ANALYSIS OF INDIAN

PHARMACEUTICAL INDUSTRY

PreparedBy:
Abhishek Gupta
Arish Siraj
Ariz Rahman
Divanshu Sharma
Gaurav Bisht
Isha Bajpai
 CONTENTS

• INTRODUCTION
• HISTORY
• FUTURE GROWTH
• ACHIEVEMENTS
• INDEPTH ANALYSIS
• THE PHARMA INDUSTRY
• INITATIVE BY GOVERNMENT
• CIPLA PHARMA
• CONCLUSION
 INTRODUCTION
•Pharmaceutical companies in India are growing at a very fast pace and
this has made the Indian pharmaceutical industry as the second largest
growing industry.

• Also the pharmaceutical industry in India is the third largest in the world,
which will be of US$20 billion by 2015

•It provides employment to millions and ensures that essential drugs at

affordable prices are available to the vast population of India

•From simple pain killers to sophisticated antibiotics and complex cardiac

compounds, almost every type of drug is now made indigenously.

Indian Pharmaceutical sector is highly fragmented with more than 20,000

registered units and is very top heavy.
 INTRODUCTION..
• Over 60% of India's bulk drug production is exported. The balance is sold locally to
other formulators

• India offers a huge cost advantage in the clinical trials domain compared to
Western countries.

• Indian pharma companies are vying for the branded generic drug space to register
their global presence
 
• Pharmaceutical Industry in India has been de-licensed and industrial licensing for
most of the drugs and pharmaceutical products has been done away with

• Over 15 prominent contract research organisations (CROs) are now operating in

India attracted by her ability to offer efficient R&D on a low-cost basis
 HISTORY
During the 1960's domestic Indian pharmaceutical companies were
not able to produce any major drugs as they were covered by patents
that granted monopoly to the innovator of that drug till the patent
expired.

Around 85% of the domestic healthcare market was controlled by MNCs

and there were hardly any exports.
 

Things changed dramatically for the domestic pharma companies with

the passing of the new Indian Patent Act in 1972 which ended the
monopoly in the end product in areas of health & food.
 HISTORY…
• The monopoly could be enjoyed in the production process for a period of seven
years. Indian companies could henceforth manufacture and market any drug using
a non-infringing process.

• The sun finally shone on the Indian pharmaceutical industry and today 75% of the
US$ 6 bn. Indian market and almost the total exports amounting to over US$ 3 bn.,
are accounted for by Indian companies.

• The industry is growing at a CAGR of 13.7 %.

• Therapeutic segments include cardiovascular, anti-diabetics, neuro-psychiatic,

respiratory.
 Future Growth
• The future market size in 2010 as projected by Mckinsey is around US$25 bn.

• Inspite of being the second largest populated country in the world, the Indian
pharma industry is nowhere among the top markets, having a 1.8% share in value
terms and 8% in volume terms, of the world pharma market

• Several top domestic companies have started making their presence felt
internationally.

• However, post 2005, in the new product patent regime there are many other fish
to fry, viz. Contract manufacturing, clinical trials, contract research, custom
manufacturing, bio-informatics and other services
 Future Growth..
• Pfizer and Eli Lilly are also carrying out some of their global research in India.

• Post 2005, many global MNCs are willing to outsource manufacturing to Indian companies as
their costs are much lower.

• Indian companies are therefore seeking approval of international regulatory agencies such as
USFDA for their manufacturing facilities.

• India already has the largest number of USFDA approved manufacturing facilities outside USA.

• The no. of DMFs filed with USA is also the largest, being 197.

• India’s pharma sector posted a robust growth of 14 per cent in September.

 
 ACHIEVEMENTS
•As per Industry sources, Indian companies won manufacturing contracts worth
75mn. in 2004

•The Boston Consulting Group has estimated that contract manufacturing of

drugs would be worth US$ 900 mn in India by 2010.

•Indian companies are also on the lookout for mergers & acquisitions to
strengthen their positions in the international markets

•Several Indian companies including M/s Matrix Labs, Shashun Chemicals,

Strides Arocolabs, Jubilant Organosys, Orchid Pharmaceuticals, Dishman
Pharma and Divis Lab, have already started undertaking contract
manufacturing of APIs for global MNCs.
 ACHIEVEMENTS..
• Indian companies are also exploiting the possibility of JVs in the international
markets

• Matrix has entered into a JV with a South African company for anti-retroviral drugs
while Lupin has entered into a JV with another South African company for
developing anti TB drugs.

• Domestic companies are also going in for marketing arrangements with MNCs to
increase their strengths in marketing  

• Lupin has joined hands with Kyowa for marketing formulations in Japan

• Ranbaxy has forayed the Italian pharma market with the launch of Ranbaxy Italia
SPA in Italy, as a wholly owned subsidiary
 ACHIEVEMENTS..
• For India to really take its place in the sun and achieve the Mckinsy projection of
US$ 25 bn.

• By 2010, the pharma industry will have to substantially increase its spend on
innovative R&D which is currently a paltry Rs.11.8 bn., a mere 4% of sales
 INDIAN PHARMA INDUSTRY :
INDEPTH ANYLASIS
• The Indian pharmaceutical industry is the world's second-largest by volume and is
likely to lead the manufacturing sector of India.

• India's bio-tech industry clocked a 17 percent growth with revenues of Rs.137

billion ($3 billion) in the 2009-10 financial year over the previous fiscal

• The first pharmaceutical company are Bengal Chemicals and Pharmaceutical

Works, which still exists today as one of 5 government-owned drug
manufacturers, appeared in Calcutta in 1930.

• The government started to encourage the growth of drug manufacturing by Indian

companies in the early 1960s, and with the Patents Act in 1970
India's Domestic Pharmaceutical
Market
 KEY INFORMATION OF PHARMA
COMPANY IN INDIA

•In terms of volume - India's pharmaceutical industry is the third largest in the
entire world.

•In terms of value - India's pharmaceutical industry ranks fourteenth

•By 2015 - It will be in the list of to markets and it will touch US $ 20 billion.

•2008-2009 - Saw 29% growth in exports of pharmaceutical drugs as compared

to 2007

•2013 - Indian formulation market is expected to touch US$ 13.7 billion

 INDUSTRY TRENDS
• The pharma industry generally grows at about 1.5-1.6 times the Gross Domestic Product
growth

• Globally, India ranks third in terms of manufacturing pharma products by volume

• The Indian pharmaceutical industry is expected to grow at a rate of 9.9 % till 2010 and
after that 9.5 % till 2015

• In 2007-08, India exported drugs worth US$7.2 billion in to the US and Europe followed
by Central and Eastern Europe, Africa and Latin America

• The Indian vaccine market which was worth US$665 million in 2007-08 is growing at a
rate of more than 20%

• The retail pharmaceutical market in India is expected to cross US$ 12-13 billion by 2012
TOP 10 PHARMACEUTICALS IN
INDIA
 KEY PLAYERS
• 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.
 
• 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.
 
• 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.
 CONTD..
• 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.
 
• 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.
 
• Cipla is an Indian pharmaceutical company renowned for the manufacture of low
cost anti AIDS drugs.. Cipla also offers other services like quality control,
engineering, project appraisal, plant supply, consulting, commissioning and know-
how transfer, support.
 PHARMA EXPORT
• In the recent years, despite the slowdown witnessed in the global economy, exports
from the pharmaceutical industry in India have shown good buoyancy in growth.

• Export has become an important driving force for growth in this industry with more
than 50 % revenue coming from the overseas markets.

• For the financial year 2008-09 the export of drugs is estimated to be $8.25 billion as
per the Pharmaceutical Export Council of India, which is an organization, set up by
the Government of India.

• A survey undertaken by FICCI, the oldest industry chamber in India has predicted
16% growth in the export of India's pharmaceutical growth during 2009-2010.

 
 CHALLENGES
• Regulatory obstacles

• Lack of proper infrastructure

• Lack of qualified professionals

• Expensive research equipments

• Lack of academic collaboration

• Underdeveloped molecular discovery program

• Divide between the industry and study curriculum

 INITIATIVES BY GOVERNMENT
 
• Tax breaks are offered to pharma industry

• New procedure for the development drugs

• Proper clinical procedures

• New Millennium Indian Technology Leadership Initiative and the Drugs and
Pharmaceuticals Research Programme - Two schemes launched by the
government.
 FUTURE SCENARIO
• 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

• Dr Reddy's Laboratories has tied up with GlaxoSmithKline to develop and market

generics and formulations in upcoming markets overseas

• 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
 CIPLA
•Kwela Abdul Hamied, the founder of Cipla, was born on October 31, 1898

•In 1935, he set up The Chemical, Industrial & Pharmaceutical Laboratories,

which came to be popularly known as Cipla

•On August 17, 1935, Cipla was registered as a public limited company with
an authorised capital of Rs 6 lakhs.

•Cipla was officially opened on September 22, 1937 when the first products
were ready for the market

•The birth of Cipla which was launched into the world by Dr K A Hamied will
be a red letter day in the annals of Bombay Industries
 PRESENT SCENARIO
• Cipla is 2nd largest pharmaceutical company in India in terms of retail sales

• Cipla manufactures an extensive range of pharmaceutical & personal care

products and has presence in over 170 countries across the world

• Cipla's product range includes Pharmaceuticals, Animal Health Care Products, OTC,
Bulk Drugs, Flavours & Fragrances, and Agrochemicals

• Cipla also provides a host of consulting services such as preparation of product

and material specifications, evaluation of existing production facilities to meet
GMP, definition of appropriate plant size and technologies etc.
 CIPLA CONTRIBUTION TO INDIAN
PHARMA
• In 1940, during the Second World War when the drug supplies were cut off, Cipla
started producing fine chemicals.
• In 1946, Cipla's product for hypertension, Serpinoid, was exported to the American
Roland Corporation.
• In 1960, Cipla started operations at second plant at Vikhroli, Mumbai.
• In 1968, Cipla manufactured ampicillin for the first time in India.
• In 1976, Cipla launched medicinal aerosols for asthma
• In 1984, Cipla developed anti-cancer drugs, vinblastine and vincristine in
collaboration with the National Chemical Laboratory, Pune.
• In 1991, Cipla pioneered the manufacture of the antiretroviral drug, zidovudine. In,
Maharashtra.
• In 2000, Cipla became the first company, outside the USA and Europe to launch CFC-
free inhalers.
• In 2005, Cipla set up a state-of-the-art facility for manufacture of formulations at
Baddi, Himachal Pradesh.
 CIPLA”S products
• Pharmaceuticals: Cipla manufactures anabolic steroids, analgesics/antipyretics,
antacids, anthelmintics, anti-arthritis, anti-inflammatory drugs, anti-TB drugs,
antiallergic drugs 
• Animal Health Care Products: These include: aqua products, equine products,
poultry products, products for companion animals, and products for livestock
animals.
 
• OTC: These include: child care products, eye care products, food supplements,
health drinks, life style products, nutraceuticals & tonics, skin care products, and
oral hygiene products.
 
• Flavour & Fragrance: Cipla manufactures a wide range of flavours, which are used
in foods and beverages, fruit juices, baked goods, and oral hygiene products  
 CIPLA ACHIEVEMENT
• Manufactured ampicillin for the first time in India
 
• Lauched etoposide, a breakthrough in cancer chemotherapy, in association with
Indian Institute of Chemical Technology

• Launches transparent Rotahaler, the world's first such dry powder inhaler device
 
• Became the first company, outside the USA and Europe to launch CFC-free
inhalers
 RESULT ANALYSIS FOR CIPLA
• Growth for domestic segment remains capped for some time and gains from
international markets are likely to accrue only in FY12E.Cipla Ltd saw export
revenues boost topline even as domestic remained sluggish during the April – June
2010 quarter. Net sales at Rs 1427 crore grew 7.7% y-o-y.

• However, margins declined 214 bps to 24.64%. Net profit at Rs 257.42 crore came
in 6.5% higher as compared to the previous corresponding quarter.Export
formulation sales grew good 14.4% y-o-y to Rs 626 crore led by anti-asthma and
anti-retroviral (ARV) segments. Salbutamol inhalers did the trick with shipments
growing 9% as HIV related ARV shipments grew 19%.

• API revenues of Rs 140.16 crore were, however, flat on a y-o-y basis.  

FINANCIAL SUMMARY
GROWTH IN PROFITS
CIPLA GOALS
•Cipla Ltd expects to top revenue of Rs
60 billion in 2010-11 (Apr-Mar).

•Cipla will also invest over Rs 10 billion in

the near term in factories and expansion
of existing units, among other things.

•Cipla expects to launch its first biosimilar

product in early 2012

•A factory to produce both biosimilar

actives and their formulations in being
constructed in Goa.
•The company has also entered the new
area of stem cell therapy through
investment in Bengaluru-based
Stempeutics Research Pvt Ltd.

•Today, Cipla shares ended at Rs 308.80

on National Stock Exchange, down 2.5%
from previous close.
 CONCLUSION
• Opportunities in the global pharma market are undoubtedly promising.

• Indian companies like CIPLA are increasingly using strategic ventures, local cost
and manufacturing advantages to overcome bottlenecks on the growth path.

• Cipla has been ranked No.1 in terms of market share in the domestic pharma
market

• Overtook Ranbaxy and Glaxo Smithkline India (GSK) to become the largest
pharmaceutical company in the domestic market for the first time in May 2007

• Cipla's growth was powered by positive growth in their existing portfolio,

especially its respiratory products.
 CONCLUSION…
• At the same time, there are several challenges; key ones being in competency
development, scaling up, global operations and innovation.

• Cipla's growth was powered by positive growth in their existing portfolio,

especially its respiratory products.

• Domestic Formulations, on other hand, grew 19.3% and 13.4% during 3QFY2008
and 9MFY2008,

• Cipla has got many strategic partnerships with companies and organizations all
over the globe
 REFERENCES
• www.wikipedia.com
• www.cipla.com
• www.kpmg.com
• www.espi.com
• www.twnside.com
• www.business.mapofindia.com
• www.tradechakra.com
• www.researchchandmarker.com
• www.economictimes.com
• www.pharmaceutical-drugmanufactures.com