indian pharmaceutical indutry 2015
TRANSCRIPT
Analysis on
Presented By:
Arjit ParasharArun Singh Amar ShaktiKumar
Industrial Analysis Project
Analysis on
Indian Pharmaceutical Industry (Grade Orange)
Contents
Industry OverviewSWOT Analysis
PEST AnalysisGrowth Drivers
Time Line Analysis
Arjit Parashar
Amar Shakti kumar
Arun Singh
PHARMA
Indian pharmaceutical market segments by value
Market Share of 2015Key International PlayersAbbott LaboratoriesGlaxoSmithKlinePfizerKey Domestic PlayersSun Pharma Cipla Lupin LimitedRanbaxyDr.Reddys
State-wise number of Pharma mfg units in India
Concentration of Pharma mfg units in India (%)
Beginning
India saw its first pharmaceutical company in 1930, Bengal Chemicals and Pharmaceuticals works
Till 1970s Indian pharmaceutical market was non existent
In Last 2 decades
5 Central Public Sector Units
20,000 registered units
250 large units
about 8000 Small Scale Units
Indias Pharma sector at a glance
$18.4 billionDomestic Pharma Market in FY14
$55.9 billion (23.9% +)Estimated Pharma Market Size in 2020
$16.6 billionPharma Exports in FY15
74% Share of Indian Companies in the Pharma Market in 2015
60% Share of Urban Regions in the Domestic Pharma Market in 2013
5%Pharma FDI as a Shareof Total FDI in India in FY14
Current ScenarioIndia is now among the top five pharmaceutical emerging markets.
Domestic Pharma market to grow at 10-12 per cent in FY15 as compared to 9 per cent in FY14
Generic drugs account for 20 per cent of global exports in terms of volume, making the country the largest provider of generic medicines globally
StrengthsHigher GDP growth leading to increased disposable income in the hands of general public and their positive attitude towards spending on healthcare.
highly skilled set of labor force and proven track record in design of high technology manufacturing devices.
Demographic potential
Cont
Well established R&D facilities.
Low cost of labor, innovation, manufacturing and operations.
Property rights supported by well-developed judicial system.
WeaknessesStringent pricing regulations affecting the profitability of pharma companies.
Poor all-round infrastructure is a major challenge.
Presence of more unorganized players versus the organized ones, resulting in an increasingly competitive environment, characterized by stiff price competition.
Poor health insurance coverage.
ContInadequate emphasis on Biosciences in education system leading to slower development in areas related to Biology giving away advantage to China.
India has a low level of government spending on healthcare, at 1% of the GDP
Competency in API/Formulation, intellectual property creation, facility design and maintenance, global regulatory and legal affairs, and managing international work force is limited to a few players among the big players
OpportunityOpening of the health insurance sector and increase in per capita income - the growth drivers for the pharmaceutical industry
India, a potentially preferred global outsourcing hub for pharmaceutical products due to low cost of skilled labour.
Health insurance is growing.
Global demand for generics rising
ContThe government is increasing spend on healthcare
Indian population is spending an increased amount of money on healthcare, Changing disease profile and favorable demographics
Increased penetration in the non - metro markets
Significant investment from MNCs
Public-Private Partnerships for strengthening infrastructure
Cont
Exports have grown very significantly at around 19% CAGR
ContIndia has a very high potential for developing as a center for international clinical trials due to its rich diversity
There is a possibility of greater returns from an Indian entry into mature markets like Brazil, Japan, Russia, etc
Rapid urbanization -Around 742 million people reside in rural areas. There is a significant gap between the number of people residing in villages that require treatment, and quality treatment and medicines reaching these villages
ThreatsOther low-cost countries such as China , Thailand and Israel affecting outsourcing demand for Indian pharmaceutical products
Skilled Labour shortage
Wage inflation
Government expanding the umbrella of the Drugs Price Control Order (DPCO)
ContCompetition from other emerging economies
Entry of foreign players (well-equipped technology-based products) into the Indian market.
Product patent regime poses serious challenge to domestic industry unless it invests in research and development.
ContMergers and acquisitions by foreign companies particularly multinational corporations of a few Indian generic leaders may completely change the direction of Indias pharmaceutical movement neutralizing its thrust on generics and cost competitiveness
PEST ANALYSIS ON PHARMACEUTICAL INDUSTRY
Political FactorsPolitical factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate. Some examples include: Tax policy Employment laws Environmental regulations Trade restrictions and tariffs Political stability
National Pharmaceutical Pricing Policy (NPPP) 2012The Indian government introduced NPPP in 2012 to regulate the prices of 348 essential drugs, based on their strengths and dosages.Manufacturers are allowed to sell these drugs on or below the price fixed by the government.The policy is applicable to imported drugs as well.
IMPLICATIONImplementation of NPPP resulted in decline of profit margins for products under regulation from 20% to 16% and 10% to 8% for retailers and stockiest respectively during 201213.The policy has resulted in significant uncertainty among stockists on whether to continue with the business amid low profit sand margin reduction
Medical Council of India (MCI) Guidelines on sales and marketing practicesMCI guidelines were issued to ensure transparency in sales and prevent unethical practices of some doctors.MCI aimed to stop medical professionals from prescribing drugs in exchange of bribe from drug manufacturers.IMPLICATIONTax authorities use the Central Board of Direct Taxes (CBDT) circular based on MCI guidelines to decide on permissible sales and marketing expenses.
Compulsory licensingIndia has adopted compulsory licensing on the following grounds under Section 84 of the Indian Patent Act: The drug did not meet reasonable requirements of the citizens, The drug was not reasonably priced The patent was not locally manufactured.
IMPLICATIONThe imposition of this regulation paved way for production of low-cost generic medicines of the branded patent drugs.Thus,costly,branded life saving drugs are available at a cheaper rates to the Indian population. The regulation affects the brand value of branded drugs manufactured by MNCs, and thus has been opposed by them
Economic FactorsEconomic factors affect the purchasing power of potential customers and the firm's cost of capital. The following are examples of factors in the macro economy: Labour Cost Skilled Workers Infrastructure quality Inflation rate
Social Factors Social factors include the demographic and cultural aspects of the external macro environment. These factors affect customer needs and the size of potential markets. Some social factors include: Health consciousness Population growth rate Age distribution Career attitudes Emphasis on safety
CompanyNet Sales(2013)Million USDEmployeesCipla1.3920,000Dr Reddys Laboratories1.1416,300Ranbaxy Labs1.0714,600Aurobindo Pharma0.928,635Lupin Ltd0.9111,355Sun Pharma 0.6811,200Novartis India0.144,500 (115,000 Worldwide)
Key Players Locally
Technological FactorsTechnological factors can lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions. Some technological factors include: R&D activity Automation Technology incentives Rate of technological change
GROWTH DRIVERSIncrease in Domestic demandsRise in outsourcing activitiesGrowth in Financing products (Health Insurance)Increase in disposable income of the customersComplications in diseases
Events & timeline analysis
Company ProfileComp.Founded inHeadquartersShare Price(NSE)(16-09-15)EmployeeproductsSun P.1983Mumbai886.80 (+20.20)32,700Pharmaceuticals, genericdrugsCipla1935Mumbai658.05 (-0.85)22,036Pharmaceuticals and diagnosticsZ. cadila1952Ahmedabad1894.00 (+99.55)11000Generic drugsgsk2000Brentford, London, UnitedKingdom1296.24 (+6.24)96,575Medicines and vaccins Mankind1995Okhla Delhi, IndiaDoes not Issue10000+Pharmaceuticals, Genericdrugs, OTC, FMCG,Diagnostics
Events & timeline analysisRs. In millionComp.2005200620072008200920102011201220132014Sun P.11852.816368.216,652.723,656.427,697.518,461.331,075.740,155.624321.428287.9Cipla2254.522981.353561.994203.295234.295605.696331.096977.508202.429380.29Z. cadila1090.001276.601450.301681.801743.401885.602920.303150.805675.704042.10gsk1474.071541.931578.581676.361884.142125.202375.882630.302546.153287.57Mankind19033548661881210431588190923833000
Increase and decrease in revenueIn %Comp.200620072008200920102011201220132014Sun P.2823015-334123-3914Cipla2416152071191513Z. cadila1512144835744-28gsk42611111110-323Mankind433121242234172021
Events & timeline of sun pharma
Cont.
Events & timeline of Cipla
Events & timeline of Mankind
Cont.
Cont.
Events & timeline of Z. Cadila healthcare
Cont.
Events & timeline of GSK
Cont.
Current NewsSun Pharma (16 September 2015)
Agreement with US Eye Care firm for around 40 million US $.
Cipla (17 July 2015)Announced to by Invagen Pharma inc. & Exelan Pharma inc. about 550 Million USD in US
ContZydus Cadila (24 June 2015)Received final approval from US food and drug administrations (USFDA) to sale Pyridostigmine Bormide(PGB) Tablets.
GlaxoSmithKline (8 June 2015)CCI has imposed fine of Rs. 64 Crores for being indulge in anti competitive activity. It had tried to fix entire bidding for supply of maligning vaccines for HAZ Pilgrims.
ContMankinds DHA Campaign (10 September 2015)
MKD has arose the importance of DHA among children.They reached 12000 Pediatricians and 20000 children to eliminate the DHA deficiency from the Indian society in last 8 months.
Future trend
3rd largest pharmaceuticals market by 2020.20% of global exports in generics.USD 45 Billion in revenue by 2020.USD 26.1 Billion in generics by 2016.USD 200 Billion to be spent on infrastructure by 2024.49% of all drug master filings registered in the USA.
How?
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