Biopharma Report

A REPORT ON DEVELOPING FUTURE SCENARIOS FOR THE INDIAN BIO/PHARMA INDUSTRY IN 2020 (DELPHI STUDY APPROACH)
By: ARUN GUPTA 09BS0000425
SMI BRAIN NET.

1|Page Indian Pharmaceutical Industry in 2020
A REPORT ON DEVELOPING FUTURE SCENARIOS FOR THE INDIAN BIO/PHARMA INDUSTRY IN 2020 (DELPHI STUDY APPROACH) BY Arun Gupta 09BS0000425 SMI BRAIN NET
A REPORT SUBMITTED IN PARTIAL FULLFILMENT OF THE REQUIREMENT OF MBA PROGRAM OF THE ICFAI UNIVERSITY, DEHRADUN
SUBMITTED TO:-
FACULTY GUIDE: Prof. A. Lakshminarasimha Associate Dean IBS-Bangalore
COMPANY GUIDE Prof. Dr. Roger Moser Director SMI India
DATE OF SUBMISSION: 2|Page
14/5/10
Indian Pharmaceutical Industry in 2020
DECLARATION
I declare that the study entitled Developing Future Scenario for the Indian Pharmaceutical Industry in 2020 conducted at SMI BRAINNET, Bangalore is a record of independent work carried out by me during the academic year 2010. I have completed my study under the guidance of my faculty Guide Prof. Lakshminarasimha .A. of IBSBangalore and company guide Prof. Dr. Roger Moser of SMI BrainNet. I also declare that this study is the result of my effort and has not been submitted to any other University or Institution for the award of any degree or personal favor whatsoever. All the details and analysis provided in the report hold true to the best of my knowledge.
Date: 14 May 2010 Place: Bangalore
Arun Gupta IBS Bangalore
ACKNOWLEDGEMENT
I would like to express our heartfelt gratitude and thankfulness towards our Industry Analytics professors, Dr. Prof. Roger Moser for giving us an opportunity to work on this project, which has helped us gain an in depth understanding of the Indian Pharmaceutical Industry. Also the expert comments given timely helped a lot. The timely advice given by Prof. A. Lakshminarasimha has gone a long way in ensuring that we do not lose focus while working on the project. The constant guidance and meaningful suggestions provided by them also helped in making this project a relevant and a rich source of learning for the students of Industry Analytics. With his kind reference we have visited a government manufacturing plant KAPL (Karnataka Antibiotics and Pharmaceuticals Limited) and get a knowledgeable exposure about all the departments of a company. We come to know how the functioning is done in an organization. We hope that this project would enable the readers understand present and the future scenarios of Indian Pharmaceutical Industry.
Regards, Arun Gupta.
Table of Contents
DECLARATION ................................................................................................................... 3 ACKNOWLEDGEMENT ..................................................................................................... 4 ABSTRACT: ......................................................................................................................... 7 INTRODUCTION ................................................................................................................. 8 Company Profile: ............................................................................................................. 8 SMI:............................................................................................................................... 8 SMI India ....................................................................................................................... 8 Our academic partner IIM-B ....................................................................................... 9 Our corporate partner(s) ................................................................................................. 9 Research ........................................................................................................................ 9 BrainNet ..................................................................................................................... 10 DEVELOPING A FUTURE SCENARIO ............................................................................ 11 Fundamental Steps of Scenario Planning ..................................................................... 12 Objective of the project.................................................................................................. 14 Limitations of the project .............................................................................................. 14 METHODOLOGY: ............................................................................................................. 14 Overview of Delphi Technique: ..................................................................................... 15 RealTime-Delphi Procedure for Respondents ........................................................... 15 Experts focused approach: ............................................................................................ 18 INTRODUCTION: INDIAN PHARMACEUTICAL INDUSTRY....................................... 19 INDUSTRY SEGMENTATION .......................................................................................... 22 DOMESTIC GROWTH DRIVERS: .................................................................................... 25 CRITICAL SUCCESS FACTORS....................................................................................... 27 New product development ............................................................................................. 27 Therapeutic coverage ..................................................................................................... 28 Exports ........................................................................................................................... 29 Low cost production through scale ............................................................................... 29 FACTORS WHICH MAKE INDIA MOST FAVORITE OUTSOURCING HUB: .............. 30 PEST Analysis of Pharmaceutical Industry: ......................................................................... 33 Political Factors.............................................................................................................. 33 Economic Factors ........................................................................................................... 34 Social Factors ................................................................................................................. 35 Technological Factors .................................................................................................... 36
SWOT ANALYSIS OF INDIAN PHARMACEUTICAL INDUSTRY ................................ 38 Strengths ........................................................................................................................ 38 Weakness ........................................................................................................................ 39 Opportunities ................................................................................................................. 39 Threats ........................................................................................................................... 40 Projections: .......................................................................................................................... 41 Outcome Projections:..................................................................................................... 41 Enabler Projections: ...................................................................................................... 42 Impact on Industry: ....................................................................................................... 44 EXPLANATION OF THE OUTCOME PROJECTIONS AND 6 ENABLERS PROJECTIONS with EXPERT COMMENTS ..................................................................... 49 Outcome projections ...................................................................................................... 49 Enabler projections: ...................................................................................................... 49 Short Stories Which Will Support the Above Projections: .................................................... 60 Lifestyle Diseases: DIABETES in India ........................................................................ 60 BRANDED PILL BITTER DOSE ................................................................................ 61 Chronic diseases cost India more than $ 1 billions. ...................................................... 62 Government support ...................................................................................................... 62 REGRESSION ANALYSIS ................................................................................................ 63 Impact on Industry:- ...................................................................................................... 63 APPENDIX ......................................................................................................................... 69 Experts Rating regarding Impact on Industry ............................................................. 69 Calculations for Conclusion: ......................................................................................... 70 References: .......................................................................................................................... 71
ABSTRACT:
The proposed project is about future scenario development of Indian Pharmaceutical industry by 2020. For projecting the most probable/likable scenarios, existing Political, Economical, Social as well as Technological factors are considered and a PEST framework is formulated. While developing this framework we need to consider the enabling factors (enablers) which can influence in future. These enablers are suggested and recommended by experts from Pharmaceutical industry as well as academic background.
Each Pharmaceutical company is controlled by 5 major elements which will directly affect their functioning. They are Customers, Suppliers, Competitors, Government and Society in large. The entire project started with identifying the various Political, Economical, Socio-Cultural and Technological factors that can influence Pharmaceutical sector especially in India. Then these identified factors were grouped under the key five elements. Now the most challenging part of project was to find out which are all factors of the key elements affect which all PEST factors. On the basis of this relationship existing we identified main projections also their corresponding enabler projections. These identified projections are sent to experts for Delphi analysis. Experts have to comment on each of main projection and also on enabler projections. Experts have to flash their thoughts on 3 parts for each projection 1) Probability of projection happening 2) Impact on industry 3) Desirability Of occurrence. Also expert can post their comments on each part.
Experts were selected from Pharma industry, consulting firm, academics, supplier segment and also financial analysts for Pharmaceutical industry. We have got 45 responses from the experts. After getting the response from the experts to analyze the data we have done Factor analysis, Regression analysis and come out at the final conclusion of the probability of happening of the most likable scenario.
INTRODUCTION
Company Profile:
SMI: The importance of Purchasing, Logistics and Supply Chain Management has increased enormously. Due to recent business developments, the strategic significance of Purchasing and Logistics has been recognized. Their functions are treated accordingly - not just when cost reductions and quality improvements are concerned. The latest research proves that competitive advantages emerge from the procurement of innovative products and services Purchasing does indeed act as an innovation driver. Logistics is often referred to as a "strategic weapon" to be used against the competition.
The Supply Chain Management Institute (SMI) is one of the leading research institutes worldwide for Purchasing, Logistics and Supply Chain Management at the European Business School (EBS) in Wiesbaden. Together with renowned partners from the academic and business world, we successfully drive up-to-date and innovative topics in Purchasing, Logistics and Supply Chain Management research projects and studies. At the same time, increasing customer expectations require an integrated approach in which all activities along the value added chain are planned, implemented and
controlled throughout the entire product life cycle. Supply Chain Management takes over this function in the company and tracks the long-term performance improvement of every single company of the Supply Chain as well as the Supply Chain as a whole.
SMI India China is known as the "workbench of the world", India is rapidly developing into a global service provider not only in IT, but also in contract research in the pharmaceutical, biotechnological and chemical industries, in engineering services for the automotive and aerospace industries, etc. At the same time, a growing customer base in India requires highquality products and services. Multinationals as well as local companies have great 8|Page Indian Pharmaceutical Industry in 2020
opportunities in India but also face many challenges. One of these challenges is the optimal management of the supply chain essentially including sourcing and logistics. Especially in the area of sourcing and supply management, a gap exists in India between the required support from universities for local and multinational companies operating in India and the number of research centers focusing on theses challenges. Our academic partner IIM-B It is well known for its excellent education of students and the success of its alumni all over the world. IIM Bangalore is the host of the research and education center of SMI and part of its Global Research and Education Network. Our corporate partner(s) The EADS-SMI Endowed Chair for Sourcing and Supply Management was established in 2007 jointly by EADS (European Aeronautic, Defence and Space Company) in order to establish the first research and education center in India, solely focusing on sourcing-related challenges in India Research The research focus of SMI India is the optimal management of the interface between suppliers in India and operations abroad or other parts of India. SMI India is therefore part of the following research groups:
Sourcing Organizations: Effective Management and Efficient Structures in Emerging Markets.
Regional Sourcing Strengths and Weaknesses: A Cluster-based Analysis for India and China.
Supplier Management in Emerging Markets: Integration Challenges and Transparency Requirements In addition, SMI India is conducting research projects in India-specific Supply Risk Management and Talent Management together with different partners from industry. 9|Page Indian Pharmaceutical Industry in 2020
BrainNet BrainNet is a leading international brand for Supply Chain Management Consulting. BrainNet, a consultancy based in Bonn, Germany, a market leading purchasing consultancy, also sends experienced industry insiders to its clients. Not only do they attend the negotiations with the suppliers but, beforehand, they also cast an expert eye over the production plants to gauge the negotiating leverage. BrainNet is one of the leading international brands for the supply chain management consulting:
10 | P a g e Indian Pharmaceutical Industry in 2020
DEVELOPING A FUTURE SCENARIO

Scenarios provide substitute images of probable futures, they serve to enable an organization to think ahead rather than to forecast future situations, without any evaluation of the probability that they will arise. Scenarios consist of a consistent set of external factors over which the company has no influence. Planning for future scenario enhances the effectiveness of corporate management. It increases the visibility of the future and widens the room for manoeuvre. It also enhances managements ability to calculate the potential impact of possible environmental changes. Is developing future scenario worth the effort? Well, this is a decision for each company to make. With increasing financial insecurity, a lot of companies are installing scenario planning as an essential part of their business model. Evolution of Scenario Planning Planning scenarios dates back to more than 60 years and has its roots in military strategy. Scenarios were developed during World War II to handle the possible effects on the environment if an atomic bomb were to be detonated. Herman Kahn and the Hudson Institute further developed this method, the rationale being to think the unthinkable and then assigning probabilities to it. In corporate management, planning scenarios gained importance during the end of 1960, when Shell was able to anticipate different potential outcomes of the oil crisis. Due to their early preparation of strategic options, Shell managed benefits from the crisis and gained competitive advantage. Shell used second generation scenarios (decision-support scenarios) which analyzed business dependence on certain relevant factors and their influence on the decision makers. While the first generation scenarios were explanatory scenarios, they only highlighted the possible future developments. By 1980s lot of companies in USA used scenario planning technique. Still scenario planning did not become the integral part of many companies due to sophisticated process, time needed and a frequent unwillingness to deal with somewhat soft factors. But today, scenario planning has formed an integral component of the business model of almost all the companies and is of a sensitivity analysis or long term forecast.
Planning for the Future General traditional planning is based on a single bundle of assumptions the official future of the organization, while alternative futures are not taken into consideration. There is a vague assumption that expectation for the future do not differ much from the past. Planning is basically done on the fact that tomorrow does not deviate much from today, which is a dangerous deception in todays uncertain world. One-dimensional thinking about the future is just not enough in todays ever-changing world. This is where scenario planning helps an organization to prepare not just for a single future but for a future space instead. Key performance indicators increase the robustness and flexibility of the corporate management, thereby giving a clear picture of the business model.
Fundamental Steps of Scenario Planning
Figure: Advanced Scenario Thinkshop (AST)
Advanced Scenario Thinkshop (AST) is a tightly organized and systematic process of developing a scenario. It is a balanced mix of quantitative and qualitative elements, while at its heart, this process is about evaluation of relevant business models and the possible strategic courses of action in the context of well defined scenarios for the companies. There are basically three steps in planning a scenario: 1. Think 2. Calculate 3. Prepare Think: The future can not be predicted, but equally it did not come out of blue. Organizations try to identify and select the uncertainties which are important for the success of the company and for which it needs to be prepared. Thinking can be facilitated through different steps: Reflect on current global and industry specific trends
Differentiate between certain and uncertain events Analyze substitute developments of uncertain trends Infer scenarios through coherent combinations as well as aggregation and description of the relevant variations of uncertainties. Calculate: The measurement of the success of a business model is based on calculation of the effects the scenarios have on the key performance indicators. Accurately defined statements helps in shaping up of the interface between the scenario and the planning model. External statements reflect the necessary attributes of the defined scenarios, while internal statements reflect the necessary attributes of the business model. Prepare: Is the current strategy and the direction of the business model enough to secure the growth and competitive advantage of the company in the important scenarios? Or further measures are necessary for the survival and stability of the company? These questions can not be answered in simple yes or no, there are certain strategies that can be used while answering these questions, the best strategy or a combination of strategies that suits the business model a particular company can be used by that company to prepare itself for the future. The strategies are: Robustness: Provide a satisfactory performance in as many defined scenarios as possible. Flexibility: Leave the strategic options open as long as possible. Multitrack: Allow the parallel pursuit of competing options for as long as possible. Risk: Provide the highest yield, even if the other scenarios result in losses. Robustness and flexibility are the best solutions for preparing for future as they can yield the greatest benefits. At times of instability in the market flexibility can be even more essential than robustness where as multitrack model is too resource intensive, costly and the level of risk associated are also high.
Objective of the project

The objective of the project is to develop scenarios that will act as indicators of the complexities that the pharmaceutical industry will face in the future, i.e. in the year 2020 and to act as forerunner on managing these complications. This is followed by contacting the right experts for their comments on the predicted scenarios. The experts were asked to assess the projections in terms of the probability of occurrence, their impact on the Indian pharmaceutical industry, and their desirability using the ratings scale provided. Scenarios for the year 2020 were developed with the help of the views received from experts.
Limitations of the project

Since the pharmaceutical industry is very vast and it covers wide range of products, only limited companies are taken into consideration for the research. Company Experts may not give the exact details and conceal some important fact and details. It is difficult to contact the right experts for this research due to their busy schedule. The Delphi approach accesses the future based on the opinions of the experts, the accuracy of these predictions remains a major limitation.
METHODOLOGY:
The study approaches the Indian Pharmaceutical industry with a unique approach that does not boast of numbers and complexities. Its simple because the focus is on preparing for the worst scenarios and otherwise not involving narrowed down views that are very susceptible to the dynamism, credible because the predictions pass through different phases of screening and authentication by the expert panel comprising of a heterogeneous set of academicians, industry personnel and industry consultants, dynamic because the participants can review their views at their convenience to suit the discussion and give it a dimension, authentic because the views expressed are part of the knowledge inherited by the panel over the subject through their many years of service in the sector and related fields. Once the expert panel has 14 | P a g e Indian Pharmaceutical Industry in 2020
an exact dimension on the study, the study focuses on the sustainability of the projections and elucidating the rest on how to prepare for the unpredictable and complicated future we live in. Overview of Delphi Technique:
The Delphi technique is one of the most commonly known methods of future research. It is a systematic, multi-stage survey procedure and was developed by the RAND Corporation at the end of the 1950s to avoid the general problems associated with group discussions (bandwagon effect, halo effect). It was first used in the Delphi project in which seven researchers assessed the possible targets of Soviet attacks on the US in the form of a structured, written survey. After years of being used solely for military purposes, the Delphi technique was presented to the public in 1964. As part of the Report on a Long-Range Forecasting Study T. J. Gordon and O. Helmer presented the results of long-term forecasting of scientific and technical developments for the next 50 years.
Today the Delphi technique is a standard approach used in science and everyday life. A classic Delphi survey comprises several rounds. Once the future assumptions, or projections as they are known, have been developed, the first round of the survey involves a group of previously selected experts. They are individually and anonymously confronted with questions which require quantitative appraisals. In addition to the appraisals, each expert can also provide comments to justify his or her opinion. Before the next round, all the participants can view the cumulated group appraisal and the comments made. The participants then have the opportunity to modify their appraisals. Through this Delphi process, the panel of experts comes close to reaching a consensus on the appraisals. RealTime-Delphi Procedure for Respondents
The RealTime-Delphi developed was an innovative and quick-response platform for participants to appraise their expectations of the future. The participants were asked to appraise 18 projections online in terms of their probability of occurrence, impact, and
desirability. They could also add comments and reasoning to their responses. Immediately after answering a question, the real-time calculations provided the participants with insight into the statistical group opinion and comments collected. The participants were then able to reconsider and change the responses they provided after the first round. The Delphi was designed to be self-explanatory. Nevertheless, the participants were able to access a tutorial at any point which explained the background to and the procedures used in the RealTimeDelphi. Every participant completed an average of around four rounds of the survey. The first round ran through all 20 assumptions, i.e. 20 first round screens and 20 revision screens with group statistics. Each time the participant logged in subsequently and was taken to a consensus portal, this was considered to be a new round.
The statistical group opinion was provided for each survey dimension in the form of a boxplot. A box-plot (also known as a box-and-whisker plot) can be described as a diagram showing a row of univariate numerical data (e.g. from 0 to 100%) as well as several characteristics of the series of data (e.g. median, distribution, outliers). The median was 16 | P a g e Indian Pharmaceutical Industry in 2020
indicated by a black line in the box-plot. A gray shaded area showed the second and third quartile also called interquartile range, which is known as a measure of dispersion. The central innovative aspect of the box-plot was the graphical and differentiated illustration of an outlier position. Divergence from the group was indicated using different colors:
a) Green: Within the group opinion b) Yellow: Moderate divergence c) Orange: Significant divergence d) Red: Strong divergence
An outlier labeling rule also helped with classifying observations as out or far out of the group opinion. In addition to the statistical group opinion, the arguments already collected from the experts for each projection could also be viewed. Once all 18 projections had been answered, the session was ended automatically. When next logging in, each participant was immediately taken to a consensus portal. The consensus portal was a form of control panel from where a respondent could jump into and review every single projection. The color of the buttons indicated the status of the given probability judgment for a projection, i.e. the divergence from the group opinion.
Experts focused approach:

For the Delphi study we approached almost 500 experts and out of these 44 have responded through their comments. So we can say that the response rate is around 9%. We have contacted experts from different fields so that we can have overview of the different prospectus of different fields. Actually we have contacted some academicians from IITs, IIMs and best Pharma colleges in India. Research scholars and PhDs from renowned institutes like NIPER (National Institute of Pharmaceutical Education and Research, CSIR labs, CRI Kausauli etc. Doctors from Indias best hospitals like AIIMS. GOI officials, Industry experts from magazines, pharma companies (suppliers), consultants and financial analysts. All these experts view industry in a different look and have different things to share. In our survey the break of experts is as follows:
Out of 44 experts 9 are from academics, 25 from industry and 10 from research centres. So we got the data that is a mixture with maximum number of experts are from industry will actually tell the difference between the present scenario and what is it going to be.
INTRODUCTION: INDIAN PHARMACEUTICAL INDUSTRY

The Indian pharmaceutical industry is a success story providing employment for millions and ensuring that essential drugs at affordable prices are available to the vast population of this sub-continent. The pharmaceutical industry has been considered an evergreen industry. It has weathered recessions, downturns and upturns and has provided investors with certain risk/reward that was well understood and documented. The rate of change in this industry, compared with most of the others, has always been sedate with a group of few pharmaceutical companies driving its future. Pharmaceutical Industry in India is one of the largest and most advanced among the developing countries. It is ranked 3rd in volume terms and 14th in value terms globally. It provides employment to millions and ensures that essential drugs at affordable prices are available to the vast population of India. Indian Pharmaceutical Industry has attained wide ranging capabilities in the complex field of drug manufacture and technology. From simple pain killers to sophisticated antibiotics and complex cardiac compounds, almost every type of drug is now made indigenously.
Indian Pharmaceutical Industry is playing a key role in promoting and sustaining development in the vital field of medicines. Around 70% of the country's demand for bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and vaccines is met by Indian pharmaceutical industry. A number of Indian pharmaceutical companies
adhere to highest quality standards and are approved by regulatory authorities in USA and UK. The Indian pharmaceutical industry traditionally relied on reverse engineering i.e. product copying, through which vast profits were made. In recent years, however, the larger domestic companies have realized the need to undertake original research and / or penetrate into the regulated generics markets in the USA/EU in order to survive in the global market. At the same time, the Indian pharmaceutical industry is renowned for supplying affordable generic
versions of patented drugs for illnesses like HIV/AIDS to some of the worlds poorest countries. Some of the strategies that have been followed by Indian pharmaceutical companies for their growth in the global markets have been as follows: Geographic diversification with few companies focusing on increasing presence in the regulated markets and others exploring the developing/under-developed markets of the world. As a part of diversification strategy, some of the companies have acquired brands, facilities and businesses overseas. Some companies have even started their local marketing in foreign markets. Partnerships for supply of bulk drugs and formulations with the generic companies as well as innovators. For regulated markets such as the US, there are companies focussing on value added generics, niche segments or patent challenges in the US. Focus on offering research and manufacturing services on a contractual basis(CMOs and CROs)
Apart from these strategies Indian companies have to devise newer strategies continuously to survive in the highly competitive global market in an industry that is characterized by - high capital requirement, high technical requirement, high process skills, high value addition prospects, high export volumes, high market sophistication. Indian companies are following the route of mergers and acquisitions to make inroads in the foreign markets. They need to consolidate further in different parts of the world to become trans-national players. Indian companies will have to rise above the statement of Michael Porter (1990), that most multi-national firms are just national firms with international operations. They shall certainly be at an advantage, as their strong national identities will give them a competitive advantage in the global markets. This decade has seen perhaps the most significant changes in the fortunes of the pharma industry:
1. Development of new products, the real driver of growth and profitability, has seen a serious drop in approvals, against a backdrop of ever increasing R&D costs. 2. There has been an emergence of biologics as a significant driver of new R&D. Many of the established pharmaceutical companies have had to make changes/acquisitions to align their portfolios to include a larger biologic presence. 3. On the other end of the product life-cycle, the ever strengthening generic competition has meant rapid declines in sales of products going off patent. 4. The global financial crisis of the past two years has added the final challenge in that the key markets, US & Europe, have had low/no growth. Big Pharma in particular have had to take a look at their business models and refocus energies towards new growth opportunities (biologics, cytotoxics and emerging markets) as well as evaluate more cost efficient operating models. The result has been that the innovative pharmaceutical industry has moved into a faster trajectory of outsourcing and off shoring of R&D and manufacturing across APIs and dosage forms. The global outsourcing industry is USD51b and growing at 14%; faster than the global pharmaceutical industry growth. India is perfectly positioned to be a preferred destination for global pharmaceutical companies to outsource R&D as well as manufacturing. Some of the key drivers being: Track record of supplying pharmaceutical API and formulations globally (with all the requisite quality and regulatory approvals in place) particularly small molecule Strong cost/quality proposition. Lower costs and strong supply of skilled manpower (scientists, QA/QC professionals etc) and capital efficiency Diverse and wide group of companies who have acquired this capability India as a outsourcing market is USD1.1b and growing at ~51%. The opportunity for growth for Indian as well as global companies looking at setting up in India is very strong and sustainable for the foreseeable future. The Indian outsourcing industry has overcome many hurdles along the way and is now poised to assume the mantle of leadership as a strategic partner of choice for global pharmaceutical companies across the areas of R&D and manufacturing.
INDUSTRY SEGMENTATION
Indian pharmaceutical industry can be widely classified into Bulk drugs, Formulations and Contract research. Bulk drugs are the Indian name for Active Pharmaceuticals Ingredients (API). Formulations cover both branded products and generics. Indian pharmaceutical sector is self sufficient in meeting domestic demand and exports successfully to various markets globally. The existence of process patents in India till January 2005 fuelled the growth of domestic pharmaceutical companies and developed them in areas like organic synthesis and process engineering, as a result of which, Indian pharmaceuticals sector is able to meet almost 95 percent of the countrys pharmaceutical needs. India is globally recognized as a low cost, high quality bulk drugs and formulations manufacturer and supplier. Contract Research, a nascent industry in India has witnessed commendable growth in the last few years. As per Yes Bank /OPPI report (2007-08), formulation segment (including domestic formulation and formulation exports) constituted 72% of the total pharmaceutical industry (in terms of sales) while bulk drugs and contract research constituted 25% and 3% of pharmaceutical industry respectively.
Fig: Segment wise Sales (SOURCE: YES BANK / OPPI)
Presently, the growth of a domestic pharmaceutical company is critically dependant on its therapeutic presence. In terms of end-use, the pharmaceutical industry is sub-divided into several therapeutic segments. These segments are broadly defined on the basis of therapeutic application. Some of these segments are low-volume, high margin segments, while the others are high-volume with relatively low margins. The new lifestyle categories like Cardiac, Respiratory and Vitamins are expanding at double-digit growing rates. The long term ailment, chronic therapies is now accounting 24% of the market. The only growth driver for acute therapies is the new product introduction under this segment. Today, anti-infective which used to be the single largest therapeutic segment in Indian pharmaceutical industry is increasing. Anti-infective segment is now 1st in terms of value contribution followed by Gastrointestinal and Cardiac. The key therapeutic segments include: Anti-infective Cardio vascular Central nervous system drugs
Anti-infective is currently the largest therapeutic segment in India. It accounts for one-fifth of total market turnover. Next in line, and accounting for one-tenth each, are cardio-vascular preparations, cold remedies, pain killers and respiratory solutions.
Fig. Therapeutic wise distribution (ORGIMS) (SOURCE: CRISINFAC, YES BANK/ OPPI)
The global pharmaceutical industry is in the midst of challenging times: In 2008, the global pharmaceutical market has grown at the slowest rate in this decade and is expected to slow down further. The market reached USD773 billion at a growth rate of 4.8% in 2008, which is the slowest growth rate of the decade. US and Europe which contributed almost 73% of the global market in 2008, achieved growth rates of 1.4% and 5.8% respectively. Going forward, the US market is expected to stagnate or decline further over the next five years while the European market is expected to grow at a sluggish pace with a CAGR of 2 - 5% for 2008 - 2013. There are primarily four reasons for this slowdown: Decreased R&D productivity: during the eight year period between 2000 and 2008, while the total R&D spend of pharmaceutical companies has increased from USD53 billion to USD129 billion, the number of drugs approved has declined. This decreased R&D productivity is due to the increased failure rate in trials and higher cost of developing new drugs due to stricter regulatory requirements. Current global financial crisis: the crisis has severely affected the liquidity of small biotech companies; with 44% of the US biotech companies having less than a years operating cash and 26% having less than six months of operating cash. Further, the consumer spend on healthcare has declined, reflected by a drop in the number of prescriptions in the US by 2% for the first time in a decade in 2008-09. Increasing penetration of generics: penetration of generics in US, in terms of their share in total prescriptions, has increased from 47% in 1999 to 63% in 2007 .Going forward, this is expected to increase further driven by impending patent expiries and measures by governments to reduce healthcare costs. Fewer and smaller blockbusters: decreased number of blockbuster approvals to replace the existing ones going off patent and reduced sales potential of recently launched drugs will further decelerate the market growth. The sales of blockbuster drugs have grown only 9% in 2007 compared to 24% in 2004. Further, projected sales of top 10 NMEs launched in 2008 show no potential of achieving a blockbuster status in the next 5 years.
DOMESTIC GROWTH DRIVERS:

Pharmaceutical sector is one of the most globalized sectors among the Indian industries. The downside is pharmaceutical sector traditionally has been immune to business cycles. The upside of Indian pharmaceutical sector, however, is influenced by a mix of global and local factors. Global factors are important as most Indian companies ship a major portion of their production to overseas markets. Also, multinationals operating in the Indian market follows the central research and global marketing model. Their actions are largely dictated by global trends although local issues are given due importance. The domestic market is critical for both Indian companies and multinationals. For Indian companies, the domestic market lends stability to bottom line and offer means to cope with fluctuations in global demand. The growth drivers for Indian pharmaceutical market are: Growing Population and Improving Incomes: Household incomes are rising in India; the proportion of middleclass in Indian population is also increasing. Statistics show a clear migration of population towards middle and upper classes. Rise in income levels is always accompanied by greater demand for medical facilities and pharmaceutical products. Middle class is already 70 million strong and is expected to grow even fast, accounting for a higher share of total population. Increase in living standards will lead to longer life expectance and higher consumption of drugs and health care services. Changing lifestyles: Rising incomes and improving literacy rates are leading to change in lifestyles. While incomes provide the means to access medical facilities and products, improving literacy boost awareness about diseases and lead to higher consumption of drugs. Changing lifestyles, however, is leading to a change in disease profile especially in urban areas. Hectic lifestyles and high cholesterol diets are resulting growing incidence of diseases such as cardio vascular diseases and cancer. Research and Development: The R&D efforts of Indian companies have been largely focussed on chemical synthesis of molecules and their cost effective production thereof. India has a large pool of technical and scientific personnel with good English language skills. Indian scientists have developed a high degree of chemical synthesis
skills while engineers have developed competencies in producing molecules cost effectively. These skills have helped Indian companies tap generic markets abroad successfully in the past and will continue to do so. Healthcare Expenditure: Indian healthcare system is largely run by the govt with private sector playing a small, but important part. The healthcare system in India comprises government hospitals in cities and towns and a network of health centres in rural areas. This is supplemented by a string of private hospitals and clinics in largely urban areas. The public expenditure on health has been growing at a decent rate while private expenditure has been recording marginal growth. Insurance Sector giving a Lift: Indian insurance sector has been thrown open to private sector. Large sections of Indian population are not covered by health insurance schemes. Currently, less than 10% of the Indian population is covered by some form of health insurance.
CRITICAL SUCCESS FACTORS

The rules of pharmaceutical business are changing. Indian pharmaceutical companies can no longer get away with plundering intellectual properties of multinational companies. Pharmaceutical business has become a new ballgame altogether after the introduction of product patents in January 2005.
New product development

Pre 2005: New product development efforts of Indian pharmaceutical companies in process patents era were limited to reverse engineering molecules discovered by other companies. Thanks to absence of product patents, Indian companies did not have to go through long winded drug development process. Nor did Indian companies have to expend any effort on research focus. Indian companies simply zeroed in on blockbuster drugs and tried to come up with an alternative process as fast as they could. The focus of the Indian companies was to launch a copy of a blockbuster drug ahead of their rivals in India and abroad. Key areas to focus on R&D for Indian companies: 1. Potential product identification Complex API Complex finished product Commercial potential of products Out-licensing opportunity to MNCs
2. Novel Drug Delivery System (NDDS) 3. New Drug Development Post 2005: A large number of drugs are going off patent in the next few years. According to IMH Health, more than $60 billion worth of drugs are going off patent by 2011. Thus, Indian companies will not be short of new products for at least another two years. In the long run, however Indian companies may find it hard to make money from drugs coming off patent. Already competition in generic market is intense and likely to increase further in the future. Hence, new molecules rather than generics will drive revenues and profits in the 27 | P a g e Indian Pharmaceutical Industry in 2020
product patents area. Indian companies need to discover new drugs either through their own efforts or research alliances. Perhaps licensing deals with multinationals could also provide Indian companies access to new drugs. Focus on basic research will come with its own issues. Indian companies will have to acquire the skills of identifying research areas that offer excellent revenue and profit potential. This will entail a closer tracking of disease profiles and related therapies as well as keeping a close tab on the research programmes of rivals. Besides, Indian companies will have to pay more attention to economics of drug development process. A product patent is granted for a period of 20 years
Therapeutic coverage
Pre-2005: In the absence of product patents, Indian pharmaceutical companies did not feel the need to focus on specific therapeutic areas. Most Indian pharmaceutical companies eschewed narrow focus and tried to cover as many therapeutic areas as possible. Now the product portfolio of many Indian companies has considerable breadth and depth. Given the price controls in the market, diversification worked to the advantage of companies in the domestic markets. In the export markets, a wider product portfolio gave companies the option of picking and choosing from an array of opportunities. Post 2005: Opinion is divided over the therapeutic strategy that Indian companies should pursue in product patent era. Some companies believe that focus on select therapeutic segment will fetch them greater dividends in terms of new chemical entities and market share. Other companies believe such a strategy is risky given the size of Indian companies and that a big setback in research could sink the company. Instead such companies are pursuing a de-risking strategy of building a wide product portfolio. In the domestic market, such a strategy will result in economies of scale at production and marketing stage, putting the company in a better place to weather competition from multinationals. In the export markets even after the introduction of product patents, products under patent protection will comprise only 15 percent of the market. So a vast chunk of the market will be still open for competition although margins will be wafer thin.
Exports
Pre-2005: Most Indian companies focused on exports. Exports improve the valuation of companies owing to higher margin in overseas markets. Indian companies built fortunes by making cheaper versions of blockbuster drugs and selling them in domestic and export markets. Indian companies built especially strong position in manufacture of bulk drugs. Out of the total exports, formulations constituted 55 percent and bulk drugs constituted 45 percent. Success in export market allowed some Indian companies to build a strong position in the domestic market organically and through acquisitions of brands and companies. Post 2005: Exports has continued to be a priority for Indian companies. Major blockbuster drugs will come off patent in the near future, creating a big generic opportunity for Indian companies. Also, a growing demand for anti-AIDS drugs in Africa will keep Indian companies busy. Exports have and will continue to provide Indian companies with the strength to withstand the onslaught of multinationals in the domestic market.
Low cost production through scale

Pre-2005: Indian pharmaceutical companies have mastered the science of producing drugs cheaply. Thanks to benign patents regime, Indian companies have developed a high level of chemical synthesis skills. The absence of development costs together with efficient production has enabled Indian companies to establish a solid position in bulk drug manufacturing. But scale did not receive as much importance as it should have, because the cost of Indian pharmaceutical companies was already low owing to aforesaid reasons. Many Indian companies did not find the return on investment of world class plants compelling enough. Post 2005: By 2011, drugs worth $60 billion will come off patent, presenting a huge generic opportunity to Indian companies. But the competition in the generic market will be brutal, resulting in thin margins. The cost of production will hold the key to success in the generic market. The production cost in turn depends on scale. Indian pharmaceutical companies need to build global scale to stand a chance in the generics market.
FACTORS WHICH MAKE INDIA MOST FAVORITE OUTSOURCING HUB:

India is a fast growing custom manufacturing outsourcing destination with a growth rate of 43% that is thrice the global market rate. This is driven by its ability to create a differentiating cost value proposition powered by its lower manufacturing costs, skilled manpower and strong technical capabilities Assurance, quality and service are the ticket to play in the custom manufacturing space while cost and innovation serve as differentiating criteria for selection. The India story is driven by its offering of a cost value proposition comprising cost efficiency along with skilled manpower and technical capabilities. 1. India is rated highest in terms of its cost efficiency attractiveness among six countries India, China, Eastern Europe, Puerto Rico, Singapore and Ireland. Approximately 67% of the respondents have rated India as excellent and rest 33% have rated it above average. 2. Indias cost efficiency is driven by its low manufacturing costs which are only 35-40% of the cost of manufacturing in the US supported by its low installation and manpower cost. 3. Around 90% of the respondents have rated India either excellent or above average for its technical capability attractiveness. This is demonstrated by the following: 4. It has manufacturing prowess in both APIs, where India is the 3rd largest player in the world with 500 different APIs and in formulations where it manufactures 60,000 packs across 60 therapy areas. 5. India currently accounts for 8% of the global pharmaceutical production making it the worlds 4th largest pharmaceutical producer. 6. Vertically integrated model of Indian players to offer end to- end services across development and manufacturing in both formulations and APIs. 7. It has around 119 USFDA and 84 UK MHRA approved plants and accounts for one third of DMFs and highest number of ANDAs in the US.
8. Approximately 90% of the respondents have rated India either excellent or above average for its skilled manpower attractiveness. 9. India offers a large pool of English speaking skilled manpower. Every year, around 1.6 million graduates and 0.4 million post graduates qualify in science courses. 10. While the growth in the North American and European markets is expected to slow down to -1 to 2% and 2 - 5% 11. respectively over 2008-2013, the growth of emerging markets would be 11-14%.This increasing influence of the emerging markets will position India in the proximity of the markets driving growth of the pharmaceutical industry. 12. Share of emerging markets in clinical trials has been increasing and India is emerging as a hot spot as compared to most emerging markets, with a robust growth of 31% p.a. over the last four years. This trend will increase Indias proximity to the clinical trial supplies market. 13. 67% of respondents have rated India above average both on project management attractiveness and response time attractiveness indicating that India has developed strong project management capabilities with reduced turnaround time 14. While India needs to improve its IP perception Indian companies are adopting various business models to ensure partnering with global companies and have been successful in doing so. 15. In order to further strengthen Indias position in the pharmaceutical manufacturing outsourcing market, government has taken or planning to take several initiatives such as 16. Streamlining and reducing time frame for approvals involving NOC manufacturer and NOC export licenses from 8 12 weeks to 2 weeks. 17. Providing infrastructure support such as building Pharmazones, a separate dedicated temperature and atmosphere controlled area to maintain the safety, efficacy, and quality of imported and export drugs/ pharmaceutical products at international airports at Delhi, Hyderabad and Mumbai.
18. Building capabilities through collaboration with western countries such as MoU with US FDA, WHO, Health Canada, South Africa and EMEA. 19. All the above factors have been instrumental in the Big Pharma conducting their sourcing operations from India and attracting global CMOs like Lonza, Patheon, DSM and Albany Molecular Research Institute to set up base or collaborate in India. 20. India is thus well poised to become the strategic partner of choice in the arena of contract manufacturing
PEST Analysis of Pharmaceutical Industry:

Political Factors 1) Stable government: government at the state and the central level is very unstable and both have different policies for the development of the Industry. a. State level. b. Central level. Both the Levels of government must support for the manufacturing and R&D in the industry. 2) Taxation policy a. Pollution clearance tax b. Service Tax c. R&D Tax and Patenting Tax d. Excise duty e. Custom duty f. License Fees g. Hazardous substance (Storage & Handling) license GOI is supporting the Pharmaceutical industry in the form of 200% weighted deduction on inhouse research and development (R&D) expenses on an average it amounts to no less than 4045% of the costs. FDI is 100% allowed in this sector but it depends on the central government to decide. 3) Strong legal policies : a. Environmental pollution due to microbial stains, chemicals, biomolecules etc b. Safety measures once the new product had been manufactured by a company, the government institutes check the safety and effectiveness of the vaccine/medicine. It must not harm the consumer. c. To protect the biodiversity- policies to save the Rare biodiversity of the country. ( micro organisms and plant and animal species)
4) Subsidies by government are not sufficient as there are less SEZs for supporting the companies in this sector. 5) IPR- Indian Patent act 2005 has made a lot of difference in this industry in each and every prospectus as discussed before. 6) Relations with the officials the company must have good relations with the higher authorities in government for the support. 7) Wage legislations of the officials. Economic Factors 1) Nations GDP, GNP only 1% of the National income is spending on the industry and research. 2) Population growth: Indian population is increasing at a good rate and also the level of diseases in the urban and rural areas. 3) Literate population: still 70% of the population lives in the rural areas so the literacy level is low and the penetration of pharma is very low in this these areas. 4) Pricing strategy a. Pricing strategy depends on the economic conditions of the country. b. Also if the price is too low then the rich people may think it is not of good quality and if prices are very high then it is a problem for the poor people to buy those products. 5) Unemployment rate to produce a highly technical product and to sell it in a country the population must be employed so that they can buy that product. 6) Buying capacity of people7) Infrastructure and Transportation cost - these facilities are not so good in India so a company have to invest more in infrastructure and transport. 8) Financing options- interest rates 9) Pay scales of the scientist the pay scale of the scientists are very low as compared to western countries so Brain drain takes place. 10) Export base if the country has a good export base then it attracts other players and in India domestic consumption is low as compared to Exports. 34 | P a g e Indian Pharmaceutical Industry in 2020
11) Mergers & Acquisitions company must look at the economic conditions to merger with the companies in India. 12) Venture funding is very less in India which is much needed for the biotech companies. 13) Business cycle stage this industry is at the growth phase of its cycle. 14) Quality standards there are only a few laboratories where GLP and GMP practices are followed, so the number of such labs has to be increased. 15) No proper marketing Social Factors 1. Lifestyle (a) Change in the lifestyles of a growing middle class population marked with a change in the socio-economic composition, (b) increase in disposable income, (c) increasing urbanization, with access to medical care as well as awareness about diseases 2. Low insurance penetration (a) Currently the market penetration is only 2% of the total population in India (b) According to World Bank Report 99% of Indians will face shortage of finance in case of any critical illness 3. Genetically modified food and human health (a) In future will the genetically produced medicine cause any harm to human health is a big issue in India 4. Bioethical issues 5. Lack of knowledge and awareness in rural areas: people living in rural areas due to poverty and illiteracy, enroll their self for clinical trials and it may lead to death of many poor people. 6. In rural India people prefer using household treatments handed down for generations for common ailments.
7. Superstition Because of superstition, the rural people hold themselves back from using medicines and go for black magic 8. Poverty With increase in urbanization, urban poverty and urban slums have also increased and this class of people is not able to buy even the basic medicines. 9. Local perception (Groups perceive risks differently depending on their culture, scientific background, perception of government, and other factors.) 10. Reference groups Most people use reference from people who they know while using medicinal products, so they dont get much idea about new drugs Technological Factors 1. Technology: India is still lacking in the availability and development of latest technology needed for the drug discovery and the research processes. Most of the latest technology for the research purposes is imported from western countries. Because latest technology not only saves time and cost but will also help to retain the educated pool of India, which go abroad due to lack of latest technology. 2. Risk involved: there is a high risk involved while importing new technology from the western countries: (a) If India, imports a technology to manufacture a product or for the research purposes and the technology is not user friendly, then the company will loose huge amount of money. (b) Success rate of the product: as we know the success rate of the drug discovery pipeline is dried up, and due to stringent regulation by USFDA, Indian Pharmaceutical companies are bound to use latest technology. 3. Lack of specialized disciplines and capabilities in various areas, especially in R&D and aspects related to product quality. 4. The production process brought in from a totally different economic context may be disastrous for the economy that imports it, if it is unchanged and unadapted. 5. Redesign the technology imported from a different country has to be redesigned according to the need of that particular company and country requirement adding cost to the company 36 | P a g e Indian Pharmaceutical Industry in 2020
6. Availability of Quality raw Materials before importing a new technology, it has to be made sure that quality raw materials are available for that technology 7. Education (i) (ii) Mismatch between academic curriculum and industry Biopharma in India also lack the academic collaboration that is crucial to drug development in the West (iii) (iv) Lower number of post graduates and PhDs Commercial Expertise
SWOT ANALYSIS OF INDIAN PHARMACEUTICAL INDUSTRY

The SWOT analysis of the industry reveals the position of the Indian pharmaceutical industry in respect to its internal and external environment. Strengths 1. India with a population of over a billion is a largely untapped market. In fact the penetration of modern medicine is less than 30% in India. To put things in perspective, per capita expenditure on health care in India is US$ 93 while the same for countries like Brazil is US$ 453 and Malaysia US$189. 2. The growth of middle class in the country has resulted in fast changing lifestyles in urban and to some extent rural centres. This opens a huge market for lifestyle drugs, which has a very low contribution in the Indian markets. 3. Indian manufacturers are one of the lowest cost producers of drugs in the world. With a scalable labour force, Indian manufactures can produce drugs at 40% to 50% of the cost to the rest of the world. In some cases, this cost is as low as 90%. 4. The fact that despite the low level of unit labor costs India boasts a highly skilled workforce has enabled the country's pharmaceutical industry at a relatively early stage to offer quality products at competitive prices. Each year, roughly 115,000 chemists graduate from Indian universities with a masters degree and roughly 12,000 with a PhD.4 The corresponding figures for Germany just fewer than 3,000 and 1,500, respectively are considerably lower. After many chemists from India migrated to foreign countries over the last few years, they now consider their chances of employment in India to have improved. As a result, a smaller number is expected to go abroad in the coming years; some may even return. 5. Indian pharmaceutical industry possesses excellent chemistry and process reengineering skills. This adds to the competitive advantage of the Indian companies. The strength in chemistry skill helps Indian companies to develop processes, which are cost effective.
Weakness
1. The Indian pharmaceutical companies are marred by the price regulation. Over a period of time, this regulation has reduced the pricing ability of companies. The NPPA (National Pharmaceutical Pricing Authority), which is the authority to decide the various pricing parameters, sets prices of different drugs, which leads to lower profitability for the companies. The companies, which are lowest cost producers, are at advantage while those who cannot produce have either to stop production or bear losses. 2. Indian pharmaceutical sector has been marred by lack of product patent, which prevents global pharmaceutical companies to introduce new drugs in the country and discourages innovation and drug discovery. But this has provided an upper hand to the Indian pharma companies. 3. Indian pharma market is one of the least penetrated in the world. However, growth has been slow to come by. As a result, Indian majors are relying on exports for growth. To put things in to perspective, India accounts for almost 16% of the world population while the total size of industry is just 1% of the global pharma industry. 4. Due to very low barriers to entry, Indian pharma industry is highly fragmented with about 300 large manufacturing units and about 18,000 small units spread across the country. This makes Indian pharma market increasingly competitive. The industry witnesses price competition, which reduces the growth of the industry in value term. To put things in perspective, in the year 2003, the industry actually grew by 10.4% but due to price competition, the growth in value terms was 8.2% (prices actually declined by 2.2%)
Opportunities 1. The migration into a product patent based regime is likely to transform industry fortunes in the long term. The new patent product regime will bring with it new innovative drugs. This will increase the profitability of MNC pharma companies and
will force domestic pharma companies to focus more on R&D. This migration could result in consolidation as well. Very small players may not be able to cope up with the challenging environment and may succumb to giants. 2. Large number of drugs going off-patent in Europe and in the US between 2005 to 2009 offers a big opportunity for the Indian companies to capture this market. Since generic drugs are commodities by nature, Indian producers have the competitive advantage, as they are the lowest cost producers of drugs in the world. 3. Opening up of health insurance sector and the expected growth in per capita income are key growth drivers from a long-term perspective. This leads to the expansion of healthcare industry of which pharma industry is an integral part. 4. Being the lowest cost producer combined with FDA approved plants; Indian companies can become a global outsourcing hub for pharmaceutical products.
Threats
1. There are certain concerns over the patent regime regarding its current structure. It might be possible that the new government may change certain provisions of the patent act formulated by the preceding government. 2. Threats from other low cost countries like China and Israel exist. However, on the quality front, India is better placed relative to China. So, differentiation in the contract manufacturing side may wane. 3. The short-term threat for the pharma industry is the uncertainty regarding the implementation of VAT. Though this is likely to have a negative impact in the shortterm, the implications over the long-term are positive for the industry.
From the above PEST analysis, we have found out 20 projections, which are further divided in to 8 outcome projections and 12 enablers projections. The main 8 projections have very low co-relation between them and enablers projections are highly co-related to these 8 main projections and these are listed below as:
Projections:
Outcome Projections: Projection PO1: 2020: Pharma/biotech companies conducting research projects in India focusing on diseases of high relevance for the Indian population receive substantial tax benefits. Projection PO2: 2020: A stringent regulatory environment for new drug approvals is strictly enforced in India.
Projection EO1: 2020: The research focus of the pharma/biotech industry in India is to 90% on priority diseases for the domestic market (e.g. Malaria, Diabetes, and Dengue). Projection EO2: 2020: The manufacturing focus of the pharma/biotech industry in India is to 90 % on export markets.
Projection SO1: 2020: Consumers in India expect to be provided with the best and latest drugs at the globally lowest prices. Projection SO2: 2020: Large-scale clinical trials for export-focused drugs are widely accepted in the Indian society.
Projection TO1: 2020: Pharma/biotech research organizations funded by the GOI (Government of India) own all necessary world-class, state-of-the-art research equipment for innovative drug discovery projects. Projection TO2: 2020: The innovation and drug discovery capabilities of pharma/biotech researchers in India are the best in Asia.
(P- Political, E- Economical, S- Social and T- Technological). Enabler Projections: CUSTOMERS: Projection CuE1: 2020: The rural population of India is ready to invest a substantial part of their income into the prevention and treatment of febrile diseases like Malaria, Diphtheria etc. Projection CuE2: 2020: Indians widely prefer to fight their lifestyle diseases (e.g. obesity, depressions etc.) with reactive approaches such as drugs than to proactively invest into any preventive activities (e.g. sports, healthy food etc.).
SUPPLIERS: Projection SuE1: 2020: Indias rich biodiversity (flora and fauna) has been identified as key investment criteria for R&D centers of global pharma/biotech companies in India. Projection SuE2: 2020: The number of PhDs at CSIR, JRF, and NET for research positions in the pharma/biotech industry is 24000 candidates p.a.
COMPETITORS Projection CoE1: 2020: Pharma/biotech companies have established a common packaging technology reducing the faked drug market sector in India by 50% compared to 2010. Projection CoE2: 2020: Global pharma/biotech companies have tripled their API (Active Pharmaceutical Ingredients) production volumes in India compared to 2010.
GOVERNMENT Projection GoE1: 2020: The GOI allows free market mechanisms to determine the pricing of essential drugs. Projection GoE2: 2020: The regulatory system for the pharma/biotech in India is essentially the same as US FDA regulatory system.
Projection GoE3: 2020: The weighted tax deduction for the R&D expenditure of the pharma/biotech industry in India is 300%. Projection GoE4: 2020: The GST (Goods and Service Tax expected to be implemented in 2011) on pharma/biotech products and medical equipments is more than 20%. SOCIETY AT LARGE Projection SoE1: 2020: The financial attractiveness of clinical trials for the less privileged part of the Indian society has lead to a global market share of clinical trials in India of more than 20%. Projection SoE2: 2020: The Indian society is largely convinced that physical health is a key factor for monetary wealth.
Factor Analysis:
Impact on Industry:
I have done Factor analysis of all the 8 outcome projections by data collected from Experts, regarding their opinion on Impact on Industry values given by them for these main 8 outcome projections. The experts had rated the impact from 1 to 5. 1 is low impact and 5 is the high impact on industry. This is done to reduce the attributes in to components to capture the patterns seen in the data. It will help the experts and the industry to see the factors which are inter The main benefits of factor analysis are that the analyst can focus their attention on the unique core elements instead of the redundant attributes, and as a data pre-processor for regression models.
KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartlett's Test of Sphericity Approx. Chi-Square df Sig. 62.259 28 .000
.551
Value of KMO statistic (.551) which is more than .500 so it is good for the Factor Analysis and it is an appropriate technique for analyzing the above correlation matrix.
Communalities Initial Po1 Po2 Eo1 Eo2 So1 So2 To1 To2 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Extraction .655 .800 .497 .600 .714 .531 .725 .689
Communalities Initial Po1 Po2 Eo1 Eo2 So1 So2 To1 To2 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Extraction .655 .800 .497 .600 .714 .531 .725 .689
Above results indicate the amount of variance in each variable that it accounted for. Initial communalities are estimates of the variance in each variable accounted for by all components or factors. This is always equal to 1.0 for correlation analyses. Extraction communalities are estimates of the variance in each variable accounted for by the components. As above tables shows that communalities in this table are all high, which indicates that the extracted components represent the variables well.
Total Variance Explained Compo nent 1 2 3 4 5 6 7 8 Total 2.416 1.666 1.129 .797 .746 .563 .394 .289 Initial Eigenvalues % of Variance 30.205 20.823 14.107 9.965 9.326 7.039 4.926 3.609 75.100 84.426 91.465 96.391 100.000 Cumulative %
Extraction Method: Principal Component Analysis.
The variance explained by the initial solution, extracted components, and rotated components is given in the above table. 2 nd 3rd and 4th Column of the table shows the Initial Eigen values i.e. total variance attributed to that factor. Number of factors for that should be used in the analysis is determined based on the Eigen values. (Only the factors with Eigen value greater than one is retained i.e. first three factors in with Eigen value of 2.416, 1.666 and 1.129). We can intemperate from the last column that nearly 75.1% of the variability is explained by three extracted variables , so you can considerably reduce the complexity of the data set by using these components, with only a 24.9% loss of information.
Scree plot:
A Scree Plot is a plot of the Eigen values against the number of factors in order of extraction. The shape of plot is used to determine the number of factors. The plot has distinct break the steep slope of factors, with large Eigen values and a gradual trailing off associated with the rest of the factors. In the total variance explained table we can see that Eigen values more than one i.e. 2.416, 1.666 and 1.129 are extracted. From this graph we can tell that these three factors will effect the Biopharmaceutical industry the most and in a significant way. And the distinct break in the Scree plot occurs at other five variables. Finally, from the cumulative percentage of variance accounted we can see that these two factors accounted for 75.1 % of variance and the gain achieved in going to these factors is marginal. Rotated Component matrix:
Rotated Component Matrix
a
Component 1 Po1 Po2 Eo1 Eo2 So1 So2 To1 To2 2 3 .456 -.258 .424 .040 .480 .031 .021 .348
.668 .709 .562

.086 .046 -.016
.770 .769
.350 -.044 .045
.640
-.390
.756
-.026
.828
But by Rotated Component Matrix we know that how these variables are related i.e. positively or negatively correlated. So we can see that Factor analysis has got three components and all the Political, Economic, Social and technological factors are covered under these 3 components. The factors P01, P02, E01 and T01 are positively correlated and are covered under component 1. The factors E02 and S01 are positively correlated and covered under component 2 .The factors S02 and T02 are positively correlated and are covered under component 3. The positive correlation signifies that all the projections
developed will have positive impact on the industry i.e. if one of the component had positive had positive effect other will also had positive effect.
EXPLANATION
OF
THE
OUTCOME
PROJECTIONS
AND
ENABLERS PROJECTIONS with EXPERT COMMENTS

Outcome projections 1. Po2 2. Eo2 3. So2 4. To2
Enabler projections: 1. CuE2 2. SuE2 3. CoE1 4. GoE2 5. GoE3 6. SoE2 P- Political, E economical, S- social, T- technological. Cu- Customers, Su- suppliers, Co- Competitors, Go- Government, So Society at large
Projection PO2: 2020 A stringent regulatory environment for new drug approvals is strictly enforced in India. Reasons: Increased failure rate of Indian drugs in western countries Bureaucracy. It reduces the time taken to approve a drug. Spurious drugs. Patent Act 2005: after the acceptance of patent act 2005 India has started to shift its focus from Reverse-engineering to Innovation and Drug discovery. Increased outsourced manufacturing projects. Increased profits due to high acceptance. India has a large market for the spurious drugs which is around 40%, a strict regulatory environment will reduce this market if not terminate completely.(P) To compete globally and increase its market share globally, regulatory environment should be strict and stringent.(P) Since the large illiterate population is vulnerable to being exploited by the pharma companies there will be increased pressure on the lawmakers to make a stringent regulatory body.(P) It will speed up the research and commercialisation of the drug and help save cost. This will have a direct impact on quality of drugs and will even lead to decline of counterfeits in the country.(I) It will encourage foreign companies to launch newer drugs in India and compete in the price sensitive market.(D)
French Custom authorities seized at Paris airport another consignment of Indian generic drugs 0f 1.74 million tablets of anti-platelet drug, Clopidogrel, which were shipped by Mumbai based Macloeds pharma to Venezuela. This was 18th time Generic drugs meant for developing countries has been confiscated during transit within the EU, although the manufacture of the drug in India and sale in the destination countries. In February and March, the Netherlands has confiscated blood pressure control and HIV-Aids drugs of Dr. Reddys laboratories and Aurobindo Pharma to Brazil, Columbia and Nigeria on grounds of alleged patient infringement.
Experts' Comments
Probability 58.02
Impact 3.88
Desirability 3.84
Projection EO2: 2020 The manufacturing focus of the pharma/biotech industry in India is to 90 % on export markets.
Reasons:
Drug patents worth $60bn to expire in 4 years. Cheap labor. GOI providing medicines at subsidized rates for the domestic population. Increased profits. Increase in the no of players in the industry.
Increased manufacturing outsourced projects in India due to low cost and high returns.
Drug patents worth $100bn will expire in 4 years, this will be a huge advantage to India to manufacture and export these drugs due to its competitive advantage in the generic drugs market. (P)
According to Ministry of health in India, 36 major Drugs are going to be unpatented. These drugs have a market share of around 400000 Crore. So it is a big opportunity for the generic producers of India which makes the 66% of the total Indian Pharma industry, to produce these drugs and it will be available at very cheaper prices.
Experts' Comments
The production cost of generics in India is approximately 50% lower than that of U.S. and EU markets. (P). Local companies can put back profits for expansion, R&D, Up gradation And Training And Development. (I). Outsourcing of manufacturing to India should increase. This will help to generate cash flows to fund research work. (D)
Probability 60.98
Impact 3.65
Desirability 3.19
Projection SO2: 2020 Large-scale clinical trials for export-focused drugs are widely accepted in the Indian society.
Reasons:
Large patient pool. Easy to retain the patients. High growth in the number of Principal investigators for clinical trials. Low cost.
Highest number of US F.D.A approved plants outside India.
India has a huge population that is relatively naive for treatment. Along with cost benefits will spur growth in this segment.(P) This segment is a significant revenue contributor. It will also demand to put the infrastructure in place with longstanding bill on clinical establishment. (I) It will increase the awareness and safety issues speciality in the rural population in relation with the clinical trials.(D) High growth in the number of Principal investigators for clinical trials. (P). Probability 50.3% Impact 3.51 Desirability 3.09
Experts' Comments
Projection TO2: 2020 The innovation and drug discovery capabilities of pharma/biotech researchers in India are the best in Asia.
Reasons: Availability of highly skilled and trained workforce. Strong Manufacturing Base. Availability of high standard R&D centers. Rich biodiversity With increasing cost of drug discovery, almost all MNCs are looking at India for its high quality and low cost manufacturing base.
Experts' Comments
India is still behind in the curve when it comes to pure drug discovery and innovation and Pharmaco genomics and Proteonomics. But surely, we are thriving to climb up the curve with returned scientists and Government incentives to step up drug discovery in the country. We are though best when it comes to manufacturing skills.(P) With increasing cost of drug discovery, almost all MNCs are looking at India for its high quality and low cost manufacturing base.(I) Strategic partnership with global companies is on the rise after the in India after the Patent Act 2005.(D) Probability 55.44% Impact 3.88 Desirability 4.07
Projection CuE2:2020Indians widely prefer to fight their lifestyle diseases (e.g. obesity, depressions etc.) with reactive approaches such as drugs than to proactively invest into any preventive activities (e.g. sports, healthy food etc.) Reasons: Western lifestyle. Eating habits. ( fast food) Lack of physical exercise in daily routine. Increase in the income level in the rural areas. Indian Pharma companies are more concentrated on producing low cost drugs for Lifestyle diseases to gain maximum profit.
Indians are more prone to sedentary lifestyle. Partly due to lack of facilities at work or open spaces for jogging etc. The Asian population is genetically more prone to lifestyle diseases due to their food habits over generations. I see a higher number of people using the medicines to treat these diseases. (P). Indians will never change their lifestyle, be it in 2020 or 2060. Indians are always reactive & largely not proactive. (P) It will impact the industry as cost of the disease would go up and it will increase the burden on GDP numbers. Cost of treating diabetes is US$ 420 per person per year. If these costs remain the same then by 2025 India's total bill for diabetes would be US$ 30 billion. Prophylaxis alone can prevent 10% from getting diabetes and save nearly US$ 8 billion a year. (I) Government need to promote healthy lifestyle habits by making more playgrounds, parks within city limits as wells as promote healthy food habits on TV etc- popular TV commercials in 80's featured ads for milk, eggs.(D
Experts' Comments
Probability 56.28%
Impact 3.47
Desirability 3.05
Projection SuE2: 2020 The number of PhDs at CSIR, JRF, and NET for research positions in the pharma/biotech industry is 24000 candidates p.a.
Reasons: Increasing investment in R&D by big MNCs. Outsourced projects due to low cost in India. 80% of the Biotech/ pharma Postgraduate want to pursue research as their career. Requirement of Highly skilled researchers in the industry. GOI giving enough incentives for the R&D sector of this industry.
Out of the total research scholars, 80% of the Biotech/ pharma Postgraduate want to pursue research as their career according to the survey by the DBT (Department of Biotechnology).(P)
The Government has taken commendable initiative in fostering the Pharmacy Education in the country as it announced establishment of 6 more National Institutes of Pharmaceutical Education and Research (NIPER) in the country i.e. at Ahmedabad, Hyderabad,
Experts' Comments
Increased outsourced projects and increased availability of USFDA approved labs lure western countries to do research. (P) We don't have the infrastructure & Government impetus to arrive at this number. Even in 2020, the situation will remain the same. (P) A huge talent pool will engage in R & D & new drugs can be discovered at low cost as it will boost drug discovery in the country. (I) Adequate utilization of talent pool in India which will help to stop brain drain to the western countries. (D)
Hazipur, Kolkata, Guwahati and Rae Bareli by allocation 50 crores for their establishment in the interim budget in order to address the issue of setting up educational institutes par
excellence to meet the challenges of Pharma industry, Academia and Research.
Probability 54.3%
Impact 3.63
Desirability 3.65
Projection CoE1: 2020 - Pharma/biotech companies have established a common packaging technology reducing the faked drug market sector in India by 50% compared to 2010 i.e. from 40% to 20 %. Reasons: 40% of the spurious drug market is in India. Increased no of deaths due to spurious drugs. Strict and stringent regulatory policies. Stiff competition from the spurious drug market. More profits for the generic manufacturers.
Lack of belief of customers in the domestic market and western market. With increased investments in The main problem with this issue is that there is no law or advanced technology, and advanced no punishment for the people who sell spurious drugs. In of IT this is bound to happen. (P) the year 2003, the Mashelkar committee had suggested Lack of infrastructure and political some harsh punishments to spurious drug offenders. In influence will not help to counter the this scenario, the packaging industry could turn out to menace of counterfeit drugs. As most be the biggest rescuer for the pharma industry. of the Government hospitals are most Government in this aspect should act strongly against any important hub for these drugs.(P) This will change the healthcare activity by any agency or individual engaged in spuriosity of drugs," says Umesh Joshi, General Manager, scenario in India and increase the credibility of the Indian Packaging Development, Wockhardt. It can also conduct regular audits or surprise inspections at pharma pharmaceutical sector multi fold and plants, dealers or retailers etc. Most crucial is to bring the also it will increase alliances and profitability of the Indian packaging material manufacturer associated with only the pharma industry under regulation ie, only authorised and companies.(I) licensed packaging vendors can supply to a pharma It is most desirable as it will Santosh Das, Head, Packaging eradicate spurious drug market and company." save lives of many poor and illiterate Development, Aurobindo Pharma,"First, a proper people which are mostly dependent on mandatory guideline needs to be put in place so that across the industry, whether it is for export or domestic Government hospitals. (D) market, product and packaging should include antiAwareness among the end users counterfeiting features and track and trace technology. should be created to identify that the brand is authentic. Besides these measures, training for the related agencies needs to be initiated to Probability Impact Desirability identify the spurious products."(D). 52.77% 3.77 3.81
Experts' Comments
Projection GoE2: 2020 - the regulatory system for the pharma/biotech in India is essentially the same as US FDA regulatory system. Reasons: Increase in the demand of quality drugs. To reduce spurious drugs. To reduce time of new drug discovery process. Less transparency in the Indian regulatory system. Low acceptability of drugs in the developed market. Failure of many drugs manufactured in India, in the U.S market. Increasing demand of high quality drugs, also increasing outsourced projects by western countries will force Indian government to follow USFDA. (P) The entire regulatory mechanism in the lines of US FDA will take more than 10 years considering the lack of efficiency of the GOI run DCGI as there is high corruption in the bureaucracy & drugs control department can never enforce the USFDA type regulatory discipline. (P) If at all this happens (which is a distant dream), it will be a very good thing as foreign companies cannot use Indian population to test their new drugs, before launching them globally. (I) The time for introduction of drugs would increase and so would the investment needed.(I) Probability 47.37% Impact 3.6 Desirability 3.65
Experts' Comments
Projection GoE2: 2020: The weighted tax deduction for the R&D expenditure of the pharma/biotech industry in India is 300%. Reasons: Increased failure rate of Indian drugs in western countries Bureaucracy. It reduces the time taken to approve a drug. Spurious drugs. Patent Act 2005: after the acceptance of patent act 2005 India has started to shift its focus from Reverse-engineering to Innovation and Drug discovery. Increased outsourced manufacturing projects. Increased profits due to high acceptance. Government will introduce a model, which mobilizes funds from investors who are willing to share the fortunes of the high-risk high-reward game of drug research and funnel it to companies with promising experimental new drugs.(D)
Experts' Comments
After the Patent act 2005, most of the MNCs are concentrating on R&D to have competitive edge and also increase in the advancement of drug discovery and innovation.(P) Industry will move up its value chain from generic makers to innovation. (I) GOI will be compelled to take this step for growth and motivate industry players.(D) The weighted tax deduction will not reach 300% as there is lack of communication between Industry and GOI and low infrastructure to support R&D in India.(P)
According to trade Estimates, top 25 companies in India spend around 6% of their sales on R&D in the last fiscal as compared to Global average of 13%. Currently, India spends around 0.8% of its GDP on R&D compared with 1.23% with China. On the other hand, developed countries spend around 3% of the GDP on R&D.
Probability 53.84%
Impact 3.88
Desirability 3.63
Projection SoE1: 2020 The financial attractiveness of clinical trials for the less privileged part of the Indian society has lead to a global market share of clinical trials in India of more than 20%.
Reasons: Large patient and genetic pool. Low cost. Availability of high standard Clinical trials centers in India. Availability of manpower in the form of PI. (Principal investigators). GOI support. (CTRI a separate government body for conducting Clinical trails in India).
Experts' Comments
There is some benefit to the lesser privileged society due to the lowered cost of drug and hopefully better version of drugs. However in order not to be exploited as guinea pigs, the government needs to come with stricter regulations for conducting the clinical trials.(P) "More investment by the foreign players in India will boost for the clinical research industry as India has the highest number of USFDA outside USA which is around 120."(I) Regulations in India being very poor, this step will give a good rope to companies to engage in more clinical trials.(I) It will encourage foreign companies to launch newer drugs in India and compete in the price sensitive market.(D) Probability 55.74% Average cost in U.S Average cost in India
Impact 3.74
Desirability 3.16
Short Stories Which Will Support the Above Projections:

Lifestyle Diseases: DIABETES in India
October 2009 50.8 million 2025 (P) 73.5 million 2030 (P) 87 million
Indians are more prone for diabetes than almost any other population in the world. Since very long, Indians believed that diabetes and heart disease are exclusive to the affluent societies. But as the living conditions improved in India in both the rural and the urban areas, Indians are increasingly following western dietary habits unsuited for their environs, adopting sedentary life style, and exposed to psycho-social stress. This has resulted in an unprecedented rise of diabetes to epidemic proportions during last few decades in the country.
The number diabetes in India is expected to go up from 50.8 million 1 in October 2009 to 73.5million by 2025 and reach 87 million by 2030, i.e. 8.4% of the country's adult population will be diabetic by 2030.
The costs of treating diabetic patients are currently about $420 per person per year. If these costs remained the same as they are now, Indias total bill for diabetes would be about $30 billion by 2025. But as its economic wealth grows and standards of care improve, treatment costs are likely to rise. The US spends an average $10,844 per year on each patient with diabetes. If Indias per capita expenditure rose to just one-tenth of this level, the total cost of treating all patients with diabetes would be around $79.7 billion by 2025.
http://indiatoday.intoday.in/site/Story/67143/Health/India+is+world+diabetes+capital.html
Demand for medicines that treat diabetes formerly associated exclusively with the developed world is thus expanding in the developing world especially India and India at the same time becoming increasingly affluent.
In 1995, every 7th diabetic person in the world was an Indian & by 2025 every 5th 2 diabetic person will be an Indian.
BRANDED PILL BITTER DOSE

PRICE WARS PRICE QUNATITY (RS.) 2mg, 10 tab 2mg, 10 tab 270 17
DRUG Risperidone
BRAND, MANUFACTURER Risperdal, johnson & Johnson Respidon, Torrent Pharma
Risedronate
Actonel, Sanofi Aventis Risofos, Cipla
35 mg, 4 tab 2000 35 mg, 4 tab 110 2.5mg, 10tab 1815 2.5mg, 10tab 99 75 mg, 10 tab 1020 75 mg, 10 tab 78 75 mg, 10 tab 768 75 mg, 10 tab 69 4mg, 1Vail 4mg, 1Vail 13900 2800
Letrozole
Femara, Novartis Oncolet, Biochem
Clopidogrel
Plavix, Sanofi Aventis Noklot, Zydus
Pregabalin
Lyrica, Pfizer Pregabit, Intas Pharma
Zoledronic Acid
Zometa, Novartis Zolodria, Cipla
Levofloxacin
Tavanic, Sanofi Aventis
500mg, 5 tab 475
Survey conducted by WHO. (World Health Organization)
Leeflox, Centaur Pharma

3
500mg, 5 tab 37
This chart shows that there is a huge difference between the Branded pill and Generic drugs and government have to take steps so that the poor customers can get the drugs at premium prices. So NPPA has to regulate the prices of the drugs.
Chronic diseases cost India more than $ 1 billions.

A joined report by WHO (world health organization) and WEF (world economic forum) says, India will incur an accumulated loss of $236.6 Billion by 2015, due to unhealthy lifestyles and faulty diets. The income loss to Indians because of these diseases, which was $8.7 billion in 2005, is projected to rise to $54 billion in 2015.
Government support
National Rural Health mission (NRHM) was bestowed with monetary favours in the budget by a minimal increase form the last year from Rs 12050 to Rs 12070 crore in order to give thrust to the healthcare oriented development programmes of the Government for the upliftment of economically weaker sections of the society. In the area of biotechnology, the Central plan of the budget has earmarked Rs 340 crore for R&D and Rs 200 crore for autonomous R&D institutions. The Government has taken commendable initiative in fostering the Pharmacy Education in the country as it announced establishment of 6 more National Institutes of Pharmaceutical Education and Research (NIPER) in the country i.e. at Ahmedabad, Hyderabad, Hazipur, Kolkata, Guwahati and Rae Bareli by allocation 50 crores for their establishment in the interim budget in order to address the issue of setting up educational institutes par excellence to meet the challenges of Pharma industry, Academia and Research. With the Indian traditional medicines making headway into the Global market, the government has provided support of Rs 354 crore in the kitty of AYUSH and Rs 134 crore for the support of Ayurveda.
3
http://pharmaceuticals.gov.in/
REGRESSION ANALYSIS
Impact on Industry:This report consist Regression analysis conducted on major 4 outcome projections. The analysis will help to identify which are the key enablers projection and the outcome projections that will influence our selected outcome projections PO2, EO2, SO2 and TO2. In these Coefficients table attached below, we have noticed the value of beta. The higher the value of beta, high is the influence on the main outcome projections. After doing Regression analysis we can get two types of values i.e. either positive or negative. The positive value of Beta shows that the factors are positively co-related i.e. if the probability of one of these increases then the probability of the other will also increase and both will have positive impact on the industry. The negative value signifies that these factors are negatively correlated i.e. if probability of one of the projection will increase the probability of the other will decrease simultaneously. The negative beta value shows that these will act as a disabler for the outcome projections. It is carried out as each time the main projection is the dependent variable and the rest of the main projections and the all the outcome projections are taken as independent variables. Projection PO1: 2020 Pharma/biotech companies conducting research projects in India focusing on diseases of high relevance for the Indian population receive substantial tax benefits.
Coefficientsa
Model 1 (Constant) Eo1
Unstandardized Coefficients Std. B Error -2.554 1.424 0.235 0.185
Standardized Coefficients Beta T -1.793 1.271 Sig. 0.087 0.217
0.236
To1 GoE1 GoE2
0.387 -0.212 0.25
0.184 0.236 0.238
0.42 -0.213 0.271
2.104 -0.895 1.051
0.047 0.381 0.305
a. Dependent Variable: Po1
The regression analysis of the Projection Po1 shows that if the above outcome projection i.e. Eo1 and To1 and enabler projections GoE1 and GoE2 will highly drive the main outcome Projection i.e. Po1 Dependent variable Important Independent variables Po1 (Substantial Tax benefits) Eo1 (Research focus on domestic market) To1(World of art Research equipments) GoE1(Free market for pricing of drugs) GoE2 (UF FDA) The regression analysis of the data signifies that if GOI will give tax benefits to the MNCs, then the focus of the companies will be increased towards the domestic diseases and they will focus their research on Domestic diseases will benefit both the consumers and the companies. Also to do research, world of class research equipments are necessary to produce high quality drugs at worldwide cheap prices. If the GOI will provide tax benefits to the companies it will not provide free market for pricing of drugs because it will make the price of the drug very high that adds to the pocket of the customer and the poor population of India, is able to get cure. To produce high quality drugs India and to earn maximum profits must follow US FDA because it will increase their credibility in the western market like EU and U.S. Projection EO2: 2020 The manufacturing focus of the pharma/biotech industry in India is to 90 % on export markets.
Unstandardized Coefficients Std. B Error -0.013 1.551 0.2 0.19 Standardized Coefficients Beta T -0.009 1.05 Sig. 0.993 0.305
Model 1 (Constant)
To1
0.22
0.561 -0.521 0.466 a. Dependent Variable: Eo2
So1 Eo1 GoE4
0.252 0.255 0.286
0.559 -0.485 0.37
2.224 -2.04 1.627
0.037 0.054 0.118
The regression analysis of the Projection Eo2 shows that if the above outcome projection i.e. To1, So1 and Eo1 and enabler projections GoE4 will highly drive the main outcome Projection i.e. Eo2. Dependent variable Important Independent variables Eo2 (Manufacturing Focus on Exports) So1 ( High Quality drugs at Worldwide low cost) To1(World of art Research equipments) Eo1(Research focus on the domestic market) GoE4 (GST will be 20%)
The projection signifies that focus of the major companies will be on Export market because to earn maximum profits as there is no regulation i.e. NPPA for the pricing of the drugs for the export market. The above regression analysis tells the important factors which actually drive the growth of Exports in 2020. Firstly there is increasing demand of high quality drugs at low cost as India is the major producer of generics, so the export focus has to be increased. Secondly main driving force will be the latest research equipments, which will act as a catalyst for the formation of high quality drugs and increase the output. Also the GST will affect the manufacturing focus i.e. the manufacturer have to thing for maximizing profits it is good to produce for the domestic market or export market. Projection SO1: 2020 Consumers in India expect to be provided with the best and latest drugs at the globally lowest prices.
Coefficients
a
Model 1 (Constant) Eo2 So2
Unstandardized Coefficients B Std. Error -0.247 1.184 0.327 0.329 0.147 0.16
Standardized Coefficients Beta
t -0.208 2.224 2.061
Sig. 0.837 0.037 0.051
0.328 0.316
SuE1 GoE1 a. Dependent Variable: So1
0.408 -0.282
0.194 0.177
0.381 -0.312
2.101 -1.59
0.047 0.126
The regression analysis of the Projection So1 shows that if the above outcome projection i.e. Eo2 and So2 and enabler projections SuE1and GoE1 will highly drive the main outcome Projection i.e. So1. Dependent variable Important Independent variables So1 (High Quality drugs at worldwide low cost) Eo2 ( Manufacturing focus for Export market) So2 (Clinical Trails are widely accepted in society) SuE1(Rich Flora and Fauna) GoE1 (Free market for the Pricing of Drugs) The regression analysis of So1 shows that there are many driving factors i.e. India is moving up the value chain from Reverse engineering to production of innovative drugs, consumers want drugs of high quality and at low cost for which right utilization of Flora and Fauna should be done for the research purposes. GOI should take steps to increase awareness about the clinical trials and also maintains strict rules and regulations and also takes care of the safety of the people. As the consumers still dont believe to spend money for branded drugs and believe in low cost generics so GOI can allow free market mechanism for the pricing of drugs because it will make the price of the drugs 10 times higher than the drugs under control of NPPA( National Pharmaceutical Pricing Authority). So this projection will act as a disabler for the production of low cost drugs because free market will allow the manufacturers to quote high price for the drugs. Projection TO2: 2020 The innovation and drug discovery capabilities of pharma/biotech researchers in India are the best in Asia.
Coefficientsa
Model 1 (Constant) Po1 CuE1 SuE1 CoE2
Unstandardized Coefficients Std. B Error 3.787 1.398 0.433 -0.422 0.29 0.361 0.206 0.253 0.283 0.328
Standardized Coefficients Beta t 2.709 2.104 -1.667 1.025 1.101 Sig. 0.013 0.047 0.11 0.317 0.283
0.399 -0.328 0.226 0.281
a. Dependent Variable: To1
The regression analysis of the Projection To1 shows that if the above outcome projection i.e. P01 and enabler projections CuE1, SuE1 and CoE2 will highly drive the main outcome Projection i.e. To1. Dependent variable Important Independent variables To1 (World of art Research Equipments) Po1 (Substantial Tax benefits) CuE1 (Increase in investment by consumers on febrile diseases like malaria, dengue etc) SuE1( Rich diversity of Flora and Fauna ) CoE2 (High production of API production) This projection To1 signifies that India to become a leader in the Pharmaceutical industry have to acquire all necessary world of art research equipments for drug discovery. GOI should support the MNCs by giving necessary and substantial tax benefits so that manufacturers can get these equipments at subsidized rates and invest in R&D. It will increase the production of Active Pharmaceuticals Ingredient. The research equipments are necessary because of
increasing investment by the consumers as Indian consumers still believe in investing their income in medicines rather than investing in good food and sports.
CONCLUSION
Political Influences Environmental Variables PO1, 59.26% PO2, 57.05% EO1, 51.91% EO2, 60.76% SO1, 60.14% SO2, 49% TO1, 44.05% TO2, 55.41% PO1, 59.26% PO2, 57.05% 82.51 82.51 80.41 81.13 83.78 82.88 78.1 77.21 81.08 Prominent scenarios Perfectly correlated Scenarios Non Prominent Situations 75.06 79.7 75.06 79.7 81.13 Economic Influences EO1, EO2, 51.91% 60.76% 80.41 Social Influences SO1, 60.14% 83.78 82.88 78.1 SO2, 49% Technological Influences TO1, TO2, 44.05% 55.41% 77.21 81.08
Political Influences
Economic Influences
Social Influences
Technological Influences
The above format provided a close idea about the probability of happening of the most important Scenarios in future i.e. 2020. According to my research, the two most important scenarios for the better future of the Indian Pharmaceutical industry are (Po2, So1) and (Eo1, Eo2). These scenarios are (Stringent regulations and High quality drugs at low cost) and (Research focus on domestic drugs and Manufacturing focus on Exports) The percentage of occurrence of these scenarios is 82.88 and 81.13 respectively. This percentage represent the 3 quadrant out of the 4 formed by two by two matrix formed by cross of these projection mentioned above. These are two scenarios Indian Pharmaceutical
companies have to maintain balance and also GOI must support by maintaining stringent and strict regulations so that MNCs benefit the Indian society in a positive way.
APPENDIX
Experts Rating regarding Impact on Industry
Po1
3 2 4 3 4 4 2 3 3 4 4 2 3 3 3 4 3 4 3 3 4 3 4 4 3 5 4 4 4 4
PO2
4 4 3 4 5 5 4 4 2 3 4 2 3 3 5 3 3 4 4 3 3 4 4 4 5 5 5 4 5 5
Eo1
3 4 4 4 4 5 3 2 3 2 4 4 3 4 3 4 3 4 4 2 3 3 4 4 4 5 3 4 4 4
Eo2
2 3 4 4 4 5 3 4 4 3 4 4 4 3 4 4 4 4 4 4 2 4 4 4 4 5 4 4 3 3
So1
2 4 4 4 4 5 3 4 3 4 4 4 4 3 2 4 4 5 4 4 4 2 4 4 4 5 4 4 3 4
So2
3 4 4 3 4 5 3 4 3 4 3 3 3 4 3 4 3 3 3 3 3 3 4 3 4 5 4 3 3 3
To1
3 3 4 3 4 3 2 3 3 4 4 3 3 3 5 4 4 4 3 3 3 3 4 5 4 2 4 4 5 4
To2
3 4 3 3 5 4 4 5 3 4 4 3 4 4 2 4 4 4 4 3 4 4 4 4 4 5 4 4 5 4
3 3 4 2 4 3 3 5 4 2 4 3 2 4
4 4 4 3 4 3 5 4 3 5 4 4 4 4
4 5 4 2 4 3 3 4 4 3 3 4 3 4
3 3 3 3 3 3 3 3 5 3 5 3 4 4
3 4 4 4 3 4 4 4 4 3 2 4 3 4
3 2 4 5 3 3 4 4 4 4 4 3 4 4
4 3 4 1 3 4 4 5 4 4 3 2 3 4
4 4 4 5 4 4 5 2 4 3 4 4 4 3
Calculations for Conclusion:
This is the way we come out with the two by two matrixes i.e. Po2 and So1. The non occurrence of these two projections is (100 56.63 %) and (100 -62.21%). When we multiply both these values we will get the probability percentage of non-occurrence of these scenarios
(17.12%) or the present scenario where there is absence of both i.e. Stringent regulations and availability of low cost drugs. So the probability of occurring of these scenarios is 82.88%.
References:
1. http://pharmaceuticals.gov.in/ 2. http://www.pharmaoutsourcingindia.in/press-a-media.html 3. Report by E&Y and OPPI 4. Report by YES Bank 5. http://www.ibef.org/GenericMessage.aspx 6. Experts comments from the Industry. 7. http://www.acrohealth.org/cro-market.php 8. http://appliedclinicaltrialsonline.findpharma.com/appliedclinicaltrials/article/articleDet ail.jsp?id=506847&sk=&date=&pageID=2 9. http://appliedclinicaltrialsonline.findpharma.com/appliedclinicaltrials/article/articleDet ail.jsp?id=522049&sk=&date=&pageID=2 10. http://license.icopyright.net/user/readingRoom.act 11. http://www.indiaonestop.com/pharmaceuticals.htm 12. http://www.pharmaceutical-drug-manufacturers.com/pharmaceutical-associations/ 13. http://cii.in/Publications.aspx?enc=fSTC8XiYaIuWcrOJ/n1U2Q== 14. Some Magazine articles given by experts.

Biopharma Report

Enviado por

Dados do documento

Título original

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Biopharma Report

Enviado por

Direitos autorais:

Formatos disponíveis

A REPORT ON DEVELOPING FUTURE SCENARIOS FOR THE INDIAN BIO/PHARMA INDUSTRY IN 2020 (DELPHI STUDY APPROACH)

By: ARUN GUPTA 09BS0000425

SMI BRAIN NET.

FACULTY GUIDE: Prof. A. Lakshminarasimha Associate Dean IBS-Bangalore

COMPANY GUIDE Prof. Dr. Roger Moser Director SMI India

DATE OF SUBMISSION: 2|Page

Indian Pharmaceutical Industry in 2020

Date: 14 May 2010 Place: Bangalore

Arun Gupta IBS Bangalore

3|Page Indian Pharmaceutical Industry in 2020

Regards, Arun Gupta.

4|Page Indian Pharmaceutical Industry in 2020

5|Page Indian Pharmaceutical Industry in 2020

6|Page Indian Pharmaceutical Industry in 2020

7|Page Indian Pharmaceutical Industry in 2020

Sourcing Organizations: Effective Management and Efficient Structures in Emerging Markets.

10 | P a g e Indian Pharmaceutical Industry in 2020

DEVELOPING A FUTURE SCENARIO

11 | P a g e Indian Pharmaceutical Industry in 2020

Fundamental Steps of Scenario Planning

Figure: Advanced Scenario Thinkshop (AST)

12 | P a g e Indian Pharmaceutical Industry in 2020

13 | P a g e Indian Pharmaceutical Industry in 2020

Objective of the project

Limitations of the project

15 | P a g e Indian Pharmaceutical Industry in 2020

17 | P a g e Indian Pharmaceutical Industry in 2020

Experts focused approach:

18 | P a g e Indian Pharmaceutical Industry in 2020

INTRODUCTION: INDIAN PHARMACEUTICAL INDUSTRY

19 | P a g e Indian Pharmaceutical Industry in 2020

20 | P a g e Indian Pharmaceutical Industry in 2020

21 | P a g e Indian Pharmaceutical Industry in 2020

Fig: Segment wise Sales (SOURCE: YES BANK / OPPI)

22 | P a g e Indian Pharmaceutical Industry in 2020

23 | P a g e Indian Pharmaceutical Industry in 2020

24 | P a g e Indian Pharmaceutical Industry in 2020

DOMESTIC GROWTH DRIVERS:

25 | P a g e Indian Pharmaceutical Industry in 2020

26 | P a g e Indian Pharmaceutical Industry in 2020

CRITICAL SUCCESS FACTORS

New product development

28 | P a g e Indian Pharmaceutical Industry in 2020

Low cost production through scale

29 | P a g e Indian Pharmaceutical Industry in 2020

FACTORS WHICH MAKE INDIA MOST FAVORITE OUTSOURCING HUB:

30 | P a g e Indian Pharmaceutical Industry in 2020

31 | P a g e Indian Pharmaceutical Industry in 2020

32 | P a g e Indian Pharmaceutical Industry in 2020

PEST Analysis of Pharmaceutical Industry:

33 | P a g e Indian Pharmaceutical Industry in 2020

35 | P a g e Indian Pharmaceutical Industry in 2020

37 | P a g e Indian Pharmaceutical Industry in 2020

SWOT ANALYSIS OF INDIAN PHARMACEUTICAL INDUSTRY

38 | P a g e Indian Pharmaceutical Industry in 2020

39 | P a g e Indian Pharmaceutical Industry in 2020

40 | P a g e Indian Pharmaceutical Industry in 2020

41 | P a g e Indian Pharmaceutical Industry in 2020

42 | P a g e Indian Pharmaceutical Industry in 2020

43 | P a g e Indian Pharmaceutical Industry in 2020

44 | P a g e Indian Pharmaceutical Industry in 2020

Extraction Method: Principal Component Analysis.

45 | P a g e Indian Pharmaceutical Industry in 2020