International Journal of Social Science and Humanities Research ISSN 2348-3164 (online)
Vol. 2, Issue 3, pp: (20-26), Month: July 2014 - September 2014, Available at: www.researchpublish.com
Foreign Direct Investment in Indian
Pharmaceutical Industry: An Assessment
Assistant Professor, Gargi College,
University of Delhi, India.
Abstract: The Indian pharmaceutical sector has come a long way, being almost non-existent at the time of independence to a prominent provider of healthcare products, meeting almost all the pharmaceutical needs of the country. Over the years, India has become an attractive investment destination for FDI. The study undertakes the task of assessing the current scenario of FDI in the Pharmaceutical sector in India. With the help of available relevant secondary data, a qualitative approach was followed for the study. It was found that the major factors that are attracting FDI in pharmaceutical sector are: increase in domestic demand, rise in outsourcing activities, growth in healthcare financing products, demand in the generics market, demand from emerging segments, large numbers of forthcoming patent expiries, dry pipeline of new drugs. But simultaneously, there are some challenges which this pharmaceutical industry is facing, for example: low government expenditure on healthcare, inadequate investment in healthcare infrastructure rural areas, lack of proper policy framework to attract larger FDI in healthcare sector, especially in the area of research and development, focus on price-controlling policy, lack of robust policies governing IPRs, lack of data protection, bureaucratic hurdles. There might be more technology transfer in the future when the IPRs are protected. It is possible that under the new patent laws, MNCs will start to outsource even patented drugs in India; consequently there will be larger scope for technology transfer spillovers in the future. It is in the interest of the state to provide public policies and a sound economic environment to encourage benefit from FDI.
Keywords: Pharmaceutical, FDI, Pharma, India, U.S.
The Indian pharmaceutical sector has come a long way, being almost non-existent at the time of independence to a prominent provider of healthcare products, meeting almost all the pharmaceutical needs of the country. According to , today the Indian pharmaceutical market is the 3rd largest in the world in terms of volume and 14 th largest in terms of value.
The annual turnover of the industry has already exceeded past Rs.1,00,000 Crore mark way back in the year 2009. Around
40% of the sales of the industry is coming through exports which shows the extent of penetration of Indian pharmaceutical companies in the global market. Pharmaceutical exports constitute more than 4% of the total national exports of our country. Moreover, the industry is growing at a respectable rate of around 10% annually with the projected growth rate rising to 18% by the year 2016-17. The Indian pharmaceutical industry is currently employing around 3.5 lakh employees of which a substantial share of employees are highly educated and skilled with Ph.D and M.Tech degrees.
However, the Industry is quite fragmented and comprises of nearly 10,500 units with majority of them in unorganized sector. Of these, about 300‐400 units are categorized as belonging to medium to large organized sector with the top 10 manufacturers accounting for 36.5% of the market share. India is among the top 20 pharmaceutical exporting countries.
Indian drugs are exported to around 200 countries in the world with highly regulated markets of USA, UK etc. The major therapeutic categories of export are anti infective, anti asthmatic and anti hypertensive .
The Indian pharmaceuticals market is witnessing dynamic changing trends such as large acquisitions by multinational companies in India, increasing investment by domestic and international players in India, deeper