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IndiaPharmaInc.
:CapitalisingonIndia'sGrowthPotentialwww.
pwc.
com/indiaForewordTheglobalPharmaindustryisunderseriouspressurefromalargenumberofinnovatormoleculesfacingpatentexpiration,athinpipelineofnewdrugs,regulatorychallengesandpricingpressures.
ThishasledtoadirectionalshifttowardstheemergingmarketsofAsia,Australia,AfricaandLatinAmerica,whicharegrowingthreetimesfasterthanthecurrentgrowthratesexperiencedintheindustry'sleadingmarketsofNorthAmerica,JapanandEurope.
Weexpectover40%oftheglobalPharmaindustry'sincrementalgrowthoverthenextdecadetocomefromtheemergingmarkets.
TheIndianPharmaindustryisonthethresholdofbecomingamajorglobalmarketby2020.
ManyexpertsbelievethattheIndustryhasthepotentialtogrowatanaccelerated15to20%CAGRforthenext10yearstoreachbetweenUS$49billiontoUS$74billionin2020.
TheIndianpharmaceuticalsmarketiswitnessingdynamicchangingtrendssuchaslargeacquisitionsbymultinationalcompaniesinIndia,increasinginvestmentbydomesticandinternationalplayersinIndia,deeperpenetrationintotheruralmarkets,growthandavailabilityofhealthcareandincentivesforsettingupspecialeconomiczones(SEZ's).
Webelievethesetrendscombinedwithincreasedpurchasingpowerandaccesstogoodqualitymedicalcarewillcontinuetopropelthedomesticpharmaceuticalindustrytonewheights.
IndianPharmacompaniesarealreadymajoroutsourcingpartnersofglobalPharmacompanies.
Research&DevelopmentinIndiaisgettingmoreinnovative.
Domesticcompanieshavestrengthenedtheirpositionintheworldforsupplyingsolutionsacrossthepharmaceuticalvaluechain.
TheyarelikelytobecomeacompetitorofglobalPharmaintheareasofmanufacturingandR&D,andapotentialpartnerinothers.
Inthisreport,welookatdevelopmentsinthebrandedgenericsmarket,over-the-counterproducts(OTC),vaccinesandruralmarkets,andanalysewhatliesaheadfortheindustryasitaimstocapitaliseonthepromiseofthedomesticmarketplace.
WebelievethatthedomesticIndianpharmaceuticalmarkethasapositivegrowthtrajectorybutwillalsofacemajortransformationalchallengesinthenextdecade.
Weaddresssomeofthesechallengesandidentifykeyimperativestoacceleratethedomesticmarket'sgrowth.
JaiHiremathChairman,CIIPharmaSummit2010&ViceChairman&ManagingDirector,HikalLtd.
SujayShettyDirectorIndiaPharmaceuticals&Lifesciencesleader,PwCBackgroundTheIndianDomesticPharmaMarketIndianPharmaMarketSegmentsRuralmarketsVaccinesChangingTaxEnvironmentChallengesTheRoadAhead-ImperativesforGrowthProfilesReferencesAboutConfederationofIndianIndustryAboutPricewaterhouseCoopersContacts61418283438444852606263ContentsExecutiveSummaryTheglobalpharmaceuticalmarketisundergoingrapidtransformation.
Asblockbusterdrugscomeoffpatent,therearefewernewproductsinthepipelinetoreplacethem.
ThisisduetodecliningR&Dproductivityandrisingregulatorycosts.
InPwCPharma2020seriesofreports,wehaveexaminedindetailthechallengesfacedbyBigPharmainthisregard.
Therehasbeenadramaticshifttowardsemergingmarketsaswesternmarketsslowdown.
GlobalPharmamultinationalcorporationsarelookingatnewgrowthdriverssuchastheIndiandomesticmarkettocapitaliseonthegrowingopportunity.
TheparadigmfacedbytheleadingeconomiesoftheUS,EuropeandJapanaresignificantlydifferentfromthoseintheemergingmarketsofIndia,China,SouthAmericaandRussia.
AccordingtoIMSHealth,theemergingmarketsofAsia/Africa/Australiagrewatarateof15.
9%in2009,ascomparedtomuchslowergrowthratesinNorthAmerica(5.
5%),Japan(7.
6%)andEurope(4.
8%).
(1)EmergingmarketswillbethenextmajorgrowthdriversfortheglobalPharmaindustry,withmorethan40%ofincrementalgrowthoftheindustrycomingfromemergingeconomiesinthenextdecade.
(2)Inourreport,"CapitalisingonIndia'sgrowthpotential",weanalysetheimmensepotentialofIndia'sdomesticPharmamarket,whichwasvaluedatapproximatelyUS$12billionin2010,andshowedastronggrowthof21.
3%forthetwelvemonthsendingSeptember2010.
(3)PwCestimatesthatoverthenext10years,thedomesticmarketwillgrowtoUS$49billion-acompoundedannualgrowthrate(CAGR)of15%,withthepotentialtoreachUS$74billion–aCAGRof20%,ifaggressivegrowthdriverskickin.
OneofthereasonsbehindthisexpectedgrowthrateisthatIndia'spharmaceuticalindustryhasafavourablemacro-environmenttogrowin.
TheIndianeconomyhasreboundedfromtheglobaleconomicdownturn,withrealgrossdomesticproduct(GDP)growthreaching9.
66%in2010.
(4)TheIndianmiddleclassisalsoexpandingrapidly,withaffordabilityofmedicinesincreasing,andanincreasedpercentageofdisposableincomebeingspentonhealthcare.
Thegovernmenthasmadepublichealthcareoneofitstopprioritiesbylaunchingpoliciesandprogrammesthatareaimedatmakinghealthcaremoreaffordableandaccessible,especiallyinruralmarkets.
Theindustryiswitnessingtrendssuchasacquisitionactivity,increasinginvestment,deeperpenetrationintothetierItotierVIandruralmarkets,growthininsurancecoverageandinnovationinhealthcaredelivery.
Takentogether,thesetrendsareleadingtoincreasedaffordabilityofservicestopatientsandaccesstoqualitymedicalcare.
Webelievethesetrends,alongwiththefavourablemacroenvironmentwillpropeltheindustrytothenextlevelofgrowth.
Atthemoment,approximately90%ofIndia'spharmaceuticalmarketismadeupofbrandedgenerics.
(5)WeestimatethatthissegmentwillgrowataCAGRof15%-20%forthenextfiveyears.
(5)Genericgenerics'andpatentedproducts'contributionstothemarketasawholeiscurrentlyverylow.
Althoughthisistheexpectedmodelofthefuture,wedonotforeseeasignificantincreaseinthenextfiveyears;themarketisexpectedtoremaincomprisedpredominantlyofbrandedgenerics.
By2020though,patenteddrugsalesareexpectedtoincrease,owingtoanimprovementintheimplementationofpatentlawsandspreadofhealthinsurance.
WealsoexpecttheOTCsegmenttobeastronggrowthdriverfortheindustry.
Currently,around67%ofIndia'spopulation,or742millionpeopleliveinruralareas(6),butruralmarketscontributetoonly17%(7)oftheoverallmarket'ssales.
Thisrepresentsahugeopportunityforpharmaceuticalcompanies,asweexpectthesemarketstobethefuturegrowthdriversfortheindustry.
Theruralmarkethasseveralchallenges,andinordertotapthefullpotentialofthisopportunity,companiesshould:createdemandbyincreasingawarenessandeducation;workwiththegovernmentthroughpublic-privatepartnerships(PPP),inordertoimprovehygieneandinfrastructureconditions;mobiliseprimarycaregiversandparamedicsthroughhealthanddiagnosticcamps;bringspecificproductsolutionstothemarketanduselocallanguages;improveaccessibilityofmedicinesbyinnovativedistributionchannelsandmakeproductsaffordable,throughappropriatepricingandpackaging.
TopIndianandforeigncompanieswilllooktoincreasetheirmarketsharebyenteringintostrategicalliances,strengtheningtheirsalesforcesandincreasingpenetrationintonewermarkets.
ThepotentialthattheIndianPharmaindustryholdsisunquestionable.
Indiaishometoapproximately1/6thoftheworld'spopulation,andisexpectedtobecomethemostpopulousnationintheworldby2050.
(8)Demandforpharmaceuticalswillgrowdecidedly.
Governmentmustcontinuetoinvestinhealthcareandmedicalinfrastructureinruralmarkets,raisehealthcarespending,encourageinnovation,containhealthcarecostsandworkwithprivateplayerstotakethemarkettothenextlevel.
BackgroundStrongmacroeconomicsoverthenextdecadeTheGrowingIndianEconomyGrowingMiddleClassWithHigherPurchasingPowerChangingDiseaseProfileGovernmentPoliciesHealthcareInsurancePwC7Largenumbersofforthcomingpatentexpiries,adrypipelineofnewdrugs,regulatorychallengesandpricingrestrictionshavecollectivelycontributedtolowgrowthratesforprominentglobalpharmaceuticalmarkets.
AsglobalmarketssuchasNorthAmerica,EuropeandJapancontinuetoslowdown(Seefigure1),pharmaceuticalcompaniesarescanningmarketsfornewgrowthopportunitiestoboostdrugdiscoverypotential,reducetimetomarketandsqueezecostsalongthevaluechain.
TheIndustryisbeginningtorealizethatsomeofthemostpromisingopportunitieswillcomefromemergingmarkets(Asia/Australia/Africa&LatinAmerica).
IMSHealthandothersourcessuggestthatemergingmarkets(China,India,Brazil,Russia,Turkey,MexicoandSouthKorea)willcontributetoover40%oftheincrementalgrowthoftheglobalPharmaceuticalindustryoverthenextdecade.
(2)Inthisreport,wewilllookatthedomesticIndianPharmamarket,andtheopportunitiesitholds.
ThehugepotentialoftheIndianpharmaceuticalindustryisimpossibleforglobalPharmacompaniestoignore,giventhatIndiawillbeoneofthetop10salesmarketsintheworldby2020.
SomeofthelargestPharmacompaniesintheworldhavebeenintheIndianmarketsincethe1970s,and5outofthetop10domesticPharmacompaniesarealreadyforeignowned,withaconsolidatedshareof22–23%.
India'sdomesticpharmaceuticalmarkethasrecordedaCAGRof13.
5%overthepastfiveyears.
(5)Withconsiderableexpertiseinmanufacturingofgenericsandvaccines,Indiancompanieshavenowalsostartedsignificantresearchanddevelopment(R&D).
Indiahastheworld'ssecondbiggestpoolofEnglishspeakersandastrongsystemofhighereducation,allthishaswell-positionedFigure2:EmergingmarketsdriveindustrygrowthSource:IMSHealth,MarketPrognosis,October20099121215111237424463484623232210101769991199323522722230%10%20%30%40%50%60%70%80%90%100%2009(f)2010(f)2011(f)2012(f)2013(f)2008-2013(f)RestofWorldEmergingmarketsSouthKorea,CanadaJapanEUUSFigure1:Emergingmarkets(Asia/Australia/Africa&LatinAmerica)growingfasterthandevelopedmarketsSource:IMSHealthmarketprognosis,March2010EuropeJapanAsia/Australia/AfricaLatinAmerica5.
50%4.
80%7.
60%15.
90%10.
60%NorthAmerica0.
00%2.
00%4.
00%6.
00%8.
00%10.
00%12.
00%14.
00%16.
00%18.
00%12345GrowthRate(%)8IndiaPharmaInc.
:CapitalisingonIndia'sGrowthPotential2010TheIndianeconomyisgrowingfast,andisvaluedatUS$1.
430trillionin2010.
(4)GDPgrowth,calculatedonaPurchasingPowerParitybasishasreached9.
66%intheyear2010,andtheInternationalMonetaryFund(IMF)expectsittoremainconsistentlyabove8%till2015.
Furthermore,India'sshareintheworldGDPhasbeensteadilyincreasing,andisexpectedtoreach6.
28%in2015,upfrom4.
17%in2005.
(4)MacrofactorspushingtheindustryTheGrowingIndianEconomyFigure3:India'sstrongGDPgrowthrateSource:InternationalMonetaryFund,WorldEconomicOutlook,(October2010)02468101220052006200720082009201020112012201320142015GDPgrowth%9.
1679.
6589.
8866.
3965.
6789.
6688.
3737.
9768.
1748.
1488.
128GDPgrowth(%)Figure4:GrowingglobalshareofIndia'sGDP(%)Source:InternationalMonetaryFund,WorldEconomicOutlook,(October2010)4.
1734.
3654.
5444.
745.
0515.
2765.
4865.
6775.
8736.
0746.
280123456720052006200720082009201020112012201320142015IndiatobecomeanoutsourcingpartnerinmanufacturingandR&D,andasalocationforclinicaltrials.
TheIndianeconomyisgrowingstronglyandhealthcareisexpandingtomeettheneedsofagrowingpopulationwithachangingdiseaseprofile.
Increaseininsurancecoverage,aggressivemarketcreation,growthintheincomeoftheIndianpopulationandsteadygovernmentinvestmentintomedicalinfrastructurehasfurtherpropelledthegrowthoftheindustry,suchthatitisonthethresholdofbecomingacompetitorofglobalPharmacompaniesinsomekeyareas,andapotentialpartnerinothers.
India'sshareoftheWorld'sGDP(%)PwC9India'spopulationiscurrentlyjustover1.
1billionandisprojectedtoriseto1.
6billionby2050–a45.
5%increasethatwillseeitoutstripChinaastheworld'smostpopulousstate.
(9)Besides,Indiahasahugemiddleclasspopulation(householdswithannualincomesofUS$4762toUS$23,810at2001-02prices),whichhasgrownrapidly,from25millionpeoplein1996to153millionpeoplein2010.
(11)Iftheeconomycontinuestogrowfastandliteracyrateskeeprising,aroundathirdofthepopulation(34%)isexpectedtojointhemiddleclassinthenearfuture.
Themiddleclasspopulationisrapidlyacquiringthepurchasingpowernecessarytoaffordqualitywesternmedicineduetoanincreaseindisposableincome.
TheIndianpopulationspent7%ofitsdisposableincomeonhealthcarein2005;thisnumberisexpectedtonearlydouble,to13%,by2025.
(12)GrowingmiddleclasswithhigherpurchasingpowerFigure5:PopulationgrowthprojectionsSource:ISIanalytics(2010)2010/112011/122012/132013/142014/152015/162016/172017/182018/192019/20Figure6:AscentoftheIndianMiddleClass-PercentageofthepopulationSource:EconomicTimes(April2009),PwCanalysis2001-022007-082009-102020(Forecast)6%11.
7%13%34%Figure7:Indianpopulation'sexpenditurebreakupasa%ofoveralldisposableincomeSource:IDFCInstitutionalSecurities,IndianPharma(June2010)0%10%20%30%40%50%60%70%80%90%100%199520052015F2025FPercentagespendYearHealthcareEducation&RecreationCommunicationTranportationPersonalproductsandservicesHouseholdproductsHousing&utilitiesApparelFood,beveragesandtobacco13%9%7%4%MillionPersons1189.
21205.
11220.
81236.
31251.
71266.
91281.
91296.
81311.
61326.
1Figure8:ShiftinDiseaseProfiletowardChronicsSource:IDFCInstitutionalSecurities,IndianPharma(June2010)ChangingDiseaseProfileTheIndianpopulationisexperiencingashiftindiseaseprofiles(Figure8).
Traditionally,theacutediseasesegmentheldasignificantshareoftheIndianpharmaceuticalmarket.
Thissegmentwillcontinuetogrowatasteadyrate,duetoissuesrelatingtopublichygieneandsanitation.
But,withincreaseinaffluence,riseinlifeexpectancyandtheonsetoflifestylerelatedconditions,thediseaseprofileisgraduallyshiftingtowardsagrowthinthechronicdiseasessegment.
Indiahasthelargestpoolofdiabeticpatientsintheworld,withmorethan41millionpeoplesufferingfromthedisease;thisisprojectedtoreach73.
5millionin2025.
(10)IMSHealthindicatesthatsomeofthefastestgrowingtherapeuticsegmentsintheIndianPharmaspacetodayarechronicdisease-relatedtherapeuticsegments.
Theanti-diabeticsegmentgrew29%inthe12monthsendingJuly2010.
Cardio-vascularmedicationandnervoussystemdisordermedicationgrewat22%forthesameperiodoftime,indicatingrapidgrowth.
(13)ThegrowingsizeoftheIndiangeriatricpopulationwillbeakeyfactorininfluencingthegrowthofthechronicsegment.
By2028,anestimated199millionIndianswillbeage60orolder,upfromabout91millionin2008.
(9)Alongwithchronic,inthelastyeartherehasbeenareboundinsalesintheacutediseasessegment.
Thistrendislikelytocontinueoverthenextfewyears,asweseecompanieswideningtheirreachintonewermarkets,whichhavearelativelyhighernumberoftreatmentnavepatientsrequiringbasictreatment,thus,creatingnewdemandfordrugsoftheacutetherapiessegment.
0%10%20%30%40%50%60%70%80%90%100%20012012CancerHeartdiseaseOthercirculatoryCNSDisordersDiabetesAsthmaOthersSenseorgansMuscoloskeletalAccidentsAcuteInfections572751152233141212812622542DiseasePrevalence(%)TheIndiangovernmenthasbeenmakingeffortstoimprovenationwideprovisionofhealthcare.
Ithaslaunchedpoliciesthatareaimedat:buildingmorehospitals,boostinglocalaccesstohealthcare,improvingthequalityofmedicaltraining,increasingpublicexpenditureonhealthcareto2-3%ofGDP,upfromacurrentlowof1%.
(14)SomeofthesignificantgovernmentallocationsonhealthcarespendincludeafiveyeartaxbreakforopeninghospitalsanywhereinIndia,withanaddedfocusontierIIandtierIIImarkets,bothinthe2008-09UnionBudget.
Goingforward,theIndiangovernmentplanstospendUS$293milliononthepromotionofhealthcarethroughprogrammesforthepreventionandcureofdiseasessuchascancer,diabetes,heartailmentsandstrokein2011-12.
Diabetes,hypertensionandnon-communicablediseasepatientswillbescreenedundertheNationalProgrammeforPreventionandControlofCancer,Diabetes,CardiovascularDiseasesandStroke(NPCDCS).
Theprogrammeislikelytocovermorethan70millionadultsacross100districtsin15statesandunionterritoriesofthecountry.
(15)HealthcareInsuranceIndia'shealthcareinsuranceindustryiscurrentlyverysmallandlimited,butisexpectedtogrowataCAGRof15%till2015.
Around80%ofIndia'shealthcareexpenditureisfinancedoutofpocket.
ThislimitsthepropensityofIndianstospendonhealthcare,particularlyinlowerandmiddleincomegroupswhichcomprisearound95%ofpopulation.
(8)ThesmallpercentageofIndianswhodohavesomeinsurance,themainprovideristheGovernment-runGeneralInsuranceCompany(GIC).
Privateinsuranceonlycameintothemarketpost2007,whentheInsuranceRegulatoryandDevelopmentAuthority(IRDA)eliminatedtariffsongeneralinsurance.
Apollowasthefirstprivatehealthcareinsuranceproviderinthecountry;otherprivateentrantsareICICILombard,TataAIG,RoyalSundaram,StarAlliedHealthInsurance,CholamandalamDBSandBajajAllianzApollo.
Governmentpolicies12IndiaPharmaInc.
:CapitalisingonIndia'sGrowthPotential2010Figure9:Healthcareexpenditurebreakup2009Source:ISIAnalytics,HealthcareIndustry(2010)Figure10:IncreaseinpenetrationofHealthcareInsuranceSource:ISIAnalytics,HealthcareIndustry(2010),GeneralInsuranceCouncilofIndia(2010)LocalSocialInsuranceCentreState71%11%6%12%GovernmentInsuranceOutofPocket80%17%3%76101004013540173202222032090660008100001000020000300004000050000600007000080000900002002200320042005200620072008200901020304050607020062015No.
ofPeoplecoveredbyHealthInsurance(Million)INRMillionMillionPersonsSizeoftheHealthcareInsuranceIndustryPwC13ThegovernmentrunsaprogrammecalledtheNationalRuralHealthMission(NRHM),forthedevelopmentofthepoor,allocatingUS$2920millioninthe2008-09budget,undertheNRHM.
(16)AhealthinsuranceschemecalledRashtriyaSwasthyaBimaYojna(RSBY)thatprovidedUS$745worthofcoverforeveryworkerwasalsoincluded.
ThetotalallocationofthisinclusionwasUS$51million(17),whichwasthenincreasedinthesubsequentbudgets.
Thelatestbudget,2010-11,incorporatedafurther20%ofthepopulationcoveredundertheNREGA(NationalRuralemploymentGuaranteeAct).
(18)Thegovernment,alongwithmanyintheindustrybelievesthatincreaseininsurancecoverageisessentialtotakethemarketforward.
But,otherexpertsbelievethatthespreadofhealthinsurancecouldleadtoamarketwhereinthereisminimaldifferentiationbetweenbrandedgenerics.
Animportantsuccessfactorforgenericmakersisdifferentiationoftheirproducts.
Whileincreasedhealthinsurancecoveragemaybenefitgenericdrugmanufacturersbyincreasingthemarket'saffordabilityformedicines,itmay,incombinationwithincreasedinstitutionalsalescauseareductioninprices,owingtotherisinginfluenceofinsurancecompanies.
Overall,lackofinsurancecoveragestillremainsachallenge.
Widespreaduseofhealthinsurancecouldtakemanyyears,notleastbecauseinsurancecompanieslackthedatatheyrequiretoassesshealthrisksaccuratelyandtheonlyproductstheysellworkonanindemnitybasis–thatis,theyreimbursethepatientafterheorshehaspaidthehealthcareprovider'sbill,makingsuchpolicieslessattractive.
Keytakeaways1.
TheIndianeconomyisgrowingstrongly,andwillcontinuetoprovideaconducivemacro-environmentfortheindustrytogrowin.
2.
Thegovernmentisincreasingspendonhealthcare;andtheIndianpopulationisspendinganincreasedamountofmoneyonhealthcareasapercentageofdisposableincome.
3.
Thediseaseprofileischangingwithanincreaseinacutediseasesalongsidegrowthofchronics.
4.
Healthinsuranceisgrowing.
"Intermsoffactorsthatcoulddrivethemarketup,Ithinkinsurancewouldbeamajorfactor.
Insurancepenetrationnumbersshouldgoupdramatically,becauseoutofpocketpaymentformedicationsisnotamodelanywhereintheworld,asitcannotdrivealargepartofthemarket.
Alotofcountrieshavegonethroughthischange;itisimperativetotakeustothenextlevel.
"–AchinGupta,Sr.
V.
P,CorporateStrategy,GlenmarkTheIndianDomesticPharmamarketSetforrobustgrowthKeyPlayersIndustrySWOTKeyRecentTrendsInvestmentScenarioPwC15Thereisahighlevelofmarketfragmentation.
Asof2009,thereweremorethan10,000firmsinthemarket,ofwhich,around200ofthemcollectivelycontrolledabout70%ofthemarketshare.
(19)Mostofthetop10playersinthemarkethadgrowthratesofover18%forthe12monthsendingJuly2010.
Ofthese,Ciplacontinuedtohavethelargestmarketshareof5.
2%,followedbyRanbaxy(nowasubsidiaryofDaiichi-Sankyo),witha4.
7%share.
(13)KeyPlayersFigure11:IndiaPharmatop10players:12monthgrowthrateendingJuly2010(09/10RevenuesinUS$millions)Source:BusinessStandard(October2010),IMSHealth,Capitaline25%37.
20%23.
6%23.
3%24.
1%25.
7%18.
6%19%15.
5%19%AbbottMankindPharmaPfizerIndiaAlkemLabsZyduscadilaSunPharmaPiramalHealthcareGSKIndiaRanbaxyCipla(1276.
1)(1125.
45)(445.
87)(631.
18)(600.
65)(276.
49)(192.
59)(200.
06)(189.
07)(436.
40)AccordingtoIMSHealth,inSeptember2010,onaMovingannualtotal(MAT)basis,theIndianPharmamarketgrewat21.
3%,reachingasizeofUS$10.
9billion.
(3)TakingintoaccountgenericmedicinessolddirectlytoinstitutionsandOTCdrugssoldthroughnon-pharmacyretailers,PwCandIMSHealthestimatethedomesticmarketsizetobeUS$12billion.
Weestimatethatby2020,itwillgrowtoUS$49billion-aconservativeCAGRof15%,withthepotentialtoreachUS$74billion–atanaggressiveCAGRof20%,ifgrowthdriverskickin.
16IndiaPharmaInc.
:CapitalisingonIndia'sGrowthPotential2010StrengthsHigherGDPgrowthleadingtoincreaseddisposableincomeinthehandsofgeneralpublicandtheirpositiveattitudetowardsspendingonhealthcareCostCompetitivenessLow-cost,highlyskilledsetofEnglishspeakinglabourforceGrowingtreatmentnaivepatientpopulationOpportunitiesGlobaldemandforgenericsrisingRapidOTCandgenericmarketgrowthIncreasedpenetrationinthenon-metromarketsLargedemandforqualitydiagnosticservicesIncreaseinhealthcareinsurancecoverageSignificantinvestmentfromMNCsPublic-PrivatePartnershipsforstrengthninginfrastructureWeaknessesPoorall-roundinfrastructureisamajorchallengeStringentpricecontrolsLackofdataprotectionPoorhealthinsuracncecoverageThreatsLabourshortageWageinflationGovernmentexpandingtheumbrellaoftheDrugsPriceControlOrder(DPCO)ConsiderablecounterfeitingthreatCompetitionfromotheremergingeconomiesFigure12:IndianPharmaIndustrySWOTanalysisSource:PwCanalysis,Industry&CompanyinterviewsIndustrySWOTKeyRecentTrendsFigure13:IndustrytrendsandimplicationsSource:PwCanalysis,Industry&CompanyinterviewsIncreaseInvestments&MNCactivityShifttowardsaNetworkedbusinessmodelIncreasingM&AandaliiancesConsolidationinthemarketIncreasingreachinNon-MetromarketsSeenasthenextvolumedriver,thoughcostsofoperationishighduetopoorhealthinfrastructureGoods&ServicesTax(GST)ThoughdelayedfromitsApril2010implementationdate,GSTwilladdsignificantefficienciestoeconomyandleadtoanoverhaulofsupplychainGrowingInsuranceMorenumbersofpatientswillbecominginfortreatment.
ChangingdiseaseprofileShifttowardsbiotech&specialitytherapies,increasedinvestmentinR&DandacutediseasesegmentwillsustainstronggrowthHealthcareinnovationUseoftechnology&ITforinnovationinhealthcaredeliverye.
g.
MobileclinicsPwC17InvestmentScenarioTheIndianPharmaindustryhasattractedUS$1707.
52millionworthofforeigndirectinvestment(FDI)intheperiodbetweenApril2000andApril2010.
(20)ThisFDIisexclusiveofinvestmentsinsharesofIndianfirms.
AcquisitionsoflocalplayersbylargeMNCsillustratetheincreasinglevelofinterestthattheyhaveshownintheIndianmarket.
MNCacquisitionsintheIndianPharmaspacetookoffin2008withtheacquisitionofRanbaxybyJapanesedrugmaker,DaiichiSankyoforUS$4.
6billion.
(21)ThisdealwasvaluedatfivetimesRanbaxy'ssales.
(12)Sincethen,therehasbeenatrendofhighervaluationsofIndianPharmacompanies,culminatingwithanewbenchmark:in2010,AbbottboughtPiramalHealthcareinadealworthUS$3.
7billion(22),avaluationthatwasninetimesthevalueofPiramal'ssalesrevenue.
(12)PartnershipsandLicensingdealsAlthoughlong-termsupplydealsbetweeninnovatorsandgeneric-producershavebeentakingplaceforawhilenow,thefrequencyofthesedealshasbeengrowingatanincreasinglyrapidrateintherecentpast.
DealsbetweenPfizerandAurobindo,andGlaxoSmithKlineandDr.
Reddy'sLabsarerecentexamplesofout-licensingdealswheregenericmakersaresigningdistributionandmarketingcontracts,sotheirproductsreachforeignregulatedanddevelopingmarkets.
Duetothelargenumberofdrugsgoingoff-patentinthenextfewyears,thistrendisexpectedtoincreaseevenfurther.
Source:Centrum.
Pharmaceuticalsupdate,(June2010).
Table1:Keyrecentmergers&acquisitionsYearIndianPlayerMNCNatureofdealDetails2010PiramalHealthcareAbbottSaleofdomesticbrandedformulationsAbbottacquiredPiramal'sdomesticbrandedformulationsdivision,alongwithits350brands,Baddifacilityandabout5,200-strongsalesforceforUS$3.
72billion2010StridesAcrolabsPfizerLicensingandsupplyarrangementTosupply40offpatentproducts,mainlyoncologyingestablesthatwouldbecommercialisedbyPfizer2009ShanthaBiotechSanofi-AventisAcquisitionAcquiredforaboutUS$820mnandgotaccesstoShantha'svaccinespipelineandaccesstoemergingmarkets2009AurobindoPfizerDossierlicensing&supplycontractFormulationsandinjectablesforUS,EUandROWmarketsonexclusiveandco-exclusivebasis2009BioconMylanDevelopment&supplycontractTodevelop,manufacture,supplyandcommercialisemanyhigh-valuegenericbiologiccompoundsfortheglobalmarkets.
2009Dr.
Reddy'sLabsGSKPharmaSupplycontractTodevelopandmarketmorethan100brandedproductsonanexclusivebasisacrossanextensivenumberofemergingmarkets,excludingIndia.
2008Strides-AspenJVGSKPharmaUpfrontmilestone&supplycontractTomanufactureandsupplybrandedgenericstoGSKwhichwouldbemarketedinabout80emergingmarkets.
2008RanbaxyDaiichiSankyoAcquisitionDaiichiacquiredRanbaxyandgotaccesstoRanbaxy'sdiversifiedproductportfolioandvastgeographicalpresence.
India'sdomesticmarketispoisedforstronggrowthonthebackofincreasedforeigninvestmentintheregion,anincreasedreachinnon-metromarkets,theimplementationofGST,growinginsurancecoverage,achangeinthepopulation'sdiseaseprofileandincreaseinhealthcareinnovation,incombinationwithgrowthofkeysegments–brandedgenerics,OTC,ruralmarketsandvaccines.
IndianPharmaMarketSegmentsAmarketdominatedbybrandedgenericsBrandedGenericsGenericGenericsOver-The-CounterProductsPatentedProductsRetailvs.
InstitutionalsalesRoadaheadPwC19BrandedgenericsOtherdrugs:10%BrandedGenerics:90%10%90%Source:Industry&CompanyinterviewsIntheglobalcontext,IMSHealth,whichbegantrackingandreportingonbrandedgenericsin2002,definesthecategoryasincluding"prescriptionproductsthatareeithernoveldosageformsofoff-patentproductsproducedbyamanufacturerthatisnottheoriginatorofthemolecule,oramoleculecopyofanoff-patentproductwithatradename.
"ThisdefinitionisusedbyboththeUnitedStatesofAmerica'sFoodandDrugAdministration(FDA)andtheUnitedKingdom'sNationalHealthService(NHS).
Itdoesnotincludeauthorizedgenerics,whicharedrugsmadebyorunderlicensefromtheinnovatorcompanyandsoldwithoutabrandname.
InIndia,anynonpatentedmoleculewithabrandnameotherthantheinnovator'snameistermedasabrandedgeneric.
Chemically,brandedgenericsareidentical,orbioequivalenttoinnovatordrugs.
Itistheshareofvoicethebrandcommandsbygettingrepeatedlyprescribedbythephysicians,duetosomedegreeofrecallandpreferenceovertheotherbrands.
Intheglobalcontext,substitution–whenaninnovatorproductgoesoff-patent-isthekeydriverforgenerics.
InIndia,it'saboutdrivingadifferenceusingthecoreequityofabrand,overacompetitor'sproduct.
Anynonpatentedmoleculewithbrandname,whichisotherthantheinnovator'sname,istermedasabrandedgeneric.
ItisdifficulttotrackandestimatetheexactcompositionofIndia'sdomesticPharmamarket;butindustryexpertsbelievethatthismarketislargelydominatedbybrandedgenerics.
Thissegmentcontributesaround90%oftotalsales,andrepresentsoneofthekeystrengthsofthemarket,encompassingtheOTCsegmentaswell.
Onlyabout10%ofthemarketconstitutescommoditygenericssoldthroughinstitutionalsalesandinnovatorproducts.
(5)ThebrandedgenericssegmentisexpectedtogrowataCAGRof15%-20%forthenextdecade.
(5)Figure14:IndianPharmamarketispredominantlyabrandedgenericsmarket20IndiaPharmaInc.
:CapitalisingonIndia'sGrowthPotential2010"Indiahasaverylargeacutesegmentgrowingatstrongdoubledigits,whichisexpectedtocontinue.
Whilethechronicmarketisrelativelysmall,itisonarapidgrowthpathduetoanageingpopulationandchanginglifestyles.
Therefore,bothmarketswillbeattractive.
"-VivekMohan,MD,AbbottIndiaTable2givesthetop20brandsintheIndianmarket,astrackedbyIMSHealth.
Theleadingbrand,accordingtoSeptember2010sales(MAT)isCorex,followedbyPhensedylbothofwhicharecoughpreparations.
(23)Figure15showsadirectcorrelationbetweentheageofabrandanditsranking-19ofthetop20brandsareoveradecadeold.
Thelastfewyearshasseenaggressivenewbrandlaunches.
However,notmanyofthesehavemadeittothetop20ranking,indicatingthatsomeoftheolderbrandshavecreatedastrongequity,enablingthemtomaintainmarketshare.
OlderbrandshavebeencreatingneweropportunitiesinthetierIItotierVIandruralmarkets,wheredemandismainlyforacutetherapies.
Inaddition,anincreasinglevelofawarenessisleadingtoagreaterpropensitytoselfmedicate,thusfurtherincreasingtheuptakeofthesebrands.
Finally,manyoftheclassicchronicbrandsarefindingawiderprescriptionbasefromgeneralphysicians.
AnexampleofthisispainmanagementbrandAspirin,whichisovera100years-oldandstillenjoysstrongsales.
TopBrandsSource:IMSHealth,MAT,(August,September2010)Table2:Top20BrandsRankTopBrandsMAT2010CompanyYearoflaunchMarketShare(%)1COREX(CRX)Pfizer19930.
52PHENSEDYLCOUGH(PHNSL)PiramalHealthcare19960.
43VOVERAN(VVR)Novartis19860.
44HUMANMIXTARD(HMIX)Abbott19940.
45AUGMENTIN(AUG)GlaxoSmithKline19920.
46REVITAL(REV)Ranbaxy19890.
47ZIFIFDC19990.
38MONOCEF(MCF)AristoPharma20010.
39DEXORANGE(DEX)FrancoIndian19900.
310TAXIM(TAX)Alkem19900.
311BECOSULES(BEC)Pfizer19890.
312LIV-52(LIV)Himalaya19890.
313MOXRanbaxy19970.
314ASTHALIN(ASN)Cipla19930.
315BETADINE(BET)WinMedicare19900.
316TAXIM-O(TAX-O)Alkem19980.
317AZITHRAL(AZL)Alembic19940.
218CALPOL(CAL)GlaxoSmithKline19950.
219ZINETAC(ZNC)GlaxoSmithKline19860.
220STORVAS(SVS)Ranbaxy-Stancare19990.
2PwC21Figure15:Olderbrandsarehigherranked"Brandpremiumdiffersfromtherapeuticareatotherapeuticarea.
Thereareinstanceswherethepriceofthebrandleaderis3timesthepriceofthecheapestbrand,andotherswherethereisa30%increase.
"–Dr.
HasitJoshipura,MD,GSKBrandshavealwaysbeensynonymouswithquality.
Thisoftenmakesleadingbrandscommandapriceremiumoverthenextrankedbrandsintheircategories.
Thispremiumcanbenegligibleorashighas300%.
(5)Forexample,infigure16,thenumber1rankedbrandforthemoleculeAmoxicillinclavulanate,Augmentin,commandsapremiumashighas260%overthenext-in-linebrand,Moxikind-CV,and101%overthethirdrankedbrand,ClavamA.
K.
But,inthecaseofthemoleculeCefixime,theleadingbrand,Zifi,commandsapricepremiumofjust2%overthesecondranked,and24%overthethird-rankedbrand.
BrandPremiumSource:PwCAnalysis.
0510152025051015202530BrandRankBrandAgeSeries1Linear(Series1)CRXPHNSLVVRAUGHMIXREVDEXZIFIMCFBECTAXLIVMOXASNBETTAX-OAZLCALZNCSVS22IndiaPharmaInc.
:CapitalisingonIndia'sGrowthPotential2010Figure16:LeadingbrandscommandapricepremiumSource:IMSHealth,MAT,(August2010)Innovatorbrandscancommandhighpremiumsoverbrandedgenerics.
Forexample,intable3,Risperdal,aninnovatorbrand,commandsa1048%premiumoverRisdone(genericbrand).
Premiumchargedbyinnovatorbrands020406080100120Zifi(1)Cefolac(2)Mahacef(3)Priceof200mg,10tablets(Rs.
)Brands(2010rankingaccordingtorevenue)CefiximeRs.
99Rs.
97Rs.
802%premium24%premium7580859095100Storvas(1)Atorva(2)Aztor(3)Priceof10mg,10tablets(Rs.
)Brands(2010rankingaccordingtorevenue)AtorvastatinRs.
96Rs.
95.
9Rs.
830.
1%premium16%premium050100150200250300Augmentin(1)Moxikind-CV(2)Clavam(3)Priceof625mg,10tablets(Rs.
)Brands(2010rankingbasedonrevenue)AmoxicillinclavulanateRs.
241Rs.
67Rs.
119.
7260%premium101%premiumPwC23Table3:InnovatorbrandscommandalargepricepremiumDrugBrandManufacturerQuantityPrice(US$)RisperidoneRisperdalJohnson&Johnson(Innovator)2mg,10tablets6.
54RisdoneIntasPharma2mg,10tablets0.
57RisedronateActonelSanofiAventis(Innovator)35mg,4tablets50.
28RisofosCipla35mg,4tablets2.
97ClopidogrelPlavixSanofiAventis(Innovator)75mg,10tablets38.
45NoklotZydus75mg,10tablets2PregabalinLyricaPfizer(Innovator)75mg,10tablets18.
28PregabitIntasPharma75mg,10tablets1.
76LevofloxicinTavanicSanofiAventis(Innovator)500mg,5tablets11.
48LeevofloxCipla500mg,5tablets2.
07Source:PwCAnalysis,PrimaryResearchBrandpremiumisdependenton1.
FirstmoveradvantageFirstmoverbrandsalwayshaveanadvantageoverlateentrants.
Ifabrandisbuiltover3to5yearsbeforecompetitionintensifies,itcancommandapricepremiumofcloseto100%overthelaterentrants.
(5)Oncecompetitionincreases,itwillhavetocutpricestosustainmarketshare.
2.
CreatingavaluepropositionCreatingavaluepropositioncanhelpbuildbrandnames,thusincreasingthebrand'slongevity.
Thisvaluepropositioniscreatedby:offeringvalueaddedservices,suchasbackingupthebrandwithscientificdata,continuousmedicaleducationandastrongportfolioofproducts,doctor–representativerelationship:continuousimprovementinsalesrepresentativequalitybyimprovingtheirinterpersonalskillsforcustomertargetingandmaintainingastrongdoctor-reprelationship,stronglife-cyclemanagementprogrammebylaunchinglineextensions,qualityofformulation,attractivepackaging,costcompetitiveness,companynameandreputation.
3.
BeingtheinnovatordrugIndustryexpertsbelievethatifacompanylaunchesaninnovatordruginthemarketlate,itcanstillenjoyapricepremium,anditwillnotloseouttothefirstmoverbrand.
Thereasonbeingtherewillalwaysbeacertainpercentageofthepopulationthatwouldbewillingtopayapremiumforinnovatordrugs.
4.
AppropriatepricingstrategyIndiaisapricesensitivemarket.
PricingstrategiesforboththeruralandtierIItotierVImarkets,shouldbebasedonmarketaffordability.
i.
Fordrugsthatarenotunderthegovernment'spricecontrolmechanism,companiescanchargeanyamountasbaseprice,andcanincreaseitannuallybyupto10%.
(24)ii.
FordrugscoveredbytheDrugsPriceControlOrder(DPCO),NationalPharmaceuticalPricingAuthority(NPPA)normsmustbeadheredto.
iii.
AnotherpricingstrategyisthedifferentialpricingofMerck'sdiabetesdrugJanuvia,whichispricedatapproximatelyUS$1perdoseinIndia–afifthofitspriceintheUS.
(25)24IndiaPharmaInc.
:CapitalisingonIndia'sGrowthPotential2010Figure17:LeadingIndianfirmsarerampingupsalesforcesSource:Emkayresearch(August,2010)Bothmultinationalcompaniesanddomesticfirmsaretakingstepstowardsmaximisingpotentialreturnsfrombrandedgenerics.
Forexample,AbbottacquiredPiramalHealthcareforitsstrongsalesforceandbrandedgenericsportfolio(Referpullout).
Domesticfirmsarealsolookingtoincreasetheirshareofthebrandedgenericsmarket,withsomeoftheleadingpharmaceuticalcompaniesaddingtotheirsalesforcesbynearly50%in2010(Figure17).
(26)MaximisingfocusonbrandedgenericsMaximisingthefocusonbrandedgenerics-Forexample:Abbott-PiramaldealforbrandedgenericsAnexcellentexampleofadealthatwascarriedoutonthebackofthevalueofbrandedgenericsistheAbbottacquisitionofPiramalHealthcare.
AbbottwaslookingtoincreaseitsstakeintheIndianbrandedgenericssector,andagreedtopayUS$3.
72billion,avaluationthatwas9-timesthatofPiramal'ssales.
ThedealincludedPiramal'sdomesticformulationsbusiness,includingitsbrandedformulationsbusinessanditsmanufacturingfacilityatBaddi.
ThevaluationofthedealwasunprecedentedintheIndianPharmamarket,andisasignalofinterestthatlargePharmacompanieshaveintheIndianbrandedgenericsmarket.
GenericgenericsCurrently,themarketshareofgenericgenericsisverylow.
WeseetwomainhurdlestopuregenericisationoftheIndianmarket:1.
Lackofgenericgenericsregulationsandguidelinesfortheestablishmentofbio-equivalence,forexampletheAbbreviatedNewDrugApplication(ANDA)guidelinesthatexistintheU.
S.
2.
Doctorcomfortderivedfromprescribingmedicationsonthebasisofbrandname.
AgoodexampleofagenericgenericsprogrammeinIndiaisthegovernment-run'JanAushadi'.
Thisprogrammeprovidesno-namegenericdrugsatsubsidizedpricesin24-hourpharmaciesthatarelocatedalloverthecountry.
0100020003000400050006000Salesfornumbers(17.
6%)(50%)(28.
6%)(60%)(0%)(22.
7%)(47.
8%)(20%)(52%)(25%)CadilaDRLCiplaRanbaxySunLupinTorrentGlenmarkIpcaUnichemSalesforcenumbersSalesforcesnumbers2010(%increasefrom2009)PwC25"TheOTCsegmentisgoingtogrowfaster.
Wearelookingatagrowthrateofaround25%,morethanthatoftheoverallmarketgrowthofaround15%.
"–SanjeevI.
Dani,Sr.
V.
P.
&RegionalDirector(Asia,CIS&Africa),RanbaxyOver-the-counterproductsTheOTCsegmenthasbeenidentifiedasoneofthepotentialgrowthdriversfortheIndianPharmaindustry,asthesaleofOTCdrugsinIndiahasbeenincreasingovertheyears.
TheOTCmarketwasworthaboutUS$1.
8billionin2009(27),andPwCestimatesthatby2020,itwillgrowtoUS$11billion-aCAGRof18%,withthepotentialtoreachUS$13billion–atanaggressiveCAGRof20%.
'OTCDrugs'meansdrugslegallyallowedtobesold'OverTheCounter'bypharmacists,i.
e.
withouttheprescriptionofaRegisteredMedicalPractitioner.
Althoughthephrase'OTC'hasnolegalrecognitioninIndia,allthedrugsnotincludedinthelistof'prescription-onlydrugs'areconsideredtobenon-prescriptiondrugs(orOTCdrugs).
26IndiaPharmaInc.
:CapitalisingonIndia'sGrowthPotential2010PatentedProductsThemarketsizeforpatenteddrugsasoftodayisverysmall.
Onlyabout1-2%ofthemarketismadeupofpatenteddrugs,whicharebeingsoldbymultinationalinnovators.
TherearemultipleIndiancompaniesthathavedrugsinthepipeline,withagreaterfocusonR&D,butestimatessuggestthatitwouldbeatleast7to10yearsbeforethesebegintohaveaseriousimpactontheindustry.
IndustryexpertsbelievethatthecurrentsizeofthepatenteddrugmarketisestimatedatUS$120-130million.
(5)Duetoweakpatentlawsinthepast,andmultiple,cheapgenericversionsofdrugspresentinthemarket,multinationalplayerswerehesitanttointroducetheirpatentedproducts.
Inthefuture,withgrowingaffordability,deepeningofhealthinsuranceandsteadyimprovementinIntellectualPropertyRights(IPR),patentedproductlaunchesshouldincrease.
TheabovefactorshavemeantthattherearealargenumberofIndiancompaniesthatmanufactureandsellOTCproducts.
Cipla,RanbaxyandZydusCadilaareexamplesofIndiancompaniesthathavedonewellintheOTCsegment.
TheattractivenessoftheIndianOTCmarkethasextendedtoMNCsaswell.
Novartis,PfizerandJohnson&JohnsonareexamplesofMNCsthathaveastrongpresenceintheIndianOTCsegment.
KeydriversbehindthegrowthoftheOTCsegment:Figure18:OTCsegmentgrowthdriversThegovernmentallowspublicadvertisingoftheseproducts,givingdrugmakersgreaterfreedomtousemorecreativemethodswhilemarketingtheirproducts.
MagicRemedies(ObjectionableAdvertise-ments)actprescribesanegativelistofdiseasesforwhichmedicationcannotbepubliclyadvertised.
DirecttoconsumeradvertisementsCompaniescanselltheirproductsoutsideofpharmacies,forexampleinpost-officesanddepartmentstoresWiderdistributionchannelThereisanincreasedrelianceonself-medicationaspublicawarenessofcommonailmentsgoesup.
IncreasedconsumerawarenessOtherthanacetylsalicylicacidandephedrineanditssalts,veryfewoftheOTCactiveingredientsfallunderthecurrentDPCOpricecontrols.
LowpricecontrolsPwC27RoadaheadThebrandedgenericssegmenthasbeenthekeydrivingforcebehindthegrowthofthepharmaceuticalmarket.
Inthenext5-10years,themarketisexpectedtoremaincomprisedpredominantlyofbrandedgenerics.
WealsoexpecttheOTCsegmenttobeastrongvolumedriverforpharmaceuticalcompanies.
Genericgenerics'andpatentedproducts'contributionstothemarketasawholeisexpectedtorise.
Althoughthisistheexpectedmodelofthefuture,wedonotforeseeasignificantchallengetothedominationofbrandedgenericsinthenext5years.
By2020,improvementintheimplementationofpatentlaws,spreadofhealthinsurance,risingaffluence,decreasinggenericlaunches,increasingnumberofpatentedproductlaunchesfromforeigncompanies,andpotentialreleasesofnoveldrugswillimpacttheshareofbrandedgenericssignificantly.
Retailvs.
InstitutionalsalesCurrently,majority(91%)ofdrugsalesisthroughtheretailmarkets,whileinstitutionalsalesareverylow(9%).
(5)Webelievethattheincreaseininstitutionalsaleswillbemarginalinthenext5years,andwillonlyshowsignificantimpactbetween2015and2020.
Increasedinstitutionalsaleswillbedrivenbytheincreaseinthepenetrationofinsurance,andthegrowingnumberofgovernmentandprivatehospitals.
Figure19:Institutionalsalesincreasemarginallyoverthenext5years91%9%InstitutionalRetail88%12%InstitutionalRetailRuralMarketsThenextfrontierMarketSizingKeyChallengesTheGovernment'sRolePharmaceuticalcompaniesenteringruralmarketsNovartisArogyaParivarCaseStudyRoadaheadPwC29Source:Novartis,ArogyaParivar:Healthforthepoor(April2010)600,000Villages(67%)4,738Periurban(13%)398Towns(9%)27Cities(11%)33%ofMarket(cities&towns)BottomofthePyramidMarketSizingMajorityofthePharmamarket'sgrowthisdrivenbytheurbanmarkets,thatis,areasthatareclassifiedasmetrosortierIcities(Referfigure20).
TierIItotierVIisclassifiedasperiurban,whileruralisthebottomofthepyramid,whichconstitutes67%ofIndia'spopulation(600,000villages).
AsperIMSHealth,peri-urbanmarketsaccountfor38%oftotalindustrysales,beingvaluedatUS$3.
4billion(28),while,ruralmarketsaccountfor17%oftotalindustrysales,beingvaluedatUS$2billion,in2010.
(7)PwCestimatesthatoverthenexttenyears,ruralmarketswillgrowataCAGRrangingfromaconservative15%toanaggressive20%,reachinganexpectedvaluationofbetweenUS$8billionandUS$12billion,dependingontheimplementationofgrowthdrivers.
TheopportunityAround742millionpeopleresideinruralareas.
(6)Thereisasignificantgapbetweenthenumberofpeopleresidinginvillagesthatrequiretreatment,andqualitytreatmentandmedicinesreachingthesevillages.
Accessibilityofmedicationinruralareasisverypoor,withlessthan20%ofthepopulationhavingaccess.
(6)Thisgaprepresentsahugeopportunityforpharmaceuticalcompaniestoexpand,andwebelievethatthesemarketswillbethefuturevolumedriversoftheindustry.
Figure20:GeographicalsplitoftheIndianpopulation30IndiaPharmaInc.
:CapitalisingonIndia'sGrowthPotential2010KeychallengesofthemarketIndiahasalowlevelofgovernmentspendingonhealthcare,at1%oftheGDP,puttingthecountryinthelowest20%ofthosethatcontributesignificantlylowlevelsofpublicspendingtohealth.
(14)BusinessMonitorInternationalforecaststhathealthcareexpenditureinIndiawillincreasefromUS$49.
7billiontoUS$86.
9billionbetween2009and2014,ariseof75%.
(29)LowgovernmentspendonhealthcareHealthcareinfrastructureispoor,comparedtourbanareas.
Thedoctorpatientratioinruralareasis1:20,000,versustheurbanratioof1:2000[Indiarequires600,000doctorsinordertomeetthestatutory1:250ratiothatisaWorldHealthOrganisation(WHO)norm].
(6)Doctorsarenotqualified,asmostoftheminvillageshaveBachelorofHealthSciences(BHS)&BachelorofAyurvedicMedicineandSurgery(BAMS)degrees.
Thequalityandavailabilityofmedicinesinruralareasisdubious,astherearemanycasesofcounterfeitingandspuriousdrugsthathavebeenexposed.
Majorityofthepatientsearnabasicdailywage,andaffordabilityisverylow.
PoorInfrastructureTable4:HealthcarepenetrationinruralareasissignificantlylowerthaninurbanareasPopulationRural(72%)742MillionPopulationUrban(28%)285MillionPopulationHospital%3169HospitalBed%2080Doctors%0892Doctors/100,000people0550SpuriousPharmasales%75-8020-25Source:Novartis,ArogyaParivar:Healthforthepoor(April2010)PwC31LimitedaffordabilityHealthcareisalowprioritywhenitcomestoincomeallocation,withaverageconsumerexpenditureonhealthcareatjust7%.
(6)80%oftheruralpopulationisonadailywage,incomelevelsareaslowas78perday.
(6)LowawarenessofdiseasesandpossibletreatmentPeopleherehavelowerliteracylevelsandlackawarenessaboutvariousdiseases&theirtreatmentoption.
TheyrelymainlyonalternativeformsoftreatmentsuchasAyurvedicmedicine,UnaniandAcupuncture.
Poorbasichygieneandlivingconditions33%ofthediseasesinruralareasarerelatedtounsafedrinkingwater&poorsanitation.
Thisisbecause80%ofruralinhabitantslackadequatesanitation,and70%don'thavesafedrinkingwater.
(6)Thishasledtoamarketdominatedbyacuteillnesses.
Providinguniversalaccesstohealthincludingwater,sanitation,nutrition,primaryeducation,communicationandemploymentareessentialtobalanceddevelopment.
IncentivesforsettinguphospitalsanywhereinIndia,especiallyintierIIandtierIIItowns.
TheNRHM2005-2012aimstoprovideeffectivehealthcaretoruralpopulationthroughoutthecountry,especiallyinthe18specialfocusedstates,whichhaveweakpublichealthindicatorsorweakinfrastructure(detailsdiscussedinchapter1).
Further,theNRHMemphasizesonprovisionofafemalehealthactivistineachvillage,strengtheningofruralhospitalsforeffectivecurativecareandmakingthismeasurableandaccountabletothecommunitythroughIndianPublicHealthStandards(IPHS),integrationofverticalHealth&FamilyWelfareProgrammes,optimalutilizationoffundsandinfrastructureandstrengtheningthedeliveryofprimaryhealthcare.
Italsotargetstoimproveaccessofruralpeople,especiallypoorwomenandchildren,toequitable,affordable,accountableandeffectiveprimaryhealthcare.
TheGovernment'srole32IndiaPharmaInc.
:CapitalisingonIndia'sGrowthPotential2010Inthefuture,healthcareconditionsinruralareasaregoingtoimprove,ruralconsumerswillhavemoredisposableincomethantheydidinthepast.
Therationalebehindthisargumentisthatfood,shelterandprimaryeducationarevirtuallyfreeinruralareas,whereasasubstantialchunkofincomeinurbanareasisspentonthesenecessities.
Accordingtoestimatesoftheplanningcommission,villagedwellershavestartedspending12%oftheirhouseholdincomeonhealthcare.
ThishasresultedinaspurtofPharmacompaniestargetingthismarket.
PharmaceuticalcompaniesenteringruralmarketsCompanyRuralPenetrationStrategyNovartisArogyaParivarisNovartis'ruralmarketinginitiative,whereinitmarketsaportfolioofdrugsforcommonailmentssuchasdiarrhoea.
Womenandchildren'snutritionissoldinsmallerpacks,inlinewithruralaffordability.
Novartisalsoorganisescampstoincreasehealthcareawareness.
PfizerPfizerrunsprojectSanjeevanisothatitcanreachouttoTierIIandbelowareas.
Theprojectismainlyforitsmatureportfolio,therebyextendingtheproductlifecycleofthesewellknownbrands.
NovoNordiskTheyhavesetupmobileclinicsalloverGoatodiagnosepeoplewithdiabetes.
EliLillyHasatieupwithSelfEmployedWomen'sAssociation(SEWA)inAhmedabadtoeducate,diagnoseandtreatpeoplefortuberculosisSanofiAventisLaunchedPrayas,aimedatbridgingthediagnosis-treatmentgapthroughastructuredcontinuingeducationprogramforruraldoctorsacrossIndia.
Figure21:MultinationalPharmaceuticalcompaniesarelookingtoenterruralmarketsSource:IDFCIndiaresearch,MNCPharma:NewAvatar(2010)ArogyaParivarisasocialinnovationtoimprovehealthcareforthepoorinruralareasbypromotingdiseasepreventionthroughahealthylifestyleandlayingfocusonCommunityEducation¬'sell-in'tostockists.
ItalsoaimstoformpartnershipswithNGOs&healthcarecompaniestoimplementacompletehealthcareprogram.
Workson4principles:Arogyausesthe4A's:awareness,affordability,availability(access),andadaptibility.
1.
AwarenessCommunityEducationmeetingsPhysicianknowledgesharing[BAMS/BHMS]2.
AdaptabilityRuralspecificsolutions[oralrehydrationsolutions(ORS)/Zinc]Vernacularcommunication[localdialect]3.
AvailabilityLinkagestocitysupplypointsMobileHealthcamps4.
AffordabilityCustomsmallpacksNovatisArogyaParivarCaseStudy"Novartishasimprovedaccesstohealthcarefor42millionunderservedpeopleinruralIndiathroughArogyaParivar(HealthFamily),asustainablesocialbusinessmodel.
"-RanjitShahani,CountryPresident,NovartisIndiaPwC33ArogyaParivar'sBusinessModelRoadAheadAnexampleofhowtechnologycanbeusedfortheincreaseinaccessibilityinmedicinesistelemedicine.
Onlyabout3%ofmedicalcareprofessionalspracticeinruralareas,meaningthataccesstohealthcareandmedicationsisverylimited.
Apotentialsolutionforthisistheremotediagnosis,monitoringandtreatmentofpatientsusingtelecommunicationtechnologies.
Thiswillallowtheruralpopulationtocallupontheconsultancyexpertiseofmedicalprofessionalsonamoreregularbasis.
Source:Novartis,ArogyaParivar:Healthforthepoor(April2010)Figure22:ArogyausesacomprehensivebusinessmodelTheruralmarketsarethenextvolumedriversforthepharmacompanies.
However,thenext2to5yearswillseealargerfocusonthemetrosandtierIItotierVImarkets,ratherthantheruralmarkets.
RuralmarketsarecurrentlygrowingslowerthanthemetrosandthetierIItoVImarketsduetoinfrastructurebottlenecks,affordabilityrelatedchallengesandahighcostofoperation.
Inordertorealisethefullpotentialoftheruralmarkets,pharmacompaniesmust:createdemandbyincreasingawarenessandeducation,workwiththegovernmentthroughPPPmodelsinordertoimprovehygieneandinfrastructureconditions,mobilizeprimarycaregiversandparamedicsthroughhealthanddiagnosticcamps,bringspecificproductsolutionstothemarket,anduselocallanguages,improveaccessibilityofmedicines-byuseoftechnology-innovativedistributionchannelsmakeproductsaffordablethroughappropriatepricingandpackaging.
CommunityMeetingsLinkcitySupplyPointsHealthcampswithDoctorsNGOArogyaDrugComplianceVillagerPharmacyDoctorsArogyaHealthEducatorCellSupervisorVaccinesShifttowardspreventionOverviewandGlobalScenarioTheIndianMarketforVaccinesVaccineMarketDriversPlayersandDealsTrendsPwC35Globally,thevaccinessectorisgrowingrapidly;therearenow245purevaccinesand11combinationvaccinesinclinicaldevelopment,andsomeindustryexpertsestimatethatthemarketcouldbeworthasmuchasUS$42billionby2015.
(30)Fivemajorplayers–GlaxoSmithKline,Merck,Sanofi-Aventis,WyethandNovartis(viaitsacquisitionofChiron)–havetraditionallydominatedthefield,butanumberofsmallerpharmaceuticalcompanieshavealsoenteredthefray.
Eventhoughgovernmentsmayhavetoinvestmore,thereisaglobalshiftinattitudesinthePharmaindustrytowarddiseaseprevention,ratherthantreatment.
Thiswillenabletheindustrytoentertherealmofhealthmanagementwithwellnessprogrammesthatsupplementwhatgovernmentsandemployersalreadyprovide.
Itwillalsoboostdemandforvaccines.
ThiscouldultimatelygeneratenewbusinessopportunitiesforPharmacompanies.
TheIndianvaccineindustry-humanaswellasanimalvaccines-registeredsalesofUS$524millionin2009-10.
Thisaccountedforabout25%ofthetotalBioPharmamarket,whichisvaluedatUS$2.
1billionforthesameperiod.
(31)PwCestimatesthatthevaccineindustrywillcontinuetodrivethegrowthofthebiopharmasegment,growingataCAGRintherangeof10-13%overthenext10yearstoreachasizeofbetweenUS$1.
4billionandUS$1.
8billionby2020.
(31)Source:Biospectrum(June2010)ExportsDomesticAnimalVaccinesHumanVaccines4507501000Figure23:Indianvaccinemarketsales,2010(US$Millions)OverviewandGlobalScenarioTheIndianMarketforVaccines2008-09(US$millions)2009-10(US$millions)GrowthrateHumanVaccinesExport15517915.
5%Domestic21523810.
7%Total37041712.
7%AnimalVaccinesTotal1021074.
9%Table5:Increasedvaccinesalesin2009-10Source:Biospectrum(June2010)36IndiaPharmaInc.
:CapitalisingonIndia'sGrowthPotential2010VaccineMarketDriversFigure24:FactorsdrivingthevaccinemarketforwardTable6:VaccinescurrentlyunderdevelopmentbyIndianplayersSource:PwCanalysisEducationandawarenessaboutdiseasepreventionParticipationbygovernmentintermsifimprovingPSUsandinvestmentIncreaseindisposableincomeIndiaistheoneofthelargestproducersofmeasles,DPT(diphtheria,pertusisandtetanus)andBCG(bacillecalmette-guérin)vaccinesintheworld.
Itproducesabout40-70%oftheWHOdemandforDPTandBCG,andalmost90%ofthedemandformeasles.
Indianvaccinesareproducedandexportedto150countriesworldwide.
ThelargestvaccineproducerinIndiaistheSerumInstituteofIndia,itistheworld'slargestproducerofmeaslesandDPTvaccines.
(32)SerumInstitutehasbeencommissionedbytheWHOtodevelopvaccinesagainstthelateststrainofH1N1.
AnestimatedtwooutofeverythreeimmunisedchildrenintheworldhavereceivedavaccinemanufacturedbytheSerumInstitute.
Astheriskofglobalpandemicsgrows,sodoesthepotentialmarketfornewvaccines.
(33)PanaceaBiotecisassociatedwiththeWHOforsupplyingpoliovaccinesthroughouttheworld.
SerumInstitutehasanagreementwiththeGlobalAllianceforVaccinesandImmunization(GAVI)todevelop,manufactureandsellmeningitisvaccines.
ShanthaBiotechnicswastakenoverbySanofiPasteur(thevaccinedivisionofSanofi-Aventis)andwasawardedacontractbytheUnitedNation(UN)tosupplypentavalentvaccinesworthUS$340millionovertheperiod2010-12.
(34)VaccineCompanyStatusofDevelopmentRotavirusvaccineBharatBiotechBharatBiotech,incollaborationwiththeIndo-Americanvaccineactionprogramme,isdevelopingarotavirusvaccineforthepreventionofdiarrhoea.
ThevaccinewillbeenteringphaseIIIshortly.
RotavirusvaccineShanthaBiotechnicsHasenteredphaseIItrials.
Cadi-05CadilaPharmaceuticalsCadi-05isaMycobacteriumcancervaccineforthetreatmentofhormone-refractoryprostatecancer.
PlayersandDealsPwC37Figure25:VaccineIndustryTrendsTrendsIncreasingexportsIncreasingfocusonadultvaccinesMajorplayerslookingtodevelopfluvaccinesIncreaseincombinationvaccinesNovelmethodsofvaccineadministrationVaccinesSource:PwCanalysisSource:Biospectrum(April2010)InfluenzavaccineCadilaPharmaceuticals;BharatBiotechBharatBiotechandCadilaenteredintoalicensingagreementwithNovavaxin2006and2009respectivelyforthedevelopmentofprophylacticinfluenzavaccinecontainingrecombinant,functionalinfluenzavirus-likeparticles.
MalariavaccineBharatBiotech;ICGEBBharatBiotech,incollaborationwiththeMalariaVaccineInitiative(MVI)atProgramforAppropriateTechnologyinHealth(PATH),theUS,andtheInternationalCentreforGeneticEngineeringandBiotechnology,India,isdevelopingamalariavaccine.
H1N1influenza(Swineflu)vaccineBharatBiotechBharatBiotechisdevelopingacellculture-basedinfluenzavaccine.
Willbeenteringphase-III.
H1N1influenza(Swineflu)vaccinePanaceaBiotecItisaninactivated,splitvirionmonovalentvaccine.
H1N1influenza(Swineflu)vaccineZydusCadilaZydusCadilaisdevelopinganegg-based,inactivatedvaccineagainsttheH1N1strainofinfluenza.
ItisthefirstIndiancompanytogetDrugControllerGeneralofIndia(DCGI)approvalforconductingclinicaltrialsofH1N1vaccineinJanuary2010.
Theyplantolaunchthevaccinebymid-AprilH1N1influenza(Swineflu)vaccineSerumInstituteofIndiaItisanindigenousliveattenuatedH1N1virusintranasalvaccinefortheprophylaxisofpandemicH1N1influenza.
HasstartedphaseII/III.
H1N1influenza(Swineflu)vaccineBiologicalEBiologicalEenteredintoalicensingagreementwithVaxInnateIncforclinicaldevelopmentandcommercializationofitsswinefluvaccineinIndiainJanuary2010.
H5N1(Avianflu)vaccineSerumInstituteofIndiaThecompanyreceivedthecontractfordevelopingtheavianfluvaccinein2006andlaterinAugust2009,Serumhasprioritizedthedevelopmentofswinefluvaccine.
MalariavaccineBharatBiotech;ICGEBEnteringphase-I.
ConjugatedtyphoidvaccineBharatBiotechConjugatedtyphoidvaccineisenteringphase-III,willbereadybyendofthisyear.
ChangingTaxEnvironmentIncreasedefficienciesexpectedGoodandServicesTax(GST)DirectTaxCode(DTC)PwC39GoodsandServicesTax(GST)hasbecomeaconstanttalkingpointtoday.
Theentireindustryiswatchingthedevelopmentsinandaroundthisfront.
TheattentioniswelldeservedasGSTisthelargestindirecttaxreformIndiahaseverhad,post-independence.
AnIntroductiontoGSTSowhatisGSTallaboutSimplyput,GoodsandServiceTax(GST)isacomprehensivevalueaddedtax(VAT)onthesupplyofgoodsorservices.
GSTiscollectedonthevalueaddedateachstageofsaleorpurchaseinthesupplychain.
Thetaxonvalueadditionisensuredthroughataxcreditmechanismthroughoutthesupplychain.
GSTpaidontheprocurementofgoodsandservicesisavailableforsetoffagainsttheGSTpayableonthesupplyofgoodsorservices.
TheideaisthatthefinalcustomerwillbeartheGSTchargedtohimbythelastpersoninthesupplychain.
ManycountriesintheworldhaveasingleunifiedGSTsystemi.
e.
asingletaxapplicablethroughoutthecountry.
However,infederalcountrieslikeBrazilandCanada,adualGSTsystemisprevalentwherebyGSTisleviedbyboththeFederalandtheStateorprovincialgovernments.
InIndia,adualGSTisproposedwherebyaCentralGoodsandServicesTax(CGST)andaStateGoodsandServicesTax(SGST)willbeleviedonthetaxablevalueofeveryintra-Statetransactionofsupplyofgoodsorservices.
Incaseofinter-Statetransactions,anIntegratedGoodsandServicesTax(IGST)isproposedtobelevied.
TherateofIGSTisexpectedtobetheaggregateoftheCGSTandSGSTrate.
DualGSTinIndiaTheCGSTandSGSTwillbebasedonacommontaxcode.
While,eachStatewilllegislateitsownenactmenttolevyandcollecttheSGST,itisexpectedthatamajorityoftheprovisionsoftheSGSTwillbeuniformacrosstheStates.
ItisproposedthatthetaxestobesubsumedunderCGSTwillincludeCentralExciseDuty(CENVAT),ServiceTax,CountervailingDuty(CVD)andAdditionalDutiesofCustomsandthetaxestobesubsumedundertheSGSTwillincludeValueAddedTax,CentralSalesTax,PurchaseTax,EntertainmentTax,LuxuryTax,LotteryTaxes,andStatesurchargesrelatingtosupplyofgoodsandservices.
CustomsdutieswillremainoutsidetheGSTregime.
Thus,theapplicablebasiccustomdutywillcontinuetobeleviedonimportofgoods.
Inaddition,boththeCGSTandtheSGSTareexpectedtobeleviedonimportsofgoods.
Similarly,importationofserviceswillbetaxedandboththeCGSTandSGSTwillapplyonsuchimports.
Thetaxwillbepayableonareversechargemechanismandtheimporterofserviceswillhenceneedtoselfdeclareandpaythetax.
Therewouldbeaparadigmshiftinthe"taxableevent"undertheGSTregime.
Itisexpectedthatthetaxableeventwillbethe'supplyofgoods'andthe'supplyofservices'.
Hence,thecurrenttaxableeventssuchas'manufactureofgoods','saleofgoods'and'renditionofservices'willbecomeredundant.
Itshouldbenotedthatatransactionof'supplyofgoods'willattractboththeCGSTandSGSTasapplicableongoods.
Similarly,a'supplyofservice'willattractboththeCGSTandSGSTasapplicableonservices.
Furthermore,inter-depottransfers(stocktransfers)willalsobesubjectedtolevyofGST.
ImpactonthePharmaceuticalIndustryTheGSTbringswithitahostofchallenges.
Italsobringswithitopportunitiestorealiseefficienciesandrelatedbenefits.
Someofthekeytaxchallenges,benefitsandopportunitiesforthePharmaceuticalindustryarehighlightedbelow.
ProcurementOntheprocurementfront,thepharmaceuticalindustryhasbeenenjoyinghostofconcessionalrateofexcisedutiesandStateVAT.
ThismaynotcontinueintheGSTera.
Further,certainStateslikeHimachalPradeshandUttaranchalofferexcisedutyexemptions.
Thus,goodsprocuredfromtheseexemptunitsarefreeofexcise.
Moreover,thereisareducedrateof1%CSToninter-Statessalesoftheseproducts.
Itisexpectedthattheaforementionedexemptions/concessionalratesmaynolongerGoodsandServicesTax(GST)40IndiaPharmaInc.
:CapitalisingonIndia'sGrowthPotential2010beavailableintheGSTregimeandthattheycouldbeconvertedtocashrefundschemes.
Clearly,thiswouldhaveanimpactonthecostofprocurement.
However,duetoavailabilityofcreditoftaxespaid,theGSTchargedbythesuppliersmaynotbearealcostandwouldbeavailableasaset-offagainsttheGSTliability.
AnotherbeneficialimpactoftheGSTistheexpecteddiscontinuanceofCentralSalesTax(CST)chargedoninter-Statesales.
CSTisacosttopharmamanufacturerswhenevertheyprocuregoodsfromoutsidetheStateandsellthesameoninter-Statebasis.
ThisisonaccountofthefactthatCSTisnotcreditable.
Although,overthelastcoupleofyearsCSTrateshavereducedfrom4%to2%,itstillcontinuestobeacostforthedealers,havinginter-Statetransactions.
ThephasingoutofCSTwillsavethestickingtaxcost.
AnotherexpectedbenefitoftheGSTiswithregardtothediscontinuanceofrefundsinrelationtotheSpecialAdditionalDuty(SAD)ofCustoms.
Atpresent,theSADispaidupfontonimportsandisthereafterrefundedthroughanelaboratevaledictorymechanism.
ItisexpectedthattheGSTonimportswouldbefullycreditableandhencethereoughtnottobeanyrefundsonthiscount.
Asmentionedearlier,theproposedGSTregimealsooffersnumerousopportunities.
Onesuchopportunityiswithrespecttoflexibilityinselectionofvendor.
Uptillnow,theselectionofvendorhasbeendependentprimarilyonlocationofthevendortotakeadvantageofthelowertaxcost.
Post-GST,withasinglemarketconcept,thiscriterionofselectionwillnolongerberelevantandtheprocurementcanbedonebasedonotherlogistics/qualityrelatedaspects.
ManufactureAsopposedtothecurrenttaxableeventsofmanufactureandsale,thetaxableeventsunderGSTregimewouldbesupplyofgoodsandservices.
Asexplainedearlier,certainunitslocatedintheStatesofHimachalPradesh,Uttaranchalenjoyanexcisetaxholidayontheirmanufacturingactivities.
Sincetheiroutputisexempted,thetaxpaidoninputs/capitalgoodsbysuchunitsisacosttotheentitieslocatedinsuchareas.
UnderGST,suchareabasedexemptionmaynotcontinue.
Theabolitionoftaxableeventofmanufacturing&theexcisebenefitsinbackwardareaswouldgiveflexibilitytotheentitiestosetuptheirunitsataplacemostconvenientfromalogisticstandpoint.
AbolitionofthetaxableeventforexcisepurposesfromGSTambitwillalsotakeawaythearchaicconceptofMRPbasedpaymentofexciseduty.
Atpresent,themanufacturesofdrugsandmedicinesarerequiredtopayexciseduty(sansabatement)onthemaximumretailprice(MRP)ofthesaidproduct.
Thus,eveniftheassessablevalueofsuchproductworksouttobedifferent,themanufacturesarecompelledtocomputeandpaytheexcisedutyontheMRPofsuchproduct.
Thisalsorestrictsthemanufacturersfromhavingmultiplesalespricesfordifferentsetofbuyerssayinstitutionalcustomers.
However,alloftheaboveisexpectedtoendintheGSTeraandhencethemanufacturerwillhavetheflexibilitytopricetheproducts.
Furthermore,manypharmacompaniesgettheirgoodsmanufacturedonloanlicensingoronacontractmanufacturingbasis.
Thejobchargesdonotattractservicetaxunlessexcisedutyisexempted.
ItwillbeimportanttoascertainwhetherjobworkwillbeconsideredastransactionofsupplyofgoodsorsupplyofservicesinGST.
ThecategorisationmaynotonlyhaveabearingontherateofGSTapplicabletosuchtransactionsbutalsomaynecessitateseparateprovisionsforarrivingatvaluationforlevyingGST.
Sales&DistributionOneofthebiggestchangesrelatingtosalesanddistributionwouldbetaxabilityofstocktransfers.
Atpresent,thebiggestchallengeforapharmadistributioncompanyismovementofgoodsacrossIndia,tocatertotheneedofeachStatelocallyandthussavetheCSTpayableotherwiseonsuchinter-Statemovement.
Also,quiteafewentitiessetupwarehousesinthusfarattractivelocationslikeDamanastheCSTrateatsuchlocationswaspreviouslylowerthantheratesprevalentinotherstates.
ThislogisticalchallengeandtheaddedcostofcompliancewouldbecomeafocalpointofattentionposttheGST.
Thedistributionteamneedstore-ascertainthewarehousinglocationsfromacommercial/logisticpointofviewratherthanfromapuretaxsavingperspective.
Reductioninsuchwarehouseswouldreducethecostofdistribution.
PricingThepharmaindustryhasbeenenjoyingseriesofproductspecificexemptions,beitforresearch,lifesavingdevicesetc.
Itisexpectedthatthesaidexemptionlistwillbeprunedsubstantially,leavingonlyahandfulofproductswithexemptions.
Companieswillhavetore-thinkthepricingstrategyofsuchproducts.
Physiciansamplesareononehandsubjecttoexciseduty,howeverontheotherhand,sincetheyarenot'sold',thereisnoVATpayable.
ThisscenarioPwC41maywellbeathingofthepastasintheGSTregime,allsuch'supplies'ofsamplesmightwellbetaxable.
Salespromotionalschemesareverycommonforthepharmaindustry.
Hitherto,differentStateshaveadopteddifferentapproachforallowingadeductionofsuchschemesfromtheVATliability.
ItisexpectedthattheSGSTmodelwillbecommonacrossIndiaandaparityinlawisexpectedforallowingthisdeductionpavingthewayforcompaniestoplanuniformpricingpolicies.
FewStateshaveimposedVATontheMaximumRetailPrice(MRP)oftheproduct,exemptingthesubsequentdealersfrompaymentofVAT.
WhilethisdefeatstheveryintentofVAT,itremainstobeseenwhetherintheGSTregime,similarMRPbasedtaxationwouldprevailornot.
Clearly,thisareawouldalsorequireadequateattentionfromapricingperspective.
ServicesResearch-basedpharmacompaniescurrentlyenjoyexemptionontestingandanalysisservices.
ItislikelythatthesaidexemptionmightbewithdrawnintheGSTregime.
Ononehand,itwouldmeantheserviceswillbecomecostlyanditwouldalsomeanthattheCENVATcredithithertolostonprovidingtheseserviceswouldberecoupedandthustheoverallcostofprovidingtheseserviceswouldcomedown.
Similarly,animpactwillbeseenonthosesetofserviceswhichareconsideredexemptfromservicetaxatthemoment.
R&Dorganizationsundertakingsuchserviceswillhavetotakeacloselookattheirinputtaxcreditpooltodeterminewhethertheyareeligibletoclaimthetaxespaidontheirinputs/inputservicesavailedinprovidingsuchservices.
42IndiaPharmaInc.
:CapitalisingonIndia'sGrowthPotential2010ITchangesTheGSTwillrequirelotofchangestobemadeintheexistingITsystem.
TheGovernmentisexpectedtoputlotofthrustonthedocumentationandrecordstoplugtheunwantedrevenueleakage.
Further,thetaxadministrationsaregearinguptobetechnologysavvyandthiswillmeanthattheindustrywillhavetore-visittheexistingEnterpriseResourcePlanning(ERP)/accountingsystemandmakesuitablechangestoputintoeffectchangeinrateoftax,changeinformatofinvoice,forcorrectandtimelytracking,computationandpaymentoftaxobligationsandcomplianceintheGSTera.
Ascanbeseenfromtheabove,GSTshouldnotbeviewednotonlyasachangeintaxsystembutalsoachangeimpactingalmosteverybusinessfunctionlikefinance,logistics,procurement,ITetc.
Hence,acohesiveeffortfromeverybusinessverticalwouldberequiredtostudytheimpactofthechangesandaconcreteroadmapwouldhavetobeputinplacewellinadvance.
ThePharmaindustry(includingFMCG)issignificantlyimpactedbytheGSTsincetheclassicmannerofconcentratedmanufacturinganddisaggregateddistributionacrossanationallevelC&FA/warehousingmechanismissignificantlydisadvantaged.
Consequently,itisimperativeforthePharmasectortounderstandtheimplicationsandthechallengesarisingoutofthedualGSTandtoensurethatthebusinessmodel/supplychainsarere-engineeredsoastomaximisethebenefits.
Indiahaswitnessednumerousdevelopmentsinthecorporatetaxregime,includinginthepharmaceuticalsector.
TheCorporateTaxregimeisonthethresholdofchangewiththeimminentonsetoftheDirectTaxesCode(DTC).
TheDTCisintendedtocomeintoeffectfromFinancialYear2012-13.
TaxStructureUndertheDTC,thecorporatetaxrateforIndiancompaniesisintendedtobemaintainedat30%asagainstcurrenteffectivetaxrateof33.
2175%undertheIncome-taxAct,1961('theAct').
MATisintendedtobeleviedat20%whichismoreorlessequaltothecurrenteffectiveMATrateof19.
93%.
Noticeably,theperiodforcarry-forwardofMATcreditisintendedtobeincreasedfrom10yearsto15years.
IncentivesavailabletothepharmaceuticalsectorItisintendedtodoawaywitharea-basedprofit-linkedtaxbenefitsandmovetowardsinvestment-basedtaxbenefits.
Accordingly,variousarea-basedincentiveslinkedtoprofitsavailableunderthecurrenttaxregimeareintendedtobedoneawaywith.
Anexceptionhasbeenmadeforunitsset-upinSpecialEconomicZones(SEZ).
UnitssetupbeforeMarch31,2014willcontinuetoenjoytaxbenefits.
ThebenefitwouldnotbeavailablebeyondtheperiodforwhichthedeductionwasallowableundertheAct.
Scientificresearchanddevelopmentexpensesrelatedtothebusinesswillcontinuetoenjoyadeductionagainstbusinessprofits.
Assetsusedinscientificresearch(otherthanland)wouldbepermitted100%depreciation.
Anapprovedin-houseR&DFacilitywillcontinuetoenjoy200%deductionofscientificresearchexpenditure(otherthanexpenditureonlandandbuilding)onscientificresearchundertheDTC.
RoadAheadItremainstobeseenwhetherDTCisimplementedbyApril1,2012andtheformittakeswhenimplemented.
CertainbenefitsavailableundertheActtopharmaceuticalcompanieshavebeendoneawaywithbutthefocusonencouragingin-housescientificresearchremains.
DirectTaxCode(DTC)ChallengesPriceControlsInfrastructureCounterfeitingLabourIntellectualPropertyExampleofgovernmentinvestmentininfrastructureexpansionThegovernmentiskeentoincludePPP'sinordertofinanceinfrastructuregrowth.
AgoodexampleofthisisacoalitionbetweentheUnionMinistryofHealthandFamilyWelfare,thepharmaceuticalindustryandprivateairportdevelopers,GVKandGMRtosetupspecializedcargozonesforpharmaceuticalproductsimportandexport.
Thiswastakenastepfurther,andtheCDSCOhastakenuptheinitiativetoformthesezonesalloverIndianairports,thefirstbeingatIndiraGandhiInternationalairport,NewDelhi.
CurrentlythegovernmenthasbudgetedUS$6millionfortheformationofthesezones.
Theseprojectscouldhelptowardsspurringinfrastructuredevelopmentinthemediumterm.
PricecontrolsarebroadlycitedasthemostcriticalchallengethatcompaniesfaceintheIndianmarket.
Indiaisoneofthemostprice-controlledmarketsintheworld,asundertheDPCO,pricesandmarginsaremonitoredcarefully.
TheDPCOisbeingsupervisedbytheNPPA.
Therewereoriginally347pricecontrolleddrugsincludedin1979,whichwerethenreducedto143in1987(35)andcurrently,thereare76bulkdrugsundertheDPCO.
(36)Pricecontrolleddrugsareessentialmedicines,suchasantibioticsandpainkillers,anddrugsusedforthetreatmentofdiseasessuchascancerandasthma.
Suchmedicinescontainbulkdrugs,orrawmaterials,whosepricesarecontrolledbytheNPPA-manufacturerscannothikepricesontheirown.
However,90%ofdrugsarecurrentlyoutsideofanypricecontrolsinIndia.
ConsumerorganisationsmaintaintheirstanceofurgingthegovernmenttocontinuetoexpandtheumbrellaoftheDPCO,buttheindustrybelievesthatthereisenoughcompetitionforthepricestobemodulatedbythemarketitself.
TheybelievethatpricecapswouldinhibitthedevelopmentofR&DinthecountryascompanieswouldbelessinclinedtoinvestinR&Dwithoutthepossibilityofhighreturns.
PriceControlsInfrastructureInfrastructurehasalwaysbeenmentionedasabarriertogrowthofthePharmaindustryinIndia.
Poorenergyandtransportinfrastructurehastraditionallyposedaproblemforcompanies.
Someareaslackbasichotelfacilities,preventingreachandpenetration.
Withthegovernmentgraduallyincreasinginvestmentininfrastructure,thesituationisimproving,butitisstillseenasaninvestmentopportunityinIndia.
46IndiaPharmaInc.
:CapitalisingonIndia'sGrowthPotential2010CounterfeitingofdrugshasbeenamajorissueintheIndianPharmaspace.
TheinherentnatureoftheIndianmarketmakesitdifficultforasystematicstudythatquantifiestheextentofcounterfeiting,tobecarriedout.
Therehavebeenmultiplereportssuggestingvariousfiguresastherateofcounterfeiting.
AgoodindicatormaybealargescalesurveythatwaspublishedinDecember2009bythehealthministrythatreportedthatspuriousdrugprevalenceismuchlowerthanotherwisesuggested.
Thereportfoundthatonly0.
046%ofallmedicinessoldcontainedevidenceofbeingspurious.
Thisisincontrasttootherreports,forexampleoneconductedbytheInternationalPharmaceuticalFederationandfinancedbytheWHOthatsaid3.
1%ofalldrugssoldinIndiawerespurious.
(37)Thesereportssuggestinglowernumbersthanearlieronesmaybeencouraging,butleadingplayersarestillwearyofthethreatofspuriousdrugs.
Stepstakenbytheindustrytocounterthethreatofcounterfeitingincludeinvestingininnovativepackaging,usingauthenticitymarkersandsponsoringprogrammestoincreaseawarenessamongstpatientsandhealthcareworkers.
TheOrganisationofPharmaceuticalProducersofIndia(OPPI)hasalsocarriedoutvariousinitiativestocombatthesituationlikeorganisingseminarsandworkingwiththeMinistryofHealthtowardsthedevelopmentofpoliciesagainstspuriousdrugs.
CounterfeitingLabourThereisanincreasingconcerninthedomesticindustryregardingashortageofskilledlabourincriticalareas.
Thiscausesademand-supplyimbalance,andhasledtoanincreasedrateofwageinflation.
PwC47IntellectualPropertyIndiahasacceptedandmadeacommitmenttotheTrade-RelatedAspectsofIntellectualPropertyRights(TRIPS)in1995,andkeepingwiththiscommitment,implementedthePatent(Amendment)Actin2005.
Althoughthisactdoesnotapplyfordrugspatentedbefore1995,itisamajorstepforwardontheearlierpatentscenario.
Sincethen,recommendationshavebeenmadetothegovernmentregardingimprovementandexpansionofthePatent(Amendment)Act,bytheSatwantReddycommitteeandtheMashelkarreport.
Thesereportshighlightedtheneedfordataexclusivityandthepreventionof'evergreening'.
DomesticandglobalPharmacompaniesareshowinganincreasedconfidenceinthepatentlaws,andweexpectanincreaseinthenumberoflaunchesofpatentedproductsintheIndianmarketinthefuture.
Resolutionofdataexclusivitylawsandcapacitybuildingatpatentofficeswillhelpinincreasingconfidenceamongforeigncompanies.
Overcomingthechallengesthatexistinthemarketisakeyimperativeforfuturegrowth.
RoadAhead:ImperativesforGrowth–RealisingIndia'spotentialThePharmaIndustryScenarioin2020Criticalsuccessfactors,requirementsforIndiatogoforwardPwC49KeyopportunitiesandgrowthareasSizein2010CAGRover10yearsEstimatedsizein2020BasegrowthAggressivegrowthBasevaluationAggressivevaluationTotaldomesticmarketUS$12billion15%20%US$49billionUS$74billionRuralmarketUS$2billion15%20%US$8billionUS$12billionOTCmarketUS$1.
8billion18%20%US$11billionUS$13billionVaccinesmarketUS$524million10%13%US$1.
4billionUS$1.
8billion1.
IncreasingpublicspendonhealthcareThegovernmentshouldstepupit'sspendonhealthcarefromacurrentlowof1%oftotalGDP,to3%.
2.
HealthInsuranceThefocusofthegovernmentshouldbeontheincreaseinpenetrationandaccessofhealthinsurance.
3.
ImprovementininfrastructureAllformsofinfrastructure,medical,educationalandphysical,needimprovementthroughPPPprogrammes.
4.
InnovationWorktowardsthelaunchof'madeinIndia'noveldrugs.
5.
CreatingenablingpoliciesandregulatoryframeworkforthelaunchofinnovatorproductsFocusonpricemonitoringratherthanpricecontrol,alongwithresolutionofdataexclusivitylawswillhelpinincreasingconfidenceamongforeigncompanies.
6.
OutoftheboxthinkingExpansionintothehighpotentialruralandperi-urbanmarketswillrequireanoutoftheboxthinkingtotailorstrategiestofitthesemarkets.
Companieswillberequiredtobuildanetworkedoperationalmodelwithvariousstakeholdersinordertosqueezecostsandimproveefficienciesacrossthevaluechain.
7.
UsingtechnologytoincreaseefficiencyTechnologycapabilitiescanbeusedtoincreaseefficiencyacrossthevaluechain,andincreasemedicalservicesaccessibility.
Anexampleofthisisthe'Telemedicindia'projectthathasbeensetupbytheSchoolofTelemedicineandBiomedicalInformatics,SGPGIMS,Lucknow,India,andSony.
TheCriticalsuccessfactorsthatarerequiredforthenextlevelofgrowthThePharmaIndustryScenarioin2020Source:PwCAnalysisTable7:Stronggrowthinkeyareas50IndiaPharmaInc.
:CapitalisingonIndia'sGrowthPotential2010PwC51AcknowledgementsWewouldliketoexpressourgratitudefortheinputandhelpwereceivedfromthefollowingexpertswhosogenerouslysharedtheirvaluabletimeandefforttowardsthisreportAchinGupta–SeniorVicePresident,CorporateStrategy,GlenmarkPharmaceuticalsLimitedDr.
HasitJoshipura–VicePresident,SouthAsiaandMangingDirector,GlaxoSmithKlineIndiaDr.
PrakashMody–Chairman&ManagingDirector,UnichemLaboratoriesLimitedRameshSwaminathan–President(FinanceandPlanning),LupinIndiaLimitedRanjitShahani–CountryPresident,NovartisIndiaLimitedSanjeevIDani–SeniorVicePresident&RegionalDirector(Asia,CIS&Africa),RanbaxyLaboratoriesLimitedVivekMohan–ManagingDirector,AbbottIndiaLimitedTheviewsexpressedhereinarepersonalanddonotreflecttheviewsoftheorganisationsrepresentedbytheindividualsconcerned.
Wealsotakethisopportunitytothankallthefollowingteammembersfortheircontributionstothisreport:AbhishekRShah–Sr.
Manager,Tax&RegulatoryServices,PwCNidhiJain–IndiaMedia&Communication,PwCNishaVishwakarma–Manager,IndiaPharmaceuticals&LifeSciences,PwCPrayatShah–IndiaPharmaceuticals&LifeSciences,PwCRahulRenavikar–AssociateDirector,Tax&RegulatoryServices,PwCSapnaVerdia–AssociateDirector,Tax&RegulatoryServices,PwC52IndiaPharmaInc.
:CapitalisingonIndia'sGrowthPotential2010ProfilesAchinGuptaSeniorVicePresident,CorporateStrategy,GlenmarkPharmaceuticalsLimited.
AchinGuptaisSr.
VicePresident,CorporateStrategyatGlenmarkPharmaceuticals,whichisoneoftheleadingIndianpharmaceuticalcompaniesengagedinNCE/NBEresearch.
Hecurrentlyleadsthegroup'sM&AandlicensingstrategyandheadsProjectmanagementofR&Dassets.
Aspartofthisrole,hehasbeencloselyinvolvedinportfolioplanningforR&Dandoptimizingthereturnoninvestmentforthesame.
AchinjoinedGlenmarkatitsSwissofficein2004andwasresponsibleforsettingupGlenmark'spresenceinSwitzerlandtoenterbiologicsresearch.
Sincethen,hehasbeeninvolvedinacquisitionofantibodyproducts,licensing-intechnologies,enteringvariousmanufacturingcollaborationsaswellasout-licensingofGlenmark'sNCEassets.
PriortojoiningGlenmark,heworkedfornearlyfiveyearswithmanagementconsultingfirm,A.
T.
Kearney,basedoutofNewDelhioffice.
AchinholdsanM.
Tech.
inBiochemicalEngineering&BiotechnologyfromIITDelhiandanM.
B.
AfromIIM,AhmedabadinIndia.
AchinGuptaPwC53Dr.
HasitJoshipuraVicePresident,SouthAsiaandManagingDirector,GlaxoSmithKline,India.
Dr.
HasitJoshipuraisagraduateinElectricalEngineeringfromVJTI-BombayUniversityandaPostGraduatefromIndianInstituteofManagement-Ahmedabad.
HehascompletedhisDoctorateprogrammeattheSchoolofManagementatIITMumbai.
AfterhavingspentaboutthreeyearswiththeTataAdministrativeServices,Hasithasspentabout16yearswiththeUnileverGroupofcompaniesinIndiaandheldpositionsofincreasingresponsibilityincommercial,sales,marketingandbusinessmanagementfunctions.
HejoinedthepharmaceuticalbusinessofJohnson&JohnsonLtd.
,asPresident&ExecutiveDirectorinOctober2001,apositionhehelduntilAugust2006.
HasitwasalsotheChairpersonfortheCorporateContributionsProgramme,aswellastheleadforGovernmentAffairsfortheJohnson&JohnsongroupofbusinessesinIndia.
InOctober2006,HasitwasappointedVicePresident,SouthAsiaandManagingDirectorIndiawithGlaxoSmithKlinePharmaceuticalsLtd.
(GSK).
HeisalsoChairmanoftheboardsofGSKBangladeshandGSKSriLanka.
Hasitformallytookoveron1stJanuary,2007.
Dr.
JoshipuraisamemberoftheBoardofGovernorsofVJTIandisalsoontheBoardofGovernorsoftheIndianInstituteofManagement,Ahmedabad.
Dr.
HasitJoshipura54IndiaPharmaInc.
:CapitalisingonIndia'sGrowthPotential2010JaiHiremathChairman–CIIPharmaSummit2010&ViceChairmanandManagingDirector,HikalLimitedMr.
JaiHiremathistheViceChairmanandManagingDirectorofHikalLtd.
HikalspecializesinContractManufacturingintheareasofCropprotectionchemicals,ActivePharmaceuticalIngredientsandalsoContractResearchanddevelopment.
Hewasawarded"ChemtechBusinessLeaderoftheYearAward(Chemicals)2005".
Hecompletedthe"OwnerPresidentManagementProgram"atHarvardUniversity,Boston,USA.
HewasnominatedasafinalistfortheErnst&YoungEntrepreneuroftheYearawardin2000Mr.
JaiHiremathiscurrentlyholdingthefollowingpositions:ChairmanofChemicalsCommittee,FICCI.
MemberoftheExecutiveCommitteeoftheIndianChemicalCouncil(ICC).
Mr.
HiremathhasservedasthePresidentofICCforaperiodof2yearsfromOctober2008toSeptember2010.
MemberoftheNationalCommitteeonDrugs&PharmaceuticalsandNationalCommitteeonChemicals&PetrochemicalsoftheConfederationofIndianIndustry(CII).
MemberofCII'sWesternRegionalCouncil.
BoardMemberoftheNationalSafetyCouncil(NSC)ofIndiaBoardMemberofNovartis(India)Ltd.
JaiHiremathPwC55Dr.
PrakashModyChairman&ManagingDirector,UnichemLaboratoriesLimitedDr.
Modyisadoctorate(Ph.
D)inOrganicChemistryfromtheUniversityofBombay.
HehasdonehisMarketingManagementfromJamnalalBajajInstituteofManagementStudies,UniversityofBombay.
Dr.
ModyisaGraduateAlumniofHarvardBusinessSchoolhavingundergonetheOwnerPresidents'ManagementProgram.
ProfessionalExperience:Dr.
PrakashModyistheChairmanandManagingDirectorofUnichemLaboratoriesLimited,aglobally-operating,integratedpharmaceuticalcompany.
Other/Achievements:Dr.
ModyistheVicePresidentoftheIndianPharmaceuticalAlliance(I.
P.
A.
)andalsoontheExecutiveCommitteeoftheindustryassociationviz.
IndianDrugManufacturersAssociation(I.
D.
M.
A.
)HeisamemberoftheNationalCommitteeonDrugs&PharmaceuticalsoftheConfederationofIndianIndustry.
InadditiontotheaboveDr.
Modyisalsoassociatedwithotherphilanthropicactivities.
Dr.
PrakashMody56IndiaPharmaInc.
:CapitalisingonIndia'sGrowthPotential2010RameshSwaminathanRameshSwaminathanPresident(FinanceandPlanning),LupinIndiaLimitedS.
Ramesh,aged44,isPresident(FinanceandPlanning)ofLupinLtd,atoptierPharmacompanybasedinMumbai.
Lupin,initslastfiscalyearended31March2009,recordedaturnoverofRs3838croresandaProfitaftertaxofRs501crores.
Rameshhasovertwodecadesofworkexperienceandhasworkedinfirmsofinternationalrepute.
HehasbeenwithLupinforthepasttwoyearsdrivingourFinancialstrategyandCorporatePlanningendeavours.
PriortojoiningLupin,hewaswithHenkelKGaA(Sept2004toJune2007)atDusseldorfGermanyastheRegionalFinancialControllerfortheEasternEuropeandMiddleEastregion,aregioncomprisingofoverseventeencountriesencompassingaturnoverofoverEuro2billions.
WhilstatHenkelGermanyhewasinvolvedinseveralinternationalprojectsincludingseveralM&AtransactionsfortheHenkelgroup.
PriortohistransfertoGermany,RameshwasCFOoftheiroperationsinIndia.
(2000-2004)RameshhasalsoservedwithVSTLtd,Hyderabad,(1996-1999)partoftheBritishAmericanTobaccogroupasCFOoftheiroperations.
Priortothisassignment,RameshwaswithStandardCharteredBank(1988-1996)inseveralcapacities.
HewasarticledaswithAFFerguson,CharteredAccountantsforhisCAapprenticeship.
(1985-1988)Rameshhasimpeccableacademiccredentialsaswell.
BesidesbeingarankholdingCharteredAccountantfromIndia,heisalsoamemberoftheCharteredInstituteofManagementAccounting,London,TheInstituteofCompanySecretariesofIndiaaswellastheInstituteofCostandWorksAccountantsofIndia.
HeisagraduateincommerceformtheMadrasUniversity.
HewasawardedtheLordCheveningScholarshipbytheForeignandCommonwealthofficeUKin1996forManagementtrainingwithLondonBusinesses.
HehasalsodoneanAdvancedManagementProgrammeattheInseadBusinessschool.
Rameshismarriedandhastwochildren.
Readingandmusicwouldbehisotherinterests.
PwC57RanjitShahaniCountryPresident,NovartisIndiaLimitedRanjitShahaniisCountryPresidentNovartisIndiaresponsiblefortheoveralloperationsoftheNovartisAGCompaniesinIndiaHestartedhiscareerwithICIinIndiaintheirbusinessesofFibres&Specialitychemicals.
Later,herosetothepositionofGeneralManagerwithICI/ZENECAintheU.
K.
,overseeingtheirAsiaPacificandLatAmoperationsfortheirPetrochemicalsandPlasticsdivision.
ThiswasfollowedbyaperiodasCEOatRocheProductsLimited,afterwhichhemovedtoNovartisinIndiain1997,followingthemergerofSandozandCiba-Geigy.
MrShahaniisPresident,OrganisationofPharmaceuticalsProducersofIndia(OPPI),anorganizationhealsoleadearlierfrom2001-2007,isPastPresidentoftheBombayChamberofCommerceandIndustry,President,SwissIndianChamberofCommerce,andwasontheCounciloftheInternationalFederationofPharmaceuticalsManufacturersAssociations(IFPMA,Geneva).
HeisathoughtleaderinthePharmaceuticalIndustryandhasbeenactivelyinvolvedinlobbyingforastrongProductPatentlawinthecountryandDataProtectionandliberalizationofthepricecontrolmechanismforPharmaceuticals.
Hehasalsostronglycanvassedfordeterrentlegislationagainstcounterfeitdrugs.
AMechanicalEngineerfromIITKanpurandMBAfromJBIMS,Bombay,wasborninKanpur,India,ismarriedandhiswifeisawellknowneducationistandcurrentlyalsotheSheriffofMumbai-theyhaveoneson-whoworkswithMcKinseyinLondon.
RanjitShahani58IndiaPharmaInc.
:CapitalisingonIndia'sGrowthPotential2010SanjeevI.
DaniSeniorVicePresident&RegionalDirector(Asia,CIS&Africa),RanbaxyLaboratoriesLimited.
SanjeevI.
DaniisthebusinessheadresponsibleforP&LforAsia,CIS(ex-USSR)&AfricaRegionsofRanbaxy.
Inthesemarkets,RanbaxyhasmajorbusinessinterestsinSouthAfrica,Russia,ASEANcountriesandUAE/GCCcountriesapartfromIndia.
SanjeevI.
Danihasover25yearsofexperienceinPharmaceuticalIndustry,bothinIndiaandOverseas.
HeisalsoaMemberoftheBoard,Daiichi-SankyoEsphaCoLtd,Tokyo,Japan.
SanjeevI.
DanihaspreviouslyworkedinvariouscapacitiesinSales&MarketingfunctionsofCompaniessuchasJohnson&JohnsonIndia,Xian-JanssenChina(aJ&Jaffiliate)basedatBeijing,ChinaandG.
DSearleIndia.
HejoinedRanbaxyinMarch2001.
HeisapharmacygraduatewithanMBApost-graduatedegreefromAhmedabad,GujaratUniversity.
SanjeevI.
DaniisanalumniofColumbiaUniversity,USAhavingcompleteditsGeneralManagementcourse.
SanjeevI.
DaniPwC59VivekMohanManagingDirector,AbbottIndiaLimitedVivekMohanisManagingDirectorofAbbottIndiaLtd,apubliclytradedcompanyinIndia.
HehasheldthisrolesinceNovember2004.
HewasearlierGeneralManagerforAbbottIndonesiabasedinJakarta.
VivekhasbeenwithAbbottfor18yearsandstartedhiscareerwithAbbottinMay1992asascientistfortheDiagnosticsDivisionintheUS.
SincethenhehasheldvariousinternationalroleswithAbbottincludingpharmaceuticalsalesmanagementforAbbottUKandnutritionalmarketingrolesforAbbottintheMiddleEast.
Vivekhassuccessfullystrengthenedorganizationsandoperationsinseveralinternationalmarketsthroughfocusedrevitalizationinitiativesandimplementationofnewcommercialmodels.
VivekhasanMBAinInternationalBusinessfromtheUniversityofIllinois,andaB.
Sc.
inMicrobiologyfromtheUniversityofMichigan.
VivekMohan60IndiaPharmaInc.
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