Indian Pharmaceutical Industry Overview » Future Prospects

The dream of Indian pharmaceutical manufacturing companies for making their presence known globally and competing with the pharmaceutical companies from the developed countries like the United States, Europe, and Japan is now coming true. With new growth opportunities emerging in the pharma world, the pharmaceutical industry has shown great interest in India pharma sector due to its sustained economic growth, healthcare reforms and patent-related legislation.

As per WTO, from the year 2005, India has granted product patent recognition to all new chemical entities (NCEs) i.e., bulk drugs developed then onwards. The Indian Government's decision to allow 100 percent foreign direct investment into the drugs and pharmaceutical industry is expected to aid the growth of contract research in the country. There has also been significant technology transfer to 100% Indian subsidiaries of MNCs since 2005.

Indian pharmaceutical interests in making a mark on the global scene got an upsurge when Dr. Reddy's licensed two of its anti-diabetic molecules to Novo Nordisk and when Ranbaxy licensed its Novel Drug Delivery System (NDDS) of ciprofloxacin to Bayer. MNCs in India faced the problem of having a very high drugs price control order (DPCO) coverage, weakening their bottom lines as well as hindering their growth through the launch of new products. DPCO coverage is expected to be diluted further in the near future benefiting the MNCs. New legislation is also expected in the OTC segment increasing the number of brands in the Over the Counter (OTC) segment.

The Indian pharmaceutical industry is also getting increasingly U.S. FDA compliant to harness the growth opportunities in areas of contract manufacturing and research. Indian companies such as Ranbaxy, Sun Pharma, and Dr. Reddy's are increasingly focusing on tapping the U.S. generic market. There are many multinational pharmaceutical companies who are looking forward to India as an attractive destination for Research & Development, contract manufacturing, clinical trials conduct and generic drug research. In 2005, the market value of Indian Pharmaceutical Industry was US$ 45billion in 2005, and the generic sector is expected to grow to US$ 100 billion in the next few years.

According to a report by McKinsey Global Institute, healthcare sector in India grew from 4% of average household income in 1995 to 7% in 2005, and is expected to grow to 13% by 2025. According to the same report, if the Indian economy continues on its current high growth path, then the Indian pharmaceuticals market will undergo a major changes in the next decade. It is expected that the market will triple to US$ 20 billion by 2015 and can easily become one of the the world's top-10 pharmaceuticals markets. The absolute growth of US$14 billion will be next to the growth potential of the US and China, and the country is in the same league as the growth in Japan, Canada and the UK. n terms of scale, the Indian pharmaceutical market is ranked 14th in the world. By 2015, it will rank among the top 10 in the world, overtaking Brazil, Mexico, South Korea and Turkey.