India Brand Equity Foundation (IBEF) Release: India Pharma Industry Trends and Overview
9/24/2013 10:23:06 AM
24 September, 2013, New Delhi: The India Brand Equity Foundation (IBEF) has released an overview of the current trends in the Indian pharmaceutical market. The domestic pharmaceutical industry in India has been growing at a compounded annual growth rate (CAGR) of over 14.5 per cent  for the past four years while pharma exports have grown at CAGR of 17 per cent during last 3 years with exports reaching $14.5 bn during the year 2012-13.
Indian pharma companies are constantly innovating and adopting international standards to stay relevant in the competitive global market. In fact, Indian pharma companies are known for their strict regulatory compliance with international market norms. It is, therefore, not surprising that the Indian pharma sector received close to 40 per cent  of all Abbreviated New Drug Approvals (ANDA) approvals from the US Food and Drug Administration (FDA) during January-July 2013. At the same time, Indian pharma companies are making high investments to ensure absorption of modern procedures and practices for operational efficiency. The two trends, viz, a growing focus on research and development (R&D) coupled with fast paced growth in health information technology (HIT) – are emerging as critical drivers of the Indian pharmaceutical industry.
Rise of R&D Investments in India
Investments in R&D in India have grown from Rs 347 crore  (US$ 52.5 million) in 2000 to Rs 4,276 crore  (US$ 646.5 million) in 2010. Of this, nearly 80 per cent or Rs 3,342 crore  (US$ 505 million) is accounted for by the domestic companies while the remaining 20 per cent or Rs 934 crore  (US$ 141.5 million) comes from foreign companies. The leading R&D spenders amongst the Indian pharma companies in 2012-13 have been Lupin Pharma (US$120 million), Dr Reddy’s Laboratories (US$120 million) and Cipla (US$67 million). Notable as well is the fact that the Government of India is providing incentives in terms of tax breaks to make the Indian pharma industry an end-to-end solution provider.
At the same time, the emergence of Contract Research Organisations (CROs) in India is a result of a wave of pharma outsourcing to the Indian market. Revenues of Indian CROs have risen to US$ 1.2 billion  in 2010 from US$ 22 million  in 2002, which represents a CAGR of 62 per cent  over an eight year period. It is important to note that clinical development, discovery and non-clinical services costs account for 85 per cent of R&D budget, which can be reduced by leveraging CROs. Besides the cost advantage, multinational pharmaceutical companies benefit from staying closer to schedule. It also contributes to their abilities to expand speed and capacity of R&D operations while maintaining high levels of quality resulting in a much required boost in R&D productivity. Additionally, India with a large population of doctors and scientists and representing the largest English speaking talent pool in some disciplines, attracts global pharma companies for contract research works.
“India has taken strong initiatives to develop bioclusters based on intrinsic academic and entrepreneurial strengths. The clusters are equipped with many facilities such as biotech parks, biotech policies, fiscal incentives like tax holidays, capital subsidies and energy concessions, centre of biotech excellence, specific biotech development funds and incubator facilities,” said Mr Rajeev Kher, Additional Secretary, Department of Commerce, Ministry of Commerce and Industry, Government of India. A growing numbers of Indian firms are moving to biologics, including biosimilars and biobetters, where injectable therapies predominate due to the greater difficulty of formulating these drugs for oral administration. Indian companies with this pre-existing specialist knowledge are well placed to develop value added products using the pulmonary route to deliver systemic drugs.
India Takes Lead in Health IT
Currently, Indian players are offering a broad portfolio of data management services pertaining to health records, health information services and clinical database management. Rapidly evolving technology is addressing the pharmaceutical industry’s need to manage cost pressures and shorten the time for drug approval. Strategies to make processes leaner are being revisited, bringing in approaches such as risk-based monitoring and the use of Electronic Health Records (EHRs).
Many indigenous IT based companies have enriched their portfolio by providing client based healthcare solutions. Some of the noteworthy names are Tata Consultancy Services, Infosys, Wipro and HCL Technologies. It is well known that almost all leading IT MNCs are present today in the country driven by India’s vast talent pool and abundance of expertise in the IT and IteS sector.
Indian companies are geared to serve global needs for Health IT. Indian tech giants are also enhancing their technical capabilities in healthcare by making niche acquisitions globally. The acquisition of the US based Landacorp by the backoffice processing firm, EXL Services’, in October 2012 and Cognizant  Technology Solutions’ acquisition of MediCall in December 2012 are noteworthy in recent times. Playing its part to jettison growth in the sector, the Government of India is presently working on a ‘trace and track’ mechanism to enable sustained monitoring of the supply chain at all three levels, namely, tertiary, secondary and primary. “The trace and track technology mechanism has already been implemented at the tertiary and secondary level. Primary level packaging implementation is expected to be in place by mid next year,” said Dr Appaji P V, Director General, Pharmexcil (Pharma Export Promotion Council of India).
Healthcare providers in India are expected to spend Rs 5,700 crore  (US$ 863.5 million) on IT products and services in 2013.Enhanced usage and application of modern IT services by the Indian pharma companies has improved access to quality healthcare for the rural population. Technology is being harnessed to access remote areas in the country in the healthcare space. For instance, mobiles are being increasingly used to beep important health messages across India- reminders to get children inoculated and for pregnant women to get their check ups done on time. One such initiative - the Women Mobile Lifeline Channel application designed by ZMQ Development - is being used by NGOs in villages to empower women.
Growing R & D investments along with the IT related initiative stand to transform the Indian Pharma market to increasingly provide credible, affordable and quality pharma solutions to the global pharma industry.
1. McKinsey India Pharma 2020 Propelling access and acceptance, realising true potential – Page 20, para 2
2. A report by Centrum Broking covered in Economic Times – Page 1, para 1
3. Department of Pharmaceuticals, Annual Report 2011-12 – Page 19, table 14
4. Department of Pharmaceuticals, Annual Report 2011-12 – Page 19, table 14
5. Department of Pharmaceuticals, Annual Report 2011-12 – Page 19, table 14
6. Department of Pharmaceuticals, Annual Report 2011-12 – Page 19, table 14
7. Lupin Annual Report 2012-13 – Page 7, Business critical investments, Table 1
8. Dr Reddy’s Annual Report 2012-13 – Page 39, col 2, para 1
9. Cipla Annual Report 2012-13 – Page 29, point 4
10. Tata Strategic Management Group report titled Contract Research – Deriving Strategic Value from Emerging markets – Page 3, figure 6
11. Tata Strategic Management Group report titled Contract Research – Deriving Strategic Value from Emerging markets – Page 3, figure 6
12. Tata Strategic Management Group report titled Contract Research – Deriving Strategic Value from Emerging markets – Page 3, figure 6
13. An article in Economic Times – Page 1, para 3 and 4
14. A report by Gartner covered in Hindu BusinessLine – Page 1, para 1
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