The Indian Pharma Turnaround Story


A McKinsey & Company Report from 2020 said,

Global pharmaceutical markets are in the midst of major discontinuities. While growth in developed markets will slow down, emerging markets will become increasingly important in the coming decade. The Indian pharmaceuticals market, along with the markets of China, Brazil and Russia, will spearhead growth within these markets.

And rightly so, the Indian Pharmaceuticals sector has seen the light of day unlike any other sector recently. Companies have reported stellar sales and profit margins that when first announced were greeted with skepticism of Mr. Market as unsustainable margins and numbers. Mr. Market also prejudiced its thinking when it said that the covid-19 Pandemic is contributing to the rally in Indian Pharma sector.

But soon the tide turned a little more and showed that there was more to the story.

Firstly, competition in the Indian marketplace is fierce, and we all know what happens when supplier competition is tough, the price comes down significantly, although the affordability that Indian Pharma Players are providing is still nowhere near the absolute low prices that the Chinese counterparts are able to throw in, due to plain ‘Economics of Scale’.

One might question that if the Chinese counterparts are still able to give better prices due to simple economics of scale, why is the Indian Pharma a potential beneficiary from all this?

To answer that lets go back to March 2020 when the pandemic really hit all across the EARTH.

We are well aware of the fact that China is the world’s manufacturing factory, and rightly so because the country has invested so heavily in their capacities over decades that its near impossible for others to compete in the same league. But in March 2020, corporates soon realized that it was not prudent to rely on only one factory. After all diversification is a good practice in all businesses.

That’s where the theme of China +1 came into the picture, and the Indian Pharma Sector is heavily leveraging off this very theme. Indian Pharma is uniquely placed. Here’s how →

Rising income levels and enhanced medical infrastructure have underpinned the step-up in growth trajectories. This growth has been broad-based across therapy and geography segments. Several leading players are beginning to focus on new and emerging opportunities. The pace of innovation in business models has been unprecedented. The launch of branded generics businesses and significant expansion of market coverage by multinationals illustrates this point. As a result, the expectations from the India businesses have risen and aspirations have become bolder.

So the question which was, “Is it worth to make our play in the Indian Pharma Sector?” has now turned into “How can the Indian market scale upto an even higher growth trajectory?”

From today’s blog we also learn about prejudices of the markets in outright judgement of progress. A topic for another day indeed.

Until next time…

Disclaimer:

This blog has been written after collecting facts from various sources. The author is not responsible for discrepancies in any information presented above.


 

Leave a Reply

Your email address will not be published. Required fields are marked *