Third largest by volume globally, the pharmaceutical industry in India is highly fragmented but holds a wide scope for growth. Fostered by salubrious scientists, engineers and doctors, this industry needs to receive the comfort of productive R&D as well as the benefits of strategic consolidation of this industry. Clocking an average growth rate of about 20%, biotechnology industry in India which comprises bio-informatics, bio-pharmaceuticals, bio-agriculture and bio-services will boost the growth of research oriented operations of the pharmaceutical industry.  Dr. Reddy’s Lab and Sun Pharmaceuticals are the top players of Indian pharmaceutical companies and Gujarat clocks most of the investments, operations and turnover registering a growth rate of 10-12 % by the end of last year which was higher than the industry average. Domestic pharmaceuticals registered a growth rate of about 12% last year. This industry has witnessed many mega-mergers by big biotech & specialty pharmaceuticals companies and patent wars due to infringement disputes which have resulted in better access to information but have hampered anatomical growth of pharmaceutical companies, especially in India. The segments that the industry operates in are:


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Global Outlook

The Addendum 2015 of the Indian Pharmacopoeia (IP) of 2014 on behalf of the Ministry of Health and Family Welfare would revitalize quality of medicines and monitor its research in the country. Working towards the “Pharma Vision 2020”, Indian Government has taken several steps to haul India’s position as the top end-to-end drug manufacturer by reducing approval time of new facilities and setting up Drug Price Control Order and National Pharmaceutical Pricing Authority to monitor, control and provide for availability of medicines at affordable rates. Despite the fact that India has an advantage of access to lower manufacturing and capital costs, India still resorts to imitative R&D and outright purchase of technology, carrying out only small scale drug testing and preventive research instead of conferring new products. Most balance sheets of pharmaceutical companies portray extremely poor R&D figures as compared to their foreign counterparts.


Domestic Outlook

India has attracted plenty of foreign direct investments through direct takeovers, launching products and services in India as well as alliances with local hospitals and research centers. It is almost an inherent characteristic of this industry as major participants close deals to squeeze through narrow markets. Internationally, Novartis and GSK wrapped up $28.5 bn through takeover of GSK’s oncology operations and a JV of their OTC businesses. While Bayer took over Merck’s OTC operations, Roche took after InterMune for $8.3 bn.


Additionally, TRIPS agreement among nations has recently sought to bridge the gap between countries in terms of access to newer, better technology and drugs without hampering patent clauses. India has caught attention by denying recognition of some profitable Western drugs which led courts to rule in favor of withdraw patent protection from India.


Future Potential

Although there are several theories which illustrate the loss of value of this industry due to large scale integration through mergers or acquisition, pharmaceutical companies, especially in India, have wasted resources in focusing on inorganic ways to grow instead of investing in R&D which would fetch more sustainable incomes. India has lost quite a lot in foreign investment through rancid patent wars since the bar for patent protection in India is set very high but looking at the potential in domestic markets, companies like Novartis AG and Pfizer Inc. continue to grow and establish operations in India despite losing out on several appeals. Apart from using synergy gains to their advantage, cost benefits of patent protection in India must be tapped by manufacturing and selling these drugs in India and then gaining fast access to world markets once the patent expires. Moreover, instead of being victimized by mergers or takeovers by foreign participants, India should continue with their strict policies on patent protection and licensing as well as investing in indigenous R&D thereby retaining intelligence and property rights in India. The global pharmaceutical landscape is changing fast but the means of growth of this industry need to be checked.


What this report contains:

  • A detailed overview of the industry

  • Structure of the industry from both, domestic and international perspectives

  • Related industries that this industry has inter-dependencies with and their understanding

  • Detailed analysis of industry segments in terms of the value and depth of corresponding market

  • Analysis & insights about the elements and critical success factors of this industry using strategic models

  • A forecast on the state of this industry in 2020, predicting the growth and movement patterns for 2016 - 2020

  • Our professional analysis on the future of the industry based on strategic actions adopted by major industry participants

  • Quantitative estimates and forecasts of the growth prospects of the industry using revenue and financial forecasting models

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