Indian Pharmaceutical Industry Outlook
The pharmaceutical sector is at a crossroads. In
a heavily disrupted marketplace, characterized by
shifting payer attitudes and patient empowerment,
neither incremental adjustments nor steady
evolution are likely to halt the decline of the
traditional pharmaceutical business model.
This paper looks ahead to a 2030 scenario to examine
the trends revolutionizing the sector trends that we
expect to have dramatic impacts.
The Indian pharmaceutical industry has contributed immensely not just to Indian but to global
healthcare outcomes. India continues to play a material role in manufacturing various critical, high‐
quality and low‐cost medicines for Indian and global markets. It supplies 50 to 60 % of global
demand for many vaccines (including ARVs), 40 % of generics consumed in the US and 25
percent of all the medicines dispensed in the UK . Over the last 5 years, 35 to 38 % of total
ANDAs approved (including 25 to 30 percent of total injectable ANDAs) have been filed from Indian
sites. Affordable anti‐retroviral (ARV) drugs from India were a major factor in AIDS patients getting
greater access to treatment. India supplies 60 percent of global ARV drugs and 30 percent of the
annual UNICEF requirement.
We believe revenues will fall well short of forecasts
as current projections, as well as business and
operating models, do not reflect the turbulence in the
marketplace. The continued upheaval will give rise to
three distinct pharmaceutical archetypes. Executive
teams need to carefully consider what type of
company they want to be and plot the optimal path
towards this status.
By preparing for this future now, organizations not
only reduce the risk of decreasing income, but can
also open up new opportunities for growth. Over
the coming months, we shall produce a series of
thought-provoking articles that will examine more
deeply specific topics outlined in this paper, which
sets the scene for volatile times ahead.
The Indian pharmaceutical industry is poised for growth. Even at current rates of seven to eight percent CAGR, the
industry’s annual revenues can grow to about USD 80 to 90 billion by 2030. However, it could also set bold aspirations
of eleven to twelve percent CAGR, and grow to annual revenues of about ~USD 65 billion by 2024 and about
~USD 120 to 130 billion by 2030. This would require multiple growth cylinders to fire simultaneously, as depicted in
Indian pharma industry can embark on a vision of establishing India’s global leadership in life sciences, while driving
deeper domestic access and affordability. Industry can work towards four primary goals as part of this vision
Accelerate the goal of universal health care across India and the world by providing access to high-quality
affordable drugs: Keeping in line with the Government of India’s vision of providing universal healthcare for
India, the industry can support this goal by providing access to quality medicines at affordable prices. In India,
as more and more patients come under treatment, this could help reduce the disease burden substantially.
The aspiration could be to make the DALY (Disability Adjusted Life Years) in India and other emerging markets
comparable to the developed economies such as the US and UK by 2030 (currently India’s DALY is 72 percent
higher than China’s).
Emerge as an innovation leader to build a globally recognized position for India: We believe the industry
can aspire to build a strong innovation pipeline (with three to five new molecular entities launched or in late
clinical trial phases and 10–12 incremental innovation launches per year by 2030) and enhance Indian pharma’s
significance beyond generics, to biologics, new drug development and incremental innovations.
Become the world’s largest and most reliable drug supplier and reach USD ~120-130 billion by 2030: The
Indian pharmaceutical industry can aspire to become the world’s largest supplier of drugs by volume. This can be
achieved by establishing a leadership position in the US generics space, focusing on building one to two ‘home’
markets outside India, and developing a strong presence in all large markets such as Japan and China.
Contribute significantly to the growth of the Indian economy: The Indian pharmaceutical industry
can contribute substantially to the growth of the Indian economy. The industry can aspire to push the net
foreign exchange earnings to around USD 30 billion to 40 billion annually by 2030 from current levels of
~USD 11 billion. The industry can also create one to two million additional jobs for the country in the same
period, boosting consumption in the local economy.
Many of the developments in the pharmaceutical
industry mirror those in the automotive sector. Like
pharmaceuticals, the industry is relatively mature and
made up of a few major players. And automakers
also face intense pressure from regulators – in their
case to cut emissions, accelerating the move toward
electric and other non-polluting vehicles. The growing
dependence upon technology, primarily software,
is attracting the interest of new entrants such as
Google, Uber and Tesla who are focusing on mobility,
rather than on the automotive industry itself.
Shift 1: Downward
pressure on pricing
With rising demand for healthcare and falling budgets,
governments and payers are exerting pressure to drive
down prices. One bold example involves the Netherlands.
Not content with striking volume deals with the major
pharmaceutical players, it is looking to utilize the power of
the EU to create even greater economies of scale. At the
moment, several member states are pooling together into a
single procurement machine with much greater bargaining
power.This initiative, in its early stages, is also being looked
at by other states seeking to cut their drug expenditure.
Additionally governments, insurers and patients are
requiring greater transparency around drug pricing.
The time-honored healthcare principle of fee-for-service is
also under attack. Payers, insurers and hospitals are
no longer willing to pay simply for a product push
approach; they want fees to be dependent upon the
success of the products and procedures through
measurable outcomes. One of the challenges facing drug manufacturers is to
build closer relationships with patients. This has many
benefits – including better understanding of patient
experience and improved adherence. However, the
industry has some way to go to become a trusted part
of the healthcare ecosystem.
Although value-based pricing (VBP) comes with its
fair share of risks and challenges, as evidenced by
Novartis’ Entresto drug, there is large potential to
create a win-win situation for multiple healthcare
stakeholders if structured and implemented correctly.
Shift 2: From treatment
to prevention … and
By 2030, we should not simply
expect more targeted therapies, practitioners will also be
able to predict the likelihood of a patient being diagnosed
with a disease or health condition, and shift from
treatment of symptoms to prevention measures and
complete cures, rather than providing temporary respite.
In this new world, some conditions may well become
a thing of the past. For example, it is now possible to
cure hepatitis C, which was previously regarded as
incurable and afflicts 180 million people worldwide. This
has created a paradigm shift that has taken healthcare
professionals, patients and payers by surprise.
This shift is driven by three underlying developments:
– groundbreaking new therapies
– advances in technology
– the consumerization of health through increased
access to data by patients.
The latter enables patients to better understand and
get more involved in managing their conditions, which
in turn will raise expectations.
The effects of these changes, and the speed with which
some historical treatment methods are replaced, will
inevitably differ by therapeutic area.
Genetics has moved forward with real pace in recent
years, with gene editing fueling a new wave of potential
applications to aid both prevention (via early detection)
and real cures. The leading genomics firms are
essentially biotech players, acting either independently
or through collaboration.
In the coming decades, gene editing could
revolutionize the treatment of different diseases such
as neurological disorders or cancers. This approach
enables healthcare providers to alter/replace the
problematic gene, to produce a new therapeutic
protein or ‘silence’ mutant cells. A number of
neurological disorders are benefiting from these
advances, like Alzheimer’s, Parkinson’s Huntington’s,
Amyotrophic Lateral Sclerosis and strokes.
Technology is also boosting another, more established
field of play: immunotherapy.
Many companies are focusing on developing
immunotherapies, either independently or in
collaboration with big pharma players, to treat and,
ultimately, to prevent diseases.
Immunotherapy based drugs are increasingly being
used for treatment of various cancers, but companies
are also exploring their use in the treatment and
prevention of other chronic conditions like diabetes,
cardiovascular diseases, Parkinson’s and Multiple
Sclerosis. For example, Cardiovax, a US based biotech
company, is developing immunotherapies to treat and
prevent cardiovascular diseases such as atherosclerosis.
These therapies may potentially be used to predict the
risk of cardiac attacks.
Shifts in the business model, and a refocus on new fields of
play, can help pharmaceutical firms to adapt to disruption.
But even these changes are unlikely to generate the kinds
of growth and revenue that shareholders demand.
Only through a complete organizational transformation
can today’s leading companies maintain influence and
earnings. This means rethinking how to play, which
throws up three types of ‘archetype’ that we believe
will prevail in the future industry.
The active portfolio company is an active portfolio company typically active in several
therapeutic areas within its portfolio. For example, those
operating in pharma tech, genetics and immunotherapy
are constantly looking for new forms of therapy, while
simultaneously reappraising their product mix to match
unmet needs. Active product lifecycle management
in pharmaceuticals is becoming ever more critical, as
the number of blockbuster drugs protected by patents
continues to decrease.
Recent asset swaps – like those involving
GlaxoSmithKline and Novartis on vaccines, oncology
and consumer health interests– are just one
example of active portfolio management; a trend that
is likely to accelerate and will therefore require new,
The ultimate manifestation of a portfolio player is
a modular organization, with an enterprise layer
equipped to acquire and divest parts of its portfolio
in a ‘plug-and-play’ fashion. For these companies, it’s
all about being flexible and agile, to move quickly to
take advantage of opportunities. Our analysis of the
life sciences deal landscape confirms the increasing
trend towards specialization, which manifests in
the acquisition of a complementary portfolio to the
Global market dynamics & implications for
Even though companies anticipated a fair set of challenges in last few quarters, the sheer speed and
impact of these has been overwhelming. Many leading generics players in India and globally shed
up to 40 percent of their market capital in mere months due to a range of reasons from regulatory
sanctions to litigation, impairment charges to generics market dynamics in the US, and raw material
price volatility in China to evolving regulatory landscape in India, etc.
Various dynamics in international markets are eroding value from the generic value pools.
These are: Further consolidation among distributors and pharmacy chains: This has continued to cause a
steep fall in generic drug prices in the US—the largest healthcare market in the world. Increased product approvals, and resultant competition in the generics space: The number of
filings and drug approvals is rising sharply, with an increasing number of Indian companies (e.g.,
accounting for around 40 percent of the ANDA approvals in 2017) vying for a share of the same
This will keep up the competition (and consequently, price erosion) in the coming years.
Drop in new launch sales: The average new launch sales per year has dropped due to lower value
of drugs going off patent. This trend is also likely to sustain for the next couple of years.
Increasing price control and protectionism in various global markets: Protectionism could
significantly impact the value of exports, which contribute around half of India pharmaceutical
Despite the likely severe impact of these factors in the short term, the industry could eventually be
buoyed up by a sustainable cost advantage, a robust new product pipeline, completion of pricing
corrections, the launch of next generic assets and scaling up of the rest of world business. Technology
and emerging business model innovations, too, could prompt a transformation.
In the coming year, we expect to see Indian pharmaceutical companies possibly adopting many of the
following five priorities to capture the full potential of these opportunities:
Driving Profitability and cost leadership through operational excellence: Indian pharma
manufacturers have been ceding ground on cost due to increasing complexity, remediation costs,
additional controls, global supply market disruptions (particularly in China owing to environmental
regulations), etc. To cope up with these margin pressures, the industry needs to improve
manufacturing efficiencies across the network and drive cost excellence initiatives across the spend
base. Some successful pharmaceutical companies have pruned their cost structures by
approximately 10 percent in a relatively short span of time.
Focussing on strategic M&A for value buys: The current operating environment could lead to
several attractive opportunities through distressed divestitures and fewer strategic buyers with
available cash at scale. Strategically pursuing and shaping deals could allow companies to make
additions to the portfolio (products, business lines) that might support shortterm top line
buoyancy and create platforms for future strategic expansion.
Advancing the specialty / differentiated drugs business model: While pharmaceutical companies
could optimize the core generic portfolio across dosage forms, most have begun to embrace the
“next‐gen” specialty/differentiated assets portfolio. This will require purposefully reinventing the
operating model for generics companies, pursuing a systematic portfolio and investment strategy (using partnership, analytics, technology, etc.), strengthening development and launch processes
(efficiency in trial design,setup and execution) and building new innovator like functional strengths
(pricing, launch, market access, regulatory, etc.).
Embracing Digital and advanced analytics for accelerated growth: The recent technological shift
has prompted the rapid rise of Advanced Analytics (AA), which is enabling companies to surface
insights even with complex and unstructured data sets. Globally, in the pharma industry we have
seen use cases of AA driving growth and productivity across the pharmaceuticals value chain
including R&D (over 10 percent increase in clinical trial productivity), Manufacturing (more than 30
percent improvement in yields and throughput), Quality (over 15 percent reduced deviations),
Supply Chain (over 20 percent increase in customer service levels), Sales (around 30 percent
improvement in sales force conversion rate), etc.
Long Journey to go….
For pharmaceutical CEOs, it is not enough to simply
recognize the emerging changes facing the industry.
Their biggest challenge is to translate the impact of these
changes on business and operating models in a holistic
way, to adapt swiftly and decisively to disruption.
The lesson from other disrupted industries is loud and
clear. Pharmaceutical companies cannot just partially
adjust existing business and operating models, when
the fundamental rules of engagement are changing so
One way CEOs can prepare for the future
is to set up fully independent, integrated Pharma 2030
experimental laboratories that report directly to them.
These labs can:
– test new archetypes that align with the company’s
financial ambition, to generate more realistic
forecasts that take account of the sector’s disruption
– evaluate how different archetypes could impact
the way the business is organized, and, equally
importantly, determine which new organizational
capabilities are needed
– develop a balanced transition map that addresses
the multiple and significant risks facing the business.
Those pharmaceutical companies that manage to
embrace the most appropriate archetypes, and master
disruption, have the greatest chance to deliver real value
to patients, which should in turn drive their success.
Expand and upskill the talent pool
As the industry’s product portfolio shifts towards more complex products, the demand for operations and highly
skilled personnel for the manufacture of these products will also increase. There is a limited supply of experienced
talent for such operations. The government can intervene by helping set up and operationalize industry-wide ‘at
scale’ capability building programs to create a skilled talent pool that can be readily absorbed into the workforce.
For example, the Government of Goa has collaborated with Cipla to launch the Cipla Technical Academy. Students
with a background in science (undergraduates or graduates holding B.Sc., M.Sc. and B. Pharm degrees or diplomas)
undergo a six-month training at the academy, followed by an onsite training. On completion, Cipla may assess to
absorb the candidates into their workforce, else The Labour & Employment Department would assist participants to
get suitable placements in other organisations.
Expand and consolidate global footprint and collaborate with international regulatory bodies
Growing and expanding in newer geographies beyond US, such as, China, Japan will be critical for Indian
pharmaceutical industry to achieve its vision 2030. Government has a critical role to play in helping the
pharmaceutical companies in making this move. This will require deeper relationship with respective Governments
to create a favourable policy and regulatory environment. The regulatory authorities in India will have to foster deeper
relationships with their international peers.
Strengthen the exchange of regulatory best-practices with global peers by becoming an observer at the
Pharmaceutical Inspection Convention (PIC), participate in ICH and closely collaborate with regulatory agencies
of countries with large markets (e.g., cooperating with the Japanese Pharmaceuticals and Medical Devices Agency
(PMDA) to set up its office in India). This could improve the quality perception of Indian drugs and help
Work closely with the US FDA and other international regulatory bodies along with the IPA to help
communicate key issues faced by Indian pharma companies and drive the required regulatory changes.
The government could work with pharmaceutical bodies to understand the latest happenings across the globe
for patient benefit. This is with the intention of modernizing the regulatory ecosystem – e.g., Pathways for comb
packs, FDCs etc.
Communicate the contributions of Indian generics to the global healthcare industry and regulators.
The Indian government and the IPA can jointly work with local medical thought leaders to publicize and
promote the contributions made by the Indian pharma industry on shaping public health outcomes. They could
also communicate the quality advantages and regulatory adherence of Indian drugs compared to generics from
The Indian pharmaceutical industry has established a strong presence in the global generics market by delivering
high-quality drugs at scale. The industry has made innovations in processes and formulations and developed itself as a
reliable, high quality and cost-effective global drug supplier. By making essential drugs affordable and accessible, the
industry has captured a leading share in developed economies such as the United States (1 of every 3 pills) and the
United Kingdom (25 percent of medicines consumed.).
So here is the compilation of various articles that I read on pharmaceutical industry , I have tried to extract all the important points that help us to understand the growth of pharma industry.
Sources: KPMG Report
ipa Research Report
outlook buisness research report
SHUCHI P NAHAR