The Indian pharmaceutical industry is one of the prominent sectors of the country.
It has a current market size of $27.57 billion and is expected to reach $55 billion by 2020 with a CAGR of 15.92%.
According to a report published by the Indian Brand Equity Foundation, India is projected to be one of the top three pharmaceutical markets in terms of growth rate and sixth largest in terms of absolute size in the next three years. At present, the industry is growing at a rate of 9-10% year on year; this is a healthy growth since it is largely a volume led business. This is a significant advantage of an emerging market economy which makes it possible to achieve double digit growth.
Courtesy: Report Linker
Trends in export
The Indian export market accounts for 20% of the global exports in general.
In 2016, India exported about $16.89 billion of pharmaceutical products and this number is expected to reach $40 billion by 2020.
The Pharmaexports in India grew at 9.44% in 2016 and are expected to show a double digit growth in 2017. Cipla has a strong presence in South Africa, across the private as well as tender market.
Cipla is the third largest company overall and is the fourth largest in the private pharma market.
A lot of Indian companies are finally moving towards the generic versions of biologic drugs or biosimilars. The Indian biosimilar industry has grown at a CAGR of 30% since 2008. Biosimilars are difficult to make but it has a large scope. There are about 25 Indian companies operating across the biosimilar space and marketing close to 50 products in the market. Indian patients now have access to biosimilars like Insulins, Filgrastim, Adalimumab, Trastuzumab, Insulin analogues, etc. The global market for biosimilars in 2020 is expected to reach between $25 billion and $35 billion. It requires a heavy investment and has a long gestation period as well which is one of the reasons companies avoid entering the biosimilar industry.
Courtesy: Indian brand and equity foundation
The pharma industry has seen a shift from the infectious diseases to non-communicable diseases as population is ageing and lifestyles and habits are also changing. Companies will have to align their portfolio of products in this direction. With an increase in the market shaping initiatives and a number of patient educations, there is growing awareness among the people across the country. A lot of diseases are spoken about now and there are lesser signs of stigma attached with the disease.
After the implementation of Goods and Services Tax, there has been a significant impact on the pharmaceutical industry. Due to the speculation related to GST, the stockists withheld purchasing for the month of May and June which led to lower sales in the first quarter of 2017-18. However, the market is expected to stabilize in the long run.
Another challenge is the time gestation due to US FDA. Since they take longer to visit the location for inspection, the delays hamper the growth. Any company which is trying to grow its sales in the US will find the delayed visits very challenging. The biotech industry also faces challenges like sub optimal infrastructure, lack of funding avenues, shortage of skilled talent, time consuming approval process etc.
In addition, there are promises of spreading healthcare and expanding to rural areas as well as diagnosing more patients across the Tier 1, 2 and 3 towns. But healthcare has not been able to reach every corner of the country, while FMCG products have penetrated across every small town. It is important to make healthcare products easily accessible across the nation.
India has made progress in healthcare over the last few decades. This can be seen in the increase in the average life expectancy of Indians which has risen from 58 years in 1990 to 66 years in 2013.
There needs improvement in terms of healthcare access to citizens and this can be accomplished through an effective healthcare delivery system which should be at the core of every company.
Indian pharma companies are investing in research and development heavily. Cipla spent about 8% of sales into research and development while Sun Pharma spent 9.1% of its total sales on the same. Lupin spent 12-15% of its total sales on R&D in 2016.It is also important to move from creating medicine to creating holistic healthcare solutions that address the core of the problem. Technology and digital intervention plays a crucial role here. In India, where the doctor to patient ratio is a challenge, in order to serve the patients better, Indian pharma needs to collaborate with effective partners like hospitals and device companies in order to integrate, generate insights and optimize data in order to provide better health outcome for the patients.
The ‘Start-Up India’ initiative is creating an enabling ecosystem through policies that include venture funding and seed funding in order to support incubators, accelerators and biotech entrepreneurs.