Indian Pharmaceutical

Sector
Submitted to
Prof. Utpal Chattopadhyay

NAME ROLL NO.

Kamlakar Gaikwad 29
Sanket Purohit 58
Ajay Jagadhane 04
Amol M 47
Dipak Sutar 78
Megha Gupta 24
Priyanka Mehta 44
Indian Pharmaceutical Market – USD 11.6 billion opportunity

Summary of Indian Pharmaceutical market

Indian pharmaceutical market currently
Market Size (US$ mn) 8700
estimated at U$ 8.7 bn As % of total health expenditure 25.3

Globally, India market ranks fourth in As % of GDP 1.3

terms of volume and the 13th largest by As % of world market 1.6

value Growth rate % 7.2

Per capita expenditure (US$) 8
Industry has shown growth of 15.8%
Source: Epsicom
CAGR for last five years

Predicted to grow by over 7 % to become a Projected Pharmaceutical market

US$ 11.6 bn opportunity by 2009 12 10.8

11.6
10.1
Indian organized pharmaceutical sector 9.4
10 8.7
8.2
controlled 70 per cent of the domestic
8
market

US$ bn
6

Indian pharmaceutical majors launched

4
more than 10 products per year, global
2
Source: Epsicom
MNCs averaged 1-2 annually.
0
2004 2005 2006 2007 2008 2009
India’s Cost Competitiveness key advantage

Western companies able to provide a step

down of 30-40% in cost by a mere site
transfer to India
Low cost Companies in India able to reduce the
heaven India
upfront capital cost of setting up a project
by 25-50%

Indian companies have been able to

Lower Filing establish USFDA approved plants at about
Cost
50% lower capital costs

Benefit of continuous cost reduction

Process Innovation
through process re-engineering.

India’s huge resource of skilled scientists,

Manpower Cost Advantage
available at a fraction of the cost in
developed countries
Capital efficiency
DEMAND FACTORS BOOSTING INDIAN PHARMA
INDUSTRY GROWTH

A huge patient base

Increasing incomes
Improving healthcare infrastructure
An increase in lifestyle-related diseases
Penetration of health insurance
Adoption of patented products
Patent expiries and aging population in the US,
Europe, and Japan
Self-reliance--displayed by the production of 70
per cent of bulk drugs and almost the entire
requirement of formulations within the country
SUPPLY RELATED FACTORS CONTRIBUTING INDIAN
PHARMA INDUSTRY GROWTH

 Low cost of production

 Low R&D costs

 Innovative Scientific manpower

 Strength of National Laboratories

SUPPLY RELATED FACTORS CONTRIBUTING INDIAN
PHARMA INDUSTRY GROWTH

 CRAMS(Contract Research and Manufacturing

Services)

 Major pharmaceutical companies worldwide outsource part of

their research and manufacturing activities to low-cost
countries

 Global market for Contract Research and Manufacturing

Services (CRAMS) in 2007 is estimated to be USD55.48 billion.
India, with more than 80 US FDA-approved manufacturing
facilities, is one of the most preferred location

 The Indian CRAMS market stood at USD1.21 billion in 2007,

and is estimated to reach USD3.16 billion by 2010.
SUPPLY RELATED FACTORS CONTRIBUTING INDIAN
PHARMA INDUSTRY GROWTH

GENERICS

 Generic medicines cost 20% to 90% less than the

original price of their brand-name equivalents.

 Indian generic manufacturers will grow to more

than US$ 70 billion as drugs worth approximately
US$ 20 billion in annual sales will face patent
expiry in 2008

 Indian drug companies account for over 25 per

cent of the total generic drug applications made
to the FDA of US, which accounts for over half of
the US$ 60 billion market
 Overview
 An integrated, research based, international
pharmaceutical company producing a wide range of
quality, affordable generic medicines
 Amongst the top 10 Global Gx companies
 Ground presence in 49 countries, products sold in >
125 countries
 International business ~ 80% of sales
 Manufacturing locations in 11 countries
 > 12,000 employees, 50 nationalities
 Strong Generics & Innovative research capabilities
 The Generic (Gx) Landscape
Fundamental drivers of growth
30 Estimated % of regional population over

60
Ageing population 25

20

15
Europe US

2005 2010 2015 2020 2025

Total Healthcare Spending, % of

16.0 GDP
15.0

High healthcare costs 12.0 11.1

10.1 9.9
8.4
7.9 7.7 7.7
8.0

4.0

0.0
United Germany France Canada Italy Japan Spain UK (1)
States

Source: World Bank, DB Global Pharma Report Aug 2005, OECD Health Data 2005 (1) – 2002, UBS European Pharma Report, Sep 2005
 Sales figure of top 5
companies

2007 2006 2005 2004 2003

Ranbaxy 4190.53 4086.84 3434.06 3497.61 3398.20

Dr. Reddy’s 3783.26 2003.26 1548.76 1740.20 1598.30

Cipla 3438.24 2897.41 2181.26 2090.98 1599.00

Sun Pharma 2191.55 1640.95 1163.12 959.75 732.96

 Amlodipine is currently the largest molecule which has gone off patent in
Japan and represents the biggest generic opportunity so far in the
Japanese generic market. The product has a market size of around USD 2
Billion
 Used as an anti-hypertensive and in the treatment of angina
 First independently developed generic product outside of Japan to have
received marketing approvals of MHLW (Ministry of Health & Labor Welfare)
Japan
 Reform process by the Government of Japan is reflected in the growing
generalization of medicines.
 Ranbaxy is well positioned to offer its affordable generic alternatives to the
Japanese healthcare system
 RANBAXY DAIICHI SANKYO DEAL

STRATEGIC COMBINATION CREATES INNOVATOR AND GENERIC

PHARMA POWERHOUSE
 Acquisition of a majority stake of more than 50 per cent in Indian pharma
major Ranbaxy .Japanese firm would acquire the entire 34.82 per cent
stake from its current promoters Malvinder Singh and family. It would also
make an open offer for an additional 20 per cent stake in Ranbaxy at a
price of Rs 737 per share . Post closing basis, the transaction would value
Ranbaxy at US$8.5 billion.
• The combined market capitalization of both companies would be around
30 billion dollars making it the world's 15th largest pharmaceutical
company.
 Strategic highlights of this deal are

 Complementary business combination that provides

sustainable growth by diversification that spans the full
spectrum of the pharmaceutical business;
 An expanded global reach that enables leading
market positions in both mature and emerging markets
with proprietary and non-proprietary products;
 Strong growth potential by effectively managing
opportunities across the full pharmaceutical life-cycle;
 Cost competitiveness by optimizing usage of R&D and
manufacturing facilities of both companies, especially in
India
 Business Model

Global Reach Product

Portfolio
Developed & Generics, Branded Gx
Emerging markets Branded, OTC

Innovative Therapeutic
Research Width & Depth
NCE, NDDS, Niche Acute, Chronic
FTF

14