New Delhi , 26 July 2005 – India is in line to become one of the top ten global pharmaceuticals markets, according to the latest in a series of studies by PricewaterhouseCoopers. With an economy predicted to grow around 5% each year for the next half decade, India offers huge opportunity to pharma multinationals particularly as sales growth is slowing in the more traditional target markets of North America, the European Union and Japan.
‘India – Prescription for Growth’ identifies a rapidly growing economy and population, changing demographics and pharmaceutical needs, a robust services base and attractive tax concessions for overseas investors as all contributing to India’s global attraction.
A growing number of foreign multinationals have already been attracted by the financial incentives of India, including tax holidays for companies based in underdeveloped areas and the deduction of capital R&D expenditure. There is also great potential for increased sourcing of pharma ingredients from India, contracting local companies to make up the finished product and setting up manufacturing facilities there.
The relaxing of pricing controls within the last ten years, coupled with strong native manufacturing expertise, provides an attractive proposition for Big Pharma. The US Food and Drug Administration (FDA) has already approved 60 manufacturing sites – more than any other country outside the US – for new developments.
Intellectual property protection continues to be a major concern and changes in recent patent legislation may ease these concerns but effective policing of the new laws will be important as India seeks to build its research and manufacturing base.
India’s significantly lower operating margins, low development and labour costs, its nascent research skills and the setting up of a growing number of major global contract research organisations in India, are proving to be an attractive mix. Yet currently only three foreign multinationals appear in India’s top 10 pharmaceuticals companies based on sales and they share only 11.9% of the market.
Thomas Mathew, Pharmaceutical leader for PricewaterhouseCoopers in India said:
“India’s native manufacturers present a huge threat to Western generics companies and currently produce 20% of the world’s generics. Local producers have started conducting original research and are becoming trusted partners. In 2004 India’s largest drug firms invested $142m on R&D. The global pharmaceutical industry must take notice of our booming industry.”
The current level of 63m people over the age of 60 is estimated to reach 189m by 2025 as a result of increased affluence and improved hygiene levels. This will inevitably shift the types of medicine and healthcare choices:
- Growth of more advanced drugs (eg. for cardio-vascular problems or disorders of the central nervous system) are due to double from 15% market share in 1999 to over 33% in 2010, in turn decreasing the market share of anti-infectives and vitamins.
- The over-the-counter market (OTC) of India, currently worth $940m, is growing at 20% a year– more than double the growth rate of prescription products– with the government planning to expand the list of those available. Yet the market is relatively undeveloped and offers opportunities to build brands and a source of new revenues.
- Although public spending on healthcare is increasing, in 2003, private companies accounted for 82% of India’s $30.5 billion expenditure on healthcare. Health insurance is also experiencing an approximate 15% increase year on year.
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