Generic-Generic market in India has shown substantial base of Rs. 822 crore in the year 2009 with 1328 products (O.P.P.I.
2009 report) and 101 registered companies marketing with growth rate of 6.3 percent as compare to industry growth rate of 11.3 percent.
Beside this Ayurveda, Unani, Homeopathy, etc contributing only 6.3 percent of the total sales. Biotechnology is another important market in India with marginally low base of Rs. 1000 crore (estimated, year 2020) growing at a very high rate includes sterile fermentation processes, skills in handling microbes and infrastructure in fabricating bioreactors.
A. Trend of Pharmaceutical Marketing in India:
The overall domestic trend from 1965 to 2001 in pharmaceutical marketing in India is growing. Way back in 1965 the industry which has shown a total capital investment of Rs.
140 Crores has shown spectacular growth over the years and grown upto Rs. 2900 Crores in 2001 therefore keeping in view the need to encourage more investment in pharmaceutical sector to achieve the future demands likely to be placed on it in order to meet the growing needs of the country as well as to promote export. It is proposed by the government to treat the entire drugs and pharmaceutical sector as a high priority industry for the purpose of permitting foreign investment. It has been also suggested that to offer foreign equity up to 51 percent on par with wholly Indian company. It is also important to quote here that at present companies with foreign equity up to 40 percent are already enjoying this facility. Similarly it has been felt that automatic approval for foreign technology agreements can be permitted for all items in the Drug and pharmaceutical sector to encourage the introduction of newer and efficient technologies.
On an average domestic demand for bulk drug and formulation includes 80 percent markets that represents formulations and rest of 20 percent is of bulk drugs. Table No. 1.3 clears that pharmaceutical sector has maintained steady growth in terms of production of bulk drugs as well as formulations, that is a result of foreign collaboration for high investments in research and developments.
In addition to this government has received several projects related to up-gradation, expansion or starting new production units. Bulk drugs production has been significantly increased over the decades from the year 1980-81 to 2000-2001 crossing the turnover of Rs. 4533 Crores and over 60 percent of bulk drugs production exported every year. The balance is sold locally to other companies. However many of the M.N.
C’s import bulk drugs from the Parent Company and formulate it for local markets.
B. Encouraging Production of Bulk Drugs and Formulations in Indian Pharmaceutical Industry:
Table No. 1.3 Production of Bulk Drugs and Formulations: (Rs. in Crore) 2002-032003-042004-052005-062006-072007-082008-09Domestic Market30365325753412839989453675094655454Exports12826152131785722216249423076038433Imports2865295631394515586767348552Total Market Size42326473325202962566684427861089335Besides these, local players who export formulation avails duty free imports of bulk drugs.
Hence there is a significant scope for Indian companies for export in developing countries for both off-patented and generic products. Production of Formulations has been crossed the bench mark of Rs 18354 in the year 2000- 2001 and India is self-sufficient in production of formulations and more than 80 percent of the formulation is sold in the domestic market itself. The size of formulation market is Rs. 18000 crore and growing at the rate of 18 percent as compared to previous year. The achieved growth is because of increasing export to developing nations like China, South Africa, European countries etc. Table No 1.4: Export of drugs and pharmaceuticals from 2002-03 to 2009-10 (May,09) are given in table below: YearExportsGrowth %2002-03128262003-041521318.
94April, 2009304314.8April 2009-Dec 200929551Following table shows the top public sector undertakings that have contributed to the overall growth in the pharmaceutical market. Table No 1.5 Public Sector Undertakings: A.Bengal Chemicals & Pharmaceuticals Limited (BCPL)B.
Hindustan Antibiotics Limited (HAL)C.Karnataka Antibiotics & Pharmaceuticals Ltd. (KAPL)D.Indian Drugs & Pharmaceuticals Limited (IDPL)E.Rajasthan Drugs and Pharmaceuticals Ltd. (RDPL)
C. Profitability trend of Indian pharmaceutical industry:
Table No. 1.
1 Profitability trend of Indian pharmaceutical industry: YearRanbaxyDRLSunWorhhardtCadilaGlenmarkTorrentCiplaAurobindo1998117515651.8341132102241999197535946.8441334115502000183608446.847224613375200125214513510261.822.54117968200162445516810967.2235023569200379536A24911186.533522481032004529283316112142.
9668229200810494751487139236.2632155.52702291The above table shows the Profitability trend of Indian pharmaceutical industry that initially profitability is very high because of monopolistic competition where few companies were dominating the market. Then slowly the increased competition is resulting into decrease in profitably because of price war amongst the companies. But in later half, from 1989 onwards again profitability increased marginally due to heavy investment in moderation of production units that reduced the cost of production and raw material of formulations. The sustainable development of pharmaceutical industry and increase in profitability is a positive sign of economic growth and prosperity.
D. Health Care Outlay as Per Five-Year Plans:
Post independence, Indian pharmaceutical industry has made a significance progress in the field of research and development in medical science, and with a relative change in disease profile calls for more advanced and innovative therapies.
However substantial share of the population has low paying capacity and cannot afford modern medicines. Besides, Government of India has reduced its social responsibility towards healthcare sector by lowering its contribution in subsequent national five-year plans. From The it is clear that government spending on healthcare has been significantly decrease from 3.3 percent in first plan (1951-56) of total plan to 1.
7 percent in eighth plan (1992-97) and if we compare India’s health expenditure in public sector undertaking with other Asian countries it is lowest amongst all. The annual per capita drug expenditure is 6 percent as compare to 12.6 percent of United States. Therefore government of India has realized the need to emphasize on health care industry and prepared the ninth plan under the national working group on Drugs and pharmaceuticals with major objectives as: 1. Growth rate for domestic consumption of formulations as 15 percent 2. Growth rate for exports of formulation as 10 percentage and bulk drugs as 20 percent 3. Indigenous production for bulk drug as 20 percent 4. Imports of bulk drugs are restricted to 12 percent of the total value of bulk drug requirement.
5. The ratio of value of consumption of bulk drugs for production of formulations to the value of formulations produced as 1:4 As pharmaceutical sector mainly depends .on Research and development of newer molecules so few of them can be entirely self sufficient in this sector. Therefore import for bulk drugs and technological advancement is continued to fulfil the demand of the domestic market.
As a result import of this mainly depends on various factors like 1. Incidence and severity of the disease in which it is used 2. Feasibility of its production in the country 3.
If however is being produced then status of its current indigenous production 4. Availability of alternate or equivalent drugs 5. International price vis-a-vis price of indigenous produce 6. And most important is tariff rates and import policy. Current Reforms in Maharashtra: The FDA is located at the western region is in state of Maharashtra, where the country’s pharmaceutical industry has been concentrated for the past 46 years.
Over 50 percent of manufactured drugs in India are currently produced in Maharashtra and therefore Maharashtra FDA plays a significant role in determining national policy on the import and local manufacture of pharmaceuticals in India. It monitors drug quality and safety through pre and post licensing checks as well as through periodic inspections and drawing drug samples from companies from time to time. Maharashtra FDA underwent some major changes over the past few years to improve its efficiency and raise its credibility. Under the present Commissioner the Indian FDA has revamped its structure, introduced a new drug management system, and instituted a new electronic drug renewal application procedure via its website.
It has also started codifying all Pharmacopoeia, Patent and Proprietary combinations of drugs. There are currently 50,000 drugs licensed by the FDA and 4,300 of them have already been codified.
E. Progressive Trends in Export, Import of Bulk Drugs and Formulations:
The progressive export and import trend in bulk drugs and formulation is shown in Table No. 1.4.
It is due to additional incentive package offered by Indian Government that in turn resulted in increase in profit margin. Export of domestic drugs and pharmaceuticals from 2003-04 to 2008-09 are given in table above, the total of import and export in Indian pharmaceutical market has crossed the land mark with a high growth rate of about 20 percent in export over the year and also has high contribution to nations total export portfolio. In recent years export of formulation as well as bulk drugs has significantly increased because of increased competition resulting in low margins in domestic market. Secondly D.
P.C.O. has laid special holiday packages for export to foreign countries. In case of domestic export Indian companies having three distinct advantages over other M.N.C’s as: 1. As India is having process patent so there is no need to pay royalty or invest extra on R&D.
2. Indian companies are supported by strong therapeutic process research and development therefore results into low manufacturing cost. 3. Minimum restriction on Indian companies to export in foreign generic markets as compared to other countries. Table 1.
4 Export Trend Bulk Drugs and Formulations: S.No.Domestic Indian market (figure in Rs crore)Growth Rate (%)2003-04325757.282004-05341284.772005-063998917.172006-074536713.452007-085094612.
32008-09554548.85Government has created an export promotion cell for pharmaceutical companies with an objective to increase export and to act as a nodal centre for all queries and issues regarding pharmaceutical export. The cell also welcomes the suggestions to increase export in pharmaceutical preparations and promotional activities to boost pharmaceutical export. Also the cell is having adequate rights to settle the claims and interact with concerned Ministers/ Departments or Foreign Boards.
Collection of statistical information related to pharmaceutical field is a part of work of this export promotion cell and to provide useful information commercial for developing drug companies. Import has been increased consistently throughout the years as seen from the Table No. As India is very self-sufficient to fulfil all requirements in domestic formulations and under free licensing all approved drugs can be freely manufactured in India subject to approval of Drug Control Authority. Beside this, all drugs can be imported freely due to Open General License Scheme. To fulfil the demand of market especially for vitamins and its preparation to avoid shortages and easy availability with low price, government has taken a decision to deregulate and de-license this category and only free flow import should be under the provision of special import license scheme. The contribution to total Export for both bulk drugs and formulations, where Ranbaxy stands at number one position due to high recognition of standards endorsed by foreign multinational companies. This shows that on an average, half of the sale of Indian companies is from exports because of reduced cost of production, corporate reorganization and therefore this enhanced profit adds in their growth that indirectly contributes for also strengthening Indian economy. Table No.
1.6 Shows overall performance of top therapeutic classes as per usage pattern in India, which is predominant for acute therapy where as in other world markets chronic therapy is predominant. 1. Systemic Antibodies/Antibacterial/Antibiotics/Anti-Infectives: The earlier generation groups such as Penicillin (e.g.
Amoxycillin) and Macrolides (e.g. Erythromycin) have mostly gone off patent. Newer generation groups like Quinolones (e.g. Ciprofloxcin, Norfloxcin) and Cephalosporin (e.g. Cefdroxil, Cefotaxim) is still largely under patent.
D.P.C.O. mostly encompasses the latest generation drugs. Major players in these segments are Cipla Ltd, Glaxo Ltd, Ranbaxy etc.
2. Vitamins, Tonics, Mineral Supplements: Therapeutic scope for vitamins, tonics, mineral supplements are in case of deficiencies. Over the year it has catches the growth of 14 percent with a volume of Rs. 5.7 billion market.
All drugs in this category are off-patent and have a huge scope in India especially for tonics that recently have shown a high growth rate in foreign countries. The major players in this market are captured by all M.N.C’s as E-Merck, Pfizer, Glaxo, and Abbott etc. 3.
Anti-Inflammatory: Ibuprofen and Diclofenac are amongst them having high contribution in this category. The domestic formulations market is estimated to be Rs. 5.2 billion growing at the rate of 15 percent per year. The major player in this market are Knoll, Pfizer, Cipla Ltd etc. also local companies are having high contribution in this market because of high profitability and high volume. 4. Cough and cold preparations: Cough and cold preparations are most commonly used in India.
Moreover Indian pharmaceutical companies are very strong in this market as compare to M.N.C’s firms. The Indian companies dominating this market are Cipla Ltd and Cadilla Ltd but M.
N.C’s like Pfizer and Knoll have shown some presence in recent years. 5. Antacids and anti-ulcerant: This segment includes many patented molecules because of recent research and development in this category. There is still good opportunity for export for off patented products in this category. Major players in this category are multinationals like Knoll and Parke Davis. Indian companies having strong portfolio are Ranbaxy, Dr Reddy’s lab, and Cadilla Ltd. 6.
Cardiac therapy: This is the fastest growing segment and majority of drugs in this category are off-patent drugs in India. The leading Indian players in this segment are USV Ltd., Cipla Ltd, Sun Pharma Ltd, Torrent Pharma Ltd etc.
Share of M.N.C’s firms in this category are relatively low. 7. Anti-diabetic: Up to year 2010 India expected to have maximum diabetic patients because of alteration in food habit and life style. In this segment M.N.
C’s like Lilly and Novo Nordisk are having strong presence. 8. Anti-anaemics: Indian companies like Cipla and Cadilla show high contribution in this segment. Majority of the formulation are age old and market size and growth is very low.
9. Hypotensives: Beside low market share Hypotensives have significant scope in Indian pharmaceutical formulation market. Majority of the product in this category are recent launches and carry patents in M.N.C’s pocket. 10. Anti-tubercular: Consistent efforts by government in eradication of tuberculosis in India have resulted into significant market share for anti-tubercular formulation in India.
Growth in this category is very limited, as proliferation of this disease comes down. The dominating players in this category are Lupin and Themis Ltd. 11. Others: It has a high share in formulation category and includes Corticosteroid, Anti-parasitic, Antifungal, Anti-AIDS, Analgesic and Antipyretic, Anti-psychotic, Antihistamine, Anti-malarial etc. having low contributory share to show their presence. The export opportunity for this therapeutic category is limited because of ongoing patent act and limited scope for generic formulations.
G. Key Indian pharmaceutical companies:
Table No 1.
7: India’s Pharmaceutical Market (Jan 2009): CompanySize ($ Billion)Market Share (%)Growth Rate (%)Total Pharma Market6.91009.9Cipla0.365.313.4Ranbaxy0.34511.
5Glaxo Smithkline0.294.3-1.2Piramal Healthcare0.273.911.
7Zydus Cadila0.243.66.8Table No 1.7 depicts about top five pharmaceutical companies in India and world for the year 2009. The top five companies represent 51 percent of total market because of intense market competition amongst them as a result that top performing company is having only 5.
7 percent of markets share. So the combined sale of these top three Indian pharma companies like Cipla, Ranbaxy and Sun Pharma represents only 11.2 percent market share & top 100 products occupies 26.65 percent of market share which clearly shows the picture of fragmented market. Therefore the whole share of pharma market is subdivided into smaller groups and each smaller company shows its presence in its market segment.
H. Indian pharmaceutical sector- Growing through Research and development:
1.8 Top 10 Fotune Pharmaceutical companies: RevenuesProfitsRankCompanyFortune 500 rank$ millions% change from 2008$ millions% change from 20081Johnson & Johnson3361,897.00-2.912,266.00-5.32Pfizer4050,009.003.
50-1.9422.30.3The government objective behind emphasis on investment in R&D is to encourage pharmaceutical companies to grow through R&D. As a knowledge and technology based industry, pharmaceutical industry has grown rapidly in last few years in research and development. “In 1976-77 only Rs. 10.
5 crore were invested on R&D that shoot up to Rs. 2100 crore in 2015”. As shown in Fig No 1.
3 the total R&D expenditure in pharmaceutical sector today is Rs. 1350 crore which is just 6 percent of total sales in India. The reasons could be high risk involved in R&D for new product development that is very expensive and based on trial & error method. Hence few firms venture into this area and long experience with the process patent regime has also brought in a sense of complacency about product development in this industry.
To become a global player in R&D it requires high investment in this sector, high-level of expertise i.e. technicians and scientist and modern facilities in specific areas of drug development. The Institutes actively engaged in R&D are: 1. Council for Scientific and Industrial Research (CSIR): Is a autonomous body which provides scientific industrial research for India’s economic growth and human welfare with state of art infrastructure as 40 laboratories and 80 field centers covering fundamental and applied areas of R&D.
their aim is to develop newer molecules in the field of anti-malarial and cardiovascular. 2. Central drug research institute (CDRI): Seeks to develop new drugs in immune diagnostics and vaccines, contraceptives agents and devices, basic biomedical studies to understand the disease process. Fig No. 1.2: Pharmaceutical Companies Total R and D Expenditure in India: (Rs.
in crore) YearRan- baxyDRLSunWorkhardtCadilaGlenmarkTorrentCiplaAurobindo199843111026193423919995513183621‘ 5103014200057232032251020238200177512530421222226200119274343438313152142003276141976088374057222004331199127691034967984920054862541438111947871555420063862152021381244574176772007460246279152134439123297200847135328716513351113244118Growth Rates223322233Torrent Pharmaceutical Ltd, a Gujarat based company is having a high invest in R&D contributed from sales as compared to other companies where as Dr.Reddy’s Lab, a Hyderabad based Indian multination is having comparatively less focus on R&D. It is also true about Dr.Reddy’s Lab that it has a high portfolio in drug development instead of process development. Ongoing projects in R&D are with Dabur Ltd. planning to set up the third phase trial for anti-cancer drugs, Nicholas Piramal healthcare tie up with Aventis pharma for selective areas in drug development, Sun pharma Ltd is all set to cash in on perspective abbreviated new drug application etc.