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Introduction

The first Indian pharmaceutical company -Bengal Chemicals and PharmaceuticalWorks -Calcutta in 1930

It still exists today as one of 5 government-owned drug manufacturers

For the next 60 years, most of the drugs in

India were imported by multinationals either in fully-formulated or bulk form

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The government started to encourage the growth of drugmanufacturing by Indian companies in the early 1960s

The Patents Act in 1970

removed composition patents from food and drugs,and kept process patents

these were shortened to a period of five to seven year 

The lack of patent protection made the Indian market

undesirable to the multinational companies that haddominated the market, and while they streamed out,Indian companies started to take their places

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They carved a niche in both the Indian and worldmarkets with their expertise in reverse-engineering newprocesses for manufacturing drugs at low costs

Although some of the larger companies have taken babysteps towards drug innovation, the industry as a wholehas been following this business model until thepresent.

The Indian pharmaceutical industry has witnessed agrowth rate of about 10% over the last few years and isexpected to touch US$ 12 billion by 2010.

 

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Pharmaceutical industry has given employment toapproximately 2.86 million people and has around20,053 units.

Indian pharmaceutical industry manufactures over 400bulk drugs and roughly 60,000 finished medicines usedin different formulations.

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Classification of Indian

pharmaceutical industry organized and unorganized sectors Accounting for over 70% of total sales, the organized

sector has about 250 manufacturing and formulation units

On the basis of management control, the organized sector can be further classified into MNCs and Indian companies.

On the basis of the product manufactured

Bulk drugs Formulations

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Formulations constitute nearly 81% and bulk drugs account for the remaining 19%.

Indian pharmaceutical industry has about 2400 licensedmanufacturers and more than 100,000 drugs.

On the basis of formulations

Prescription medicines

Over-the-counter medicines

On the basis of formulations patent

Branded formulations

Generics

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SWOT Analysis of Pharma

Sector 

Strengths

Cost effective technology Strong and well-developed manufacturing base Clinical research and trials Knowledge based, low- cost manpower in science & technology Proficiency in path-breaking research High-quality formulations and drugs High standards of purity Non-infringing processes of Active Pharmaceutical Ingredients

(APIs) Future growth driver  World-class process development labs Excellent clinical trial centers Chemical and process development competencies

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Weaknesses

Low Indian share in world pharmaceutical market(about 2%)

Lack of strategic planning Fragmented capacities Low R&D investments Absence of association between institutes and

industry Low healthcare expenditure Production of duplicate drugs

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Opportunities

Incredible export potential Increasing health consciousness

New innovative therapeutic products Globalization Drug delivery system management Increased incomes Production of generic drugs Contract manufacturing Clinical trials & research Drug molecules

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Threats

Small number of discoveries

Competition from MNCs

Transformation of process patent to product patent(TRIPS)

Outdated Sales and marketing methods

Non-tariff barriers imposed by developed countries

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  e

   M  a  n  u   f  a  c   t  u  r   i  n  g

  o  p  p  o  r   t  u  n   i   t   i  e  s

   I  n

  n  o  v  a   t   i  o  n

  o  p  p

  o  r   t  u  n   i   t   i  e  s

ContractResearch

Clinical

Research

IndianPharmaceutical

Aldorado

Key Opportunities Segments

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Research & Development

Government has taken various policy initiatives tostrengthen R & D in the pharma sector.

Fiscal incentives are awarded to R & D units towards thedevelopment of new drug molecules, clinical research,new drug delivery systems, new R & D set ups andinfrastructure provision.

Certain leading R & D companies have increased their Research and Development spending to over 5 percent of their turnover in comparison to an average spending of 2

per cent.

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Pharma units interested in obtaining Income TaxExemption under Section 35(2AB) need to gettheir Research and Development unit

recognized by CSIR.

A Pharmaceutical R & D Promotion Fund to the

tune of Rs150 crore has been established for promoting R & D in the pharma sector.

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Lower FilingCost

Process Innovation

Manpower Cost Advantage

Capital efficiency

India’s Cost Competitiveness key advantage

Low cost

heaven India

Western companies able to provide a step down of 30-

40% in cost by a mere site transfer to India

Companies in India able to reduce the upfront capital

cost of setting up a project by 25-50%

Indian companies have been able to establish USFDA

approved plants at about 50% lower capital costs

Benefit of continuous cost reduction through process re-

engineering.

India’s huge resource of skilled scientists, available at a

fraction of the cost in developed countries

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Current Scenario

There now exists a whole new world of markets for Indianpharma companies 

Innovation, through more value to the user, throughefficiencies in distribution, logistics and product promotion

The Indian pharmaceutical industry ranks 4th in terms of volume (with an 8 per cent share in global sales) 13th in terms of value (with a share of 1 per cent in global sales) Produces 20-24 per cent of the world's generic drugs (in terms of

value 17th in terms of pharmaceutical export value

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Drugs worth $ 190 billion in annual revenues would bevulnerable to generics

The global generics market is expected to grow at

about 15 percent to reach $ 70 billion in the year 2008.

The rise in generics gives way to specialty productssuch as hormones, steroids, peptides and biosimilars. 

Global pharma industry would see revenue growth ofonly 5% to reach $ 735 billion in the year 2008.

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4441,933Dr.Reddy’sLaboratories

2

4231,842Cipla3

225980Wockhardt10

2511,091Cadila Healthcare9

5502,375Sun Pharmaceutical8

2711,180Lupin Laboratories7

2821,228GlaxoSmithKline6

2901,260Aurobindo Pharma5

3191,387Ashwin Dalvi India4

1,0264,461Ranbaxy1

,Revenue 2008 (USD millions)

Revenue 2008

(Rs crore)CompanyRank

Top 10 Pharmaceuticals in India, 2008

Source: Pharmaceutical Sales Busters

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Future of the Pharmaceutical

Industry

For the first time, the seven largest markets will contribute to just50 percent of growth, while seven emerging markets—Brazil,China, India, Mexico, Russia, Indonesia, and Turkey—willcontribute to nearly 25 percent of growth worldwide.

With market value of about US$ 45billion in 2005, the genericsector is expected to grow to US$ 100billion in the next few years.

Clinical Research Outsourcing (CRO), a budding industry valuedover US$ 118 million per year in India, is estimated to grow to US$380 million by 2010

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The future of Indian pharmaceutical sector is verybright because of the following factors: Clinical trials in India cost US$ 25 million each, whereas in US they

cost between US$ 300-350 million each. Indian pharmaceutical companies are spending 30-50% less on

custom synthesis services as compared to its global costs.

In India investigational new drug stage costs around US$ 10-15million, which is almost 1/10th of its cost in US (US$ 100-150million)

Treatment to prevention, from generalised to personalisedmedicine, from distribution chain to direct consumer sales andfrom multilateral to unilateral regulatory regime.

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Conclusion

India has the capability to become a global pharmahub by exporting domestically produced genericproducts and positioning itself as an off shoring

destination for clinical and pre-clinical research andother support services. There is tremendouspotential in the Indian pharma market itself.Consumer spending on healthcare went up from 4

per cent of GDP in 1995 to 7 per cent in 2007. Thatnumber is expected to rise to 13 per cent of GDP by2015.

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Thank You!

1-C

Aakash Acharya , 01

Aruna Krishnamurthy , 11

Ishita Bhagat , 21

Manas Majumdar, 31

Rakesh Roy, 41

Diksha Rai, 61