Indian Pharmaceutical Industry: Today’s Medicines financing Tomorrow’s Miracles

In today’s newsletter we lay emphasis on the Indian Pharmaceutical Industry with a laser focus on its future market.

One of the industries that 7.8 Billion people had faith on, during the pandemic was, the Pharmaceutical Industry for the innovation to eradicate the virus. The pharmaceutical industry is perhaps the only industry on the planet, where to get the product from idea to market the company needs to spend about a decade, several billion dollars, and there is about a 90% chance of failure.
Global Pharmaceutical industry will be worth USD$ 1.57 Trillion in 2023.
Expected Region wise Market share in 2023:

1. North America- 45.33%
2. Asia pacific- 24.07%
3. Europe- 20.24%
4. Latin America-7.53%
5. Middle East and Africa- 2.96%

Indian Pharmaceutical Market (IPM)
Due to lock down, IPM had taken a steep decline during the Month of April and May showing a degrowth of 12% and 8% respectively. But since then, there has been relaxation at a few places, IPM bounced back and registered a growth of 6% in the month of June. 
As of MAT June’20, IPM was valued at Rs. 148,551Cr and grew by 7%

In June’20, IPM was valued at Rs 12,147 Cr of which Indian companies constituted ~80% and MNC ~20%

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Big Bulls of Indian Pharma:

• Sun Pharma and Abbott have been in forefront throughout the year (June’19-June’20) in terms of Market share with registering market share of 7.71% and 6.47% respectively in June’20
• Amongst top 10 players Torrent and Cipla have posted topmost growth of 11% and 10% respectively for June’20 and as per MAT June’20, Mankind has the highest growth of 11%

Indian Pharma companies have been toying with different strategies to build their US business as the traditional low-cost model of selling generic drugs is no longer as lucrative as it used to be. Leading pharma companies like Sun Pharma have heavily invested in growing specialty businesses like dermatology and Ophthalmology. 24% of total R&D spend as of Q3 2019 was on speciality R&D and in the same quarter, global specialty revenues were $118 million across all markets.

According to Indian Pharmaceutical Alliance, “The next wave of growth could come from increasing exports to large and traditionally under penetrated markets such as Japan, China, Africa, Indonesia, and Latin America, which would help the industry meet its aspiration of becoming the world’s largest supplier by volume”

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In every crisis lies opportunity:
COVID-19 crisis and differences between India-China, has opened opportunities for Indian Pharma industry. How?

1. It doesn’t depend on which country finds the vaccine; India will definitely be called upon to mass produce it as one of three vaccines in the world are made in India. Bill Gates also said that only India can make the vaccine for the entire world and even China praised India’s Pharmaceutical prowess. Take a case of Rotavirus, India had produced it at a 15% cheaper rate. India is also a home to the largest vaccine manufacturers. Around 70% of vaccines are made in India. The Serum Institute, for instance, makes 1.5 billion doses every year and its vaccines are exported to 170 countries every year.
2. India can become a major provider for global supply of API 
3. Become a preferred medical tourist destination for those seeking affordable treatment in quality secondary/tertiary health services
4. Pursue medical diplomacy by providing medical training and technical expertise to many other developing nations whose healthcare systems are much worse than India
5. Pharmaceutical companies can provide end-to- end indigenous production

Specially with COVID-19, Indian Pharmaceutical companies have grabbed the opportunity to develop the vaccine and the drug:
Vaccine:

1. Bharat Biotech International limited (COVAXIN)
2. Zydus Cadila
3. Serum Institute of India
4. Indian immunologicals limited
5. Mynvax
6. Auro Vaccines and Gennova Bio Pharmaceuticals

Also, to support ATMANIRBHAR Bharat government has allocated Rs 100 crores from the PM-CARES Fund to support the companies to develop a novel Coronavirus vaccine. Currently these 6 Indian companies are working on the COVID19 vaccine and to sum it up the Wuhan virus vaccine developed anywhere in the world, will be made in India.

Drug:
Gilead who holds the patent of Remdesivir for COVID-19 has made a licensing agreement with few of Indian Pharmaceutical companies for developing and marketing in 127 countries. Currently, DCGI has given approval to 3 Indian Pharma companies for marketing in India:

1. Hetero
2. Cipla
3. Mylan

The evolution form competition to collaboration:
Developing new drugs and treatment is not easy, and it can no longer be done alone. Collaboration and acquisition are key and in recent years pharmaceutical companies have begun to embrace a more acquiring and collaborative way of working to help overcome some of the challenges the industry is facing. Acquisitions and collaborations gives a company a strategic advantage, opportunity to grow their customer base and meet the unmet needs of the patients.
Pharmaceutical Collaborations:

1. Cipla and Boehringer Ingelheim forge partnership to co-market 3 oral anti-diabetic drugs
2. GSK acquired Novartis consumer healthcare business
3. Sun Pharma acquired Ranbaxy

Ajit Mahadevan, partner in EY said “The acquisitions made by Indian companies were not failures. It may have slowed, but that does not mean it’s the end. All Indian drug companies worth their salt are looking at acquisitions. If it is not happening, it only means the valuation is not right. There are regulatory, market and technological reasons for companies to acquire assets in foreign markets”

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Future Pharma:
Indian Pharmaceutical sector is expected to grow to US$ 100 billion, while medicine is expected to grow to US$ 25 Billion by 2025. Medicine spending in India is projected to grow at 9-12% over the next 5 years, becoming 1 of top 10 countries in terms of medicine spending.  India’s Biopharma sector has emerged as a key global player offering numerous advantages in terms of faster market entry. The Biopharma sector has delivered a robust 5-year CAGR of >50% and is the fastest growing healthcare segment. 2020 market size for Biologics and Biosimilars in India: USD$ ~4 billion and expected to reach USD$ ~12 billion by 2025.

Should Indian Pharmaceutical companies consider moving to market biologics and biosimilars apart from drugs related to acute and chronic segments? Can biologics and biosimilars drive the future growth of IPM?

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