Indian Pharmaceutical Market Outlook - Enhanced purchasing power, rural market penetration and expanded access to healthcare attracting Big Pharma investment

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Indian Pharmaceutical Market Outlook - Enhanced purchasing power, rural market penetration and expanded access to healthcare attracting Big Pharma investment

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Indian Pharmaceutical Market Outlook - Enhanced purchasing power, rural market penetration and expanded access to healthcare attracting Big Pharma investment

Summary

GBI Research's new report "Indian Pharmaceutical Market Outlook - Enhanced purchasing power, rural market penetration and expanded access to healthcare attracting Big Pharma investment" provides in-depth analysis of the trends, issues and challenges facing the Indian pharmaceutical market. It is built using data and information sourced from proprietary databases, primary and secondary research and in-house analysis by GBI Research's team of industry experts. The Indian pharmaceutical industry grew from $0.8 billion in 1980 to $21.73 billion in 2010 and is expected to grow further as Multinational Companies (MNCs) enter the market. Although pharmaceutical giants such as GlaxoSmithKline (GSK) have been present in the market for years, the rising income of the middle-class population, changing patent laws, low-cost skilled labor and low-priced infrastructure in India have attracted other MNCs. With the current scenario, the market is expected to grow at a Compound Annual Growth Rate (CAGR) of 12% during the 2011–2015 period. Branded generics are expected to become more prevalent in India as many global players are planning to launch them after their patents expire.

The once highly fragmented Indian pharmaceutical industry is undergoing strategic consolidations with the aim of emerging as a highly organized sector. With the inflow of MNCs' R&D operations the industry will continue to experience a trend of M&A. Deals and acquisitions are set to continue due to low-cost infrastructure and labor as patent expiries and the thin pipelines of major companies will cause revenues to fall.

The Indian government has implemented various initiatives to increase insurance coverage and reduce healthcare costs, such as the National Rural Health Mission and Jan Aushadhi. A revised pricing policy was also proposed in 2011, which will increase government control to over 60% of drugs.

Rising income levels, changing disease patterns, increasing reach of healthcare, reduced out-of-pocket expenditure and growth of new products such as generics and biosimilars are expected to drive growth in the future.

Scope

- Macroeconomic environment of the pharmaceutical industry in India, covering demographic analysis, drivers, and barriers

- Important industry characteristics, looking at healthcare policies, regulations, distribution, pricing, taxation, spending, insurance and reimbursement

- Market analysis of segments such as prescription medicines, biotechnology, over-the-counter medicines and Contract Research and Manufacturing Services (CRAMS)

- Annualized market data from 2005 to 2010 for important therapeutic segments

- Competitive profiling of five major domestic and international companies operating in the Indian pharmaceutical market

- Analysis of licensing, partnership and M&A deals that took place between 2007 and 2011

Reasons to buy

- Develop market-entry and market-expansion strategies by identifying the leading segments poised for strong growth

- Device a more tailored country strategy through understanding key drivers of and barriers to the pharmaceutical market

- Develop key strategic initiatives by understanding leading companies' key focus areas

- Accelerate and strengthen your market position by identifying key companies for M&A and strategic partnerships

Table of Contents

1 Table of Contents 5

1.1 List of Tables 8

1.2 List of Figures 9

2 Indian Pharmaceutical Market Outlook – Introduction 10

3 Indian Pharmaceutical Market Outlook – Overview 11

3.1 Global Pharmaceutical Industry Landscape 11

3.2 Macro View of the Indian Pharmaceutical Sector 12

3.3 Demographic Analysis 13

3.3.1 Population Size, Growth, and Structure 13

3.3.2 Crude Death Rate 15

3.3.3 Infant Mortality Rate 16

3.3.4 Life Expectancy at Birth 17

3.4 Driver and Barriers 19

3.4.1 Drivers 19

3.4.2 Barriers 21

3.5 SWOT Analysis of Indian Pharmaceutical Industry 22

4 Indian Pharmaceutical Market Outlook – Industry Characteristics 23

4.1 Healthcare Policy 23

4.1.1 National Health Policy 2002 23

4.1.2 National Rural Health Mission 23

4.1.3 National Urban Health Mission 24

4.2 Intellectual Property Rights in India 25

4.2.1 Effect of Patent Laws on Pharmaceutical Production in India 26

4.2.2 Key Impact of the New Patent Laws on India 27

4.2.3 Patent Act 2005 – First Step towards Improving IP Protection 27

4.2.4 IPR Enforcement Rules 2007 27

4.2.5 Trademarks Bill 2007 27

4.2.6 Drugs and Cosmetics Act (Amendment) 2008 27

4.3 Drug Distribution Structure 28

4.4 National Pharmaceuticals Pricing Policy 29

4.4.1 Objectives of the Present Policy 29

4.4.2 Key Principles of National Pharmaceuticals Pricing Policy, 2011 29

4.4.3 Principles for Drug Price Control and Determination in National Pharmaceutical Pricing Policy 2011 30

4.4.4 Other Aspects of the Policy 30

4.4.5 Impact Analysis of the Policy 31

4.5 Goods and Services Tax 31

4.5.1 An Introduction to Goods and Services Tax 31

4.5.2 Dual Goods and Services Tax in India 31

4.5.3 Impact on the Pharmaceutical Industry 32

4.6 Direct Tax Code 33

4.6.1 Tax Structure 33

4.6.2 Incentives Available to the Pharmaceutical Sector 33

4.6.3 Road Ahead 33

4.7 Healthcare Spending in India 34

4.8 Insurance and Reimbursement 35

4.8.1 Private Health Insurance 35

4.8.2 Health Insurance Companies Landscape 36

5 Indian Pharmaceutical Market Outlook – Market Analysis 37

5.1 Market overview 37

5.1.1 Contract Research and Manufacturing Services 37

5.1.2 Biotech 38

5.1.3 Over-the-Counter Drugs 42

5.1.4 Prescription Drugs 42

5.1.5 Herbal Medicines 43

5.2 Market Segmentation 44

6 Indian Pharmaceutical Market Outlook – Market Analysis by Therapeutic Categories 46

6.1 Market Share of Leading Therapeutic Segment 46

6.2 Anti-Infectives 47

6.2.1 Market Size 47

6.2.2 Key Brands and Players 48

6.2.3 Recent Developments 48

6.2.4 Outlook 48

6.3 Cardiovascular System 49

6.3.1 Market Size 49

6.3.2 Recent Developments 50

6.3.3 Outlook 50

6.4 Gastrointestinal 51

6.4.1 Market Size 51

6.4.2 Recent Developments 52

6.4.3 Outlook 52

6.5 Diabetes 53

6.5.1 Market Size 53

6.5.2 Recent Developments 54

6.5.3 Outlook 54

6.6 Central Nervous System 55

6.6.1 Market Size 55

6.6.2 Recent Developments 56

6.6.3 Outlook 56

6.7 Respiratory 57

6.7.1 Market Size 57

6.7.2 Recent Developments 58

6.7.3 Outlook 58

6.8 Dermatology 59

6.8.1 Market Size 59

6.8.2 Recent Developments 60

6.8.3 Outlook 60

6.9 Oncology 61

6.9.1 Market Size 61

6.9.2 Recent Developments 62

6.9.3 Outlook 62

7 Indian Pharmaceutical Market Outlook – Key Trends 63

7.1 Rapid Consolidation and Rise of Multinational Corporations in the Indian Pharmaceutical Industry 63

7.1.1 M&A Deals 63

7.1.2 Licensing Deals 65

7.1.3 Partnership Deals 66

7.2 Patent Litigations Favoring Generics 67

7.2.1 Indian Patent Office Revokes Patent for Pfizer's Cancer Drug Sutent (sunitinib) 67

7.2.2 Indian Appeals Body Dismisses Bayer's Plea for Stay on Natco's Generic Nexavar (sorafenib) 67

7.2.3 Delhi High Court Rules in Favor of Cipla in Roche's Tarceva (erlotinib) Patent Lawsuit 67

7.2.4 Indian Supreme Court Asks Novartis to Scale Down Price of Cancer Drug Glivec (imatinib) 67

7.3 Increasing Importance of Rural Marketing in India 68

7.3.1 Case Study - Novartis Arogya Parivar Case Study 68

7.4 Product Localization and India-Specific Pricing 70

7.4.1 Case Study - GlaxoSmithKline, Localized Business Model 70

7.5 Sales Strategies 71

7.5.1 Case Study - Mankind, Sales Excellence 71

7.6 Patented Products Introduced in Niche Segments 72

7.6.1 Case Study - Merck's Successful Strategy for Patented Products 72

7.7 Actions Taken by Indian Government against Counterfeit Drugs 73

8 Indian Pharmaceutical Market Outlook – Competitive Landscape 74

8.1 Key Foreign Companies 74

8.1.1 Sanofi 74

8.1.2 Roche 74

8.1.3 AstraZeneca 75

8.1.4 GlaxoSmithKline 75

8.1.5 Abbott Laboratories 75

8.2 Key Domestic Companies 76

8.2.1 Dr. Reddy's Laboratories 76

8.2.2 Lupin 78

8.2.3 Cipla Limited 80

8.2.4 Ranbaxy Laboratories Limited 81

8.2.5 Biocon 83

9 Indian Pharmaceutical Market Outlook – The Way Forward 85

9.1 Outlook for the Indian Pharmaceutical Industry 85

9.2 Risks 86

9.2.1 Currency Fluctuation and Financial Problems will make it Difficult to Sustain Growth 86

9.2.2 Regulatory Hurdles 86

9.2.3 Financial Disparity 86

9.2.4 Intellectual Property Concerns 86

9.3 Recommendations 87

9.3.1 Improved Links between Industry and Academia 87

9.3.2 Focus on R&D Initiatives and Skilled Manpower 87

9.3.3 Support for Clinical Trials Sector 87

9.3.4 Quality Drugs to be made Affordable and Accessible 87

9.4 Opportunities Ahead 88

9.5 Strategies for Future Success 88

9.5.1 Increasing Importance of Biosimilars 88

9.5.2 Rural Markets 89

10 Indian Pharmaceutical Market Outlook – Appendix 90

10.1 Market Definitions 90

10.2 Abbreviations 90

10.3 Bibliography 92

10.4 Research Methodology 93

10.4.1 Coverage 93

10.4.2 Secondary Research 93

10.4.3 Primary Research 93

10.4.4 Expert Panel Validation 94

10.5 Contact Us 94

10.6 Disclaimer 94

List of Tables

Table 1: Pharmaceutical Market, India, Share of Pharmaceutical Products in Total Exports and Imports (%), 2012 12

Table 2: Pharmaceutical Market, India, Population by Age Group (%), 2001–2026 13

Table 3: Pharmaceutical Market, India, Crude Death Rate (per 1,000 Population), 1981–2009 15

Table 4: Pharmaceutical Market, India, Infant Mortality Rate by Sex (per 1,000 Live Births), 1980–1998 16

Table 5: Pharmaceutical Market, India, Infant Mortality Rate by Sex (per 1,000 Live Births), 1999–2009 16

Table 6: Pharmaceutical Market, India, Ceiling Price Reduction and Impact, 2012 31

Table 7: Pharmaceutical Market, India, Healthcare Expenditure among BRIC Countries, 2012 35

Table 8: Pharmaceutical Market, India, Indian Biosimilar Companies with Marketed Products in India, 2010 40

Table 9: Pharmaceutical Market, India, Retail Market Revenue ($bn), 2007–2011 44

Table 10: Pharmaceutical Market, India, Hospital Market Revenue ($m), 2007–2011 45

Table 11: Pharmaceutical Market, India, Anti-Infectives Market Revenue, ($bn), 2005–2010 47

Table 12: Pharmaceutical Market, India, Anti-Infectives, Major Companies and Brands, 2011 48

Table 13: Pharmaceutical Market, India, Cardiovascular Market Revenue ($m), 2005–2010 49

Table 14: Pharmaceutical Market, India, Gastrointestinal Market Revenue, ($m), 2005–2010 51

Table 15: Pharmaceutical Market, India, Diabetes Market Revenue ($m), 2005–2010 53

Table 16: Pharmaceutical Market, India, Central Nervous System Market Revenue ($m), 2005–2010 55

Table 17: Pharmaceutical Market, India, Respiratory Market Revenue ($m), 2005–2010 57

Table 18: Pharmaceutical Market, India, Dermatology Market Revenue ($m), 2005–2010 59

Table 19: Pharmaceutical Market, India, Oncology Market Revenue ($m), 2005–2010 61

Table 20: Pharmaceutical Market, India, Dr. Reddy's Laboratories, Strategic Consolidations, 2011–2012 77

Table 21: Pharmaceutical Market, India, Lupin, Strategic Consolidations, 2011 79

Table 22: Pharmaceutical Market, India, Cipla, Strategic Consolidations, 2012 80

Table 23: Pharmaceutical Market, India, Ranbaxy, Strategic Consolidations, 2011–2012 82

Table 24: Pharmaceutical Market, India, Biocon, Strategic Consolidations, 2011–2012 84

List of Figures

Figure 1: Pharmaceutical Market, India, ANDA Filings by Indian Companies, 2012 11

Figure 2: Pharmaceutical Market, India, Growth in Pharmaceutical Products Trade, (%), 2006–2011 12

Figure 3: Pharmaceutical Market, India, Population by Age Group (%), 2001–2026 13

Figure 4: Pharmaceutical Market, India, Crude Death Rate (per 1,000 Population), 1981–2009 15

Figure 5: Pharmaceutical Market, India, Infant Mortality Rate by Sex (per 1,000 Live Births), 1980–2009 16

Figure 6: Pharmaceutical Market, India, Life Expectancy at Birth, 1901–2025 17

Figure 7: Pharmaceutical Market, India, Healthcare Indicators in BRIC Countries, 2012 18

Figure 8: Pharmaceutical Market, India, Drivers and Barriers, 2012 19

Figure 9: Pharmaceutical Market, India, Doctors and Nurses (per 10,000 population), 2010 20

Figure 10: Pharmaceutical Market, India, SWOT Analysis 22

Figure 11: Pharmaceutical Market, India, NRHM Progress, 2011 24

Figure 12: Pharmaceutical Market, India, Intellectual Property Rights Protection Framework, 2010 25

Figure 13: Pharmaceutical Market, India, Regulatory Landscape, Intellectual Property Rights Protection, 1963–2005 26

Figure 14: Pharmaceutical Market, India, Drug Distribution System, 2012 28

Figure 15: Pharmaceutical Market, India, Healthcare Expenditure, 2009 34

Figure 16: Pharmaceutical Market, India, Healthcare Expenditure among BRIC Countries, 2012 34

Figure 17: Pharmaceutical Market, India, Health Insurance Companies Landscape, 2012 36

Figure 18: Pharmaceutical Market, India, Services Outsourced in Value Chain (%), 2011 37

Figure 19: Pharmaceutical Market, India, Biotechnology Market Revenue ($m), 2003–2011 38

Figure 20: Pharmaceutical Market, India, Biotechnology Market Segmentation (%), 2011 39

Figure 21: Pharmaceutical Market, India, Market by Sub-sector (%), 2011 43

Figure 22: Pharmaceutical Market, India, Retail Market Revenue ($bn), 2007–2011 44

Figure 23: Pharmaceutical Market, India, Hospital Market Revenue ($m), 2007–2011 45

Figure 24: Pharmaceutical Market, India, Market Share by Therapy Area, 2005 and 2010 46

Figure 25: Pharmaceutical Market, India, Anti-Infectives Market Revenue ($bn), 2005–2010 47

Figure 26: Pharmaceutical Market, India, Cardiovascular Market Revenue ($m), 2005–2010 49

Figure 27: Pharmaceutical Market, India, Gastrointestinal Market Revenue ($m), 2005–2010 51

Figure 28: Pharmaceutical Market, India, Diabetes Market Revenue ($m), 2005–2010 53

Figure 29: Pharmaceutical Market, India, Central Nervous System Market Revenue ($m), 2005–2010 55

Figure 30: Pharmaceutical Market, India, Respiratory Market Revenue ($m), 2005–2010 57

Figure 31: Pharmaceutical Market, India, Dermatology Market Revenue ($m), 2005–2010 59

Figure 32: Pharmaceutical Market, India, Oncology Market Revenue ($m), 2005–2010 61

Figure 33: Pharmaceutical Market, India, Number of M&A Deals, 2007–2012 63

Figure 34: Pharmaceutical Market, India, M&A Deals, Deals by Value (%), 2007–2012 64

Figure 35: Pharmaceutical Market, India, Number of Licensing Deals, 2007–2012 65

Figure 36: Pharmaceutical Market, India, Licensing Deals, Deals by Value (%), 2007–2012 65

Figure 37: Pharmaceutical Market, India, Number of Partnership Deals, 2007–2012 66

Figure 38: Pharmaceutical Market, India, Partnership Deals, Deals by Value (%), 2007–2012 66

Figure 39: Pharmaceutical Market, India, Novartis Arogya Parivar Marketing Mix, 2012 68

Figure 40: Pharmaceutical Market, India, Novartis Arogya Parivar, Factsheet, 2012 69

Figure 41: Pharmaceutical Market, India, Mankind Sales Strategies, 2012 71

Companies Mentioned

Sanofi

Roche

AstraZeneca

GlaxoSmithKline

Abbott Laboratories

Dr. Reddy's Laboratories

Lupin

Cipla Limited

Ranbaxy Laboratories Limited

Biocon

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Pharmaceutical Industry: Indian Pharmaceutical Market Outlook - Enhanced purchasing power, rural market penetration and expanded access to healthcare attracting Big Pharma investment

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