Health awareness, rise in life style diseases noted as key drivers for pharma sector: Dun & Bradstreet

Favourable demographics, rising income levels, growing health awareness and increasing incidence of lifestyle diseases are the key growth drivers of the pharma industry in India, according to the Dun & Bradstreet: Sector Analysis Report: 12th edition of Top 500 companies 2012. The sector has clocked a turnover of Rs.100,000 crore in 2011-12 with a growth rate of 15 per cent. Sales growth is propelled primarily by exports, said the report. The 24 featured pharmaceutical companies' share in the overall industry turnover is estimated to be 57 per cent. The total gross turnover of the 24 pharmaceutical companies stood at Rs.571.7 billion during FY11, registering Y-o-Y growth of nearly 17 per cent. This growth is mainly fuelled by growing consumption levels in India and increasing demand from export markets. Although the domestic market continues to account for a larger share of 53 per cent of the total gross turnover, the proportion of exports in total turnover has been increasing gradually. This is driven by faster growth in the export market of 18 per cent Y-o-Y compared with 16 per cent Y-o-Y growth of domestic market. The growth in the export market can be attributed to its strength in the generic drugs market. Further, with many branded drugs slated to go off patent over the next few years, there is growing opportunity for Indian generic drug manufacturers. Moreover, foreign pharmaceutical companies are perusing opportunities to reduce their research cost, said the report. Armed with the low-cost advantage, the Indian contract research and manufacturing services stands to benefit from this trend. Further, export growth is also supported by increasing alliances of Indian companies with global players, according to the report. Although the Union government is working to boost innovation by encouraging R&D investment in India., the reality is that total R&D expenditure of the 24 pharmaceutical companies as a percentage of the total gross turnover stood at 5.3 per cent during FY11, inching 0.04 per cent compared with the previous year, according to the report. R&D is the backbone that drives the future of the pharmaceutical industry globally. The expenditure varied widely between 1–11 per cent of the turnover in case of individual companies. Out of the 22 companies, expenditure of nine companies was more than or equal to 5 per cent during FY11 compared with 11 companies during FY10. Within the featured pharmaceutical companies, during FY11 domestic pharmaceutical companies were revealed to be spending 5.5 per cent of sales on R&D, crawling up by 0.3 per cent as compared to 4.4 per cent of sales in case of foreign companies, which noted a Y-o-Y drop by around one per cent concludes the report. Thus, the near-term outlook for Indian pharmaceutical industry seems to be challenging. This is largely due to volatility in forex and rising raw material cost. However, despite these challenges, the Indian pharmaceutical industry is expected to emerge strongly in the long-term supported by robust demand, recovery in the domestic market, potential opportunities in generic segment and other outsourcing opportunities. Furthermore, large number of patent expirations will continue to offer growth prospects for the industry players, stated the report. Source:Pharmabiz