-:Indian Pharmaceutical Industry:-

1) Introduction: -
History:-

Indian Pharmaceutical Industry developed at the advent of the 20th century. In

1907, Bengal Chemicals and Pharmaceuticals were established at Calcutta. Before and
soon after independence in 1947, Indian Pharma market was dominated by multinationals.
In 1948 the share of the Indian companies and MNC!s was 33% and 67% respectively.
During 1998 the scenario had changed with the Indian and the MNC!s respective market
shares being 61% and 39% the Indian Pharma sector developed only after 1955 when the
large public sector units like Indian Drug and Pharmaceuticals Ltd. (IDPL) and Hindustan
Antibiotic limited (HAL) were established. The government patronage also encouraged
private sector entrepreneurs. As a result companies like Alembic Chemicals, Ranbaxy,
Torrent, Cadila and many more companies grabbed growing demand in the drug market.

India's pharmaceutical market currently stands ninth in the world market for
pharmaceuticals with a 1.5% share. The market was valued at more than $3 billion last year
(1998. At its annual growth rate of 15% (almost double the world's 6% annual growth rate),
this market is expected to reach $6 billion by 2001 and should more than double to $13.3
billion in 2006. India's official OTC market currently stands at over $130 million, and the
industry's heart disease sector is expected to grow from $90 million now to more than $350
million in 2005.

Current demand in the Indian pharmaceutical sector stands at about $4 to $5

billion, and is forecast to increase at an annual rate of 15 - 20% in the future. Nevertheless,
average per capita expenditure on pharmaceuticals in India is only $3 -- compared to $412
in Japan, $222 in Germany and $191 in the US. This is due in part to the prevalence of
alternative healing methods in India, such as ayurvedic medicine and homeopathy, but also
because prices for drugs have been kept artificially low by the Indian government. In fact,
India's pharmaceutical industry is one of the most highly regulated industries in the country.
Price controls have a strong effect on profitability in the industry, and weak patent protection
poses a long-term threat to investment in India's drug market. Foreign firms also find it
difficult to operate in India due to arbitrary Bureau of Industrial Cost and Pricing (BICP)
pricing changes, arbitrary local FDA decisions, high import duties (about 42%) and complex
import procedures.
However, while the pharmaceutical sector in India will most likely stay regulated
in the short term, there are plans for reform. The sheer size and growth of India's domestic
pharmaceutical industry is making it increasingly difficult for the government to regulate
prices for every single firm, and pressure from the World Trade Organization is also
speeding up discussions within the national government to improve patent protection. As a
result, foreign pharmaceutical firms can expect improved market opportunities in India's
enormous drug market over next several years.
2) Developments In The Sector:-

Indian Pharma industry is about 120 years old. Production of modern medicine by
indigenous company began with Bengal Chemicals in late 1800’s. Alembic chemicals (in
1907) and Bengal immunity (in 1919) were established. The then operational Patent Act
was highly restrictive for Indian companies as MNCs were holding patents for products,
processes etc. This situation changed after independence when public sector units were
established and efforts were made to create technical institutions for generating skilled
manpower. Though a few drugs of low value were produced indigenously, most of the basic
drugs were imported.

Then came the Patent Act of 1970 which was implemented by 1972. The special provisions
for food and healthcare have really played a major role in the development of the indigenous
industry and paved the way for a stronger, self-sufficient and even competitive
pharmaceutical industry of today. By mid seventies the indigenous industry developed
capabilities to produce a large number of drugs by adapting technologies from other
countries under different therapeutic groups like antibiotics, anti-inflammatory, vitamins,
antipyretics, etc. (Narayana, 1983). Some of the policies adopted like self-reliance, import
substitution, monopolies and restrictive trade practices act, Foreign exchange regulation Act
etc greatly aided research by technical institutes which could help the industry in their
processes optimization, trouble shooting and quality maintenance and also paved a way for
the development of most valuable process reengineering capability in the IPI.

Though the current IPI has capabilities to produce pharmaceutical compounds, around 100
units have their own R&D setups in 2003. Some of the companies have equally good R&D
units and sophisticated societies but have not tried to get DSIR recognition. Others are only
engaged in production activities. The public sector units which were doing quite well in the
1980’s were starved of funds. Absence of influx of new skills and ever increasing
overheads, added to lack of modernization of infrastructure, lead to gradual decline of this
sector in the 90’s.
# Key Players In Indian Pharmaceutical Industry:-

There are several national and international pharmaceutical companies that operate in
India. Most of the country's requirements for pharmaceutical products are met by these
companies. Some of them are briefly described below:

• 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. Ranbaxy Laboratories 2009-2010 Q3 Net Profit Results showed a profit of
Rs 116.6 crore as compared to Rs 394.5 crore deficit, recorded during the
corresponding period last fiscal.
• 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. The company has 6 FDA plants that produce active
pharma ingredients and 7 FDA inspected and ISO 9001 and ISO 14001 certified
plants. Dr. Reddy's Q1 FY10 result shows the revenues of the company at Rs. 18,189
million which is up by 21%. During this quarter the company introduced 24 new
generic products, applied for 22 new generic product registrations and filed 4 DMFs.
• Cipla is an Indian pharmaceutical company renowned for the manufacture of low
cost anti AIDS drugs. The company's product range comprises of anthelmintics,
oncology, anti-bacterials, cardiovascular drugs, antibiotics, nutritional supplements,
anti-ulcerants, anti-asthmatics and corticosteroids. Cipla also offers other services like
quality control, engineering, project appraisal, plant supply, consulting, commissioning
and know-how transfer, support. For the financial year 2008-09 the company
registered an increase of 22% in sales and other income over the previous year.
• Piramal Healthcare is the second largest pharmaceutical healthcare company in
India. The brands manufactured by the company include Gardenal, Ismo, Stemetil,
Rejoint, Supradyn, Phensedyl and Haemaccel. Nicholas Piramal has entered into join
 ventures and alliances with several international corporations like Cheissi, Italy; IVAX
Corp; UK, F. Hoffmann-La Roche Ltd., Allergan Inc., USA etc.
• 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. On November
2009, the FDA had announced that the H1N1 vaccine manufactured by GSK would
join the list of the four vaccines approved.
• 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. The net profit was Rs124.8cr
which was increase of 39%; the increase was on account of higher sales and
improvement in the OPM.

India's Domestic Pharmaceutical Market (12 Months Ended January 2009)

Company Size ($ Billion) Market Share (%) Growth Rate (%)

Total Pharma Market 6.9 100.0 9.9
Cipla .36 5.3 13.4
Ranbaxy .34 5.0 11.5
Glaxo Smithkline .29 4.3 -1.2
Piramal Healthcare .27 3.9 11.7
Zydus Cadila .24 3.6 6.8
Source: ORG IMS

3) Employment Opportunity:-
“The Indian pharmaceutical industry is a success story providing employment for
millions and ensuring that essential drugs at affordable prices are available to the vast
population of this Sub-continent.”
- Richard Gerster
a) Job Prospects in Pharmacy

To start a career in pharmacy, a candidate needs to opt for D.Pharma or B.Pharma after
completion of 12th class. Both PCB and PCM stream students can apply for these courses.

• D.Pharma: It’s a two-year diploma course in pharmacy.

• B.Pharma: It’s a four-year degree course in pharmacy.

Admissions to D. Pharma or B. Pharma are mostly on the basis of ranks obtained in

entrance exams conducted by the states or the university. After completion of B.Pharma
one can go for M.Pharma for specialization, and after that one may register himself/herself
for post doctorate degree or Ph. D.
The job opportunities that pharmacy courses offer are as follows:

• Pharmacist
• Drug Therapist
• Hospital Drug Coordinator
• Health Inspector
• Preparing Prescription to Patients
• Drug Inspector
• Chemical / Drug Technician
• Research Officer
• Pathological Lab.
• R&D
• Scientist
• Bio-tech Industries

b) Type of Employment:-

Given below is the wide range of job opportunities offered by the pharmaceutical
sector:
 • Pharmacist
• Drug therapist
• Hospital drug coordinator
• Health inspector
• Drug inspector
• Chemical / drug technician
• Research officer
• Scientist
• Lecturers for D. Pharma or B. Pharma Colleges
• Medical representative
• Owner of medical store

4) Future Growth

a) Future Scenario

With several companies slated to make investments in India, the future scenario of the
pharmaceutical industry in looks pretty promising. The country's pharmaceutical industry
has tremendous potential of growth considering all the projects that are in the pipeline.
Some of the future initiatives are:

• 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
• Public spending on healthcare is likely to raise from 7 per cent of GDP in 2007 to 13
per cent of GDP by 2015
• Dr Reddy's Laboratories has tied up with GlaxoSmithKline to develop and market
generics and formulations in upcoming markets overseas
• Lupin, a Mumbai based pharmaceutical company is looking to tap opportunities of
about US$ 200 million in the US oral contraceptives market
• 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
b) 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
• The Indian drug and pharmaceuticals segment received foreign direct investment to
the tune of US$ 1.43 billion from April 2000 to December 2008

5) Conclusion:-

The analysis of the Indian pharmaceutical industry has revealed that the industry has
grown impressively in the last decade. There has been an increasing inclination to invest in
R&D, reflected by the increasing R&D expenditure and R&D intensity. This may be a result
of stricter patent laws as a result of accession of India to WTO. The Indian companies are
also beginning to make an impact on the global markets with almost a fifth of the total
turnover coming from foreign sales as well as a large number of USFDA approved
manufacturing units. Indian companies have invested more in R&D activities, and come out
with more new products, processes and have greater number of publications compared to
foreign MNCs in India. This may be the reason explaining the decrease in their spending on
royalty during this period. There has been increased activity of mergers and acquisitions in
the IPI, which may be to improve their capability to compete with global players. Thus we
see that there is change in the structure of the IPI and notable improvement in their
performance, during the last decade.

# Swot Analysis of Pharma Sector

a) 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

b) 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

c) 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

d) 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

# Role of Pharmaceutical Industry in India Gdp-Facts

• The Pharmaceutical Industry in India is one of the largest in the world

• It ranks 4th in the world, pertaining to the volume of sales
• The estimated worth of the Indian Pharmaceutical Industry is US$ 6 billion
• The growth rate of the industry is 13% per year
• Almost most 70% of the domestic demand for bulk drugs is catered by the Indian
Pharma Industry
• The Pharma Industry in India produces around 20% to 24% of the global generic
drugs
• The Indian Pharmaceutical Industry is one of the biggest producers of the active
pharmaceutical ingredients (API) in the international arena
• The Indian Pharma sector leads the science-based industries in the country
• The pharmaceutical sector has the capacity and technology pertaining to complex
drug manufacturing
• Around 40% of the total pharmaceutical produce is exported
• 55% of the total exports constitute of formulations and the other 45% comprises of
bulk drugs
• The Indian Pharma Industry includes small scaled, medium scaled, large scaled
players, which totals nearly 300 different companies
• There are several other small units operating in the domestic sector