Why is the Pharmaceutical Industry Highly Successful in India?

Last Updated at: May 06, 2020
147
Why is the Pharmaceutical Industry Highly Successful in India_

The success of the Indian Pharmaceutical Industry is one that is hailed all over the world. Regarded as a highly competitive and cut-throat sector, the Indian pharma companies have been able to hold their own against the big leagues in many ways. At present, more than 5 lakh people are working in the pharma sector in India in over 12,000 different companies. Out of these, over three thousand of them are large pharma companies. Even though drug prices in India are much lower than in Europe and the US, these companies still find a way to do well. So, what is the secret behind Indian pharmaceutical companies doing so well? Here’s a look at the reasons that help Indian pharmaceutical companies thrive in our country.

  • Growth of Pharmaceutical Industry
  • What helps Indian pharmaceutical companies succeed?
  1. Generic Drugs
  2. Export
  3. Government Efforts
  4. IT Support
  5. Globalization

Growth of Pharmaceutical Industry

The early 20th century witnessed slow growth due to the draconian laws that the British had in place while ruling India. Therefore, the industry was in shambles, and most drugs had to come from abroad. However, due to the availability of cheap labor, the presence of several resources and low taxation led to several foreign companies setting up camps in India. After Independence, India built on these subsidiaries to grow its pharma sector. The Patent Act, which came out in 1970, lifted a lot of restrictions and made the process of patenting easier than ever before.

This, along with the Economic Liberalisation of the early 1990s, led to an influx of FDI, which helped set up our pharma industry. The years that followed witnessed a massive growth in Indian pharmaceuticals as they attracted orders, projects, and clients from the West. At present, India’s pharma industry is regarded as the world’s third-largest, with a CAGR of 10% annually.

Indian pharmaceuticals were worth the US $36 billion in 2016, with a CAGR of 15.92%. While the demonetization and GST led to a small slow down, the industry is back on its feet again. The government has also helped this revival with its Pharma Vision 2020 scheme. Such plans will help speed up the growth even further, with experts looking at the industry hitting USD 55 billion by the end of 2020. So, what made all of this possible?

What helps Indian pharmaceutical companies succeed?

Here’s a look at some of the biggest reasons behind Indian pharmaceutical companies doing so well for themselves.

Generic drugs

Generic drugs are those which work the way drugs from top pharma companies do but at a much lower cost. They work similarly and deliver the same results, but do so at more affordable prices. India became the third-largest drug manufacturer in the world due to its ability to create highly efficient generic drugs. 

Export to the West

In many ways, the pharmaceutical industry in India resembles the IT industry. One of the biggest reasons for its sustenance and performance is export to the western world. The same way a lot of IT professionals end up taking up outsourced work from the West, Indian pharma companies take up offers from the West. The availability of affordable drugs and highly qualified manpower led to a lot of offers migrating to India. The small and medium-sized pharma companies here scooped up these offers. It is interesting to note that the US proves to be the largest market for Indian pharma companies. 

Start Your Pharmacy Business

Government Efforts

To help the Indian pharmaceutical companies, the Indian government has come out with various schemes. Strong backing by the government has encouraged these industries to come out into the forefront. The Indian government allows these industries to take in over 70% of Foreign Direct Investment. Such moves help in making it easier for businessmen to attract investors and pump more money into the industry. Furthermore, India’s patent system, thanks to laws such as the Patent Act of 1970, is much more flexible. Such agile laws help the pharma sector conduct their business efficiently.

Backup from the IT sector

India’s IT sector is known for providing exceptional service at affordable rates. Having already made it big in the Western world, this industry has led the way for pharmaceutical companies in India. Many European and American companies have the guts to work with Indian pharma companies as they know Indian IT companies. Therefore, the IT industry has done wonders for the pharma sector by providing promotional support.

Globalization

The concept of globalization has helped India attract large offers from the US and Europe. As per this way of business, companies look for cheaper and more efficient production facilities offshore to expand their operations. This, in turn, gives opportunities to small-scale industries to scale up and grow their own products and services.

Therefore, there are many reasons for the Indian pharmaceutical industry doing very well for itself. Right governmental action and smart decisions from top-level management can help Indian companies become top pharma companies in the world. Furthermore, the availability of cheap labor and production infrastructure are components that will be prevalent in India for many more years to come. Therefore, there is a good chance that the pharmaceutical industry will continue to grow and develop in India, helping employ millions soon enough.

 

 

 

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Why is the Pharmaceutical Industry Highly Successful in India?

147

The success of the Indian Pharmaceutical Industry is one that is hailed all over the world. Regarded as a highly competitive and cut-throat sector, the Indian pharma companies have been able to hold their own against the big leagues in many ways. At present, more than 5 lakh people are working in the pharma sector in India in over 12,000 different companies. Out of these, over three thousand of them are large pharma companies. Even though drug prices in India are much lower than in Europe and the US, these companies still find a way to do well. So, what is the secret behind Indian pharmaceutical companies doing so well? Here’s a look at the reasons that help Indian pharmaceutical companies thrive in our country.

  • Growth of Pharmaceutical Industry
  • What helps Indian pharmaceutical companies succeed?
  1. Generic Drugs
  2. Export
  3. Government Efforts
  4. IT Support
  5. Globalization

Growth of Pharmaceutical Industry

The early 20th century witnessed slow growth due to the draconian laws that the British had in place while ruling India. Therefore, the industry was in shambles, and most drugs had to come from abroad. However, due to the availability of cheap labor, the presence of several resources and low taxation led to several foreign companies setting up camps in India. After Independence, India built on these subsidiaries to grow its pharma sector. The Patent Act, which came out in 1970, lifted a lot of restrictions and made the process of patenting easier than ever before.

This, along with the Economic Liberalisation of the early 1990s, led to an influx of FDI, which helped set up our pharma industry. The years that followed witnessed a massive growth in Indian pharmaceuticals as they attracted orders, projects, and clients from the West. At present, India’s pharma industry is regarded as the world’s third-largest, with a CAGR of 10% annually.

Indian pharmaceuticals were worth the US $36 billion in 2016, with a CAGR of 15.92%. While the demonetization and GST led to a small slow down, the industry is back on its feet again. The government has also helped this revival with its Pharma Vision 2020 scheme. Such plans will help speed up the growth even further, with experts looking at the industry hitting USD 55 billion by the end of 2020. So, what made all of this possible?

What helps Indian pharmaceutical companies succeed?

Here’s a look at some of the biggest reasons behind Indian pharmaceutical companies doing so well for themselves.

Generic drugs

Generic drugs are those which work the way drugs from top pharma companies do but at a much lower cost. They work similarly and deliver the same results, but do so at more affordable prices. India became the third-largest drug manufacturer in the world due to its ability to create highly efficient generic drugs. 

Export to the West

In many ways, the pharmaceutical industry in India resembles the IT industry. One of the biggest reasons for its sustenance and performance is export to the western world. The same way a lot of IT professionals end up taking up outsourced work from the West, Indian pharma companies take up offers from the West. The availability of affordable drugs and highly qualified manpower led to a lot of offers migrating to India. The small and medium-sized pharma companies here scooped up these offers. It is interesting to note that the US proves to be the largest market for Indian pharma companies. 

Start Your Pharmacy Business

Government Efforts

To help the Indian pharmaceutical companies, the Indian government has come out with various schemes. Strong backing by the government has encouraged these industries to come out into the forefront. The Indian government allows these industries to take in over 70% of Foreign Direct Investment. Such moves help in making it easier for businessmen to attract investors and pump more money into the industry. Furthermore, India’s patent system, thanks to laws such as the Patent Act of 1970, is much more flexible. Such agile laws help the pharma sector conduct their business efficiently.

Backup from the IT sector

India’s IT sector is known for providing exceptional service at affordable rates. Having already made it big in the Western world, this industry has led the way for pharmaceutical companies in India. Many European and American companies have the guts to work with Indian pharma companies as they know Indian IT companies. Therefore, the IT industry has done wonders for the pharma sector by providing promotional support.

Globalization

The concept of globalization has helped India attract large offers from the US and Europe. As per this way of business, companies look for cheaper and more efficient production facilities offshore to expand their operations. This, in turn, gives opportunities to small-scale industries to scale up and grow their own products and services.

Therefore, there are many reasons for the Indian pharmaceutical industry doing very well for itself. Right governmental action and smart decisions from top-level management can help Indian companies become top pharma companies in the world. Furthermore, the availability of cheap labor and production infrastructure are components that will be prevalent in India for many more years to come. Therefore, there is a good chance that the pharmaceutical industry will continue to grow and develop in India, helping employ millions soon enough.

 

 

 

0

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