Gaurav N. Brahmbhatt, Head - Pharma Business, Health Care at Home India

Global Perspective

Global pharmaceutical market is highly dynamic and in the midst of major transition, where it’s facing many challenges and at the same time is bracing itself for newer ways to drive growth. Demographic, epidemiological and economic shifts are transforming the pharmaceutical and biotech markets. Major scientific and technological advances will reinforce this trend and also generate huge scope and opportunities for pharma and biotech industry in near future.

The pharmaceutical industry is responsible for the research and development (R&D), running clinical trials, production and marketing of medications and also developing newer molecules, innovative technologies of genomics, proteonomics etc. which have led to the production of new medicines, diagnostic tools and lines of research medications to meet the substantial demand. Pharmaceutical industry contributes to the welfare of humanity and provides significant socio-economic benefits to society through creation of jobs, supply chains and community development. Thus, its immense importance as a global sector is evident.

Indian Scenario

The Indian pharmaceutical industry is one of the most significantly emerging markets and has been witnessing phenomenal growth in recent years and is likely to be in the top 10 global markets by value by 2020. From its nascent stages in the 1970s, the Indian pharma industry has become a mature industry.

Currently, it is regarded as one of the fastest-growing pharma industries globally, primarily driven by a large and aging population, changing disease profile due to urbanisation, improvements in healthcare infrastructure and financing, increasing health care expenditure as people are becoming more affluent and living longer and active private-sector participation. Such changes have increased the demand for better healthcare and for medications. Industry has evolved from traditional model of pushed marketing to current model where companies are focusing more on disease prevention, disease education, running various patient support programmes or groups, providing value added services and developing more innovative and technology driven ideas which can address the changing trends.

The Indian pharmaceuticals market (IPM) is estimated to grow at about 15 per cent CAGR over the next five years and will outperform the global pharma industry and expected to reach US$ 55 million by 2020. IPM is the third largest in terms of volume and thirteenth largest in terms of value, as per a report by Equity Master. The IPM is highly fragmented with about 24,000 players. Most of the players in the market are small-to-medium enterprises; 250 of the largest companies control 70 percent of the Indian market. India gained its foothold on the global scene with its innovatively engineered generic drugs and active pharmaceutical ingredients (API), and is now seeking to become a major player in outsourced clinical research as well as contract manufacturing and research.

FUTURE: The Road Ahead

As the industry embarks on its road to future, it has taken a giant leap and in order to sustain a robust growth rate companies have been exploring newer methods of partnerships such as joint ventures and licensing of innovator products and technologies. Industry is witnessing newer trends such as health insurance, mobile technology and growth of medical devices industry, which is further giving the impetus to the growth of pharma industry.

The main opportunities for the Indian pharmaceutical industry are in the areas of:

Health Insurance

Health expenditure in India is largely funded out of the pocket, and this is reflected in the poor per-capita expenditure on health in India. Health insurance is thus critical to the growth of the healthcare market, and to the growth of the pharma market in India, in particular.

Medical technology

The medical technology sector, which plays a vital role in the delivery of healthcare services in India was valued at 2.75 billion USD in 2008 (NIPER) and is expected to reach 14 billion. USD in 2020 at a CAGR of approximately 15 percent. The medical equipment segment forms the largest share of the medical technology sector with over 55 percent of the total market size followed by medical implants segment which constitutes over 25 percent.

mHealth

There are 913 million mobile subscribers in India as per the estimates of Telecom Regulatory Authority of India (TRAI) for August 2012. The ubiquitous mobile phone offers opportunities for pharma companies in a variety of ways:

• Improving awareness

• Enhancing compliance

• Performing authentication

Generics (including biotechnology generics)

Indian companies are among the world leaders in the production of generics and vaccines constituting nearly 70 to 80 percent of the market. India is the largest provider of generic drugs globally accounting for 20 percent of global exports in more than 65 countries worldwide. India has the largest number 523, FDA approved drug manufacturing facilities outside the U.S. Indian firms now account for 35 percent of Drug Master File applications and one in four of all U.S. Abbreviated New Drug Application (ANDA) filings submitted to the FDA.

Biotechnology

India's biotechnology industry is expected grow at an average growth rate of around 30 per cent a year and reach US$ 100 billion by 2025. Biopharma, comprising vaccines, therapeutics and diagnostics, is the largest sub-sector contributing nearly 62 percent of the total revenues at Rs 12,600 crore (US$ 1.9 billion) according to Ministry of External Affairs. India hopes to sweep the market in bio-generics and contract manufacturing as drugs go off patent and Indian companies upgrade their manufacturing capabilities. So biotech is seen as a hot field with a lot of growth potential.

Outsourcing [Contract Manufacturing (CM), Information Technology (IT) and R&D]

Contract Manufacturing (CM): CRAMS (Contract Research and Manufacturing Services) is one of the fastest growing segments in the pharmaceutical and biotechnology industry due to the international standard quality at low cost. TechNavio's analysts forecast the CRAMS market in India to grow at a CAGR of 32.67 percent over the period 2013-2018.

Information Technology (IT): India's status as an information technology superpower, with access to specialist skills and 24/7 work hours, is a huge advantage as it strengthens its position as the destination of choice for contract research, including drug discovery because of its rich talent pool, technological innovation, creditable quality, operational flexibility, cost effectiveness, time-to-market and competitive advantage.

Research and Development (R&D): India was previously known as the generic capital of the world owing to the wide spread reverse engineering industry, this is now changing and companies in India have started to develop and innovate drugs with focus shifting more towards R&D. According to global innovation survey, India is identified as India as an R&D “hotspot” due to cost-effectiveness, available skills and expertise, growing biotech industry, established R&D centres, market access, biodiversity and government incentives and initiatives.

Role of Pharmaceuticals & Biotech Consultants

With the growth of pharmaceutical companies, consulting has recently developed into an industry of its own. Consultants work with leading pharmaceutical and biotech companies to help them to create the foundations for future growth and improve the effectiveness, efficiency of their current business operations and approaches to R&D. They help their clients to become the future market leaders by focusing on the priorities that will make them agile and adaptable to attractive market opportunities.