Technology advances and economic fluctuations have been the two key triggers behind transition of global pharmaceutical industry. The global economic scenario is going through disruptive changes and witnessing the rise of a new Asia. This is leading to growth of Asian economies from being low cost and literate labour markets to progressive economies, said Pravin Vete, associate director, Business Advisory Services, Ernst & Young Pvt. Ltd.

At a presentation on the ‘Indian pharmaceuticals market – Emerging trends’ made during the just concluded Indian Pharmaceutical Congress (IPC) - 2012 at Chennai, Vete provided a macroeconomic view of the sector. Stating that overall pharma industry was in a phase of transition, he said that Indian pharma market was attractive but fragmented.

However India remains amongst the fastest growing pharmaceutical markets in the world. In terms of scale, the Indian pharmaceutical market is ranked 14th in value in the world and fourth in volume. By 2014, it will reach Rs  791 billion and rank among the top 10 in the world, overtaking Brazil, Mexico, South Korea and Turkey. In terms of players, the market is fragmented with most of the players having less than 0.5 per cent market share. The top ten pharma companies in India are Abbot, Cipla, Ranbaxy, GSK, Sun, Zydus Cadila, Mankind, Alkem, Pfizer and Lupin. The major market share is with Indian pharma companies, with multinational companies (MNCs) having less than 20 per cent by value. There are only three MNCs in the top 10 pharma companies which are Abbot, GSK and Pfizer. The revenues of both Indian & MNC players are driven by few established products which account for 50 to 60 per cent of the revenues. Around 30 percent of the revenues for Indian pharma companies come from ‘A’ class products.

There are close to 8,700 molecules or combinations in the Indian pharma market, and more than 32,000 brands and dosage forms. There are a very large number of products in the Indian pharma market with multiple combinations of molecules. Of these molecules/combinations, only 11 per cent by number account for 75 per cent of the market by value and the competition in these molecules is high.

The real issue in India is significantly low level of healthcare expenditure. Per capita healthcare expenditure in India is less than half of that in China and less than one-eight than that in Brazil. Total healthcare expenditure in India is four per cent of GDP against the world average of nine per cent, pointed out Vete.

According to him, the key drivers of change are research and development productivity, patent cliff, globalisation, demographics, pricing and reimbursement. This has automatically led to healthcare reforms and  extensive adoption of information technology.

Thus pharma market environment is changing rapidly. From a global context there is re-balancing of economies, research versus generic, consolidation v/s expansion, doctor v/s pharmacy, focus v/s diversification, re-balancing of R&D, chemistry v/s biology, in-house v/s collaborative, doctor v/s patient – technology induced and doctor v/s pharmacy – economy induced.

From an Indian context, there is high disease burden, chronic v/s acute, access v/s awareness, market share v/s market shaping, competition v/s collaboration. This necessitates a re-look in Indian’s pharma’s need to shift focus to look at portfolio building, differentiated strategies that are doctor driven ad look at finished formulation expansion.