The Rs.1,145-billion domestic pharmaceutical sector’s healthy run is likely to continue in the coming decade. After having clocked 14.5% CAGR over the past decade, Morgan Stanley expects the industry to compound growth at 12-14% over the next 10 years. Currently, branded generic drugs account for a chunk of the domestic market with 70% volume share, followed by over-the-counter drugs at 21% and patented drugs at 9%. The domestic formulation market is split between chronic and acute therapeutic areas. While cardiovascular, anti-diabetes, gastro-intestinal, and neurological segments comprise the chronic category; acute therapies are divided into anti-infectives, respiratory, pain, and gynecology. Of the top 15 players dominating the market, Sun Pharma, post its merger with Ranbaxy in 2015, has emerged as the leader.
Going ahead, the report states that companies with a higher exposure to chronic therapies will grow faster in the coming years. Changing lifestyles resulting in rising chronic illnesses, technological development, ageing population and increasing healthcare expenditure are expected to fuel growth. Importantly, government-sponsored initiatives such as Rashtriya Swasthya Bima Yojna and Employees State Insurance Corporation are expected to contribute to an increase in population covered under health insurance. Going ahead, underpenetrated rural markets will present a huge opportunity for pharma players given that rural population accounts for only 20% of the domestic formulations market.