Indian pharma sector: surviving the slowdown & regaining the m&a MOMENTUM

The Indian pharma sector is today a force to reckon with, on the global pharma map. Pharmaceutical exports from India stood at USD 16.84 billion in 2016–17, and is expected to cross USD 20 billion by the year 2020 although the industry as a whole is expected to touch USD 55 billion by 2020. The sector enjoys a conspicuous presence in the US pharma market, the largest pharma market in the world. The sector began its global foray by producing cheaper versions of patented drugs. The local law permitted it, subject to a few riders. The pharma players followed it up with production of ingredients for multinational drug manufacturers. The US became the largest market for some of India's largest generic drug manufacturers and there was no looking back until 2017. Revenues and margins took a hit. Inspections by US customers and warnings and import alerts from the US pharma regulators slowed down the Indian pharma sector's growth. Investors tightened their purse strings. Hence the researcher set out to ascertain the reasons behind the slowdown in the sector's growth. The findings reveal that among other things, consolidation has improved the bargaining power of the US pharmacy chains, thereby contracting the margins of the Indian exporters. The researcher concludes that the Indian players should graduate to exports of superior products since exports of plain vanilla generics alone cannot be of much help. They should develop complex generics, specialty products, biosimilars and other innovative products. A beginning in this direction has been already made by some leading players. But investments being huge, Indian pharma players should stay the course by forging strategic partnerships. This is where mergers and acquisitions can help the Indian pharma players. Their inorganic growth strategy should be drawn up against this backdrop.