India’s pharma industry strengthens

Indian pharmaceutical production expected grow 15 per cent by 2020 with domestic buying power sustaining revenues

India’s generic drug market

The Indian pharmaceutical industry continues to be boosted by the manufacture of generic drugs. The country is a leader in the market with approximately 70 per cent of pharmaceutical revenues emanating from its production.  

India is the largest provider of generic drugs. The country accounts for 20 per cent of global exports in terms of volume.

During 2016-17, the industry faced stiff competition from one of its primary export destinations–the US, suggests a recent Care Ratings report. Indian pharmaceutical companies have experienced pricing pressure in the US generics market following a consolidation of distribution channels and an increase in competition.

“no global pharmaceutical or life sciences company can afford to ignore India, as a potential market, competitor or partner.”

Despite this, Indian companies in Q1 2017 received 55 Abbreviated New Drug Application (ANDA) approvals and 16 tentative approvals from the US Food and Drug Administration (USFDA). ANDA approvals are expected to reach 700 by the end of 2017, resulting in year–on–year growth of 17 per cent. However, the report suggests the industry may face future competition from other countries to achieve ANDA approval.

Future export opportunities

Looking ahead, US$ 50bn worth of drugs is expected to become off-patented during 2017-19. This is expected to boost generic drug export volumes from India to the US, creating opportunities within the Contract Research and Manufacturing Services (CRAMS) segment.

“We expect growth rate for CRAMS to be higher compared to average growth rate of the industry. These factors are likely to support pharma exports from India," the Care Ratings report said.

According to the Pharmaceuticals Export Promotion Council of India (PHARMEXCIL), pharmaceutical exports reached US$ 16.4bn in 2016-17 and are expected to grow 30 per cent to US$ 20bn by 2020. The care report revealed the majority of exports, 40.6 per cent, were to the American continent followed by 19.7 per cent to Europe, 19.1 per cent to Africa and 18.8 per cent to Asia.

Growing domestic market

Demand for medicines in India’s domestic market has additionally helped spur on pharmaceutical industry revenues. Economic growth has stimulated the spending power of India’s middle class resulting in growing demand for general healthcare services. Moreover, the rise of lifestyle diseases including diabetes, cardiovascular disease and cancer have also increased demand for medicines. Fortunately, this need can be supplemented by the country’s large pool of scientific manpower. According to latest figures, the sector is expected to generate 58,000 additional job opportunities by 2025.

Projections suggest the Indian pharmaceutical market will grow to US$ 100bn by 2025, with increased consumer spending, rapid urbanization, and rising healthcare insurance acting a driving force for growth.

Government initiatives

The Indian government has put in place a number of initiatives designed to encourage investment. The 'Pharma Vision 2020' aims to make India a global leader in end-to-end drug manufacture. Furthermore, it plans to reduce approval times for new facilities to boost investment.

Implementation of the Goods and Services Tax (GST)—designed to create tax-neutral inter-state transactions between two dealers, reducing dependency on multiple states and an increasing focus on regional hubs—is expected to result in efficient supply chain management and considerable cost cutting.

Enforcement of a stricter Drug Price Control Order has impacted revenue growth, suggests the Care Ratings report. This has impacted the industry in the domestic market.

According to Mr Arun Singh, Indian Ambassador to the US, “By 2020 India will emerge as the sixth largest pharmaceutical market globally by absolute size”.

It appears that the generics and domestic market will play a part in this despite new challenges. PwC research suggests, “no global pharmaceutical or life sciences company can afford to ignore India, either as a potential market, competitor or partner.”