Synopsis: The pandemic push will lead to an 11% annual growth for the Indian pharma industry over the next two years and help it surpass USD 60 billion from around USD 45 billion in FY21, according to a report.
The Indian pharma industry grew at a CAGR of roughly 4.5% from $18 billion in FY17 to $21 billion in FY21. According to Care Ratings, the Indian pharmaceutical business ranked third in terms of volume and thirteenth in terms of value in FY21, with market size of roughly $45 billion.
CARE Ratings expects India’s pharma business to develop at an annual rate of roughly 11% over the next two years, reaching a value of about $60 billion.
“The main factors that are expected to drive the growth of the industry are (a) ability to leverage the opportunity available for Indian pharma companies due to expiry of the patent drugs across the globe, (b) ebbing of regulatory risks, (c) adoption of various strategies to de-risk from dependency on China for key raw materials, (d) increasing trend in PE investments, and (e) solid fundamentals of the industry.
Exploiting these opportunities, CARE Ratings expects the credit risk profiles of its rated entities to remain stable to positive during FY22 and FY23,” it added.
According to Care Ratings, the Indian pharmaceutical business ranked third in terms of volume and thirteenth in terms of value in FY21, with market size of roughly $45 billion.
“The reason for higher rank in terms of volume while lower rank in terms of value is primarily attributed to the predominance of the Indian pharma market in the generic segment. The industry has exhibited compound annual growth rate (CAGR) of about 7.2% during FY17-FY21 and registered a growth of about 12% during FY21,” it said.
The Indian domestic pharmaceutical industry grew at a CAGR of roughly 4.5 per cent from $18 billion in FY17 to $21 billion in FY21. Furthermore, pharmaceutical exports, which contributed about $17 billion in FY17, have grown at a CAGR of about 10% to $24 billion in FY21.
“Especially during FY21, on account of increase in the demand for covid-19- related drugs, the exports have grown by 18%. Thus, on account of a better export growth rate, the contribution of domestic to exports has changed from 52:48 during FY17 to 47:53 during FY21.
CARE Ratings expects that with better prospects in regulated and semi-regulated markets, the contribution of domestic to exports would widen to 45:55 by FY23,” it added.
Over the next five years, patented medications worth USD 240 billion will be taken off the market around the world. Domestic generic formulation businesses that are already creating generic versions of these proprietary pharmaceuticals will be able to cash in on this early and will be able to earn an additional USD 5-6 billion.
Because of the focus on generics, the local country enjoys huge cost advantages over the developed market in terms of production, R&D, and clinical trials, with savings of 50%, 87%, and 90%, respectively.
As of June 2021, the country’s proportion of total ANDA approvals has climbed from roughly 40% in 2020 to around 44%. It has the biggest number of USFDA-compliant pharma factories outside of the US, with 36% in 2017.
Domestic pharma businesses’ R&D spending is expected to stay around 8% of total sales in FY23, according to the research.
