK would join the list of the four vaccines
approved.

 Zydus Cadila also known as Cadila Healthcare is an Indian pharmaceutical company located
in Gujarat. The company's 1QFY2010 results show the net sales at Rs880.3cr which is higher
than the estimated Rs773cr. The net profit was Rs124.8cr which was increase of 39%; the
increase was on account of higher sales and improvement in the OPM.

PHARMACEUTICAL COMPANIES IN INDIA

The government of India has recognized Pharmaceutical sector as an intellectual industry.
Based on the projections regarding India's strengths in the area, investment base has been
increased for future development of the sector. The industry over a period of 25 years have
grown immensely and made progress in infrastructure, knowledge capital, and dynamic
research and development strengths.

List of Pharmaceutical Companies

Alembic Chemicals
Aurobindo Pharma
Glenmark Pharmaceuticals Limited
Lupin
Pfizer India
Zandu Pharmaceuticals Ltd.
Wyeth Limited, India

Sun Pharmaceutical Ltd

RECENT DEVELOPMENTS - PHARMACEUTICALS

-Strides Arcolab plans to buy Chennai based Grandix

-Changing patterns: Indian pharma sees better prospects in Europe now
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 -Reliance Life to give a shot at generic drug market
-Chronic diseases plus economic growth: Pharma sector gains

INDIA’S DOMESTIC PHARMACEUTICAL MARKET(12

Months ended January 2009)

Company Size ($ Billion) Market Share (%) Growth Rate (%)

Total Pharma Market 6.9 100.0 9.9
Cipla .36 5.3 13.4
Ranbaxy .34 5.0 11.5
Glaxo Smithkline .29 4.3 -1.2
Piramal Healthcare .27 3.9 11.7
Zydus Cadila .24 3.6 6.8
Source: ORG IMS

FUTURE SCENERIO

With several companies slated to make investments in India, the future scenario of the
pharmaceutical industry in looks pretty promising. The country's pharmaceutical industry has
tremendous potential of growth considering all the projects that are in the pipeline. Some of
the future initiatives are:

 According to a study by FICCI-Ernst & Young India will open a probable US$ 8 billion market
for MNCs selling expensive drugs by 2015
 The study also says that the domestic pharma market is likely to reach US$ 20 billion by 2015
 The Minister of Commerce estimates that US$ 6.31 billion will be invested in the domestic
pharmaceutical sector
 Public spending on healthcare is likely to raise from 7 per cent of GDP in 2007 to 13 per cent
of GDP by 2015
 Dr Reddy's Laboratories has tied up with GlaxoSmithKline to develop and market generics
and formulations in upcoming markets overseas
 Lupin, a Mumbai based pharmaceutical company is looking to tap opportunities of about US$
200 million in the US oral contraceptives market
 Due to the low cost of R&D, the Indian pharmaceutical off-shoring industry is designated to
turn out to be a US$ 2.5 billion opportunity by 2012

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ARTICLES

BOOMING PHARMA SECTOR IN INDIA

April 2010

Pharmaceuticals has emerged as one of the leading industries in the Indian Inc., with the
domestic market showing an unprecedented growth of around 9% to generate revenue of
about INR 554.5 Billion (US$ 11.1 Billion) in FY 2009. This dramatic growth in the Indian
pharmaceutical industry can be attributed to several factors such as growing middle class
population, rapid urbanization, increase in lifestyle-related diseases and acceptance of health
insurance. Besides, the product patent regime has provided ample support to the industry to
sustain its growth pace despite the global economic downturn. Generic is emerging as one of
the leading segments to be benefited by many drugs going off-patent in due course of time.

According to our new research report “Booming Pharma Sector in India”, the Indian
pharmaceutical industry is projected to show double-digit growth in near future owing to rise in
pharmaceutical outsourcing and consolidation of highly fragmented industry. As exports form
major part of the pharmaceutical industry in India, leading players have started expanding
their reach towards the West.
Thanks to investments in R&D and thriving for more and more ANDA filings, the clinical trials
market is expected to grow at blistering pace in coming years. To support this evidence, we
have done an extensive research and analysis of various segments of the Indian
pharmaceutical market.

These segments include: Domestic & Export Market, Branded & Generics Drugs,
Formulations & Bulk Drugs, etc.
The baseline for optimistic future outlook of the pharmaceutical market is improvement in
access to medicines of Indian population. Emerging sectors like biogenerics and pharma
packaging will also pave the way for the pharmaceutical market to continue its upward trend
over the forecast period (FY 2010- FY 2013).

The report provides thorough statistical and analytical overview of the Indian pharmaceutical
market. It contains information about past, present and future trends, with focus on entire
structure, composition and working of the pharmaceutical market. The report extensively
discusses opportunities and challenges expected to arise within and outside the
pharmaceutical market. The report also analyzes emerging sectors, regulatory environment
and distribution system to identify strength and weaknesses of the pharmaceutical market. It
has thoroughly examined current market trends, industrial developments and competitive
landscape to enable clients understand the market structure and its progress in coming years.
It also gives a brief overview of demographics and healthcare profile to adjudge the
pharmaceutical market in terms of demand, expenditure and possible future direction.

Source : http://www.rncos.com/Report/IM131.htm

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India to be Among Top 10 Drug Producers by 2020
Apr 30, 2010
The flourishing Indian drug market needs to concentrate on product counterfeiting and more spending
on healthcare systems to enjoy a bright future ahead.

According to PricewaterhouseCoopers (PwC), India is expected to be in the league of 10 leading drug

markets in coming ten years. It is likely to be worth at least US$50 Billion (Rs2.2 Trillion), as per the
news published by Livemint.

Indian drug manufacturers are expected to become contender to global drug manufacturers in some
spheres. They are also likely to become a potential partner in various other segments like clinical
trials, drug research, and contract manufacturing.

India possesses a significant expertise in contract manufacturing and leads in the manufacture of
generic or off-patent vaccines and drugs, and this is the major reason for such a remarkable growth.
Over 20% of world’s generics are produced in India. Drugs worth nearly US$ 70 Billion are likely to go
off patent in the USA, offering India a chance to manufacture a considerable share of the products to
exploit the ensuing generics opportunity.

Foreign players are also expected to increasingly discover investment opportunities in the country in
establishing research centres, outsourcing production services, and authorizing products and
technologies. In manufacturing, pharmaceutical firms are strengthening bonds with Indian players to
serve the world markets via marketing alliances like the joint venture of Dr Reddy’s Laboratories Ltd
and Glaxo SmithKline Plc in 2009.

Growth is also expected in the pharma export market besides domestic market. According to a market
research report titled “Booming Pharma Sector in India” by RNCOS, from an estimated Rs.244 Billion
(US$ 5.48 Billion) in 2009-10, pharma exports will arrive at Rs. 593 Billion (US$ 13.31 Billion) by 2011-
2012.

The report also reveals that due to the implementation of severe price control norms in the Indian drug
market that are encouraging drugmakers to exports so as to harvest better margins and growth in
generics, mainly in the US, Europe and Japan, the pharma exports are likely to grow

According to a Research Analyst at RNCOS, “The Indian drug market has a dazzling future. However,
still there are some constraints in the market, and the presence of fake drugs is one of them. This
constraint may smudge the reputation of India as a quality drug manufacturer. The sector’s growth is
also hindered by the lack of government initiative to spend on healthcare systems. So to experience a
glittery future, India has to work a lot on overcoming these obstacles.”
Source : http://www.rncos.com/Blog/2010/04/India-to-be-Among-Top-10-Drug-Producers-by-2020.html

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 Source : business@mapsofindia.com

Conclusion :-

Thus this is the industry report of the Indian Pharmaceutical Industry and its various contributions
towards the pharmaceutical industry of some of the companies in India.