• Ranks 4th in volume terms but 13th in terms of value globally

• Contributes 8% to global pharmaceutical sales volumes but only 1% to global sales in value terms

• Total production by the domestic pharmaceutical industry in FY2004 was estimated at Rs. 357.5 billion; of this the formulations accounted for 78% and bulk drugs for the balance 22%

• Presence of over 10,000 units

• Highly fragmented market

• India is self-sufficient in the production of drugs and formulations as far as domestic demand is concerned.

• Besides, it exports to different regions/countries, including Europe and North America. The production in the Indian pharmaceutical industry has increased at a rate of 15.8% during FY1994-2004

• The country’s exports of pharma products grew at a CAGR of 22.9% during 1994-2003

• Imports of pharmaceutical products into India increased at annualised rate of 20.4% during the period FY1994-2003.

• Bulk drugs account for over 70% of imports of pharmaceutical products into the country.

• Bulk drugs imports increased mainly on account of the price differential as in certain cases, products are available at lower prices in the international market.

• The Indian pharmaceutical industry is highly regulated.

CEO SPEAK

R&D should be encouraged by not only continuing fiscal incentives but by enhancing such incentives in order to make India competitive in the global market place. This will help the country leverage its scientific skills. — Brian Tempest, CEO,Ranbaxy Labs Ltd

Key Issues

• High competitive intensity

• Introduction of product patents in January 2005

• Change in research focus and enhanced risk

• Increase in dependence on export markets, especially the more regulated ones, that has associated risks

• Changes in technology and therapeutic preferences in the developed countries, which may impact the revenues of the Indian pharmaceutical companies.

fe Perspective

• Customs duties should be exempt for more life saving drugs to make these drugs available to patients at an affordable price.

• Excise duties may be cut from 16% to 8 % to bring down prices.

CII suggestions

• Halve basic customs duty on diagnosis reagents to 10%

• Extend Cenvat credit on R&D equipment and consumables even if research centre is outside factory premises

FICCI Wishlist

• Extend facilities given to SEZ units to EOUs

• Allow deduction for investment made in land and building

• Extend Cenvat credit on inputs for medicines containing alcohol