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India Pharmaceuticals and Healthcare Report Q3 2011
Business Monitor International, June 2011, Pages: 102
Business Monitor International's India Pharmaceuticals and Healthcare Report provides industry professionals and strategists, corporate analysts, pharmaceutical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on India's pharmaceuticals and healthcare industry.
BMI View: India's pharmaceutical market is failing to fulfil its potential. Positive attributes include a huge population, a booming economy, a low-cost generic drug programme and relative political stability. However, sales of medicines are being restricted by faltering urbanisation, massive income disparities, insufficient state involvement in healthcare and, most importantly, a sub-standard intellectual property regime.
Headline Expenditure Projections
- Pharmaceuticals: INR613bn (US$13.4bn) in 2010 to INR717bn (US$16.0bn) in 2011; +16.9% in local currency terms and +19.9% in US dollar terms. Our long-term forecast forecast has been revised up following a re-assessment of historic data.
- Healthcare: INR2,702bn (US$58.9bn) in 2010 to INR3,001bn (US$67.1bn) in 2011; +11.1% in local currency terms and +14.0% in US dollar terms. Our forecast has been revised up moderately due to analyst intervention.
- Medical devices: INR132bn (US$2.89bn) in 2010 to INR153bn (US$3.43bn) in 2011; +15.8% in local currency terms and +18.9% in US dollar terms. Our forecast has been revised up slightly due to analyst intervention.
Business Environment Rating: India is underperforming compared with its regional peers. The country’s score has remained static over the previous two quarters and a decrease is possible in the Q411 update of this report, due to a recent downward revision of its pharmaceutical market. India scores above the regional average for Industry Rewards and Industry Risks, but below the average for Country Rewards and Country Risks.
Key Trends & Developments
- In May 2011, The Drugs Controller General of India (DCGI) put a temporary halt on marketing approvals for new drugs in key therapeutic segments. The DCGI has announced that approvals will be provided after the country's medicine regulator streamlines a new system which will establish a 10-member New Drug Advisory Committee (NDAC).
- In April 2011, the Indian government was planning to publish details of every medicine patented in the country on its website in the next 2-3 months, according to P H Kurien, Controller General of Patents. The move is part of the government's transparency drive to enable Indian pharmaceutical companies to challenge patent holders and market generic version of high-priced patented drugs.
- In March 2011, India's Finance Minister Pranab Mukherjee announced the roll back of the proposed 5% service tax on healthcare, as suggested in the 2011/12 federal budget proposals. The minister took the decision following criticism from the opposition and medical fraternity in the country. The minister previously proposed a 5% service tax on air-conditioned hospitals with more than 25 beds and on diagnostic services.
BMI Economic View: With India’s FY2010/11 real GDP growth coming in at 8.5% (a fraction below our 8.6% target), we now believe the risks to our 7.8% FY2011/12 projection lie on the downside. Investment activity is unlikely to stage much of a comeback until we see clear signs of a monetary pause. We have yet to see much of a meaningful re-ignition in the government's reform drive. Private consumption growth will also continue to grind lower as higher lending rates reduce demand for 'big ticket' items.
BMI Political View: The state election results offered a mixed bag for the ruling United Progressive Alliance (UPA) and its dominant member the Indian National Congress (INC), but we note that they could have been much worse given its recent troubles with corruption and high inflation. Attention will now turn to next year's state ballots, which include that of Uttar Pradesh – India's most populous state with an estimated population of 200mn. The contest will see regional heavyweight Mayawati of the Bahujan Samaj Party (BSP) go head-to-head with INC member (and premier-in-waiting) Rahul Gandhi. The results could determine whether the INC has sufficient political capital to strengthen its mandate in the next general elections due in 2014.
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