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LORD JESUS CHRIST SAYS

“Blessed are you when people insult you, persecute you and falsely say all kinds of evil against you because of me. Rejoice and be glad, because great is your reward in heaven, for in the same way they persecuted the prophets who were before you.

26 Jul 2016

SHARE MARKET- PHARMA COMPANIES PICKINGS IN INDIA.


Introduction:
The Indian Pharmaceutical market (IPM) accounts for approx. 1.4% of the global pharmaceutical industry in value terms and 10% in the volume terms. The IPM is valued at Rs 860 bn for the year ending March 2015. The growth in 2015 stood at 12.9%. Owing to robust historical growth and future prospects, many MNC companies have active presence in the Indian Pharma space.

The IPM is highly fragmented with about 24,000 players (330 in the organised sector). The top ten companies including domestic and MNC companies make up for more than a third of the market. The market is dominated majorly by branded generics, which constitutes nearly 70% to 80% of market.


Besides the domestic market, Indian Pharma companies also have a large chunk of their revenues coming from exports. Major companies are focusing on the generics market in the US, Europe and semi-­regulated markets, others are focusing on custom manufacturing for innovator companies. Bio pharmaceuticals is also increasingly becoming an area of interest given the complexity in manufacture and limited competition.

The past few years have been glorious ones for the Indian companies, as major blockbusters lost their patent protection, paving way for generics. However, every passing year is leaving lower patented drug opportunities for the Indian companies for the launch of generics. Thus, Indian Pharma companies have increased their R&D expenses. The companies are spending more to establish niche product portfolios for the future.

The year gone by was one where M&A activity continued to attract interest of companies globally. This included many Indian names too. Indian companies such as Lupin, Cipla, Dr Reddy’s and others also showed keen interest. Lupin announced a mega deal worth US$ 800 m for acquiring Gavis. On the other hand, Cipla and Dr Reddy’s too made acquisitions in the US and India respectively.
Growth Ahead

The IPM size is expected to grow at 9­12% CAGR between 2013-­18. The growth in Indian domestic market will be boosted by increasing consumer spending, rapid urbanisation, increasing healthcare insurance, drugs and so on. On the global front, the IPM is ranked 13th in terms of value. Owing to robust growth, its ranking is expected to improve to 11th position by 2018.

The life style segments such as cardiovascular, anti-­diabetes, anti­-depressants and anti­-cancers will continue to be lucrative and fast growing owing to increased urbanisation and change in lifestyle patterns. Going forward, better growth in domestic sales will depend on the ability of companies to align their product portfolio towards these chronic therapies as these diseases are on the rise.

In various global markets, the government has been taking several cost effective measures in order to bring down healthcare expenses. Thus, governments are focusing on speedy introduction of generic drugs into the market. This too will benefit Indian pharma companies. However, despite promising outlook, intense competition and consequent price erosion would continue to remain a cause for concern. Over and above this, following GMP will be an important criterion for companies in order to grow in the global markets.


For the US market, Indian companies are developing niche portfolios in various segments. High margin injectables, dermatology, respiratory, biosimilars, complex generics etc. have become an area of interest. Most of the Indian pharma companies have been working on these niche drugs to optimise growth and margins. Thus, post patent cliff, the companies which have developed their product basket in the niche category will be ahead in the curve. Moreover, generic penetration in the US is expected increase to 86­ 87% over the next couple of years from 83% currently.

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