US Market to drive Industry Growth of Indian Pharma Sector

/US Market to drive Industry Growth of Indian Pharma Sector
  • Pharmaceutical Industry India

The Indian Pharmaceutical product sector has witnessed a steady growth in exports worldwide. Until 2020 it is supposed to become the 10th largest market in value terms. The Pharma exports were estimated to reach the number of $25 billion in the fiscal year 2014-2015 and had a value of $6.4 billion in 2015. How are the industry’s plans to grow in 2016?

The Indian Pharma Industry remained stable in growth numbers, its production-, Research&Development- and labour costs are lower compared to many other countries, and it is backed up with a lot of engineers and scientists that can be helpful in terms of future management and operations. Also, the industry receives governmental support which makes it interesting to invest in for foreign companies as well, like a 100% FDI allowance in the sector.

Today, Indian Pharma companies who focused mainly on generic drugs, see an additional sales pool in niche markets not served by industry leaders in the US. When it comes to market entry, serving those niches could mean a competitive advantage for Indian companies.

Within all countries, the US market is a main market for drug exports from India. Also, a lot of large company drugs went off patent there so that Indian companies could use this potential to adopt those formulas. When a product goes off patent, a company can imitate it. The affordability aspect is what makes these generics especially popular. And the user of a product doesn’t have to compromise on quality and effectiveness. The UN Patent Pool has even signed sub-licenses for the allowance to produce an AIDS generic with several Indian companies.

Indian Pharma companies make most of their money with generic drugs (70% market share in the sector and 20% of exports worldwide), but they currently face revenue opportunities lying in more R&D to create niche treatments, new distribution systems nd, as mentioned, drugs going off patent. The largest opportunity herein lies in blockbuster drugs going off patent. Blockbuster drugs are drugs that continuously exceed sales revenue of US $1 billion per year. Recently, a lot of company’s patents of such drugs went off, so Indian companies see the chance to produce their own drugs and market them towards America. Those new creations or tweaks of off patent products are a large chance for the companies to further grow and place a foot into other markets than the one for generic drugs.

Within nine months, almost a third of all FDA (Food& Drug Administration) applications for new drug approvals came from India. This shows a 19% increase compared to the same period a year before.

Hence, there can be challenges for the companies and their new drugs. One is to get them prescribed by doctors. Also, there is a large regulatory scrutinity taken recently by the American government, like warning letters, import alerts and the consolidation of supply chain in the US markets. Also, the market growth for Pharmaceuticals in the US has slowed down recently and less big products went off patent.

Overall, with the opportunity of expanding in the American niche drugs market alongside the existing generics market, Indian Pharma companies will have new revenue and growth opportunities.

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