India Pharmaceuticals and Healthcare Report Q4 2009

In the Q409 update of BMI's India Pharmaceuticals & Healthcare report, we have introduced our 10-year Drug Expenditure Forecast Model. The country's US$14.23bn pharmaceutical market is forecast to reach a value of US$44.99bn by 2018, representing a compound annual growth rate (CAGR) of 12.20%. The main drivers of growth are a booming economy, increasing access to medicines, more investment in healthcare infrastructure and a greater incidence of chronic diseases.

India's intellectual property (IP) regime is far below international standards; however, there are signs that this situation is changing. In August 2009, health activists and some generic drug companies severely criticised the Indian Commerce Ministry's decision to accept the Mashelkar committee's recommendations to grant patents to new drugs. The adoption of the recommendations indicates that new patents will be allowed on incremental innovation under Section 3(d) of the Indian Patent Act, in the event that the candidate drug offers enhanced therapeutic efficacy. Patent experts supported the decision as it is in line with international norms.

Pharmaceutical regulations are rapidly improving in India. In July 2009, the Indian Department of Biotechnology (DBT) planned to create a separate regulator for the biotechnology sector. The National Biotechnology Regulatory Board would be responsible for identifying and controlling drugs and vaccines which are developed from natural sources. That same month, the Drug Controller General of India (DCGI) identified six research and development (R&D) centres in which new drugs will be tested before they are launched. Meanwhile, in May 2009 the DCGI decided to withdraw the powers given to statelevel regulators to issue export quality licences, which are called Certificates of Pharmaceutical Products.

The move was designed to centralise and standardise procedures.

Unfortunately, India's pharmaceutical industry is gradually developing an undesirable reputation for producing sub-standard medicines. During Q309, regulators in the US and UK have blacklisted select batches of drugs made by firms based in the South Asian country. While the scale of the seizures was small, BMI believes the implications are huge. Quality of manufacturing must improve, or demand for Indian-made pharmaceuticals will decrease.

Due to the absence of some form of government-provided universal healthcare, India's health insurance market is one of the most promising sectors in the world. This was underlined in June 2009, when Indiabased Religare Enterprises signed an agreement with Swiss Re to establish a joint venture with an initial investment of US$100mn. Operations are expected to start in 2010. At that time, Swiss Re was already present in the India health insurance market, holding a 26% stake (the maximum permissible) in TTK Healthcare Services.

• Executive Summary
• SWOT Analysis
• India Pharmaceutical Industry SWOT
• India Political SWOT
• India Economic SWOT
• India Business Environment SWOT
• India's Pharmaceutical Business Environment Ratings
• Limits of Potential Returns
• Risks to Realisation of Returns
• India ??