Indian pharmaceutical exports: The growth story

The Indian pharmaceutical industry is the largest supplier of cost effective generic medicines to the developed world. With the widest range of medicines available for exports and with the availability of the largest number of approved pharmaceutical manufacturing facilities, India is all set to become the leader of pharmaceutical exports to the world.
 
According to IBEF, the domestic Indian pharmaceutical industry is estimated to be $ 26 billion in 2014 growing at nearly 20 percent and is expected to reach nearly $ 50 billion in 2020.  It is evident that a lot of internal factors are responsible for the growing Indian pharmaceutical industry. There are more than 200 companies which are manufacturing medicines for the largest population in the world which adds to the prevailing competition on the domestic front.
 
To explore further opportunities of growth, the Indian pharmaceutical industry players, particularly the large ones have set up their subsidiary companies, regional offices or taken over local companies in other geographies and many have even set up their manufacturing plants in developed nations too. All these activities have been continuing since the last 10 years particularly which have made the Indian pharmaceutical industry command a strong global presence.
 
Table 1: Global drug market

	2012-13	2016-17	%Growth
Global pharma market (in $ bn)	962	1200	24.7%
Global generic market (in $ bn)	274	432	57.7%
Global generic market (in $ bn)	28.5%	36%
	2012-13	2014-15	%Growth
Indian pharma generic drug exports (in $ bn)	15	25	66.7%

Indian pharmaceutical industry’s exports comprise mainly of generic drugs and accounted for nearly $ 15 billion in the FY 2012-2013 as per data available from a strategy paper from the Commerce Ministry of India. According to a report by the ministry, Indian pharmaceutical exports were expected to achieve a target of $ 25 billion set for 2014-15.

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A look at the generic drug market scenario of the world (refer Table 1) shows as to how the same is acting as a key driver of the global pharmaceutical market. The generic drug market is expected to grow at nearly at 60 percent by the year 2016-2017 and contribute nearly 36 percent of the total market in the year 2016-2017.

  The percentage contribution of the generic pharmaceutical market to the world is expected to increase from 28.5 percent in 2012-2013 to 36 percent in 2016-2017. Indian pharmaceutical export medicines contribute to nearly 5 percent of the total world’s consumption of generic drug medicines in the current scenario.
 
Indian pharmaceutical industry has been eyed as the key contributor in terms of export growth to the sector since 2008 – with a CAGR of 13 percent during the period of 2008-2013.
 
The year on year growth has taken a promising growth since 2008 with an incremental increase in the range of $ 1-1.5 billion each year. The US is the largest consumer of Indian pharmaceutical exported medicines followed by the UK. Many of the top 50 domestic Indian pharmaceutical companies contribute to this growth both in value and volume.
 
As per the updates from Pharmexcil (the government agency responsible for promotion of pharmaceutical exports from India), North America alone contributes to 27 percent of the total generic drug consumption of Indian pharmaceutical medicines followed by the European Union and Africa which contribute 18 percent each in terms of consumption to the total medicines exported from India.
 
Indian pharmaceutical exports mainly comprise of bulk drugs, formulations and herbal products to the developed world. Formulations contribute to 72 percent of the total Indian pharmaceutical drug exports, ie to the extent of nearly $ 11 bn ($ 10.8 billion) as per projected statistics available from Pharmexcil for 2013-2014.
 
The growth rates of the Indian formulation exports for FY 2010-2011 over the FY 2009-2010 has been nearly 30 percent. The formulation growth rate has managed to sustain this growth rate in the FY 2011-2012 to 27 percent over the FY 2010-2011. The growth rate of Indian pharmaceutical formulations has been nearly 20 percent in the FY 2012-2013.
 
Indian bulk drugs and herbal products have witnessed a declined growth rate since the FY 2012-2013 on account of market factors and rising competition from other Asian competing nations. Needless to say, as per data from IBEF and Pharmexcil, the Indian pharmaceutical export consumption has been nearly 5 percent each in the top 10 generic drug markets, such as US, UK, Russia, etc for the year 2013 and the same is predicted to rise year on year. The use of Indian pharmaceutical generic drug is also increasing in other nations like Canada, France, Germany, Brazil and Japan.
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Rashmi Pant is an expert in market research with more than 15 years of experience in major industrial sectors. She is also the owner of HOW TO: http://www.rashmipant.com/