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Indian Pharmaceutical Industry Riding a Growth Wave

Indian Pharmaceutical Industry Riding a Growth Wave. Pharmaceuticals. India - An Overview Market and Growth Potential Players Opportunities Why India? Contact in India. India - An Introduction. Population States/UTs Geographical Area Languages recognised Business language

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Indian Pharmaceutical Industry Riding a Growth Wave

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  1. Indian Pharmaceutical Industry Riding a Growth Wave

  2. Pharmaceuticals • India - An Overview • Market and Growth Potential • Players • Opportunities • Why India? • Contact in India

  3. India - An Introduction • Population • States/UTs • Geographical Area • Languages recognised • Business language • Per Capita Income** • GDP** Over 1 bn 35 3.3 mn sq kms 22 English US$ 534 US$ 650 bn Source:CSO Statistics **(at factor cost & at current prices) 1USD=43.54 INR (as on July 4, 2005)

  4. India - Fast pace Growth • Largest democracy • 4th largest economy by PPP index • 6th largest energy consumer • ForEx reserves skyrocket from US$ 42 bn (2001) to US$ 133 bn (February, 2005) • GDP growth to continue between 6-8% • 3rd largest economy by 2050: Goldman Sachs • Leading in IT & BPO • Oil & Gas and Biotechnology sunrise industries

  5. India - Leading the world • Hero Honda - largest manufacturer of motorcycles • Moser Baer - among the top three media manufacturers in the world • Pharmaceutical Industry - 4th largest in world • Walmart, GAP, Hilfiger sources more than USD 1bn worth apparel from India • 100 Fortune 500 have set R&D facilities in India including GE, Delphi, Eli Lilly, HP, Heinz and Daimler Chrysler

  6. Pharmaceuticals • India - An Overview • Market and Growth Potential • Players • Opportunities • Why India? • Contact in India

  7. Pharma Market Size (2002-03) US$ 7 bn Size 2010 (estimated) US$ 25 bn CAGR (1995-2002) 16.6% Exports 23% CAGR(1995-2002) Volume – wise 8% of global market 4th largest in the world Share of formulations 80%

  8. Exports India - Net exporter of pharmaceutical products Exports (2002-2003) US$ 2.8 bn CAGR (over last decade ) 26% Rate of growth (2003) 21% Export destinations US, Germany, Russia, UK and China

  9. Increased R&D Focus Shift from business-driven research to research-driven business

  10. Increasing R&D Spend 1996 -2002 Annual recurring R&D expense growth rate 32.3% yoy

  11. Resurgence of FDI Resurgence of FDI in the Pharma Sector Source: CMIE 100% automatic FDI approvals to aid increased investment in R&D infrastructure by MNCs

  12. Quality Assurance in Manufacturing India has the highest number of USFDA approved plants outside the US Manufacturing facilities • GMP compliant • Approved by international bodies - US FDA, UK MCA, South African MCC

  13. Pharmaceuticals • India - An Overview • Market and Growth Potential • Players • Opportunities • Why India? • Contact in India

  14. Domestic Players Ranbaxy Largest pharma company in India; Laboratories Annual revenues of US$1bn Dr Reddy’s Indian company with presence in Laboratory more than 50 countries Cipla One of the lowest cost manufacturer of anti-HIV drugs in the world Wockhardt Largest Indian pharmaceutical company in UK

  15. MNC Presence in India GlaxoSmithKline Leads in 6 of the 10 therapeutic categories Pfizer Owns the two largest selling brands in India Astra Zeneca Involved in cardiovascular, respiratory, maternal healthcare & pain control and anasthesia Aventis Indian manufacturing sites identified as potential global sourcing units by global parent company

  16. MNC Presence in India Merck Leader in laboratory reagents market in India Novartis Collaborations with Dr Reddy’s and Torrent Wyeth Contract-manufacturing tie-up with Indian major Bharat Biotech Sanofi-Synthelabo Present in cardiology, thrombosis & neuropsychiatry Roche Already invested US$ 20 mn in India and plans additional US$ 7.35 mn in 2004-05

  17. MNC Activity in India • Novartis AG seeking tie-ups with Indian companies • Bristol-Myers to enter India again • Aventis’s Goa unit to be sourcing hub • Pfizer India doubles research investment in India • AstraZeneca, Glaxo to make India R&D hub • Chiron to make India its Asian hub • Bayer AG to make India sourcing hub • Eli Lilly to make India sourcing hub • German major Boehringer Ingelheim to enter India • India to be Roche's global hub for bulk drugs

  18. Pharmaceuticals • India - An Overview • Market and Growth Potential • Players • Opportunities • Why India? • Contact in India

  19. Invest in India Contract Research • USD 70 mn market (2001-02) • Growing at 20% per annum • Outsourcing - fastest growing area for new investment • US$ 1 bn opportunity by 2010 Clinical research

  20. Invest in India • Largest pool of trained analytical and development chemists • Excellent track record of innovation • US FDA approved manufacturing facilities • 30-50% cost savings Custom synthesis

  21. Invest in India • Global Outsourcing opportunity worth US$ 15 bn by 2010 • Global majors to outsource manufacturing from India API sourcing and contract manufacturing

  22. Invest in India Collaborative R&D • Pre clinical testing • Superior and low cost chemical synthesis • skills advantages • Clinical trials • India to be an outsourcing centre for conducting • low cost clinical trials GlaxoSmithKline has R&D alliance with Ranbaxy Laboratories

  23. Export from India Source: SSKI Exports drive growth for Indian pharmaceutical majors

  24. Export from India Source: SSKI Generics - The key driver for export growth

  25. Partner with India Marketing alliances - A win-win strategy Increased market penetration • Zydus Cadila has strategic agreement with Schering AG • Nicholas Piramal has 5 year strategic alliance with Biogen Idec

  26. Partner with India New Drug Delivery System (NDDS) • Process reengineering expertise • Low-cost scientific manpower available • Low capital requirement for NDDS research • Fast clearances from regulatory authorities

  27. Pharmaceuticals • India - An Overview • Market and Growth Potential • Players • Opportunities • Why India? • Contact in India

  28. Advantage India • Excellent chemical synthesis skills • Successful scaling up of laboratory processes to plant-size • Cost-effective and commercially viable non-infringing processes • Pool of low-cost and highly skilled medical professionals • Manufacturing facilities of international standards • Quick absorption of new technology

  29. Indian Pharmaceutical Act • Reduction in number of drugs under price control to 28 as against 74 • 100% foreign investment automatically permitted • Abolishment of industrial licensing for bulk drugs, intermediates and formulations • Automatic approval for Foreign Technology Agreements

  30. Regulatory Scenario • IPR/Patent regulations • Product patent regime implemented w.e.f January 2005 • in compliance with TRIPS • Price regulations • Price controls decline substantively • Product and quality regulations

  31. Policy Incentives • Tax exemptions at par with IT • Reduction in peak custom duties from 30% to 25% • Increase on rate of depreciation on life saving equipment from 25% to 40% • Tax holiday for R&D companies

  32. Union Budget 2005-06 • Key Features • 22% increase in allocation under the National Rural Health Mission • Formation of a SME Growth Fund to provide equity support to small & medium units in the pharmaceutical & biotechnology sectors. • Import duty on select equipments used in pharmaceutical & biotech research reduced from 20% to 5%. • 150% weighted deduction on R&D expenditure Fillip to R&D initiatives

  33. Pharmaceuticals • India - An Overview • Market and Growth Potential • Players • Opportunities • Why India? • Contact in India

  34. Contact in India Confederation of Indian Industry (CII) The Mantosh Sodhi Centre 23, Institutional Area Lodi Road New Delhi – 110003 Tel 0091 11 24629994-97 Fax 0091 11 24626149/24615693 Email c.banerjee@ciionline.org

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