Riding on different factors from expansion of middle class, generic and brand development, marketing effectiveness, rural markets and health insurance, the Indian pharmaceutical industry will grow at 19.64 per cent by 2015, according to a white paper by Confederation of Indian Industry (CII).
The growth of pharmaceutical industry in India is facilitated by health consciousness of people, affordability due to rising incomes of expanding middle class and also health insurance facilities. A large number of untreated and under-treated medical conditions will lead to higher demand for newer and better medicines. In addition to this potential market, rural markets offer a substantial growth for the pharmaceutical industry, the study says. The white paper titled 'CII-Interlink paper on growth agenda of pharmaceutical industry in India', was prepared for CII by business management consulting firm Interlink.
These developments will trigger pharmaceutical industry to be more focussed to meet the challenges of innovative new medicines and contain pricing pressures. Among the prime drivers, expansion of middle class will contribute two per cent to the growth of the industry, while pricing can boost it only by one per cent, as there is only slim chance of price relaxation, the study states.
"Rural markets are expected to contribute two per cent incremental growth as rising disposable incomes of rural people are likely to make them steady consumers of old products. Enhancing marketing efficiencies resulting in higher marginal productivity of the sales force is expected to contribute one per cent incremental growth by achieving deeper market penetration and higher returns on investment. Increase in health insurance, even at optimistic growth rates can impact the market only marginally resulting in incremental growth rate of only 0.14 per cent," according to the study.
Brands can drive incremental growth of 0.5 per cent by creating differentiated products originated and developed in India with a global market for themselves, it adds.
The significant developments motivating the pharmaceutical industry in India to become stronger in both domestic and global arena include the shift of pharma market from mature markets like North America, Europe and Japan to emerging markets like E-7 countries, which will register higher growth rate, more focus of specialty products as compared to primary care products, expansion of generic market; loss of patents of leading products and strong and persistent demand for more effective healthcare delivery, the study said.
According to Anjan Das, senior director, CII, "A large number of global pharma companies will look forward to initiate collaborative alliances with Indian companies in research, manufacturing and even distribution." The study focused on value creation as it drives the growth. Value creation comes from drug discovery, biotechnology, manufacturing, innovation and technology, wellness industry and brands. Value addition comes from CRO, CRAMS, APIs and M&A activity, the white paper says.
"Although Indian economy cannot remain insulated from global economic factors such as oil prices and food shortages, it has a much better adjustment capacity. India can aspire to be in the league of developed economies by 2015. It will drive the global market rather than being driven by global forces. India has both capabilities and competitive edge in terms of entrepreneurship, innovation and talents of becoming a strong global hub in both research and manufacturing," it points out.