The Indian pharma sector has reasons to be upbeat. Despite the global slowdown hitting all businesses, experts are upbeat about the pharma sector’s growth. A McKinsey report claims that the Indian market will grow to a whopping USD 55 billion by 2020! This could even reach 70 billion. The figure puts India firmly in the category of developed markets, possible second only to the US market when the time comes.
From a negligible existence two decades ago, the growth of the Indian pharma sector has been close to phenomenal. More impressively, the pharma marketing growth has been organic, largely supported by local factors and businesses. This makes the growth sustainable and capable of being aggressively driven. But first we must identify the growth factors:
The Indian population, often considered a bane, has a good side as well. This is the huge market that no international company can ignore. With rising incomes, this means we are looking at 73 million strong market base! The single market is bigger than a number of countries put together. For the Indian SME sector this huge market has been crucial in creating a steady growth rate. The domestic market has given them strength to spread themselves in the international market as well.
Growing Affordability of Drugs
One of the hampering factors in the Indian market was the lack of affordability of expensive drugs. This means that Indians usually bought only generic drugs. But rising incomes, insurance sector growth and government welfare schemes will mean that more and more Indians will be able to afford healthcare, including branded medicines that were deemed too expensive for the Indian market.
The GDP growth is expected to rise by 8% in the next decade, increasing the average spend on medicines. This will be supported by the growing insurance sector, which is expected to grow by at least 15% in this time period. Almost 650 million are expected to be under a health insurance cover by 2020. While this will affect the middle class, government initiatives to bring the poor under insurance coverage will increase this number manifold.
This has twofold effect. Not only can Indian companies now get the volume, with high priced drugs they can also boost their value. In fact, Indian drugs already dominate the global markets in terms of volume, by 2020.
Growth in Tier II Towns
While the growth of the pharma sector in tier I towns is predictable, given the rapid urbanization, the shift in tier II towns and the rural area will be the most remarkable. As Tier I cities get saturated, pharma marketing attention will shift to Tier II and rural areas. Government spending on medical infrastructure will further strengthen the market in these areas.
The factors mentioned above, such as rising income, apply to the rural sector as well. Innovative marketing techniques will create demand and raise awareness. More hospitals and visibility of different drugs has created a profound effect here as well. Marketers expect the sale of branded drugs to go up in Tier II cities at the very least.
Typically, the rural sector has seen more sales of traditional medicines, such as Ayurveda. However, the tide is slowly changing here as well. Education and increased awareness of medicines and pharmaceuticals has raised the demand for both generic and branded medicines. This is coupled with the rise of medical infrastructure in these areas with more clinics and hospitals opening up.
The shift to pharma marketing here has been remarkable because it has rated a market where almost none existed. Although the sake of expensive or branded medicine may not equal Tier I cities, it is significant enough to make a difference.
What We Need
While these are the predictions for the growth of the pharma sector, there is still a lot to be done. We need more public-private partnership to make this a reality:
- Increase government spending in healthcare
- Bringing public-private partnership in insurance sector
- Introducing affordable insurance cover
- Focus of pharma marketing in creating medical infrastructure in Tier II cities and rural areas.
With aggressive pharma marketing the Indian pharma sector is expected to grow phenomenally in the next few years, equaling the developed markets in both volume and value. However, we need steady growth and government investment in the sector for the sector to realize its potential.