The Indian pharmaceutical industry has come out as a potential player in the global pharmaceutical market. During 1950s – 60s, the industry was largely dominated by foreign enterprises and it continued to depend on imported bulk drugs.
Since at that time the domestic sector did not have the capabilities to start local production of bulk drugs and foreign firms hesitated to do so, the government decided to start public sector enterprises. This led to the establishment of the Indian Drugs and Pharmaceuticals Ltd (IDPL). This was the first step in the evolution of Indian pharma industry. The legislation of Indian Patent Act 1970 and the New Drug Policy 1978 helped domestic market in producing low cost but quality drugs.
Over the last few decades, Indian pharma industry has evolved from almost non-existent to a world leader in the production of high quality generic drugs. The upsurge in production was due to various factors like legislative changes, the growth in contract manufacturing and outsourcing, joint ventures and tie ups, India’s mastery of reverse engineering of patented drug molecules and efforts to comply with its World Trade Organization (WTO) Trade Related Intellectual Property Agreement (TRIPs) obligations.
The Indian pharma industry has gained significant global presence in the last few years and has been competing with China, Brazil, major African countries like South Africa, etc. In the global market, India ranks third in terms of manufacturing pharma products by volume, and 14th in terms of value.
The significant changes taking place in the global market seems to offer immense opportunity for the Indian pharmaceutical industry. The patents of blockbuster drugs valued at around US$ 13 billion in revenues expired in 2007 and patents worth US$ 60 billion are expected to expire by 2012. Hence there will be a lucrative market available for generic products worth US$ 73 billion.
Current status of Indian industry
At present India is on the top in exporting generic medicines worth US$ 1billion and produces around 20 to 24 per cent of the global generic drug production. Currently, the Indian pharma industry is one of the world’s largest and most developed industries. Moreover, it is expected that the Indian generic market will grow at a compound annual growth rate (CAGR) of around 17 per cent for 2012-13 and 14.2 per cent by 2015-16. In May 2010, the Union Minister of Commerce and Industry and the Minister of Trade and Industry, Singapore signed a ‘Special scheme for registration of generic medicinal products from India’. This scheme allows fast registration of Indian generic medicine in Singapore, which shows that Indian pharma industry has expanded its wings in the global market.
India’s rank in the global pharma market
In 2003, China and Brazil were the only two countries that featured among the top 10 pharma markets worldwide. At that time India was at 13th position. But in 2010 there was sudden change as China ranked was third in worldwide pharma market. By 2015, four of the emerging markets i.e. China, Brazil, India and Russia are expected to rank among the top 10 global pharma markets, in which after China probably India will emerge as highest gainer. The other major markets forecast to grow up are Brazil, Venezuela, Turkey and Korea.
India vs other markets
The statistics shown by IMS Market Prognosis reveals that out of all the emerging markets, China and Venezuela are expected to be the fastest growing by more than 20 per cent till 2015, while India and Russia are predicted to rank in the next level with double-digit growth rates.
However to sustain in global pharma market, pricing is most complex decision for pharma companies. India not only have lower price points than various major pharma markets such as the US and Europe, but it also has lower price points in comparison with other emerging markets like Russia, Brazil and Hong-Kong.
This also holds true for both innovator as well as generic products. Keen competition and a price regulator have played a key role in this, and therefore, average revenue per brand is relatively low in the country.
The growth of Indian pharma industry is hugely relied on the types of global strategies adopted by its firms. Internationalization strategy adopted by India is crucial for sustaining and enhancing competitive position in the world pharma market, as this strategy helps upgrade the technological strength of Indian pharmaceutical firms. For example, as large number of Indian pharmaceutical firms lack technological capabilities for product development. Getting overseas business enterprises with new product portfolios, newly developed technology and skills can allow them to emerge as global players. Internationalization in the form of strategic collaborations with global players from developed countries for contract manufacturing, research and marketing can also be beneficial for Indian companies to expand their global operations.
In the last decade, the business strategies of Indian pharmaceutical companies with respect to the global market have changed significantly. The decisions for their products, methods used by firms, business locations and sourcing of raw material is hugely dependent on orientation of global market.
After identifying strategic markets across the globe, the industries have adopted a variety of global strategies for enhancing their market position like undertaking direct investment for greenfield projects and overseas contracts. These are tie ups like California based Gilead Sciences with Mylan Laboratories, Ranbaxy Laboratories and Strides Arcolab agreement to collaborate for promoting access to high-quality, low-cost generic versions of Gilead’s HIV medicine emtricitabine (FTC) in developing countries – including single tablet regimens containing emtricitabine and fixed-dose combinations of emtricitabine co-formulated with other Gilead HIV medicines, and other strategies for entering into contract manufacturing with global players. Various segments of value-added activities of Indian companies like manufacturing, distribution and marketing, R&D, are now being coordinated and formulated according to considerations of global geographical advantages and worldwide business environment.
Now, with several major US and Europe companies ready to make investments in India, the future prospects of the industry in India looks quite promising. The country's pharmaceutical industry has tremendous potential for growth, considering all the projects that are in the pipeline.
Public spending on healthcare is likely to rise from seven per cent of Gross Domestic Product (GDP) in 2007 to 13 per cent of GDP by 2015. Multinational companies will make an aggressive bid for the Indian pharma market as India moves towards trade-related aspects of intellectual property rights. No doubt generics will have a huge demand. Also international companies have agreed to set up their own R&D labs in India and develop drugs for various tropical diseases. Indian pharma companies are also expected to move up the value chain from merely being reverse engineers to developers of proprietary products in the US market.
The global pharmaceutical market has now recovered after experiencing a fall during the past two years and is expected to be follow a growth path. The sudden fall in global pharma market was mainly due to economic slowdown and additionally the expiry of patent of key blockbusters. Together with this saturation in potential pharma markets aggravated the situation. However, India has shown continuous and robust growth proving itself to be one of the fastest growing pharma market in the world.
India has emerged as potential global player worldwide due to changes in legislative, contract manufacturing and high profile tie-ups with biggies, reverse engineering of patented drug molecules and low cost of manufacturing.
Due to substantial and enduring value provided by Indian pharmaceutical companies to generic players in the US market ,almost 50 per cent of global certified dossiers for active pharmaceutical ingredients are filed from India. Of the global DMF filings in the US, India accounted for 45 per cent in 2009, which increased to 49 per cent in 2010 and 51 per cent in 2011.
This shows that Indian companies are not only providing finished dosage forms as part of various partnership deals but are also moving towards becoming standalone in providing APIs. So after having kick-off start in global pharma market , India has now become an important emerging player worldwide and for sure will remain amongst the toppers for next few decades.
(Dr. (Mrs.) Mrunali. R. Patel is Assistant Professor and Karan D. Mistry is Research scholar, Indukaka Ipcowala College of pharmacy, New Vallabh Vidyanagar, Gujarat. Dr. Rashmin B. Patel is Assistant Professor, A. R. College of Pharmacy & G. H. Patel Institute of Pharmacy, Vallabh Vidyanagar, Gujarat.)