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This article draws a sketch of Indian Pharma Industry in terms of current trends, investment in R&D and future prospects. It also reviews the Economic Value Added (EVA) concept and highlights the fact that computation of EVA has added new dimensions to the accountability aspect of management of pharma companies.
The Indian pharma industry has been gradually making success waves across the world and it has also been rated very high among the third world countries as it has many quality manufacturers under its umbrella. It can be proud of the fact that many of its units have been recognized by the regulating authorities of the US and the UK. From simple pain killers to highly sophisticated complex compounds, a wide array of medicines is manufactured indigenously in India.
Indian pharma industry is worth $4.5 bn and the growth rate per annum is 8-9%. It is a highly scattered sector. It has more than 20,000 registered units under its wing. A total of 250 internationally known pharma companies control 70% of the market with the market leader having 7% of the market share. It meets 70% of the domestic demand for bulk drugs, chemicals, tablets, orals and injections. Manufacturers can produce any drug duly approved by the Drug Control Authority (DCA). Thanks to deregulation of pharma industry. Indian pharma industry's R&D expenditure is just 1.9% of industry's turnover as compared to its foreign counterparts which invest 10-16% of their turnover in R&D. As per the World Trade Organization (WTO), from the year 2005, India has granted product patent recognition to all new chemical entities. The pharma industry is eligible for 150% weight deduction for R&D expenses. These R&D companies are also eligible to enjoy tax holiday for 10 years. The government has sanctioned Rs. 150 cr for promoting R&D in the pharma industry.
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