Astrazeneca Annual Report Analysis

ASTRAZENECA PHARMA INDIA LTD

ANKIT GARG

Roll No. 09

Indian Pharmaceutical Industry:

The Indian Pharmaceutical industry is highly fragmented with about 24,000 players (around 330 in the organised sector). The top ten companies make up for more than a third of the market. The revenues generated by the industry are approximately US$ 7.6 bn and have grown at an average rate of 10% over last five years. The Indian pharma industry accounts for about 1% of the world's pharma industry in value terms and 8% in volume terms. In the recent past, Indian companies have targeted international markets and have extended their presence there. While some companies are exporting bulk drugs, others have moved up the value chain and are exporting formulations and generic products. India also offers excellent exports opportunities for clinical trials, R&D, custom synthesis and technical services like Bioinformatics.

The drug price control order (DPCO) continues to be a menace for the industry. There are three tiers of regulations – on bulk drugs, on formulations and on overall profitability. This has made the profitability of the sector susceptible to the whims and fancies of the pricing authority. The new Pharmaceutical Policy 2006, which proposes to bring 354 essential drugs under price control has not been officially passed as yet and has been stiffly opposed by the pharmaceutical industry. The R&D spend of the top five companies is about 5% to 10% of revenues. Despite growing at a CAGR of over 50% over the last four years, the ratio is still way below the global average of 15% to 20% of sales. However, despite the relatively low R&D spending, Indian companies are stepping up their research activities to make themselves more self sufficient in terms of product development, now that the product patent regime has come into force.

The Indian pharma sector witnessed a stronger performance in 2011. For generic companies, revenues from the overseas markets...