Indian Pharmaceuticals Industry: A Beacon of Light During the Covid-19 Pandemic

By BWA Envoy
November 20, 2021
2 Minutes Read

The world economy is experiencing a better growth recovery and is expected to grow to 4.3 per cent in 2022.1 This growth is attributable to the ongoing macroeconomic policy support, government-backed economic support packages and the release of pent-up demand associated with the easing of the pandemic and diminishing economic impact caused due to the subsequent waves of the pandemic. With a growth forecast of 9.5 per cent in FY 2022, India has jumped on the bandwagon. The current prospect for the Indian economy has improved with the tapering of the second wave coupled with an aggressive vaccination push.

The Indian Pharmaceutical Industry has been rightly branded as the ‘pharmacy of the world’ supplying vaccination and medical supplies to the virus-affected nations amidst the pandemic and exporting generic drugs to over 200 countries. India is the source of 60,000 generic brands across 60 therapeutic categories. It accounts for 40 per cent of the generics demand in the US and around 25 per cent of all medicines in the UK. In 2020, India contributed to 80 per cent of the medicine consumption in the domestic pharma market.

We expect the industry to reach a size of over USD 62 Billion by FY2025. The Indian Pharmaceutical Industry India’s exports stood at USD 24.44 Billion in FY2021 with year-on-year growth of 18.1 per cent (exports of USD 20.7 Billion in FY2020).3 It has emerged as the largest generic drug exporter in the global market due to lower manufacturing costs, high-quality medicines at competitive prices, an established manufacturing ecosystem and a large trained and skilled workforce.

The domestic pharmaceutical market size stands at USD 20.3 Billion in FY 2021. Anti-infectives, antidiabetics, oncology, cardiovascular and pulmonary related medicines are in high demand. There is a rise in incidences of pandemic related diseases, lifestyle and chronic diseases in India resulting in increased demand for these medicines. Increased health awareness, better spending capacity of the population accompanied by growing health insurance coverage further supports this demand.

More than USD 250 Billion (in sales) of drugs are expected to lose patent exclusivity between CY 2018 –2024.4 The patent cliff opportunity across formulations could boost growth and create new export avenues for Indian companies. With the available USFDA compliant infrastructure, it is expected that India will lead this opportunity.

Global pharmaceutical companies are trying to delink from their dependency on China for Key Starting Materials (KSMS) and Active Pharmaceutical Ingredients (APIs) and diversify into other markets. Indian companies are expected to benefit from this opportunity.

The government has launched several initiatives focused on this sector’s development and eased s investment and regulatory norms. Several government initiatives such as Clinical Trials Rule 2019 and the Production Linked Incentive (PLI) scheme will benefit domestic manufacturers, reduce import dependence by promoting the manufacturing of 53 identical KSMS and APIs, and improve infrastructure by establishing three Bulk-Drug Parks.

The sector is also expected to benefit from the solid fundamentals of the industry. Major pharmaceutical companies have reported robust operating performance and profitability in FY2021. We expect capital expenditures to rise in FY2022 as major companies are expanding production capacities in APIs and injectable products to meet increased demand and take advantage of government incentives.

The Indian pharmaceutical companies are focussing on high-cost, high-complexity speciality generics. To gain access to manufacturing facilities or niche proprietary therapies, the companies are engaging in the acquisition, strategic partnership, collaborations and/or cross-licensing. We expect this trend to continue with further deals being anticipated.

The current situation has presented newer opportunities and we expect the Indian pharmaceutical industry to benefit from it
1 World Bank Report, June 2021
2 RBI Report, July 2021
3 Drivers of Indian Pharmaceutical Exports, RBI Report, July 2021
4 EvaluatePharma Research Report