An Overview of Pharmaceutical Industry in India

Overview:

The Pharmaceutical industry is a component of the bigger healthcare sector of a country and is majorly related to medications. It deals with various aspects related to medications like their research and development, manufacturing and their marketing. These different aspects are interrelated to each other’s and comprises of different players like drug makers, drug marketers and also entities like biotechnology corporations.

The Global Pharma Industry is around $1.2 Trillion in Size (According to Global Use of Medicines report from the IQVIA Institute for Human Data Science). Whereas Indian Market Size is roughly around $17.50 Billion (Domestic Market Size).

The core objective of the industry is to make available the drugs that provide safety from infections, maintain health, and also help cure diseases. Since, the industry has a direct impact on the global population, it comes under the regulatory ambit of various organisations like World Health Organisation, US Food and Drug Administration and Medicines and Healthcare Products Regulatory Agency. The regulations are in the area of drug safety, their pricing and quality and also extend to patenting of drugs produced.

The Past and the Present

Through the course of last ten years, the industry has seen a lot of progress. There is more emphasis on research, especially in the domain of bio-science. Continuous improvement in technology along with improved infrastructure has helped arresting the growth of various major infections like HIV and different forms of cancer.
Some of the major players in the industry globally are Johnson & Johnson, Novartis, Pfizer, Sanofi, GlaxoSmithKline, etc. Certain Biotech companies like Gilead Sciences, Amgen Inc, Celgene Corporations have also made a name for themselves.

Components of the Industry

The pharma industry is very similar to other industries but yet very different. It has raw materials manufacturers, finished goods producers, Research & Development entities, marketing companies and consumers. But the industry has a lot more regulations and require more capital than other industries.

• Drug Manufacturing – the manufacturers include Active Pharmaceutical Ingredients (API) and formulations manufacturers. They make
  •  API which are the raw materials used in the production of drugs,
  • Generic drugs
  • Patented Drugs
  • CRAM (contract research and manufacturing services) - entities providing services to carry out research and produce drugs under licenses from other companies
• Drug Marketing – here, the companies work towards augmenting the market reach of the drugs. A company may not be able to sell its products due to a lack of license or marketing network and that is the situation when these entities come to play their part.
• Biotechnology – pharma companies usually rely on their in-house research centers or are dependent upon biotech companies that provide them with licenses to produce patented drugs.

Growth Drivers

Aging Population - The average human life span has improved globally with the course of time. With increased longevity, come infections and diseases and this has prompted more research on aging population to ensure proper health and avoid infections.

Changing lifestyles – The people have a very hectic schedules nowadays, and consequently have unhealthy eating habits, no time to exercise and have a proper sleep. It has caused problems like high obesity, poor digestion, and various other issues. This has opened a big door of opportunity for the industry to produce drugs and supplements to mitigate the impact of these problems.

Increased income – On average, the middle class has been growing in number in both the developing and developed nations. People now have relatively high disposable income and also have started to become more health conscious, with expectations of better healthcare solutions.

The Outlook

There have been various challenges for the industry like political uncertainty, pricing pressures, higher pressures on payers to reduce costs, consolidation, less approvals by USFDA, strict regulations. To tackle these, the industry has put some emphasis on some structural changes like inorganic capability building, leveraging technologies, foraying into unexplored fields of science. IQVIA, a healthcare consulting firm forecasted in its January 2019 report, that the global pharmaceutical industry will exceed US$ 1.5 trillion by 2023, with a CAGR of somewhere between 3%-6%. India in this market is the biggest supplier of generic drugs globally. It meets 50% of the global demand for various vaccines, 40% of generic demand in US and 25% of all medicines in UK. It is anticipated to grow at a CAGR of 22.4% over the five years ending in 2020.

Talking in terms of Indian market, the export growth is expected to improve from 2019 to 2024 as the various industry players have substantially invested in R&D to improve their offerings. The expenditure has seen a rise with a CAGR of roughly about 20%. Certain regulations like more stringent measures by USFDA for the maintenance of facility, cleanliness and enhanced manufacturing systems are a cause of concern for the pharma players. Things like rising per capita income, more penetration in healthcare and increasing incidents of chronic diseases, Ayushman Bharat would give an impetus to the industry. Another positive for the Indian industry comes in the form of Bulk Drugs, whose exports are likely to grow on the back of disruption in the Chinese supply Chain like the shutdown of factories due to regulations pertaining to pollution, explosions and API quality issues.
 
Some of the things which will define the sector in the times ahead include:

• Novel technologies like CRISPR/Cas9, gene-modification tools. But these will be available for a small set of patients because of their cost and accessibility.
• Life sciences companies’ constant strive in Artificial Intelligence, Machine Learning and Deep learning in scout for breakthroughs for discovery and development of medicines.
• In the Indian scenario, the government is pondering over a step to exclude the drugs made from locally produced ingredients from the price control measures in order to stimulate the indigenous manufacturing and reduce the reliance on imports. In 2018-19, the pharma companies based in India bought about $2.4 billion worth of bulk drugs from China, and that is worth about 68% of total raw materials imported.  However, one impediment in this would be to get the doctors to prescribe medicines produced from local APIs. So, until the doctors’ loyalty to brands remain, changes like these to price control regime will prove to be ineffective. 

Conclusion

Despite representing nearly 18% of the world Population the size of Pharma Industry is a mere 1.5%. This shows the kind of untapped market that exists in India. This figure maybe an understatement because of availability of Ayurvedic Medicines which is hard to take into account if we talk about the remote sections of the society. Apart from it, a very low Income per capita which a lot of analyst predicts will be go up in the near future is a positive sign in this domain. Nevertheless, there are various challenges that the sector faces like Price Control which leads to various MNC’s preferring neighboring countries from where high earning populace get themselves treated. Trying to remove the price cap from locally sourced API is a good move but its trickle down effects will depend on whether the locally sourced APIs are comparable in quality to those of foreign market and the costing of these APIs (Given the price sensitive market that India is).