SIZE OF INDIAN PHARMACEUTICAL INDUSTRY:
The Indian Pharmaceutical Industry today is in the front rank of India’s science-based industries with wide ranging capabilities in the complex field of drug manufacture and technology. A highly organized sector, the Indian pharmaceutical industry is estimated to be worth $ 4.5 billion, growing at about 8 to 9 percent annually. It is highly fragmented with more than 20,000 registered units. It meets around 70% of the country's demand for bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and injectables. There are approximately 250 large units and about 8000 Small Scale Units, which form the core of the pharmaceutical industry in India (including 5 Central Public Sector Units). In terms of the global market, India currently holds a 3.2% share. The Pharma Industry in India produces around 20% to 24% of the global generic drugs. The Indian Pharmaceutical Industry is one of the biggest producers of the active pharmaceutical ingredients (API) in the international arena. The Indian Pharma sector leads the science-based industries in the country. The pharmaceutical sector has the capacity and technology pertaining to complex drug manufacturing. Around 40% of the total pharmaceutical produce are exported. 55% of the total exports constitute of formulations and the other 45% comprises of bulk drugs. The Indian Pharma Industry includes small scaled, medium scaled, large scaled players, which totals nearly 300 different companies. There are several other small units operating in the domestic sector. Top 10 Pharmaceutical Companies in India: RANK 1 2 3 4 5 6 7 8 9 10 COMPANY Ranbaxy Laboratories Dr. Reddy's Laboratories Cipla Nicholas Piramal Aurobindo Pharma GlaxoSmithKline Lupin Laboratories Sun Pharmaceutical Industries Cadila Healthcare Wockhardt REVENUE 2004 (Rs Crore) 4,461 1,933 1,842 1,387 1,260 1,228 1,180 1,110 1,091 980
With respect to product, industry is segmented into two parts: Ethical (Prescribed) Drugs: A prescription drug is a licensed medicine that is regulated by legislation to require a prescription before it can be obtained. Over the Counter Drugs: Over-the-counter (OTC) drugs are medicines that may be sold directly to a consumer without a prescription from a health care professional.
Ethical drugs account for about 60% of total industry sales, with OTC products representing the balance. The ethical sector can be further segmented into: Brand/Trade Name Drug – A drug that has a trade name and is protected by a patent and hence can be produced and sold only by the company holding the patent. Generic Drug – A generic drug is a drug which is produced and distributed without patent protection. The generic drug may still have a patent on the formulation but not on the active ingredient. A generic drug must contain the same active ingredients as the original formulation. Generics are lessexpensive equivalents of brand-name prescribed drugs.
External Analysis of the industry done based on Porter’s Five Forces Model.
Porter’s Five Forces Model
1. Competitive Rivalry within the Industry: Pharmaceutical industry is one of the most competitive industries in the India with as many as 20,000 different players fighting for the same pie. The rivalry in the industry can be gauged from the fact that the top player in the country has only 6% (2006) market share and the top 5 players together have about 18% (2006) market share. High growth prospects make it attractive for new players to enter in the industry. Another major factor that adds to the industry rivalry is the fact that the entry barriers to pharmaceutical industry are very low. Many small players that are focused on a particular region have a better hang of the distribution channel, making it easier to succeed, albeit in a limited way. The...