A Study On The Pharmaceutical Industry in India
A Study On The Pharmaceutical Industry in India
A Study On The Pharmaceutical Industry in India
By: Group-1 Basavraj Masuti Bhupesh Dasgupta Niket Kumar Soni Nikita Aggarwal Robin Rathi Shweta Punj
INTRODUCTION
OVERVIEW
Pharmaceutical Industry is worlds largest industry estimated at about 773$billion. India ranks third in terms of manufacturing pharmaceutical products by volume. A high technology and knowledge-intensive industry. Characterized by a highly risky and lengthy R&D process. For the year 2008-2009 the total turnover of Indian pharmaceutical industry was US$21.04 billon For the year 2008-2009 the total domestic market worth was US$12.26 billion For the year 2008-2009 the total exports were US$ 8.7 billon The Indian Pharmaceutical Industry stands 3rd in the world in terms of volume and 14th in terms of value. Industry has over 60,000 generic brands across 60 therapeutic categories and manufactures more than 500 different active pharmaceutical ingredients (APIs).
Pharmaceuticals-Gelatine Capsules
Natural Capsules Medi Caps Sunil Healthcare Lupin Jubilant life Orchid Chemicals Dr. Reddys Lab Cipla Ranbaxy Labs
Intas Pharma Alkem lab Aditya Medisales Arvind Remedies Ajanta Pharm Ankur Drugs Parenteral Drugs Venus Remedies Ahlcon Parent(I) Abbott India Glaxosmit Pharma Aventis Pharma
The Indian pharmaceutical market is expected to grow at a CAGR of 14.5% between 2009 and 2019, from $17.1billion to $66.3 billion, respectively.
Contd
To study marketing initiatives taken by Indian Pharmaceutical Companies. To foresee future outlook of Indian Pharmaceutical Industry. To study Indian Pharmaceutical Industry in comparison to other countries (USA, Germany, China etc).
INDUSTRY ANALYSIS
It is seen that Piramal has the largest share (6.2 per cent) with revenue of USD 717 million during F Y10. During F Y10, Lupin posted the highest growth in revenue among the major players. Ranbaxy, with a revenue base of USD524 million. The top four firms account for just over one-fifth of the market share.
NATURE OF COMPETITION
The Indian pharmaceutical market is highly competitive and remains dominated by low-priced, domestically-produced generics. There is huge competition based on the price of the product resulting in shrinking profit margins The market is divided among the top 10 pharma companies accounting for 36.1% of the overall R&H sales The domestic market is very competitive with a large number of players and is characterized by several market segments
Barriers to entry: Pharma industry is one of the most easily accessible industries as the capital requirement for the industry is very low, creating a regional distribution network is easy, since the point of sales is restricted in this industry in India. The patent regime has raised the barriers to entry.
CONTD
Threat of substitutes: This is one of the great advantages of the pharma industry as demand for pharma products continues and industry thrives independent of whatever happens. However, in recent times, the advances made in the field of biotechnology, can prove to be a threat to the synthetic pharma industry.
CONCENTRATION RATIO
It is measured by Herfindahl-Hirschman Index. India's Domestic Pharmaceutical Market (12 Months Ended January 2009)
Company Total Pharma Market Cipla Ranbaxy GlaxoSmithkline Piramal Healthcare ZydusCadila Size ($ Billion) 6.9 .36 .34 .29 .27 .24 Market Share (%) 100.0 5.3 5.0 4.3 3.9 3.6 Growth Rate (%) 9.9 13.4 11.5 -1.2 11.7 6.8
The HHI is expressed as: HHI = s1^2 + s2^2 + s3^2 + ... + sn^2 (where sn is the market share of the ith firm). A Herfindahl Index with a result of less than 1,000 to be a competitive marketplace; a result of 1,000-1,800 to be a moderately concentrated marketplace; and a result of 1,800 or greater to be a highly concentrated marketplace. HII for pharmaceutical industry = 5.3^2 + 5^2 + 4.3^2 + 3.9^2 + 3.6^2 = 99.72 HII is very less than 1000 which indicates it to be a low concentrated market place.
TYPES OF DRUGS
Consumer or prescription products Institutional market products Industrial market products OTC (Over the counter) or non-prescription products
PEST ANALYSIS
The main regulatory body in India is CDSCO 100% FDI regime in pharmaceutical sector IPR regime, popularly known as the patent act was brought into action in January 2005 Govt. decided to impose excise duty on the maximum retail price of all drugs The price in India is controlled by National Pharmaceutical Pricing Authority (NPPA) Indian pharma market slowed down to 13.5% in 2011 Reasons for slowdown a.) rise in interest rate b.) home loans and EMIs are going up, salary growth has slowed down as a result disposable income has also got impacted.
Political
Economic
As a result of huge population the demand for healthcare product in India is very high. Healthcare infrastructure is poor, the quality and availability of medicines in rural area is dubious Healthcare is a low priority when it comes to income allocation, with average consumer expenditure on healthcare at just 7%.
Social
Technologi cal
Pharmaceutical companies are using IT across various functional areas like R&D, QC, QA, clinical development etc. A number of software solutions are commonly used in the pharmaceutical industry Some of the software's are ERP, LIMS, SFA, CRM etc.
INTERNATIONAL EXPOSURE
Ranbaxy has an expanding international portfolio of affiliates, joint ventures and representative offices across the globe The Indian government has encouraged private and public sectors as well as foreign investors to increase investments in pharmaceutical industry
MARKETING INITIATIVES
Marketing is done through different ways like : Direct Marketing B2B Marketing Companies are using different method for promotion like television, hoarding, and free sampling and distributor sales representatives for spreading awareness among the consumers Marketing is mostly done in electronic media and print media which are effective tool for marketing for mass
FUTURE OUTLOOK
Indian people are becoming more careful regarding their health Healthcare grew from 4 percent of average household in 1995 to 7 percent in 2005 and is expected to grow by 13 percent by 2015 Indian Pharmaceuticals market growth will be well distributed between rural and urban centers By 2015 India is projected to be the 10th largest market just behind U.S, Japan, France ,Germany, China, Spain, Italy, Canada, Currently it Ranks 14th
CONCLUSION
India is in process of becoming major pharmaceutical location. The main drivers of growth are growing population which is around 1.5 billion and may overtake Chinese population by 2025,and also the growing number of older people with markedly higher demand for medicine Cheap skilled workforce, attractiveness towards industry and a steady demand in the market will help India take a respectable position in the global pharmacy market. Pharmaceutical industry is reorienting itself and focused on self developed medicine and/or contract research and production for western drugs company