It is a great time for the Indian pharma sector. It is booming, the Nifty Pharma Index — a proxy representation of India’s pharmaceutical industry is at a 4-year high. There is a high demand for domestic manufacturers and every step they are taking are yielding dividends.
In order to understand the success in the pharma industry, we have to understand the pains and efforts that have been taken as far as the research and development process is concerned. For instance, it might take 5 years for you to develop a new drug and then, you still might need another 10 years to clinically test the product and gain approval from the regulatory agencies. It should be mentioned here that the entire process is an extremely capital-intensive process and the only way to remunerate the investment of the pharma company is to protect the investment through patent protection.
India is a prominent and rapidly growing presence in global pharmaceuticals. It has become the largest provider of generic medicines globally and the country occupies a 20% share in global supply by volume, and also supplies 62% of global demand for vaccines.
Currently, India is ranked 3rd worldwide for production by volume and 14th by value. It is also the only country with largest number of US-FDA compliant Pharma plants (more than 262 including APIs) outside of USA. And, the country has more than 2000 WHO-GMP approved Pharma Plants, 253 European Directorate of Quality Medicines (EDQM) approved plants that have modern state of the art Technology.
- India holds 12 per cent of all global manufacturing sites that cater to the United States market
- The cost of manufacturing in India is approximately 33% lower than that of the United States
- India’s online pharmacy market is estimated to grow to $2.7 bn by 2023 from about $360 million in 2019
The pharma industry is being consolidated and we have seen an emergence of pharma retail chains. There will be more concentration in the supply chain. And then, there is an increase in requirements posed by some formulations like biologics, that need advanced expertise that include the ability to maintain the cold chain and avoid shocks during the distribution process.
Apart from this, reduction in inventory and the reduction of order cycle time will be key objectives for companies that are aiming to optimise their supply chains in order to offer their drugs at affordable prices.
All these factors make India a lucrative market to set up shop and expand in the pharma sector. We have to understand this: India’s healthcare system has been struggling to meet the needs of the vast population, but in the recent time, the government programmes and reforms in the health insurance industry should improve the situation which is why it is a great opportunity to invest in India.