Pharmaceutical Sector Analysis

Overview

The Indian pharma market is currently valued at 72069 crore INR1. The market has experienced a
slowdown this year with its growth going down to 9.8% from 16.6% in 20122. This slowdown can be
attributed to the new drug pricing policy and the regulatory interventions over the last year.

The Indian pharmaceutical industry is witnessing regulatory challenges like delays in clinical trial
approvals, uncertainties over the FDI policy, the new pharmaceutical pricing policy, a uniform code for
sales and marketing practices and compulsory licensing.

In order to bounce back to a healthy growth rate in future, companies will have to rethink the way they
do their businesses today. The government will have to play a great role in establishing a strong
regulatory set-up as well as a speedy redressal for related issues.

Quality and regulatory concerns could also lead to greater US FDA scrutiny in future. Companies will
have to step up their quality and manufacturing compliances in line with the global guidelines.

Companies will also have to think if their governance and compliance framework is robust and is
updated with the constantly changing regulatory requirements.

They need to focus on using the new technologies to connect better with their key stakeholders like
patients, healthcare providers, regulators, governments, payers and the society at large.

In this report, we look at the changing landscape of the industry, the regulatory hurdles and the
emerging technologies that need to be considered in order to achieve a sustainable and compliant long-
term growth.











Indian pharmaceutical market highlights

Market value and growth scenario
The Indian Pharmaceutical Market (IPM) is valued at 72069 crore INR in 2013 as against 65654 crore
INR in 2012 with an incremental value of 6416 crore INR, which is down from the 9363 crore INR for
2011-2012. The IPM has experienced a slowdown this year with its growth at going down to 9.8% from
16.6% in 2012. From 2010 to 2012, the IPM had a CAGR of approximately 15%.
The IPM growth rate has declined after November 2012 from an average of 16% to 8%. This slowdown
can be attributed to the following:
The National Pharmaceutical Pricing Policy (NPPP) being announced towards the end of 2012
Higher growths for the corresponding quarters and months in the previous year
The NPPP implementation and the subsequent price corrections leading to a low uptake among
the stockists in Q2 of 2013

Company performance
The top 10 companies contributed to 41% of total IPM sales up from 39% in 2010. These companies had
a collective growth of 9% (lower than the IPM). Companies that ranked from 11 to 20 contributed to
22% of IPM sales and had a cumulative growth of 12% (higher than the IPM). The remaining companies
contributed to 37% of the IPM sales with a growth rate of 9%.












Top 10 Pharmaceutical Companies in India

Find below the list of latest Top 10 pharma companies in India by Net Sales (BSE):
1. Dr Reddys Labs: With total net sales of Rs 8,434 crore, Dr Reddys Labs is the largest
pharmaceutical company in India.
2. Cipla: With total net sales of Rs 8,202 crore Cipla is the second largest pharmaceutical company
in India.
3. Lupin: With total net sales of Rs 7,122.51 crore Lupin is the third largest pharmaceutical
company in India.
4. Ranbaxy Labs: It is the fourth largest pharma company in India with the total net sales of Rs
6,303.54 crore.
5. Aurobindo Pharma: Aurobindo Pharma is on 5th position with the total net sales of Rs 5,425.10
crore.
6. Cadila Health: Cadila Health is the sixth largest pharma company with the total sales revenue of
Rs 3,152.20 crore.
7. Torrent Pharma: It is the seventh largest pharma company with the total sales revenue of Rs
2,766.23 crore.
8. Jubilant Life: Eight largest company has the total sale revenue at Rs 2,641.07 crore.
9. Glaxo SmithKline: It has the total net sales of 2,630.30 crore and the ninth largest
pharmaceutical company in India.
10. Wockhardt: Revenue of Rs 2,560.10 crore makes Wockhardt India's 10th largest pharma firm by
sales.
Growth trends in Indian companies and MNCs
There has been a slowdown in the growth of the top Indian as well as multinational companies.
However, the slowdown is more prominent in the MNCs than in the Indian companies. In 2012, the top
five MNCs had a growth rate of 16% which dropped down to 7% in 2013. Similarly, in 2012, the top five
Indian companies had a growth rate of 16% that dropped down to 12% in 2013.


New introductions
Contribution of the new introductions (NIs) to the IPM has gone down from 6.3% in 2010 to 4.1% in
2013. The number of new products launched has gone down from approximately 1900 in 2010 to
approximately 1700 in 2012. Of all the new launches as of MAT Apr 2013, the maximum were in anti-
infective (468), pain- analgesics (435) and gastro (389) therapies. The average value per NI was 0.89
crore INR for the overall market and was the highest for vaccines (4.32 crore INR).
Other trends in 2012 2013
Implementation of NPPP by the government
This resulted in the margins of all products that came under the purview of the NPPP drop from 20% and
10% to 16% and 8% for the retailers and the stockists respectively. This decrease in stockist margins led
to a significant uncertainty among many stockists regarding the feasibility of staying in business due to
the lower profitability post the margin reduction.

Increase in adoption to MCI guidelines
More companies were seen adopting the MCI guidelines for the promotion of products to doctors and
changes being made to the sales and marketing strategies across the industry.

Focus on improving sales force productivity
Companies have focused on increasing the productivity of their field forces with an aim of optimisation,
re-deploying in high potential territories, implementing robust processes and using technology to
monitor the performances on regular basis, thereby trying to bring in enhanced efficiency in the overall
sales force.

Alliances and partnerships
Another trend seen in the market was the partnerships between the multinational and Indian
companies with an aim of increasing the reach in terms of the number of customers and geographical
coverage for patented molecules. These were seen in the form of co-marketing, co-promotion, licensing
and joint ventures.

The FDI policy
Hundred percent FDI through the automatic route was possible in the Pharma sector in India. Given the
high current account deficit, India requires FDI. The FDI policy, however, gives confusing signals. 100%
FDI in Greenfield investments is allowed by the automatic route but after November 2011, the
brownfield investments require the approval of the Foreign Investment Promotion Board (FIPB) which
often comes with conditions. The time consumed in this process also acts a deterrent. FIPB conditions
include the need to maintain production levels for the NLEM at the highest level for three years
preceding the FDI, the need to maintain R&D expenses at the highest level for three years preceding FDI,
the need for information on the transfer of technology to the administrative ministries and FIPB etc. The
intention behind such restrictions may be good but it discourages investment. We need a FDI policy
which addresses these concerns while ensuring the affordability as well as the availability of drugs in
India


Key Recent Mergers & Acquisitions in Pharmaceutical Sector

Year Indian Player MNC Nature of deal Details
2010 Piramal
Healthcare
Abbott Sale of domestic branded
formulations
Abbott acquired Piramal's domestic branded
formulations division, along with its 350 brands,
Baddi facility and about 5,200-strong sales force
for US$3.72 billion

2010 Strides
Acrolab
Pfizer Licensing
and supply
arrangement
To supply 40 off patent products, mainly oncology
ingestible that would be commercialised by Pfizer


2009 Shantha
Biotech
Sanofi-
Aventis
Acquisition Acquired for about US$820mn and got access to
Shantha's vaccines pipeline and access to emerging
markets

2009 Aurobindo Pfizer Dossier
licensing &
supply contract
Formulations and injectable for US,EU and ROW
markets on exclusive and co-exclusive basis


2009 Biocon Mylan Development &
supply contract
To develop, manufacture, supply and
commercialise
Many high-value generic biologic compounds for
the global markets.


2009 Dr. Reddys
Labs
GSK
Pharma
Supply contract To develop and market more than 100 branded
products on an exclusive basis across an extensive
Number of emerging markets, excluding India.

2008 Strides-Aspen
JV
GSK
Pharma
Upfront
milestone &
supply contract
To manufacture and supply branded generics to
GSK which would be marketed in about 80
Emerging Markets.


2008 Ranbaxy Daiichi
Sankyo
Acquisition Daiichi acquired Ranbaxy and got access to
Ranbaxy's diversified product portfolio and vast
Geographical presence.





Pharmaceutical Sector Market Capitalization

Pharmaceuticals
Company Name
Last Price %
Chg.
52 wk. 52 wk. Market Cap
High Low
( cr)
Sun Pharma
624.25 0.32 653.1 403 1,29,292.41
Dr Reddys Labs
2,830.00 1.52 2,939.80 1,786.50 48,140.81
Lupin
983.85 -0.57 1,003.00 599 44,111.44
Cipla
383 -0.58 450 375.8 30,751.89
GlaxoSmithKline
2,699.95 -1.74 3,054.40 2,120.00 22,869.39
Cadila Health
1,024.00 -0.02 1,079.00 631 20,966.25
Divis Labs
1,442.95 1.19 1,450.00 905 19,152.89
Glenmark
580.4 0.62 612 458 15,741.82
Ranbaxy Labs
369.3 0.59 490.15 253.95 15,650.16
Aurobindo Pharm
532.6 -0.48 544.75 127.15 15,516.70
Ipca Labs
878.9 -0.12 906.9 489.75 11,091.64
Torrent Pharma
560.05 -0.45 578 328 9,477.32
Biocon
459 0.27 497.4 272.5 9,180.00
Piramal Enter
531 0.02 648.3 476 9,163.10
Sanofi India
2,699.85 -0.06 2,940.00 2,410.00 6,217.92
Alembic Pharma
297.05 1.64 309.9 96.7 5,599.87
Wockhardt
471 1.48 2,166.05 336.6 5,169.28
Sun Pharma Adv
163.15 1.08 179.5 115.75 3,861.83
Ajanta Pharma
1,057.00 0.53 1,086.05 433.29 3,715.43
Abbott India
1,733.95 -0.1 1,792.50 1,300.05 3,684.52
Pfizer
1,174.75 0.27 1,779.00 985 3,505.62
Natco Pharma
865 0.41 876 390 2,903.46
AstraZeneca
1,084.20 -7.62 1,285.00 595 2,710.50
FDC
131 -1.61 143.45 79 2,329.61
Strides Acrolab
374.4 1.01 1,050.00 343.8 2,230.14
Jubilant Life
137.9 1.47 190 65.1 2,196.49
Kappac Pharma
682.05 -4.65 734.7 30.1 2,063.79
Unichem Labs
222 2.28 225.45 138 2,011.87
Wyeth
777 -0.08 1,065.00 553.05 1,765.35
Novartis India
435 -0.21 639 361 1,390.29
Indoco Remedies
144.45 0.42 161.65 55.05 1,331.11
Shilpa
353.05 -2.05 381.7 136.15 1,298.74
Claris Life
177.5 0.14 232 142.05 1,132.77
JB Chemicals
131.85 2.69 139.25 70.3 1,117.19
Merck
604 0.2 689.1 522.6 1,002.60
Suven Life Sci
74.55 0.13 83.4 22 870.96
Hikal
495 3.16 556 360 813.78
Dishman Pharma
91.5 0.94 110.4 37.05 738.38
Marksans Pharma
17.15 1.18 21.25 3.79 660.8
Panacea Biotec
97.3 0.72 155.2 82.3 595.97
Granules India
280 1.56 294 90.15 568.54
Sequent Scientific
204 -0.17 218.75 81.3 557.64
Sharon Bio Medicine
46.35 -3.34 57.95 27.27 489.31
Syncom Formula
5.69 -1.73 6.19 2.1 444.19
Shasun Pharma
76.3 1.19 94.2 45.6 432.04
Elder Pharma
205.5 1.36 401 188 422.03
TTK Healthcare
479.45 -0.68 663.4 380.05 372.34
Alembic
13.69 3.4 17.25 8.58 365.57
Nectar Life
16.05 -0.31 20.7 9.65 359.94
Orchid Chemical
47.4 1.07 90.9 35 333.94
Ahlcon Parent
453 -0.66 488 285 326.17
Aarti Drugs
266.1 0.04 274.9 129.3 322.21
Arvind Remedies
46.3 2.32 59.95 27.55 315.42
Venus Remedies
244 0.56 358.05 140 279.18
Vivimed Labs
167.6 1.02 309.85 96 271.58
Caplin Labs
170.95 4.97 170.95 43.15 258.31
Sterling Bio
9.46 4.99 10.45 3.43 253.41
SMS Pharma
270.35 -1.03 277.8 152 228.86
Neuland Lab
269.15 4.32 370.4 86.75 206.05
Morepen Lab
4.5 4.9 5.79 2.05 202.42
Amrutanjan Heal
125.9 0.76 150.45 96.8 184.01
Plethico Pharma
42.35 -0.59 254 31.25 144.27
Anuh Pharma
163 0.28 168.8 105 136.14
Ind-Swift Labs
34.3 0.59 53.35 19.25 134.7
Patidar Build
208.1 -4.98 243.25 64.4 114.47
DIL
485 -1.22 580 352 111.22
Parenteral Drug
33.25 -2.21 130.55 25.65 99.14
Kopran
24.35 1.67 30.3 11.8 95.09
RPG Life
54.1 -0.09 85.5 45 89.46
Dr Datson Labs
62.3 -2.2 284.85 29.6 86.52
Hester Bio
98.5 2.34 145 78.1 83.79
Astec Life
39.4 4.93 39.4 14.45 73
Lincoln Pharma
43.25 4.47 53.7 22.7 70.54
Albert David
122 0.29 141.85 80.2 69.63
Piramal Phytoca
26.35 -3.13 36.3 17.2 68.41
Nath Bio-Genes
97.2 4.97 97.2 38.9 62.54
Themis Medicare
60.5 4.13 77.95 40 48.71
Wanbury
22.3 -1.33 30.65 15.65 44.53
Jenburkt Pharma
92.9 -1.8 103.8 64 43.19
Bal Pharma
38.7 1.98 41.6 13.55 43
Bafna Pharma
22.7 -0.22 43.2 17.9 42.35
Bharat Immuno
9 1.12 15.95 8.26 38.86
Gufic Bio
4.85 -1.62 8.69 4.3 37.51
Coral Labs
102.9 0.39 111.2 55 36.76
Parabolic Drugs
5.06 0.4 9.5 3.39 35.97
Transchem
24.75 -4.81 29.95 17.5 30.29
Brooks Labs
18.2 2.82 24.65 13.15 29.46
Celestial Labs
19 -1.3 20.4 8.75 27.75
Fervent Synergi
10.6 -3.64 23.9 9.84 26.5
Ind-Swift
5.7 0.53 10.49 4.35 26.32
Syncom Health
6.5 -1.81 13.68 5.1 26
Vikram Thermo
46.35 -8.94 67 40.7 25.88
Alpa Labs
12 0 14.1 5.76 25.25
Kerala Ayur
23.05 0.66 37.85 17.05 24.33
Jagson Pharma
9.12 -2.25 12.79 7 23.89
Kilitch Drugs
17.9 0.56 28 16.9 23.68
Smruthi Organic
61.95 5 157.95 46 23.64
Country Condos
2.94 5 3.28 0.61 22.81
Beryl Drugs
44.4 9.9 44.4 15.05 22.78
Lyka Labs
10.5 1.35 13.99 8.46 22.66
Ambalal Sarabha
2.83 -0.35 3.59 1.57 21.69
Elder Healthcare
53.85 4.97 73.5 30.75 21.54
Zyden Gentec
19.3 -4.93 50 14.5 21.45
Ortin Labs
11.99 3.01 35.2 10.5 20.31
Surya Pharma
0.98 2.08 1.69 0.59 19.87
Aarey Drugs
11.38 -0.87 31.35 9.02 19.14
Sunil Health
18.4 -3.41 33.6 10 18.87
Krebs Biochem
17.4 4.82 23 9.42 16.55
Natural Capsule
34.25 4.9 37.65 29.7 15.42
BDH Industries
21 0.48 27.55 12.53 12.09
Panchsheel Org
22 0 26.25 19 11.03
Principal Pharm
5.53 1.84 5.53 1.62 10.99
Sanjivani Paren
16.75 -2.05 21 11.45 9.88
Medicamen Bio
10.79 -4.85 11.99 4.75 9.16
Twilight Litaka
3.41 -2.29 7.9 1.95 8.45
Makers Labs
16.5 0 24.6 14.3 8.11
Nutraplus Prod
12 0.25 14.74 10.8 7.55
Mangalam Drugs
5.39 2.67 8.6 3.81 7.1
Sandu Pharma
9.7 4.86 14.7 8.78 6.87
Anus Labs
0.28 -3.45 0.64 0.17 6.84
Trimurthi Drugs
7.12 4.4 20.65 4.44 5.77
Rekvina Labs
18.95 -4.77 25.8 12 5.71
Hiran Orgochem
0.55 0 1.1 0.4 5.43
KDL Biotech
1.95 -1.02 3.16 1.61 4.69
Combat Drugs
5.22 -1.88 225 5.22 4.18
Auro Labs
6.6 4.76 11.7 5.28 4.11
Saamya Biotech
1.42 -4.7 2.82 1.15 3.53
Total Market Capitalisation in Cr. 4,71,714.62





SWOT analysis of Pharma Sector