The Indian pharmaceutical sector was valued at $33 billion in 2017. India’s pharmaceutical export stood at $17.27 billion in FY18 and reached $15.52 billion in FY19 (up to January). India’s domestic pharmaceutical market turnover reached Rs. 129,015 crore in 2018, growing by 9.4% year-on-year from Rs. 116,389 crore in 2017.
According to data released by the Department for the Promotion of Industry and Internal Trade (DPIIT), the sector attracted cumulative FDI inflows worth $15.93 billion between April 2000 and December 2018. Investment in research and development by Indian pharmacy companies increased from 5.3% in FY12 to 8.5% in FY18. In 2017,
Indian pharmaceutical sector witnessed 46 merger and acquisition deals worth $ 1.47 billion.
Sujay Shetty, leader, pharma life sciences, PwC India, said in a PwC - CII report, “The industry has seen many regulatory interventions over the last one year, which will require careful consideration by pharma companies as they plan their future strategies.” He added, “They will continue to focus on improving operational efficiency and productivity. Developments in health insurance can help the growth of the pharma industry by removing financial and physical barriers to healthcare access in India.”
Challenges faced by the industry
The most important challenge of the industry comes from regulators in developed markets, which have imposed strictures on several leading Indian exporters like Ranbaxy, Wockhardt and Strides for failing to comply with prescribed manufacturing practices.
According to an Edelweiss report, the Jan Aushadhi scheme, under which the government provides quality medicines at affordable rates, may disrupt around 20% of Indian pharmaceutical market sales. This report expects that around Rs. 6,000 crore of the Bureau of Pharma PSUs of India (BPPI) drugs could adversely impact around Rs. 25,000-30,000 crore branded sales, assuming an average price differential of five times. India has over 5,000 Jan Aushadhi stores that cover a list of more than 800 drugs - both chronic and acute - across therapies like anti-cancer, anti-infective, reproductive and gastro intestinal medicines.
“We believe this two-pronged focus will enable the BPPI to expand to over 10,000 stores by FY21. With each store achieving monthly sales of around Rs. 5 lakh, the scheme is set to top Rs. 6,000 crore by FY21,” the report said.
In 2017, experts at the IIHMR University, Jaipur stated that despite the prevailing challenges in the Indian pharma sector, 58,000 additional job opportunities are likely to be created as the industry is expected to grow up to 45% by 2025.
“Despite capping of prices, demonetisation and GST implementation – all of which are perceived to impact the pharma sector adversely, this industry will continue to grow and the major growth engines will be domestic sales, exports, an ageing population, health insurance coverage, increase in per capita spending, medical tourism etc.,” said Dr. S.D. Gupta, Chairman of IIHMR University during the Pharma Summit in 2017.
Kapil Pal, a medicine and pharmacy expert, said, “There are job opportunities after attaining the B.Pharm degree.
However, they are not well paid. It is better to get an M.Pharm. degree and then search for jobs. Patience is the key in pharmacy sector.”
Some of the initiatives taken by the government to promote the pharmaceutical sector in India are as follows:
l The allocation to the Ministry of Health and Family Welfare has increased by 13% to reach Rs. 61,398 crore ($ 8.98 billion) in Union Budget 2019-20.
l The National Health Protection Scheme is largest government funded healthcare programme in the world, which is expected to benefit 100 million poor families in the country by providing a cover of up to Rs. 5 lakh ($7,723.2) per family per year for secondary and tertiary care hospitalisation. The programme was announced in the Union Budget 2018-19.
l The Government of India unveiled its ‘Pharma Vision 2020’ aimed at making India a global leader in end-to-end drug manufacture.
The Indian government has taken several steps to reduce costs and bring down healthcare expenses. Speedy introduction of generic drugs into the market has remained in focus and is expected to benefit the Indian pharmaceutical companies. In addition, the thrust on rural health programmes, lifesaving drugs, and preventive vaccines augur well for the pharmaceutical companies.