2011 Pharma Industry Update and Future Trends

Fact File:-
Turnover of Indian pharma industry has grown exponentially from Rs.10 crore (about US$ 2 million) in 1948 to about 
Rs. 1,00,000 crore (US $ 21 billion) today.  Presently maintaining a growth rate of over 15% annually.
India is ranked 3rd largest country in terms of production volume and 13th in terms of value with 8% of World’s 
Production but only 1.5% of Value.
The Indian Pharmaceutical Industry employs over 4.2 million personnel, both in manufacturing and ancillary sectors.
Exports of about Rs. 50,000 crore (over US $ 10 billion) last year growing at 22% annually. 
More than 200 manufacturing facilities are approved by US FDA, UK-MCA, Australia, South Africa Authorities and many 
more are holding WHO-GMP certi cates.
Strengths and weaknesses of India’s pharmaceutical industry
Cost advantages 
Large pool of highly trained manpower.
2nd largest number of U.S. FDA approved facilities.
TRIPS (Trade Related Intellectual Property Rights) 
compliance.
Lower operating costs.
Growing biotechnology industry.
Reverse engineering skills.
Largest number of Drug Master Files.
Bio-diversity.
FDI growing at 100 percent.
Strong IT skills for research data management.
Strong marketing and distribution network.
Well established network of laboratories.
It has an excellent record of development of 
improved, cost-bene cial chemical synthesis for 
various drug molecules. 
Industry concentrated at lower end of value chain.
Low level of investment in R&D.
Highly fragmented industry.
Government price controls.
Low margins.
High tari s and taxes.
Substandard drugs and counterfeiting.
Most Indian companies are small by world standards.
Lack of experience in drug discovery.
Corruption.
Weak domestic market.
Low levels of per capita medical expenditure.
Strengths Weaknesses
Source: CII, Financial Express
“India is going to rank 
among top 10
Global players by 2015 in 
pharmaceutical sector. ”
Conventionally, the Indian pharmaceutical industry has been depended on a core 
competency in generics, manufacturing and comparatively unripened 
potentialities in Research & Development. This prospect has overhauled 
considerably since the 1990s and Indian companies have been making 
investments towards ourishing drug discovery and development activities. 
The adoption of patent laws and the surge of contract manufacturing have 
preceded to the diversi cation of revenue streams, altering Indian pharma industry 
to go across high market growth.Industrial Evaluations
India’s pharmaceutical industry consists of large, medium, small companies and is 
one of the world’s most cost competitive industries. It is also extremely fragmented 
with more than 25,000 domestic manufacturing units. 
35 years of protection has switched the Indian pharmaceutical industry to 
everlasting scienti c and manufacturing potentialities, permitting many of its 
leading companies to spring up the value added string in the space. 
MNC presence in India
Many of the world’s leading pharmaceutical companies have subsidiaries or other 
2011 Pharma Industry Update and Future Trends

“Indian pharmaceutical 
companies produce
20 -22 % of the world’s 
generic drugs,
offer 60,000 finished 
medicines in 60 
therapeutics
and nearly 400 bulk drugs
 used in formulations. ”
operations in India. Multinational companies like Astrazeneca, Baxter, Aventis, P zer, Novartis, MSD, Wyeth and Merck have 
been active in India’s pharmaceutical market mainly through subsidiaries. The relaunch of product patents precipitated the 
return of a large number of other MNCs, some of who left during the process patent era. 
MNC pharmaceutical companies have also been drawn by tax holidays, the implication of capital R&D expenditures and 
other nancial motivators provided by the Indian government. 
There are approximately 34 foreign drug companies engaged in the Indian pharmaceutical market and among them are 15 
of the world’s 20 largest pharmaceutical companies. “Although MNCs have not launched new products they have invested in 
new production facilities, R&D centers and many are engaged in contract manufacturing, clinical trials and other forms of 
outsourcing.”  FICCI
Mergers, acquisitions, and other alliances
The last 3 years have seen a substantial rise in the number of integrations, mergers, acquisitions, and other form of link ups 
in the Indian pharmaceutical industry. Most of the acquisitions postulate Indian companies are looking for paths to sync with 
international markets, extend their global footmarks, broaden and expand their product portfolios, o er their customers a 
‘near shore-o shore’ option, improve their custom manufacturing, packing, R&D capabilities, acquire subsisting brands, and 
bring in access to the highly regulated markets. 
Contract research and manufacturing, outsourcing, and other services
CRAMS (Contract Research and Manufacturing Services) can be divided into 3 basic segments: the production of 
intermediates, active pharmaceutical ingredients for new chemical entities and the manufacture of generic drugs. India has 
emerged as one of the world’s leading CRAMS providers for MNC innovator companies and now accounts for 6 to 7 % of the 
global market. Many expect India will command at least 15 percent of the market.
The passage of the Patents (Amendment) Act 2005 has signi cant implications for both Indian and multinational companies 
competing in the Indian market. 
     
Leading Indian companies are now gradually moving away from the generic production to the development of new drugs, 
exports to regulated markets and cooperative agreements with global MNC's. 
Confronting lagging sales of patented drugs by MNC's in their home markets, declining R&D revenues and rising costs, many 
MNC's have turned to contract manufacturing, research services (CRAMS), co-marketing alliances, outsourcing of research 
and clinical trials to reduce costs, increase development capacity and trim the ‘time to market’ for new drugs. 
These strategies permit MNC's to focus on their core pro t making activities, such as drug discoveries and marketing, rather 
than on manufacturing. India has emerged as the principal destination for global pharmaceutical companies across the 
pharmaceutical value chain.
Although CRAMS is still in its nascent stages in India, it represents a signi cant opportunity for medium-sized Indian 

Contract outsourcing
International pharmaceutical companies are now outsourcing a wide range of activities 
including: the manufacture of Active Pharmaceutical Ingredients (API), chemical 
intermediates, formulations, clinical research, clinical testing, packaging and labeling. 
The Indian market for contract outsourcing has been driven by the need of leading 
MNC pharmaceutical companies to reduce production costs and increase revenues. 
These companies have shifted portions of the production, research & development, 
clinical trials, packaging, labeling, stability testing, other types of drug development 
and discovery activities to India.
Conclusion
The pharmaceutical business in the world trade environment will have to be competitive. The major focus should be on 
research, drug design and development. The industry, authorities and institutions must understand the challenges and 
market needs to develop workforce with competent, managerial and entrepreneurial talent.
Pharmaceutical industry players will need to take risk and fortify their organization by focusing on to bring in talents and 
skills from outside the industry than with traditional approaches focused on developing talent from internal departments 
to focus more on to achieve industry goals.
Innovation, not original research alone, is the order of the day. 
MNC's will make an aggressive bid for the Indian market, as India moves towards TRIPS, and international companies 
register their new drugs for patenting after 10 years. 
Smaller companies, which had so far bene ted from the protective regime, may be forced to become contracting 
units, or close shop. 
Generics will have a huge demand. 
Increasing R&D costs will lead to more consolidation for international companies. Within 5 years, the top 10 pharma 
companies will control over 60% of the world market. 
International companies could set up their own R&D labs in India and develop drugs for tropical diseases. 
Innovations in R&D process such as genomics and combinatorial chemistry. 
Indian pharma companies are expected to move up the value chain from merely being reverse engineers to 
developers of proprietary products in the US market. 
Implementing New Technologies to Address Key Issues.
Combating the growth of counterfeit drugs.
Handling "reverse logistics" where shipments are sent back to the manufacturer either due to incorrect items being 
issued or simply being out of date. 
Improving the overall e ciency of receiving goods, ensuring that the right products have been delivered. 
Future Trends
“ e Indian Pharmaceutical 
 Industry employs 
over 4.2 million personnel, 
 both in manufacturing and 
allied sectors.”


source:- www.harneedi.com