Updated on 28 June 2013
Enhanced accessibility will be another major contributing factor to the growth story. Besides the alarming growth in the medical infrastructure in major cities, tier 2 and rural areas have been covered by medical infrastructure using some innovative models. The government has also increased the healthcare spend which is driving the demand for products. Overall, even branded products are benefiting from the surge in demand.
Besides these, the growth of India's biotechnology and vaccine manufacturing has spurred growth in pharma products. Growing propensity for self-medication and stimulation of the market by disease awareness campaigns from health careindustry and providers is also leading to market expansion.
While presenting the highlights of their report, the authors debunked some of the most common myths about India's pharma market.
Myth 1: India has an end-to-end advantage in R&D Innovation.
Reality: It is not so. But India's advantage lies in many pockets of the value of the chain.
Myth 2: Intellectual property is the biggest obstacle in realizing India's potential in R&D innovation.
Reality: In fact, it is infrastructure and policy for clinical trials that remain the major obstacle to major global engagement with India.
Myth 3: MNC's continue to seek ‘deals' that offer cost arbitrage.
Reality: In fact, alliances that focus on innovation, quality and service are big unmet needs.
Myth 4: India is far from being a source of new chemical entities (NCEs) due to the above three constraints.
Reality: In fact, India has registered 2 NCEs in the last 12 months and there is actually a growing NCE pipeline in the country.
The McKinsey report is of the view that India's pharma market growth will be fairly fragmented, thereby creating opportunities for a large number of players. Nearly two-thirds of the market will be in top cities and tier 1 towns and hence targeting middle class consumer segment will be a key determining factor for success among entrepreneurs. Rural India may have a huge population and will grow fast at 15 percent but its overall share nationally will be only 25 per cent.
Similarly, two-thirds of the sales will come through the retail channel, institutional sales will be only about a quarter of the total market.