The pharmaceutical industry in India was valued at US$ 33 billion in 2017 and Generic drugs account for 20 per cent of global exports in terms of volume, making the country the largest provider of generic medicines globally and expected to expand even further in coming years According to the Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, domestic pharmaceutical market turnover reached Rs 129,015 crore (US$ 18.12 billion) in 2018, growing 9.4 per cent year-on-year and exports revenue was US$ 17.28 billion in FY18 and US$ 19.14 billion in FY19. Hyderabad, Mumbai, Bangalore and Ahmedabad are the major pharmaceutical hubs of India.
The Government started to encourage the growth of drug manufacturing by Indian companies in the early 1960s, and with the Patents Act in 1970. However, economic liberalization in 90s by the former Prime Minister P.V. Narasimha Rao and the then Finance Minister, Dr. Manmohan Singh enabled the industry to become what it is today.
Indian companies carved a niche in both the Indian and world markets with their expertise in reverse-engineering new processes for manufacturing drugs at low costs which became the advantage for industry.
India’s biopharmaceutical industry clocked a 17 percent growth with revenues of Rs.137 billion ($3 billion) in the 2009-10 financial year over the previous fiscal. Bio-pharma was the biggest contributor generating 60 percent of the industry’s growth at Rs.8,829 crore, followed by bio-services at Rs.2,639 crore and bio-agri at Rs.1,936 crore
In 2002, over 20,000 registered drug manufacturers in India sold $9 billion worth of formulations and bulk drugs. 85% of these formulations were sold in India while over 60% of the bulk drugs were exported, mostly to the United States and Russia. Most of the players in the market are small-to-medium enterprises; 250 of the largest companies control 70% of the Indian market.Thanks to the 1970 Patent Act, multinationals represent only 35% of the market, down from 70% thirty years ago.
Most pharma companies operating in India, even the multinationals, employ Indians almost exclusively from the lowest ranks to high level management. Homegrown pharmaceuticals, like many other businesses in India, are often a mix of public and private enterprise.
In terms of the global market, India currently holds a accountable share and is known as pharmacy of the world and biggest generic supplier. India gained its foothold on the global scene with its innovatively engineered generic drugs and active pharmaceutical ingredients (API), The country accounts for around 30 per cent (by volume) and about 10 per cent (value) in the US$ 70-80 billion US generics market. Growth in other fields notwithstanding, generics are still a large part of the picture. India is the largest provider of generic drugs globally. Indian pharmaceutical sector industry supplies over 50 per cent of global demand for various vaccines, 40 per cent of generic demand in the US and 25 per cent of all medicine in UK.
Quality
Between 2015 and 2017, there were 31 FDA warning letters to Indian pharmaceutical companies citing serious Data Integrity issues, including data deletion, manipulation or fabrication of test results, see “An Analysis Of 2017 FDA Warning Letters On Data Integrity” By Barbara Unger, Unger Consulting Inc.According to Outsourcing Pharma in 2012 75% of counterfeit drugs supplied world over had some origins in India, followed by 7% from Egypt and 6% from China.[10]
The Central Drug Standards Control Organisation (CDSCO), the drug regulatory authority of India conducted a nationwide survey in 2009 and announced that of “24,000 samples [that] were collected from all over India and tested. It was found that only 11 samples or 0.046% were spurious.” In 2017 a similar survey found 3.16% of the medicines sampled were substandard and 0.0245% were fake. Those more commonly prescribed are probably more often faked.
Exports
Exports of pharmaceuticals products from India increased from US$6.23 billion in 2006-07 to US$8.7 billion in 2008-09 a combined annual growth rate of 21.25%.
India exported $11.7 billion worth of pharmaceuticals in 2014.Pharmaceutical export from India stood at US$ 17.27 billion in 2017-18, and is expected to grow by 30 per cent to reach US$ 20 billion by the year 2020.The 10 countries below imported 56.5% of that total:
| Rank | Country | Value (US$) | Share |
|---|---|---|---|
| 1 | United States | $3.8 billion | 32.9% |
| 2 | South Africa | $461.1 million | 3.9% |
| 3 | Russia | $447.9 million | 3.8% |
| 4 | United Kingdom | $444.9 million | 3.8% |
| 5 | Nigeria | $385.4 million | 3.3% |
| 6 | Kenya | $233.9 million | 2% |
| 7 | Tanzania | $225.2 million | 1.9% |
| 8 | Brazil | $212.7 million | 1.8% |
| 9 | Australia | $182.1 million | 1.6% |
| 10 | Germany | $178.8 million | 1.5% |
Patents
A significant change in intellectual property protection in India was the 1 January 2005 enactment of an amendment to India’s patent law that reinstated product patents for the first time since 1972. The legislation took effect on the deadline set by the WTO’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, which mandated patent protection on both products and processes for a period of 20 years. Under this new law, India will be forced to recognise not only new patents but also any patents filed after 1 January 1995. In December 2005, the TRIPS pact was amended to incorporate specific safeguards to ensure that the public health concerns of affordability and accessibility for a large section of people in developing countries was not compromised. These amendments came into force only in January 2017, however, after two-thirds of the member countries ratified them. In the domestic market, this new patent legislation has resulted in fairly clear segmentation. The multinationals narrowed their focus onto high-end patents who make up only 12% of the market, taking advantage of their newly bestowed patent protection. Meanwhile, Indian firms have chosen to take their existing product portfolios and target semi-urban and rural populations.
Product development
Indian companies are also starting to adapt their product development processes to the new environment. For years, firms have made their ways into the global market by researching generic competitors to patented drugs and following up with litigation to challenge the patent. This approach remains untouched by the new patent regime and looks to increase in the future. However, those that can afford it have set their sights on an even higher goal: new molecule discovery. Although the initial investment is huge, companies are lured by the promise of hefty profit margins and thus a legitimate competitor in the global industry. Local firms have slowly been investing more money into their R&D programs or have formed alliances to tap into these opportunities.
Small and medium enterprises
As promising as the future is for a whole, the outlook for small and medium enterprises (SME) is not as bright. The excise structure changed so that companies now have to pay a 16% tax on the maximum retail price (MRP) of their products, as opposed to on the ex-factory price. Consequently, larger companies cut back on outsourcing and what business is left shifted to companies with facilities in the four tax-free states – Himachal Pradesh, Jammu and Kashmir, Uttarakhand, and Jharkhand. Consequently, a large number of pharmaceutical manufacturers shifted their plant to these states, as it became almost impossible to continue operating in non-tax free zones. But in a matter of a couple of years the excise duty was revised on two occasions]first it was reduced to 8% and then to 4%. As a result, the benefits of shifting to a tax free zone was negated. This resulted in, factories in the tax free zones, to start up third-party manufacturing. Under this these factories produced goods under the brand names of other parties on job work basis.
As SMEs wrestled with the tax structure, they were also scrambling to meet the 1 July deadline for compliance with the revised Schedule M Good Manufacturing Practices (GMP). While this should be beneficial to consumers and the industry at large, SMEs have been finding it difficult to find the funds to upgrade their manufacturing plants, resulting in the closure of many facilities. Others invested the money to bring their facilities to compliance, but these operations were located in non-tax-free states, making it difficult to compete in the wake of the new excise tax. Swas Medicare is one of the small scale leading pharmaceutical company of India, which is owned and founded by a Physician.
Largest companies
Sales, marketing, and business
Multinational Pharmaceutical Companies ranked as per active presence of sales, marketing and business in India
| Pfizer GlaxoSmithKline Sanofi Aventis Merck Johnson and Johnson Amgen Novartis Roche | Bristol-Myers Squibb Wyeth EliLilly Schering-Plough Abbott Takeda Boehringer Ingelheim Astellas |