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| Edited By: C Chitti Pantulu |Source: |Updated: Sep 15, 2017, 01:18 AM IST
HYDERABAD: There will be as many opinions as there are experts. But pundits are unanimous on which direction the Indian pharmaceutical industry will take: up is the only way it can go. But then, there are myriad views on the how much the segment will grow.
McKinsey & Co recently predicted that the Indian market will have a CAGR of 12.3% to reach a size of $20 billion by 2015.The most aggressive estimate so far is that of international investment banking firm Goldman Sachs which has said India will be the world’s fifth largest pharmaceuticals market by 2020 with sales of $43 billion compared with $6.5 billion now.
It will clock a scorching CAGR of 14% during the period. From a different perspective, what is good news for the pharmaceutical sector is bad medicine for the common man.
Rapid urbanisation and prevalence of chronic lifestyle diseases will be the primary reason for this phenomenal growth of the market. Goldman Sachs analysts Vikram Sahu and Ishan Sethi said lifestyle diseases will be responsible for nearly 50% of the drug sales in the country by 2020, up from the current 25%.
Cancers, diabetes and cardiovascular diseases are likely to account for a third of the incremental demand during 2007-2020 and more than double their share in the total market to 34% in 2020 from 15% in 2007.
However, one positive aspect of this story is that much of this growth will also be a result of pharmaceutical penetration in the country which is currently low at below 40%, said Merrill Lynch analysts Visalakshi Chandramouli and Arvind Bothra. Significantly, generics will continue to account for 80% of the overall market which will see a massive increase in overall per capita spending rise to $35 by 2020, the Goldman Sachs analysts said.
Among the top 10 Indian companies, which derive 60% of their revenues from overseas sales, it is only Sun Pharma and Nicholas Piramal which are best positioned to leverage this domestic opportunity, the Goldman research said.
Significantly, Nicholas Piramal will be one of the fastest growing firms in the group with a 24% EPS CAGR over FY2007-10.
Likewise, Sun Pharma is also well positioned to benefit from the domestic growth opportunity though its business mix is likely to change thanks to the May 2007 acquisition of Taro.
Glenmark with a relative large sales force, is also ranked well to tap the domestic opportunity, they added. The top 15 Indian players account for 35% of the current market while the MNCs hold 22% share, it had said.
