Indian Pharma Industry in 2020_An essay by Sushant Sant

The Indian Commerce and Industry Minister mentions that there are great opportunities for the Indian pharmaceutical industry in the African and Latin American countries. He also stated that the growing sector will play a crucial role in reaching the country’s goal of becoming a 5 trillion dollar economy.

Union Minister of Commerce and Industry of India, Suresh Prabhu, recently stated at a function organised by the Organization of Pharmaceutical Producers of India that India is recognised globally as one of the key players in the field of generic medicines. He also said that by 2020 India is likely to be among the top three pharmaceutical markets by incremental growth and 6th largest market globally in absolute size. The increase in the size of middle class households coupled with the improvement in medical infrastructure in the country will influence the growth of the pharmaceuticals sector. (“India to be Among Top 3 Pharma Markets by 2020,” n.d.)

The Indian pharmaceuticals market has characteristics that make it unique. First, branded generics dominate, making up for 70 to 80 per cent of the retail market. Second, local players have enjoyed a dominant position driven by formulation development capabilities and early investments. Third, price levels are low, driven by intense competition. While India ranks tenth globally in terms of value, it is ranked third in volumes. These characteristics present their own opportunities and challenges.

From a market size of USD 12.6 billion in 2009, the Indian pharmaceutical market will grow to USD 55 billion by 2020, with the potential to reach USD 70 billion in an aggressive growth scenario. In a pessimistic scenario characterised by regulatory controls and economic slowdown, the market will be depressed and is expected to reach USD 35 billion.

(“778886_India_Pharma_2020_Propelling_Access_and_Acceptance_Realising_True_Potential.pdf,” n.d.)

With market diversity on the rise, the drivers of growth have proliferated and become more nuanced. We identified 11 drivers of growth grouped under four dimensions: epidemiological factors, increasing affordability, enhanced accessibility, and rising acceptability.

First, population growth at around 1.3 per cent every year and a steady rise in disease prevalence will increase the patient pool by nearly 20 per cent by 2020.

Second, the affordability of drugs will rise due to sustained growth in incomes and increases in insurance coverage. With real GDP growing at nearly 8 per cent over the next decade3 , income levels will rise steadily. Rising incomes will drive 73 million households into the middle and upper income segments4 . In addition to income growth, health insurance coverage will augment affordability. By 2020, nearly 650 million people will enjoy health insurance coverage. Private insurance coverage will grow by nearly 15 per cent annually till 2020. However, the largest impact will be seen through government sponsored programmes that are largely focused on the ‘below poverty line’ (BPL) segment5 , and are expected to provide coverage to nearly 380 million people by 2020

Third, accessibility to drugs will expand due to growth in medical infrastructure, new business models for Tier-II towns and rural areas, launches of patented products, and greater government spending on healthcare. Medical infrastructure will experience dramatic growth over the next decade, with over USD 200 billion Being invested in creating and upgrading medical infrastructure. As a result, over 160,000 beds will be added every year across different segments of hospitals. This infrastructure creation will need to be supported by the creation of ‘soft’ capacity in terms of doctors and other healthcare professionals. Furthermore, non-traditional business models will drive access in Tier-II and rural areas. This, in turn, will reduce the gap in per capita spend on pharmaceuticals between rural and urban areas (i.e., USD 1.8 in rural markets in 2007 vis-à-vis USD 15.6 in urban markets). Patented products will also drive growth in select therapeutic areas. While the number of launches since 2005 has been limited, the recent successes of Januvia and Galvus indicate that patented products can drive tremendous growth in a few disease areas. Finally, government spending in healthcare will increase significantly (Exhibit 4). It has been growing at 18 per cent annually since 2005 to 2006, and is translating into a higher level of access in Tier-II and rural markets. In addition, this will create a USD 4.5 billion segment of pharmaceutical products within the government’s public health spending.

Fourth, the acceptability of modern medicine and newer therapies will increase due to aggressive market creation by players, an increased acceptance of biologics and preventive medicine, and a greater propensity to self-medicate. Players will shape the patient funnel, especially for chronic therapies such as cardiovascular and neuropsychiatry. Investments in increasing patient awareness and education will impact diagnosis and treatment levels. In addition, patients will show greater propensity to self-medicate. The consumer healthcare segment has the potential to grow at over 14 per cent annually, provided players make the larger OTC brands easily available to consumers, differentiate their products, and establish an emotional connection with patients. Finally, the acceptance of biologics and preventive medicine will rise. Vaccines can grow at over 20 per cent over the next decade. The biologics market will also grow rapidly to become a 3 billion segment by 2020. (“778886_India_Pharma_2020_Propelling_Access_and_Acceptance_Realising_True_Potential.pdf,” n.d.)

References-

778886_India_Pharma_2020_Propelling_Access_and_Acceptance_Realising_True_Potential.pdf, n.d.

India to be Among Top 3 Pharma Markets by 2020 [WWW Document], n.d. URL https://www.process-worldwide.com/india-to-be-among-top-3-pharma-markets-by-2020-a-734057/ (accessed 1.11.19).