Indian Pharma industry is currently undergoing unprecedented changes. There is huge growth in Indian Pharma because the industry has received product patents. This has been instrumental in the industry’s huge achievement as a international exporter of superlative generic drugs. The new patent regime had led to the return of the pharmaceutical multinationals. India is evolving into a multi channel market. The most striking part of this shifting paradigm is the increasing dominance of the hospital segment. India’s leading drug manufacturers are becoming global players, utilizing both organic growth, through the continuing development of their business, and mergers and acquisitions. They are also planning to boost their presence in existing markets and open up new ones.
Anticipated Evolution of India into a multi-channel market
Figure 1: Current Landscape
81% -Trade Pharma
9% – Hospitals
10% – OTC
Figure 2: Developed Market Models
48% – Trade Pharma
28% – Hospitals
19% – OTC
8% – Retail Chains
And there is strong need for Pharma companies in particular to rethink their business strategy in order to tap into the maximum value of this growing opportunity.
Collaboration for growth:
There has been a development at record levels in recent years in Indian Pharma industry. Now, opportunities have been expanding in a number of fields. On the other hand, the domestic industry’s long-established position as a world leader in the production of high-quality generic medicines is set to reap various benefits as the patents on a number of drugs are scheduled to expire over the next few years. In addition, governments across the globe are seeking to curb their soaring prescription drug costs. India’s long-established position as a preferred manufacturing location for multinational drug manufacturers is quickly spreading into other areas of outsourcing activities.
The major fact is that both local drug and multinational manufacturers could ultimately benefit from the market potential of India’s population. This gives way to a large market that likely to open up as the result of a projected boom in health insurance. This untapped domestic market is also highly attractive to the pharmaceutical MNCs, which recently have returned to India in large numbers (many companies had left when the regime allowing process patents only was introduced in the early 1970s). Now, MNCs and domestic companies are commencing to work together, utilizing each other’s strengths for their mutual benefit.
Why is the hospital segment becoming increasingly attractive to Indian Pharmaceutical industries?
The Indian hospital segment today represents a high potential market to Pharma industry due to five factors. They are:
• Growth Rate
• Market Size
• Investment Climate
• Ease of Targeting
• Certain Behavioural factors
Market Size:
India has over 25, 000 Lakh hospitals including government owned by both government and private. These hospitals span all over cities, towns, and represent a total opportunity size of approximately INR 55, 000 Crore.
The majority of the potential lies in urban hospitals and outpatient treatments.
“Pull Forces”
Increasing patient sophistication and awareness
Increasing preference to be treated at hospitals for chronic disorders
“Push Forces”
Regulatory changes
Expand Private insurance coverage
Based on this shifting paradigm, India is going to be a significant player in the Indian Pharma industry!