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Indian pharmaceuticals, a formula for success

India is the largest provider of generic medicines globally, with a 20% share in supplies by volume, the export of generic drugs is one of India's strengths. The Indian pharmaceutical industry handles 60,000 generic brands across 60 therapeutic categories and with a strong network of 10,500+ manufacturing units and 3,000 pharma companies, India achieved a pharma exports figure of USD 16.3 bn in the year 2015-16.

Indian vaccines are exported to150 countries and more than 500 different Active Pharmaceutical Ingredients (APIs) are manufactured in India. The cost of production in India is around two-thirds of that in the USA and almost half of that in Europe.

  •  Pharma exports recorded CAGR of 11.9% for decade ending 2015-16
  •  Third largest pharmaceuticals market by 2020 in terms of incremental growth

 

100% Foreign Direct Investment (FDI) is allowed under the automatic route for greenfield pharma

100% Foreign Direct Investment (FDI) is allowed under the government route for brownfield pharma in upto 74% FDI is under automatic route and beyond 74% is under government approval route

for more details refer FDI Policy 2017

HIGHLIGHTS

  • Largest vaccine producer in the world
  • Third largest provider of generics medicines in the world
  • Fourth largest medical device market in Asia

Industry Scenario

India is emerging as a key market for Medical Devices and Diagnostics

Indian pharmaceutical sector accounts for about 2.4% of the global pharmaceutical industry in terms of value. The turnover of Indian pharmaceutical industry was estimated at USD 27.5 bn in FY 2015-16. The market is expected to expand at a CAGR of 12.8% over 2015–20 to reach USD 55 bn. 

Generic drugs with 70% of market share form the largest segment of the Indian pharmaceutical sector. Over The Counter (OTC) medicines constitute around 21% of the market while patented drugs have a 9% share.

The Indian medical device market stood at USD 3.9 bn in 2015, accounting for approximately 1.7% of the global medical device market. The industry estimate suggests that the Indian medical device market will grow to USD 8.1 bn in 2020 at a CAGR of 16%. India is one of the top 20 global medical device markets, and the 4th largest medical device market in Asia.

Growth Drivers

Pharma GD
  • Global share in exports in generics medicines

    20%

  • Overall contribution to Pharmaceutical exports

    11.9%

  • Generic drugs revenue share in Indian pharma industry

    70%

  • Patented drugs revenue share in Indian pharma industry

    21%

Key policies

National Pharmaceutical Pricing Policy 2012

The National Pharmaceutical Pricing Policy-2012 has been notified on 07.12.2012. The salient features of National Pharmaceutical Pricing Policy, 2012 (NPPP-2012) are as under:

· The regulation of prices of drugs is on the basis of essentiality of drugs as specified under National List of Essential Medicines (NLEM)-2011.
· The regulation of prices of drugs is on the basis of regulating the prices of formulations only.
· The regulation of prices of drugs is on the basis of fixing the ceiling price of formulations through Market Based Pricing (MBP).

Cluster development Scheme

The Department of Pharmaceuticals has announced the scheme for cluster development programme for pharma sector in July 2014 to enhance, quality, productivity and innovative capabilities of the SME pharma sector in the country.
 

TB and Kala azar Scheme

a) Target specific New Drug Discovery for Anti Tubercular Agents
Project on Target specific New Drug Discovery for Anti Tubercular Agents aims at discovering high affinity ligands that can be developed into efficacious and less toxic drugs against TB.

b) Target specific New Drug Discovery against Kala Azar
The Kala Azar Project aims at discovering new drugs to fight against Kala Azar. The focus of the Project is to put together a concerted effort to discover high affinity ligands that can be developed into efficacious and less toxic drugs against Kala Azar.

Janaushadhi Scheme

With a view to achieve the objective of making available quality generic medicines at affordable prices to all, ‘Jan Aushadhi Scheme’ was launched by the Department of Pharmaceuticals, Ministry of Chemicals & Fertilizers, Government of India in November, 2008 across the country.
 

Implementation of Scheme for Schedule M Compliance for SSI Pharma Units

As per the second supplement of the Revised Guidelines issued by MSME on the Credit Linked Capital Subsidy Scheme (CLCSS) for Technology Up-gradation of Micro, Small and Medium Enterprises by the Ministry of MSME on 13th July, 2009 the pharma SSI units will now be able to avail the benefits of CLCS Scheme for financial assistance for an expanded list of products from 32 to 179.

Pharmaceutical Promotion Development Scheme (PPDS)

The objective of Pharmaceutical Promotion Development Scheme (PPDS) is promotion, development and export promotion in Pharmaceutical sector by extending financial support for conduct of seminars, conferences, exhibitions, mounting delegations to and from India for promotion of exports as well as investments, conducting studies/ consultancies, for facilitating growth, exports as well as critical issues affecting Pharma sector.
 

FDI Facts

  • FDI inflows (in USD) in drugs & pharmaceuticals during Apr2000-Jun2017

  • FDI allowed in greenfield pharma

  • FDI allowed for brownfield pharmaceuticals projects

Recent Investments

  • November 2017 - Piramal Enterprises Ltd acquired a portfolio of spasticity and pain management drugs from UK-based specialty biopharmaceutical company Mallinckrodt Pharmaceuticals, in an all-cash deal for USD 171 mn.

  • October 2017 - Sun Pharmaceutical Industries Ltd, India's largest drugmaker, has entered into an agreement with Switzerland-based Novartis AG, to acquire the latter’s branded cancer drug Odomzo for around USD 175 mn.

  • January 2017 - Aurobindo Pharma has bought Portugal based Generis Farmaceutica SA, a generic drug company, for USD 144 mn.

  • November 2016 - Sun Pharmaceuticals Industries Limited plans to acquire 85.1% stake in Russian company Biosintez for USD 24 mn for increasing its presence in Russia through local manufacturing capability.

Major Investors