Indian Pharmaceutical Industry

Summary
The Indian pharmaceutical market is estimated as an $8,790 million market. The growing
population, demand for specialty healthcare, and the need for medicines to combat lifestyle related
diseases are leading to increased demand for quality pharmaceuticals and new medicines. In March
2005, the Indian Patents Third Amendment Bill established patent protection for pharmaceutical
products in India. This will usher a change in this highly fragmented industry. Growing demand
along with product patent regulations will make the Indian market an attractive proposition for
international companies.
Market Overview
The size of the Indian pharmaceutical industry is estimated at $8,790 million. The Indian
pharmaceutical industry contributes 8 percent in volume but only 1 percent in value terms to the
global pharmaceutical sales. Of the total market, pharmaceutical formulations account for 78 percent
and bulk drugs for the balance 22 percent. A study by the Indian Commission for Health in India
indicates that 56 percent of the Indian health expenditure in on drugs equivalent to around $17.9
billion in 2004 but most of this is on traditional medicines rather than allopathic drugs.
Indian Pharmaceutical market
Market size
as a percent of GDP
Growth rate in percent

$8,790 million
1.3
7-8

Source: Espicom Business Intelligence report dated February 2005

The Indian pharmaceutical industry has 200 medium and large size researches and development
(R&D) based pharmaceutical companies including multinationals, government owned and Indian
private companies. In addition to these large companies, it is estimated that there are 10,000 smaller
licensed generic manufacturers but only around 3,000 of these companies are operational.
This highly fragmented industry has resulted in with no players controlling more than 7 percent of
the retail formulation market. However, similar to the global trends, mergers and acquisitions in the
Indian pharmaceutical industry has resulted in the 10 top formulation firms accounting for 37
percent of the retail formulation market.
Pharmaceutical companies in India both Indian and foreign, manufacture bulk drugs in several
therapeutic categories and the industry has facilities to manufacture various types of dosage namely
capsule, tablets, injectables, orals, and liquids. Of the 400 bulk drugs in the Indian market, it is
estimated that 300 are domestically produced. In the past few years, under-production of some bulk
drugs has led to rising imports. On the other hand, over-production of drugs such as
sulphamethozole, ranitidine, and chloroquin has led to lower price in the Indian market.
A major concern for both manufacturers and users of pharmaceuticals is the presence of fake or
substandard medicines. Despite efforts of large companies to protect their products, counterfeit
drugs remains a big problem.

Market Trends
The industry has enormous growth potential. Factors listed below determine the rising demand for
pharmaceuticals.
The growing population of over of a billion
Increasing income
Demand for quality healthcare service
Changing lifestyle has led to change in disease patterns, and increased demand for new
medicines to combat lifestyle related diseases.
Demand for drugs for treatment of lifestyle-related diseases such as diabetes, cardiovascular
diseases, and central nervous system are on the increase. There are around 700,000 new cases of
cancer each year and total of around 2.5 million cases. It is estimated that there are around 40
million people in India with diabetes and the number is rising, 5.1 million HIV/AIDS patients, and
14 million tuberculosis cases. According to industry reports, while the Indian pharmaceutical
industry witnessed a growth of 7 percent, the cardio-vascular segment recorded 15 to 17 percent
growth and anti-diabetes segment of over 10-12 percent growth.
Historically, the low cost of domestically produced drugs together with government controlled
prices, and the absence of patent regulations had made the market less attractive for foreign players.
With the new patent laws in place the market scenario will change. Indian market will become
attractive for foreign companies.
Import Market
According to contacts and industry studies, imports are estimated at 10 to 12 percent of the total
market. The major suppliers are Switzerland, China, USA, Germany, Italy, Denmark, France, and
UK. Imports include raw materials and finished products. Some major pharmaceuticals being
imported include Provitamins and Vitamins, Cortisones, Hydrocortisone, Insulin, Penicillin,
Osetrogen, Progesterone and other hormones, Erythromycin and other antibiotics, Antisera & other
blood fraction, and Glycosides.
Competition
Competition is mainly from the domestic manufacturers and imports from China because of the low
manufacturing cost. With the new patent regulations the industry expects to see a major structural
shift with the entry of foreign pharmaceutical manufacturers.
There are five government-owned companies the Indian public sector. These companies are the
Indian Drugs and Pharmaceuticals, Hindustan Antibiotics Limited, Bengal Chemicals and
Pharmaceuticals Limited, Bengal Immunity Limited and Smith Stanistreet Pharmaceuticals Limited.
Some of the major Indian private companies are Alembic Chemicals, Aurobindo Pharma, Ambalal
Sharabhai Limited, Cadila Healthcare, Cipla, Dr. Reddys, IPCA Laboratories, Jagsonpal Pharma,
J.B. Chemicals, Kopran, Lupin Labs, Lyka Labs, Nicholas Piramal, Ranbaxy Labs, Matrix
Laboratories, Orchid Chemical and Pharmaceuticals, Sun Pharmaceuticals, Ranbaxy Laboratories,
Torrent Pharma, TTK Healthcare, Unichem Labs, and Wockhardt.
The foreign companies in India include Abott India, Astra Zeneca India, Aventis Pharma India,
Burrough-Wellcome, Glaxo SmithKline, Merck India, Novartis, Pfizer Limited, and Wyeth Ledele
India.
India also exports pharmaceuticals to numerous countries around the world, including to the U.S.,
Germany, France, Russia and UK.

End Users
Around three quarters of the pharmaceuticals are for the retail market, rest for direct sales to the
hospitals and nursing homes. End users of pharmaceuticals are the government and private
healthcare service providers, and retailers.
In India, healthcare service is provided both by the government (public) and private sector. The size
of the Indian healthcare delivery market is estimated at $18.7 billion. The private sector provides for
63 percent of the healthcare market. With only 15 percent of the population covered by insurance, a
large proportion of the healthcare spending is out of pocket spending.
Healthcare data
Hospitals
Medical Colleges
Beds
Physicians
Nurses
Retail Chemists (pharmacies)

16,000
171
870,161
503,900
737,000
500,000

Source: National Health Policy 2002, and Organization of Pharmaceutical Producer of Indian, and
Espicom report
The government healthcare infrastructure includes primary health centers and sub centers in the
villages that are the first point of contact that provide basic drugs for minor ailments. At the
secondary level, the district hospitals and the community healthcare centers, and finally, at the
tertiary level are the government owned hospitals and medical colleges. The private healthcare
providers consist of private practitioners, for profit hospitals and nursing homes, and charitable
hospitals. They are numerous and fragmented.
Market Access
Regulatory offices
The Central Drug Standard Control Organization (CDSCO) in the Ministry of Health is responsible
for regulating pharmaceuticals in India (website http://www.cdsco.nic.in), CDCSOs functions:
Establish the drug standards and regulations, and administer the Drugs and Cosmetics Act
Co-ordinate with the Drug Controllers in the states and union territories
Approve import/manufacturing/sale of new drugs in India
Check and control the quality of imported and manufactured pharmaceuticals
It is the Central License Approving Authority with respect to blood and blood products,
intravenous fluids, sera and vaccines.
Other organizations under the Ministry of Health and their functions include:
The Central Drugs Laboratory, Kolkata, is responsible for testing samples of imported drugs.
It is the designated laboratory under the Drugs and Cosmetics Act, and for samples referred by
drug inspectors. It also supplies the reference standards for various drugs to pharmaceutical
manufacturers.
The Central Indian Pharmacopoeia Laboratory in Ghaziabad undertakes experimental work
related to standards for drugs included in the Indian Pharmacopoeia and functions as a
government analyst for several Indian states.
The Central Drug Testing Laboratory in Chennai and in Mumbai, test drug samples and assist
the CDSCO in the analysis of drug formulations and substances.

 The Drugs Consultative Committee is a statutory advisory body under the Drugs and
Cosmetics Act that issues licenses to import biological and other special products.
The Central License Approving Authority (CLAA) under the Drugs Controller General of
India (DGCI) examines applications for licenses with respect to blood banks, sera, and vaccine
under the Drugs and Cosmetics Act.
Pharmaceutical Policy 2002
Details are available on http://chemicals.nic.in/pharma1.htm. The main objectives of the policy are:
To ensure availability of good quality essential pharmaceuticals at reasonable prices for mass
consumption.
To strengthen the indigenous capability for cost effective quality production and export of
pharmaceuticals by reducing trade barriers in the pharmaceutical sector.
Quality control system for pharmaceutical production and distribution to make quality an
essential attribute of the domestic industry.
Encouraging pharmaceutical R&D that is compatible with the country's needs.
To encourage new investment in the pharmaceutical industry and the introduction of new
technologies and new drugs.
Pharmaceutical Registration
The Drugs and Cosmetics Act 1945 and subsequent amendments to the Act regulate the import,
manufacture, distribution and sale of pharmaceuticals in India. There have been several amendments
to the Drugs and Cosmetics Act. Details can be obtained from the website http://www.cdsco.nic.in/.
The amendments to the rules, under a new heading Import and Registration came into force on 1st
January 2003 which includes:
Applications for permission to import or manufacture new drugs or to undertake clinical trials.
No new drug may be imported without permission from the licensing authority.
License requirements, companies are required to obtain a license to manufacture
pharmaceuticals in India, for either domestic sale or export
Standards for imported drugs, and rules governing the import of drugs by a government
hospital or autonomous medical institution
Good manufacturing practices, the requirements of premises, plant and equipment for
pharmaceutical products.
To register a new drug in India, a New Drug Application must be submitted to the regulatory
authority DCGI, along with the documents such as details of the drug's regulatory status in other
countries; restrictions of use in approved countries; a free sale certificate from the country of origin;
results of clinical data based on approved protocol; published data of confirmatory Phase III trials
undertaken abroad; details of bio-availability and dissolution studies; a sample of the marketing
information, including draft labels and cartons and inserts; a sample of the pure drug substance
along with testing protocol for analysis at the Central Drugs Laboratory (CDL) in Calcutta.
Generally, local Phase III clinical trials are required for the registration and marketing approval of
all new drugs in India.
According to the industry, drug registration can take 12-18 months, longer time if delays are
encountered. Decisions on fast track approvals for drugs are on the basis of demand for the drug and
in public interest.
Advertising
The Ministry of Health plans to amendment the Drugs and Magic Remedies (Objectionable
Advertising) Act, to make the Act more stringent for advertisements misleading consumers. The Act

prohibits certain kinds of advertising, particularly advertisements that claim 'magical remedies' for
certain conditions.
Patents
The Indian Parliament finally approved Indias long-awaited product patent legislation in March
2005. The Indian Patents Third Amendment Bill, 2005 establishes product patent protection for
pharmaceuticals in India. It is a milestone and strengthens certain facets of the Indian patent process.
However, there exist some areas of ambiguity.
Manufacturers of new drugs will be able to apply for product patents. New products will be eligible
for patent protection. The Bill is unclear on what constitutes a new product. With the patents
regulations in place, the Indian government will now be able to process 'mailbox' patent
applications. The Bill maintained the simplified and rationalized procedures and need to reduce the
processing time for patent applications.
The mandatory compulsory licensing for mailbox patents will not permit patent holders to eliminate
generic copies that are present in the Indian market prior to January 1, 2005. In such a situation, the
patent holder will only be entitled to receive a reasonable royalty.
The manual on patent practice and procedures in India is a detailed document, available on the
website: http://www.patentoffice.nic.in/ipr/patent/patents.htm. The Patent office is headquartered in
Kolkata with branch offices in New Delhi, Mumbai and Chennai. The contact details can be obtain
from http://www.patentoffice.nic.in/ipr/patent/patofficeadd.htm
Pricing
The Department of Chemicals and Petrochemicals of the Ministry of Chemical and Fertilizer
develops
the
pricing
policy
for
the
pharmaceutical
industry,
website:
http://chemicals.nic.in/pharma1.htm
In India, the prices of some drugs are controlled through the Drug Price Control Order (DPCO)
1995. Over the past years the number of drugs under DPCO has been reduced and currently price
controls remain on 74 drugs. Details on the website: http://nppaindia.nic.in/drug_price95/txt8.html
or http://chemicals.nic.in/pharma1.htm
Price controlled drugs are divided into two categories, the first category includes drugs considered
as essential and is subject to more stringent rules than those in the second category. Concessions
exist for manufacturers who conduct in-house bulk drug research and development, and for new
drugs introduced into India, either by domestic or foreign firms.
The National Pharmaceutical Pricing Authority (NPPA) implements and enforces the provisions of
the Drug Prices Control Order (DPCO); monitors the availability of the drugs; undertakes studies on
pricing of pharmaceuticals; and advises the Government on policy matters, website:
http://www.nppaindia.nic.in/index1.html
In the event of rising prices of unrestricted medicines, the government reserves the right to take
appropriate measures and introduce price controls. The DPCO remains a bone of contention between
the government and industry.
Market Entry
Over seventy percent of the pharmaceuticals are for the retail market, through distributors and
wholesalers. The balance is for direct sales to hospitals, and nursing homes.
The Medical Stores Organization (MSO) under the Ministry of Health procures pharmaceuticals for
government owned and managed hospitals and dispensaries; it distributes supplies received from

international aid agencies; procures medicines for the National Health Programs; and co-ordinates
disaster relief. MSO has offices and storehouse in Mumbai, Calcutta, Guwahati, Hyderabad, and
Chennai, Karnal and New Delhi. MSOs testing laboratories are located in Mumbai, Chennai and
Kolkata for quality test of the drugs and medicines.
Maintaining one or more Indian agent/representatives is the best way to enter the large Indian
market. Representatives maintain close contact with government officials and decision makers,
obtain advance information regarding procurements, and keep the foreign supplier abreast of local
market opportunities, conditions and competition.
Opportunities for Profile Building
The domestic industry is represented by three main pharmaceutical associations:
Organization of Pharmaceutical Producers of India (OPPI).
Its members comprise indigenous companies and multinational companies, website:
http://www.indiaoppi.com
Indian Drug Manufacturers' Association (IDMA)
The IDMA represents the interests of domestic manufacturers, website: http://www.idma-assn.org
Indian Pharmaceutical Association (IPA)
Website: http://www.indianpharma.org
Key contact:
Drugs Controller General (India), Central Drugs Standard Control Organization, Ministry of Health
and Family Welfare, Nirman Bhawan, New Delhi 110001. Phone: 91-11-23018806; Fax: 91123012648; email: dci@nb.nic.in; website: www.cdsco.nic.in
Upcoming Trade Shows/events
India Pharma 2005
The 5th International Exhibition and Conference for the Pharmaceutical Industry will be held from
October
1to
3,
2005
in
Greater
Noida/Delhi,
Website:
http://www.messeduesseldorf.de/cidex/pharma_basic.htm
India Chem
India Chem is held every two years. The next exhibition would be during September/October 2006.
For more information please contact the Federation of Indian Chamber of Commerce and Industry.
Website: www.ficci.com