Pharmaceutical Industry-EXPORT IMPORT INDIA The pharmaceutical industry develops, produces, and markets drugs or pharmaceuticals licensed for use as medications. Pharmaceutical companies are allowed to deal in generic and/or brand medications and medical devices

1. Pharmaceutical
Industry

2. Overview
The pharmaceutical industry develops, produces, and
markets drugs or pharmaceuticals licensed for use
as medications. Pharmaceutical companies are allowed to
deal in generic and/or brand medications and medical devices
The Pharmaceutical industry has grown from mere US$ 0.3
billion turnover in 1980 to about US$ 13.22 billion in 2011-12.
Globally, India ranks 3rd in terms of volume of production (10
per cent of global share) and 14th largest by value (1.5 per
cent of global share). The reason for lower value share is the
lowest cost of drugs in India ranging from 5 per cent to 50 per
cent less as compared to developed countries
The total turnover of India's pharmaceuticals industry between
2011 and 2012 was US$13.22 billion.

3. The various categories under pharmaceuticals are:
Bulk Drugs (APIs)
Drug Intermediates
Drug Formulations
Biotechnology
Biological Products
Herbal Products (Ayurveda, Siddha & Unani )
Medicinal Plants
Homeopathy
Nutraceuticals and Physiochemical
Diagnostics
Clinical Research
Surgical

4. Along with Brazil & PR China, India has carved a niche for itself by
being a top generic Pharma player.
Major share of Indian Pharma exports going to highly developed
western countries bears testimony to not only the excellent quality
of Indian pharmaceuticals but also its price competitiveness.
More than 50 per cent share of exports is by way of dosage forms.
Indian companies are now seeking more Abbreviated New Drug
Approvals (ANDAs) in USA in specialized segments like anti-
infective, cardio vascular and central nervous system groups
Around 15% of Indian Pharmaceutical scientists are in USA, hence
good network

5. SWOT Analysis
Strengths
Cost Effective
Strong Manufacturing Base
Low cost of innovation, manufacturing and operations
Availability of high quality skilled workforce.
Low cost of skilled manpower and proven track record in
design of high technology manufacturing devices
Excellent marketing and distribution network
Diverse ecosystem

6. Weakness
Lack of coordination between industry and academia.
Negligible expenditure on healthcare in the country.
Manufacture of fake and low quality medicines
Stringent pricing regulations affecting the profitability of
pharma companies
Presence of more unorganized players versus the organized
ones, resulting in an increasingly competitive
environment, characterized by stiff price competition.

7. Opportunities
Increased export potential
Opening of the health insurance sector and increase in per
capita income - the growth drivers for the pharmaceutical
industry
Marketing tie ups with multinational companies to sell their
products in domestic market.
Immense scope to position India as a centre for
international clinical trials.
Key player in global pharmaceutical R&D.
Export of generic drugs to developed markets

8. Threats
Product patent regime is a major threat to domestic industry
unless the industry takes up R&D initiative aggressively.
Drug Price Control Order puts undue pressure on product
prices, affecting the profitability of the pharmaceutical
companies.
The new MRP based excise duty regime threatens the
business of smaller pharmaceutical companies.
Other low-cost countries such as China and Israel affecting
outsourcing demand for Indian pharmaceutical products
Entry of foreign players (well equipped technology-based
products) into the Indian market

9. Production Centres
State wise
Source- annual report of pharmexcil 2011-12
State No. of Manufacturing Unit Total
Formulations Bulk Drugs
Maharashtra 1928 1211 3139
Gujarat 1129 397 1526
West Bengal 694 62 756
Andhra Pradesh 528 199 727
Tamil Nadu 472 98 570
Others 3423 422 3845
Total 8174 2389 10563

10. Gujarat- Ahmedabad, Ankleshwar, Vapi, Vadodara
Maharashtra - Mumbai, Tarapur, Aurangabad, Pune
Andhra Pradesh - Hyderabad, Medak
Tamil Nadu – Chennai, Pondicherry

11. Trends in Export
The Pharmaceutical industry has grown from mere US $0.3 billion turnover in
1980 to about US$ 21.73 billion in 2011-12.
The industry is making adequate returns from the domestic sales but bulk of its
profits come from the export of generics and active pharmaceutical ingredients to
the developed markets.
The industry has been exporting more than half of its total production, which is
estimated to be more than 20 billion dollars currently.
In 2011, India exported $10.3 billion worth of pharmaceutical products,
registering 17.5% growth over 2011. By March 2012, pharmaceutical exports
from the country have touched a growth of 45%.
The largest export destination continues to be the US, followed by the UK,
Germany, South Africa, and Russia. Segment wise, generic drugs account for
58% of total exports, APIs account for 40% and traditional medicines account for
the remaining 2%.
The country’s commerce ministry has set an ambitious export target of $25
billion by 2013–2014.

12. Trends in Exports
Year Exports (in billion US
$)
Growth %
2008 to 2009 6.3 14.4.
2009 to 2010 8.6 36.5
2010 to 2011 9.1 5.81
2011 to 2012 13.22 45.6
SOURCE- ANNUAL REPORT OF PHARMEXCIL 2011-12

13. Major Export Destinations
India’s largest export destination for Pharma products is still the
USA, followed by the UK, Germany, South Africa and Russia. More than
50 per cent share of exports is by way of dosage forms.
The exports to US accounts for more than 40% of the total exports of
pharmaceuticals from India. The trigger for the development of the
generics market in the US came in the form of legislative action initiated in
the first half of the 1980s .
Europe is emerging as a key market and a potential growth driver. The size
of its market in 2006 was US $14.2 billion with Germany, France, the UK
and Italy accounting for more than 50% of the market. The governments in
Europe are trying to reduce Healthcare costs by embracing generic drug
companies.
India has had a unique position among the countries in the developing
world for it has a strong generic pharmaceutical industry, which has been
able to provide medicines at prices that were amongst the lowest in the
world.

14. Top Ten Destinations
Sr. No. The Country of Import Amount
(US $ million)
1 USA 1791
2 UK 263.9
3 Germany 243.6
4 South Africa 226.8
5 Russia 221.4
6 Brazil 165
7 Nigeria 154.1
8 Kenya 137.3
9 Netherlands 131.7
10 Turkey 119
Source – DGCIS, Pharmexcil Research

15. Following is the table of India’s exports of pharmaceuticals during the last four years
Region wise.
*Only 11 months statistics of the year 2011-12 has been received.
Hence the formulations figures for the year 2011-12 include a moth’s estimates.
Source: CMIE/DGCIS

16. EXPORTS OF FORMULATIONS CONTRIBUTION TO PHARMA
Source: CMIE/DGCIS

17. Major Competitors of
Pharmaceutical industry
The domestic market is very competitive with a large number of players
comprising of pure generics; branded generics, formulations, with varying
degrees of combinations and permutations among large players and small
players.
The main anti-competitive issues in the pharmaceutical sector are centered
on anti-competitive agreements and collusive practices along the supply
and distribution chains.
There was an international cartel of bulk vitamins present for quite some
time and cost in India about US$25mn, in the 1990s, as a result of
overcharging. Although no domestic cartel in pharmaceuticals have been
detected so far.
Most pharmacy owners in India are members of a trade association, All
India Organization of Chemists and Druggists (AIOCD).

18. 2011 2009
Country Rank US $
(in billion)
Growth
%
Rank US $
(in billion)
Growth
%
USA 1 322.3 3 1 301.1 6
Japan 2 111.64 16 2 89.86 17
China 3 66.8 22 3 45.26 24
Germany 4 44.92 7 4 41.28 -2
France 5 41.19 6 5 40.45 -5
Brazil 6 28.46 23 10 17.63 8
Italy 7 28.36 7 6 27.08 -1
Spain 8 22.68 2 7 22.72 1
Canada 9 22.29 3 9 19.14 0
UK 10 21.56 6 8 19.83 -11
Source – DGCIS, Pharmexcil Research

19. BIO-TECHNOLOGY PARKS
BTP units are entitled to following
Exemption from Income Tax as per section 10A and
10B of Income Tax Act, 1961
Exemption from Industrial Licensing for manufacture of
items reserved for SSI sector
Export proceeds will be realized within 12 months
Units will be allowed to retain 100% of its export
earnings in EEFC account
100% FDI permitted through automatic route
19

20. Units will not be required to furnish any bank guarantee at the
time of import or going for job work in DTA where unit has –
Turnover of Rs. 5 cr
Unit is in existence for at least three years
Unit has achieved positive NFE
Unit has not been issued a show cause notice during the
preceding 3 years on grounds other than procedural violations
under the penal provisions of the customs act, Central Excise
Act, Foreign Trade (Development & Regulation) Act, Foreign
Exchange Management Act, Finance Act, 1994
BIO-TECHNOLOGY PARKS

21. Contd..
• Procurement and Supply of Export promotion material
like brochure/literature, pamphlets, hoardings etc. up to
a maximum value limit of 1.5% of FOB value of
previous years shall be allowed.
• A BTP unit may procure goods from DTA or bonded
warehouses without payment of duty, all types of
goods, including capital goods, required for its
activities, provided they are not prohibited items of
import in the ITC (HS). Goods imported by the unit
shall be on with actual user condition and shall be
utilized for export production.
21

22. Quality Standards
Major Regulatory Bodies
The Central Drug Standards and Control Organization (CDSCO) is located
under the Ministry of Health and Family Welfare.
It prescribes standards and measures for ensuring the safety, efficacy and
quality of drugs, cosmetics, diagnostics and devices in the country;
Regulates the market authorization of new drugs and clinical trials
standards; supervises drug imports and approves licenses to manufacture.
The National Pharmaceutical Pricing Authority (NPPA), instituted in
1997 under the Department of Chemicals and Petrochemicals,
It fixes or revises the prices of decontrolled bulk drugs and formulations at
judicious intervals;
Periodically updates the list under price control through inclusion and
exclusion of drugs in accordance with established guidelines
It maintains data on production, exports and imports and market share of
pharmaceutical firms and imparting inputs to Parliament in issues
pertaining to drug pricing.

23. The main aspects of pharmaceutical
regulation are thus divided between the
above two ministries.
The Ministry of Health and Family
Welfare - examines pharmaceutical
issues within the larger context of public
health
Ministry of Chemicals and Fertilizers
focuses on industrial policy.
Other ministries
Ministry of Environment and Forests,
Ministry of Finance,
Ministry of Commerce and Industry
Ministry of Science and Technology.

24. Various Acts governing the regulation of
quality standards
Drugs and Cosmetics Act of 1940 and Rules 1945 regulates drug
manufacturing, quality and marketing.
Pharmacy Act of 1948,
The Drugs and Magic Remedies Act of 1954
Drug Prices Control Order (DPCO) 1995
Various other policies instituted by the Department of Chemicals and
Petrochemicals.

25. International standard of pharmaceutical
machinery
Standardization
Pharmaceutical Quality System ISO-9001
Every pharmaceutical company needs to meet the latest GMP
compliance
GMP would want the machinery manufacturers to follow a set of
procedures and rules with proper documentation in the manufacturing.

26. Provision in Indian Foreign Trade Policy for
Pharmaceuticals
Budget proposal in 2011-2102
Budget Proposal Impact
Proposal to extend weighted deduction of
200% for R&D expenditure in an In-house
facility for further period of 5 years beyond 31st
March, 2012
Positive for all Indian Pharmaceuticals
companies.
Allocation of NRHM proposed to be increased
from Rs 18,115 cr. in FY 2011-2012 to Rs.
20,822 cr. in FY 2012-13.
Positive for all Indian Pharmaceuticals
companies.
Proposal to continue to allow repatriation of
dividends from foreign subsidiaries of Indian
Company at a lower tax rate of 15% up to
march 2013.
Positive for all Indian Pharmaceuticals
companies., mainly Indian companies as they
generate the highest revenue from the export
market.
Introduced MAT on partnership firms. Would negatively impact organizations like
Cadila Healthcare and Sun Pharmaceutical.

27. Focused Product Scheme
The exports of the products notified in Appendix 37D of
HBPv1 are entitled for Duty Credit Scrip equivalent to 2%
of FOB value of exports for exports made from 21.8.2009
onwards.

28. Pharmaceutical products in Table (New Focus
Products) of Appendix 37D entitled to this benefit are:
30039090 Other Medicaments not put up in measured doses or
in packing
30041030 Amoxycyllin in Capsules, injections etc.
30049029 Other Anthelmintics Drugs; Antiamoebic and Other
Antiprotozoal / Antifungal Drugs
30049079 Other Antihypertensive Drugs
30049034 Omeprazole And Lansoprazole
30022029 Other Mixed Vaccine
30049011 Medicaments of Ayurvedic System
29420090 Other - Bulk Drug Loratadine
30066020 Contraceptive Base on Other Products of Heading

29. Market Linked Focus Product Scheme
Pharmaceutical has been included in Market linked Focus
Product Scheme. Thus exports made to 13 identified
markets (Algeria, Egypt, Kenya, Nigeria, South Africa and
Tanzania, Brazil, Mexico, Ukraine, Vietnam, Cambodia, A
ustralia, New Zealand) will be eligible for benefit under
this Scheme.

30. ZERO DUTY EPCG SCHEME
Zero duty EPCG scheme allows import of capital goods for
preproduction, production and post-production at zero Customs
duty, subject to an export obligation equivalent to 6 times of duty saved on
capital goods imported under EPCG scheme, to be fulfilled in 6 years
reckoned from Authorization issue-date.
The scheme will be available for exporters of chemicals & pharmaceuticals
However, zero duty EPCG Scheme shall not be available for import of
capital goods relating to export of products covered under following
chapters / headings of ITC(HS) classification:. Zero duty scheme shall also
not be available for units who are currently availing any benefits under
Technology Upgradation Fund Scheme (TUFS) administered by Ministry
of Textiles, Government of India.
Available for exporters of chemicals & pharmaceuticals

31. Problems faced by the Exporter
Internal factors – Local
Low investments in innovative R&D continue to be a major problem for
exporters of Indian pharmaceutical industry
Majority of companies lack the ability to compete with MNCs for New
Drug Discovery, Research and commercialization of molecules on a
worldwide basis due to lack of resources
The country has at times shown inadequate regulatory framework or
compliance and enforcement regime, reflected in occurrences such a
production of spurious or low quality drugs
Rapidly increasing costs of skilled manpower such as scientists/
regulatory compliance personnel / pharmaceutical lawyers/ international
business development personnel is pushing up the cost of innovation.

32. International Threats
China’s massive expansion of Bulk Drug industry is flooding Asian and
African countries.
Russia’s self sufficiency in the Pharmaceutical sector.
China’s expansion into formulations caused a decline in the exports to
Vietnam in FY2011.
A few countries like Argentina, Bangladesh, Egypt and Gulf countries do
not recognize India as a major manufacturing hub.
Exporter to Brazil and Mexico complains about recent increase in Import
Tax to 14%, prohibitive registration charges of about $20,000 for each
product and waiting period of 18 months.
Nigeria has banned some specific drugs and formulations to protect
domestic industry.
Countries in Europe have started importing Hops (Humulus Lupulus
Extract).

33. Pharma Export Promotion
Council (Pharmexcil)
A. Creation of Functional Desks
Legal - Help Indian pharmaceutical organizations to understand
intricacies in international contracts for international sale of goods,
agency/distributor agreements, JVs, Technical tie-ups
Marketing - Develop information base on each country with respect to
the structure of the market, environment, SWOT analysis, registration
requirements, etc.
Learning and Development (L&D) - Providing L&D in marketing
areas especially distribution, pricing, packaging, promotion, etc.,
knowledge about market environment in relevant countries to members
• B. Intellectual Property Rights
• Help organisations in API process development and formulation
development

34. C. Regulatory Research Desk
Helping organizations in understanding regulatory
procedures of various countries.
Developing useful information base on regulatory
requirements ,guidelines and facilitate learning modules to
understand the process of registration and understanding
intricate issues involved in drug registrations
• D. Advisory Services Centre
• Providing guidance and inputs to financial institutions with
respect to R&D.

35. References:
Periodic Analysis of Export of Drugs, Pharmaceuticals and Fine Chemicals; Available at
http://pharmexcil.org/docs/Monthly-Analysis-of-April-Feb10-11.pdf; Version – April 2011 to February
2011; Pharmexcil; Accessed on 31st December 2012
http://commerce.nic.in/whatsnew/StrategyPaper.pdf
Department of Pharmaceuticals - http://www.pharmaceuticals.gov.in/
National Pharmaceutical Pricing Authority - http://www.nppaindia.nic.in/
Ministry of Health - http://www.mohfw.nic.in/
Department of Chemicals and Petrochemicals - http://www.chemicals.gov.in/
Directorate General of Foreign Trade - http://www.dgft.gov.in/
CDSCO – Drugs Controller General (India) - http://www.cdsco.nic.in/
Central Borad of Excise and Customs - http://www.cbec.gov.in/
Portal for all Central and State Government websites - http://www.nic.gov.in/
India Patent Office links -
http://www.ipindia.nic.in/, http://www.patentoffice.nic.in/, http://www.patinfo.nic.in/
Patent Facilitating Centre - http://www.pfc.org.in/info/site.htm
World Health Organization - http://www.who.int/en/
World Trade Organization - http://www.wto.org/
US Patents Office - http://www.uspto.gov/
European Patents Office Links - http://www.epo.org/topics/ip-webguide.html, http://ep.espacenet.com
World Intellectual Property Organisation (WIPO) - http://pctgazette.wipo.int

36. Thank
You
By
Bipin