22-11-2012, 12:41 PM
Indian Pharmaceutical Companies: Success & Potential
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Introduction
The Indian pharmaceuticals sector has come a long way, being almost non-existing during 1970, to a prominent provider of health care products, meeting almost 95% of the country’s pharmaceutical needs. (1) With a growing population and increased demand for antibiotics and medicines to resist, reduce, and prevent disease, there is an ever-increasing demand for quality pharmaceuticals and new medicines. Currently, the Indian pharmaceutical industry is estimated to be nearly a $4.6 billion market; it is predicted to continue to grow at a rate of eight to nine percent over the course of the next several years, and double in nearly a decade. According to Dr. Richard Gerster, “The Indian pharmaceutical industry is a success story providing employment for millions and ensuring that essential drugs at affordable prices are available to the vast population of this sub-continent.” (3) The industry ranks very high amongst other countries in terms of technology, quality, and range of medicines manufactured. From simple headache pills to sophisticated antibiotics and complex inhalers, almost every type of medicine is now made within this country. In the beginning of 2005, pharmaceutical companies were granted patent protection for their products in India, due to the establishment of Indian Patents Third Amendment Bill. This product patent regulation and a growing population will make the Indian market an appealing proposition for foreign companies.
Domestic Market
The Indian pharmaceutical industry possesses numerous producers of medicine which are approved by regulatory authorities in both the USA and UK. Of the total market, there are currently two hundred large to medium research and development based pharmaceutical companies, including government, private and multinational. (7) In addition to these large manufacturers, there are more than ten-thousand smaller, licensed generic companies; only thirty percent of these companies are operational. Due to so many different competitors, there is no one company in the country that controls more than seven percent of the market. (7) However, similar to global trends, mergers and acquisitions in the Indian pharmaceutical industry have resulted in the top ten firms accounting for thirty-seven percent of the market.
Export Market
Indian pharmaceutical exports have been increasing steadily over the past several years. Bulk drugs especially have seen substantial growth, increasing at a rate of over twenty percent per year. Dealing with the US, India’s pharmaceutical exports have zoomed from $6 million in 2000 to $93 million in 2001 to $223 million in 2002. (7) India is now the largest exporter of antibiotics to the United States.
Import Market
Current imports into India are estimated at ten to twelve percent of the total market. The major suppliers are China, Germany, USA, Italy, Switzerland, Denmark, France, and the United Kingdom. (6) These imports include raw materials such as bulk drugs and early stage developments, and finished materials ready to be sold to the end user.
Market Entry
Over seventy percent of the pharmaceuticals are for the retail market, through distributors and wholesalers. (7) The balance is for direct sales to hospitals, and nursing homes.
The Medical Stores Organization (MSO) under the Ministry of Health procures pharmaceuticals for government owned and managed hospitals and dispensaries. This organization distributes supplies received from international aid agencies and acquires medicines for the National Health Programs; and co-ordinates disaster relief. MSO has offices and storehouse in Mumbai, Calcutta, Guwahati, Hyderabad, and Chennai, Karnal and New Delhi. (7) MSO’s testing laboratories are located in Mumbai, Chennai and Kolkata for quality testing of the drugs and medicines. (7)
Maintaining one or more Indian agent/representatives is the best way to enter the large Indian market. Representatives maintain close contact with government officials and decision makers, obtain advance information regarding procurements, and keep the foreign supplier abreast of local market opportunities, conditions and competition.