Indian pharma landscape in 2017

Antal International takes a closer look at the business trends that could be game changers for India’s growing pharmaceutical industry

The Indian pharmaceutical industry, which is expected to grow over 15 per cent per annum between 2015 and 2020, will outperform the global pharma industry, which is set to grow at an annual rate of five per cent between the same period. The market is expected to grow to $55 billion by 2020, thereby emerging as the sixth largest pharma market globally by absolute size, as stated by Arun Singh, Indian Ambassador to the US.

It is evident that a lot of internal factors are responsible for the gargantuan growth seen here. There are over 200 companies manufacturing medicines for the largest population in the world which adds to the prevailing competition on the domestic front. India has always been an important contributor to the global pharma industry with its large domestic market, impressive growth rate over last few years, and due to that it has become one of the sunrise sectors of the Indian economy.

There are various factors that have contributed to the growth of this sector

• Changing demographics
• Higher spending
• Rise of lifestyle diseases
• Easier access to medical facilities and health insurance
• MNC’s and Foreign brands adopting strategies that are more Indianised in terms of pricing, products etc
• Increase in exports to regulated and semi regulated markets
• Building partnership with MNC’s from emerging markets

As 2016 comes to a close, we take a closer look at the industry and the business trends that could be game changers for this growing industry.

Boost in generic drug exports

India is the largest provider of generic drugs globally with the Indian generics accounting for 20 per cent of global exports in terms of volume. 2017 sees a big opportunity for Indian firms to export generic drugs to countries like Japan and Latin America. India has been exporting drugs to the US for a while, however, pricing pressures and a host of other factors took a big toll on the overseas shipments and the pharma exports from India fell by over one per cent in the six months to September.  India is now shifting its’ attention toward countries like Japan that have a high number of ageing population along with a rise in demand for generic drugs, which gives Indian pharma firms a good opportunity for exporting generics in the Japanese market.

Increase in number of M&As

The Indian pharma sector has seen a healthy year, driven by M&A’s and this trend will continue in 2017. The government’s decision to increase FDI to 74 per cent in existing pharma companies is expected to boost mergers and acquisitions and private equity investments in the sector. This move is a welcome change for global pharma companies who are looking at India as a lucrative market and are therefore looking for Indian pharma firms to partner with.

Government policy

The government’s revamp plan for this sector such as winding off NPPA, drug price control, government-regulated prices, perpetuity of licenses to manufacture drugs will all bring more flexibility into the sector. These positive initiatives coming from the government will ease business operations and open doors for more investment within this sector.

The latest government initiative ‘Pharma Vision 2020’ is a platform that will attract global companies to invest in India and make India a global pharma leader. Other initiatives like ‘Make in India’ ‘Swachh Bharat Abhiyan’ are also proving to be beneficial and encouraging for this industry.

Medical tourism

A recent report by Nomura Financial Advisory and Securities (India) revealed that medical tourism in India is expected to grow at 20-25 per cent over the next five years. The report cited various factors like rising internationally accredited healthcare facilities and lower costs of surgeries like bypass, hip/ knee replacement, neurosurgery, cosmetic surgeries, cancer treatments as well as dental treatments, which are boosting medical tourism in India. Hospitals across the country have observed an increase in patients coming from neighbouring countries as well as Europe, the Middle East, South Africa etc.

Trump win

The Trump landslide in the US Presidential election seems to be a ‘win-win’ for the Indian pharma industry. Trump’s administration is expected to remove the restrictions on drug imports as he said this would give American patients greater access to drugs manufactured abroad. If Trump does lift export barriers for drugs manufactured outside the US, Indian Pharma companies will benefit the most.

Pharma sector going digital

Mobile apps and social media are set to play a bigger role the growth story of the pharma industry in India. Indian pharma firms are now getting rid of old schools marketing methods and switching to new age technologies. Mobile apps, social media will play a bigger role; pharma companies will pay more attention on digital marketing strategies and spend. The industry is at its best phase and global investors are eyeing India, therefore marketing will play a major role at this hour. This year we saw top pharma companies launch innovative and interactive mobile apps, increase use of webinars, live video chats and other digital platforms to keep clients engaged in the new age digital world.

Rising demand to acquire Indian health-tech startups

We saw many examples of global pharma and biotech companies teaming up with Indian health startups which signal an opportunity to reach out to bigger and more competitive global markets. Optimism within this field has led to an increase in number of health tech startups and this trend will continue into the next year as well with more global pharma and bio tech giants looking to team up with startups in India.

R&D takes priority

2016 saw pharma companies prioritising R&D and 2017 will see the same trend. Companies have also increased their R&D budgets to boost productivity and launch differential and speciality products that will help the sector establish a stronghold in the global market. These companies are working towards creating niche and complex products through investments in R&D. Despite high risk of success, gestation periods and uncertainty regarding returns on investment, Indian companies are continuously investing higher funds toward R&D. These companies are entering new tie-ups with major international players, universities, academicians and absorbing new technologies. Indian pharma companies are engaged in contract manufacturing in a big way and R&D investments are offering necessary support for these activities. Even these companies are taking up clinical trials for MNCs.

Move to cloud services, attract tech giants

The cloud services business has been gaining momentum in India. We are now seeing an increasing number of firms from various sectors moving to cloud- based services; which has in turn led to an increase in the popularity of cloud services within India and many more local players are now entering this domain. This market is becoming highly competitive with global cloud firms like Amazon, IBM, Google, Microsoft eyeing the smaller Indian players to tap on this opportunity and expanding their presence in the Indian market.

Hiring trends in the sector

The business trends that we see above will boost hiring within this sector massively. There will be a steady rise in the need for skilled manpower in the pharma industry especially within R&D, analysis and testing, Quality Assurance (QA), Intellectual Property (IP), manufacturing and Sales & Marketing.

In the coming year, the industry will focus on women at senior and leadership roles. The pharma industry was for a long time dominated by male leaders. However, 2017 may see more women being hired or mentored to manage more senior level roles.  This sector is emerging as a popular choice amongst Gen Y, since the nature of work, primarily treating patients and research for new drug discoveries plays an integral role in meeting their key career aspirations. Therefore the industry will now have to focus on training, developing, retaining and mentoring existing talent for future leadership roles. As recruiters, we do expect a lot more activity within this industry in 2017 and the years to follow.