For most of the Indian pharma companies, domestic business contributes 20-50 per cent of the overall revenue. However, what is noteworthy is that Indian pharmaceutical firms are not only catering to the domestic market and fulfilling the country’s demands, they are also exporting their products to around 220 countries. Pharma companies export high quality, affordable drugs to countries such as the US, Kenya, Malaysia, Nigeria, Russia, Singapore, South Africa, Ukraine, Vietnam, and more.
It is being estimated that currently, the US is the biggest consumer for Indian pharma products and accounts for 22 percent of the sector’s exports, while Africa accounts for 16 percent. Commonwealth of Independent States (CIS) places around 8 percent of orders.
Indian pharmaceutical industry still has significant growth opportunities in export market, and major local companies could have the potential to compete with multinational pharmaceutical companies. Amongst them, the greatest impact in world market will come from those Indian pharmaceutical companies, which adopt technology innovations to differentiate their products and make them more competitive both domestically as well as globally.
This will also help the companies to counter competition from other nations supplying low-cost drugs to the global market. Similarly, ongoing threat of counterfeit drugs also needs to be taken care of if Indian pharma companies have to increase their sales in global market.
The biggest business that will have a significant economic impact on Indian pharma is its outsourcing capacity. India has potential to soon become a global outsourcing base for manufacturing. The industry’s adherence to good manufacturing practice (GMP) would help to transform it to even greater heights as an international hub for production. The industry has acquired a commendable position in the global pharma market as a supplier of high-quality, low-cost generic drugs and also has moved up the value chain into more challenging segments such as drug discovery and development.
Mergers & acquisitions is another trend that is driving the pharma business in India. Recent times have seen some of the significant global tie-ups within the pharma industry. Some of these tie-ups are as below.
Recent major mergers & acquisitions between global & Indian firms
Sun-Merck Joint Venture (JV): Sun and Merck have formed JV to develop, manufacture and commercialize new combinations and formulations of innovative, branded generics in the emerging markets. Under the JV, Sitagliptin and Sitagliptin+Metformin have already been commercialized in the Indian markets.
Lupin-Lilly JV: They entered into collaboration to promote and distribute Lilly’s Huminsulin range of products in India and Nepal.
Cadlia_Bayer JV: The venture will sell brands from both companies in Indian markets.
Biocon-Pfizer JV: This collaboration will give Pfizer exclusive rights to commercialize Biocon products globally including co-exclusive rights with Biocon in Gernmany, India and Malaysia.
Universal Medicines – Aventis: Aventis has acquired Universal Medicines for over $ 100mn.
The huge potential of the Indian pharmaceuticals market is impossible for foreign companies to ignore, given that it will be one of the top 10 sales markets by 2020. PwC notes a number of methods for foreign companies to explore opportunities in India.
- Outsourcing – Recently there has been a move from outsourcing lower value and manufacturing activities to more research-based capabilities
- Licensing – It is being used to establish a common platform in order to gain rapid in-market acceptance and create a complete therapy range
- Franchising – Lots of franchisees are entering India involving foreign brands
- JVs-Joint ventures with domestic partners bring local expertise & network and ease in getting government approvals. Pharmaceuticals are deemed a high priority area so approvals can be quick.
- Subsidiaries – Some multinational companies such as Pfizer and Novartis are taking advantage of the potential in India through partially or wholly owned subsidiaries.