Analysis Of Indian Pharma Industry :- YBM Blogs

 Analysis of Indian Pharma Industry:-YBM Blogs

The pharmaceutical industry discovers, develops, produces, and markets drugs or pharmaceutical drugs for use as medications to be administered (or self-administered) to patients, with the aim to cure them, vaccinate them, or alleviate the symptoms. The Pharmaceutical Industry develops, produces, and markets drugs licensed for use as medications. For this they have a well equipped R&D department. Pharmaceutical companies are allowed to deal in generic and/or brand medications and medical devices. They are subject to a variety of laws and regulations of the government regarding the patenting, testing, pricing and ensuring safety and efficacy and marketing of drugs.

 

The Indian Pharmaceutical industry is the second-largest in the world by volume and is leading the manufacturing sector of India [1]. The Indian bio-tech industry has achieved a growth rate of 17 percent and has gained revenues of Rs.137 billion ($3 billion) in the 2009-10. Bio-Pharmaceutical was the biggest contributor generating 60 percent of the industry's growth at Rs.8, 829 crore, followed by bio-services at Rs.2, 639 crore and bio-agriculture at Rs.1, 936 crore. The first pharmaceutical company was Bengal Chemicals and Pharmaceutical Works, which still exists today as one of 5 government-owned drug manufacturers, in Calcutta in the year 1930.

These are the top five Indian pharmaceutical companies

Market structure :  The pharmaceutical industry is becoming an oligopoly due to the staggering costs of developing and marketing new drugs and because of patents that protect new products from competitors. It can cost more than $1 billion to develop a new drug, get it approved by the Food and Drug Administration and bring it to market, according to "Forbes" magazine. With those kind of upfront costs, only a handful of companies including Pfizer, Merck and Novartis, can afford to create and sell new products. The government grants those companies extended patents on their drugs, and these patents protect drug developers from competitors for many years.

 

Growth of pharmaceutical industry over the years: The Indian pharma industry has been growing at a compounded annual growth rate (CAGR) of more than 15% over the last five years and has significant growth opportunities. The Indian pharma industry is on a good growth path and is likely to be in the top 10 global markets in value term  by 2020, according to the PwC – CII  report titled “India Pharma Inc: Gearing up for the next level of growth”.

Ø High burden of disease, good economic growth leading to higher disposable incomes, improvements in healthcare infrastructure and improved healthcare financing are driving growth in the domestic market, the report highlighted.

 

Here is the graph showing the development of pharmaceutical industry over the years in terms of revenue

Market size: Indian pharmaceutical industry, with current market size of $27.57 billion (last reported in 2016) is expected to reach a mark of $55 billion by 2020 at a CAGR of 15.92%, according to a report by the Indian Brand Equity Foundation (IBEF). The Indian pharmaceuticals market has characteristics that make it unique. First, branded generics dominate, making up for 70 to 80 per cent of the retail market. Second, local players have enjoyed a dominant position driven by formulation development capabilities and early investments.

The graph representing market size if Indian pharmaceutical industry from 2002-07.

 

Effect of covid on Indian pharmaceutical industry: The COVID–19 pandemic has disrupted supply chains across the world. Every sector, including pharma, is suffering from supply chains coming to a grinding halt. Prices of raw materials have shot up amid limited supply, production schedules have been interrupted, factories have been shut down and shipping costs are sky-high in most countries. The impact on the Indian pharma sector is typically evident, given that most raw materials are procured from China, the epicentre of the outbreak. With the movement of people and goods restricted amid lockdowns, manufacturers of generic drugs are unable to launch products or conduct clinical trials. As a result, timelines for drug filings have got stretched. Furthermore, cash flows from new generic drug launches have either been wiped out or delayed.

The below graph shows the sales growth of therapy drugs due to Covid-19

Future of pharmaceutical industry:

Although India is known as the “Pharmacy of the World”, as it contributes 20% of the world generics and 60% of the total vaccines in the world market, it is indeed a matter of pride for us that India caters 40-70% of the WHO demands for the vaccines. Moreover, the growth of the Indian pharma sector since last 5 years has been in double digit number. Through Ayushman Bharat  India has been able to establish a high impact at the global level in the healthcare sector. India is the among the few countries in the world who has 665 US FDA approved plants outside US and has 44% global ANDAs.

 

Due to ongoing pandemic, DGFT (Directorate General of Foreign Trade) on 3rd March 2020 made changes in their export policy and they banned several formulations. Later, on 25th March 2020 again, this export policy was and the “wonder drug” -Hydroxychloroquine (which is considered in the treatment of COVID-19) too was included in the list.  All this was done because the API which is used in the manufacturing of these formulations is imported from the global market especially China and due to Covid-19 the import of these API was badly affected, as these API were in short supply.