The Hindu : Business : India's pharmaceutical sector set for rapid growth

Online edition of India's National Newspaper
Saturday, Apr 15, 2006

Business

Business

India's pharmaceutical sector set for rapid growth

Special Correspondent

$65 b worth of drugs will go off patent in the U.S. and Europe in the next two years

NEW DELHI: The Indian pharmaceuticals industry is set to grow rapidly in the next few years as global patents on billions of dollars worth of drugs will expire by 2007-08, setting the stage for a spurt in both exports and output. An industry study projects that exports will rise 18 per cent within the next two years, especially in the area of generic drugs since as much as $65 billion worth of drugs will go off patent over this period in the U.S. and Europe.

The study thus expects export volumes to touch Rs. 30,000 crore by 2007-08 from Rs. 18290 crore in 2004-05.

Output will also rise steeply with an 11 per cent growth rate projected over this period bringing the turnover of the pharma sector to Rs. 60,000 crore by 2007-08 as against Rs. 43,290 crore in 2004-05.

The study carried out by the Associated Chambers of Commerce and Industry of India (Assocham), says the pharma industry would reach a turnover of Rs. 48,015 crore in 2005-06 with export volumes likely to exceed Rs. 21,582 crore.

Releasing the study, Assocham President Anil K. Agarwal said low production costs would give India an edge over other countries, particularly China and Israel, in the case of generic drugs.

Mr. Agarwal said drugs worth $40 billion in the U.S. and drugs worth $25 billion in Europe will go off patent by 2007-08.

He felt that it would be easier for Indian manufacturers to seize a larger market share of overseas markets than in the domestic market where price controls are likely to continue. Consequently, pharma majors would have no options but to explore export opportunities.

The chamber is also of the view that the migrations into a new regime of product patent would change the fortunes of domestic pharma industry in the long term and would bring with it new innovative drugs. Though this will increase the profitability of multinational pharma companies, and force domestic players to focus on research and development, besides forcing consolidation of small players who may not be able to cope up with the challenging environment.

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