Updated on 28 June 2013
McKinsey & Company study - India’s pharmaceutical market will more than double from the current year’s $18 billion to over $ 45 billion by the year 2020
"The India Advantage" continues to exists despite some recent hiccups in the national economic growth scenario and quality issues faced by a major company like Ranbaxy, reiterated Dr Ajay Dhankar, director at McKinsey and lead author of a special report on India pharma. The report, commissioned by the USA India Chamber of Commerce was released at a high profile pharma meeting at Cambrdidge, Massachusetts on June 21, 2013.
There are several reasons for McKinsey to be gung-ho about India. The country's healthcare sector has tripled in size in the last decade from $23 billion in 2002 to more than $70 billion in 2012. "This has happened despite India lagging behind peer countries in spending, outcomes, health human resources and infrastructure," Dr Dhankar said.
According to figures compiled by McKinsey, India's pharma market was only $6 billion in 2005. It zoomed to $18 billion in 2012. And Mckinsey predicts India's pharma market will grow to at least $45 billion by the year 2020.
"There is widespread acknowledgement of India's potential for R&D innovation and while the fundamental drivers of the India Advantage exists, the opportunity has not played out as expected," added the co-lead author of the report Mr Vivek Badoria, a principal at McKinsey.
Even in the most pessimistic scenario, the authors observe that India will be a top 3 pharma market by incremental growth by 2020 and in absolute size the country will become the 6th largest market globally by 2020.Only USA, China, Japan, Germany and Russia will be ahead of India in the global phama sweepstakes.
The India growth story in pharma is based on 11 major drivers, according to the McKinsey report. The topmost reason is the presence of epidemiological factors and approximately 5 per cent of the population has high disease prevalence rates. A third of the incremental growth will come from the affordability factor determined by steady rise in income levels, huge expansion in insurance coverage and affordable pricing.