Indian pharmaceutical market will grow to a level of 55 billion dollars by 2020 and move into global top-tier according to a study, 'India Pharma 2020: Propelling access and acceptance, realising true potential', by McKinsey & Company. The report explores the potential  of Indian pharma market and the implications it has on the commercial capabilities of its players..

The report analyses four key industry-shaping drivers for accelerating growth in India’s pharma market ie epidemiological factors which focus on the population growth each year, along with a steady rise in disease prevalence that will increase the patient pool by nearly 20 per cent in 2020. The increasing affordability due to sustained income growth, and incremental additions due to higher health insurance coverage; greater accessibility due to growth in medical infrastructure, with over US$ 200 billion being invested over the next 10 years and rising acceptability due to increased diagnosis and treatment rates, an increased acceptance of biologics and preventive medicines, and the increased tendency to self-medicate.

“As pharmaceutical players look at the domestic Indian market today, the fundamental thought has changed from ‘whether India or not’ to ‘what is the potential of India and how can we get it,” said Vikas Bhadoria, co-author of the report and partner, McKinsey & Company. “The Indian industry faces a period of flux due to market discontinuities. Increased competition, tougher investment sourcing, new market opportunities, consolidation, and perhaps most importantly, dramatically different performance expectations, make it vital for the industry to innovate and accelerate growth and rapidly.”

The new report, discusses the future outlook of India’s pharmaceuticals market and estimates that the rising healthcare access and increased acceptability will help the Indian pharmaceuticals market achieve its true potential. The study analysed key industry-shaping drivers for accelerating growth, and lays out projections for three potential growth scenarios, and offers recommendations for what players will need to do to drive growth and succeed in the Indian pharma market.

According to the report the contribution of these growth drivers will undergo periodic shifts. While affordability will continue to provide the basic thrust to this growth, the interplay between accessibility and acceptability will account for nearly 60 per cent of the incremental $42 billion market opportunity.

The growth will be broad-based and opportunities will proliferate and scale up. The metro and tier I markets will primarily drive this growth, as rapid urbanisation will see 250 million rural people relocate to urban centres by 2030. However, the rural market will also increase its share, moving from its current 20 per cent to 25 per cent in 2020, as more than 28 million rural households emerge from below the poverty line. All therapies will maintain or enhance growth rates as the market is still under penetrated. The hospital and institutional sales channel will double in importance, increasing its share to 26 per cent of the overall opportunity.

The report suggests that the non-traditional emerging opportunities, such as patented products, consumer healthcare, biologics, vaccines, and public health, will also scale up. As an example, consumer healthcare – both in the Rx-to-OTC segment and pure-play OTC non Rx segments – promises a massive increase from their current US$ 3 billion estimate to US$ 14 to 18 billion by 2020, implying that players will need to create capabilities to generate consumer insight, and innovate in product formats and store merchandising.

According to Palash Mitra, partner, McKinsey & Company, and leader of the Pharmaceuticals & Medical Products Practice in India, “Leaders will have to significantly modify their business models to compete in new arenas of growth. Commercial model capabilities will need to change. This is a time for meaningful investments to be made, be it in increasing acceptance of therapies, especially in hard to reach rural areas, driving growth from the large and mature brands, or in creating innovative sales force coverage models.”

He informs that the players will also begin collaborating with other industry players to shape the market, or working in public-private partnerships to dramatically increase standards of care in India. Players will need to come to terms with the fact that risk-taking will differentiate the winners from the losers. Similarly, the agenda for policy makers is cut out for them to raise healthcare spending, invest in infrastructure, increase the number of physicians in the public sector, and ensure that its public health insurance execution delivers to plan. “Most importantly, the government has a crucial role to play in helping the industry stay viable and competitive,” Mitra adds.