Analysis of the Pharmaceutical Industry

This PPT contains complete analysis of Pharmaceutical Industry including worldwide and nationwide picture, leading organizations, SWOT analysis, Government policies and regulations, challenges and solutions.

1. BUSINESS ENVIRONMENT INDUSTRY ANALYSIS PHARMACEUTICAL INDUSTRY DEPARTMENT OF COMMERCE MASTER OF BUSINESS ADMINISTRATION UNIVERSITY COLLEGE OF COMMERCE AND BUSINESS MANAGEMENT KAKATIYA UNIVERSITY ( 2020-2022)

2. S.no. Hall ticket no. Name of the student 1. 21564C1022 A. Hindu 2. 21564C1106 Abhishek 3. 21564C1154 S. Vinay 4. 21564C1148 B. Preethi 5. 21564C1023 B. Ramya Sree 6. 21564C1105 S. Chidvilas Pavan 7. 21564C1143 Meharaj 8. 21564C1002 K. Sagar 9. 21564C1109 P. Deepika Reddy 10. 21564C1016 Ajith 11. 21564C1107 T. Akhil Kumar

3. Table of contents Introduction Meaning and definition Origin and growth Worldwide picture and nationwide picture Leading organizations – Strategies SWOT Analysis Government Policy and regulations Challenges and solutions Conclusion

4. Introduction India is called the Pharmacy of the world . In India there are 3000 drug companies and 10500 manufacturing units. The word pharmacy comes from the Greek word ‘pharmakeia’. Father of Pharmaceutical Industry is William Procter J r .

5. The pharmaceutical industry discovers, develops, produces and markets drugs or pharmaceutical drugs for use as medications. Pharmaceutical companies may deal in generic or brand medications and medical devices. They are subject to a variety of laws and regulations that govern the patenting, testing, safety, efficacy and marketing of drugs . Pharmaceutical industry is engaged with manufacturing of API ( Active Pharmaceutical Ingredients) Drug i.e. pharmaceutical dosage form (tablet, capsule, suspension, emulsion, parenteral preparation etc.) as well as medical devices. Definitions:

6. Types of Drugs Branded drugs Generic drugs Prescription drugs Over the counter (OTC) drugs 2 . Based on the nature of disposal 1. Based on the nature of development

7. Origin : The roots of the pharmaceutical industry lie back with the apothecaries and pharmacies that offered traditional remedies as far back as the middle ages. Originating as a pharmacy founded in Darmstadt in 1668. Merck in Germany was possibly the earliest company to move in the direction of rationalism and experimentation. It was only in the middle of the 19th century that Beecham became involved in the industrial production of medicine, producing patented medicine from 1842, and the world’s first factory for producing only medicines in 1859. Pfizer an American(USA) company was founded in 1849 Pfizer was initially into the chemicals business. Their business expanded rapidly during the American civil war as demand for painkillers and antiseptics rocketed.

8. It wasn’t just Swiss companies that had their roots in the dye trade . Bayer was founded in 1863 as a dye maker. It later moved into medicines, commercialising aspirin around the turn of the 20th century , one of the most successful pharmaceuticals ever at that point. Origin of pharmaceutical industry in India The evolution of pharmaceutical sector in India may be set into four stages. A. First stage : before 1970 B. Second stage : 1970-1990 C. Third stage : 1990-2010 D. Fourth stage : 2010-now In 1930, in Calcutta the first pharmaceutical company named Bengal chemical and pharmaceutical works was established. It is the government owned company. Today , India has gained immense importance in the pharmaceutical domain.

9. GROWTH OF PHARMACEUTICAL INDUSTRY The factors that affect the pharmaceutical market size include disease prevalence, drug affordability, consumer attitudes, government policies and some supply-side factors: The global pharmaceuticals market was worth $935 billion in 2017 and will reach $1170 billion in 2021, growing at 5.16%, according to a recent pharma market research report by The Business Research Company.

10. GROWTH IN INDIA In 1969, Indian pharmaceuticals had a 5% share in the domestic market and global pharma had a 95% share. By 2020, Indian pharma has almost 85% share . India's pharmaceutical industry, which is currently valued at $41 billion, is expected to grow to $65 billion by 2024 and $120-130 billion by 2030 . Innovation-led research and development, healthcare delivery (R&D), manufacturing and supply chain, and market access are the opportunities . India ranks 3rd worldwide for pharmaceutical production by volume and 14th by value. The country has an established domestic pharmaceutical industry, with a strong network of 3,000 drug companies and 10,500 manufacturing units.

11. Indian pharmaceutical sector supplies over 50% of the global demand for various vaccines, 40% of the generic demand for US and 25% of all medicines for UK . India contributes the second largest share of pharmaceutical and biotech workforce in the world . India’s domestic pharmaceutical market turnover reached Rs. 1.4 lakh crore (US$ 20.03 billion) in 2019, up 9.8% y-o-y from Rs. 1.29 lakh crore (US$ 18.12 billion) in 2018. In May 2020, pharmaceutical sales grew 9% y-o-y to Rs. 10,342 crore (US$ 1.47 billion . Though the pharma industry has grown at a compounded annual growth rate (CAGR) of approximately 13% over the two decades, in the last decade it was 8.5% and has been lower at 6.2% over the past five years . Medical devices industry in India has been growing 15.2% annually and is expected to reach US$ 8.16 billion by 2020 and US$ 25 billion by 2025.

12. PRESENT PANDEMIC SITUATION Covid-19 has presented both an opportunity and a challenge for India to emerge as the ‘pharmacy of the world . During April-October, 2020, India’s pharmaceutical exports totaling $11.1 billion witnessed an impressive growth of 18%, as against $ 9.4 billion during the corresponding period a year ago. This has led to an increase in the share of pharmaceuticals exports in India’s total exports from 5.1% in April-October, 2019 to 7.3% in April-October, 2020, making it the third largest exported commodity . The commitment of provision of Covid-19 vaccine to other countries has made India the epicenter for its manufacturing. Healthcare and well-being has received top priority in this 2021-2022 budget, with more than doubling of the outlay to Rs 223,846 crore, including the allocation of Rs 35,400 crore towards COVID-19 vaccination and Rs 64,184 Cr for a new scheme to strengthen the country’s primary, secondary and tertiary health infrastructure.

13.       World Wide Picture of Pharmaceutical Industries     Global Pharmaceutical Market is expected to grow in the upcoming years despite the recent slowdown in key markets across the globe.           The reasons are                     a. Aging and Growing population                     b. Rising income levels                     c. Emerging medical conditions                     d. Emergence of new diseases                               Global pharmaceutical market is expected to be worth USD 1.57 trillion by 2023.    The growth in this market is predicted on the basis of various factors like market drivers, current and upcoming trends, current growth pattern, and market challenges

14. Growth Drivers and Inhibitors

15. The global pharmaceutical industry is expected to witness positive growth as the top pharma companies are at forefront of the fight against COVID-19 . The world’s biggest pharmaceutical companies: Top ten by revenue              1. Johnson & Johnson – $82.584bn              2. Roche – $63.751bn              3 . Novartis – $ 48.66bn              4. Merck – $ 47.94bn               5. Pfizer– $ 47.64bn              6. Bayer – $ 46.8bn              7. GlaxoSmithKline – $ 43.26bn              8. Sanofi – $40.69bn              9. AbbVie – $ 33.266bn             10. Abbott – $31.9bn      Globally Top Leading Pharmaceutical Industries

16. The top pharmaceutical products sold globally include Humira, Eliquis and Revlimid. Globally, the United states has emerged as the leading market for pharmaceuticals followed by group emerging markets. Emerging markets may include middle and low income countries. Despite increasing revenues globally , the Latin America region accounts for the low share of the global pharmaceutical markets revenues. The pharmaceutical industry comprises companies that engage in research and development, manufacturing, marketing, and distribution of chemical and biological drugs for human and veterinary use.

17. India ranks 3 rd worldwide for pharmaceutical production by volume and 14 th by value. The country has an established domestic pharmaceutical industry, with a strong network of 3000 drug companies and 10500 manufacturing units. Market Size: Indian Pharmaceutical sector is expected to grow to US$100 million, while medical device market is expected to grow U$ 25 billion by 2025. Pharmaceuticals export from India stood at U$ 16.3 billion in FY 2020.(Bulk Drugs, Intermediates, Drug Formulations, Biologicals, and Surgicals.) National Wide Picture of Pharmaceutical Industry ADVANTAGE OF OUR NATION Cost efficiency Economic Drivers Policy Support Increasing Investment

18. Net profits of leading Pharmaceutical companies in India as of 2020 (in billion Indian rupees)

19. LEADING ORANIZATIONS OF PHARMACEUTICAL INDUSTRY World Wide Leading Organizations Nation Wide Leading Organizations

20. WORLD WIDE LEADING ORGANIZATIONS Particulars Johnson&Johnson Hoffman -La Roche Novartis Founders : Headquarters : Robertwood Johnson New Jersey , US. (1886) Fritz Hoffman-La Roche Basel , Switzerland .(1896) John Rudolf , Clavel Basel , Switzerland .(1996) Revenue : No of employees: USD 82.58 billions. 1,32,200. USD 63.751 billions. 1,01,200. USD 48.66 billions. 1,10,000. Subsidiaries : Janssen Pharma, Mc Neil, Ethicon Inc etc-- Genentech, Ventenna, Syntex, Genmark etc-- Sandoz, Ciba Geigy, Alcon, Delmark, Wasabrod etc-- Vision : Be yourself change the world. We inspire people to transform healthcare in the world. Trusted leader in changing the practice of medicine. Mission : Make diversity and inclusion how we work every day. Identifies the purpose of organization’s operational goals and existence. To discover new ways to improve and extend people’s lives. Strategies : D iversification. G rowth & Innovation. M anagement for long term goals. F ocus on human healthcare. P eople & Values. F inding new medicines. F itting treatment to patients. E xcellence in science. D elivering value for all stake holders. U nleash the power of people T ransformative innovation. E mbrace operational excellence. G o big on data & digital. B uild trust with society. Tagline : For all you love. We innovate healthcare. Caring and Curing.

21. Nation wide leading organizations Particulars Sun Pharma Cipla Dr Reddy’s Lab Founders : Headquarters : Dilip Shanghvi (1983). Goregoan, Mumbai . Khawaja Abdul Hamied. Mumbai. (1935). Kallam Anji Reddy. Hyderabad. (1984). Revenue : No of employees: INR 33,473.4 Cr 36,000. INR 17,476.19 Cr 22,036. INR 17,460 Cr 21,650. Subsidiaries : Ranbaxy , GSK ltd , Pharmaleucence Inc etc-- Invagen, Medpro, Sitech Lab, Medialab pvt ltd. Hetero Biopharma, BMS Laboratories, Glaxo ltd. Vision : Reaching people , touching lives as a leading provider of valued medicines. Make India self - reliant in healthcare. To improve quality of life and life expectancy itself. Mission : To provide good health and happiness for all. To be a leading global health care company. To provide affordable and innovative medicines for healthier lives. Strategies : S ustainable revenue streams. S eek cost leadership. B alance profitability and investments for future. L ow cost strategy. B usiness scope & expanding to other countries. M ore strategic partnerships. M ore R&D spending. R ationalization of costs. I mproving corporate relationship. D iscovery of new chemical entities. I mportance to research & innovation. Tagline : Leadership through focused research. Caring for life. Good health Can’t wait.

22. STRENGTHS Strong Manufacturing Base Low cost of Innovation , Manufacturing and operations. Effective purchasing and good relationships with suppliers. Skilled financial management , good credit control and few bad debts. A strong product range. Effective Research and Development. Growing turnover and profitability. Healthy domestic market with rising per capita expenditure is another significant strength enabling achievement of economies of scale. SWOT Analysis of Pharmaceutical Industry

23. WEAKNESSES Less investment in Research and development . Negligible expenditure on healthcare in the country. Sales and Marketing knowledge is inadequate due to lack of knowledge of international pharmaceutical marketing /pricing practises and market environment in various countries. Ability to evaluate contracts /alliances etc., is available only in top countries. Process and product patents procedure is different in different countries .

24. OPPORTUNITIES India has significant export opportunities Licensing deals with MNCs for NCE (New Chemical Entities), New drug substance and NDDS (New Drug Delivery Systems) offer new opportunities for Indian manufacturers India has a very high potential for developing as a centre for international clinical trials due to its rich diversity . India can become a niche player in global pharmaceutical R&D and possibilities exist for expansion of biotechnology generics (also known as bio- similars ) and biopharmaceuticals.

25. THREATS Product patent regime poses serious challenge to domestic industry unless it invests in research and development. R&D efforts of Indian pharmaceutical companies are hampered by lack of enabling regulatory requirement . Drug Price Control Order puts unrealistic ceilings on product prices and profitability Export effort is hampered by procedural hurdles in India as well as non-tariff barriers imposed abroad . Lowering of tariff protection has increased competition in domestic markets resulting in erosion of profitability.

26. Government Policy and Regulations Regulations Pharmaceutical industries in India are mainly under the surveillance of CDSCO and NPPA CDSCO : Central drug standard control organization NPPA : National pharmaceutical pricing authority FDI : Foreign Direct Investment Objectives of the CDSCO & NPPA To collect /maintain data on production ,export and imports. To deal with all legal matters arising out of the decision of the authority.

27. Licenses and Documents Required to Start a Pharma industry Drug License Number GST(Goods and service Tax ) Registration Food Safety & Standard Authority of India(FSSAI) Trade Mark & Name for The Product Company Registration Licenses Required for Export and Import of drugs: 1. NOC ( No Objection Certificate ) 2. Controller and CDSCO

28. Permissions & Licenses Required to Start a Pharma Industry in Some Foreign Countries USA – FDA(Food and Drug Administration) European Countries –EMA(European Medical Agency) Brazil- ANVISA (Angencia Nacional de Vigilancia Sanitaria) China –SPAC(State Pharmaceutical Administration of China)

29. Challenges in Pharmaceutical Industry Demand forecasting Price fluctuation assessment Risk management Drug quality Patent issues Lack of Research Low earning/ Less profits Skilled manpower, raw materials Equipment, modification of operational facility

30. Solutions to overcome c hallenges P redictive Analytics solution to help in better demand forecasting. Analyzing shifting customers interests and fluctuating prices. Big data analytics solution to devise robust risk management strategies. Using of latest laboratory equipment and technology for production of pharma products using raw materials. Prevention of mixing pollutants which as produced as byproducts in nearby water bodies and natural air which e ffects severely nearby people. example : Divis laboratories Encouragement of researches for development of R&D. Recruitment of skilled people to achieve great results.

31. Conclusion Pharmaceutical Industry plays an important role in implementing the welfare state of the people. Economic growth of the industry along with the availability of generic goods and healthy competition is the need of the hour for India. After analyzing the impact of the FDI in the Indian pharmaceutical Industry, it is established that India needs adequate FDI and its spillovers for the growth of the industry.