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The Indian Pharmaceutical Industry….INTRODUCTION
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. A highly organized sector, the Indian Pharma Industry is estimated to be worth $ 4.5 billion, growing at about 8 to percent annually. It ranks very high in the third world, in terms of technology, quality and range of medicines manufactured. From simple headache pills to sophisticated antibiotics and complex cardiac compounds, almost every type of medicine is now made indigenously.
Playing a key role in promoting and sustaining development in the vital field of medicines, Indian Pharma Industry boasts of quality producers and many units approved by regulatory authorities in USA and UK. International companies associated with this sector have stimulated, assisted and spearheaded this dynamic development in the past 5 years and helped to put India on the pharmaceutical map of the world.
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The Indian Pharmaceutical sector is highly fragmented with more than 0,000 registered units. It has expanded drastically in the last two decades. The leading 50 pharmaceutical companies control 70% of the market with market leader holding nearly 7% of the market share. It is an extremely fragmented market with severe price competition and government price control.
The pharmaceutical industry in India meets around 70% of the countrys demand for bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and injectibles. There are about 50 large units and about 8000 Small Scale Units, which form the core of the pharmaceutical industry in India (including 5 Central Public Sector Units). These units produce the complete range of pharmaceutical formulations, i.e., medicines ready for consumption by patients and about 50 bulk drugs, i.e., chemicals having therapeutic value and used for production of pharmaceutical formulations.
Following the de-licensing of the pharmaceutical industry, industrial licensing for most of the drugs and pharmaceutical products has been done away with. Manufacturers are free to produce any drug duly approved by the Drug Control Authority. Technologically strong and totally self-reliant, the pharmaceutical industry in India has low costs of production, low R&D costs, innovative scientific manpower, strength of national laboratories and an increasing balance of trade. The Pharmaceutical Industry, with its rich scientific talents and research capabilities, supported by Intellectual Property Protection regime is well set to take on the international market.
ADVANTAGE INDIA
Competent workforce India has a pool of personnel with high managerial and technical competence as also skilled workforce. It has an educated work force and English is commonly used. Professional services are easily available.
Cost-effective chemical synthesis Its track record of development, particularly in the area of improved cost-beneficial chemical synthesis for various drug molecules is excellent. It provides a wide variety of bulk drugs and exports sophisticated bulk drugs.
Legal & Financial Framework India has a 5 year old democracyand hence has a solid legal framework and strong financial markets. There is already an established international industry and business community.
Information & Technology It has a good network of world-class educational institutions and established strengths in Information Technology.
Globalisation The country is committed to a free market economy and globalization. Above all, it has a 70 million middle class market, which is continuously growing.
Consolidation For the first time in many years, the international pharmaceutical industry is finding great opportunities in India. The process of consolidation, which has become a generalized phenomenon in the world pharmaceutical industry, has started taking place in India.
THE GROWTH SCENARIO
Indias US$ .1 billion pharmaceutical industry is growing at the rate of 14 percent per year. It is one of the largest and most advanced among the developing countries.
Over 0,000 registered pharmaceutical manufacturers exist in the country. The domestic pharmaceuticals industry output is expected to exceed Rs60 billion in the financial year 00, which accounts for merely 1.% of the global pharmaceutical sector. Of this, bulk drugs will account for Rs 54 bn (1%) and formulations, the remaining Rs 10 bn (7%). In financial year 001, imports were Rs 0 bn while exports were Rs87 bn.
STEPS TO STRENGTHEN THE INDUSTRY
Indian companies need to attain the right product-mix for sustained future growth. Core competencies will play an important role in determining the future of many Indian pharmaceutical companies in the post product-patent regime after 005. Indian companies, in an effort to consolidate their position, will have to increasingly look at merger and acquisition options of either companies or products. This would help them to offset loss of new product options, improve their R&D efforts and improve distribution to penetrate markets.
Research and development has always taken the back seat amongst Indian pharmaceutical companies. In order to stay competitive in the future, Indian companies will have to refocus and invest heavily in R&D.
The Indian pharmaceutical industry also needs to take advantage of the recent advances in biotechnology and information technology. The future of the industry will be determined by how well it markets its products to several regions and distributes risks, its forward and backward integration capabilities, its R&D, its consolidation through mergers and acquisitions, co-marketing and licensing agreements.
PHARMA SECTOR……….SWOT ANALYSIS
Strengths
· Cost Competitiveness
· Well Developed Industry with Strong Manufacturing Base
· Well Established Network of Laboratories and R&D infrastructure
· Access to pool of highly trained scientists, both in India and abroad.
· Strong marketing and distribution network
· Rich Biodiversity
· Competencies in Chemistry and process development.
Weaknesses
· Low investments in innovative R&D.
· Lack of resources to compete with MNCs for New Drug Discovery Research and to commercialise molecules on a worldwide basis.
· Lack of strong linkages between industry and academia.
· Lack of culture of innovation in the industry
· Low medical expenditure and healthcare spend in the country
· Inadequate regulatory standards
· Production of spurious and low quality drugs tarnishes the image of industry at home and abroad.
Opportunities
· Significant export potential.
· Licensing deals with MNCs for NCEs and NDDS.
· Marketing alliances to sell MNC products in domestic market.
· Contract manufacturing arrangements with MNCs
· Potential for developing India as a centre for international clinical trials
· Niche player in global pharmaceutical R&D.
Threats
· Product patent regime poses serious challenge to domestic industry unless it invests in research and development
· R&D efforts of Indian pharmaceutical companies hampered by lack of enabling regulatory requirement. For instance, restrictions on animal testing outdated patent office.
· Drug Price Control Order puts unrealistic ceilings on product prices and profitability and prevents pharmaceutical companies from generating investible surplus.
· Export effort hampered by procedural hurdles in India as well as non-tariff barriers imposed abroad.
· Lowering of tariff protection
STRATEGIES AND TRENDS
· Focus on R&D
Major Indian companies such as Ranbaxy, Dr Reddy's Laboratories, Nicholas Piramal, Cipla, Lupin and Wockhardt are investing and concentrating on R&D. The R&D activities of Indian companies are targeted both at New Drug Discovery Research as well as Novel Drug Delivery Systems (NDDS). Ranbaxy and Dr Reddy's Laboratories have so far led the way.
· Co-Marketing alliances
In order to increase market penetration and increase their presence in select therapeutic segments, both domestic and multinational companies have entered into product specific marketing arrangements. For instance, Ranbaxy has entered into marketing alliances with Cipla, Glaxo and Hoechst and Nicholas Piramal has tied up with Hoechst.
· Product rationalization / brand and company acquisition
Domestic pharmaceutical companies are following a two-pronged strategy. On one hand, they are rationalizing their product portfolio by phasing out low volume products that do not fit with their future strategy. On the other hand, they are scouting for brand acquisitions and even company acquisitions in order to increase their therapeutic reach and market penetration.
· New product launches
Domestic companies are expanding their therapeutic reach by launching new products in high margin segments, thereby increasing product portfolio and increasing critical mass. However with the introduction of WTO led product patents in 005, domestic companies would lose their freedom to introduce products in the market.
· Expanding distribution network
Companies are increasing market penetration through enhanced distribution channels, particularly in the rural markets. This will increase the ambit of access to modern medicines as well as facilitate licensing of products for MNCs in the post product patent regime.
· Upgraded manufacturing facility
Increasingly companies are in the process of upgrading their manufacturing facilities, adopt GMP standard and getting international regulatory approvals from USFDA UKMCA. Approvals from these agencies would facilitate export to developed countries.
· Contract manufacturing
Companies are planning to set up contract manufacturing and global sourcing bases for supplying bulk drugs and intermediates to MNCs.
· Tapping international generic market
Companies are setting up subsidiaries abroad and entering into strategic alliances to exploit long term opportunities in the international generic market in the next five to ten years. They have started applying for DMFs, product registrations and ANDAs worldwide.
· Medium term strategy is to concentrate on products that are going off patent in the next five to ten years. The long-term objective is to enter higher platform of drug delivery systems & niche R&D.
KEY PLAYERS
The Indian pharmaceutical industry comprises both MNCs as well as domestic companies. While at one time, MNCs dominated the market; their market share has declined steadily from 75 per cent in 171 to about 5 per cent. In order to boost the domestic industry, the government introduced process patents in the Indian Patent Act of 170. Domestic pharma companies were quick to take advantage of this and developed expertise in process development and manufacturing of pharmaceuticals. As a result Domestic companies had a robust pipeline of products, large therapeutic width and depth and were able to provide masses with the low priced quality pharmaceuticals.Out of the ten top pharmaceutical companies in India, three are MNCs. The top ten pharmaceutical companies operating in India are ( Rs.Crores)Company Finance Year Net Sales PAT
Ranbaxy Laboratories Dec 1 155 1.58
Glaxo Limited Dec 1 888. 77.06
Wockhardt Dec 1 841.7 104.55
Novartis March 000 7.1 10.4
Cipla March 000 704.8 1.06
Aurobindo Pharma March 000 6.1 74.6
Lupin Laboratories March 000 485. 0.6
Hoechst Marrion Roussel March 000 47.86 7.45
Cadila Healthcare March 000 447.86 7.6
Dr Reddy's Laboratories March 000 46.01 60.4
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