The pharmaceutical sector is crucial for both healthcare advancement and economic development, driven by a strong demand for medicines, vaccines, and healthcare innovations. In recent years, this industry has undergone significant transformation, particularly in India, which now ranks third globally in pharmaceutical production by volume. The Indian pharmaceutical industry has grown with a CAGR of 9.43% over the past 9 years. India is home to the largest number of USFDA-compliant pharmaceutical manufacturing facilities outside the US and has around 500 API (Active Pharmaceutical Ingredient) producers, contributing approximately 8% of the global API market.
In this article, learn about the Indian pharma sector growth, along with the SWOT analysis and the stocks involved.
The Indian pharmaceutical sector contains multiple segments, including generic drugs, over-the-counter medications, bulk drugs, vaccines, contract research and manufacturing, biosimilars, and biologics. India fulfils over 50% of the world’s demand for various vaccines, supplies 40% of the generic demand in the USA and provides 25% of all medicines in the UK. With a robust network of approximately 3,000 drug companies and 10,500 manufacturing units, India holds a prominent position in the global pharmaceutical landscape.
The Indian pharmaceutical market is projected to reach ~US$ 130 billion by 2030 and could grow to US$ 450 billion by 2047Lucknow Investment. Valued at around US$ 50 billion, the industry derives over US$ 25 billion from exports, with India meeting around 20% of the global generic drug export demand.
Robust Manufacturing Base: India boasts a vast network of over 10,500 manufacturing units and around 3,000 pharmaceutical companies, enabling a diverse range of products.
Cost Advantage: The country has a competitive edge in production costs, allowing for affordable drug manufacturing without compromising quality.
Global Compliance: A significant number of Indian pharma companies comply with international regulatory standards, including those of the US FDA, making them eligible for global markets.Kanpur Investment
Strong R&D Capabilities: Increasing investment in research and development has led to innovations in drug development, particularly in generics and biosimilars.
Strong Government Support: The Indian pharmaceutical sector is evolving with significant government initiatives and active participation from the private sector. The Ministry of Health and Family Welfare has implemented various measures to ensure the availability of quality drugs in India.
Quality Control Issues: Despite compliance with global standards, incidents of quality control failures have raised concerns about the reliability of some manufacturers.
Limited Focus on Innovative Drugs: The sector has historically emphasised generics over original drug development, which may hinder long-term growth and market diversification.
Quality Issues: Illegally manufactured, diverted, counterfeit, or adulterated products are quickly exposed to the black market and distribution networks. Consumers often purchase loose tablets instead of complete strips, rendering solutions like barcodes and holograms ineffective in addressing these challenges.
Growing Global Demand: Increasing healthcare needs worldwide, particularly in emerging markets, present opportunities for expansion and export of Indian pharmaceuticals.
Biotechnology Advancements: The rise of biotechnology and personalized medicine opens new avenues for research and product development.
E-commerce Growth: The growing trend of online pharmacies and telemedicine can enhance distribution channels and access to medicines.
Government Support: The Indian government’s initiatives to boost the pharmaceutical sector, including the Production-Linked Incentive (PLI) scheme, can further stimulate growth and innovation.
Intense Competition: The global pharmaceutical market is highly competitive, with numerous players vying for market share, leading to pricing pressures.Lucknow Stock
Regulatory Changes: Stringent regulations and compliance requirements in international markets can pose challenges for Indian manufacturers.
Intellectual Property Issues: Concerns regarding patent infringement and intellectual property rights can affect innovation and market entry for new products.
Health Crises: Events like the COVID-19 pandemic can disrupt supply chains, impact production, and alter demand patterns in the pharmaceutical sector.Bangalore Wealth Management
As of June 30, 2024, the Department for Promotion of Industry and Internal Trade (DPIIT) has recognized a total of 1,40,803 entities as startups, with 2,127 of these in the pharmaceutical sector. In March 2024, Union Minister for Chemicals & Fertilizers and Health & Family Welfare, Dr Mansukh Mandaviya, inaugurated 27 greenfield bulk drug park projects and 13 greenfield manufacturing plants for medical devicesHyderabad Stocks. In the Indian pharmaceutical industry, 24 mergers and acquisitions (M&A) deals were announced in Q1 2024, totalling a value of US$ 456.3 million.
When we look at particular companies, Cipla received approval from the Central Drugs Standard Control Organization (CDSCO) to market the novel antibiotic plazomicin in India for the treatment of complicated urinary tract infections (cUTI), which affect around 150 million patients annually. Additionally, Sanofi announced plans to invest US$ 435 million over the next six years to expand its global capability centre (GCC) in Hyderabad, India, by increasing its workforce and further developing the facility. Apart from these, many other contributions have also been made to the sector.
Note: The pharma stocks list provided here is as of October 29, 2024. The stocks are picked from the Nifty 500 universe and sorted based on the market cap.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
Hyderabad Wealth Management