The demographic statistics in India reveal the country has a population of one billion (48% female and 52% male), and the population growth rate is 1.6 per cent, and 58 per cent of population is aged less than 25 years, and 83% below 45 years. Over 70 per cent of our population lives in rural areas and 302 towns account for 65% of the urban population. The per capitia income is estimated at US $ 400 and the population earning income over US$ 1000 per annum (the middle class) is approximately 150 million people.
Statistics on the prevailing healthcare system shows the country has 150000 pharmacies in urban area and the same number in rural areas. About five lakh doctors and 6 lakh each nurses and pharmacists work in 15000 hospitals, of which 55 per cent are Government owned and 45 per cent by others. It also has 180,000 (130,000 are sub-centres with basic services) dispensaries and health centers. Total bed strength in hospitals is about 1000,000, of which 60 percent is in the public sector. The concept of medical insurance is very limited and re-imbursement is allowed mainly from companies/institutions to employees.
The size of the domestic market is estimated to be US $ 4 and 5 billion, and our per capita annual consumption is US $ 4. There are about 23,000 manufacturing units, making about 6500 brands in 77 therapeutic segments. Market growth rate is estimated to be 14 % and the imports is to the tune of 4 percent of the total turnover. The multinationals incorporated in India have cornered a market share of 40 percent and Indian companies command the remaining 60 per cent. Indian drug prices are among the lowest in the world.
During 2002-03, India's export of drugs and pharmaceuticals crossed Rs.12,000 crores ($ 2.5 billion) and in 2003-04 it touched Rs.15,000 crore ( $ 3.2 billion). The country is proud to have the highest number of plants approved by the US FDA outside the US. Similarly, the Indian companies filed largest number of DMFs, which gives them access to the high growth generic bulk drugs market. Generic drug manufacturing is the main growth driver for the future. The world market is expected to exceed $ 55 billion by 2005, and India is set to capture a large portion of this market by leveraging its inherent strengths in technology, R&D facilities and trained human capital.
In order to facilitate the sector's growth, the Indian Government has announced exemptions from import licenses to foreign pharmaceutical units setting up their manufacturing units in Special Economic Zones. For the overseas companies, setting up of a plant is 40 percent cheaper in India compared to developed countries and the cost of bulk drug production will be 60 to 70 percent less, in the present conditions. In accordance with WTO stipulations, India will grant product patent recognition to all NCEs from 2005 and this will further offset the growth. Indian pharma companies topped drug filings with the FDA in 2003 with a total of 126 DMFs, accounting for 20 per cent of all drugs coming into the US market, higher than Spain, Italy, Israel and China. Of the 108 ANDA pending approval from the FDA in February 20004, as many as 52 were patent challenges and nearly half of these were first to file (180-day market exclusivity) applications. In India, patent applications have shot up from 4000 in 1995 to almost 15000 in 2003.
The Indian companies are also going global and a number of strategic overseas acquisitions took place in 2003, like Ranbaxy buying RPG Aventis's French business in December, Wockhardt acquiring CP Pharmaceuticals in the UK in July and Zydus Cadila buying Alpharma in France in July. Inbound investment is growing significantly, especially in the field of clinical research outsourcing. Pfizer has doubled its R&D spending in India to around $ 13 million.
Novaritis, Astra Zeneca, Eli Lilly and GSK have committed to making India a global hub for their clinical research activities. R&D is no longer confined to the government or big companies. It is sprouting everywhere. A number of new companies are also taking on R&D contracts for global firms. Divi's Labs, Vimta Labs, JSS-CADRAT and Matrix Labs are some of the new stars in this space.
A Mckinsey projection estimates the global market size to grow to $ 25 billion by year 2010, and huge opportunities are emerging worldwide. Between 2004 and 2007, $ 26.5 billion worth of drugs will go off patent primarily in the US and to a lesser extent in the EU market. These include antibiotics like ciprofloxacin, flucanozole and citaloprarm, which together gross around $3.5 billion. According to a 2004 estimate prepared by investment bank Morgan Stanley on the basis of applications filed with the USFDA by Indian companies, over the next eight to 10 years, Indian companies have the potential to target '180-day exclusivity' filings for drugs worth $ 33 billion in the US alone.
Clinical trial research, which constitutes approximately 70 percent of time and money spent on developing a new drug, is an area of extreme importance for all companies. Outsourcing pre clinical work and clinical research accounts for nearly US $ 13 billion. There is an increased focus on reducing the costs of clinical development. Contract Research organizations are fast gaining importance because of their global access to investigating sites, specialized local expertise and competitive pricing strategies. In the present IPR regime, importance of timely clinical trials has become extremely important, as reflected by the steadily increasing number of global studies. The ten major Asian markets (excluding Japan) are expected to grow by a compound annual growth rate of 10.9% during the five year period 1999-2004, up from a CAGR of 7.3 percent during the period of 1994-1999.
In this scenario, the year 2005 should herald the beginning of vast changes in the Indian pharmaceutical industry, and these will be directly linked to the changes and developments in the global markets. India will emerge as a definite global destination. The successful strategy for Indian companies in a post 2005 world will include attaining product mix, augment skills, and use M&A option for either companies or products.
- Extracted from the speech by
Dr B Suresh, president, Pharmacy Council of India, delivered at PMA Silver Jubilee Celebrations.)