Pharmaceutical Industry

The Indian pharmaceutical market is the 15th largest individual market by sales, but the 4th by volume of product. With domestic drug sales of almost $5 billion, Indian companies have also developed a considerable service industry for the global pharmaceutical market..
The domestic market, which consistently grew at 9.5 percent CAGR in the last five years, is poised to accelerate at 13.6 percent between 2006–2010 to touch the market size of $9.48 billion by 2010 from present level of little over $ 5.7 billion.

India has more US FDA approved laboratories than any other country outside the USA. A number of US companies already source pharmaceutical raw materials from India. In comparison with China, the wide use of English in commerce is mooted as an advantage to US companies, along with India’s tradition as an exporting nation.

The Indian Pharmaceutical sector is highly fragmented with more than 20,000 registered units. It has expanded drastically in the last two decades. The leading 250 pharmaceutical companies control 70% of the market with market leader holding nearly 7% of the market share.

Unlike in other countries, the divide between biotechnology and pharmaceuticals remains fairly defined in India. Biotech there still plays the role of pharma’s little sister, but many outsiders have high expectations for the future. India accounted for 2% of the $41 billion global biotech market and in 2003 was ranked 3rd in the Asia-Pacific region and 11th in the world in number of biotechs.[45] In 2004-5, the Indian biotech industry saw its revenues grow 37% to $1.1 billion.

The Indian biotech sector parallels that of the U.S. in many ways. Both are filled with small start-ups while the majority of the market is controlled by a few powerful companies. Both are dependent upon government grants and venture capitalists for funding because neither will be commercially viable for years. Pharmaceutical companies in both countries have recognized the potential effect that biotechnology could have on their pipelines and have responded by either investing in existing start-ups or venturing into the field themselves.

Key Players

- Aarti Drugs

- Abbott India

- Ajanta Pharma

- Alembic

- Astrazeneca Pharma

- Aurobindo Pharma

- Aventis Pharma

- Cadila Health

- Cipla

- Dr. Reddy

- Elder Pharma

- German Remedies

- Glaxo Smithkline

- Ind Swift Lab

- Ipca Laboratories

- J B Chemical

- Jagson Pharma

- K D L Biotech

- Kopran

- Krebs Biochem

- Lupin

- Lyka Labs

- Medicorp Tech

- Merck

- Natco Pharma

- Nicholas Piramal

- Novartis

- Orchid Chemicals

- Organon

- Panacea Bio

- Pfizer

- Pharmacia

- Ranbaxy

- R P G Life Sciences

- Shasun Chemicals

- Siris Limited

- Sterling Biotech

- Strides Arcolab

- Sun Pharma

- Suven Life Sciences

- Torrent Pharma

- Unichem Lab

- Wockhardt

- Wyeth Ltd

- Zandu Pharma

Current Trends:

Indian pharmaceutical industry is undergoing fast paced changes. The Indian Generics market is witnessing rapid growth opening up immense opportunities for firms. This is further triggered by the fact that generics worth over $40 billion are going off patent in the coming, few years, which is close to 15% of the total prescription market of the US.

The need to cut costs is persuading US and Western European firms to seek alternative destinations such as China and India for clinical trials. Another factor in this decision is that India and China have joined the World Trade Organization (WTO), which has invigorated both countries’ economies. As a result, clinical trials conducted in these countries are no longer confined to evaluating new medicines for their own markets. India and China have opened up new opportunities for Western European and US firms to expand their pharmaceutical and biotechnology product markets substantially. In 2006, the global clinical trials sector is estimated to be about $10 billion and has the potential for considerable growth over the next few years.

India presents a good option for outsourcing several drug development process components, including clinical trials, due to such factors as:
1. excellent and expanding hospital and clinical facilities
2. a huge patient population base
3. therapeutic diversity
4. data processing infrastructure for bioinformatics
5. well-trained, English-speaking physicians and support personnel
6. dominant generic drug makers
7. a relaxed regulatory environment

Technological Strengthening: Companies are faced with the realization that the only way they can continue to sell first generation drugs (in the absence of licensing or distribution agreements) is by discovering and developing them indigenously. For Indian firms, there are two routes to this end. They can either latch onto the skills of MNCs or they can embark on programs to develop their own technical capacities.

· Redefining New Drug Discovery : Several Indian companies (e.g., Ranbaxy, DRL, Dabur, and Wockhardt) are turning the prospect of increased patent protection to their advantage by spearheading new drug discovery programs. Developing new drugs is time and capital-intensive. Their costs have been substantially lower than global benchmarks – for example, DRL, estimates research costs as one eightieth of those of its MNC competitors – and their success rate has been higher. Indian companies have yet to place their own products on global markets, but there is reason to believe that at least some of their endeavors will succeed as planned. Even if one accepts DRL’s exceptional cost claims, Indian companies are still advised to seek ways to reduce costs and risks.

· Leveraging Non-technological Strengths : India’s Pharmaceutical companies must also expand and develop their non-technological strengths to keep pace with MNC competition. In keeping with this broader development strategy, some companies are placing greater emphasis on developing state-of-the-art processes and novel delivery systems. Also, companies are choosing to concentrate on non-technological phases of the product cycle, such a marketing and distribution, and low-technology product areas such as traditional medicines and generic drugs.

· Another particularly popular non-technological strategy, related to “India skills” above, consists of local companies entering into alliances with MNCs that do not have strong India presence in order to co-market their products. These Indian companies have become specialists in the marketing and distribution phase of the product cycle.

· Growing Larger : Indian companies – which have traditionally limited themselves to domestic production and distribution – must therefore grow larger to enter discovery and /or to expand to developed export markets.

· Mergers, Acquisitions, and Partnerships: Mergers have occurred between Indian companies such as DRL and Cheminor, between MNC subsidiaries such Hindustan Ciba-Geigy and Sandoz India (Novartis), and between Indian and foreign companies. With respect to acquisitions, companies such as Ranbaxy, Sun, and DRL have purchased assets from firms based in other countries in order to expand their international presence. Partneships ad marketing alliances are also increasingly common. Conversely, other Indian companies are looking to international partners to market, distribute, and gain approvals for their products in foreign markets.

· Export Focus: Liberalization has substantially increased the global competitiveness of Indian pharmaceutical products, as local companies have been forced to compete alongside MNCs in their home market. Moreover, as the Indian market becomes more crowded, companies are increasingly pressured to look elsewhere in order to expand their revenues. For these reasons, the majority of the Indian companies have taken specific measures to boost exports.

People Challenges:

Pharma industry has always invested in people development. The skew has been towards technical and product training. There is a growing emphasis on managerial & business skills.

Industry is facing severe attrition and losing out to sectors such as BPO.

The problem is exacerbated by an inadequate supply of skilled talent, as B.Sc & B.Pharma programs are not aligned to industry needs.

One of the big challenges is to develop leadership skills as people grow in their career path from medical representatives to field managers to further growth.

Executive image and professional demeanour is a critical aspect of this growth.

While several MNC’s do a lot of “global” sales training , there is a need to address the consultative selling approach for institutions and sales presentation skills while selling to doctors.

Also one of the common concerns that Pharma Industry faces is sales force supervision including business development, territory management and performance through remote teams.

Skills Inventory :

In view of the industry trends and people challenges, the people and business skills appear to be :

· Leadership for new managers as well as middle to senior managers.

· Robust in house trainers and training quality for technical training.

· Consultative & institutional selling.

· Presentation skills (one-to-one, MR to senior doctors)

· Time Management

· Business Etiquette & Executive Image for junior levels.

· Communication & team management for middle and senior levels.

· Innovation