Indian pharmaceutical industry

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1. Indian pharmaceutical industry Presented by: Dhruv Seth Kushal shah Urvi shah

2. Flow of the presentation Evolution of the indian pharmaceutical industry Introduction Major player SWOT Indian scenario Global scenario Future outlook Conclusion

3. Evolution of Indian pharmaceutical sector 1970-1990 Patent act 1970 Domestic companies Production and export initiative taken 1990-2010 Operations in foreign countries Liberalized market Generic drug 2010 Nppp-2012 Patent filling by pharma players Kam and cso (key account management) (contract sales organization) 2010-2015 Price reduce to 80%(2013) Fdi (100%)on medical devices 10,500 manufacturing units and 3000 pharma industry 2016 In union budget,2016,fdi increased 74%in existing pharmacy companies. “pharma vision 2020”

4. Introduction In 1930,in Calcutta the first pharmaceutical company called Bengal chemicals and pharmaceutical works which still is today as one of 5 government owned drug manufacturer started. The history of Indian pharmaceutical market in 1970’s was almost non existant.today,india has gained immense importance and carved a niche for itself in the pharmaceutical domain. India pharmaceuticals market ranks third in the world in terms of volume and 14 th in terms of value. The government of India unveiled “pharma vision 2020”aimed at making india a global leader in end to end drug manufacturer.

5. Pharmaceuticals exports from India stood at US$ 16.64 billion in FY 2016-17. Multinational companies are collaborating with Indian pharma firms to develop new drugs Government of India is planning to set up an electronic platform to regulate online pharmacies under a new policy Indian pharma companies spend 8-13 per cent of their total turnover on R&D Under Union Budget 2017-18, new 5,000 postgraduate seats in medical colleges were announced by the government, to ensure availability of specialist doctors. In this sector ,100 percent FDI is allowed under automatic route.

6. INDIAN PHARMA MARKET The Indian pharmaceuticals market witnessed growth at a CAGR of 5.64 per cent, during FY11-16, with the market increasing from US$ 20.95 billion in FY11 to US$ 27.57 billion in FY16. The industry’s revenues are estimated to have grown by 7.4 per cent in FY17. India’s cost of production is significantly lower than that of the US and almost half of that of Europe. It gives a competitive edge to India over others. Medicine sales in India increased 8.1 per cent year-on-year in November 2017

7. Market leaders Top 9 Publicly Listed pharmaceutical companies in India by Market Capitalization as of 2017. Rank Company Market Capitalization 2017 (INR crores) 1 Sun Pharmaceutical Rs 1,55,716 Crore 2 Lupin Ltd Rs 68,031 Crore 3 Dr. Reddy's Laboratories Rs 49,293 Crore 4 Cipla Rs 47,319 Crore 5 Aurobindo Pharma Rs 41,283 Crore 6 Zydus Cadila Healthcare Rs 31,631 Crore 7 Piramal Enterprise Rs 30,975 Crore 8 Glenmark Pharmaceuticals 25,302 Crore 9 Torrent Pharmaceuticals Rs 22,742 Crore

8. IMPACT OF GST IN INDIAN PHARMA There are two key things that have changed are the manufacturing price- many raw materials for API and products have moved from 5% vat backet to 12% GST bracket and a lot of medicine salts/compounds have moved from 5% to 12% GST bracket. We need to understand the margins at which the supply chain operates. The C&F(carrying and forwarding agents ) agent operates at 4-6% margin on MRP, distributor wholesaler operates at 7-8% margin on MRP and retailers at 20% margin on medicines. To sum it up, pharmaceutical industry in India is over USD 100 billion and at any point of time 15-18% hold in the inventory section. So, even a 3-4% loss in overall value chain on 15 billion dollars accumulates to USD 600 million losses for the industry, a lump sum amount. With time, we will see the fullest impact of GST and take steps accordingly

9. GENERIC DRUGS FORM THE LARGEST SEGMENT OF INDIAN PHARMA MARKET With 70 per cent of market share (in terms of revenues), generic drugs form the largest segment of the Indian pharmaceutical sector India supplies 20 per cent of global generic medicines market exports, in terms of volume, making the country the largest provider of generic medicines globally and expected to expand even further in coming years Over the Counter (OTC) medicines and patented drugs constitute 21 per cent and 9 per cent, respectively, of total market revenues of US$ 20 billion

10. The share of generic drugs is expected to continue increasing; domestic generic drug market is expected to reach US$ 27.9 billion in 2020 Due to their competence in generic drugs, growth in this market offers a great opportunity for Indian firms Generic drug market is expected to grow in the next few years, with many drugs going off-patent in the US and other countries Domestic generic drug market has reached US$ 26.1 billion in 2016

11. PHARMA EXPORT TO CONTINUE WITNESSING HIGH GROWTH Indian pharma companies are capitalizing on export opportunities in regulated and semi-regulated markets In FY17, India exported pharmaceutical products worth US$ 16.8 billion, with the number expected to reach US$ 40 billion by 2020. During April – November 2017, India exported pharmaceutical products worth Rs. 549.56 billion (US$ 8.49 billion). Indian drugs are exported to more than 200 countries in the world, with the US as the key market

12. India is the world’s largest provider of generic medicines; the country’s generic drugs account for 20 per cent of global generic drug exports (in terms of volumes) Around 40.6 per cent of India’s US$ 16.8 billion pharmaceutical exports in 2016-17 were to the American continent, followed by a 19.7 per cent to Europe, 19.1 per cent to Africa and 18.8 per cent to Asian countries.

13. PHARMA GIANTS RAISE THEIR R&D SPENDING In FY17, highest expenditure on research and development has been done by Sun Pharma, followed by Lupin Sun Pharma’s R&D spending is 7.6 per cent of the total sales in the FY17 , which grew at a CAGR of 38.3 per cent from FY11 to FY17. Sun Pharma’s R&D plan includes developing more products through expanded R&D team for global markets, focusing on more complex products across multiple dosage forms and investments in specialty pipeline Lupin’s R&D spending was 13.5 per cent of sales in FY17, with major thrust on oral solids (45 per cent of R&D spend)

14. (P)political Factors *P olitical uncertainty *S tringent Price Control *I rrespective cost of the real costs *R everse-engineering route implied *F inished products costlier (E)conomic Factors *S mall proportion of its GDP on healthcare *Non-standardized medication. *Taxes are very high *Registered Medical practitioners is low *Cost of goods high (S)ocio-cultural Factors *M alnutrition dramatically exacerbate. *Poor Sanitation and polluted water *Household treatments pursue more *Superstitious thinking among people *Healthcare problem (T)echnological Factors * Advanced automated machines *Computerization has increased *Newer drug delivery systems are the innovation *Ayurveda is a well-recognized science in india.

15. Strength Strong manufacturing base Cost effective Availability of high quality skilled workforce Excellent marketing and distribution network Diverse ecosystem

16. Weakness Low investments in innovative R&D The ability to compete with MNCs for New Drug Discovery, Research and commercialization of molecules on a worldwide basis due to lack of resources. Diffused nature of the Indian pharmaceutical industry means that only about 20 to 30 companies are large enough to bear the transactions costs associated with sustained exports to and compliance with entry regulations of the developed markets Strong linkages between industry and academia which are essential for growth of the industry is lacking in India. Manufacturer of fake and low quality medicines.

17. Opportunity Increased export potential Marketing tie ups with multinational companies to sell their products in domestic market. Immense scope to position india as a centre for international clinical trials. Key player in global pharmaceutical r&d. Exports of generic drugs to developed markets.

18. Threats The new MRP based excise duty regime threatens the business of smaller pharmaceutical companies. Lowering of tariff protection has increased competition in domestic markets resulting in erosion of profitability Drug Price Control Order puts unrealistic ceilings on product prices and profitability.

19. Conclusion The Indian pharmaceutical company is the fastest growing industries in the world competing with the global pharmaceutical industries. It is in the front rank of India's science based industries.in the post independence era that is post 1947 the Indian pharmaceutical company was completely dominated by multinational companies(mncs)and drug price in India was among the highest in the world. The India pharma market is expected to grow usd 55 billion by 2020,therby emerging as the sixth largest pharmaceutical market by absolute size.

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