Scenario of pharmaceutical market in India

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Harjeet | 27 May, 2013
The pharmaceutical industry in India is most progressive and advanced among all the developed and developing countries. The industry has provided great employment opportunities to thousands of people, apart from contributing greatly towards the Indian economy.

Today, India is among the top five pharmaceutical emerging markets in the world. The market is expected to grow at a compound annual growth rate (CAGR) of 14-17 percent over 2012-16. The total revenues of the market stood at US$ 11 billion and are estimated to be US$ 74 billion by 2020.

Growth in the sector

Pharma sector in India is growing at a rapid pace, marked by a number of mergers and acquisitions (M&A) and growth in foreign expenditure. The sector is going to be a major area of focus in the coming years as Indian medicines are increasingly becoming popular in many parts of the world because of the cost effectiveness and easy availability. The manufacturing cost of Indian pharma companies is up to 65 percent lower than that of US firms and almost half of that of the European manufacturers.
The domestic pharmaceutical market is expected to register a strong double-digit growth of 13-14 percent in 2013 on back of increasing sales of generic medicines, continued growth in chronic therapies and a greater penetration in rural markets.
The growth of healthcare sector also provides huge opportunities for investing in India's pharma space. The growing network of private and public hospitals in the country generates a huge demand for industrial cleaning equipment, waste management, hygiene products and laundry solutions.

Pharmaceutical exports

The Ministry of Commerce has targeted Indian pharma sector exports of US$ 25 billion by 2014 at an annual growth rate of 25 percent.

Last year, the industry registered exports of US$ 13 billion at a growth rate of 30 percent, as per Dr P.V. Appaji, Director-General, Pharmaceutical Exports Council of India (Pharmexcil). The Government has also planned a 'Pharma India' brand promotion action plan spanning over a three-year period to give an impetus to generic exports.

FDI inflows

The cumulative drugs and pharmaceuticals industry in India attracted foreign direct investment (FDI) inflows worth US$ 10,308.75 million during April 2000 to February 2013, according to the Department of Industrial Policy and Promotion (DIPP)

Recent initiatives

The Department of Pharmaceuticals has prepared a 'Pharma Vision 2020' document for making India one of the leading destinations for end-to-end drug discovery and innovation and for that purpose, the department provides requisite support by way of world class infrastructure, internationally competitive scientific manpower for pharma research and development (R&D), venture fund for research in the public and private domain and such other measures.

Pharmexcil has removed the need for overseas investors to get a no-objection from their joint venture (JV) partner before venturing out on their own or roping in another local firm. This will promote the competitiveness of India as an investment destination and be instrumental in attracting higher levels of FDI and technology inflows into the country.

FDI policies

FDI, up to 100 percent, under the automatic route, is permitted for green field investments (when a company establishes a subsidiary in a new country and starts its own production) in pharmaceutical sector in India
FDI, up to 100 percent, under the government approval route, is permitted for brown field investments (when company purchases an existing plant or firm, rather than construction of a new plant)

* Harjeet is an Indian - born mass-market novelist, who covers the world internet related topics . He writes columns and articles for various websites and internet journals in the domain of Investments and Investing in India.
* The views expressed by the author in this article are his/ her own and do not necessarily reflect the views of SME Times. (Source: ArticlesBase.com)