Leading pharma

producer

Indian pharmaceutical sector accounts for about 1.4 per cent of the global pharmaceutical
industry in value terms and 10 per cent in volume terms

Among fastest growing

industries

The countrys pharmaceutical industry is expected to expand at a CAGR of 14.5 per cent
over 200920 to reach USD55 billion

Rapidly growing
healthcare sector

Indian healthcare sector, one of the fastest growing sectors, is expected to advance at a
CAGR of 17 per cent to reach USD280 billion over 201120

Growing generics
market

The generics market is expected to grow to USD26.1 billion by 2016 from USD11.3 billion
in 2011; Indias generics market has immense potential for growth

Ranked 5th in terms of

attracting FDI

Attracted 5 per cent of the total FDIs into India from April 2000 to February 14
Cumulative FDI inflows worth USD11.6 billion from April 2000 to February 14

Source: India Biz, PWC, Department of Industrial Policy and Promotion, Deloitte, PharmaBiz,
Frost and Sullivan report on Indian Pharmaceutical Market, McKinsey, Aranca Research
Notes: API - Active Pharmaceutical Ingredient, USFDA - United States Food and Drug Administration, CAGR - Compound Annual Growth Rate

Cost efficiency
Growing demand

2013

Market
size:
USD12.3
billion

Economic drivers

Low cost of production and R&D

Economic prosperity to improve
boosts efficiency of Indian pharma
drug affordability
companies
Increasing penetration of health
Indias cost of production is
insurance
approximately 60 per cent lower
than that of the US and almost half
of that of Europe
Due to lower cost of treatment,
India is emerging as a leading
destination for medical
Advantage
tourism

2020F
Market
size:
USD55
billion

India
Policy support

Diversified portfolio

Accounts for over 10 per cent of

global pharmaceutical production
Over 60,000 generic brands
across 60 therapeutic categories
Manufactures more than 500
different APIs

Government unveiled Pharma

Vision 2020 aimed at making India
a global leader in end-to-end drug
manufacture
Reduced approval time for new
facilities to boost investments
In this sector, 100 per cent FDI is
allowed under automatic route

Source: PwC, McKinsey, Pharmaceuticals Exports Promotion Council of India, Aranca Research
Notes: 2020 revenue forecasts are estimates of McKinsey, API - Active Pharmaceutical Ingredients, F - Forecast

2010 and beyond

19902010

197090

Before 1970

Market
dominated by
foreign
companies, with
little domestic
participation

Indian Patent Act

passed in 1970
Several domestic
companies start
operations
Development of
production
infrastructure
Export initiatives
taken

Liberalised market
Indian companies
increasingly launch
operations in foreign
countries
India a major
destination for generic
drug manufacture
Approval of Patents
(Amendment) Act
2005, which led to
adoption of product
patents in India

Increased patent
filings by pharma
players
Likely adoption of
newer sales models
such as channel
management, KAM
and CSO
Leading pharma
companies have
increased their R&D
spending on new
cost-effective generic
products to
strengthen their
presence across
global markets

Source: Aranca Research

Notes: KAM - Key Account Management, CSO - Contract Sales Organisation

Active Pharmaceutical
Ingredients
(APIs)

Contract Research and

Manufacturing Services
(CRAMS)

Pharmaceutical
industry
Formulations

Biosimilars

India is expected to be the third largest global generic API

merchant market by 2016, with a 7.2 per cent market share

In 2012, drug companies from India filed 49 per cent of the overall
Drug Master Filings (DMFs) in the US

Fragmented market with more than 1,000 players

CRAMS industry is estimated to have reached USD8.0 billion in

2015, up from USD4.04.5 billion in 2012

Largest exporter of formulations in terms of volume, with 14 per

cent market share and 12th in terms of export value

Domestic market size currently valued at USD11.2 billion

Double-digit growth expected over the next five years

Biosimilars sector is expected to touch USD1.4 billion by 2016

from USD482 million in 2011

The government plans to allocate USD70 million for local players

to develop biosimilars

Source: BMI, Datamonitor, Kemwell Biopharma, Chemical Pharmaceutical Generic Association,

ICRA Report Estimates, Aranca Research, pharmanewsprwire.com
Note: OTC - Over The Counter

With 5.7 per cent of market share, India ranks fourth in

terms of total market share in Asia-Pacific

Market share by value in Asia-Pacific (2011)

In terms of Pharmaceutical Risk/Reward ratings for 4Q13,

India stood 9th in Asia-Pacific

13.5%

Japan

5.7%
China
6.4%
48.8%

South Korea
India

25.5%
Rest of Asia-Pacific

Source: Business Monitor International, Market Line, Aranca Research

The Indian pharmaceuticals market increased at a CAGR of

9.4 per cent in 2013 from USD6 billion in 2005, and is
expected to expand at a CAGR of 23.9 per cent to USD55
billion by 2020

Revenue of Indian pharmaceutical sector

(USD billion)
55

By 2020, India is likely to be among the top three

pharmaceutical markets by incremental growth and sixth
largest market globally in absolute size

12
6

2005

2013

2020F

Source: PwC, McKinsey, Aranca Research

Notes: F - Forecast, CAGR - Compound Annual Growth Rate

With 72 per cent of market share (in terms of revenues),

generic drugs form the largest segment of the Indian
pharmaceutical sector. In 2011, sales of generic drugs
stood at USD11.3 billion
Over the Counter (OTC) medicines and patented drugs
constitute 19 per cent and 9 per cent, respectively, of total
market revenues

Revenue share of Indian pharmaceutical

sub-segments in 2011 (%)

Patented
drugs
9%
OTC
medicines
19%

Generic
drugs
72%

Source: Business Monitor International, Aranca Research

Anti-infective drugs command the largest share (16 per

cent) in the Indian pharma market

Indian pharmaceutical market segments by value

(Feb 2014)

The cardiovascular segment represents 13 per cent of the

market share; its contribution is likely to rise due to the
growing number of cardiac cases in India

Anti- infectives
Cardiovascular
(CVS)
Gastro-intestinal

16%
29%

Top five segments contribute nearly 57 per cent to the total

drugs consumption

13%

Vitamins, minerals
Respiratory
Pain/analgesic

7%

11%
Anti diabetic

7%
9%

8%
Others

Source: All Indian Origin Chemists & Distributors,

Department of Pharmaceuticals, Planning Commission Report,
Aranca Research

Trade data of Indian pharma sector (USD billion)

Indian pharma companies are capitalising on export

opportunities in regulated and semi-regulated markets

10

The Ministry of Commerce targets to export USD25 billion

worth of pharmaceuticals in 2016. Indian drugs are exported
to more than 200 countries in the world, with the US as the
key market

9
7
5

India is the worlds largest provider of generic medicines;

the countrys generic drugs account for 20 per cent of global
generic drug exports (in terms of volumes)
In terms of value, exports of pharmaceutical products
increased at a CAGR of 26.1** per cent to USD10.1 billion
during FY0613
During the same period, imports of pharmaceutical products
rose at a CAGR of 25.4** per cent to USD1.8 billion

2
0.4

0.6

0.7

FY06

FY07

FY08

0.9
FY09
Exports

1.1
FY10

1.2

1.7

FY11

FY12

1.8

1.2

FY13 FY14*

Imports

Source: Department of Commerce India, Planning Commission

Report, India Business News, BMI, Aranca Research
Notes: CAGR - Compound Annual Growth Rate;
** - CAGR is mentioned in INR terms
* - From April 2013 to Dec 2013

Market share, revenue and growth rates of

leading companies (%)

Cipla has the largest share (5.0 per cent) in the Indian
pharma market, with MAT sales of USD649.6 million during
March 2013

Cipla

Sun Pharma posted the highest growth in revenue (20 per

cent) among major players during the same period

25%
472.1

Ranbaxy ranks fourth in the market, with a revenue base of

USD542.2 million for March 2013 MAT sales

Revenue growth

20%

GlaxoSmithKline, with a revenue base of USD596.2 million

for March 2013 MAT sales, ranks third in the market

Sun Pharma
641.1

524.4

Glaxo

15%

Ranbaxy

398.1
596.2

Zydus Cadila

10%
498.2

542.2

Abbott HC

649.6

5%

While these top four companies garnered 20 per cent

market share, top 10 companies comprise nearly 39 per
cent of the market share

Mankind

0%
2.5%

Lupin
3.5%

4.5%
Market share

5.5%

Note: The bubbles denote MAT March 2013 sales in USD million

Source: All Indian Origin Chemists & Distributors,

Equity Master, BMI, Aranca Research
Notes: Market share is in terms of revenue,
MAT - Moving Annual Total

R&D spending by top six pharma giant

(USD million)

By 2020, the Indian healthcare sector is expected to reach

USD280 billion from USD70 billion currently
This would help drive R&D growth in India; the average
R&D expenditure by Indian pharma companies is close to 6
per cent of total revenues
In FY13, total R&D spending by top six pharma companies
was USD560.9 million

141

142

102
87

82

83

69

78
63

47
29
9

Lupin

Dr. Reddy's Ranbaxy

Labs
FY10

Cipla

Wockhurdt

Piramal
Healthcare

FY13

Source: Deloitte, PWC, Aranca Research

Note: R&D - Research and Development

Research and
development

Indian pharma companies spend 6 per cent of their total turnover on R&D
Expenditure on R&D is likely to increase due to the introduction of product patents;
companies need to develop new drugs to boost sales

Indias pharmaceutical export market is thriving due to strong presence in the generics
space
Pharmaceuticals Exports Promotion Council expects pharma exports to reach USD25
billion in 2016

Export revenue

Joint Ventures

Multinational companies are collaborating with Indian pharma firms to develop new drugs
Pfizer partnered with Aurobindo Pharma to develop generic medicines
Six leading pharmaceutical companies have formed an alliance LAZOR to share their
best practices, so as to improve efficiency and reduce operating costs

Expansion by Indian
players abroad

Cipla, the largest supplier of anti-malarial drugs to Africa, set up a USD32-billion plant in
Africa for the production of anti-retroviral and anti-malarial drugs
Ranbaxy, the fifth-largest pharmaceutical company in South Africa, installed a USD30
million manufacturing facility in Johannesburg in 2010
Source: Aranca Research
Note: R&D - Research and Development

PPP in R&D

Indian Government plans to involve the private sector in R&D mainly for sectors such as
vaccines, drugs and pharmaceuticals, super computing, solar energy and electronic
hardware
The government has invested USD1.1 billion in the Public-Private Partnership fund to
support R&D in India

Patents Act

Amendments to the Patents Act, 1970, to make it TRIPS compliant

Increased incentives to domestic firms to conduct R&D
Increased likelihood of technology transfer from developed nations

Product patents

The introduction of product patents in India in 2005 gave a boost to the discovery of new
drugs
India reiterated its commitment to IP protection following the introduction of product
patents

Source: Aranca Research

Note: R&D - Research and Development

Ranbaxys API manufacturing

facility at Toansa, Punjab

Wockhardt's facility covers an

area of 40,468 sq meters in
Baddi, Himachal Pradesh
Baddi is also home to Ciplas
formulations manufacturing facility

Dholka in Gujarat houses a major

manufacturing facility of Cadila,
which spans over 100 acres

Lupin has an USFDA-approved

plant at Tarapur, Maharashtra.
The facility forms the core of
Lupin's fermentation capabilities

Mandideep in Madhya Pradesh is

the manufacturing hub for Lupins
cephalosporin and ACE-Inhibitors
Cipla has a formulations
manufacturing plant at Indore
Piramals USFDA-approved
manufacturing plant in Hyderabad
GlaxoSmithKline has a major
facility at Rajahmundry, Andhra
Pradesh
Source: Company websites

Competitive Rivalry

Growth opportunities for pharma companies are expected to grow in

next few years, with many drugs going off-patent in the US and other
countries, thus increasing competition

Threat of New Entrants

Strict government regulations

thwart entry of new players
Difficult to survive because of
high gestation period

Bargaining Power of Suppliers

Difficult-to-manufacture APIs
such
as
steroids,
sex
hormones and peptides give
bargaining power to suppliers.
However, generic APIs do not
have much of that power

Threat of New
Entrants
(Low)

Substitute Products

Threat to substitute products is

low; however, homeopathy and
Ayurvedic medicines can act as
substitute

Bargaining
Power of
Customers
(High)

Competitive
Rivalry
(High)

Threat of
Substitute
Products
(Low)

Bargaining Power of Customers

Generic drugs offer a costeffective alternative to drugs

innovators
and
significant
savings to customers

Bargaining
Power of
Suppliers
(Medium)

Source: Aranca Research

Cost leadership

Players in the sector are trying to achieve cost leadership in various ways. For example,
Sun Pharma is trying to achieve the same by

Players in the sector are trying to differentiate themselves by investing heavily on R&D
efforts. For example,

Sun Pharma is trying to develop technically complex APIs, such as steroids, sex
hormones, peptides, carbohydrates and taxanes, which require special skills and
technology

Dr Reddys is investing in technology platforms. It acquired OctoPlus N.V, a

Netherlands-based company, to get access to the Poly Lactic-co-Glycolic Acid
(PLGA) technology for the formulation of complex injectables

Differentiation

Focus on new markets

Vertical Integration: Complex API, which require special skills and technology, are
developed and scaled up for both API and dosage forms

Certain players in the sector are focussing on entering new markets with new
opportunities. For example, Lupin is making inroads into new markets such as Latin
America, Russia and other East European countries

Source: Company websites, Aranca Research

Note: R&D Research and Development

Demand-side
drivers

Accessibility of drugs to
greatly improve

Increasing penetration of
health insurance

Growing number of stressrelated diseases due to

change in lifestyle

Better diagnostic facilities

Growth
drivers

Cost advantage

India a major manufacturing

hub for generics

546 sites registered at

USFDA

Supply-side
drivers

Policy support

Reduction in approval time

for new facilities

Focus on specialised
pharma education

Improved accessibility for

BPL people

Source: Pharmaceutical Export Promotion Council

Notes: BPL - Below Poverty Line, USFDA - United States Food and Drug Administration

Launch of patented
drugs

Following the introduction of product patents, several multinational companies are

expected to launch patented drugs in India
Growth in the number of lifestyle diseases in India could boost the sale of drugs in this
segment

Medical infrastructure

Pharma companies have increased spending to tap rural markets and develop better
medical infrastructure
Hospitals market share is expected to increase from 13.1 per cent in 2009 to 26 per cent
in 2020
Indias generic drugs account for 20 per cent of global exports in terms of volume, making
the country the largest provider of generic medicines globally
Indias generics market is expected to reach USD26.1 billion by 2016 from USD11.3 billion
in 2011; the countrys generics market has immense potential for growth

Scope in generics
market

In 2011, Indias OTC drugs market stood at USD3.0 billion; it is expected to rise at a
CAGR of 16.3 per cent to USD6.6 billion over 200816
Increased penetration of chemists, especially in rural regions, would increase the
availability of OTC drugs in the country

Over-The-Counter
(OTC) drugs

Patent expiry

Between 2010 and 2015, patent drugs worth USD171 billion are estimated to go offpatent, leading to a huge surge in generic product
The newly available market will be filled by generics, which would provide great
opportunity to Indian companies
Source: BMI, India Biz, Aranca Research
Note: CAGR - Compound Annual Growth Rate

Cost efficiency
Indias cost of production is nearly 60 per cent lower than
that of the US and almost half of that of Europe

Relative cost of production with US cost as base

100
85

Labour costs are 5055 per cent cheaper than in

Western countries
40

The cost of setting up a production plant in India is

40 per cent lower than in Western countries
Cost-efficiency continues to create opportunities for Indian
companies in emerging markets and Africa
Competency
India has the second largest number of USFDA-approved
manufacturing plants outside the US
India has 2,633 FDA-approved drug products
India has over 546 USFDA-approved company sites, the
highest number outside the US

US

Europe

India

Source: Frost and Sullivan report on Indian Generic Pharmaceuticals

Market, BMI, Financial Express, Aranca Research
Note: USFDA - United States Food and Drug Administration

Accessibility

Acceptability

Over USD200 billion to be spent on medical

infrastructure in the next decade
New business models expected to penetrate tier-2 and
tier-3 cities
Over 160,000 hospital beds expected to be added each
year in the next decade
Increasing access to lower-income segments due to
government initiatives that increase access and
affordability (e.g. RSBY)

Rising levels of education to increase acceptability of

pharmaceuticals
Patients to show greater propensity to self-medicate,
boosting the OTC market
Acceptance of biologics and preventive medicines to rise
Vaccine market could grow 20 per cent per year in the
next decade
Surge in medical tourism due to increased patient inflow
from other countries

Demand
drivers
Demand

drivers
Affordability
Rising income could drive 73 million households to the
middle class over the next 10 years
Over 650 million people expected to be covered by
health insurance by 2020
Government-sponsored programmes set to provide
health benefits to over 380 million BPL people by 2017
By 2017, the government plans to provide free generic
medicines to half the population at an estimated cost of
USD5.4 billion

Epidemiological factors
Patient pool expected to increase over 20 per cent in the
next 10 years, mainly due to rise in population
New diseases and lifestyle changes to boost demand
Increasing prevalence of lifestyle diseases

Source: ICRA report on Indian Pharmaceutical Sector, Pharmaceutical Industry:

Developments in India- Deloitte, Mckinsey Pharma Report 2020, Aranca Research
Note: RSBY - Rashtriya Swasthya Bima Yojna

Pharma sales as a per cent of total health

care spending

Over 201220, total healthcare spending is expected to rise

at a CAGR of 20 per cent to USD280 billion from USD65
billion
Pharmaceutical sales, as a percentage of total healthcare
spending, are expected to increase to 27 per cent by 2016
from 18.9 per cent in 2008

140

30%

120

25%

100

20%

80
15%
60

10%

40

5%

20
0

0%
2008 2009 2010 2011 2012F2013F2014F2015F2016F
Healthcare expenditure
Pharma sales as a % of Healthcare expenditure

Source: Deloitte, BMI, PWC, Aranca Research

Notes: F - Forecast, CAGR - Compound Annual Growth Rate

Per capita sales of pharmaceuticals (USD)

Growing per capita sales of pharmaceuticals in India offers

ample opportunities for players in this market

27

Per capita sales of pharmaceuticals is expected to expand

at a CAGR of 16.3 per cent to USD27 by 2016F

23

CAGR: 16.3%

19
16

11

13

14

9
8

2008

2009

2010

2011 2012F 2013F 2014F 2015F 2016F

Source: BMI, Aranca Research

Notes: F - Forecast, CAGR - Compound Annual Growth Rate

Reduction in approval
time for new facilities

Collaborations

Steps taken to reduce approval time for new facilities

NOC for export licence issued in two weeks compared to 12 weeks earlier

MoUs with USFDA, WHO, Health Canada, etc. to boost growth in the Indian Pharma
sector by benefiting from their expertise

Support for technology

upgrades and FDIs

Industry infrastructure

Pharma vision 2020

Zero duty for technology upgrades in the pharmaceutical sector through the Export
Promotion Capital Goods (EPCG) Scheme
Permission for 100 per cent Foreign Direct Investment (FDI)
Government is planning to relax FDI norms in the pharmaceutical sector

Government of India plans to set up a USD640 million venture capital fund to boost drug
discovery and strengthen pharma infrastructure

Pharma Vision 2020 by the governments Department of Pharmaceuticals aims to make

India a major hub for end-to-end drug discovery

Source: Aranca Research

Rising share of government expenditure

(USD billion)

Government expenditure on health increased from USD14

billion in 2008 to USD23 billion in 2011
The expenditure is expected to expand at a CAGR of 18 per
cent over 200816 to USD53 billion, thereby increasing the
share of government expenditure to total healthcare
spending from 27.6 per cent to 39.9 per cent during same
period

133
116
101

88
77

72
51

65

54

14

16

20

2008

2009

2010

23

26

31

37

44

53

2011 2012F 2013F 2014F 2015F 2016F

Healthcare expenditure

Expenditure by Government

Source: Business Monitor International, Aranca Research

Notes: CAGR - Compound Annual Growth Rate, F - Forecast

Public and private expenditure on healthcare

(USD billion)

The share of private sector spending increased from USD36

billion in 2008 to USD49 billion in 2011
Supported by favourable government policies, the private
sectors share is expected to reach USD80 billion by 2016

53
44

14

16

20

37

38

45

2008

2009

2010

23

26

49

51

31

57

37

64

72

80

2011 2012F 2013F 2014F 2015F 2016F

Expenditure by Public sources

Expenditure by Private players

Source: Business Monitor International, Aranca Research

Note: F - Forecast

Penetration of health insurance is expected to more than

double by 2020

Population covered by health insurance (in million)

Increasing penetration of health insurance is likely to be

driven by government-sponsored initiatives such as RSBY
and ESIC

140

240

Government-sponsored programmes expected to provide

coverage to nearly 380 million people by 2020
Private insurance coverage would increase nearly 15 per
cent annually till 2020
By 2015, spending through health insurance would reach
8.4 per cent of the total health spending, up from 6.4 per
cent in 200910
The share of population having medical insurance is likely
to rise to 50 per cent by 2015

110

120

80

25

55
20
35

130

2010
Private insurance
ESIC
State insurance

2020
Government employee insurance
RSBY

Source: IRDA, Mckinsey estimates, Aranca Research, World Bank

Notes: RSBY - Rashtriya Swasthya Bima Yojna,
ESIC - Employees State Insurance Corporation

Essentiality of drugs is determined

by including the drug in National
List of Essential Medicines (NLEM)
(348 drugs at present)

Promote rational use of medicines

based on cost, safety and efficacy

Essentiality of
drugs

Cost-based pricing is
complicated and timeconsuming than marketbased pricing

Market-based pricing is
expected to create greater
transparency in pricing
information and would be
available in public domain
Prices of NLEM drugs
linked to WPI

National
Pharma
Pricing Policy
2012

Market-based
pricing

Price control of
formulations
only

Only finished medicines

are to be considered
essential which would
prevent price control of
APIs, which are not
necessarily used for
essential drugs

Source: National Pharmaceuticals Pricing Policy 2012

In 2013, the M&A deal value in healthcare and pharmaceuticals was USD4 billion, up over 44 per cent from that in 2012
Total number of deals in 2013 was 44 compared with 42 deals in 2012
Pharma, healthcare and biotech witnessed M&A deals worth USD4 billion in 2013

Date
announced

Indian company

Foreign company

Value
(USD million)

Type

Torrent Pharmaceutical

Elder Pharmaceuticals Ltd

322

Acquisition

Cipla Medpro

512

Acquisition

GlaxoSmithkLine Plc

1,088

Acquisition

Natco Pharma

Litha

NA

JV

May, 2010

Glenmark

Sanofi

615

JV

June, 2011

Dr Reddys

Iso Ray

NA

Licensing rights

April, 2011

Sun Pharma

Merck

NA

Marketing

September, 2010

Piramal

Abbot

3,720

Business buyout

December, 2009

Orchid Chemicals

Hospira

400

Business buyout

March, 2009

Aurobindo Pharma

Pfizer

Not disclosed

Generic development and supply

Shantha Biotech

Sanofi Aventis

783

Acquisition

June, 2008

Ranbaxy Labs

Daiichi Sankyo

4,600

Acquisition

August, 2008

Dabur Pharma

Fresenius Kabi

219

Acquisition

December, 2013
July, 2013
January, 2013
September, 2011

December, 2012

Cipla
GlaxoSmithkLine Consumer

Source: BMI, Aranca Research

Note: JV - Joint Venture

Date announced

Indian company

Foreign company

Value
(USD million)

Type

January, 2013

Cosme Farma Laboratories

Adcock Ingram Healthcare

87.8

Asset acquisition

August, 2012

Strides Arcolab Ltd

Gilead Sciences Inc

NA

Licensing agreement

Ranbaxy

Gilead Sciences Inc

NA

Licensing agreement

August, 2013

Jubilant Biosys

Endo Pharmaceuticals

NA

Drug development

October, 2012

Piramal Healthcare Ltd

Fujifilm Diosynth Biotechnologies

NA

Drug development

March, 2009

Biocon

Bristol-Myers Squibb

NA

Exclusive marketing

March, 2013

Unichem Laboratories

Mylan

30

Acquisition

October, 2012

SMS Pharmaceuticals

Mylan

33

Acquisition of manufacturing unit

Biocon

Abbott Laboratories

NA

Contract research

Agila Specialties

Mylan, a Canonsburg

1,850

Acquisition

February, 2012

Jubilant Biosys

Mnemosyne Pharmaceuticals Inc

NA

Drug development

January, 2011

Zydus Cadila Healthcare

Bayer

NA

Marketing arrangement

December, 2012

Claris Lifesciences

Otsuka Pharmaceutical

250

JV

November, 2012

Zydus Cadila Healthcare

Abbot Laboratories

NA

Licensing agreement

Lupin

Eli Lilly

NA

Marketing arrangement

July, 2011

March, 2012
September, 2012

July, 2011

Source: ICRA Research on Indian Pharmaceutical Sector, India Ratings Research Outlook on Indian Pharmaceutical, BMI, Aranca Research
Notes: JV - Joint Venture, ADC - Antibody Drug Conjugates

Clinical trials market

As

per
various
studies,
India
is
among the leaders in
the clinical trial market

Due to increasing
population
and
income
levels,
demand for high-end
drugs is expected to
rise

Demand for high-end

drugs could reach
USD8 billion by 2015

Due to a genetically

diverse
population
and availability of
skilled doctors, India
has the potential to
attract
huge
investments to its
clinical trial market

Penetration in rural
market

High-end drugs

Growing
demand
could open up the
market for production
of high-end drugs in
India

With 70 per cent of

Indias
population
residing in rural areas,
pharma
companies
have
immense
opportunities to tap
this market

Demand for generic

medicines in rural
markets has seen a
sharp growth. Various
companies
are
investing
in
the
distribution network in
rural areas

Source: BMI, Aranca Research

The share of generic drugs is expected to continue

increasing; it could represent about 90 per cent of the
prescription drug market by 2016

Share of patented and generic drugs in prescribed

drug market (USD billion)

Due to their competence in generic drugs, growth in this

market offers a great opportunity for Indian firms
26.1

Generic drug market is expected to grow in the next few

years, with many drugs going off-patent in the US and other
countries

21.8

6.9
0.8

8.1
0.9

2008

2009

10.0
1.1
2010

11.3

12.6

15.1

18.1

3.3
2.7
2.2
1.8
1.5
1.3
2011 2012F 2013F 2014F 2015F 2016F

Patented drug sales

Generic drug sales

Source: BMI, Aranca Research

Note: F - Forecast

Indias OTC drugs market stood at USD3 billion in 2011 and

is expected to expand at a CAGR of 16.3 per cent to
USD6.6 billion over 200816

OTC drug market (USD billion)

6.6

Inclusion of various other drugs and cosmetics under the

OTC market may further boost the sector
There is a huge market for OTC drugs as the penetration of
chemists in the rural market increases

CAGR: 16.3%

4.7

5.5

3.9
2.7
2.0

2.2

2008

2009

2010

3.0

3.3

2011 2012F 2013F 2014F 2015F 2016F

Source: BMI, Aranca Research

Notes: CAGR - Compound Annual Growth Rate, F- Forecast

Sun Pharma net sales (USD million)

Sun Pharma was set up in 1983, with a compact

manufacturing facility for tablets and capsules

2,655

It set up its first API plant at Panoli in 1995

CAGR: 23.3%

It has 26 manufacturing facilities across four continents and

employs more than 14,000 people
Nearly 72 per cent of its sales come from international
markets

2,067

1,672
1,256
932

847

Its revenues increased from USD932 million in FY09 to

USD2.6 billion in FY14, at a CAGR of 23.3 per cent
FY09

Sun Pharma acquired Ranbaxy Laboratories Ltd to become

the fifth largest global specialty pharma company, No 1
pharma company in India, and ensure a strong positioning
in emerging markets

FY10

FY11

FY12

FY13

FY14

Source: Sun Pharma website, Aranca Research

Note: CAGR - Compound Annual Growth Rate

256 approved
products and 391
filed for approval
Revenue base of
USD2.1* billion

Acquisitions
across the globe
Focus on R&D

Market capitalisation
of USD15.6* billion

Over half the sales

from North America

23 manufacturing
sites worldwide
Organic growth
phase

All-India
operations begin
Strong presence in
generics market

Among top five

Indian pharma
companies

Commenced
operations in
Calcutta

1983

Nationwide
marketing
operations
rolled out
1987

Built the first

API plant

First
international
acquisition:
Niche Brand
in the US

Acquired
controlling
stake in Taro
and full
control on
Caraco

1995

2004

2012
Source: Sun Pharma website
Note: *As of FY 201213

Dr Reddys net sales (USD million)

Dr Reddys began as an API manufacturer in 1984,

producing high-quality APIs for the Indian domestic market

CAGR: 14.2 %*

It has presence in almost all therapeutic segments

It has an integrated business model in three segments:
Pharmaceutical Services & Active Ingredients (PSAI),
Global generics and Proprietary products

1,479

1,480

FY09

FY10

2,016

2,141

2,193

FY13

FY14

1,626

Dr Reddys has access to numerous emerging markets

through partnerships with GlaxoSmithKline (GSK)
Its product offering spans the entire value chain, from
process development of APIs to submission of the finished
dosage dossier to regulatory agencies
Its revenues increased from USD1.5 million in FY09 to
USD2.2 million in FY14, at a CAGR of 14.2* per cent
Global generics comprised over 71 per cent of its revenue
mix in FY13
Dr Reddys is investing heavily on R&D to differentiate itself
in the market. Its R&D spend for FY1415 is expected to be
910 per cent

FY11

FY12

Source: Dr Reddys website

Notes: CAGR - Compound Annual Growth Rate,
*CAGR is mentioned in INR terms, R&D Research and Development

Four technology
development
centres

Revenue base of about

USD2.1* billion
Over 25 billion
units in generics
capacities

Market capitalisation of
USD5.5* billion

Among the leaders in

supply of generic APIs
globally

18 manufacturing
sites worldwide

Fastest Indian
company to cross
USD2 billion
revenues
First company in
Asia-pacific outside of
Japan to list on NYSE

Integrated business
spanning three segmentsPSAI, GG and PP
Among top three
Indian pharma
companies

16,500+
associates
worldwide

Dr Reddys
Laboratories
incorporated in
Hyderabad

Listed on BSE;
commenced
production of
its first API

Dr Reddys
Research
Foundation
established,
drug discovery
begins

Acquires
Roches API
business in
Mexico

Exclusive JV
with FUJIFILM
to develop and
manufacture
generic drugs
in Japan

1984

1986

1993

2005

2011

Source: Dr Reddys website, Annual Report

Notes: PSAI - Pharmaceutical Services and Active Ingredients, GG - Global Generics, PP - Proprietary Products, JV - Joint Venture, *As of FY201213

Lupin net sales (USD million)

Lupin is a renowned pharma player producing a wide range

of quality, affordable generic and branded formulations and
APIs

1,839
1,742

Lupin has emerged as the fifth largest and among the

fastest-growing Top Five companies in the US

CAGR: 24%*
1,474

It is one of the worlds largest manufacturers of TB drugs

and has significant market share in the cardiovascular,
diabetology, asthma, paediatrics, CNS, Anti-infectives and
NSAIDs therapy segments

1,271

822

1,007

Its revenues increased from USD822.5 million in FY09 to

USD1.8 million in FY14, at a CAGR of 24* per cent
FY09

Advanced market formulations comprised nearly 52 per cent

of its revenues in FY12
Specialty generic player across the globe, including
emerging markets

FY10

FY11

FY12

FY13

FY14

Source: Lupin website

Notes: CAGR - Compound Annual Growth rate
* - Growth in INR terms
API - Active Pharmaceutical Ingredient, CNS - Central Nervous System,
NSAIDS - Non-steroidal Anti-inflammatory Drugs, TB - Tuberculosis

153 ANDAs and

111 DMFs
Revenue base of
about
USD1.7* billion

Diversifying into
different business
segments

Market capitalisation
of USD5.2* billion

Global leadership in
anti-TB segments

Talent pool of
1000+ scientists

Acquisitions
across the globe
Expanding India
operations

Focus on R&D

14th largest global

generic pharma
company

Third largest Indian

pharma company

Commenced
business

1968

Commissioned
a formulations
plant and R&D
centre at
Aurangabad

JV in Thailand
Lupin
Chemicals
(Thailand)
established

1980

1989

Commenced
supply of
Cephalosporin
to alliance
partners in US
2001

Acquires Irom
Pharma; enters
into joint
development
agreement with
Medicis Enter
2011

Source: Lupin website, Annual Report

Notes: ANDAS - Abbreviated New Drug Application, DMFs - Drug Master Files, * - As of FY201213

Cipla net sales (USD million)

Established in 1935, Cipla has over 34 state-of-the-art

manufacturing units
It is one of the few companies producing medicines for rare
diseases such as Idiopathic Pulmonary Fibrosis, Pulmonary
Arterial Hypertension, Thalassaemia and Multiple Sclerosis
Cipla outperformed other global pharma majors by offering
patented anti-AIDS drugs at affordable prices

CAGR: 13.0%*

1,457

1,489

FY12

FY13

1,374

1,081

1,130

FY09

FY10

It has presence in over 170 countries, with an employee

strength of over 20,000; moreover, it is the sixth-largest
player in South Africa
Its revenues increased from USD1.1 billion in FY09 to
USD1.5 billion in FY13, at a CAGR* of 13.0 per cent
Cipla has plans for a USD36-million investment to upgrade
its plant in Durban, and a USD512-million takeover of South
Africa's Cipla Medpro
It is the first company to develop drug for the treatment of
H1N1 flu

FY11

Source: Cipla website, Cipla brochure, Cipla corporate profile

Notes: CAGR - Compound Annual Growth Rate,
* - Growth in INR terms
API - Active Pharmaceutical Ingredient, OTC - Over The Counter

53 per cent of
total income from
oversees sales

Revenue base of
about
USD1.5* billion
Worlds largest
ARV
manufacturer

Market capitalisation
of USD5.6* billion

Global presence in
over 170 countries

Over 10,000
product
registrations
globally

Over 2,000
products in 65
therapeutic
categories

Manufactured first
Indian API in
1960
34 internationally
approved facilities

One of the worlds

largest generic drug
companies

Third largest Indian

pharma company

Cipla
established to
make India
self-sufficient
in healthcare
1935

Pioneered
inhalation
therapy to
manufacture
MDI

Launched
Deferiprone,
worlds first
oral iron
chelator

1978

1994

Pioneered
access to HIV.
ARVs made
available at
less than a
dollar
2001

Made cancer
treatment
affordable with
breakthrough
in reducing
cost of cancer
drugs
2012

Source: Cipla website, Annual Report

Notes: MDI - Metered Dose Inhaler, ARV - Anti-retroviral, * - As of FY201213

The Indian Pharmaceutical Association

Kalina, Santacruz (E),
Mumbai 400 098
Phone: 91-22-2667 1072
Fax: 91 22 2667 0744
E-mail: [email protected]
www.ipapharma.org

Indian Drug Manufacturers' Association

102-B, Poonam Chambers, Dr A.B. Road
Worli, Mumbai 400 018
Phone: 91-22-2494 4624/2497 4308
Fax: 9122 24950723
E-mail: [email protected]
www.idma-assn.org

Organisation of Pharmaceutical Producers of India

Peninsula Chambers, Ground Floor,
Ganpatrao Kadam Marg, Lower Parel,
Mumbai 400 013
Phone: 9122 24918123, 24912486, 66627007
Fax: 9122 24915168
E-mail: [email protected]
www.indiaoppi.com

Bulk Drug Manufacturers Association

C-25, Industrial Estate, Sanath Nagar
Hyderabad 500018
Phone: 91 40 23703910/23706718
Fax: 91 40 23704804
E-mail: [email protected]
www.bdmai.org

CRAMS: Contract Research and Manufacturing Services

API: Active Pharmaceutical Ingredients
FDI: Foreign Direct Investment
GOI: Government of India
INR: Indian Rupee
USD: US Dollar
BPL: Below Poverty Line
RSBY: Rashtriya Swastha Bima Yojna
ESIC: Employees State Insurance Corporation
Wherever applicable, numbers have been rounded off to the nearest whole number

Exchange rates (Fiscal Year)

Exchange rates (Calendar Year)

Year

INR equivalent of one USD

Year

INR equivalent of one USD

200405

44.81

2005

43.98

200506

44.14

2006

45.18

200607

45.14

2007

41.34

200708

40.27

2008

43.62

200809

46.14

2009

48.42

200910

47.42

2010

45.72

201011

45.62

2011

46.85

201112

46.88

2012

53.46

201213

54.31

2013

58.44

201314

60.28

2014*

61.58
Average for the year
* - from January to March 2014

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