The India pharmaceutical story continues to be on an upswing. The sector is getting

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healthy reviews from independent experts that indicate the pharmaceutical sector is on the right track.

The latest to endorse the India pharmaceutical story is a survey conducted jointly by the Federation of Indian Chambers of Commerce and Industry (Ficci) and Ernst & Young (E&Y). This survey expects the Indian pharmaceutical market to triple to $20billion by 2015 from $7.1 billion in 2007 with a compounded annual growth rate (CAGR) of 12.3 per cent, and accordingly move into the world’s top 10 markets. The health ministry and the pharma majors have of late pointed to the potential of the sector by recommending several steps to put the entire healthcare sector in top gear. The E&Y report noted that in 2015, India would be a potential $8 billion market for multi-national companies (MNCs) with patented drugs accounting for nearly 8-10 per cent of the total market. The report cited the key reason for this to happen as the advent of the product patent regime in 2005. The patent infrastructure in the country had been appreciably upgraded over the past few years to support new laws with the addition of patent examiners, decentralisation of the filing process and digitisation of records. Patent-protected products have the potential to capture up to 8-10 per cent share of the total market by 2015, implying a market size of $2billion.

The report argued that the population in the highest income class is expected to grow to 25 million in 2015 from 10 million today and this would in turn drive the affordability of high-value patented drugs. MNCs already present are further consolidating their presence in India, while new players are increasing in this domain.

The report said MNCs are increasingly restructuring their operations with global parents increasing their equity stakes in their Indian affiliates. Companies such as BMS and Merck that had exited the Indian market have staged a re-entry. MNCs were acquiring Indian companies to expand their presence like what happened with the Daiichi and Ranbaxy deal.

The Ficci-E&Y report mentioned that in addition, India also had a significant cost arbitrage in the conduct of clinical trials, including infrastructure, operational, patient recruitment, drug, manpower, data management and processing costs. Indian allied services market is growing at a CAGR of 21 per cent as compared with 7.5 per cent globally.