The Indian Pharmaceuticals industry is a Rs. 59700 crore industry. It is a highly fragmented industry which is divided into MNC’s and Indian manufacturers.  There are over 3,000 small and medium generic pharmaceuticals’ manufacturers in India.  The Indian companies have traditional strength in generic and bulk drugs which focus on the middle and low end of the consumer market. The MNC’s have more concentration on the high end consumer market. India also has its own system of medicines with over 7,000 units manufacturing Ayurveda, Unani and Homeopathic medicines.

The Indian pharmaceuticals industry has made its impact felt in the global arena.  India accounts for 8% of the volume of the total manufactured pharmaceuticals in the world and 2% of the total value of the same. This makes the Indian pharmaceuticals industry 4th in the world in terms of share of total manufactured volume of pharmaceuticals. The exports of the industry are worth Rs. 27,600 crore and India ranks 17th in the world in terms of value. Indian Pharmaceuticals industry also accounts for 22% of the global generic drugs market.

On the policy front, FDI up to 100% is allowed through the automatic route. Following the de-licensing of the pharmaceutical industry, industrial licensing for most of the drugs and pharmaceutical products has been done away with. Manufacturers are free to produce any drug duly approved by the Drug Control Authority.  Recent legislations have made it compulsory for manufacturing units to comply with WHO and international standards of production. It has also laid down Good Manufacturing Practices (GMP) which focuses on the guidelines for quality control.

India has its strength in manufacturing. It manufactures quality medicines at affordable prices which is the reason why Indian drugs perform well in regulated and unregulated markets. This is made possible because of the low cost of production. Research & Development costs are also low and so are the labour costs. The cost of one research scientist in India is roughly 1/6th of the cost in USA.

Moving forward, the Indian Pharmaceuticals industry is expected to grow at 24% per annum to Rs. 1.2 lakh crore by 2010. This will be driven by the potential for marketing patented drugs, growth in contract research and manufacturing, growth in pharmaceutical retail and IT-enabled services including clinical/market data analysis. Clinical trials are also expected to be a growth booster with the Clinical trials industry expected to grow to Rs. 6,900 crores by 2010. Several companies in India are entering into mergers & acquisitions to increase their economies of scale and increasing their spend on R&D to better compete with the global giants of pharmaceuticals.

Data Sources: Investment Commission of India, Pharmaceuticals Export Promotion Council

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Best Practices