Mckinsey Report: Capturing The Indian Advantage

McKINSEY REPORT
INDIA PHARMA SUMMIT-2009
CAPTURING THE INDIAN ADVANTAGE
PRESENTED BY:-
MOHAMMAD INSAAF 29
SHRUTI SAVE 39
VIPIN MISHRA 27
DEEPA PANSARE 31
NAMRATA PATANKAR 33
KALPESH RAUT 37
ASHWIN SURALE 42
OBJECTIVES:
To identify opportunities & enablers.
• To create a road map for India Pharma Inc. to realize its full potential
and to become globally competitive.
• Project India as an emerging integrated global pharma hub.
• Address global challenges that impact India pharma Inc.
• Chart a roadmap for global alliances.
ORGANISERS:
BUSINESS SEGMENTS :
• Foreign generics markets.
• Domestic Pharma market.
• Contract Research And Manufacturing Services.
• Clinical research services.
•New Chemical Entity (NCE) discovery and development.
• Biopharmaceuticals.
INTRODUCTION
•McKinsey is the preeminent management consulting firm.
•Since 1993, the India office has served leading companies,

nonprofits, and governments
•McKinsey serves as an adviser to the world’s leading businesses.
•It is widely recognized as a leader and one of the most

prestigious firms in the management consulting industry
•They hire the best talent and provide them with unrivalled
opportunities to grow and have world-shaping impact
•McKinsey has over 8,700 consultants in 90 consulting offices

across 50 countries
TRENDS IN GLOBAL PHARMA
MARKET
• The rise of emerging market:
1)Markets like-Brazil,China,India,Russia and Turkey

account for 70%of this growth.(exb 1)
2)Global players have significantly increased investments

in these markets.(exb 2)
Innovative approaches in R&D:
1)Around 70% compounds are not

recovering cost of capital.
2)Distributing risks by investing in minority

bets.
3)engaging in risk sharing partnerships and

out-partnering of assets.(exb 3)
• Outsourcing and off-shoring to
control costs:
1)Outsourcing to low cost countries has potential to change

cost structures.
2) Exit from manufacturing APIs .(exb 4)
3)Outsourcing of R&D lags behind manufacturing activities.

(exb 5)
The rise of biologics:
1)Future leadership driven by biologics.(exb6)
2)Biologics are expected to account for 30% of

revenue of major pharma companies.
3)In 2012 ,9 of the top 20 drugs are expected to be

biologic . (exb 7)
INDIA’S UNIQUE POSITION IN
GLOBAL PHARMA MARKET
• Strong and sustainable growth momentum
• Diversities of business opportunities
• Strong process chemistry skills
• Local industry and entrepreneurship opportunities

• Diverse market backed by strong fundamentals:
1)Indian pharma market is to reach US$40 billion mark by 2015
2)Nearly 60% of growth will be driven by shifts in income demographics and

rise in medical infrastructure.(exb 8)
3)Well distributed across business segments and provides multiple options to

specialise and succeed.
Competitive manufacturing cost structure:
1)Cost of manufacturing APIs in India can be 50% lower

than in developed markets.(exb 9)
2)Quality and availability of chemists and scientists in India

is among the best in the world.(exb 10)
• Experimentation in business model innovation:
1)India an ideal centre for experimentation.
2)Global players can test ,incubate and export business

model in other emerging markets.such as branded
generics and comprehensive care for treatment of
chronic diseases.
• Successful domestic industry create partnership
opportunities:
•
1)Domestic industry is strong and entrepreneurial
2)Responsible for building industry talent and infrastructure
3)Industry offers meaningful partnership opportunities for

international players in their global businesses.
THE ‘INDIA ADVANTAGE’
• INDIA owns a unique position in global pharmaceutical
industry.
• Indian pharmaceutical industries potential
Current ---> US$ 20 billions.
Expected ---> US$ 40 billions.
• Yet the extent of India Advantage is to be fully
comprehended and captured.
• SPANS 3 AREAS:
1. Domestic market.
2. Manufacturing.
3. Research.
• There are broad spectrum of opportunities to
take advantage of for growth.
• Collaboration between industry players
enhances these opportunities.
• The opportunities are
1. Capturing domestic market.
2. Leveraging India’s manufacturing
competitiveness.
3. Leveraging India’s R&D.
1. Capturing domestic market.
• Unlike other developed markets , indian
market is not growing in only one primary
direction but it is growing in multiple
direction , thereby opening diverse market
segments.
2. Leveraging India’s manufacturing competitiveness.
Global pharmaceutical outsourcing industry is expected to

grow to USD 100 billion by 2015.
India has the potential to capture 8 to 10% of pharma

industry by 2015.
This potential distributed across segments along 4 dimensions:

3. Stage of production
4. Stage in product lifecycle.

3. Technology type.
4. Customer segment.
5. Stage of production
API’s & Intermediate => 70% of USD 8 -10

billion.
FDF’s => remainder.
2. Stage in product lifecycle.
Mature and Generics => more than half of the

drug potential
On patent drugs => 25-30% of the potential.
3. Leveraging India’s R&D.
India’s potential in R&D is underscored by it’s large talent pool

of process chemists, a large and diverse patient pool across
therapeutic areas, world-class hospitals and trained
investigators for clinical trails, and IT talent for bio-statistical
and analytical capabilities.
India’s R&D will be one of the top 5 innovation hubs in next

ten years.
Focus will be on 2 areas:
1. NCE R&D
2. PROCESS & LIFECYCLE R&D.
•India’s R&D potential is less certain.
•It faces strong competition from emerging R&D

hubs like Singapore, China & Israel.
•Achieving India’s true potential will require a

visionary outlook by government.
CHALLENGES AHEAD
•Low Health Care & insufficient Infrastructure
eg: Additional 2 million beds to match the
standards of other major developing nations
•Limited Access to Insurance

Insurance covers only 10% of population
•Shortage of Specialized Talent

Significant shortage of physicians, nurses &
support staff
•Funding Gaps
Lack of Government Funds
•Aspects Related to Production Quality
Average or Substandard quality

IMPERATIVES FOR STAKESHOLDER
• Domestic companies
• Improvement in manufacturing and formulation

development
• Front-end skills such as brand marketing, PLC

enhancement , scientific selling need to be
upgraded
• Avoid temptation of attempting too much and

stretching their resources
GLOBAL PHARMA COMPANIES
•Change mindsets and deep commitment from the

highest levels in global management.
•Need to step-up investments to capture domestic market

opportunity.
•Adopt India business model, relax margin expectation for

period of few years.
•Collaboration with domestic players,.

GOVERNMENT AND INDUSTRY REGULATORS
•More investment on healthcare, education, research

infrastructure
•To promote greater innovation, shapes the country vision

and accelerates development efforts
•To facilitate greater insurance coverage
•To harmonise regulatory framework on important issue

such as patent related matter and clinical research

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McKINSEY REPORT

INDIA PHARMA SUMMIT-2009

CAPTURING THE INDIAN ADVANTAGE

• Foreign generics markets.

• Domestic Pharma market.

• Contract Research And Manufacturing Services.

• Clinical research services.

•New Chemical Entity (NCE) discovery and development.

•Since 1993, the India office has served leading companies,

•McKinsey serves as an adviser to the world’s leading businesses.

•It is widely recognized as a leader and one of the most

•McKinsey has over 8,700 consultants in 90 consulting offices

1)Markets like-Brazil,China,India,Russia and Turkey

2)Global players have significantly increased investments

1)Around 70% compounds are not

2)Distributing risks by investing in minority

3)engaging in risk sharing partnerships and

1)Outsourcing to low cost countries has potential to change

2) Exit from manufacturing APIs .(exb 4)

3)Outsourcing of R&D lags behind manufacturing activities.

1)Future leadership driven by biologics.(exb6)

2)Biologics are expected to account for 30% of

3)In 2012 ,9 of the top 20 drugs are expected to be

• Diversities of business opportunities

• Strong process chemistry skills

• Local industry and entrepreneurship opportunities

1)Indian pharma market is to reach US$40 billion mark by 2015

2)Nearly 60% of growth will be driven by shifts in income demographics and

3)Well distributed across business segments and provides multiple options to

1)Cost of manufacturing APIs in India can be 50% lower

2)Quality and availability of chemists and scientists in India

1)India an ideal centre for experimentation.

2)Global players can test ,incubate and export business

2)Responsible for building industry talent and infrastructure

3)Industry offers meaningful partnership opportunities for

Global pharmaceutical outsourcing industry is expected to

India has the potential to capture 8 to 10% of pharma

This potential distributed across segments along 4 dimensions:

4. Stage in product lifecycle.

API’s & Intermediate => 70% of USD 8 -10

2. Stage in product lifecycle.

Mature and Generics => more than half of the

India’s potential in R&D is underscored by it’s large talent pool

India’s R&D will be one of the top 5 innovation hubs in next

•It faces strong competition from emerging R&D

•Achieving India’s true potential will require a

•Limited Access to Insurance

•Shortage of Specialized Talent

Lack of Government Funds

•Aspects Related to Production Quality

Average or Substandard quality

• Improvement in manufacturing and formulation

• Front-end skills such as brand marketing, PLC

• Avoid temptation of attempting too much and

•Change mindsets and deep commitment from the

•Need to step-up investments to capture domestic market

•Adopt India business model, relax margin expectation for

•Collaboration with domestic players,.