Introduction
In the recent decade, India’s pharmaceutical business has grown tremendously. This sector generates more than $11 billion per year and is expected to rise to more than $20 billion by the end of 2020, making it one of India’s fastest-growing industries. All forms of drugs, including over-the-counter treatments and prescription medicines such as antibiotics, pain relievers, contraceptives, and tranquillizers, are manufactured, distributed, sold, and marketed in the pharmaceuticals sector. It also comprises vaccinations and antibodies, which are employed in laboratories to assess the effects of new treatments or as research tools.
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The Indian pharmaceutical industry is one of the country’s fastest-growing industries, with one of the primary drivers being the changing lifestyles of Indian citizens, who are now much more conscious of their health and well-being. However, as people become more aware, there is a greater demand for therapies and pharmaceuticals to improve quality of life, which pharmaceutical companies are working hard to provide. Here, we’ll look at some of the primary factors influencing the pharmaceuticals market’s growth in India, as well as the prospects available in this quickly expanding industry.
Indian Pharmaceuticals Market Size:
In the worldwide pharmaceuticals sector, the Indian pharmaceuticals industry is a major player. India is the world’s third-largest producer by volume and the fourteenth-largest producer by value. The country is the world’s largest provider of generic medications, accounting for 20% of worldwide supply by volume, and the world’s leading vaccine manufacturer. Outside of the United States, India boasts the biggest number of US-FDA approved pharma plants, with over 3,000 pharma businesses and a robust network of over 10,500 manufacturing facilities, as well as a highly skilled workforce.
In India, there are 60,000 generic products available over 60 therapeutic categories. Generic medications, over-the-counter medicines, API/bulk drugs, vaccines, contract research and manufacturing, biosimilars, and biologics are all major segments.
- The government has authorised incentives totaling INR 21,940 crore ($3 million).
- By 2024, it’s expected to reach $65 billion, and by 2030, it’ll be between $120 and 130 billion.
- 10% to 12% growth rate
- Manufacturing costs are 33% cheaper than in Western markets.
- Exports increased by 18.7% year over year.
After Japan, China, and South Korea, India is the fourth largest Asian medical device market and one of the top 20 global medical device markets. With 60% of the world’s vaccines and 20% of generic medications coming from India, Indian pharmaceutical businesses have established a global imprint, owing to their price competitiveness and high quality.
Under the automatic route for Greenfield pharmaceuticals, 100 percent Foreign Direct Investment (FDI) is allowed in the pharmaceutical sector. Brownfield pharmaceuticals are allowed 100 percent FDI in the pharmaceutical sector, with 74 percent approved under the automatic method and the rest through government permission.
For further details, please refer FDI Policy
India’s Pharmaceutical Sector
In recent years, India’s pharmaceutical business has seen significant development and investment, and it shows no signs of slowing down. Nearly four million people work in the industry, which is backed by a variety of manufacturing facilities. Investors are keeping a close eye on global trends and preparing themselves to profit from India’s burgeoning pharmaceutical industry. According to some projections, branded medicine sales might exceed $24 billion by 2016, representing a more than 50% rise since 2010. Large investments in research and development (R&D) as well as marketing techniques that focus on branded pharmaceuticals rather than generics have fueled India’s pharmaceutical sector’s growth. In addition, because India’s pharmaceutical business offers larger profit margins than other rising economies, many international companies have increased their focus on it. As a result, India’s pharmaceutical sector currently has hundreds of enterprises investing in R&D and other sorts of innovation.
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Industry Scenario
India’s pharmaceutical sector is anticipated to grow to $65 billion by 2024 and $120 billion by 2030.
India’s pharmaceutical sector is currently valued at $41.7 billion dollars. India is a large exporter of pharmaceuticals, having pharma exports to over 200 nations. India supplies approximately half of Africa’s generics need, 40% of generic demand in the United States, and 25% of all pharmaceuticals in the United Kingdom.
India is also a major provider of DPT, BCG, and Measles vaccinations, accounting for 60 percent of global demand. India supplies 70% of WHO vaccinations (as per the WHO’s essential Immunization Schedule).
Since 2013-14, Indian pharmaceutical exports have increased by 103 percent, from INR 90, 415 crores in 2013-14 to INR 1,83,422 crores in 2021-22. The Pharma Sector’s export performance in 2021-22 was the best it has ever been. Exports have increased by about $10 billion in the last eight years, a tremendous increase.
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India as a Healthcare Hub
India’s pharmaceutical sector produces over 20% of all pharmaceuticals produced worldwide. It was ranked sixth among worldwide medicine suppliers in 2014. Dr Reddy’s Laboratories and Ranbaxy Laboratories, two of India’s most well-known enterprises, generate more than half of their revenue from abroad markets. Despite the fact that India’s pharmaceutical industry faces a number of problems, including its status as a generic medicine exporter and high operating costs, investment opportunities abound due to the country’s vast market potential. Over the next five years, India will be one of four countries that will lead increase in pharmaceutical spending.
India’s proportion of global healthcare spending is expected to rise from 3.8 percent to 5.5 percent by 2020, according to the report. Factors like as rising disposable incomes and an ageing population, which means an increase in the number of people who need chronic care or regular check-ups, will fuel this trend. In addition, in emerging economies such as China and Brazil, there is an increasing demand for affordable pharmaceuticals.
According to India’s health-care statistics, the government spends more on healthcare than any other Asian country, and 90% of Indians have private or public health insurance. This means that the majority of Indians have access to high-quality healthcare, including advanced medical technology and pharmaceuticals. As a result, India is a very appealing market for pharmaceutical companies, and as a result, investors have been eager to invest in BSE-listed pharmaceutical equities (Bombay Stock Exchange). While there are various variables driving investor interest in pharma companies, one stands out: the Indian pharmaceutical industry’s strong growth potential.
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GROWTH DRIVERS
- Government Support There are INR 21940 in government incentives for PLI 1.0 and PLI 2.0.
- Medical Tourism offers high-quality services at low prices when compared to the United States, Europe, and South Asia.
- Infrastructure Development Outside of the United States, India boasts the most US-FDA-compliant plants.
- Strong medicine manufacturing expertise, including low-cost generic patented drugs and end-to-end production.
- Strong domestic demand has resulted in the launch of the world’s largest national health protection scheme.
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Production Linked Incentive (PLI) Scheme
The following Production Linked Incentive Schemes are supporting the Indian pharmaceuticals market by boosting domestic manufacturing capacity, including high-value items across the global supply chain.
Key Starting Materials (KSMs), Drug Intermediates (DIs), and Active Pharmaceutical Ingredients (APIs) under the PLI Scheme (PLI 1.0) 2. Pharmaceuticals Production-Linked Incentive (PLI) Scheme d (PLI 2.0).
Benefits of Starting a Business in India’s Pharmaceutical Sector
India is a popular choice for pharmaceutical businesses looking to establish manufacturing facilities because of its low production costs and competent workforce. The Indian government has been actively pushing pharmaceutical investments by offering a variety of tax breaks and other financial incentives. The Ministry of Finance has been working to increase ease of doing business through numerous policy changes, which has boosted new investment prospects in India’s fast increasing pharmaceutical industry. For example, during the 2017-18 Budget Speech, it was announced that FDI caps for the manufacture of medications and pharmaceuticals will be raised from 26% to 49% via the automatic method.
Download PDF: The Indian Pharmaceuticals Sector: Investment Opportunities in Drugs, Medicines, and Active Pharma Ingredients (APIs) Industry
Furthermore, 100 percent FDI will be authorised via the automatic route in Greenfield pharma projects with a capital investment of Rs 100 crore or more over a five-year period, with no requirement for local sourcing. Furthermore, 100 percent FDI will be allowed under the automatic route in brownfield pharma projects with a capital investment of Rs 500 crore or more over three years and no requirement for local sourcing. These policies are likely to attract significant foreign direct investment into India’s rapidly growing pharmaceutical industry. This is intended to facilitate entry into India’s pharmaceutical business for indigenous players as well as global multinationals such as Pfizer Inc., Johnson & Johnson, Novartis AG, and others. This would provide a favourable climate for them to capitalise on India’s enormous growth potential in the healthcare sector.
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Industry Trends
- Supplier of Generics Around the World
- By volume, it accounts for 20% of the global supply.
- Biosimilars and Biologics: Globally, the most biosimilars have been approved, with a CAGR of 22%.
- Supplier of Vaccines around the World: Vaccines are supplied to over 150 nations, making it the world’s largest vaccine supplier.
- Industry of Contract Research and Manufacturing Services
- This is one of the fastest-growing industry categories due to a large skill pool and cost savings.
- Healthcare is a rapidly expanding industry.
- Increasing salaries, medicine affordability, and the use of health insurance.
Some Useful Links:
Government Ministry/ Department
- Central Drugs Standard Control Organisation (CDSCO)
- Department of Pharmaceuticals, Ministry of Chemicals & Pharmaceuticals
- National Pharmaceutical Pricing Authority
Industry Associations
- Bulk Drug Manufacturers Association
- Federation of Pharma Entrepreneurs
- Indian Drug Manufacturers’ Association (IDMA)
- Indian Pharmaceutical Alliance
- Organisation of Pharmaceutical Producers India (OPPI)
- Pharmexcil
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