India's pharma exports may reach $20 billion by 2020: Study

Export of pharmaceutical products from India is likely to exceed the $14 billion mark this year and may reach about $20 billion by 2020, thereby registering a compounded annual growth rate (CAGR) of about 8%, according to an Associated Chambers of Commerce & Industry of India (ASSOCHAM)-TechSci Research joint study.

“However, growth in pharmaceutical products’ exports from India may decline by almost half, ie, from the level of CAGR of about 15% clocked during 2010-14 to about 8% during 2015-2020 on account of delay in regulatory approvals in top markets of the US, Russia, Africa and others,” highlighted the study titled ‘IPR in pharmaceuticals: Balancing, innovation and access,’ jointly conducted by ASSOCHAM and TechSci Research.

“Consolidation of pharmacy players is leading to an increase in pricing pressures for generic companies existing in the US market which is expected to result in decline in year-on-year growth of pharmaceutical exports from India over next five years,” the ASSOCHAM-TechSci Research study noted.

Currency declines set to add to woes

Besides, a steep decline in currency in emerging markets like Africa, Russia, Ukraine and Venezuela is expected to add woes to drug manufacturing companies that supply pharmaceutical drugs to that region and are unable to generate high revenues on account of selling their drugs at a low priced currency.

India is the largest supplier of medicine to the USA. Pharmaceutical exports from India to the USA rose from $3.4 billion in 2013 to $3.7 billion in 2014, mainly due to increasing demand for high-quality generic drugs in the market.

However, growth rate for exports of pharmaceutical products from India to the USA is declining, due to increasing US Food and Drug Administration scrutiny on the quality of pharma products coming from drug manufacturing plants located in India.

In order to boost growth rate of exports to the USA, Indian companies will need to leverage their compliance to the US FDA regulations.

The exchange rate crisis in the country is affecting pharmaceuticals market in Russia. As such, stabilization of currency is of utmost importance in generating revenues through exports.

In addition, many Indian companies are operating through the Pharmaceutical Benefits Program (PBP) and hospital tenders, for supplying vital and essential drugs, for which prices are then regulated by the Russian government.

Similarly, India's exports of pharmaceuticals to Africa are being affected due to port delays and prolonged custom valuation.

“Pharmaceuticals’ exports are a major factor contributing to growth of this industry in India with the US and few fast growing markets like Brazil, Mexico, Russia, South Africa and in South-East Asia emerging as the main export markets for generic drugs,” said DS Rawat, secretary general of ASSOCHAM while releasing the study.

“India’s pharmaceutical industry has transformed from being mainly a generic manufacturer to providing complex drug formulations to foreign markets thereby registering a significant growth,” said Mr Rawat. “Pharmaceutical market in India is being driven by rapid socio-economic changes, rising sedentary lifestyle amid people and expected growth in number of people suffering from obesity, diabetes, cardiac problems and other related ailments,” he added.

Report recommendation on data protection

Further, with a view to benefit and drive the growth of pharmaceutical research and innovation in India, the ASSOCHAM-TechSci Research study has recommended for data protection to be introduced as an Intellectual Property Right.

It has also suggested digitization of IPR for pharmaceuticals in India to strengthen online processing and maintenance of information database thereby making the process more systematic and convenient.

Though it would require allocation of more personnel for patent examinations and training sessions to be organized as part of resource development module, the study has emphasized that efficient management of IPR filings would help in building a stronger IPR framework in India.

India’s pharmaceutical market may reach $20 billion this year and about $55 billion by 2020 from about $18 billion as of 2014 thereby clocking a CAGR of over 22%. The pharmaceutical sector in India will register higher growth during the course of next five years (22%) as compared to a CAGR of about 14% seen by the sector during 2010-14.