Engineering the revolution for affordable healthcare
India is currently one of the most talked about emerging markets and widely considered a nation that could decide the future of the world economy. It has become much more than just a “low cost resource pool” for the world. With the advent of the Make in India national campaign in the latter part of 2015, the market has seen a renewed surge of interest in the enormous opportunities present in the country.
The Indian economy is currently the seventh largest in the world measured in nominal GDP and the third largest in purchasing power parity (PPP). The country is classified as a newly industrialized country, one of the G-20 major economies, a member of BRICS, and a developing economy with an average growth rate of approximately 7% over the last two decades.
India’s economy became the world’s fastest growing major economy in the last quarter of 2014 with the potential to become the world’s third largest economy in the next decade, as well as one of the two largest economies by mid-century. The outlook for short-term growth is also good. According to the IMF, the Indian economy is the “Bright Spot” in the global landscape.
India has the one of fastest growing service sectors in the world, which contributed approx. 53% to GDP in 2014–2015 (source: Planning Commission, Government of India). It has capitalized on its large, young, and well-educated English-speaking population to become a major exporter of IT services, BPO services, and software services with revenues of USD 783 billion.
The country has emerged as a leading destination for clinical trials, contract research and manufacturing activities. The Government of India’s Pharma Vision 2020 aims at making India a global leader in end-to-end drug manufacturing.
The business mantra of the new Prime Minister Mr. Modi is Democracy, Demography, Demand and De-regulation. He has indicated that India is blessed with the first three Ds, and that he is leaving no stones unturned to add the fourth. His slogan is that India is not working for incremental growth, but for a quantum jump… which has been well received and adapted by the local business community.
Engineering sector employs 27% of Indian workforce
Today, India is a very different country from what it was 15–20 years ago. It has presently become the second largest market for smart phones. Thanks to the Internet, the knowledge, exposure, aspiration and ambition levels of modern youths are vastly different from previous generations.
Engineering is the largest Indian industry segment and contributes about 20% to total exports. In 2015–2016 engineering goods exports amounted to USD 71 billion. India exports to about 200 countries. The engineering segment employs about 27% of the workforce and accounts for about 30 % of the total new investments and 63% in terms of foreign collaborations.
The engineering sector attracts immense interest from foreign players as it enjoys a competitive advantage in terms of manufacturing costs, technology and innovation. India’s manufacturing base is the fourth largest among emerging economies.
Volkswagen, Skoda, Toyota, Honda, Nissan, Suzuki, Ford, GM, Hyundai, Yamaha, Kawasaki and many of the world’s best known automobile companies have made India their design and manufacturing hub. India ranks second in terms of manufacturing competence in the 2010 global manufacturing competitiveness index and Deloitte Touche Tohmatsu.
Very soon, India will be the second largest producer of steel in world and will be the third largest market for automobiles. At the moment, it is the seventh largest automobile producer in world.
The Make in India campaign has received the attention of several infrastructure and engineering multi nationals including GE and ThyssenKrupp, which are considering investing in the country. Other major foreign OEM investments are from Airbus, Boeing, Lockheed Martin, SAAB, BAE Systems.
India is in the process of globalizing its manufacturing base through the establishment of capital equipment and downstream industries to generate employment as well as boost the Make in India campaign through improved competitiveness of local products.
The US assistant secretary of state, Nisha Desai Biswal, when referring to US-Indian relations, has said that “much of the focus has been on the economic partnership and while there continues to be challenges, we have seen a dramatic rise in US investment in India”.
Pharmaceutical sector growing rapidly
The Indian pharmaceuticals market is the third largest in terms of volume and 13th largest in terms of value, as per a report by Equity Master. Presently the market size of the country’s pharmaceutical industry stands at USD 20 billion.
Branded generics dominate the pharmaceuticals market, constituting nearly of 70% to 80% of the market. It is the largest provider of generic drugs globally and accounts for 20% of global exports in terms of volume.
Pharmaceutical exports have grown at a compound annual growth rate (CAGR) of 68% over the last decade, while vaccines are exported to 150 countries. Indian pharmaceuticals are exported to more than 200 countries around the world, with the US being the key market.
According to India Ratings, a Fitch company, the Indian pharmaceutical industry is estimated to grow at CAGR of 20% over the next five years. This growth will outperform the global pharma industry growth, which is set to grow at an annual rate of 5% in the same period.
India constitutes around 8% of the total global generics market by volume, indicating a huge untapped opportunity in the sector. Outsourcing is projected to spike after the discovery and manufacturing of formulations.
India is home to about 10,500 manufacturing units and over 3,000 pharma companies. It exports all forms of pharmaceuticals from APIs to formulations to biosimilars. The cost of production is significantly lower (35–40 %) than that of the US and almost half of that of Europe. It accounts for 36% (3,000) of 8,374 DMFs (Drug Master Files) filed with the USA and has over 500 USFDA approved plants (the highest for any country outside the U.S.).
The pharmaceutical market size is expected to grow to USD 100 billion by 2025, driven by, among others, increasing consumer spending, rapid urbanization, and raising healthcare insurance.
Innovative Biotech sector set to expand at 30% p.a.
The biotechnology sector is highly innovative and is on a strong growth trajectory. The sector is one of the most significant in enhancing the country’s global profile as well as contributing to the growth of the economy. At present, India is among the top 12 biotech destinations in the world and ranks second in Asia, after China.
The Indian biotech industry holds about a 2% share of the global biotech industry. It is, however, expected to grow from the current USD 5–7 billion to USD 75–100 billion by 2025, growing at an average rate of 30%. The high demand for different biotech products has also opened up scope for foreign companies to set up operations locally.
Complete pharma and biotech offering
India is one of the few major economics that have a strong worldwide presence in the complete spectrum of Pharma and Biotech engineering, equipment, machinery and other accessories. Its pharma and biotech engineering services, equipment, and machinery etc. are exported to over 100 countries. The continuous growth the Pharma and Biotech manufacturing sector has encouraged the engineering industry to develop local capabilities in product development and advanced manufacturing technologies.
Further boosts are the high capabilities and expertise for drug development, research, tech transfer, dossiers, clinical trials, engineering, turnkey execution, machinery / equipment, quality laboratory set up, skilled man-power, qualification documentation, training, SOP development, validation, instruments, mock testing for regulatory inspections, and audits hand holding till validation batches.
The domestic talent pool is a mix of engineers and pharmacists, biotechnologists and chemists who understand the pharma biotech needs, starting from chemical synthesis or fermentation to the execution of USFDA, EMEA, PIC, ANVISA, WHO and other global regulatory compliant facilities as per cGMP & GAMP design.
Indian machinery is installed and in operation in many FDA approved manufacturing facilities in India and abroad.
The future looks bright
With the offering of numerous differentiating and competitive advantages in terms of R&D, knowledge, skills and cost effectiveness, the Pharma and Biotech industry in India has immense potential to emerge as a key global Lifesciences destination.
Local pharma engineering companies will play a vital role in developing world class equipment, not only meeting the desired quality and regulatory requirements, but also delivering affordable turnkey engineering solutions. In just a few decades, the Indian pharma engineering industry has improved immensely in terms of precision, quality, productivity, automation, accuracy, and validation.
The country can be seen as one-stop-shop for the entire pharma and biotech spectrum, starting from development of pharmaceutical or tech-transfer up to validation batches.
Indian companies are quick to adopt the changes required to make them truly global players. The country’s export base of engineering offerings has shifted from low value to hi-tech and from developing countries to the entire globe. The Indian Government is taking all the required measures to make it one of the most investor friendly business destinations around.
With the generous talent-pool in engineering, pharmaceuticals, chemistry, biotechnology and medical sciences, encouraging investments from both Government and Industry and the significant cost-advantage over other countries without compromising on quality; India is set to lead the pack in engineering affordable healthcare for the world.
Author: Abhay Ranjan