According to a recent report, India, the world’s second largest pharmaceutical market by volume and consumption, is expected to see high growth this year, due to expansion of domestic and export segments, improved contract services and rising population.

Further, the Indian pharmaceutical market surged 13% last year while it grew 14.80% in the fiscal 2008, with the domestic market reached Rs 32,095 Crore. Tier II cities with total population below 100,000 along with rural areas represent 40% of the market, and are anticipated to see faster growth than the rest of the country.

The Indian pharmaceutical industry is expected to grow as a result of rising volume of the industry and launch of new products. Moreover, both domestic and export segments of the industry are rapidly expanding owing to the strong domestic pharmaceutical market which is supported by large population base of more than one billion and a booming Indian economy.

Further, India is a preferred destination for contract services in the field of research and manufacturing as it has skilled manpower and efficient manufacturing capability, low operation costs and a large number of USFDA approved plants. In addition, the pharmaceutical industry is getting strong support from various facilities provided by domestic service providers, such as Active Pharmaceutical Ingredient (API) manufacturing, basic research and clinical research.

Moreover, the value of prevalent diseases is likely to scale up with rising population and urbanisation in coming years. The Indian pharma industry has a critical role in the growth of global pharmaceutical industry as both domestic and multinational corporations are greatly benefited.

The Indian pharmaceutical companies are performing quite well overseas, partly on account of depreciation in the Indian rupee. Despite this, the return from pharma industry depends on the market growth. In face of weak rupee and high inflation and interest rates, the overall industry is anticipated to be range-bound for a short period of time.

Investors in the Indian pharmaceutical industry are under intense pressure though exports are increasing and domestic market is expected to grow well. If the decline in the rupee continues, it will boost the earnings of the industry players. Under such conditions, the pharma sector, a defensive and under-owned sector, is expected to outperform the broad market.

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