A recent McKinsey & Company report has stated that the Indian pharmaceuticals market has the potential to flourish to $55 billion in 2020.
The report, 'India Pharma 2020: Propelling access and acceptance, realising true potential,' stated that this will be four times the market from the $12.6 billion the industry from 2009. The report says that the pharma market has the ability to touch $70 billion by 2020 if aggressive and innovative strategies are implemented.
"The magnitude and intricacy of the market is intensifying as India is reaching for the global top tier," Palash Mitra, Partner at McKinsey & Company, and Leader of the Pharmaceuticals & Medical Products Practice in India said.
Recognizing prevailing gaps in global pharmaceuticals markets, the report states it is the BRIC countries, including India, which will be the leaders of the pack for innovation in the coming decade.
Countries included in the BRIC partnership are Brazil, Russia and China.
The pharmaceutical industry in India has been expanding at 13-14 percent in the previous five years. This is a considerable upsurge over the nine per cent growth observed between 2000 and 2005. The report claimed that five new opportunities will seize 45 percent of the market by 2020. It will be budding from the $3-billion industry it is today to $14-18 billion in 2020. These five opportunities are patented products, consumer healthcare, biologics, vaccines and public health.
Metro and Tier-1 markets, which have seen an expansion at 14-15 percent in the previous five years, will promote further expansion in the industry. They make up 60 percent of the Indian pharmaceuticals market in this era and seem determined to progress to a market size of $33 billion by 2020. This can be credited to the effect of swift urbanisation and the development of medical infrastructure. Rural markets, conversely, will represent 25 percent by 2020, which is up from 20 percent presently, while Tier-2 markets will regress from their current capacity of 20 percent to 15 percent.
"Entrance in rural and Tier-2 markets is of concern," said Mitra. "Orthodox commercial models are going to be ineffective. The industry has to discover newer approaches to improve healthcare and drugs."
Epidemiological aspects like a larger patient pool by 2020, rising availability of drugs due to a surge in investment in medical infrastructure, better reception of new medicines and making medicines affordable are the pillars of this growth.
Economical medicinal products will provide 50% of the forecasted growth, with increasing incomes and rising insurance coverage decreasing the price of drugs. A surge in income levels will place an additional 73 million people in middle and upper class segments, while 650 million people will possess health insurance by the year 2020. While private insurance will expand by 15 percent by 2020, the masses will be offered insurance via schemes which are sponsored by the government. These schemes will target the lowest tiers of society.
"While expansion in the pharmaceuticals market has so far been powered by increasing affordability, the industry is required to take a more proactive approach in bettering accessibility and acceptance of modern medicine," cautioned Mitra.
There have been several transformations in the pharmaceuticals industry in the previous five years. The report indicates the discontinuous growth in the expansive healthcare sector, joined with the altering structure of the industry itself because of considerable changes in the frontrunners of the industry. Four of the prime candidates in the pharmaceutical market currently, including the market leader, are new contestants. The instability is also being created by moving away from traditional foundations of growth to more up-to-date ones.