Pharma Sector-Round Table Conference-Centrum

Current challenges and the way ahead

We recently organized a Round Table Conference on Indian Pharma
Industry - Current Challenges and the Way Ahead. We invited Mr. Ranga
Iyer, a veteran in the pharmaceutical industry as a distinguished
speaker.



We summarize Ranga’s views on the pharma industry as follows:



The domestic pharma market is expected to grow at 13-15% in FY15 as
the downward revision in prices by NPPP has been absorbed. The generic
business is growing significantly in India and has crossed Rs200.0bn
mark as per market estimates. MNC pharma companies are unlikely to
enter the generic business due to the low EBIDTA margin of 14-15%.



$ Domestic market to report strong growth in FY15:  The domestic
market is expected to grow at 13-14% in FY15.  For FY14, the GDP
growth and inflation are expected to be 4.5% and 7-8% respectively.
There is a possibility of increasing healthcare expenditure by the
Government. The acute segment continues to grow and lifestyle changes
are likely to drive the chronic business. Downward revision in prices
by NPPP has been absorbed. The generic business is growing
significantly and has crossed Rs200.0bn as per the market estimates.



$ Increase in price expected from April’14: The introduction of new
products has stabilized at the current level in the domestic market.
Volume growth has been maintained.  Prices for DPCO drugs are expected
to rise from April’14 in line with Wholesale Price Index (WPI). For
most products outside price control, manufacturers are likely to
increase prices up to 10%.



$ MNCs unlikely to enter generic business: MNC pharma companies are
unlikely to enter the generic business as EBIDTA margins are 14-15%.
Some of the bigger companies which entered the generic business are
generating revenues of Rs2.0-4.0bn per annum. These companies have
entered acute therapy, where the product volume is large. The entry
into generic business is easy as it requires the approval of State
FDA.



$ US generic market highly competitive: The US generic market is
becoming highly competitive with the increase in the number of
players. Indian pharma companies face competition from other
countries. However, Indian generic players have launched difficult to
manufacture and differentiated products rather than vanilla generics.
Export of API and formulations is over Rs750.0bn annually and is
increasing at a rapid pace.



Thanks & Regards

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