Pharmaceutical industry in India
The pharmaceutical industry in India is the world's third-largest in terms of volume. According to the Department of Pharmaceuticals of the Indian Ministry of Chemicals and Fertilizers, the total turnover of India's pharmaceuticals industry between 2008 and September 2009 was US$21.04 billion. The domestic market was worth US$12.26 billion. The industry has a market share of $14 billion in the United States.
According to the India Brand Equity Foundation, the Indian pharmaceutical market is likely to grow at a compound annual growth rate (CAGR) of 14-17 per cent in between 2012-16. India is now among the top five pharmaceutical emerging markets of the world.
Exports of pharmaceutical products from India increased from US$6.23 billion in 2006–07 to $10.1bn in 2013(according to ibef india) a combined annual growth rate of 21.25%. According to PricewaterhouseCoopers (PWC) in 2010, India joined the top 10 global pharmaceutical markets in 2020 with turnovers reaching US$50 billion.
The government began encouraging the growth of drug manufacturing by Indian companies in the early 1960s, and with the Patents Act in 1970. This patent act removed composition patents from foods and drugs, and though it kept process patents, these were shortened to a period of five to seven years.
The lack of patent protection made the Indian market undesirable to the multinational companies that had dominated the market and as they left, Indian companies carved a niche in both the Indian and world markets by reverse-engineering new processes for manufacturing low-cost drugs. Although some of the larger companies have taken baby steps towards drug innovation, the industry as a whole has not changed its business model.
In 2009-10, India's biopharmaceutical industry grew at 17 percent, with revenues of Rs. 137 billion ($3 billion). Bio-pharma was the biggest contributor, generating 60 percent of the industry's growth at Rs. 88.29 billion, followed by bio-services at Rs. 26.39 billion and bio-agri at Rs. 19.36 billion.
In 2013, there were 4,655 pharmaceutical manufacturing plants in India, employing over 345 thousand workers.
The number of purely Indian pharma companies is less. Foreign companies dominate and control the Indian pharma industry. These have subsidiaries in India for its cheap labor. In 2002, over 20,000 registered drug manufacturers in India sold $9 billion worth of formulations and bulk drugs. 85% of these formulations were sold in India while more than 60% of the bulk drugs were exported, mostly to the United States and Russia. Most of the players in the market are small-to-medium enterprises; 250 of the largest companies control 70% of the Indian market. Thanks to the 1970 Patent Act, multinationals represent only 35% of the market, down from 70% thirty years ago.
Most pharmaceutical companies operating in India, even the multinationals, employ Indians almost exclusively from the lowest ranks to high level management. Homegrown pharmaceuticals, like many other businesses in India, are often a mix of public and private enterprise.
In terms of the global market, India currently holds a modest 1–2% share, but it has been growing at approximately 10% per year. India gained its foothold on the global scene with its innovative generic drugs and active pharmaceutical ingredients (API).
As it expands its core business, the industry is being forced to adapt its business model to recent changes in the operating environment. The first and most significant change was the 1 January 2005 enactment of an amendment to India’s patent law that reinstated product patents for the first time since 1972. The legislation took effect on the deadline set by the WTO’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, which mandated patent protection on both products and processes for a period of 20 years. Under this new law, India will be forced to recognise not only new patents but also any patents filed after 1 January 1995, subject to Section 3(d) of the Indian Patent Act,1970. Indian companies achieved their status in the domestic market by breaking these product patents, and it is estimated that within the next few years, they will lose $650 million of the local generics market to patent-holders.
In the domestic market, this new patent legislation has resulted in segmentation. The multinationals narrowed their focus to 12% of high-end patients using the new patent protection. Meanwhile, Indian firms have taken their existing product portfolios to semi-urban and rural populations.
Even after the increased investment, market leaders such as Sun Pharma and Dr. Reddy’s Laboratories spent only 5–10% of their revenues on R&D, lagging behind Western pharmaceuticals like Pfizer, whose research budget last year was greater than the combined revenues of the entire Indian pharmaceutical industry. This disparity is too great to be explained by cost differentials, and it comes when advances in genomics have made research equipment more expensive than ever. The drug discovery process is further hindered by a dearth of qualified molecular biologists. Due to the disconnect between curriculum and industry, pharma in India have so far lacked the academic collaboration that is crucial to drug development in the West.
Pharmaceuticals and biotechnology
Unlike in other countries, the difference between biotechnology and pharmaceuticals remains well-defined in India. Bio-tech there still plays the role of pharma’s little sister, but many outsiders have high expectations for the future. India accounted for 2% of the $41 billion global biotech market and in 2003 was ranked 3rd in the Asia-Pacific region and 11th in the world in number of biotech. In 2004-5, the Indian biotech industry saw its revenues grow 37% to $1.1 billion. 75% of 2004–5 revenues came from bio-pharmaceuticals, which saw 30% growth last year. Of the revenues from bio-pharmaceuticals, vaccines led the way, comprising 47% of sales. Biologics and large-molecule drugs tend to be more expensive than small-molecule drugs, and India hopes to sweep the market in bio-generics and contract manufacturing as drugs go off patent and Indian companies upgrade their manufacturing capabilities.
Most companies in the biotech sector are extremely small, with only two firms breaking 100 million dollars in revenues. At last count there were 265 firms registered in India, over 75% of which were incorporated in the last five years. The newness of the companies explains the industry’s high consolidation in both physical and financial terms. Almost 50% of all biotech are in or around Bangalore, and the top ten companies captured 47% of the market. The top five companies were homegrown; Indian firms account for 62% of the bio-pharma sector and 52% of the industry as a whole.[4,46] The Association of Biotechnology-Led Enterprises (ABLE) is aiming to grow the industry to $5 billion in revenues generated by 1 million employees by 2009, and data from the Confederation of Indian Industry (CII) seem to suggest that it is possible.
Comparison with the US
The Indian biotech sector parallels that of the US in many ways. Both are filled with small start-ups, while the majority of the market is controlled by a few powerful companies. Both depend upon government grants and venture capitalists for funding because neither will be commercially viable for years. Pharmaceutical companies in both countries recognise the potential effect that biotechnology could have on their pipelines and have responded by either investing in existing start-ups or venturing into the field. In both India and the US, as well as in much of the globe, biotech is seen as a hot field with a lot of growth potential.
Biotechnology industry and the IT industry
Many analysts have observed that the hype around the biotech sector mirrors that of the IT sector.[who?][clarification needed] Biotech colleges have been popping up around the country eager to service the pools of students that want to take advantage of a growing industry. The International Finance Corporation, the private investment arm of the World Bank, called India the "centerpiece of IFC’s global biotech strategy."[this quote needs a citation] Of the $110 million invested in 14 biotech projects investment globally, the IFC has given $43 million to 4 projects in India. According to Dr. Manju Sharma, former director of the Department of Biotechnology, the biotech industry could become the "single largest sector for employment of skilled human resource in the years to come". British Prime Minister Tony Blair was similarly impressed, citing the success of India’s biotech industry as the reason for his own country’s own biotech opportunities.[this quote needs a citation] Malaysia is also looking to India as an example for growing its own biotech industry.
The Indian government has been very supportive. It established the Department of Biotechnology in 1986 under the Ministry of Science and Technology. Since then, there have been a number of dispensations offered by both the central government and various states to encourage the growth of the industry. India’s science minister launched a program that provides tax incentives and grants for biotech start-ups and firms seeking to expand and establishes the Biotechnology Parks Society of India to support ten biotech parks by 2010. Previously limited to rodents, animal testing was expanded to include large animals as part of the minister’s initiative. States have started to vie with one another for biotech business, and they are offering exemption from VAT and other fees, financial assistance with patents and subsidies on everything ranging from investment to land to utilities.
The government has also taken steps to encourage foreign investment in its biotech sector. An initiative passed earlier this year allowed 100% foreign direct investment without compulsory licensing from the government. In April, a delegation headed by Kapil Sibal, the minister of science and technology and ocean development, visited five cities in the US to encourage investment in India, with special emphasis on biotech. Just two months later, Sibal returned to the US to unveil India’s biotech growth strategy at the BIO2005 conference in Philadelphia.
The biotech sector faces some major challenges in its quest for growth. Chief among them is a lack of funding, particularly for firms that are just starting out. The most likely sources of funds are government grants and venture capital, which is a relatively young industry in India. Government grants are difficult to secure, and due to the expensive and uncertain nature of biotech research, venture capitalists are reluctant to invest in firms that have not yet developed a commercially viable product.
The government has addressed the problem of educated but unqualified candidates in its Draft National Biotech Development Strategy. This plan included a proposal to create a National Task Force that will work with the biotech industry to revise the curriculum for undergraduate and graduate study in life sciences and biotechnology. The government’s strategy also stated intentions to increase the number of PhD Fellowships awarded by the Department of Biotechnology to 200 per year. These human resources will be further leveraged with a "Bio-Edu-Grid" that will knit together the resources of the academic and scientific industrial communities, much as they are in the US.
- Pharmaceutical marketing
- Pharmaceutical industry
- National pharmaceuticals policy
- Opium and Alkaloid Works
- Contract Research Organization
- Genome Valley
- Pharmaceutical industry in Bangladesh
Notes and references
- "Pharma to topple IT as big paymaster". The Economic Times. 8 June 2010. Retrieved 8 June 2010.
- It’s ‘India Calling’ for global pharmaceutical companies, says a PricewaterhouseCoopers report
- US regulator on India visit calls for greater drug safety collaboration - Economic Times
- A BRIEF REPORT PHARMACEUTICAL INDUSTRY IN INDIA
- academic research
- "Indian biotech industry grew 17 percent in 2009–10: Survey". The Economic Times. 21 June 2010. Retrieved 21 June 2010.
- "AnythingResearch.in". India Pharmaceutical Market Research Report.
- "Pharmaceutical Drug Manufacturers"
- "Pharma News India". brandindiapharma.in.
- "Pharmaceuticals Market overview and trends"
- "Indian Pharmaceutical Industry Trends"
- "Understanding the WTO – Intellectual property: protection and enforcement". WTO. Retrieved 27 July 2010.
- "patent ever-greening". Indian Govt.