Indian Research Notes: F – Forecast, CAGR –

Indian
pharma sector is estimated to account for 3.1- 3.6 %
of the global pharma industry in terms of value and 10 % in value terms. It is
estimated to grow to 100US$ billion by 2025. India accounts for 20 per cent of global exports in
generics. India’s
pharmaceutical exports stood at US$ 16.84 billion in 2016-17 and are expected to reach US$ 20
billion by 2020. During April – September 2017, India exported pharmaceutical products worth Rs.411.3 billion (US$ 6.4 billion). During April – October 2017, India exported pharmaceutical products worth Rs.478.3 billion (US$ 7.4 billion).

 

    Figure 1: Revenue of Indian pharmaceutical
sector ($ billion)

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Source:
Department of Pharmaceuticals, PwC, McKinsey, TechSci Research

      Notes: F – Forecast, CAGR – Compound
Annual Growth Rate

 

 

The market size is
expected to grow to US$ 55 billion by 2020 and become the 6th
largest pharmaceutical market globally by absolute size. Branded generics with
nearly 80% of market share will dominate the pharmaceuticals market (in terms
of revenues).

 

According to data
from the Ministry of Commerce and Industry, India has out- performed China in
pharmaceutical exports with a YoY growth of 11.44% to US$ 12.91 billion in FY
2015-16, on other hand imports rose marginally by 0.80 % YoY to US$ 1,641.15 Million.

 

Figure 2:
Projected size of Indian Pharma market in $ billion

 

 

     Source: Mckinsey Analysis, secondary
Research

 

Figure 3:
Formulation and Bulk Drugs Export Outlook:

 

 

Source:
CRISIL research; KPMG in India analysis

 

The US Food and Drug
Administration (USFDA) approved 201 in FY 2015-16 drugs of Indian companies,
nearly doubled from 109 in FY 2014-15. India accounts for around 30% (by
volume) and about 10% (value) of US generics market which stood at US$ 70-80
billion in 2015-16.

 

India’s biotechnology industry made of
bio-agriculture, bio-pharmaceuticals, bio-services, bio-informatics and
bio-industry is expected grow at an average growth rate of 30% a year and
expected to reach $100 billion by 2025.

 

 

Figure 4:
Percentage Distribution of Biotech Companies in Various Segments

 

Biopharma, therapeutics, comprising vaccines and
diagnostics, is the largest sub-sector of biotech contributing nearly 62% of
the total revenues at Rs 12,600 crore ($ 1.88-billion).

 

 

Geographical Clusters: Most of the pharmaceutical manufacturing units are
concentrated in Maharashtra and Gujarat. These two states are home for 44% of
the pharmaceutical manufacturing units.

 

Source:
Ministry of Skill Development & Entrepreneurship

 

 

Table 1: Geographical
Distribution of the Pharmaceutical Companies In India

 

State

No. of Manufacturing units

Total

Formulation

Bulk Drugs

Maharashtra

1928

1211

3139

Gujarat

1129

397

1526

West Bengal

694

62

756

Andhra Pradesh

528

199

727

Tamil Nadu

427

98

570

Others

3423

422

3845

Total

8174

2389

10563

Sources:
Department of Pharmaceuticals; KPMG in India analysis, ASSOCHAM

 

The data clearly suggests that due to better infrastructure
facilities, enhanced support from small-scale companies, conductive industrial
atmosphere and skills in chemistry, Maharashtra remains an attractive
destination for Pharma companies. The Maharashtra government promotes the
“Centres of Excellence” working on cutting-edge R&D in emerging areas of
technology and life sciences.

 

Figure: Percentage
Distribution of Pharmaceutical Companies in Various Regions

Sources:
Department of Pharmaceuticals; KPMG in India analysis, ASSOCHAM

On other hand Gujarat
always encourages new investments in the state and employs approximately 52,000
people in this sector.

 

The 5 tax-free states namely Himachal Pradesh, Uttaranchal,
Jammu & Kashmir, Jharkhand and Sikkim are emerging as hot destinations for
Pharma companies. Uttarakhandand Himachal Pradesh (HP) is considered to be
among the fastest growing Pharma hubs in India. Baddi and some other areas in
HP have over 300 manufacturing units. Haridwar, Roorkee, Dehradun and Rudrapur
of Uttarakhand have 200 pharma manufacturing units.

 

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