There is large acquisitions by multinational companies and increasing investment by domestic and international players in India, deeper penetration into the rural markets, growth and availability of health care.
The Indian pharmaceutical market is highly fragmented with the top 10 players accounting for nearly 38% of total sector revenues, which was estimated at $21.5-billion in 2011. The pharmaceutical market is expected to grow at a CAGR of 14.3% to reach $36.7-billion by 2015.
India accounts for nearly 8% of global pharmaceutical production, which makes it the third-largest pharmaceutical manufacturer in the world. Pricing is a critical aspect for pharmaceutical companies operating in India. The number of drugs in the essential drugs list has increased from 74 to 348. This price cap will potentially impact the revenues of pharmaecutical companies operating in India.
Nearly 18 of the top 20 global pharmaceutical companies have set up their subsidiaries in India. They also enter in marketing arrangements with domestic players to expand the reach of their products. The share of formulations and active pharmaceutical ingredients (APIs) stood at 82:18 in FY11 as against 69:31 in FY07.
The domestic pharmaceutical market amounted to $14.3-billion in 2011. The market has grown at 16.3% year over year in 2011. India's total pharmaceutical exports were estimated at $7.2-billion in 2011, growing at a CAGR of 18.1% between 2007 and 2011.
The United States is the largest market for India's pharmaceutical exports. The exports are expected to reach $16.7-billion by 2015. India accounts for more than 45% of the world's requirement of bulk drugs.
Medical devices and equipment
​The Indian medical devices industry is growing significantly every year and ranks among the top 20 in the world. It is the fourth-largest medical device industry in Asia after Japan, China and South Korea The Indian industry was valued at $2.4-billion in 2010, growing at a CAGR of 12% for 2007 to 2010.
However, the size of the industry is still small as per capita spending was just around $2 in 2010. The industry is forecasted to reach $4.8-billion by 2015, growing at a CAGR of 15.6% (2009–2015).
Medical devices sales in the country are steadily improving as a function of overall health care expenditure. In 2010, medical device sales contributed nearly 4.4% of total healthcare expenditure in the country.
It is projected that the sales of medical devices will increase to 4.5% of total healthcare expenditure in the country by 2015. The private sector contributed nearly 77.4% to healthcare expenditure in 2010. Orthopedic implants are expected to grow at a CAGR of 18.7% between 2009 and 2015.
Dental products and consumables are expected to grow at CAGRs of 17.4% and 17.1% respectively during the same period. Growing private sector participation in healthcare and the Indian Government's initiatives are likely to drive the growth of the industry in the near future, especially in rural areas.
In addition, the rising per capita income of people in the country will enable the doubling of per capita spending on medical devices by 2015 from $2 currently.
Moreover, medical device manufacturers are eyeing the opportunity presented by the growth witnessed in medical tourism. In light of these factors, the medical devices market in India is expected to offer a competitive environment to both SME companies and foreign multinational entities.
MNCs are expected to continue to dominate the medical devices industry in India, especially the high-technology product category, due to their scale of operations and extensive service networks. The domestic industry is expected to meet low-to-midtechnology product demand.
Further, the development of favorable regulations, along with IP protection in sync with global norms, is expected to enable this industry to effectively benefit from the forthcoming growth opportunity and drive the next phase of industry growth.
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