Increasing personal incomes, addition of healthcare facilities and deeper penetration of health insurance will see India's pharmaceutical market triple to touch $20 billion in a decade, global consulting firm McKinsey said.
The projected growth would see India become the 10th biggest pharmaceutical market - moving up from the 14th position two years ago - by replacing Brazil, Mexico, South Korea and Turkey, the McKinsey report released here today said. The Indian pharma market was $6.3 billion in 2005.
At a compounded annual growth rate of 12.3 per cent, the absolute growth of $14 billion will be next to the growth potential of the US and China, and in the same league as the growth in Japan and Canada and the UK.
"Five factors will drive the growth of the Indian pharmaceutical market over the next decade. Doubling of disposable incomes and the increase in numbers of middle class households will account for nearly 40 per cent of this projected growth as both affordability and access will increase dramatically," says Palash Mitra, partner, McKinsey & Co, and co-leader of the pharmaceuticals & medical products practice.
According to Mitra, significant expansion of medical infrastructure will make up another 20 per cent. Greater penetration of health insurance (15 per cent) and a gradual shift in disease profile and adoption of patented products (10 per cent) are the other major growth drivers.
The study forecasts that mass therapies will remain important despite a shift towards specialty therapies that will account for 45 per cent of the market by 2015. The growing share of patented products (to 10 per cent from its current nominal levels) and the growing purchasing power of tier 2 markets, including rural India, will contribute to almost half of the growth till 2015, it says.
"These trends have strategic implications for pharmaceutical companies - Indian and multinationals and policymakers," Gautam Kumra, director, McKinsey & Co, and the leader of the pharmaceuticals & medical products practice in India points out.
"The challenge before Indian companies will be to focus on not just ensuring product access, and building robust sales and marketing capabilities but also creating new markets and crafting differentiated business strategies to service these markets. On the other hand, multinationals need to raise their game in India, and accordingly customise their business models, and invest in their India operations," Kumra says.
"The policy makers need to create an encouraging environment for the industry. Measures such as incentives to support capability building in R&D, ensuring broader access through higher levels of health insurance penetration, and building public health infrastructure and capability are important areas among others that require their intervention," he added.
