Indian Pharma Industry by tyty722

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									Investment Opportunities in the Indian Pharmaceutical Industry

June 2006
Virtus Global Partners 420 Lexington Ave, Suite 300 New York, NY 10170 www.virtusglobal.com

Market Snapshot
India occupies a significant position in the world Pharma market – especially in generics 8% by volume (4th largest in the world) 1.5% by value (13th largest) The size of Indian Pharmaceutical industry is about $8.8 billion. This constitutes 1.3% of India’s GDP The domestic market is about $4.8 billion
MARKET ANALYSIS

Export of generics accounts for 38% of the Pharma sector revenues India has a low per capita annual spend of $5 on Pharma products ranks 67th in the world India has a nascent but rapidly growing Biotech industry – $750 million in revenues in 2003-04 1.5% share of the global Biotech market

INDIAN PHARM A

Confidential & Proprietary Virtus Global Partners 2006

Industry Structure
The Pharmaceutical industry in India is fragmented with over 3,000 small/medium sized generic pharma manufacturers International pharmaceutical majors like Pfizer, Johnson & Johnson, Glaxo SmithKline and Novartis have an established presence in India The Biotech Industry is seeing the emergence of several domestic private players with worldclass capabilities International majors like Monsanto, Syngenta and Aventis are already in India and are focusing on the Bio-Agriculture segment

INDIAN PHARM A

MARKET ANALYSIS

Confidential & Proprietary Virtus Global Partners 2006

Policy
FDI up to 100% is permitted through the automatic route for the manufacture of drugs and pharmaceuticals provided the activity does not attract compulsory licensing or involve the use of recombinant DNA technology and specific cell/tissue targeted formulations Patent (Amendment) Act enacted in April 2005: Introduces product patent regime for food, chemical and pharmaceutical products - TRIPs compliant Consolidation likely in the fragmented Pharma industry due to recent legislation and policy updates
MARKET ANALYSIS

Good Manufacturing Practices (GMP) outlined in Schedule M to the Drugs and Cosmetics Rules revised Manufacturing units are required to comply with the WHO and international standards of production

INDIAN PHARM A

Confidential & Proprietary Virtus Global Partners 2006

Major Players
Major Players and Presence in Value Chain Revenues FY05 Value Chain Presence Company ($ million) R & D Manufacturing Domestic Private Players Ranbaxy Cipla Dr. Reddy’s 1,333 548 441

Marketing

International Private Players (CY 04) India
MARKET ANALYSIS

354 183 146

Aventis - India Pfizer - India

Source: Capitaline Database, Company web-site

INDIAN PHARM A

Confidential & Proprietary Virtus Global Partners 2006

Outlook
The Indian Pharmaceutical industry (including exports) is expected to grow at 23% p.a. till 2010 The domestic market expected to double in the next 5 years to over $10 billion The Biotech industry is projected to grow at a CAGR of 39%; India expected to have a significant share of the global market

INDIAN PHARM A

MARKET ANALYSIS

Confidential & Proprietary Virtus Global Partners 2006

Potential
India is an attractive global sourcing destination for Pharmaceuticals: Availability of low-cost, high-quality production and regulatory compliance Large and growing US FDA approved plant capacity Synthetic Chemistry talent for early stage compound development Low cost of research and world-class testing facilities *Cost of a research scientist in India is only about 1/6th to 1/4th of that in USA Major opportunities in Biotechnology are in the areas of Bio-informatics, Biopharma, Bio-agri and Bio-services Many international biotech companies like Chiron Corp, GSK and Sigma Aldrich Corp have expressed interest especially in Bio-manufacturing

INDIAN PHARM A

MARKET ANALYSIS

Confidential & Proprietary Virtus Global Partners 2006

Potential
Major opportunities in Pharmaceuticals are in the following areas: Marketing of Patented Drugs Contract Research and Manufacturing (CRAM) IT enabled services including clinical/market data analysis
MARKET ANALYSIS

Clinical Trials: Revenues to grow from $70 million (2002) to $1-1.5 billion by 2010 driven by a 60% cost advantage and large gene pool for trials

INDIAN PHARM A

Confidential & Proprietary Virtus Global Partners 2006

About Virtus Global Partners
Virtus Global Partners is a global investment and advisory firm with offices in the US and India. Our primary focus is on US and India based cross border businesses. We provide a full range of investment banking services including cross border M&A, strategic partnerships, fundraising and general advisory services. Our corporate clients include mid to large size venture-backed enterprises as well as quoted companies. Our focus sectors include technology and technology enabled businesses, pharmaceuticals, auto ancillary, food processing and industrials. Virtus Global Partners provides: Deep knowledge of US and Indian core industry markets; Senior level access to leading industry executives, investors and entrepreneurs, both in US and India; In-depth technical and financial skills for value-enhancing deal structuring; Refined and responsive transaction process; Corporate culture built on teamwork, integrity and professionalism; and Relentless focus on maximizing value for our clients.

INDIAN PHARM A

MARKET ANALYSIS

Confidential & Proprietary Virtus Global Partners 2006


								
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