Ibok Healthcare Sector Ppt

7/31/2019 Ibok Healthcare Sector Ppt

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INVESTMENT BANK OF KOZHIKODE

INDIAN HEALTHCARE SECTOR

SURYA GUNIN

KAMALIKA GANGOLY

RINKESH SHAH


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EXECUTIVE SUMMARY

Ministry of Statistics and Programme Implementation, the Indian

economy has registered a growth of 7.4 per cent in 2009-10 and tuned topost a growth rate of 8.2% for 2010-11

The healthcare industry has registered a growth of 9.3 per cent in 2000-

2009.

It is projected to grow at a CAGR of 23% by 2012

The public sector contributes to the tune of only 15-20% and a huge

business potential exists for corporate India.

Combined sales of prescription drugs and over-the-counter (OTC)

medicines are forecast to increase from INR 739.3bn in 2009 to INR

837.7bn in 2010. This equates to year-on-year (y-o-y) growth of 13.3%.

The Indian pharmaceutical market is 14th largest in terms of value, but

the third largest in terms of volume.

It has the fourth largest pharmaceutical market in terms of value in the

Asia Pacific region, behind Japan, China and South Korea.


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0 50 100 150 200 250 300 350 400 450 500

US

Japan

France

Germany

Italy

UK

Spain

Canada

China

Mexico

Brazil

South Korea

Turkey

India

Top 14 Pharmaceutical Markets

2015 (US$ Bn) 2005 (US$ Bn)


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THE DIFFERENT SECTORAL ANALYSIS

PHARMACEUTICALS

The Indian Pharmaceutical grew from INR 862.48bn(US$18.81bn) in 2010 to INR 1,008bn (US$21.72bn)in 2011

HEALTH CARE

The Indian Healthcare grew from INR 2,699bn(US$58.85bn) in 2010 to INR 2,956bn (US$63.70bn)in 2011

MEDICAL

The Indian Medical Devices grew from INR 132.43bn(US$2.89bn) in 2010 to INR 152.31bn (US$3.28bn) in2011


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Prescription Drug Market Forecast

Indias prescription drug market represents oneof the most significant growth opportunities inthe global pharmaceutical industry.

Prescription drugs account for the majority ofIndias pharmaceutical market, which we defineas sales of OTC medicines plus prescriptiondrugs.

A key driver of prescription drug sales in India isthe modernization and expansion of thehealthcare sector.


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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Prescription Drugs Sales (US$ Bn)

PRESCRIPTION DRUG MARKET FORECAST

2005 - 2019


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Patented Drug Market Forecast Patented medicines will remain a marginal

player in the overall market.

International players will remain the leadingsuppliers of novel and hi-tech drugs, but

some larger local companies will increasinglyinvest in their own R&D activities.

Sales of more advanced medicines, such as

those to treat cardiovascular diseases,diabetes and cancer-related conditions willbe key drivers.


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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Patented Drug Sales (US$Bn)

PATENTED DRUG MARKET FORECAST

2005 - 2019


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Generic Drug Market Forecast

Indias INR592.9bn (US$12.55bn) generic drugmarket is characterized by healthy growth, lowpack prices, medicines that would be termed

patented in most other countries, and very fewforeign players.

The major driver of the countrys generic drugmarket is the patent regime, which does not

meet international standards. One of the most promising sales outlets are part

of the Jan Aushadhischeme.


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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Generic Drug Sales (US% Bn)


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Key Trends & Developments

GlaxoSmithKline (GSK) hopes to outpace the market in2011 after underperforming in 2010, according toMehernosh Kapadia, senior executive director, inFebruary 2011.

To achieve this goal, GSK will launch new patentedand branded generic drugs and expand its sales andmarketing network.

Despite growing domestic resistance to acquisitions of

local pharmaceutical companies by foreign firms, UK-based household products giant Reckitt Benckiser saidit would acquire India' s Paras Pharmaceuticals forINR32.6bn (US$724mn) in December 2010.


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SWOT ANALYSIS OF

PHARMACEUTICAL INDUSTRY

STRENGTH Massive pharmaceutical market growth potential

Strong local manufacturing sector with leading domestic players

Low-cost but skilled English-speaking labour force.

Swift market approval times.

WEAKNESSES Among the least-developed pharma markets in Asia with

extremely low per capita consumption.

Underdeveloped healthcare infrastructure. Vast regional disparities in healthcare coverage

Many multinationals already selling their products at reducedprices


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OPPORTUNITIES Robust generic and OTC drug market growth

Large and growing population boosting pharmaceutical and medical

demand Underdeveloped market for chronic illnesses and diagnostics

Increasing research and development (R&D) activity by domesticfirms

Global expansion of larger local companies

THREATS Failure to properly enforce World Trade Organization (WTO)-

compliant patent legislation for drugs.

Considerable counterfeit drug industry

Government failure to revise its opaque and discriminatorypricing and reimbursement policy.

Need for overhaul of healthcare delivery structures hamperingbetter access to medicines


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PESTLE

POLITICAL LANDSCAPE

The country is led by the UPA govt. with the IndianNational Congress (INC) party at the front.

India continues to rank high on corruption Lacks the political will to implement tough policies.

ECONOMIC LANDSCAPE

According to Data monitor estimates, Indian economy

is expected to grow at more than 8% during 201013. The fiscal deficit is believed to have been around 6.9%

during 200910, the highest in 16 years.


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SOCIAL LANDSCAPE

Indias progress on the social front continues to beslow despite focus on sustained improvement inquality of life.

The gender ratio in India is improving.It is at 936females per 1,000 males as per the 2001 census.

TECHNOLOGICAL LANDSCAPE

In the prevailing education system, most science andengineering graduates require further training beforethey can begin work.

The 11th five-year plan prioritizes R&D by increasing

opportunities in science and expanding R&D inuniversities.

The Indian internet access market generated totalrevenues of $3 billion in 2009


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LEGAL LANDSCAPE

The expansion of the tax base has improved the

availability of resources to the central government andindividual states.

The lack of a single regulator for the financial sector hasresulted in limited growth in this area, as inter-linkageshave not been fully exploited.

ENVIRONMENTAL LANDSCAPE

India is a poor performer on the Environmental

Performance Index (EPI). In an EPI study carried out in2010, India was ranked in the 123rd position out of 163countries.

Indias dependence on thermal energy, mainly coal-based,has resulted in a host of environmental problems.


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INDIA MARKET SUMMARY

India is the fourth largest market in the Asia Pacific region, behind Japan,

China and South Korea.

However, US$14 per capita spending is among the lowest in the world,

similar to the levels of Pakistan and Vietnam.

Generic drugs will continue to account for the vast majority of drugconsumption in India (at around 75% of total spending), largely owing to

the low cost and limited purchasing power of most of the population.

A substantial amount of the Indian generic drug market comprises

illicit products, due to the countrys lax patent laws. However,

conditions are quickly changing for the better. Traditional and ayurvedicmedicines are very popular

India accounts for almost 10% of global drug production by

volume and is increasingly focusing on indigenous R&D.


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1813

1288

12551

Pharmaceutical Market (by sub-section in US$ bn) 2009-10

OTC Medicine

Patented Drugs

Generic Drugs


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HEALTHCARE SECTOR

Healthcare services are provided by public and private sectors, the

latter having developed in the latest decades when India

embraced privatization.

Private healthcare boasts of superior quality and facilities. It

accounts for more than 65% of primary care and more than 40%of hospitals, resulting in personnel shortages in the public sector.

The large geographical size and growing population numbers

traditionally have hampered adequate access to medicines and

medical services in the sub-continent.

As per The Federation of Indian Chambers of Commerce and

Industry (FICCI) it would cost approximately US$200bn over the

next five years to solve the crisis in Indian healthcare.

To address the funding shortfall, the federation has proposed a

five-pronged public-private-partnership (PPP) model.


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COMPANY ANALYSIS

RANBAXY LABORATORIESSTRENGTHS

Largest domestic pharmaceutical company and a leading global generic

drugs player.

Exports accounting for majority of sales, thereby insulating the company

from fluctuating domestic market conditions.

Considerable overseas presence.

WEAKNESSES

Harsh government pricing policy with the state keen to keep a

downward pressure on prices. Considerable legal costs relating to numerous cases with multinationals,

and most recently with US drug major Pfizer.

Authorized generic drugs will affect anticipated sales from first-to-file

opportunities in the US.


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OPPORTUNITIES Development of generic drugs market presence in Europe and other

markets following key acquisitions and the establishment of whollyowned subsidiaries.

Increasing focus on the high-growth area of generic pharmaceuticals bydivesting its non core businesses.

Growing research-based product pipeline.

Rising local demand for generic drugs, especially in rural areas.

Synergies expected from the involvement of Japanese major DaiichiSankyo.

THREATS Increasingly competitive nature of both the domestic and global generic

drugs market.

Share price continues to fluctuate under pressure from alleged

manufacturing wrongdoings. Increasing foreign competition in the domestic market.

Governments failure to revise its opaque and harsh pricing policy.

Governments plan to impose price controls on all essential medicines.


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PIRAMAL HEALTHCARE LIMITED

STRENGTHS Indias second-largest generic drugg manufacturer with a strong

product portfolio.

Strong and numerous alliances with international drugdistributors and research-based manufacturers such as

AstraZeneca. Tradition of expansion through acquisition of facilities abroad.

WEAKNESSES Significant reliance on the tough Indian market.

Lack of R&D division prevents company from enjoying the highmargins that patented

drugs bring.


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OPPORTUNITIES

Strength in drug-delivery systems implies potential in Asian drug

markets, where demand for hospital-use products is positive. Rising regional and global demand for cardiovascular products.

Development of new therapeutic strengths, including anti-

diabetes products.

THREATS Failure by the Indian government to revise its harsh price controls policy.

Continued threat from counterfeit industry.

Competition from larger local rivals.

Piramal Healthcare, formerly known as Nicholas Piramal India (NPIL), is

one of Indias leading healthcare companies. It is the flagship company

of the INR25bn (US$550mn) Piramal Enterprises (PEL), one of Indias

largest diversified business organizations.


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DR. REDDYS LABORATORIES

STRENGTHS Leading Indian generic drugs manufacturer.

Diverse and prominent global presence, including thedeveloped Western markets.

A significant number of recent product launches.

WEAKNESSES

Exposed to increasingly tough generic competition in the

US in the key product lines. Undergoing costly restructuring in an attempt to boost

R&D and increase generic filings with the US FDA.

Authorized generic drugs will affect anticipated sales fromfirst-to-file opportunities in the US.


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OPPORTUNITIES

New ANDA financing potentially boosting development pipeline.

Authorized generic drugs likely to deliver new opportunities in the US.

Heavy R&D spending potentially yielding new drug discoveries. Rising regional demand for cheaper generic products amid cost-

containment pressures.

Focus on fast-growing diabetes segment and partnership with Novo

Nordisk likely to boost revenues in the medium to longer term.

The acquisition of Betapharm in Germany to boost short-term revenue

growth.

THREATS

Limited room for expansion in mature European generic drugs markets

threatening this high-growth area. Unstable environments in Russia and Latin America threatening

development in those parts of the world.

Governments failure to revise its opaque and harsh pricing policy.

Governments plan to impose price controls on all essential medicines.

Anticipated price cuts on some 8% of all medicines sold in the country.

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