SWOT Analysis of Pharmaceutical Sector in India:
1. Indian with a population of over a billion is a largely untapped market. In fact the penetration of modern medicine is less than 30% in India.
2. The growth of middle class in the country has resulted in fast changing lifestyles in urban and to some extent rural centers.
3. Indian manufacturers are one of the lowest cost producers of drugs in the world. With a scalable labor force, Indian manufactures can produce drugs at 40% to 50% of the cost to the rest of the world. In some cases, this cost is as low as 90%. 4. Indian pharmaceutical industry posses excellent chemistry and process reengineering skills.
1. The Indian pharma companies are marred by the price regulation. Over a period of time, this regulation has reduced the pricing ability of companies. The NPPA (National Pharma Pricing Authority), which is the authority to decide the various pricing parameters, sets prices of different drugs, which leads to lower profitability for the companies.
2. Indian pharma sector has been marred by lack of product patent, which prevents global pharma companies to introduce new drugs in the country and discourages innovation and drug discovery.
3. Very low penetration in India. To put things in to perspective, India accounts for almost 16% of the world population while the total size of industry is just 1% of the global pharma industry.
4. Due to very low barriers to entry, Indian pharma industry is highly fragmented with about 300 large manufacturing units and about 18,000 small units spread across the country. This makes Indian pharma market increasingly competitive. Opportunities
1. The migration into a product patent based regime is likely to transform industry fortunes in the long term. The new patent product regime will bring with it new innovative drugs.
2. Large number of drugs going off-patent in Europe and in the US between 2012 to 2015 offers a big opportunity for the Indian companies to capture this market. 3. Opening up of health insurance sector and the expected growth in per capita income are key growth drivers from a long-term perspective. This leads to the expansion of healthcare industry of which pharma industry is an integral part.
4. Being the lowest cost producer combined with FDA approved plants, Indian companies can become a global outsourcing hub for pharmaceutical products. Threats:
1. There are certain concerns over the patent regime regarding its current structure. It might be possible that the new government may change certain provisions of the patent act formulated by the preceding government.
2. Threats from other low cost countries like China and Israel exist. However, on the quality front, India is better placed relative to China. So, differentiation in the contract manufacturing side may wane.
3. The short-term threat for the pharma industry is the uncertainty regarding the implementation of VAT. Though this is likely to have a negative impact in the shortterm, the implications over the long-term are positive for the industry Other Important News about Pharma Industry:
Third Largest in the world in terms of volume & 13th largest in terms of value Total Market Size: Rs. 1233 bn
Domestic Consumption: Rs. 600 bn & Exports: Rs. 633 bn
Compounded Annual Growth Rate of the industry in past 5 years: 12.5% Expected to grow at 15.1% during 2013-2017
Main Drivers for higher R & D costs in Indian Companies are: a) increased pace of product filings in US and Europe,
b) focus on complex generics, some of which require clinical trials to demonstrate basic safety and efficacy and
c) investments in developing biosimilars for emerging markets and eventually for developed markets.
About Dr Reddys:
Started in 1984 by Anji Reddy Garu.
The company has over 190 medications, 60 active pharmaceutical ingredients (APIs) for drug manufacture, diagnostic kits, critical care, and biotechnology products. Reddy’s was linked to UK...
Please join StudyMode to read the full document