Updated on 23 May 2013
Mr Glenn Saldanha, chairman and MD, Glenmark Pharmaceuticals, India
The Indian pharmaceutical industry has witnessed a healthy growth in the last decade, driven by factors like rising consumption levels in the country and strong demand from export markets. The domestic pharma market, which recorded a compound annual growth rate (CAGR) of around 14-to-15 percent in the last 10 years is now the third largest in the world in terms of volume and 14th largest in terms of value.
However, despite this high growth, drug consumption per capita in India is still among the lowest globally. The per capita consumption volumes are estimated to be eight-to-12 times lower than in the US and Japan. Hence, the tremendous growth potential for the industry cannot be understated. However, having said so, the industry is expected to face some major transformational challenges in the coming decade.
While patent expirations, lack of new product pipelines, coupled with general economic downturn are some of the challenges confronting the global pharma industry, the Indian pharma sector on the other hand, is braving odds of weak macro factors of the economy, increasing competition and pricing pressures in certain categories.
In the past two years, the growth of the domestic pharma market has slowed down a bit to 12-to-13 percent due to weak macro factors and increasing competition from unlisted players and MNC pharma companies. Over the last couple of years, we have seen several big pharma firms enter the branded generic space in order to compete with domestic drug makers. This trend is expected to intensify in the coming years adding more pressure in this already fragmented market.
You could also see increased mergers and acquisition activities, with MNC pharma companies acquiring India-related businesses or firms. The high growth rates of 15-to-20 percent enjoyed by the industry just a couple of years back are most likely to be a thing of the past. Under such a scenario, the Indian industry has to settle for a muted growth of around 10-to-12 percent in the immediate future.