Pharmaceuticals Industry in India – Business Opportunities & Advantages

The Indian pharmaceutical industry holds a prominent global position, covering diverse segments such as generic drugs, vaccines, and biologics. India is a major supplier of low-cost vaccines worldwide, producing a significant portion of WHO's demand for crucial vaccines like DPT, BCG, and measles vaccines. With over 3,000 pharmaceutical companies and 10,500+ manufacturing facilities, India is the largest provider of generic medicines globally and a leader in vaccine manufacturing. The industry benefits from 100% Foreign Direct Investment, making it a key player in affordable HIV treatment globally. India also excels in the biotechnology sector and is expected to contribute significantly to the global pharmaceutical market, which is set to surpass USD 1 trillion in 2023. The country's healthcare sector is rapidly growing, anticipated to reach USD 50 billion by 2025, with pharmaceuticals playing a vital role. India is poised to become a substantial player in the medical device market, further enhancing its position in the global healthcare industry. The Indian pharmaceutical industry's exports, valued at around USD 50 billion, include a substantial portion from generic drug exports, reinforcing its status as a leading global vaccine producer and exporter of generic medicines.

Market Snapshot

The Indian pharmaceutical industry is rapidly expanding, projected to reach USD 65 billion by 2024 and USD 130 billion by 2030. India serves as a key global exporter, supplying medicines to over 200 countries and meeting significant portions of Africa's generic medicine needs and global vaccine demand. With essential vaccines like DPT, BCG, and Measles, India fulfils 70% of WHO's vaccine requirements. The industry covers various segments and holds the third-largest global pharmaceutical producer position by volume. India is a major player in the Active Pharmaceutical Ingredient market, contributing 8% globally and manufacturing over 500 APIs. Additionally, India's medical device sector, valued at USD 11 billion, contributes 1.5% to the global market. This growth, coupled with its ability to meet urgent healthcare demands like supplying hydroxychloroquine, emphasizes India's pivotal role in the global pharmaceutical and healthcare landscape.

Industry Segmentation

• Active Pharmaceutical Ingredients (APIs): APIs are crucial components in pharmaceuticals, constituting 35% of the industry. India is the third-largest global API producer, manufacturing over 500 different APIs and contributing 57% to WHO's prequalified list.
• Biosimilars: India's biosimilars market is set to grow significantly with an estimated CAGR of 22%, reaching USD 12 billion by 2025. This growth suggests biosimilars will constitute nearly 20% of India's pharmaceutical market.
• Contract Research and Manufacturing Services (CRAMS): The pharmaceutical and biotechnology sector is rapidly adopting CRAMS, utilizing services from Contract Research Organizations (CROs) and Contract Manufacturing Organizations (CMOs) for outsourcing needs.
• Formulations: India leads in pharmaceutical formulation exports with a 14% market share by volume and is expected to experience double-digit growth in the coming years. Additionally, the pharmaceutical packaging market in India is projected to grow at a CAGR of 7.54%, reaching USD 3,027.14 million by 2030.

Growth Drivers

India's pharmaceutical industry is thriving, supported by government incentives, including substantial funding for PLI schemes and the establishment of bulk drug parks to ensure a consistent supply of active components. The country's reputation as a global healthcare hub is strengthened by its success in medical tourism, offering high-quality healthcare services at competitive costs. India boasts a robust infrastructure with a high number of US-FDA compliant pharmaceutical plants, signifying its commitment to international quality standards. The industry's expertise in producing low-cost generic patented drugs and providing end-to-end manufacturing solutions positions India as a global pharmaceutical leader. Furthermore, a strong domestic demand, coupled with the world's largest National Health Protection Scheme, stimulates industry growth, innovation, and investment in research and development, solidifying India's status as a pharmaceutical powerhouse.

Supply Side Drivers

India plays a pivotal role in the global generics market, holding the second-highest number of US FDA approved plants outside the US and fulfilling 20% of the world's demand for generic drugs. The country is witnessing a shift with the launch of patented drugs due to the implementation of product patents and rising lifestyle diseases, along with the potential expiry of around 120 patents, indicating a substantial market growth. Furthermore, India is introducing over-the-counter drugs, including widely used medications, without prescriptions, reflecting regulatory changes. The nation's medical infrastructure is also evolving, drawing investments from private players and focusing on rural markets and medical device industry advancements, positioning India as a significant player in the international pharmaceutical landscape.

Demand Side Drivers

India's pharmaceutical landscape is undergoing significant transformations driven by various factors. The government's Pradhan Mantri Bhartiya Janaushadi Kendras initiative, with 9,442 centers nationwide, aims to provide free generic medicines to over 650 million people, enhancing accessibility. Increasing education levels are boosting acceptance of pharmaceuticals, leading to a growing over-the-counter market and acceptance of biologics and preventive medicines. The country's medical infrastructure is set to expand with a planned investment of over USD 200 billion, including the addition of more than 160,000 hospital beds annually over the next decade. Additionally, epidemiological factors indicate a 20% increase in the patient pool by 2030 due to population growth and lifestyle-related conditions, further driving demand. India's position as a global leader in generic drug exports, contributing to 20% of the global volume, underscores its pivotal role in the international pharmaceutical arena.

Growth in Pharmaceuticals Exports

India's pharmaceutical industry has achieved global recognition for its production of generic medicines and low-cost vaccines, ranking third in global pharmaceutical production by volume. Indian pharmaceutical products are exported to over 200 countries, notably the United States. Despite challenges like global disruptions and decreased COVID-related medicine demand, India's pharmaceutical exports exhibited resilience, growing steadily. The medical devices sector in India is set for substantial growth, expected to rise from USD 11 billion to USD 50 billion. India's vaccine industry demonstrated remarkable capabilities, developing indigenous COVID vaccines in collaboration with institutions like ICMR and NIV, supplying 115 million doses to over 97 countries. Notably, the industry experienced a 138% increase in exports during April-October 2022-23, highlighting India's enduring manufacturing prowess and its crucial role in the global pharmaceutical landscape.

Recent Industry Trends

India's pharmaceutical industry is a global leader in several key areas. It serves as a major global generics supplier, accounting for 20% of the world's supply by volume, and excels in biosimilars and biologics with a remarkable CAGR of 22%. India is a powerhouse in the vaccine market, supplying over 150 countries, and its Contract Research and Manufacturing Services (CRAMS) sector is one of the fastest-growing segments. The country's rapidly expanding healthcare industry, marked by increased affordability, is making healthcare more accessible to a broader population. India is also actively fostering partnerships and investments, notably with Japanese and UK-based companies, contributing to global healthcare stability. Moreover, Indian pharmaceutical companies are introducing innovative products to the market, further strengthening the nation's position in the global pharmaceutical landscape. India's significant role in the global pharmaceutical market is underscored by its robust exports, which constituted 6.47% of total exports in March 2023, reflecting its stature as a major industry exporter.

Strategies for Growth

• M&A in Biotech
• Cost Leadership
• Focus on New Markets
• Differentiation

Government Support and Policies

• Ayushman Bharat Digital Mission (ABDM): ABDM enables citizens to create digital health records, successfully piloted in six Union Territories, with over 394 million Ayushman Bharat Health Accounts created, integrating 774 partner solutions.
• Strengthening of Pharmaceuticals Industry (SPI): The SPI scheme, with a USD 60.9 million outlay, supports existing pharmaceutical clusters and MSMEs, aiming to enhance productivity, quality standards, and sustainability.
• Scheme for Development of Pharma Industry: This umbrella scheme includes sub-schemes supporting Bulk Drug and Medical Device Industries, Pharmaceutical Industry Assistance, Promotion and Development, and Technology Upgradation.
• Production-Linked Incentive (PLI) Scheme: A USD 2.04 billion initiative incentivizing domestic production of key pharmaceutical components, emphasizing self-sufficiency and growth.
• Promotion of Medical Devices Park: Aiming for global leadership, this initiative establishes world-class infrastructure, providing standardized testing facilities, reducing production costs, and enhancing availability and affordability of medical devices.
• Union Budget 2023-24 Initiatives: Introducing a mission to eradicate sickle cell anemia by 2047, supporting ICMR labs, promoting pharmaceutical research and innovation, establishing nursing colleges, and encouraging public-private R&D collaborations.
• National Commission for Homoeopathy Bill: Enacted to enhance transparency within the homoeopathy sector, promoting accountability and regulation.
• Biotechnology-based Programme for Women: A program focused on empowering women through employment opportunities, skill development, awareness campaigns, and health enhancements, leveraging biotechnology.
• Biotechnology Industry Research Assistance Council (BIRAC): Founded to boost research and innovation in India's biotech sector, offering financial support for technology and product development, particularly under the Small Business Innovation Research Initiative (SBIRI) scheme.
• National Biopharma Mission: An Industry-Academia collaboration aimed at accelerating biopharmaceutical development in India, promoting research and innovation in this sector.

Foreign Direct Investment

India's pharmaceutical sector has witnessed significant changes in its foreign direct investment (FDI) policy, distinguishing between Greenfield and Brownfield investments. While Greenfield investments, involving the introduction of new products, enjoy up to 100% FDI through the automatic route, Brownfield investments, in established entities, allow up to 74% FDI through automatic route, with government approval needed for investments beyond this threshold. Amid the ongoing Covid-19 crisis, discussions are underway to potentially bring Brownfield FDI in pharmaceuticals under the 100% automatic route, with the government implementing safeguards to address concerns. The industry has attracted substantial foreign investment, with a cumulative FDI equity inflow of USD 21.22 billion, constituting 3% of total FDI inflow. Notably, the sector experienced a remarkable 200% increase in FDI in the fiscal year 2020-21 and sustained robust growth in subsequent years, reflecting its adaptability to the changing global landscape and ability to address crucial healthcare challenges.

Opportunities

India's pharmaceutical industry is undergoing dynamic shifts in various sectors. Companies are strategically targeting the rural market, where 70% of the population resides, investing significantly in expanding distribution networks to meet the growing demand for generic medicines. India's prominence in the global clinical trials market is evident, driven by its genetically diverse population and skilled doctors, attracting substantial investments. Initiatives like AstraZeneca India's CDI division and Akston Biosciences' clinical trials for COVID-19 vaccines underscore India's significance in global clinical research. Additionally, Contract Research and Manufacturing Services (CRAMS) are rapidly growing, with pharmaceutical companies outsourcing to Contract Research Organizations (CROs) and Contract Manufacturing Organizations (CMOs). Moreover, the increasing population and rising income levels are expected to boost the demand for high-end drugs, creating opportunities for domestic production in India's pharmaceutical landscape.

Key Industry Players

• Sun Pharmaceutical Industries Ltd.
• Cipla Ltd.
• Dr. Reddy's Laboratories Ltd.
• Torrent Pharmaceuticals Ltd.
• Zydus Lifesciences Ltd.
• Biocon Ltd.

Regulatory Framework

India's pharmaceutical industry operates within a stringent regulatory framework overseen by the Central Drugs Standard Control Organization (CDSCO) under the Ministry of Health and Family Welfare. The CDSCO approves new drugs and clinical trials, ensuring compliance with regulatory standards. New drugs require approval from the Drug Controller General of India (DCGI) after ethical clinical trials approved by Institutional Ethics Committees. Generic drugs are approved through Abbreviated New Drug Applications (ANDA) demonstrating bioequivalence. The industry adheres to Good Manufacturing Practices outlined in Schedule M. India's patent law covers both process and product patents, with provisions for compulsory licensing to ensure essential medicine availability. Trademarks and copyrights also apply. Drug prices are regulated by the National Pharmaceutical Pricing Authority (NPPA) through Drug Price Control Orders (DPCO) under the Essential Commodities Act. Ethical guidelines for clinical trials are provided by Ethics Committees and the Indian Council of Medical Research (ICMR). Pharmacovigilance is monitored by the Pharmacovigilance Program of India (PvPI), evaluating adverse drug reactions. Import and export are regulated by the Directorate General of Foreign Trade (DGFT).

Conclusion

The Indian pharmaceutical industry presents lucrative prospects for newcomers due to its robust regulatory framework, skilled workforce, diverse product range, and cost-effective manufacturing capabilities. India is a global leader in generic drug production, supported by government initiatives like the PLI Scheme and research support. The country's vast domestic market, growing middle class, and increasing healthcare awareness fuel industry growth. Despite challenges such as competition and regulatory compliance, strategic partnerships, innovation, and a focus on quality are crucial for success. With the right approach, businesses can establish a strong presence and contribute significantly to India's healthcare landscape, ensuring long-term success and growth.


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