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Indian Pharmaceutical Export Market

Perspective on key export destinations


July 2015

Report by
Mr. Irish Pereira
Pharma Market Analyst

Table of Contents

Indian Pharmaceutical Industry Snapshot


Indian Pharmaceutical Industry Overview
Indian Pharmaceuticals Export Market
Key players in Indian pharma industry
Pharma players and their export destinations
Emerging trends in Indian Pharma Market
Bibliography

Indian Pharmaceutical Industry - Snapshot


Industry structure

Global Contribution

There are around 3,000


pharma companies
About 10,500
manufacturing units in India

Indian pharmaceutical
industry accounts for about
1.4 % of the global
pharmaceutical industry
Ranks third in terms of
volume of production
14th largest by value

Regulatory Status

Domestic Market size


The Indian pharma market is
expected to grow at a CAGR of
23.9% to USD 55 bn by 2020
from USD 12 bn in 2013

Exports
India exports to more than
200 countries of the World
Indian Pharmaceutical
Exports amounted to USD
15.2 bn in 2014-15
US alone accounted for
around 27% of total pharma
exports followed by
European Union and Africa
* 1 USD = 63 INR

India

1,400 WHO GMP approved


manufacturing units
584 sites USFDA approved
(Highest number of
approved plants outside US)
1,105 CEPs,
950 TGA approvals

Growth Drivers
Domestic growth driven by
higher penetration in tier-II
& III cities and the largelyuntapped rural market
Increased health Insurance
penetration
Rising healthcare spending's
Growth in the number of
lifestyle diseases
Governments Pharma
Vision 2020 to make India a
major hub for end-to-end
drug discovery
3

Table of Contents

Indian Pharmaceutical Industry Snapshot


Indian Pharmaceutical Industry Overview
Indian Pharmaceuticals Export Market
Key players in Indian pharma industry
Pharma players and their export destinations
Emerging trends in Indian Pharma Market
Bibliography

Expected to grows to USD 55 billion by 2020, Indian pharma


market
Indian Pharmaceutical Sector Market Size (USD bn)

The Indian pharmaceutical sector which started in 1930 with

Bengal Chemical and Pharmaceutical Works, was virtually non


Source: Mckinsey, IBEF India

existent till 1970

55

The Indian pharmaceuticals market which was valued at USD 6

billion in 2005, increased at a CAGR of 9.4 per cent to USD 12

billion in 2013 and is expected to expand at a CAGR of 24 per cent

24

12

2005

2013

to USD 55 billion by 2020


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

2015F

2020F
* 1 USD = 63 INR

markets by incremental growth and sixth largest market globally


in absolute size

Indian pharmaceutical market segments by value (Feb 2014)


Anti-infective drugs command the largest share (16 %) in the

Anti- infectives
16%

Cardiovascular (CVS)

29%

Gastro-intestinal

13%
7%
7%

11%
8%

Source: IBEF India

9%

Indian pharma market


The cardiovascular segment represents 13 per cent of the market

Respiratory

share; its contribution is likely to rise due to the growing number

Vitamins, Minerals

of cardiac cases in India

Pain/analgesic
Anti diabetic
Others

Top five segments contribute nearly 57 per cent to the total drugs

consumption

Source: PWC, Mckinsey, Aranca Research, Extracted from IBEF Report dated August 2014, * 1 USD = 63 INR
All Indian Origin Chemists & Distributors, Department of Pharmaceuticals, Planning Commission Report, Aranca Research

will be continued to be dominated by Branded Generics


Patented (Innovator) Vs Generics Scenario*
2010

2015E

2%

Drivers of Branded Generics


Global Context

Substitution (when
an innovator product goes off-patent)
is the key driver

Indian Context

Difference in Brand Equity of a


product (which is created by adopting
superior communications strategies
with physicians) is the key driver

10%

Patented
Generic
90%

98%

Source: Mckinsey India

What are Branded


Generics ?

Any non patented molecule with


brand name, which is other than
the innovators name, is termed as
a branded generic

Share of Global Patent Pipeline (By therapeutic area)

27%

29%
7%
10%
Source: Mckinsey India

17%
10%

Branded Generics which are identical, or bioequivalent to

innovator drugs continue to dominate the Indian pharma market


While the patent law will encourage the launch of new and more

patent protected products, the effort on innovation is still led by


the foreign players rather than indigenous companies
As per Mckinsey India Patent share model, Patented products

Anti- Cancer

are expected to capture 10% share of total Indian pharma market

Central Nervous System

in 2015 and the growth is attributed to an improvement in the

Anti -lnfective

implementation of patent laws and spread of health insurance

Gastro- Intestinal

By 2015, Mckinsey expects the top five therapeutic areas namely

Cardiovascular

neuropsychiatry, oncology, anti-infective, gastro-intestinal, CVS to

Others

contribute 60-70 % of total patented product launched

Source: * Mckinsey Reports titled India Pharma Inc. Capitalising on Indias Growth Potential Dated 2010 &
Report India Pharma 2015 Unlocking the Potential of the Indian, Pharmaprojects

API is the largest segment of the Indian Pharmaceutical Market

Active
Pharmaceutical
Ingredients (APIs)

Indian
Pharmaceutical
Industry

Contract Research &


Manufacturing
Services (CRAMS)

Formulations

Fragmented market with more than 1,000 players


CRAMS industry is estimated to have reached USD8.0
bn in 2015, up from USD4.04.5 bn 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 bn
Double-digit growth expected over the next five years

Biosimiliars

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

Biosimilars sector is expected to touch USD 1.4 bn by


2016 from USD 482 mn in 2011
The government plans to allocate USD 70 mn for local
players to develop biosimiliars

Source: BMI, Datamonitor, Kemwell Biopharma, Chemical Pharmaceutical Generic Association, ICRA Report Estimates, Aranca Research,
pharmanewsprwire.com. Extracted form IBEF report dated August 2014

* 1 USD = 63 INR

Indian Pharmaceutical sector is driven by confluence of demand,


capabilities and policy

Reduction in approval
time for new facilities
Focus on specialised
pharma education
Improved accessibility
for BPL (Below Poverty
Line) people
Pharma Vision 2020 by
the Indian
governments Dept. of
Pharmaceuticals aims
to make India a major
hub for end-to-end
drug discovery
MoUs with USFDA,
WHO, Health Canada,
etc. is expected to
boost growth in the
Indian Pharma sector

Increasing penetration of health insurance


Accessibility of drugs to greatly improve
Growing number of stress related diseases due to
change in lifestyle
Better diagnostic facilities
Per capita sales of pharmaceuticals is expected to
expand at a CAGR of 16.3% to USD 27 by 2016 from
USD 16 in 2011

Demand side drivers


Policy Support

Growth
Drivers

Indian Pharmaceutical Sector

Supply side drivers

India a major manufacturing hub for generics


Cost advantage - Indias cost of production is nearly 60
% lower than that of the US and almost half of that of
Europe; Expected to create opportunities for Indian
companies in emerging markets and Africa
546 sites registered at USFDA
Patent drugs worth USD 171 bn are estimated to go
off patent Between 2010 and 2015 providing great
opportunity to Indian companies

Source: Pharmaceutical Export Promotion Council. Extracted from IBEF Report Dated August 2014

* 1 USD = 63 INR

Indian Pharmaceutical sector SWOT Analysis


STRENGHTS

WEAKNESS

Qualified English-speaking manpower


Fair protection of intellectual property rights.
India has skilled scientists / technicians / management

Low investments in innovative R & D


Majority of companies lack the ability to compete with

MNCs for New Drug Discovery, Research and


Commercialization of molecules on a worldwide basis due to
lack of resources.
Rapidly increasing costs of skilled manpower such
as scientists / regulatory compliance personnel /
pharmaceutical lawyers / International business
development

personnel at affordable cost leading to low cost of innovation


/ manufacturing / capex costs / expenditure to run cGMP
compliance facilities and high quality documentation and
process understanding
Data management functions for clinical trials
Strength in Chemistry which are essential for
drug discovery.

SWOT
India

has significant export


opportunities. US$40 billion
worth of drugs in the USA and
US$25 billion worth of drugs in
Europe are going off patent .
This translates to an opportunity of additional export of
USD 19.5bn
Cost advantage in contract manufacturing & Research
multi-national companies find it compelling to shift their
production bases to countries offering such cost advantage.
India has a very high potential for developing as a centre
for international clinical trials due to rich diversity.

OPPURTUNITIES
Source: Extracted from Report Can India be the Leader in Global Generics

Product patent regime poses serious

challenge to domestic industry unless


it
invests
in
research
and
development.
Improper systems and issues complicates conducting clinical

trials scope in India


MNCs play different strategies to pull down Indian
companies
Drug Price Control Order puts unrealistic on product prices
and profitability

THREATS
9

PHARMEXCIL Facilitating agency for Indian Pharma Exports

The Pharmaceutical Export Promotion Council of India (PHARMEXCIL) has been set up in 12.5.2004.
by Government of India to promote the Indian pharmaceuticals industry around the world

Key functions of PHARMEXIL


Facilitation of exports of Drugs, Pharmaceuticals, Biotechnology
products, Herbal medicines and Diagnostics etc.
Authorized to issue Registration-cum-Membership Certificate (RCMC)
which is one of the requirements for the importers and exporters of
commodities
Concerned with giving export thrust to the various products through
visits of delegations to various markets abroad, organizing of seminars,
workshops and exhibitions

Indian
Pharma
Exports

Pharmexcil also holds Buyers/ Sellers meets and compiles detailed data
base on pharma exports and problems in exporting pharma products

Source: Department of Pharmaceuticals Government of India Annual Report 2014-15

10

Table of Contents

Indian Pharmaceutical Industry Snapshot


Indian Pharmaceutical Industry Overview
Indian Pharmaceuticals Export Market
Key players in Indian pharma industry
Pharma players and their export destinations
Emerging trends in Indian Pharma Market
Bibliography

11

India continues to be a hub for low cost pharma research and


production in turn aiding manufacturing for exports
Indian Pharmaceutical Exports (USD bn)

US accounted for ~ 27% of India's pharmaceutical exports in FY'14

as against 25.5 per cent in FY'13, making it the single largest

Export of Drugs, Pharmaceuticals & Fine


chemicals
2015-16E
17.20
2014-15

export destination
Major share (~55%) of Indian Pharmaceuticals is exported to

15.20

2013-14

regulated western markets, highlights not only about excellent


quality of Indian pharmaceuticals but also about reasonableness

14.84

of the prices

2012-13

14.59

2011-12
2010-11

As per India Ratings & Research, India's pharma exports are

13.20

expected to grow at 10-12 per cent and reach ~ USD 17.2 bn by


2015-16 from USD 15.2 bn last fiscal

10.43

2009-10

8.96

2008-09

8.67

Exports growth are likely to be driven by fully operational USFDA

* 1 USD = 63 INR
Source: Pharmexil

Formulations share in Total Pharma Exports (2014-15)

facilities, led by restored regulatory approvals and thereby


increased exports to US and regulated markets

Top Pharmaceuticals Export Destinations (Value wise USD mn)


Source: Ind Ra Research, CMIE

Formulations
API & Others

29%

71%
Source: Pharmexil

Source: Pharmaceutical Export Promotion Council of India (Pharmexcil), Department of Pharmaceuticals, India Ratings & Research

* 1 USD = 63 INR

12

Indias Pharma Industry is aptly known Global pharmacy of the


world, with exports to more than 220 countries around the globe
Top 25 destination countries of Indias pharmaceutical exports during 2013-14 (INR mn)

India is the pharmacy of


the worldWe hope to
achieve 10-15 per cent
growth in export of
pharmaceutical products
during 2015-16,"
PV Appaji,
Director General,
Pharmexcil

Source: Pharmexcil Annual Report 2013-14, Department of Pharmaceuticals, Economic Times article

13

Table of Contents

Indian Pharmaceutical Industry Snapshot


Indian Pharmaceutical Industry Overview
Indian Pharmaceuticals Export Market
Key players in Indian pharma industry
Pharma players and their export destinations
Emerging trends in Indian Pharma Market
Bibliography

14

Key players in Indian Pharma Industry


Indian Pharma Market Market share

Major Indian Pharma Companies (By Revenue-USD mn)


FY 2014

2571

SUN PHARMA

2091
LUPIN
1760
CIPLA
1664
AUROBINDO
1,283
CADILA
1120
JUBILANT
921
GLENMARK
900
WOCKHARDT
773
TORRENT
664
IPCA
517
PIRAMAL
457
* 1 USD = 63 INR
DR REDDY'S

Multinational Pharma Companies (By Revenues-USD mn)


419
372
305
176
137

27%
73%

Indian Pharma Companies


Multinational Pharma companies

Sun Pharma + Ranbaxy


Abbott + Subsidiaries
Cipla
Zydus Cadila
Alkem+ Subsidiaries
Mankind
Lupin
Pfizer
Macleods
Emcure+Zuvetus
Others

8.9%
6.2%
5.0%
4.2%
3.6%
3.6%
3.4%
3.0%
2.9%
2.7%
56%

Source: AIOCD AWACS MAT March 2015

The Indian pharmaceutical industry is highly fragmented with about 24,000

players (330 in the organised sector). The top 10 companies make up for
more than a third of the market.
Sun pharma and Abbott represent top Indian and Multinationals pharma

companies respectively

FY 2014
GSK INDIA
ABBOTT* INDIA
SANOFI INDIA
PFIZER INDIA
NOVARTIS

Branded Generic Sales March 2015

2014

* 1 USD = 63 INR

* Excluding subsidiaries revenues

Sun pharma acquired Ranbaxy in 2014-15 to be largest Indian pharma

company
Till 2014 MNCs had 74 brands (25% of total) among the top 300 brands in

the domestic market.

Source: Company Annual Report 2013-14, Research Report By Centrum Broking, Pharmabiz.com article titled Current scenario and future challenges in pharma
segment dated Jan 2013

15

Table of Contents

Indian Pharmaceutical Industry Snapshot


Indian Pharmaceutical Industry Overview
Indian Pharmaceuticals Export Market
Key players in Indian pharma industry
Pharma players and their export destinations
Emerging trends in Indian Pharma Market
Bibliography

16

Sun Pharma
Key Company Facts
Name

SUN PHARMA

Headquarters

Mumbai India

Employees

30,000

Revenues (USD mn)

Differentiating Strategy of the company


597 ANDAs filed & 438
approved ANDAs across
multiple therapies in US
159 ANDAs pending
FDA approval, including
complex generics, FTF
and pure generics

Market leader

FY 15

4,376

FY 14

2,571

Global Presence

150 Countries

Website

http://www.sunpharma.com/
Companys Strategic plans

US Business:
Enhance share of specialty/branded business
Continue to focus on complex generics and high entry

in India & Strong


positioning in Emerging Markets
Highly leveraged in US with 64% of
total revenues
Sun Pharma is the 5th largest Global
Specialty Generic Pharma Company

Geographical Revenue Mix (% of Net Formulation Sales)


FY 15

25

FY 14

24
India

64

7 6

52
US

Emerging Markets

14

ROW Markets

Source: Company Annual Report

Geography

Focus Therapeutic Areas

barrier segments
Gain critical mass in key therapeutic segments
ROW Business:
Gain critical mass in key emerging markets
Enhance product basket in emerging markets
Improve profitability in developed European markets

India

CNS, CVS, Diabetology

US

Dermatology, oncology, controlled


substances, ophthalmology

Europe:

Complex generics and differentiated


products

Future markets for particular focus will include Latin

Emerging Markets:
Mexico, Brazil,
Russia & CIS, South
Africa

Chronic therapies like the metabolic


syndrome, diabetes, neurology and
cardiology

America, Russia & CIS, South Africa and a few Asian


markets with focus on specialty products

Source: SPIL Financials Q4 FY15,SUNS Investor Presentation June 2015, Annual Report 2013-14

17

Dr. Reddys Lab


Key Company Facts

Differentiating Strategy of the company

Name

DR. REDDYS LABORATORIES


LIMITED (DRL)

Headquarters

Hyderabad, India

Employees

20,000

Revenues (USD mn)

Dr. Reddys Laboratories' revenue model is

based on global markets rather than Indian


pharma market and its prime focus is on
building a sustainable Biosimilar business
US and Europe markets alone accounts for ~

FY 15

2,352

FY14

2,091

56% of the company revenues as against 12 %


from India

68 pending
ANDAs & 2
pending
NDAs of
which 43
para-IV and
14 are first to
file products

Global Presence

20 Countries

Geography

Focus Therapeutic Areas

Website

http://www.drreddys.com/

India

Oncology, Nephrology, Urology,


Hepatology and Rheumatology

Russia

Gastro intestinal, Antiinfective, Oncology, Pain &


Dermatology

North America: US

Dierentiated Formulations and


discovery & development of 'New
Chemical Entity' or 'NCEs'. In the
following therapeutic areas:
Neurology
Dermatology
Pain management
Anti-Infectives
Gastro- Intestinal

Companys Strategic plans

Complex Generics leverage to Russia, CIS, Venezuela


Complex Generics enabled entry in Brazil, Colombia, East. Africa
Expand 2025 China potential through First Generics to launch
Leverage innovator Oncology, Gastro-intestinal to Emerging Mkts.

Europe
Geographical Revenue Mix (% of Net Sales)
FY 15

43.7

12

FY 14

41.8

15

North America Generics


India

12.1 4.9 8.8


11.9 5.3 5.6

Russia & CIS


Europe Source: Company Annual Report

CIS: Ukraine,
Kazakhstan, Uzbekistan
and Belarus
ROW: Venezuela, South
Africa, Australia, New
Zealand and markets in
Southeast Asia

Source: Company Annual Report 2013-14, DRLs Investor Presentation, Financial Analyst report by Prabhudas Lilladher dated May 2015,

18

Lupin
Key Company Facts
Name

LUPIN LIMITED

Headquarters

Mumbai India

Employees

14,000

Revenues (USD mn)

Differentiating Strategy of the company


US

FY 15

2,000

FY 14

1,760

Global Presence

100 Countries

Website

http://www.lupin.com/

Geography

Focus Therapeutic Areas

India

Cardiology, CNS, Diabetology, antiasthma, Gynaecology, anti-infective,


Gastro-intestinal and Oncology

US & Canada

Anti-asthama and COPD, Dermatology,


Ophthalmology, Pediatrics, CNS

Europe

CNS

Japan

CNS, Cardiovascular, Gastroenterology


and injectable segments

South Africa

Cardiovascular, CNS & OTC segments

Philippines

Oncology

Mexico & LATAM

Ophthalmic

& Europe markets remain the


principal growth engines for the Company
and are the major contributors to Lupins
global revenues and overall profitability
Lupin is targeting total complex generics
filings in US market worth USD 51.2bn

Total of 210
ANDA filings till
date, of which 111
have been
approved (18
approvals in FY15)

Companys Strategic plans


Lupin has made Acquisitions a vital route to their growth strategy

and are targeting geographies, complementary product portfolios


and therapies absent in their current portfolio
Primary Focus US / EU / potentially Japan
Therapy Focus on Pediatrics, Dermatology, GI, Ophthalmics
Future Expansion areas: EU, Russia) & LatAm
Lupin enetered into starategic partnership with Merck Serono to
leverage their distribution in major markets such as Brazil,
Mexico, Indonesia, Phillipines, Africa,and Central Eastern Europe
and Emerging markets
Lupin entered into a distribution agreement with Salix
Pharmaceuticals Inc, USA to gastroenterology products for Canada

Geographical Revenue Mix (% of Net Formulation Sales)


FY 15

26

50

3 12

4 6

FY 14

25

49

3 13

4 6

India

USA

Europe

Japan

Source: Company Annual Report 2013-14, DRLs Investor Presentation, Financial Analyst report by Prabhudas Lilladher dated May 2015,

South Africa

ROW

19

CIPLA
Geographical Revenue Mix (% of Net Formulation Sales)

Key Company Facts


Name

CIPLA LIMITED

Headquarters

Mumbai, India

Employees

20,000

Revenues (USD mn)

FY 15

1,801

FY14

1,664

FY 14

44.0

FY 13

44.0
India

USA

14
15

36
8.0

South Africa

33
ROW Markets

Source: Company Annual Report

Companys Strategic plans

Global Presence

170 Countries

Business de-risked via front end build in 17 select markets eg.

Website

http://www.cipla.com/

Yemen, Iran, Sri Lanka, Myanmar, Morocco and Algeria;


Integration of operations on track
Tender wins in South Africa- Respiratory, ARV and newer areas
such as mental health and cardiovascular
Launch of Salmeterol Fluticasone in select European markets:
Croatia, Germany, Sweden, Slovakia, Czech; added Belgium and
Hungary in recent month

Differentiating Strategy of the company


More

200 formulation
projects underway

Increased

R&D spending
revenue for FY 2014-15

development
~6.2%

of

Received ATMP classification from EMA


and granted process patent in China and
North America

Formulation filings: North America (12),


Europe (78), International (>1800)

36 DMFs filed in Europe, North America


and International

Total ANDAs
filed: 147
Approved: 79
Tentative
approval/
awaiting
approval:68

Source: Company Annual Report 2013-14, Cipla Investor Presentation 2015

Geography

Focus Therapeutic Areas

North America

Respiratory, oncology and


anti-infectives

Europe

Respiratory, HIV, pain


management, OTC

South Africa

ARV, Respiratory, Mental


Health, Cardiovascular,
Womens Health
20

Aurobindo
Differentiating Strategy of the company

Key Company Facts


Name

Aurobindo Pharma Limited

Headquarters

Hyderabad, India

Employees

9500

Revenues (USD mn)

FY 15

1,923

FY14

1,283

A global company

with more than 85%


of operating income
coming
from
international
operations

Total ANDAs (USA) 376 - Approved


193 - Under review - 183
Formulations Dossiers in key advanced
markets (incl. Multiple registration into EU.
SA and Canada) - 2184

Companys Strategic plans

Global Presence

125 countries

Website

http://www.aurobindo.com/

Aurobindo plans to strengthen business presence in potentially

Geographical Revenue Mix (% of Net Formulation Sales)

large markets such as Japan, Brazil, South Africa, Canada,


Australia, North & West Africa and Middle East
Other focus markets being developed are Mexico, Columbia

Ukraine, Russia Kenya, Tanzania, Ethiopia, Nigeria Vietnam,


Malaysia, Philippines

FY 15

51

FY 14

33

63

USA

Europe

12

ROW

10
Geography

Focus Therapeutic Areas

US

Oncology, Hormones, Peptides, Nonbetalactam, CNS, CVS, ARV, Anti Infective,


OTC (Anti Allergy, laxatives, oral
antiseptics and rinses, first aid care,
sunscreen & ophthalmic)

Europe (Post
Actavis
Acquisition)

Hormone, Oncological Penem, Oral


Contraceptive, Dermatological, Ophthalmic

16

Anti -Retrovirals
Source: Company Annual Report

Source: Company Annual Report 2013-14, DRLs Investor Presentation, Financial Analyst report by Prabhudas Lilladher dated May 2015,

21

Cadila Healthcare
Differentiating Strategy of the company

Key Company Facts


Name

Cadila Healthcare

Headquarters

Ahmedabad, India

Employees

16,000

Revenues (USD mn)

Cadila Healthcare(Zydus) is one of the

FY 15

1144

FY14

998

Global Presence

US, Europe (France & Spain) LatAm,


South Africa. +25 Emerging markets

Website

http://zyduscadila.com/
Companys Strategic plans

oldest players in the Indian formulations


market with strong positions in key
segments
of
Cardiovasculars,
Gastrointestinals, Womens Healthcare.
Globally, Cadila has a strong presence in
the regulated markets of the US, Europe,
Latin America and South Africa

Geographical Revenue Mix (% of Net Formulation Sales)


FY 14

40

FY 13

35

44
India

Cadila Healthcare aims to be a leading global healthcare provider

with a robust product pipeline; achieve sales of over USD 1600


mn by 2015 and to be research-based pharmaceutical company
by 2020
According to Industry sources Cadila Healthcare, is in late-stage
talks to acquire smaller rival Claris Lifesciences which has
speciality generic drugs including blood products and antiinfectives, as well as the delivery systems for such products, such
as vials, ampoules and intravenous bags.
The deal if successful is expected to fortify Cadilas Global
expansion as half of the Clariss sales come from 70 emerging
markets, including Brazil and Russia.

US formulation:
235+ ANDA
fillings of which
85+ approvals
Brazil - 100+
filings- 40
approvals

USA

28
Europe

Emerging Markets

6 6 4
7

6 5
Brazil

Source: Company Annual Report

Geography

Focus Therapeutic Areas

India

CVS, Female healthcare Respiratory, Gastro


Intestinal and Dermatology

Brazil

Branded Products in Female healthcare,


Hepatology, Diabetes, CNS, CVS and
Nutraceuticals

Mexico

Cardiology and Central Nervous System

Source: Company Annual Report 2013-14, DRLs Investor Presentation, Financial Analyst report by Prabhudas Lilladher dated May 2015,

22

Torrent
Differentiating Strategy of the company

Key Company Facts


Torrent

Name

Torrent Pharma

Headquarters

Ahmedabad, India

Employees

8600

Revenues (USD mn)

FY 15

739

FY14

664

Pharma
has
strong
presence
in
domestic market with
focus and leadership in
CVS and CNS segments
Torrents US revenues
grew by 44% in 2014-15

US: 48 ANDA approvals (including


5 tentative approvals)
Pipeline consists of 22 pending
approvals and 47 products under
development
Brazil : Approvals - 31 products
whereas 25 products under approval

Global Presence

40 countries

Geography

Focus Therapeutic Areas

Website

http://www.torrentpharma.com/

US

Metabolic disorders and Vascular Diseases

India

Cardiology, Diabetology, Oncology


Gastroenterology, Derma,, Gynaecology
and Pain

Asia
(Excluding
India)

CVS, Neuropsychiatry & Diabetalogy,


Gastro Intestinal and Anti-Bacterial

Europe

CNS, CVS, and Gastro Intestinal

Russia & CIS

cardiovascular , Central Nervous System


and Gastrointestinal

Brazil

CVS, CNS, Oral Anti Diabetic/obesity (OAD)

Thailand

Cardiovascular, Neuro-Psychiatry and AntiDiabetic segment

Companys Strategic plans


Torrent pharma plans to acquire dermatology business of

Mumbai-headquartered Encore group to tap both domestic as


well as the developed markets like US and Europe
The company is increasingly focusing on Chronic segments like
cardiac, CNS, anti-diabetic which has registered huge growth
potential in domestic market

Geographical Revenue Mix (% of Net Formulation Sales)


FY 15

37

FY 14

31
India

USA

19
20
Europe

21
25

Brazil

14

14

10

ROW
Source: Company Annual Report

Source: Company Annual Report 2013-14, DRLs Investor Presentation, Financial Analyst report by Prabhudas Lilladher dated May 2015,

23

Wockhardt
Differentiating Strategy of the company

Key Company Facts


Name

Wockhardt Limited

Headquarters

Mumbai, India

Employees

8600

Revenues (USD mn)

Wockhardt

FY 15

711

FY14

767

is a leading Indian
Pharma company with most of its
revenues leveraged on major
international markets
Post Import alerts by US FDA in
2013-14,company has realigned its
global business model

US Business: Total 14
ANDAs during FY15 and a
total of 69 ANDAs
pending approval till date
UK(Europe): 11 new
filings in FY14-15

Companys Strategic plans

Global Presence

20 countries

Website

http://www.wockhardt.com/

Geographical Revenue Mix (% of Net Formulation Sales)

Wockhardt

aims to capitalise the generic and biotech


opportunities in the Regulated and Emerging Countries

The company has focussed on LATAM as major global expansion

destination
Company has boosted its R&D focus with 14% y-o-y growth in

FY 15

FY 14

36

27

25

45

India & Emerging Markets

research expenditure

39

29

USA

Geography

Focus Therapeutic Areas

India

Pain Management, Anti -Diabetes,


Respiratory and CNS

UK

OTC & Dental

France

Osteoarthritis, Rheumatology, Arterial


hypertension & chronic heart failure and
Phlebotonic Vasculoprotector.

Ireland

OTC & Nephrology

Europe
Source: Company Annual Report

Source: Company Annual Report 2013-14, DRLs Investor Presentation, Financial Analyst report by Prabhudas Lilladher dated May 2015,

24

Table of Contents

Indian Pharmaceutical Industry Snapshot


Indian Pharmaceutical Industry Overview
Indian Pharmaceuticals Export Market
Key players in Indian pharma industry
Pharma players and their export destinations
Emerging trends in Indian Pharma Market
Bibliography

25

Key market trends

Chronic segments poised dominate the Indian pharma market in future

Consolidation in US Markets has forced Indian Pharma Multinationals to


diversify to Non US Markets

Indian pharma companies eye US complex generics market; boosting its R&D
spend

Indian pharma majors line to tap the Japanese Generic Opportunity

26

Chronic segments poised dominate the Indian pharma


market in future
The Great Indian Chronic Opportunity
% Value growth terms - 5 Year CAGR
INDIAN PHARMA MARKET
11.3
ANTI- DIABETIC
ANTI - NEOPLASTICS
UROLOGY
DERMATOLOGY
VITAMINS/NUTRIENTS/MINERALS
CARDIAC
NUEROLOGY/CNS
STOMATOLOGICALS
GASTRO INTESTINAL
RESPIRATORY
PAIN & ANALGESICS
ANTI -INFECTIVES

Chronic
growth ?

The chronic segment has witnessed significant growth in last five

20.5
19.1
16.3
16.1
13.3
12.9
12.2
11.5
11.3
10.5
8.7
7.1 Source: AIOCD AWACS

Increased incidence of chronic lifestyle


disorders such as Diabetes, cardiac disorders

Target companies to tap Indian


Chronic opportunity
Sun Pharma
Lupin
Torrent Pharma
Dr. Reddys

Key segment sin Chronic


segment
Cardiovascular Gastro
Intestinal
Neurology
Anti Diabetes

Oncology

years as compared to acute segment which continue to dominate


the of Indian pharma market
According to data from industry body AIOCD, the last five years

have seen the highest volume/value growth in chronic therapies


like anti-diabetic medicines followed by urology and dermatology
and have grown at more than double the industry growth rate
The trend is likely to sustain, given the increased incidence of

chronic lifestyle disorders in a steadily prospering economy


Moreover value wise growth of chronic segment was partly due to

the government's drug price control policy (DPCO) which capped


the prices of many of the drugs in the acute therapies portfolio
Gearing up for the growth of chronic illnesses in the country,

Indian pharma companies have been gradually changing their


portfolio from being predominantly acute therapies focussed to
include more of the higher-margin chronic therapies

Source: Economic Times article titled Chronic illness sees a spurt in business opportunity for pharma market
dated 19 November 2014

27

Consolidation in US Markets and rise in USFDA alerts has


forced Indian Pharma to diversify to Non US Markets
USFDA Import Alerts to Indian Pharma Companies

slowdown in product approvals and channel consolidation in US market

Source:USFDA

32
7

21

2011

2012

2013

Why
Diversify
to Non US
Markets ?

Glenmark
New Target
Geographies
for Indian
Pharma Firms

In recent years here has been extensive consolidation between pharmacy

managers (Drug distributors) and retail chains with around 16 mergers and
acquisitions in 2012 and 10 in 2013

MAR-14

Reduce overall dependence on US


Market due to:
Retail CONSOLIDATION
affecting margins
Slow rate of FDA APPROVALS &
increased FDA IMPORT ALERTS

Indian Pharma Firms


affected by
Consolidation in US
Mkt
Dr. Reddys,
Sun Pharma,

Indian Pharma companies have begun to diversify to Non US Markets to outset

Indian Pharma Firms


affected by USFDA Import
Alerts
Sun Pharma
Ranbaxy Labs Dr. Reddys
Cadila
Wockhardt
Glenmark
Lupin
Ipca
Aurobindo

Brazil,
Mexico,
Venezuela
Japan

It has started to hurt revenues of Indian generics players, whose sales come

mainly from the US market, as with falling number of players in the wholesale
and retail space their bargaining power has risen
Moreover drug exports to US which accounts for 25 per cent of the countrys

cumulative drug exports, are struggling with decreased product approvals,


increased audit inspections and resultant import alerts From USFDA
Hence major Indian pharma companies which are witnessing muted revenue

growth rate than previous year, are diversifying to new geographies


Few pharma companies are focussing on European countries with aim to

counterbalance the heavy reliance currently on the US market for export of APIs
and niche formulations from the country

Spain, Greece, Russia,


Kazakhstan
Germany,
France
Italy

Source: Indian Express article titled Consolidation in US hurts Indian generic firms Dr Reddys Lab, Sun Pharma dated 24 Nov 2012, Financial Express
article titled Indian drug firms may lose out as US pharma supply chain consolidates dated 3 March 2014

28

With growing complex generic opportunity in US, Indian


drug makers are investing in R&D of complex products
As the US complex generics segment growing at twice the pace of

US Patent Expiry Forecast

the commoditised generics, Indian drug makers are investing in


R&D to develop complex products

2013

Source: USFDA Orange Book, Oct 2011)

The complex generics market accounts for ~ 50% of the US generics

207

253

235
162

203

209

171

market and is valued at USD 25 bn with the potential to outperform


the growth rate of the overall market by at least two times
Pharmaceutical companies to enjoy higher pricing power as

competitive intensity in the complex generics segment is relatively


low with four to seven sellers per product

2013

2014

2015

2016

2017

2018

2019

2020

What are
Complex
Generics ?

Complex generics are large and complex in


comparison to unbranded, branded, and companybranded genericsformulations or active ingredients
used to treat chronic and life threatening diseases
like cancer, Hepatitis C, and HIV

Complex
Generic
Interest ?

Low Competitive intensity in the complex


generics segment allows pharmaceutical
companies to enjoy higher pricing power

Indian Pharma Firms targeting Complex


Generic Opportunity
Lupin
Dr. Reddys
Sun Pharma (dermatology, oncology,
controlled substances, ophthalmology)
Wockhardt

Evidently, Indian Pharma companies to tap the potential in the

opportunity have reinvested their cash flow in establishing


dedicated facilities and raised their R&D expenses towards
development of niche complex products such as injectables, oral
contraceptives, and transdermals
For example, Lupin has invested in a dedicated facility for

ophthalmic and oral contraceptives in Indore, (Madhya Pradesh


state),
Dr Reddys Laboratories has set up an injectables facility in Vizag

(Andhra Pradesh State)


Wockhardt aims to continue supplies from the Shendra facility

India has the second


highest number of US
FDA approved plants
after the US and
accounts for 22% of
overall US FDA
approved facilities

(Maharashtra state) once it is inspected and approved


Between 2009 and 2014 Indian pharmaceutical companies have

monetised opportunities from US market arising from rising


healthcare costs and due to blockbuster drugs going off patent
registering a healthy growth in sales to reach USD 5 bn in FY14
from USD 1.4 bn in FY 09

Source: Indian Express article titled Consolidation in US hurts Indian generic firms Dr Reddys Lab, Sun Pharma dated 24 Nov 2012, Financial Express
article titled Indian drug firms may lose out as US pharma supply chain consolidates dated 3 March 2014

29

Indian pharma majors line to tap the Japanese


Generic Opportunity
The Japanese pharmaceutical market is the second largest

pharma market in the world and is valued at over USD 115 bn


However according to industry sources, Indias exposure to

Japan is a mere one per cent


With its healthcare reforms aimed to reduce healthcare

budgets and generic friendly policies adopted by the Japanese


government, the market is gradually opening up to generics
The Japanese Govt. aims to increase generic penetration to ~

34 % by 2017
Among Indian drug makers, Lupin has a significant presence in

the Japanese pharmaceutical market


Indian government through Pharmexcil is incentivising Japanese

entry for Indian firms for APIs and formulations

Japanese
Interest ?

Low generic penetration offering huge potential


Japanese market offers PREMIUM for generics

Target companies
interested to tap Japanese
generic market

Japan Pharma Market 2013


27%
73%
Patented

Generic

Source: Lupin Estimates

Lupin
Dr Reddys
Cadila
Intas
Sun Pharma

Glenmark
Shasun Pharma
Sami Labs
Aurobindo Pharma

Source: Economic Times article titled The Japanese Are a Brand Conscious People, Says Lupin MD dated 10 May 2012, Business Standard article titled How Lupin
cracked the Japanese pharma market dated 19 Jan 2012, Lupin Website , Pharmexcil stands for Pharmaceuticals Export Promotion Council of India

30

Indian Pharmaceutical Industry Snapshot


Indian Pharmaceutical Industry Overview
Indian Pharmaceuticals Export Market
Key players in Indian pharma industry
Pharma players and their export destinations
Emerging trends in Indian Pharma Market
Bibliography

31

Bibliography

Databases/Reports
Mckinsey Reports titled India Pharma Inc. Capitalising on Indias Growth Potential

Dated 2010
Mckinsey Report India Pharma 2015 Unlocking the Potential of the Indian of the

Indian pharmaceuticals market


All Indian Origin Chemists & Distributors
Department of Pharmaceuticals, Government Of India

Websites
www.pharmexcil.com/
www.idma-assn.org ((Indian Drug Manufacturers' Association)
www.pharmabiz.com/

Company Annual reports, Investor presentations


Press articles from Economic Times, Indian Express
32

Feedback & suggestions


are welcome
Contact Details
Mr. Irish Pereira
Pharma Market Analyst
Email: irishpereira@gmail.com
Mob: +91-8087068343

33