According to our new research report "Booming Pharma Sector in India", the Indian pharmaceutical industry is projected to show double-digit growth in near future owing to rise in pharmaceutical outsourcing and consolidation of highly fragmented industry. As exports form major part of the pharmaceutical industry in India, leading players have started expanding their reach towards the West. Thanks to investments in R&D and thriving for more and more ANDA filings, the clinical trials market is expected to grow at blistering pace in coming years. To support this evidence, we have done an extensive research and analysis of various segments of the Indian pharmaceutical market. These segments include: Domestic & Export Market, Branded & Generics Drugs, Formulations & Bulk Drugs, etc.

Pharmaceuticals has emerged as one of the leading industries in the Indian Inc., with the domestic market showing an unprecedented growth of around 9% to generate revenue of about INR 554.5 Billion (US$ 11.1 Billion) in FY 2009. This dramatic growth in the Indian pharmaceutical industry can be attributed to several factors such as growing middle class population, rapid urbanization, increase in lifestyle-related diseases and acceptance of health insurance. Besides, the product patent regime has provided ample support to the industry to sustain its growth pace despite the global economic downturn. Generic is emerging as one of the leading segments to be benefited by many drugs going off-patent in due course of time.

The baseline for optimistic future outlook of the pharmaceutical market is improvement in access to medicines of Indian population. Emerging sectors like biogenerics and pharma packaging will also pave the way for the pharmaceutical market to continue its upward trend over the forecast period (FY 2010- FY 2013).

The report provides thorough statistical and analytical overview of the Indian pharmaceutical market. It contains information about past, present and future trends, with focus on entire structure, composition and working of the pharmaceutical market. The report extensively discusses opportunities and challenges expected to arise within and outside the pharmaceutical market. The report also analyzes emerging sectors, regulatory environment and distribution system to identify strength and weaknesses of the pharmaceutical market. It has thoroughly examined current market trends, industrial developments and competitive landscape to enable clients understand the market structure and its progress in coming years. It also gives a brief overview of demographics and healthcare profile to adjudge the pharmaceutical market in terms of demand, expenditure and possible future direction. 

                                            Market Trends:

In terms of the global market, the Indian Pharmaceutical market currentlyholds a modest 1-2% share, but it has been growing at approximately 10% per year.

The size of the domestic pharmaceutical market is larger than export market. However, owing to the growth of global generics market, stringent price controls in the domestic market, and better margins, the export market is growing much faster than the domestic market.Traditional branded generics presently dominate the Indian pharmaceutical market but the future will see strong growth in the specialty branded generics and patented drug segments.

Drugs for diabetes and cardiovascular diseases are expected to see the fastest growth among all therapy areas during 2007-2011.The retail pharmaceutical market in India is presently highly unorganized;however, a vast opportunity exists for the organized market.

Between 2000 and 2005, domestic pharma industry grew at a CAGR of about 9.5 percent and touched the market size at $5.13 billion by March 2005. However, towards March 2006, the growth rate jumped to 11percent to hit the market size of $5.7 billion. It is estimated that it will hover around 13.6 percent during 2006 - 10 to take up Indian domestic pharma market size at $ 9.48 billion by 2010.

The country's pharmaceutical market is a US$ 7.3 billion opportunity with the domestic retail market expected to cross the US$ 10 billion mark in 2010 and be worth an estimated US$ 12-13 billion in 2012.The Indian pharmaceutical industry ranks 4th in terms of volume (with an 8 per cent share in global sales) globally. In terms of value it ranks 13th (with a share of 1 per cent in global sales) and produces 20-24 per cent of the world's generic drugs (in terms of value)

 India is also one of the top five active pharmaceutical ingredients (API) producers (with a share of about 6.5 per cent).The Indian Pharmaceutical Industry today is in the front rank of India's science-based industries with wide ranging capabilities in the complex field of drug manufacture and technology. The sector is estimated to be worth US$ 6 billion, and growing at over 13 per cent annually. Indian pharmaceutical companies now supply almost all the country's demand for formulations and nearly 70 per cent of demand for bulk drugs.

 The domestic pharmaceutical market in India has grown at a CAGR of nearly 12% in the last five years.The major pharmaceutical companies in India are the main R&D investor in the country. The R&D spend (capital and current) of these major companies has grown at CAGR of 38 percent during the period 2000-01 to 2005-06.

In 2005-06, the R&D expenditure of 50 major companies totaled $495.19 million growing at a rate of 26 percent over the previous year. The higher growth rate is attributed to product patent implementation in the country inJanuary 2005.

The Indian prescription drug market in 2006 was worth Rs 27,333 crore (Rs 273.33 billion), up 18 per cent as compared to Rs 23,243 crore (Rs232.43 billion) in 2005. Bulk of this business came from the sale of drugs that do not enjoy patent protection, a reason for the dominance of domestic companies.

                                  Estimated Growth:

According to a McKinsey study, the Indian pharmaceutical industry is projected to grow to US $ 25 billion by 2010 whereas the domestic market is likely to more than triple to US$ 20 billion by 2015 from the current US$ 6 billion to become one of the leading pharmaceutical markets in the next decade. 

Between 2007-08 and 2011-12, the Indian domestic pharmaceutical market is expected to grow at a CAGR of nearly 16%. It is estimated that the clinical trial market in India will be $1 billion by 2010.Over the last 5 years the Contract research and manufacturing services (CRAMS) industry has been contributing close to 8 percent of the total Indian pharmaceutical business. Developed countries are expected to further propel the CRAMS industry to grow at a CAGR of nearly 32 percent from 2006 to 2013 as India offers global pharma companies both quality and cost advantage. Already, India has the largest number of US Food and Drug Administration (US FDA)-approved plants outside the US,with over 100 facilities and the contract manufacturing market is expected to reach $ 900 million by 2010.

Patented drugs, which had no share in the pharmaceutical market, are expected to have a 10% market share in 2010.Driven by factors such as rising rural incomes and a strong distribution network, India's rural pharmaceutical market is experiencing a strong growth. The product patent regime will encourage the Indian companies to invest more in Research and Development.

                          INDIAN PHARMACEUTICAL MARKET

Pharmaceutical companies in India both Indian and foreign, manufacture bulk drugs in several therapeutic categories and the industry has facilities to manufacture various types of dosage namely capsule, tablets, injectables, orals, and liquids. Of the 400 bulk drugs in the Indian market, it is estimated that 300 are domestically produced.

Moreover, India is emerging as the most favoured destinations for collaborative Research & Development bioinformatics, contract research and manufacturing and clinical research as a result of growing compliance with internationally harmonized standards such as Good Laboratory Practices (GLP), current Good Manufacturing Practices (cGMP) and Good Clinical Practices (GCP).

Factors contributing to the growth of the Pharmaceutical Market:

India today has the distinction of producing high quality generic medicines that are sold around the world. Further, India is poised to be one of the fastest growing pharmaceutical markets in the world. The following factors have fuelled the growth for the drugs and pharmaceutical market:

• The growing population of over a billion;
• A huge patient base;                                       
• Increasing incomes;
• Improving healthcare infrastructure;
• An increase in lifestyle-related diseases such as diabetes, cardiovascular
• diseases, and central nervous system;
• Penetration of health insurance;
• Adoption of patented products;
• Patent expiries and aging population in the US, Europe, and Japan.

As a result, a number of multinationals have entered the Indian Pharmaceutical market. Already 15 of the 20 largest pharmaceutical companies in the world have a presence in India. In fact, during April 2000 to October 2007, drugs and pharmaceuticals are the tenth largest FDI-attracting sectors in India.

The following challenges faced by the global pharmaceutical industry also open up a number of opportunities for the Indian Pharmaceutical Industry:

• higher healthcare costs;
  
• competition from generics;
• patent expiries of blockbuster drugs;
• drying R&D pipelines;
  
• increasing R&D costs.

This offers immense growth opportunity for the Indian Pharmaceutical Industry in the following segments:

• Bulk-drugs;
• Domestic formulations;
• Exports to non regulated markets;
• CRAMS;
• Exports of generics to regulated markets;
• NCE research for global pharmaceutical companies.

The Indian patent act of 1970 was amended in 2005 in order to gain admittance to the World Trade Organization (WTO) and become compliant with TRIPs (Trade-Related Aspects of Intellectual Property rights), an important WTO regulation. The Amendment established patent protection for pharmaceutical products in India. The recognition of product patent has provided global companies with better IPR protection and as a result has opened up a new segment for the Pharmaceutical  Industry in Contract Research and Manufacturing Services (CRAMS).

The Indian pharmaceutical market at present is highly fragmented, with the top three companies having a market share of around 5% each. However,introduction of the product patent regime is likely to result in heavy consolidation in future.

Around three quarters of the pharmaceuticals are for the retail market, rest for direct sales to the hospitals and nursing homes. The End users of pharmaceuticals are the government and private healthcare service providers,and retailers. In India, healthcare service is provided both by the government (public) and private sector. The size of the Indian healthcare delivery market is estimated at$18.7 billion. The private sector provides for 63 percent of the healthcare market.

Key Characteristics of the Indian Pharma Sector:

The Indian pharmaceutical market is marked by the following significant features:

• Self-reliance displayed by the production of 70% of bulk drugs and almost the entire requirement of formulations within the country;
• Low cost of production;
• Low R&D costs;
• Innovative Scientific Manpower;
• Excellent and world-class national laboratories specializing in processdevelopment and development of cost effective technologies;
• Increasing balance of trade in pharma sector;
• An efficient and cost effective source for procuring generic drugs especially the drugs going off patent in the next few years;
• An excellent centre for clinical trials in view of the diversity in population.
  

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