Impact of FDI on the Indian pharma industry

Abstract

India has a highly developed pharma industry which is thirteenth in terms of value and third in terms of volume. The industry is valued at US $ 12.26 billion and is growing at a rapid rate of 10 – 11 percent per annum (DIPP). It has a wide range of pharmaceutical products ranging from 350 bulk drugs (chemicals that are used as an ingredient for final production of pharmaceutical formulation) to pharmaceutical formulations (drugs that will be used for final consumption) (DIPP). India’s specialty is in generic drugs which is 70 to 80 percent of Indian pharma market. India’s share of global exports in generic drugs is around 20 percent which makes it the largest player in this market. The industry is very fragmented but slowly consolidation has started happening (IBEF). India’s spend on R&D is around 18 percent of revenue. It also large pool of scientists actively engaged in this sector. The high talent availability and low costs in R&D makes it an attractive option for off shoring industry. India’s share in off shoring industry is expected to increase to US$ 2.5 billion by 2012. Presently, India exports a lot of drugs to African countries, France, U.S., Russia, U.K. and Germany (DIPP). Indian pharmaceutical industry is highly fragmented with around 24000 pharma companies. There are 250 players in the organized sector which constitute around percent of the pharma market. Out of top 20 companies in this sector about 75 percent are Indian owned. Some important Indian companies are – Cipla, Cadila Healthcare, Torrent Pharma, Lyka Labs, Kopran, IPCA Laboratories, TTK Healthcare, Aurobindo Pharma, Unichem Labs, Ranbaxy Laboratories, Wockhardt, Piramal, Sun Pharmaceuticals, Dr. Reddy’s, Matrix Laboratories,etc. The foreign players in India are Glaxo SmithKline, Novartis, Merck, Abbott, Pfizer Limited, Astra Zeneca India, etc. (DIPP)