The Indian pharmaceuticals market is the 3rd largest in terms of volume and 13th largest in terms of value, as per a report by Equity Master. India is the largest provider of generic medicines globally with the Indian generics accounting for 20 percent of global exports in terms of volume. Of late, consolidation has become an important characteristic of the Indian pharmaceutical market as the industry is highly fragmented.
India enjoys an important position in the global pharmaceuticals sector. The country also has a large pool of scientists and engineers who have the potential to steer the industry ahead to an even higher level. Presently over 80 percent of the antiretroviral medicines used globally to combat AIDS (Acquired Immuno Deficiency Syndrome) are supplied by Indian pharmaceutical firms.
The UN-backed Medicines Patent Pool has signed six sub-licenses with Aurobindo, Cipla, Desano, Emcure, Hetero Labs and Laurus Labs, allowing them to make generic anti-AIDS medicine TenofovirAlafenamide (TAF) for 112 developing countries.
The Indian pharma industry, which is expected to grow over 15 percent per annum between 2015 and 2020, will outperform the global pharma industry, which is set to grow at an annual rate of 5 percent between the same period!. The market is expected to grow to US$ 55 billion by 2020, thereby emerging as the sixth-largest pharmaceutical market globally by absolute size, as stated by Mr. Arun Singh, Indian Ambassador to the US. Branded generics dominate the pharmaceuticals market, constituting nearly 80 percent of the market share (in terms of revenues).
India has also maintained its lead over China in pharmaceutical exports with a year-on-year growth of 11.44 percent to US$ 12.91 billion in FY 2015-16, according to data from the Ministry of Commerce and Industry. Imports of pharmaceutical products rose marginally by 0.80 percent year-on-year to US$ 1,641.15 million.
Overall medicine approvals given by the US Food and Medicine Administration (USFDA) to Indian companies have nearly doubled to 201 in FY 2015-16 from 109 in FY 2014-15. The country accounts for around 30 percent (by volume) and about 10 percent (value) in the US$ 70-80 billion US generics market.
India's biotechnology industry comprising bio-pharmaceuticals, bio-services, bio-agriculture, bio-industry, and bioinformatics is expected to grow at an average growth rate of around 30 percent a year and reach US$ 100 billion by 2025. Biopharma, comprising vaccines, therapeutics, and diagnostics, is the largest sub-sector contributing nearly 62 percent of the total revenues at Rs 12,600 crore (US$ 1.88 billion).
The Government of India unveiled 'Pharma Vision 2020' aimed at making India a global leader in end-to-end medicine manufacture. Approval time for new facilities has been reduced to boost investments. Further, the government introduced mechanisms such as the Medicine Price Control Order and the National Pharmaceutical Pricing Authority to deal with the issue of affordability and availability of medicines.
Mr. Ananth Kumar, Union Minister of Chemicals and Petrochemicals, has announced setting up of chemical hubs across the country, early environment clearances in existing clusters, adequate infrastructure, and establishment of a Central Institute of Chemical Engineering and Technology.
Some of the major initiatives taken by the government to promote the pharmaceutical sector in India are as follows:
- The Government of India plans to set up around eight mini medicine-testing laboratories across major ports and airports in the country, which is expected to improve the medicine regulatory system and infrastructure facilities by monitoring the standards of imported and exported medicines and reduce the overall time spent on quality assessment.
- India is expected to rank among the top five global pharmaceutical innovation hubs by 2020, based on Government of India's decision to allow 50 percent public funding in the pharmaceuticals sector through its Public-Private Partnership (PPP) model.#
- Indian Pharmaceutical Association (IPA), the professional association of pharmaceutical companies in India, plans to prepare data integrity guidelines which will help to measure and benchmark the quality of Indian companies with global peers.
- The Government of India plans to incentivize bulk medicine manufacturers, including both state-run and private companies, to encourage ‘Make in India’ programme and reduce dependence on imports of Active Pharmaceutical Ingredients (API), nearly 85 per cent of which come from China.
- The Department of Pharmaceuticals has set up an inter-ministerial coordination committee, which would periodically review, coordinate and facilitate the resolution of the issues and constraints faced by the Indian pharmaceutical companies.
- The Department of Pharmaceuticals has planned to launch a venture capital fund of Rs 1,000 crore (US$ 149.11 million) to support start-ups in the research and development in the pharmaceutical and biotech industry.
The Indian pharmaceutical market size is expected to grow to US$ 100 billion by 2025, driven by increasing consumer spending, rapid urbanization, and raising healthcare insurance among others.
Going forward, better growth in domestic sales would also depend on the ability of companies to align their product portfolio towards chronic therapies for diseases such as cardiovascular, anti-diabetes, anti-depressants and anti-cancers that are on the rise.
The Indian government has taken many steps to reduce costs and bring down healthcare expenses. Speedy introduction of generic medicines into the market has remained in focus and is expected to benefit the Indian pharmaceutical companies. In addition, the thrust on rural health programs, lifesaving medicines, and preventive vaccines also augurs well for the pharmaceutical companies.
Exchange Rate Used: INR 1 = US$ 0.0149 as on September 21, 2016
References: Consolidated FDI Policy, Department of Industrial Policy & Promotion (DIPP), Press Information Bureau (PIB), Media Reports, Pharmaceuticals Export Promotion Council