PHARMACEUTICAL INDUSTRY IN INDIA

1.1. INTRODUCTION
India is the largest provider of generic drugs globally. Indian
pharmaceutical sector industry supplies over 50 per cent of global demand
for various vaccines, 40 per cent of generic demand in the US and 25 per
cent of all medicine in UK.

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 per cent of the antiretroviral drugs used globally to combat AIDS
(Acquired Immune Deficiency Syndrome) are supplied by Indian pharmaceutical
firms.

1.2. MARKET SIZE

The pharmaceutical sector was valued at US$ 33 billion in 2017. The country’s
pharmaceutical industry is expected to expand at a CAGR of 22.4 per cent
over 2015–20 to reach US$ 55 billion. India’s pharmaceutical exports stood
at US$ 17.27 billion in FY18 and have reached US$ 15.52 billion in FY19 (up
to January 2019). Pharmaceutical exports include bulk drugs, intermediates,
drug formulations, biologicals, Ayush & herbal products and surgicals.

India’s domestic pharmaceutical market turnover reached US$ 18.12 billion in

2018, growing 9.4 per cent year-on-year US$ 17.87 billion in 2017.

Indian companies received 304 Abbreviated New Drug Application (ANDA)

approvals from the US Food and Drug Administration (USFDA) in 2017. The
country accounts for around 30 per cent (by volume) and about 10 per cent
(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 grow at an
average growth rate of around 30 per cent a year and reach US$ 100 billion
by 2025.

1.3. INVESTMENTS AND RECENT DEVELOPMENTS

The Union Cabinet has given its nod for the amendment of the existing Foreign
Direct Investment (FDI) policy in the pharmaceutical sector in order to allow
FDI up to 100 per cent under the automatic route for manufacturing of medical
devices subject to certain conditions.

The drugs and pharmaceuticals sector attracted cumulative FDI inflows worth
US$ 15.93 billion between April 2000 and December 2018, according to data
released by the Department for Promotion of Industry and Internal Trade
(DPIIT).

Some of the recent developments/investments in the Indian pharmaceutical

sector are as follows:

 In February 2019, the Indian pharmaceutical market grew by 10 per cent

year-on-year.
 Between Jul-Sep 2018, Indian pharma sector witnessed 39 PE investment
deals worth US$ 217 million.
 Investment (as % of sales) in research & development by Indian pharma
companies* increased from 5.3 per cent in FY12 to 8.5 per cent in FY18.
 In 2017, Indian pharmaceutical sector witnessed 46 merger &
acquisition (M&A) deals worth US$ 1.47 billion
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 The exports of Indian pharmaceutical industry to the US will get a

boost, as branded drugs worth US$ 55 billion will become off-patent
during 2017-2019.
 In 2017, Indian pharmaceutical sector witnessed 46 merger &
acquisition (M&A) deals worth US$ 1.47 billion.
 The exports of Indian pharmaceutical industry to the US will get a
boost, as branded drugs worth US$ 55 billion will become off-patent
during 2017-2019.

1.4. GOVERNMENT INITIATIVES

Some of the initiatives taken by the government to promote the
pharmaceutical sector in India are as follows:

a. The allocation to the Ministry of Health and Family Welfare has

increased by 13.1 per cent to US$ 8.98 billion in Union Budget 2019-
20.
b. In October 2018, the Uttar Pradesh Government announced that it will
set up six pharma parks in the state and has received investment
commitments of more than US$ 712-855 million for the same.
c. The National Health Protection Scheme is largest government funded
healthcare programme in the world, which is expected to benefit 100
million poor families in the country by providing a cover of up to
US$ 7,723.2 per family per year for secondary and tertiary care
hospitalisation. The programme was announced in Union Budget 2018-19.
d. In March 2018, the Drug Controller General of India (DCGI) announced
its plans to start a single-window facility to provide consents,
approvals and other information. The move is aimed at giving a push
to the Make in India initiative.
e. The Government of India is planning to set up an electronic platform
to regulate online pharmacies under a new policy, in order to stop
any misuse due to easy availability.
f. The Government of India unveiled 'Pharma Vision 2020' aimed at making
India a global leader in end-to-end drug manufacture. Approval time
for new facilities has been reduced to boost investments.
g. The government introduced mechanisms such as the Drug Price Control
Order and the National Pharmaceutical Pricing Authority to deal with
the issue of affordability and availability of medicines.
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1.5. KEY PLAYERS IN INDUSTRY

The key players that dominate the pharmaceutical industry are as follows:

A. Sun Pharmaceuticals is the largest pharmaceutical company from India

and the fifth largest specialty generic company in the world. It has
capabilities across dosage forms like injectables, sprays, ointments,
creams, liquids, tablets and capsules. Its businesses include
producing generics, branded generics, speciality, over-the-counter
(OTC) products, anti-retrovirals (ARVs), Active Pharmaceutical
Ingredients (APIs) and intermediates in the full range of dosage
forms. It also produces specialty APIs. US formulations contributed
the most to company’s US$ 4 billion sales in FY18 with a contribution
of 34 per cent, followed by India branded formulations at 31 per
cent. In 9M FY19, total income of the company reached Rs 22,645.95
crore (US$ 3.14 billion). http://www.sunpharma.com/

B. Cipla is a leading pharmaceutical from India with presence across the

world. It was established in 1935 as Chemical Industrial &
Pharmaceutical Laboratories Ltd and changed to its current name in
1984. The company has a vast portfolio with more than 1,500 products
in the market. The company’s business is divided into three strategic
units - Active Pharmaceutical Ingredients (API), Respiratory and
Cipla Global Access. Its largest market is India which contributed 39
per cent to its revenues in FY18, followed by Africa and North
America with contribution of 22 per cent and 17 per cent,
respectively. Its total income reached Rs 11,779.69 crore (US$ 1.83
billion). In 9M FY19, total income of the company reached Rs 9,400.61
crore (US$ 1.30 billion). https://www.cipla.com/en/

C. Lupin Ltd is a leading pharmaceutical company from India and is

amongst the top 10 generic companies in the world. It started its
business in 1968 and over the years has become one of the largest
pharmaceutical companies in India and the world. Its businesses
include formulations, Active Pharmaceutical Ingredients (API), drug
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delivery systems and biotechnology. Its largest market is the North

American region which contributed 38 per cent of its revenues in
FY18, followed by India with 26 per cent and Asia-Pacific (APAC) with
17 per cent. Its net sales reached Rs 15,560 crore (US$ 2.41 billion)
in FY18. In Q1 FY19, its total sales reached Rs 3,774.6 crore (US$
537.85 million). http://www.lupin.com/

1.6. EXPORTS
 Pharmaceutical export from India stood at US$ 17.27 billion in 2017-
18, and is expected to grow by 30 per cent to reach US$ 20 billion by
the year 2020.
 Exports of pharmaceutical* products together stood at US$ 10.80
billion during April-October 2018.
 During April-October 2018, top importers of India’s pharmaceutical*
products were USA ( US$ 3.21 billion), UK (US$ 383.30 million), South
Africa (US$ 367.35 million), Russia (US$ 283.33 million) and Nigeria
(US$ 255.89 million).
 India is expected to rank amongst the top three pharmaceutical
markets in terms of incremental growth by 2020.
 India is the largest supplier of generic medicines globally (20 to 22
per cent of global export volume)
 India has one of the lowest manufacturing costs in the world. It is
lower than that of USA and almost half of Europe.
 Pharmaceutical Export Promotion Council was established in 2004 by
the Ministry of Commerce and Industry, Government of India, to
promote Pharma exports.

1.7. ROAD AHEAD

Medicine spending in India is projected to grow 9-12 per cent over the next
five years, leading India to become one of the top 10 countries in terms of
medicine spending.

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 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 drugs into the market
has remained in focus and is expected to benefit the Indian pharmaceutical
companies. In addition, the thrust on rural health programmes, lifesaving
drugs and preventive vaccines also augurs well for the pharmaceutical
companies.