The Indian market for drugmakers has really taken off, thanks to the country’s growing economy and population and increasing demand for Western medicines. In fact, market research firm AIOCD Pharmasofttech AWACS says that the Indian pharmaceutical market grew 18.9% in February — its highest growth in 19 months.
This figure includes both domestic and multinational manufacturers: India has a thriving domestic industry with expertise in generics, vaccines, and contract manufacturing, while several Western companies are making inroads in the market with Indian production centers and partnerships. With those factors in place, industry experts predict that the Indian pharmaceutical market could hit $85 billion by 2020.
Dominant Player in Exports Market
India is one of the largest exporters of pharma products to the US and Europe, and it boasts the highest number of FDA-approved US facilities abroad (an indication of the high quality of the industry’s standards). With its advanced chemistry capabilities and low-cost manufacturing, India is positioned to develop more products, whether for its own domestic market or for the multinationals that have been scrambling to get involved in the rush.
The nation also stands poised to take advantage of opportunity in generics, as some $70 billion worth of medications are headed towards US patent expiration within three years. Generics make up more than 70% of India’s pharmaceutical revenues, and the country currently produces more than 20% of the world’s generics.
Rethinking Your Growth Strategy
However, accounting firm PricewaterhouseCoopers asserts that in order to best take advantage of the boom, pharmaceutical firms must rethink their growth strategies. It says that they “will have to adopt new business models and think of innovative ideas to service their evolving customers faster and better.” Changing regulations will need to be taken into consideration. Companies will also need to focus on improving operational efficiency and productivity.
India’s Sun Pharmaceuticals is indeed doing just that. It acquired fellow Indian pharma firm Ranbaxy Laboratories last month, creating the world’s fifth-largest specialty generic pharmaceutical company. The combined company will benefit from an expansion of research and development capabilities, a broader global presence, and an enhanced product portfolio, allowing it to focus on sustainable growth.
Other Industry Factors
One factor to be considered is India’s 2013 Drug Price Control Order (DPCO), which placed a ceiling on the price of hundreds of essential medicines, or roughly a third of the market. The DPCO serves to benefit patients with cheaper treatments but puts profit pressures on pharmaceutical manufacturers. The 2013 ruling also was the first to place pricing restrictions on multinational companies working in India. Furthermore, certain aspects of the ruling provide an advantage to domestic manufacturers. For example, it includes a five-year exemption from price ceilings for any drug that has been discovered and developed within India.
In what some are calling a major win for public health, and others are calling a major loss for Big Pharma, an Indian court last month rejected a bid from Bayer to block an Indian drugmaker from marketing a generic version of its cancer treatment Nexevar. That treatment, which costs more than $5,000 per month to take, is being challenged by Natco Pharma’s generic, which costs consumers 97% less. With India’s leading position in the drug market, the ruling could have a large impact on the pharmaceutical industry.
Despite these challenges, India has become the hot market for the pharmaceutical and biopharmaceutical industries. The country’s growing middle class, its aging population along with its accompanying need for more medications, and its strong higher-education system that produces hordes of available scientists for R&D are all contributing factors to the trend, which bodes well for those seeking to enter the fray.