The Indian Pharmaceutical Industry

Released on: October 3, 2008, 2:40 am

Press Release Author: bharatbook

Industry: Industrial

Press Release Summary: launches a latest report which elucidates
facts about the "The Indian Pharmaceutical Industry"

Press Release Body: added a new report on "The Indian Pharmaceutical
Industry" (

The Indian Pharmaceutical Industry (IPI), estimated at US$ 9 bn, has grown at a CAGR
of 7% during the last six years. It is ranked 4th in volume terms and 11th in value
terms globally. India’s share in the global pharmaceutical market is less than 2% in
value terms as drug prices in India are one of the lowest in the world. Exports
contributed to more than half of IPI’s turnover during 2005-06 and have been a major
growth driver for the industry growing at a CAGR of 19% during the last six years.

The playing field for the domestic pharmaceutical companies changed completely with
the advent of product patent regime from January 2005. The IPI is now exposed to a
host of new opportunities and risks. This has led the domestic pharmaceutical
companies to pursue various strategies on the business and R&D front with the aim of
achieving long-term sustainable growth under the new regulatory regime. Besides
changes in the patent laws, the issues with respect to drug pricing and the Union
Pharmaceutical policy will shape the regulatory environment for the industry in

The changing dynamics of the global pharmaceutical industry especially that of the
regulated markets like USA and Europe have presented a number of opportunities for
IPI to capitalize on. Some of the major concerns facing the global pharmaceutical
industry are higher healthcare costs, competition from generics, patent expiries of
blockbuster drugs, drying R&D pipelines and increasing R&D costs. These translate
into a significant growth opportunity for IPI in the form of exports of generics to
regulated markets and contract manufacturing/ research for global pharmaceutical
companies.It has in its report on the Indian Pharmaceutical Industry developed an
IPI Value Road which enlists the various value opportunities for growth of Indian
pharmaceutical companies. The IPI Value Road attempts to establish a growth path for
Indian pharmaceutical companies by identifying six growth segments in increasing
order of perceived value that can be generated by following strategies focused on a
particular segment. The segments identified are bulk-drugs, domestic formulations,
exports to non regulated markets, CRAMS, exports to regulated markets and NCE
research. The various strategies adopted by Indian pharmaceutical companies focusing
on each of the six segments are then identified and explained. The top-28 Indian
pharmaceutical companies are classified based on their current orientation visà-vis
the value road. These companies are mapped according to their current and future
focus segments on the value road which are likely to shape their growth in the near
to medium term. CARE Research believes that the growth of the Indian pharmaceutical
companies in the domestic market get restricted with the MNCs introducing newer
patented drugs in the country. Under this scenario, the growth for the formulation
companies is likely to come from the generics opportunity in the regulated markets
and geographic expansion in the semi/non regulated markets. The value of drugs going
off-patent in regulated markets is estimated at US$ 70-80 bn during the next five
years and this represents a huge opportunity for Indian pharmaceutical companies to
establish their presence in these markets. Pricing pressure in the regulated
markets, high litigation expenses and counter strategies followed by innovator
companies are factors that could dampen the growth of Indian pharmaceutical
companies pursuing the generic opportunity.

The recognition of product patent has provided global companies with better IPR
protection and as a result has opened up a new segment for the IPI in Contract
Research and Manufacturing Services (CRAMS). IPI is well-positioned to take
advantage of this opportunity with world class manufacturing facilities adhering to
various regulatory standards, large pool of skilled manpower and cheaper cost of
production. The investment in R&D is also on the rise as it has become important for
Indian companies to start innovating new drugs in order to ensure long term
sustainable growth and remain competitive at the global level. Indian companies have
invested in New Chemical Entity (NCE) research and are scouting for global partners
for pursuing collaborative research. The availability of large patient base, skilled
manpower and lower costs of carrying out clinical trials has made India a favourable
destination for R&D outsourcing. It believes that in the near to medium term
horizon, the growth of IPI would be driven by exports to regulated markets and
CRAMS. Companies having strong presence in these segments are likely to benefit more
as compared other companies.

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