1

EXTERNAL ANALYSIS FOR INDIAN PHARMACEUTICAL INDUSTRY

9-Mar-12

By
2

Kranthi Kiran P Krishna Chaitanya P Raviteja Ch Aditya B

9-Mar-12

Introduction
3

The marketplace for this industry is the human body but only as long as it holds diseases. A key strategy to improve profits is to develop drugs that simply mask the symptoms while avoiding the cure!! The worst part is that, the eradication of diseases is by its very nature opposed to the interests of the pharma investment industry.

9-Mar-12

Overview about Indian Pharma Industry

4

Worlds 13th largest in terms of value. 4th largest in terms of volume. Highly fragmented with more than 20,000 registered manufacturing units. Leading 250 pharmaceutical companies control 70% of the market. Market leader holds only 7% of the market share.
9-Mar-12

15

9-Mar-12

Overview about Pharma

6

Industry

Highly Regulated
Patent Act (1970), Product Patent Regime(2005)
NPPA

Research Oriented
Product Patent Regime(2005)

Limited Customer Choice

End-user different from influencer

Highly dependent on development of Health Infrastructure

9-Mar-12

STRATEGIC GROUP MAPPING

9-Mar-12

9-Mar-12

9-Mar-12

Industry Competition/Rivalry
10

Most competitive industry in the country with as many as 20,000 different players. Top player in the country has only 7% market share and top five have 20%. High growth prospects. Even though need for working capital is high, patents for generic drugs are available easily and it does not require skilled personnel.
9-Mar-12

Continued
11

Generic drugs - Rivalry is mainly due to cost competitiveness. Has remained the same even after 2005. Patented drugs Rivalry due to product differentiation. Has increased after 2005.

9-Mar-12

Bargaining Power of Buyers

12

End user of the product is different from the influencer. Consumer has no choice but to buy what doctor says. Buyers are scattered and they as such does not wield much power in the pricing of the products. Can be slightly higher in case of generic drugs.
9-Mar-12

Bargaining Power of Suppliers

13

Pharma industry depends upon several chemicals. Very competitive and fragmented industry. Chemicals are largely a commodity. Pharma industry can switch from their suppliers without incurring a very high cost. Can be slightly higher in case of patented drugs. 9-Mar-12

Threat of new entrants(Generic drugs)

14

Most easily accessible industries for an entrepreneur in India. Capital requirement for the industry is very low, creating a regional distribution network is easy. The bigger players are moving towards R&D, thus providing an opportunity for new entrants. Supplier can go for forward integration to become a pharma company.
9-Mar-12

Threat of new entrants(Patent drugs)

15

Very high capital and skill required. The field of discovery and developments of new chemical entity (NCEs), had more misses than hits and very few discoveries reach the final stages of approvals Established firms will make it very difficult for a new entry.

9-Mar-12

Threat of Substitutes
16

One of the great advantages of the pharma industry is that it is almost irreplaceable. Demand for pharma products continues and the industry thrives. Recent improvements in biotechnology and biopharmaceuticals can prove to be a threat. Home remedies
9-Mar-12

CONSOLIDATED ANALYSIS
17

9-Mar-12

Conclusion
18

In the domestic market, the new patent legislation resulted in fairly clear segmentation. The big players narrowed their focus onto high-end customers who make up only 12% of the market, taking advantage of their newly bestowed patent protection. Meanwhile, the smaller firms have chosen to take their existing product portfolios and target semi-urban and rural populations
9-Mar-12

19

THANK YOU

9-Mar-12