The report was prepared with the overview of global pharmaceutical markets and Asian markets with special emphasis on emerging markets such as India.

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FINANCIAL MANAGEMENT IN
PHARMACEUTICAL INDUSTRY
MANAGEMENT RESEARCH PROJECT
--Dr.Richa Singh
Professional diploma in financial management,
Centre for Management,
Thadomal Shahani Education Trust

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INDEX
1. INTRODUCTION—GLOBAL HEALTH----------------Pg 03
2. TOP-DOWN APPROACH -world TO India—------pg 04
3. History of the industry--------------------------------pg 11
4. WTO agreement—1995, 1970----------------------pg 13
5. The ‘PATENT’ play—Indian implications –------pg 16
6. The Game changes (2005) --------------------------pg 18
7. Major players in the industry----------------------pg 23
8. Managers role becomes more dynamic—-----pg 27
9. The Indian market: Opportunities ---------------pg32
10. The Indian Market: Challenges-----------------pg40
11. Recent Financial deals-----------------------------pg44
12. What’s new-Industry updates/Trends—-----pg46
13. Conclusion-------------------------------------------pg47
14. Abbreviations----------------------------------------pg50
15. References--------------------------------------------pg51

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INTRODUCTION---GLOBAL HEALTH
Global healthcare industry can be
Divided into above components
Medical
Devices
&technol
ogy
Medical
literature &
I.T.Solutions
Market
Research
Firms
Regulatory
authories
Diagnostic
s
Pharmaceti
cals
Hospials &
Clinics

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Each of these components is interdependent and each one needs
specialised professionals with a ‗human‘ touch, investment in research &
development, and sharp financial acumen to plan ahead of time.
The world pharmaceutical industry has been changing profoundly in
the last decade. Intensive globalization, increased competitiveness and
the fight for global market shares create new challenges for
pharmaceutical companies. Fast globalization definitively reinforces the
consolidation of the world pharmaceutical industry. Alliance in forms of
mergers and acquisitions prevail more and more as a strategic
orientation for the world pharmaceutical companies. By alliance, they
tend to create strategic synergies in an endeavour to be successful,
competitive and capable to continue with further development circles.
Globally all stakeholders in the healthcare domain share a common
concern to make healthcare products and services available to maximum
number of people at low cost ,and in an efficient, quick manner.
There are a lot of challenges arising because different demographic
needs, climatic variation and changes regulatory outline in each country.
Thus the role of a manger to effectively manage--resources, people,
information and activities becomes more prominent.
TOP-DOWN APPROACH -world view TO Indian view
Pharmaceutical Industry Trends- Global Scenario
The global pharmaceutical market research has been done by many
companies and almost all of the market reports indicate a significant
growth of pharmaceutical market. The forecasting indicates
pharmaceutical market growth of about 4 - 6% in 2010-2011. The
established markets, including the US, UK, and Japan, together account
for 30% of the global demand for pharmaceutical excipients.
If present industry overview is taken into consideration then the global
pharmaceutical market in 2010 is projected to grow 4 - 6%
exceeding $825 billion. The global pharmaceutical market
sales are expected to grow at a 4 - 7% compound annual
growth rate (CAGR) through 2013.

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This industry growth is driven by stronger near-term growth in the US
market and is based on the global macro economy, the changing
combination of innovative and mature products apart from the rising
influence of healthcare access and funding on market demand. Global
pharmaceutical market value is expected to expand to $975+
billion by 2013. Different regions of the world will influence the
pharmaceutical industry trends in different ways.
A] Middle East & African Pharmaceutical Market
The Middle East combined with the African Pharmaceutical market is
projected to grow at a CAGR of around 11% during 2010-2012. The
development of infrastructure and rapidly changing regulations in this
region are being seen as the cause of its growth. Also there is a high
prevalence of diseases and huge population base that increases the
overall pharmaceutical sales in this part of the world. Presently South
Africa, Saudi Arabia and Israel dominate the region's pharmaceutical
industry due to their better infrastructure and regulatory environment.
However, The Middle East pharma market depends on imported
pharmaceutical drugs and therapeutics. The governments of countries in
this region are taking measures to raise their domestic production
through heavy investments in the pharmaceutical industry. How far they

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are successful in the attempt of becoming considerable pharma
production centre remains to be seen.
B] European Pharmaceutical Market
European Trade in Pharmaceuticals 2008
SOURCE:EUROSTAT
The seven main European markets represent a marketplace for
pharmaceutical products worth US$162 billion a year.
The seven markets are diverse in terms of health provision, funding,
domestic production and health plans. The market is expanding due to
an ageing population, earlier diagnosis of disease and wider use of
pharmaceuticals. Government responses to meeting the rising demands
in publicly funded health - and especially the drugs bill - range from

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increased health insurance, co-payments and related taxes to increased
use of private funding and generic substitution. Increasingly, battles
about reimbursement levels and pricing are set to hot up in the coming
years.
The growth in the generics sector looks set to continue - particularly in
markets where current levels of generic subscribing are low. The
migration of R&D to countries that offer more advantageous commercial
and research environments will become a cause for concern.
C] Asia Pacific Pharmaceutical Market
The pharmaceutical market world over will experience significant shifts.
Asia-Pacific region will emerge as the fastest growing pharmaceutical
market over the recent past. The reason for this positive shift can be
attributed to the low costs and favourable regulatory environment. This
region has experienced important developments regarding contract
manufacturing, especially in generics and APIs. Increased R&D activities
in the region have helped Asia-Pacific pharmaceutical industry to
achieve an estimated market size of around US$ 187 Billion in 2009.
Here, the pharmaceutical industry is expected to grow at a CAGR of
around 12.6% during 2010-2012. It can, in fact, become the global API
production hub in next few years.
Pharmaceutical sales are growing at a fast rate in India, China,
Malaysia, South Korea and Indonesia due to the rising disposable
income, several health insurance schemes (that ensures the sales of
branded drugs), and intense competition among top pharmaceutical
companies in the region (that has boosted the availability of low cost
drugs). China‘s pharmaceutical market will continue to grow at a 20+ %
annually, and will contribute 21% of overall global growth through
2013. India - 3rd Largest Producer of Pharmaceuticals Across the World-
is already a US$ 8.2 Billion pharmaceutical market. The Indian
pharmaceutical industry is further expected to grow by 10%.

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Distribution of Global Pharmaceutical Sales by Region

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Source: IMS Health Market Prognosis, March 2010

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S

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HISTORY OF THE PHARMACEUTICAL
INDUSTRY‖
In response to multiple tragedies related to the
pharmaceutical industry during the 1950s and 1960s, the
world saw a substantial increase in the number of regulations,
guidelines, and laws regarding the "safety, quality and efficacy
of new medicinal products" over the next decade. As the industry
expanded production into international markets, pharmaceutical
standards still remained a national responsibility and global standards
did not exist. Soon, there was a need to standardize quality and safety
regulations in order to provide consumers with safe products in a timely
manner.
It was the EC (now the European Union) which urged for the creation of
a single market for pharmaceuticals in the 1980s.
However, it was until 1989, at the WHO Conference of Drug
Regulatory Authorities (ICDRA), that plans began to develop for
the creation of a global pharmaceutical regulator. In April 1990, the
International Conference on Harmonisation of Technical

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Requirements for Registration of Pharmaceuticals for Human
Use (ICH) was created. Now, the ICH is composed of more than
six parties that represent the regulatory bodies and the
research-based industries that are responsible for the decision
making processes related to the pharmaceutical industry in
the United States, Japan, and Europe. Included in this group
are the European Union, the Ministry of Health, Labor, and
Welfare (Japan), the Japan Pharmaceutical Manufacturers
Association (JPMA), the Food and Drug Administration
(FDA), and the Pharmaceutical Research and Manufacturers
of America (PhRMA). There are also ICH Observers that act as
a liaison with non-ICH countries, including the World Health
Organization (WHO) and The European Free Trade
Association (EFTA).
The ICH guidelines are currently divided into four main
categories: Quality topics, Safety topics, Efficacy topics, and
Multidisciplinary topics.
Quality topics incorporate guidelines for the stability testing of new
drug substances and products, the impurities in new drug products, and
the specifications for test procedures and acceptance criteria for new
drug substances and new drug products.
Safety topics focus more on providing the guidelines for toxicity tests
and carcinogenicity studies.
Efficacy topics include clinical safety measures, ethnic factors, and
special population situations and,
Multidisciplinary topics range from medical terminology to data and
electronic standards.
‖‖‖ In recent years, the Food and Drug Administration (FDA) has
become more involved with international regulatory partners and
international health associations in order to leverage its resources and

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achieve its public health goals. By sharing regulatory information
internationally, drug product quality will continue to improve as well as
technological innovation. This, in turn, will enhance public health
protection. The FDA also will continue to actively work with the ICH on a
new plan to develop a pharmaceutical quality system with will be "based
on an integrated approach to risk management and science." In the near
future, the FDA will seek membership in the Pharmaceutical Inspection
Cooperation Scheme (PIC/S). This is an "arrangement between "health
authorities whose purpose includes leading the international
development, implementation, and maintenance of harmonized CGMP
standards and quality systems of world-wide pharmaceutical
inspectorates." Also, this participation will further increase
harmonization and information sharing in the global pharmaceutical
industry.
WTO AGREEMENT -1995
The World Trade Organization (WTO) is the international organization
dealing with the rules of trade between nations. As of February 2005,
148 countries are Members of the WTO. In becoming Members of the
WTO, countries undertake to adhere to the 18 specific agreements
annexed to the Agreement establishing the WTO. They cannot choose to
be party to some agreements but not others (with the exception of a few
"plurilateral" agreements that are not obligatory).
Of these agreements, Trade-Related Aspects of Intellectual
Property Rights (TRIPS) is expected to have the greatest
impact on the pharmaceutical sector and access to medicines.
The TRIPS Agreement has been in force since 1995 and is to date the
most comprehensive multilateral agreement on intellectual property.
The TRIPS Agreement introduced global minimum standards for
protecting and enforcing nearly all forms of intellectual property rights
(IPR), including those for patents. International conventions prior to
TRIPS did not specify minimum standards for patents. At the time that
negotiations began, over 40 countries in the world did not grant patent
protection for pharmaceutical products. The TRIPS Agreement now
requires all WTO members, with few exceptions, to adapt their laws to
the minimum standards of IPR protection. In addition, the TRIPS

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Agreement also introduced detailed obligations for the enforcement of
intellectual property rights.
However, TRIPS also contains provisions that allow a degree of
flexibility and sufficient room for countries to accommodate their own
patent and intellectual property systems and developmental needs. This
means countries have a certain amount of freedom in modifying their
regulations and, various options exist for them in formulating their
national legislation to ensure a proper balance between the goal of
providing incentives for future inventions of new drugs and the goal of
affordable access to existing medicines.
India had signed the WTO agreement and since Trade Related
Intellectual Property Rights(TRIPS) was a part of WTO
agreement, India was bound to implement the provisions of
TRIPS agreement provided a transition period of ten year
from 1995-2005. This meant that India had to make significant
changes in its patent law and respect the Intellectual Property Right‘s
(IPR‘s) by 2005
WHAT IS A PATENT?
Patent is a legal document granted by the government
giving an inventor the exclusive right to make, use and
sell an invention for a specified period of time. It is
also available for significant improvements on
Previously invented articles.
According to the UN definition, a patent is a legally
Enforceable right granted by country‘s government to
its inventor. Patent Law represents one branch of a
larger legal field known as intellectual property rights.
Patent Law centres on the concept of novelty and non-obvious
inventions. The invention must be legally useful.
The focused only on process patents, helped to establish the foundation
of a strong and highly competitive domestic pharmaceutical industry
which in the grip of a rigid price control framework transformed into a
world supplier of bulk drugs and medicines at affordable prices to

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common man in India and the developing world. The Indian
pharmaceutical companies have been doing extremely well in developed
markets such as US and Europe
WHY PATENT?
The underlying idea behind granting patents is to
encourage innovators to advance the state of
technology. Patent protection guarantees profits to
inventors in return for investing in the production of
socially useful information by granting a temporary
monopoly on the product. The patent holder therefore,
can prohibit all others from copying the patented
product and offering it in the market for a lower
price, during the life of the patent.

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Cost of Developing an Innovative Medicine
BACKGROUND OF INDIAN
PHARMACEUTICAL INDUSTRY WITH
RESPECT TO PATENT
The Indian Pharmaceutical industry has transformed itself over the past
few decades in India, being almost none existing till 1970‘s, to now being
a prominent provider of Pharmaceutical Products. The Indian
Pharmaceutical industry meets approximately 95% of the country‘s
pharmaceutical needs. The present turnover of the Indian Pharma
Industry is approximately $ 9.0 billion of which the share of exports is
40%. Compared to the global picture, the Indian pharmaceutical

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Industry ranks 4th in terms of volume, and 13th in terms of value, which
is highly significant
PRE TRIPS: PATENTS ACT (1970)
Patents Act 1970 in its original form does not differentiate
between Process and Product patents for medicines, food and
chemicals. One of the important features of the Act was that it did not
provide product patents for the three mentioned industries. These
industrial sectors were covered by product patent only. In addition the
Drug Price control Order, 1970 put a cap on the maximum
price that could be charged and ensured that the life saving
drugs are available at reasonable prices. The Act of 1970
safeguards the interests of the inventor and consumer in an evenhanded
manner. Therefore with a regulatory system focused only on process
patents, helped to establish the foundation of a strong and highly
competitive domestic pharmaceutical industry which in the grip of a
rigid price control framework transformed into a world supplier of bulk
drugs and medicines at affordable prices to common man in India and
the developing world. The Indian pharmaceutical companies have been
doing extremely well in developed markets such as US and Europe
POST TRIPS: PATENTS AMENDMENT ACT(2005)
The Patent Amendment Act 2005 passed by the Parliament in its budget
session of 2005 brings the Indian Patent Act in full conformity with the
intellectual property system in all respects. The amendment of 2005
extends full TRIPS coverage to food, drugs and medicines. It
requires patents to be provided to products as well. The other
implications under the new act are the term of a patent protection
has been extended to twentyyears compared to the seven years
which was provided by the act of 1970 and the onus of proving
on a legal complaint that the process used by one enterprise is
totally different from that which has been used by another
would lie on the defendant. Prior to the amendment the
responsibility was on the patent holder to establish patent breach.

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Under the new patent law Indian pharma companies which were free to
copy and sell patented molecules or drugs will not be able to do so.
Therefore no patented drug launched after 1st January 2005 can be
copied and sold, also there are patent applications of MNC Pharma
Companies pending in the EMR mailbox which are going to be shortly
opened by the patent office. If the patent office grants patents rights then
Indian pharma companies selling those molecules will have to stop
manufacturing and marketing of those drugs or may have to pay royalty
if they continue to manufacture and market those drugs.
Further the government of India is also committed to cGMP(current
Good Manufacturing Practices) norms as specified by
WHO(World Health Organization) and has subsequently modified
Schedule M of the Drugs & Cosmetics Act and now Pharma
companies have to follow strict standards in manufacturing practices.
THE GAME CHANGES –‗NEW‘ RULES
The rules of pharmaceutical business are changing. Indian
pharmaceutical companies can no longer get away with
plundering intellectual properties of multinational
companies. Pharmaceutical business has become a new
ballgame altogether after the introduction of product patents
in January 2005.
PARAMETERS PRE AND POST TRIPS
(a) NEW PRODUCT DEVELOPMENT
Pre TRIPS
New product development efforts of Indian pharmaceutical companies
in process patents era were limited to reverse engineering molecules
discovered by other companies. Thanks to absence of product patents,
Indian companies did not have to go through long winded drug
development process. Nor did Indian companies have to expend any
effort on research focus. The focus of the Indian companies was to
launch a copy of a blockbuster drug ahead of their rivals in
India and abroad.

19. DR.RICHA SINGH
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Post TRIPS
A large number of drugs are going ―off patent‖ in the next few years.
According to IMH Health, more than $60 billion worth of drugs are
going ―off patent‖ by 2011. Thus, Indian companies will not be short of
new products for at least another two years. Further Indian
pharmaceutical companies have also stepped up their efforts in product
development for the global generic market and this is visible with the
DMF filings at the US FDA. About 30% of the new DMF filings at the US
FDA are being filed by Indian companies. In the long run, however
Indian companies may find it hard to make money from drugs coming
off patent. Already competition in generic market is intense and likely to
increase further in the future. Focus on basic research will come
with its own issues. Indian companies will have to acquire the
skills of identifying research areas that offer excellent revenue
and profit potential. This will entail a closer tracking of disease
profiles and related therapies as well as keeping a Close tab on the
research programmes of rivals. Besides, Indian companies will
have to pay more attention to economics of drug development
process
The actual problem lies in the fact that the product patents fail
to introduce research and development in the neglected
diseases. Hence while on one side the introduction of product patents
will help in development of new and more effective drugs, the problem
still remains that the research and development undertaken by the drug
manufactures evade the neglected diseases and the diseases
which are region specific such as medicines for malaria and
tuberculosis which are found prevailing in developing
countries like India
(b) THERAPEUTIC COVERAGE
Pre-TRIPS
In the absence of product patents, Indian pharmaceutical companies did
not feel the need to focus on specific therapeutic areas. Most Indian

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pharmaceutical companies eschewed narrow focus and tried
to cover as many therapeutic areas as possible.
Post TRIPS
Opinion is divided over the therapeutic strategy that Indian companies
should pursue in product patent era. Some companies believe that focus
on select therapeutic segment will fetch them greater dividends in terms
of new chemical entities and market share. Other companies believe
such a strategy is risky given the size of Indian companies and that a big
setback in research could sink the company. Instead such companies are
pursuing a de-risking strategy of building a wide product portfolio. In
the domestic market, such a strategy will result in economies of scale at
production and marketing stage, putting the company in a better place to
weather competition from multinationals.
(C) COST OF PRODUCTION
Pre-TRIPS
Indian pharmaceutical firms use to produce and supply both
bulk drugs and finished formulations in the global market at
very competitive rates. The expansion of AIDS treatment over the
past few years has been driven by the accessibility and affordability of
generic ARVs (anti-retro viraldrugs) from India. Indian pharmaceutical
companies have mastered the science of producing drugs cheaply. Indian
companies have developed a high level of chemical synthesis skills. The
absence of development costs together with efficient
production has enabled Indian companies to establish a solid
position in bulk drug manufacturing. country. This has resulted
in the Indian pharmaceutical players offering their products at
some of the lowest prices in the world. But scale did not receive as
much importance as it should have, because the cost of Indian
pharmaceutical companies was already low owing to aforesaid reasons.
Post TRIPS
Specifically, the introduction of product patent protection in the Indian
market may have far-reaching implications on access to medicines at
affordable prices in a large number of developing and least developed
countries, because a product patent system will make India dependent

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on the multinational companies for technology and for permission to
produce the patented drug. Exorbitant prices will be charged and
the Indian pharmaceutical industry will become subservient to
the MNCs. They will lose the position that they had gained in the wake
of the Act of 1970.
Millions of Indians need medicines. Most of them cannot
afford to pay high prices. Going by global experience, product
patents that are now enforced, can only lead to monopolies and these, in
turn, to high prices. India needs to build in enough safeguards
even in our current patent law. Perhaps in our haste to join WTO,
we neglected many important issues.
(D) MERGER AND ACQUISITIONS:
Pre TRIPS
The Indian companies excel as far as the back end of the pharmaceutical
value chain is concerned i.e manufacturing APIs and formulations.
What the Indian companies are short of is the front-end
distribution and marketing infrastructure in the developed
world.
Acquisitions are the quickest way to front end access. Indian Drug
manufacturers persuaded foreign acquisitions to bridge this gap and to
fulfil following motives.
• Improve global competitiveness
• Move up the value chain
• Create and enter new markets
• Increase their product offering
• Consolidate their market shares
• Compensate for continued sluggishness in their home market.
There are also entry barriers for companies from the developing
countries and acquisitions make it easy for these organizations to find a
foothold in the developed markets.
Post TRIPS

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Companies are reaching out to their counterparts to take
mutual advantage of the other‘s core competencies in R&D,
Manufacturing, Marketing and the niche opportunities offered
by the changing global pharmaceutical environment. The pace
of change has never been as rapid as it is now. To adapt to these
changing trends, the Indian pharmaceutical and biotechnology
companies have evolved distinctive business models. Size and end-to-
end connectivity are major detriments in the global markets. To achieve
them, Western MNC‘s have to look to Indian companies. While,
India‘s strong manufacturing base will stand global generic
companies in good stead as a low-cost development and
manufacturing destination the spate of mergers and
acquisitions by Indian companies has ushered an era of the
"Indian Pharmaceutical MNC Indian pharmaceutical companies
have now moved up a step in the value chain and are looking at inorganic
route to growth through acquisitions. Many top and mid tier Indian
companies have gone on a global "shopping spree" to build up
critical mass in International markets.
(E) EXPORTS
Pre-TRIPS
Most Indian companies focused on exports. Exports improve the
valuation of companies owing to higher margin in overseas markets.
Indian companies built fortunes by making cheaper versions of
blockbuster drugs and selling them in domestic and export markets.
Pharmaceutical exports clocked $7.2 billion in 2007-08,
accounting for six per cent of the country‘s total exports,
according to Pharmexcil, the Pharmaceutical Export
Promotional Council.
Post TRIPS
In the export markets even after the introduction of product patents,
products under patent protection will comprise only 15 percent of the
market. So a vast chunk of the market will be still open for
competition although margins will be wafer thin. Exports have

23. DR.RICHA SINGH
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continued to be a priority for Indian companies. Major blockbuster drugs
will come off patent in the near future, creating a big generic opportunity
for Indian ompanies. Also, a growing demand for anti-AIDS drugs
in Africa will keep Indian companies busy. Exports have and
will continue to provide Indian companies with the strength to
withstand the onslaught of multinationals in the domestic
market.
Current Indian Senario –Major players
India currently represents just U.S. $6 billion of the $550
billion global pharmaceutical industry but its share is
increasing at 10 percent a year, compared to 7 percent annual
growth for the world market overall. Also, while the Indian sector
represents just 8 percent of the global industry total by volume, putting
it in fourth place worldwide, it accounts for13 percent by value,2 and its
drug exports have been growing 30 percent annually.
The ―organized‖ sector of India's pharmaceutical industry consists of 250
to 300 companies, which account for 70 percent of products on the
market, with the top 10 firms representing 30 percent.

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According to the German Chemicals Association,
in 2005, India's top 10 pharmaceutical
companies were :Ranbaxy, Cipla, Dr. Reddy's
Laboratories, Lupin, Nicolas Piramal,
Aurobindo Pharma, Cadila Pharmaceuticals,
Sun Pharma, Wockhardt Ltd. and Aventis
Pharma.
Indian-owned firms currently account for 70 percent of the domestic
market, up from less than 20 percent in 1970. In 2005, nine of the top 10
companies in India were domestically owned, compared with just four in
1994.
India's potential to further boost its already-leading role in
global generics production, as well as an offshore location of
choice for multinational drug manufacturers seeking to curb
the increasing costs of their manufacturing, R&D and other
support services, presents an Opportunity worth an estimated
$48 billion in 2007.
India‘s pharmaceutical industry currently comprises about 20,000
licensed companies employing approx. 500,000 staff. Besides many
very small firms these also include internationally well-known
companies such as Ranbaxy, Cipla or Dr. Reddy‘s. With sales of
roughly EUR 1 bn, Ranbaxy is currently the world‘s seventh largest
generics manufacturer.

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Between 1996 and 2006, nominal sales of pharmaceuticals on the
Indian subcontinent were up 9% per annum and thus expanded
much faster than the global pharmaceutical market as a whole (+7%
p.a.). Indian companies strongly expanded their capacities, making
the country by and large self-sufficient. Nonetheless, with total
sector sales of roughly EUR 10 bn, India commands a less than 2%
share in the world‘s pharmaceutical market (1966: 1.5%). This puts
the country in twelfth place internationally, even behind Korea, Spain
and Ireland and before Brazil, Belgium and Mexico. Among the
Asian countries, India‘s pharmaceuticals industry ranks fourth at 8%,
but has lost market share to China, as sales growth there was
nearly twice as high and sales volumes nearly four times higher than
in India.

26. DR.RICHA SINGH
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Currently the most important segment on the domestic market
is anti-infectives; they account for one-quarter of total turnover. Next
in line, and accounting for one-tenth each, are cardio-vascular
preparations, cold remedies and pain-killers. By contrast,
medicines against civilisation diseases (such as diabetes, asthma and
obesity)or so-called lifestyle drugs (anti-depressants, drugs to help
smokers to quit and anti-wrinkle formulations) are of little significance

27. DR.RICHA SINGH
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at present. All in all, the Indian pharma industry produces about 70,000
different drugs.
CHANGING ROLES FOR MANAGERS
Managers of pharmaceutical industry need financial and non-financial
information to develop and implement strategy by planning for the
future (budgeting); making decisions about products, services, prices
and what costs to incur (decision-making using cost information); and
ensuring that plans are put into action and are achieved (control). This
function is called management accounting.
In time, developments and innovations appeared. Organizations
confronted with automation of production processes and technological
evolution developed new and complex cost and management systems.
The decline of manufacturing and rise of service industries led to the
need for ―accurate knowledge of product costs, excellent cost control
and coherent performance measurement‖ (Cooper and Kaplan, 1989).
And the challenge of today‗s competitive environment is to
develop efficient and effective management and cost systems
which also allows to measure performances and provides
timely and accurate information to facilitate efforts to control
costs, to measure and improve productivity, and to devise
improved production processes.
In this way, management accounting is now implicated with (Collier,
2003): value-based management, non-financial performance
measurement systems, quality management approaches,
activity-based costing and management and strategic
management accounting in order to help managers to increase the
value of the business.
THE IMPORTANCE OF MANAGEMENT CONTROL IN
MONITORING THE PHARMACEUTICAL INDUSTRY
Managerial accounting is an integral part of management which provides
information that is used by management to formulate strategies, plan,
coordinate and control the activity, make decisions, optimize the use of
resources and safeguard assets. Management controls in

28. DR.RICHA SINGH
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pharmaceutical industry are the organization, policies, and
procedures used by agencies to reasonably ensure that:
1) programs achieve their intended results;
2) resources are used consistent with agency mission;
3) programs and resources are protected from waste, fraud,
and mismanagement;
4) laws and regulations are followed; and
5) reliable and timely information is obtained, maintained,
reported and used for decision making.
The Management Control acts through the following phases in sequence
(Johnson and Kaplan, 1987): 1) planning, where for any company‘s unit
a set of objectives must be defined, that is of specific expected results,
which need to be: understandable, agreed, measurable in extent and
time, reachable, consistent with one another and with the available
resources, 2) programming, where a program is drawn up in order to
get the planned objectives, taking into account the internal and external
restraints to the company 3) result checking, where it is measured
whether each company‘s unit has achieved or not the assigned
objectives, 4) shifting analysis, where the possible shifting between
objectives and results is analyzed and 5) corrective action
implementation, in order to optimize the units behavior against the
planned objectives.
HOW CAN WE MEASURE THE PERFORMANCE OF A
PROJECT OR AN ACTIVITY IN PHARMACEUTICAL
INDUSTRY?
The standard-cost method is a modern and efficient method for
pharmaceutical industry. This method offers undeniable advantages in
what concerns the operative study and analysis of the production
efficiency, being thus able to accomplish an important function in the
leadership of the modern enterprise: it is an investigation and
previsional tool and it represents a precious mean when you have to
make a decision.

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The standard-cost method makes part of the category of methods of
previsional calculation and of efficient of the production process which
allows the establishment of the production costs with anticipation
regarding the beginning of the production process and the achievement
of the budgetary control of the costs through the determination of the
divergence between the real and pre-set costs taking into account the
divergences and their causes in the same time with the development of
the production process. According to the concept of this method, the
production costs must be calculated with anticipation and one must use
pre-set measures. In the same time with the development of the
production process, the operative follow-up of expenses is organized as
through a comparison with standard costs in order to establish the
divergences regarding the expenses and their causes so that the
budgetary control of the cost should be accomplished
HOW TO MONITOR RISK IN PHARMACEUTICALS
CORPORATIONS?
Every entity faces a variety of risks from external and internal sources
that must be assessed. A precondition to risk assessment is
establishment of objectives, linked at different levels and internally
consistent. Risk assessment is the identification and analysis of relevant
risks to achievement of the objectives, forming a basis for determining
how the risks should be managed. Because economic, industry,
regulatory and operating conditions will continue to change,
mechanisms are needed to identify and deal with the special risks
associated with change.
For R&D companies, this will mean registering all clinical and
human trials in a central location, as well as voluntarily
disclosing all relevant information. This could possibly include
compulsory reporting—directly by researchers—of all data to a third
party. On the commercialization side, direct marketing would be
redefined as comparative data became common and readily available.
Should executives fight growing pressure for increased transparency?
Companies that embrace information transparency will benefit from
renewed public trust, fewer and smaller settlement payouts, improved
P/E ratios, and lower costs of capital. Transparency also means that
society will begin to share the risks inherent in the pharmaceutical

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business. Ultimately, as pharmaceutical companies give to society,
society will balance its need for innovation against the risks involved in
new drug therapies.
For the future we are not so bold as to believe that this vision of the
future is either completely accurate or will be passionately embraced by
the industry. Debate and spirited discussion should occur. The important
point is that companies, and the industry as a whole, begin to design and
prepare for a new environment. Companies must prepare for these
changes today to ensure that they can use the upcoming shifts to their
advantage. The following steps are offered as a guide (O‗Meara and
Ryan, 2011):
 Review competitive positioning. Is our company stronger in
research and development or manufacturing and marketing? Rethink
your strategic goals and choose a business model that best supports
them.
 Adopt new financial tools. Assess the feasibility, costs and
benefits associated with various financial tools and then understand the
implications that each alternative brings.
 Plan for information transparency. At the most basic level,
companies must identify and mitigate the risks inherent in sharing
information. Recent examples of personal data threats in consumer
finance and retail banking offer good lessons about the difficulty of
maintaining data integrity. By working with public advocacy and legal
groups you can help shape data transparency.
 Encourage patients to become active partners in their
health care. Patients are becoming increasingly active partners in their
health care decisions. Companies can facilitate this trend through better
consumer education and by stressing the importance of two-way
communication. Also, all marketing strategies should reinforce this
partnership message.
 Ultimately, it is up to all pharmaceutical companies to begin
managing their challenges to emerge as part of a better, more
productive and stronger industry. The future will depend on confronting
each challenge and on a new mindset—it‗s time to think beyond the next
blockbuster.

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THE IMPACT OF MANAGEMENT CONTROL ON STRATEGY
AND PERFORMANCES
To maintain a competitive position a company must generate the
information necessary to define and implement its organizational
strategies. Strategy is the link between an organization goals and
objectives and the operational activities executed by the organization. In
the current global market, firms must be certain that such a linkage
exists.
The accomplishment of a strategy reclaims taking in consideration the
different management horizons: First is the strategic horizon –
settles the goals and objectives on long term, 5-10 years, and as a result
of these elaborates strategic plans. Second is budgetary horizon –
translates into practice the established goals and objectives on medium
term using budgets and operational plans. And the end is operational
horizon – elaborates, applies, pursuits and analyses action plans.
Management control acts within each horizon using specific instrument
on every level and the controlling process is bounded to the decision
making process. The Management Control Systems (MCS) enables
managers to perform strategic analyses on issues such as determining
core competencies and organizational constraints from a cost-benefit
perspective and assessing the positive and negative financial and non-
financial factors of strategic and operational plans.
Healthcare Players are pursuing new business models and approaches to
overcomethe challenges posed by dwindling margins, high outflows, and
cases of fraud and abuse. These new models help keep pace with
regulatory and legislative changes,bring focus on changing customer
definitions, and enable collaboration with allstakeholders. While this
enables better outcome management, these approachesalso help fulfill
the long-aspired state of lower premiums, wider coverage,flexible plans,
and healthy margins.

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INDIAN MARKET: OPPTUNITIES
Generics
Indian firms will likely take around 30 percent of the increasing
global generics market, the Associated Chambers of Commerce and
Industry of India (Assocham) forecast.
Currently, the Indian industry is estimated to account for 22 percent
of the generics world market.
Low production costs give India an edge over other generics-
producing nations, especially China and Israel, says Assocham‘s
President Mahendra Sanghi.
India has the largest number of U.S. Food and Drug Administration
(FDA) approved drug manufacturing facilities outside the U.S.
Indian firms now account for 35 percent of Drug Master File
applications and one in four of all U.S. Abbreviated New
Drug Application (ANDA) filings submitted to the FDA.
The U.S. continues to be an attractive market for Indian firms, despite
the challenges of price erosion and the launch of ―authorized generics‖
by innovator companies, says Ranjit Shahani, vice chairman and

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managing director, Novartis India Ltd, and President of the
Organisation of Pharmaceutical Producers of India.
The major concern of the U.S. FDA appears to be the entry of counterfeit
drugs, he says, but he does not believe this to be an obstacle for
reputable Indian manufacturers. Moreover, while the World Trade
Organization (WTO) Doha Trade-Related Aspects of Intellectual
Property rights (TRIPs) national Emergency/compulsory license
agreement presents an exporting opportunity for Indian firms, Shahani
stresses that the firms must have anti-diversion measures in place in
order to protect their reputation.
―The European generics market, pointing to Dr Reddy's recent
acquisition of Betapharm of Germany for $570 million, holds more
promise.‖ Indian companies have acquired over $1 billion
worth of pharmaceutical companies overseas in the past year
and a half and should increasingly look more aggressively at
countries like Brazil, Russia and the Collaboration for Growth

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Indian firms should move up the value chain to produce
innovative ―super generics‖ as the once-a-day Ciprofloxacin product
developed by Ranbaxy and licensed to Bayer, move up from producing
―generic generics‖ to branded generics.
Biotechnology Generics
Firms based in India and China could be among the first to bring bio
generics (generic versions of biological products) to the regulated
markets and faster than expected. The first bio generic product was
approved by the European Medicines Agency (EMEA) which refers to
these products as ―biosimilars,‖ in April 2006.
IMS estimates that biotechnology products accounted for 10 percent of
global pharmaceutical sales in 2004
Patents on the first generation of blockbuster biopharmaceuticals are
beginning to expire, and the high cost of these products means the
generic versions will find large markets among hard-pressed
governments and other payers. Sales of bio generics are flourishing in
the unregulated markets.
An early beneficiary when the regulated markets finally establish
frameworks for bio generics is likely to be Wockhardt. This
pharmaceutical and biotechnology company was one of the first Indian
drug manufacturers to enter the European market, achieving this
through a series of acquisitions;
Biopharmaceuticals are central to Workhardt's growth
strategy and the firm expects this area of its business to take
off from 2006. Export Import Bank Chairman T.C. Venkat
Subramanian believes the patent expires on 11 major drugs could
help bring a ―biotechnology revolution‖ to India. He forecasts
that biotechnology could potentially generate revenues of $5

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billion and create one million jobs by 2010, through products
and services
Biotechnology
In 2003-04, biopharmaceuticals accounted for 60 percent of India's total
biotechnology market, which was worth an estimated $709 million-up
39 percent over the previous period.
Investment in the sector was up 26 percent to $137 million-and exports
accounted for 56 percent of industry revenues. The domestic
biopharmaceuticals sector grew 38.5 percent and had the largest local
market share, at 76 percent, followed by bioagriculture at 8.4 percent,
bioservices at 7.7 percent, and industrial products at 5.5 percent and bio-
informatics at 2.5 percent.
The industry is growing fast, with an initial emphasis on vaccines and
bioservices. The industry is situated mainly in Karnataka, although there
are operations in Andra Pradesh, Hyderabad, Kerala, Maharashtra and
West Bengal.
The top 10 players in terms of revenues in 2004 were:-
Biocon, Serum Institute of India, Panacea Biotec,
Nicholas Piramal, Novo Nordisk, Venkateshwara
Hatcheries, Wockhardt, GSK, Bharat Serums &
Vaccines, and Eli Lilly & Co. ----according to reports of
Burrill & Co, the U.S.-based life sciences merchant bank. As is
generally the case worldwide, most biotech companies in India have
developed along the contract or collaborative research models.
Observers also warn that India's nascent biotechnology sector could face
particularly strong competition from China, the only developing country
to participate in the international Human Genome Project.
India is regarded as having the edge over China in terms of
qualified, English-speaking employees, intellectual property
rights, and judicial and quality standards. However, if China

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does emerge as the dominant biotechnology player, this could
have very serious implications for India.
Outsourcing: IT Outsourcing
India's status as an information technology superpower, with access
to specialist skills and 24/7 work hours, is a huge advantage as it
strengthens its position as the destination of choice for contract
research, including drug discovery.
Eighty-two percent of U.S. companies overall rank India as their first-
choice IT outsourcing destination, says leading international clinical
research organization Chiltern International, adding that IT and IT-
enabled services (ITES) companies have been expanding their
activities in India to new business segments such as bioinformatics
and life sciences;
Those doing so or planning to include Accenture, Intel, Satyam,
Cognizant, IBM, Oracle and TCS.
Wipro Spectramind, India's largest third-party offshore business
process outsourcing provider, is conducting bioinformatics work for
global pharmaceutical companies.
―India is considered a highly promising outsourcing IT and clinical data
management destination because of its rich talent pool, technological
innovation, creditable quality, operational flexibility, cost effectiveness,
time-to-market and competitive advantage,‖ says Dr. Umakanta Sahoo,
general manager of CRO Chiltern International in India.
MNCs that have already entered into off shoring contracts include :
Pfizer India, which has signed a preferred provider contract for its
biometrics division with Cognizant Technologies India and is also
working with SIRO Clinpharm;
Wyeth, working with Accenture in clinical trial data management;

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GSK, whose biomedical data sciences and clinical data management
centre in Bangalore supports studies for the group worldwide; and
Novartis, which has a software development, centres for specialized drug
development programs.
Healthcare IT solutions offered by TCS
Other Advantages: CRAMS
The global pharmaceutical market is estimated to represent a $48 billion
opportunity for India by 2007, in terms of:
• manufacturing outsourcing-supply of active pharmaceutical
ingredients (APIs) and intermediates
• development outsourcing-conducting preclinical and clinical trials
• customized chemistry services-contract research services for
compounds pre-launch.

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Worldwide revenues for pharmaceutical industry contract
manufacturing and research services (CRAMS) totalled $100 billion in
2004 and will grow at an average annual rate of 10.8 percent to reach
$168 billion by 2009, say analysts at Frost & Sullivan.
Within this total, the global market for contract manufacturing of
prescription drugs is estimated to increase from a value of $26.2 billion
to $43.9 billion, although the over-the-counter medicines and
nutritional products sector will show the fastest growth
The Asian region has recently been challenging North America and
Europe's traditional domination of the global pharmaceutical contract
manufacturing market: India and China could potentially account for 35
percent to 40 percent of the outsourced market share for active
pharmaceutical ingredients, finished dosage formulations and
intermediates.
Indian successes in this area have already created some significant
international developments.
For example, Jubilant Organosys, which has the largest CRAMS business
in India, acquired Target Research Associates plus 64 percent of Trinity
Laboratories and its wholly owned subsidiary Trigen Labs, all U.S.-based
firms.

39. DR.RICHA SINGH
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Another large Indian firm, Bilcare Ltd, acquired its first manufacturing
facility in the U.S. last year, with the purchase of Philadelphia-based
proClinical Inc.
CONTRACT RESEARCH
India and China's drug outsourcing discovery markets combined are
currently worth around $7.3 billion and, driven by government
initiatives to diversify the drug discovery
portfolio and develop infrastructure, are set to reach $19.8 billion in
2011, say analysts at Frost & Sullivan
In September 2004, a global innovation survey by the Economist
Intelligence Unit identified India as an R&D ―hotspot,‖ defined as a place
where
(1) companies are able to tap into existing scientific and technical
expertise networks,
(2) there are good links to academic research facilities,
(3) the environment supports innovation and
(4) it is easy to commercialize.

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Costs of pharmaceutical innovation in India are estimated as low as one-
seventh of their levels in Europe, and the country's clinical research
industry is currently worth $100 million.
INDIAN MARKETS: CHALLENGES
Patents and Intellectual Property Rights
Since the introduction of product patents the MNCs have largely
returned, the most recent being Merck & Co, which inaugurated its
wholly owned subsidiary MSD India Pvt Ltd in July 2005 after being
absent for approximately 20 years.
Assocham believes the new patent regime will enable the development of
innovative new drugs, which will increase profitability for MNCs. It will
also force domestic players to focus on R&D, which, for those who can
afford to do so, will have long-term beneficial effects, it says.
The industry is also waiting to see whether the government will follow
international guidelines governing compulsory licensing, the process by
which the TRIPs agreement permits governments, in special cases, to
waive the patent on a particular medicine. Elsewhere in the world, the

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trade treaty allows compulsory licenses to be issued in response to a
national emergency, but in India they may currently be invoked due to
factors such as the reasonability of a product's price, and its potential for
export and local manufacturing, among other issues. Government policy
in this area needs to be more clearly defined.
Pricing Issues
The prices of 74 bulk drugs and their formulations, which account for
around 40 percent of the retail pharmaceutical market, are controlled by
the Drug Price Control Order (DPCO) of 1995. The government's 2002
Pharmaceutical Policy would have reduced the numbers of price-
controlled drugs still further, but this proposal is currently under judicial
review in the Supreme Court. If it is approved, the number of price-
controlled drugs is expected to drop to 25.
Regulatory Reforms
The government needs to provide incentives and allow companies to
make additional profits that they can plough back into research. Tax
incentives are also necessary to attract more foreign investment into the
country, as they have proved successful in regions such as Singapore,
Puerto Rico and Ireland.

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The government is now starting to develop an infrastructure for clinical
trials in India, with amendments made recently to Schedule Y of the
Drugs and Cosmetics Rules of 1945 to allow for multicenter concurrent
clinical trials in India and address the protection of trial participants,
and the integration and quality of data. Among other developments,
Good Clinical Practice guidelines have been published and made
mandatory.
―The success of government moves to encourage further outsourcing
activities will depend on both the new Policy and improvements to the
regulatory framework, Kewal Handa of Pfizer India says.
In terms of TRIPs compliancy, he urges the government to take a
pragmatic view and create a truly level playing field so that all companies
can operate on an equal footing.
R & D Spending
Indian manufacturers cannot fulfill their ambitions to become players on
the world stage unless they make significant increases to their R&D
expenditures; at 2 percent of sales, these are currently far below the
global level of 10 to 20 percent.
In fiscal 2005, the leading five Indian companies increased their R&D
spending 47 percent overall to a total of $192.3 million from $131 million
in fiscal 2004. Within that total, individual companies' spending rose as
much as 90 percent, with Dr Reddy's amounting to 14.7 percent of its net
sales. However, Nicholas Piramal and Cipla still spend less than 5
percent of their net sales on research, and the combined R&D
expenditures of the five is still less than 3 percent of Pfizer, the world's
leading research-based drug manufacturer.
India's new patents regime is already producing changes in terms of
greater commitment to discovery research within the industry, although
a major shift for Indian firms away from reverse engineering will not be
seen for three to four years, Ajay Piramal of Nicholas Piramal forecasts.
In what was regarded as the start of a significant new trend, in
September 2004, the Indian firm Glenmark out licensed GRC-3886, a
PDE4 inhibitor in development for the treatment of asthma and chronic
obstructive pulmonary disease to Forest Labs of the U.S., for $190

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million in staggered milestone payments and 15 percent of sales in
royalties.
Developing the Domestic Indian Pharmaceutical Market
Satish Reddy of Dr Reddy's Laboratories applauds the government's
draft National Pharmaceutical Policy for 2006's provisions on increasing
access to treatments for life-threatening diseases, but points out that
Western lifestyle diseases are currently providing the major growth in
the domestic market.
India currently spends 4.5 to 5.0 percent of its GDP on health
care, but public spending accounts for just 0.9 percent, putting
the nation among the 20 lowest-spending countries worldwide.
Total health expenditures were $29.3 billion in 2004, with around 83
percent accounted for by private providers. The balance of spending is
also iniquitous; while the poorest 20 percent of the population has
double the mortality rates, malnutrition and fertility of the richest
quintile, the latter group receives about three rupees for every one rupee
spent on the former. Two-thirds of what the government spends on
health care goes to secondary and tertiary care rather than basic services.
Ninety-four percent of all private health spending is out of
pocket, mostly at the time of the incident, and more than 40
percent of hospitalized people borrow money or sell assets in
order to cover their expenses. The remaining 6 percent of spending
is provided by insurance -3.7 percent social, 1.6 percent employer-
sponsored and 0.7 percent private insurance.
The health insurance market was opened up to the private sector in
2000 and, since then, growth has been fast, with nearly 10.3 million
policies sold in 2003-04 compared to 7.5 million in 2001-02. A 40
percent compound annual growth rate (CAGR) is forecast for the health
insurance sector over the coming years, making it a significant driver of

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the domestic health care market, which analysts at McKinsey believe
could be worth $40 billion by 2012.
Lack of Infrastructure
With rampant power cuts and bad transportation facilities India lacks
behind its close Asian competitors to efficiently utilise the available
resources.
RECENT FINANCIAL DEALS

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An enabling factor for Indian firms' activity overseas is their increased
liquidity in the market, with increasing numbers of Foreign Currency
Convertible Bond listings and private equity findings.
Eleven of the 18 acquisitions are comparatively small, worth $5 to $30
million, but the value of Indian industry purchases is rising fast, having
grown from just $8 million in 1997 to $116 million in 2004, and this fast
pace is expected to continue.

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INDUSTRY UPDATES—
RECENT NEWS
2011 will be a year of regulatory tussle
for pharmaceutical industry--
Government policy and regulatory changes were the focus
point for the pharmaceutical industry in India in the year
2011.
Indian pharmaceutical major, Ranbaxy Laboratories has
signed a consent decree with the US Food and Drugs
Administration [FDA] in order to make it possible to sell
drugs produced at its plans in India, which are facing a
fan in the US
Centre aims to boost pharmaceutical exports to China The
central government is keen on increasing export of
pharmaceutical products to neighbouring China as the
country appears to be ready to allow Indian generics
makers to enter the country.
Biocon receives positive results under phase 3 TREAT-
PLAQ study with Itolizumab
Pharma sector to see healthy growth, but not for all
companies
Wockhardt receives final approval to market nasal spray
of Fluticasone
India is emerging as a new centre for the trials of
paediatric oncology drugs.

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A tree-member delegation of the Central Drugs Standard
Control Organization (CDSCO) is scheduled to be
dispatched by the Union Health Ministry to China.
The 12 doctors attached to M Y Hospital, Indore, and 66
other government and private doctors were involved in
the trials conducted on children and mentally challenged
patients among others in alleged violation of rules by not
taking consent of the subjects and also by not informing
the health authorities.
CONCLUSION
Health spending as a
% of GDP 2010
Health spending as a
% of GDP 2020
GDP growth Health spending
growth
Country 2010 2020 2010-2020 2010-2020
Brazil 8.7% 9.7% 45.3% 62.0%
China 4.6% 5.7% 114.9% 166.5%
India 4.4% 5.2% 100.2% 140.0%
Russia 5.5% 5.8% 44.9% 52.2%
© 2010 PricewaterhouseCoopers, LLP
There has never been a more important time for India's government and
its drug producers, both multinational and domestic, to work together in
partnership for the good of the industry and the nation. With its
enormous advantages, including a large, well-educated, skilled and
English-speaking workforce, low operational costs and improving
regulatory infrastructure, India has the potential to become the region's
hub for pharmaceutical and biotechnology discovery research,

48. DR.RICHA SINGH
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manufacturing, exporting and health care services within the next
decade.
However, in order for this to happen, it is imperative that the regulatory
environment continues to improve. Otherwise, India needs to look to the
achievements of China, where the government's strong commitment pro-
industry policies have produced a positive environment that not only
offers drug manufacturers a product patent regime but also, and
crucially, data protection. India's continuing failure to do so needs to be
urgently rectified.
The goals set out in the Indian government's draft National
Pharmaceuticals Policy for 2006 in terms of domestic market
development are ambitious, and will require a positive pricing
environment if the country's 1 billion people are to be able to access the
life-saving and innovative medicines they need.
Again, partnership is key: industry leaders are keen to work with
government on issues of affordability and point out that price controls
will do nothing to increase access to new and effective treatments. For
foreign investors, collaborations with India present a huge opportunity
both in terms of joint production for the global market and supply of the
growing domestic market.
Outlook for India‘s pharmaceutical industry up to 2015
All in all expect India to see drugs sales rise by an annual 8% to nearly
EUR 20 bn between 2006 and 2015. To be sure, this growth rate is
higher than that seen for Germany (+5% p.a.) and the entire world
(+6%). Nonetheless, India‘s share in world pharmaceutical sales will rise
only marginally to a good 2%.
Growth of India‘s pharmaceutical industry and thus its share in global
drugs manufacturing could even be slightly higher if the Infrastructure
problems could be remedied quickly. While the Pharmaceutical
industries of China and Singapore will likely Continue to show much
higher growth, India looks set to even lose market share in Asia. It is
likely that many of smaller companies will merge or disappear from the
market altogether. By contrast, large pharmaceutical companies with
sales volumes of over EUR 50 m will be able to increase their sales as

49. DR.RICHA SINGH
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they will be better equipped to adjust their product ranges to the
demands of international markets.
These firms will expand their capacities in India – mostly in the sector‘s
clusters surrounding Delhi and Mumbai – but will also take over firms in
the industrial countries. Medium-sized businesses will benefit from
increasing contract Production for western firms.
All in all, the share of pharmaceuticals in the total chemicals industry in
India will come to roughly 17% in 2015 (2006: 18%), compared with 28%
in Germany (from 24% in 2006). For the world as a whole, the ratio will
likely be only slightly lower than the German level (25%).
Although India‘s pharmaceutical sector is growing strongly, the
population‘s demand for drugs cannot be met by the country‘s own
production in all segments. At EUR 1.5 bn, India‘s total drugs imports
are comparable in size to Norway‘s entire pharmaceuticals market.
Imports look set to continue to rise strongly.
On a medium-term horizon, one-fifth of the world‘s pharma sales will be
accounted for by the emerging markets. China will then be among the
group of the five largest manufacturers, while India will join the group of
the ten largest suppliers. The sooner India manages to close the
infrastructure gap, the higher growth will be in the country‘s
pharmaceutical industry.

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REFERENCES: