SUMMER INTERNSHIP PROJECT

On
“A study of Indian pharma export with covid-19”
AT

BY
Sumant kumar
Roll no. 069/2019B
LAL BAHADUR SHASTRI INSTITUTE OF
MANAGEMENT NEW DELHI
JUNE 2020
 CERTIFICATE

This is to certify that the present study is based on my original research work and my indebtedness to
others’ works, publications, etc. wherever cited in this study has been duly acknowledged at appropriate
places.
This work has not been submitted either in part or in full for the award of any diploma or degree in any
university/ Institute and is now being submitted for evaluation in partial fulfilment for the requirement
of the Two-year Full Time Post-Graduate Diploma in Management- Finance

(Sumant kumar)
Roll No. 069/2019

(Dr. Anil kanungo)

Faculty Mentor
 TABLE OF CONTENTS

S.NO PARTICULARS PAGE NO.

1. Industry overview 4

2. Indian market review 6

3. Global market scenario 11

4. Products in research 16

5. PPE kits 17

6. Therapuetic drugs 24

7. Major importers 26
 Pharma industry of India

Industry overview
Pharmaceuticals industry of india was worth nearly $36 billion in 2018-19
Pharmaceutical industry of india is estimated at $36.2 billion,Comprises of formulation and
bulk drugs exports in 2018-19. In this, the export of formulations is of about $14.4 billion. In
year 2019, formulation segment’s exports increased because major companies focused on new
launches in conventional segments and increased their focus on niche, specialty and limited
competition products. In year 2018, India spends nearly 1.5% of its total gross domestic product
on healthcare and hence, ranks amongst the lowest, globally. The developed countries spend
about 10-17% of their GDP on healthcare.
The value chain in pharma industry comprises of three step
Bulk drugs – bulk drugs in pharma is the raw material which is to manufacture the
formulations.They are mostly manufactured by combining more than two os more drugs.
Formulations – formulation are the final drugs used by the consumer. It is mostly developed by
using different individual drugs
Chemical Intermediaries – As the name suggested they could be anything from a catalyst or
a stabilizing compound in formulations

As the demand in developed market increases and price of the medicine increases in north
America and European markets, India could tap each of these market very easily through its cost
effective methods, and skilled human resource

Major player market size wise

Indian market Review
Demand for Acute ailment in India is high because of the hygiene conditions in India, but as the
lifestyle of population is changing the Indian market is moving towards chronic diseases
Drugs to treat Acute disease is higher in Indian market
Acute ailments – Acute ailments like common cold, fever, infectious disease which does not last
for more than 30 days are known as acute ailments
Chronic ailments – The diseases which could not be fully cured and are prolonged in nature. For
example, Asthma , Cancer, Blood pressure

Due to relatively poor sanitation facilities, India has a greater share of acute diseases than
chronic diseases, as compared to developed countries. Thus, drugs addressing acute diseases
dominate the domestic market. About 60%of total drugs sold are used to treat acute diseases
Domestic formulation sales for two segments

Chronic
Chronic segmentsCardiovascular system drugs

Therapies for cardiovascular (CVS) ailments rely primarily on control of blood pressure and
cholesterol, since high blood pressure increases risk of heart diseases and strokes. In 2018-19,
this segment posted a 12% growth to reach Rs 164.3 billion and constituted about 13% of total
domestic sales. Key players are Sun Pharma, Zydus Cadila, Torrent and Astra Zeneca.
Respiratory

Sales posted growth of 13%, reaching an estimated Rs 111.9 billion in 2018-19. Key players are
Cipla, Pfizer, Zydus Cadila and GlaxoSmithKlin
Anti-Diabetic
The increasing volume, availability and accessibility of drugs has provided strong growth of
nearly 17%. The rising population of diabetics in India, (73 million in 2017) was a key driver.
Major companies providing Anti –diabetic medicines are Lupin, Sun Pharma, Torrent, Novo
Nordisk, Sanofi, Eli Lilly.

Acute ailments
Domestic formulation sales in Acute case
Anti-infectives
Sales increased by 7% on-year in 2018-19 to Rs 160.9 billion. Anti-infectives accounted for 13%
of total formulations sales. Key drug players are GlaxoSmithKline, Alkem Laboratories, Ranbaxy,
Mankind and Alembic.

Gastrointestinal
Gastrointestinal contributed about 11% to total domestic formulation sales. Sales grew by 11%
y-o-y to an estimated Rs 143.3 billion, led by healthy volumes. Major players are Zydus Cadila,
Dr Reddy, Torrent, Cipla and Sun Pharma.

Pain/analgesics

Pain/analgesic drugs accounted for ~7% of total domestic formulations sales. This segment
recorded a y-o-y growth of 8%, reaching an estimated Rs 89.2 billion in 2018-19. Major players
include Zydus Cadila, GlaxoSmithKline , Novartis and Wockhardt.

GLOBAL Market scenario.

Moderating pricing pressure and new product launch has impacted the growth in year FY 19

In 2020, the global pharmaceutical industry (before pandemic) has expected to be

grown by 5% . In 2018 the growth was weak because of pricing pressure especially in
the US market . Now US market is slowly picking up pace with easing pricing
pressure . There were 59 NME approvals in 2018.
Emerging markets too saw continued growth momentum, because of high demand for
generic drugs. Increasing incidence of diseases, rising penetration of healthcare and
better affordability were growth drivers in these markets.
Market overview through sales in different therapies
Oncology retained the top spot under therapy classes, with ~14.3% share in overall
global pharma sales. Oncology, Anti-rheumatics and anti-diabetics have been the
fastest growing therapeutic segments in the last five years. Rising incidence of
diabetes aided growth in the anti-diabetics segment.

Leading drugs in global pharma sales

Among branded drugs, Humira (Adalimumab) continued to be the top selling drug in
2018 as well, with sales close to $19.3 billion. It is a monoclonal antibody to treat
Rheumatoid Arthritis.
Top corporations by global pharma sales

Johnson & Johnson maintained its top position; Novartis slips down
The top 10 players maintained a global market share of about 49% in 2018.
Johnson & Johnson leads in terms of overall revenues, as its revenue grew by
6.7% on year. Growth was primarily driven by increase in therapeutic sales of
immunology and oncology by 7.2% on-year and 35.6% on-year respectively.
Bayer climed up from 9th rank to 5th rank as its sales increased by 18.2% on
year mainly driven by strong performance of its key product Xarelto.
Revenue of Abbvie grew by 16% on year in 2018, as sales of Humira (top
selling global drug) accounted for 61% of the companies total

Products In Research

PPE KITS PRODUCTS

S.no Products HS codes
1) Masks 63079040
2) Gas Masks 902000
3) Protective Goggle 900490
4) Plastic face shields 392620
8) Gloves 401511,401519
9) Garments 621010
10) Safety footwear 640110
11) Head 650610
 Therapuetic products

S.no Products HS codes

1) Hydroxychloroquine 30049099
2) Lopinavir 30049099
3) Ritonavir 30049099
4) Dexamethasone 30043913
5) Remdesivir 98041000

PPE KIT

What is a PPE KIT?

Personal Protective Equipment (PPE) is specialized clothing or equipment worn by professionals

across industries for various kinds of protection. In the medical field, these kits are used by
doctors and healthcare personnel for protection against infectious surfaces or infected persons.
PPEs prevent contact with an infectious agent or body fluid that may contain an infectious
agent, by creating a barrier between the potential infectious material and the health care
worker.
The risk of transmission of coronavirus can be reduced if use of PPE is done ubiquitously. PPE kit
is not a single product, but it is a set of wearing accessories. According to the WHO, PPE kits
relevant for COVID 19 include gloves, medical/surgical face masks, goggles, face shields and
gowns, as well as items for specific procedures-filtering facepiece respirators (i.e. N95 or FFP2
or FFP3 standard or equivalent) and aprons. Since the components of PPE kit are different
products at individual level, their HS Codes are also different.
i. Textiles masks including surgical mask/face mask made from non-woven textiles are under HS
Code 630790.
ii. Gas masks with mechanical parts or replaceable filters for protection against biological
agents are under HS Code 902000.
iii. Protective spectacles and goggles are placed under HS Code 900490.
iv. Plastic face shields (covering more than the eye area) are placed under HS Code 392620.
v. Gloves are under HC Code 401511, 401519, 611610, 621600.
vi. Protective garments for surgical/medical use like coverall are under HS Code 621010.
vii. Safety footwear as a part of PPE Kit are placed under HS Code 640110, 640230, 640340.
viii. Head Cover – HS Code 650610

PPE kits market is estimated to value over US$ 60 billion and register a CAGR of over 8% from
the forecast period 2020 to 2025. In India itself, by the end of 2020, domestic demand of PPE
kits is expected to be worth US$ 1.4 billion as per Apparel Export Promotion Council’s estimate.

PPE production in INDIA per day during Covid

Demand for PPEs has reached unprecedented levels as COVID-19 has spread globally and
governments have sought to prepare and respond. National stockpiling strategies by affected
countries have further driven up demand. During quarter 1 of 2020, the United Nations has
delivered over 6.4 million gloves, 1.8 million surgical masks, and 1 million gowns to countries
across the world. However, an enormous gap remains between demand and supply conditions
in lower income & middle-income countries.
The World Health Organization (WHO) estimated that 89 million medical masks are required for
the COVID-19 response each month, along with 76 million gloves and 1.6 million medical
goggles. WHO itself has so far shipped nearly half a million sets of personal protective
equipment to 47 countries, but supplies are depleting rapidly. To meet rising global demand,
WHO estimates that industry must increase manufacturing by 40% and urges governments to
act quickly to boost supply. Supply availability has been hampered by a number of issues,
including export and travel restrictions by some producing countries, and lockdowns that have
forced suppliers to (temporarily) shut down

Tapping into global demand

As industry insights suggest, most of them see PPE as a long-term product category going
ahead, as these products will be more in demand across the globe in future. The World Health
Organization (WHO) has estimated the requirement for 89 Mn medical masks each month
along with 76 Mn examination gloves and 1.6 Mn medical goggles. “Healthcare workers rely on
PPE to protect themselves and their patients from being infected and infecting others. Without
secure supply chains, the risk to healthcare workers around the world is real. Industry and
governments must act quickly to boost supply, ease export restrictions and put measures in
place to stop speculation and hoarding. We can’t stop COVID-19 without protecting health
workers first.” To meet the rising global demand, WHO estimates that industry must increase
manufacturing capacity by 40 per cent. Governments should develop incentives for industry to
ramp up production by easing restrictions on the export and distribution of personal protective
equipment and other medical supplies. The spread of Covid-19 has sky-rocketed the global
demand for PPE and China, being the largest producer of PPE kits affected in the initial stages of
the outbreak, has led to massive disruption of the global supply chain. Most countries in Europe
and North America rely on Asia for 60 per cent to 70 per cent of their PPE supply. Besides
China, Taiwan alone makes up for 20 per cent of the supply of face masks, while other countries
with PPE production capacity, include India, Japan, Korea, Malaysia, Mexico, Thailand, United
States (US), and several European countries.

By region, the US had the largest market share of 33 per cent, followed by Asia and the Pacific
(28 per cent), and Europe (22 per cent) in 2018

Value-wise industry
Product wise PPE distribution
By product, gloves have the highest share of sales revenues at 25 per cent, followed by suits
or coveralls at 22 per cent. Face masks and hats came in third with a share of 14 per cent.
In percentage terms
Recommendation for exports for PPT

1. Strengthen local supply chains - Given the potential for border closures or unanticipated
delays in procuring raw materials from other states, governments both at the central as well as
the state levels, must be proactive in planning to localize, regionalize and secure shorter supply
lines. Government initiatives such as reducing the cost for licensing facilities and products,
expediting development of high-speed manufacturing lines and other strategies to assist
companies in overcoming barriers to new production, will encourage local companies to be able
to shift production to making PPE equipment.
2. Opening borders - Post Covid-19 crisis, the Indian government must re-evaluate current
bilateral and multilateral trade agreements and envision new ones that enable supplies of critical
components and materials. India is one among the top countries in Asia with maximum number
of Free Trade Agreements (FTAs), either in operation or under negotiation or proposed. Overall,
with the exception of a few agreements like South Asian Free Trade Area (SAFTA), India has
been unable to fully leverage most of its FTAs. Hence, it is important that India implements the
necessary measures to remove these obstacles such as high cost compliance and strict regulation
that hinder the overall competitiveness of exports in the country.
3. Tie up with technology companies – As one of the largest technology providers, India can
leverage the technical know-how and build analytics to create efficient PPE supply chain
management mechanisms to monitor high demand of critical products. This will enable to predict
surges in ordering, maintain optimum stock levels, limit wastage and avoid stock-outs. PPE
forecasts, based on rational quantification models, can ensure the rationalization of requested
supplies; assist in monitoring and controlling PPE requests from countries as well as large
responders and promote a centralized request management approach.
4. Global standards to improvise indigenous PPE products – This will prove to be a benefit
in the long-term to make PPE manufactured in India, more export-oriented in conjunction with
the rising global demand. Gathering data by capturing ratings and reviews of PPEs and
developing universal fit guidelines, will also help manufacturers focus on wearability while
keeping in mind their safety and efficacy. Disposing and processing of PPE suits is damaging to
the environment and with sustainability becoming increasingly important to companies, reusable
PPE gears will be preferred and will see a spike in demand in the future.
5. Strengthen supply chain and optimally utilize trade finance programs for Micro, Small, and
Medium-sized enterprises (MSMEs) – MSMEs are particularly vulnerable to the economic and
trade impact of COVID-19. Many and most of the PPE supply manufacturers in India are also
MSMEs, who may be experiencing supply chain disruptions,

Therapuetic products
The hydroxychloroquine market is expected to expand at a CAGR of ~4% during the period
(2020-2030).
What Is Hydroxychloroquine?
Hydroxychloroquine is a derivative of chloroquine and was primarily used to suppress and treat
acute attacks of malaria. The hydroxychloroquine is an ideal medicine for treating rheumatoid
arthritis and systemic lupus erythematosus. Rheumatoid arthritis is a highly prevalent disease
requiring high-cost treatment in countries like the United States, France, and Germany. Due to its
fewer side effects, it has become the most preferred drug over chloroquine. The present scenario
of COVID-19 pandemic has risen the demand for hydroxychloroquine drugs to be used as a best
treatment drug.
Hydroxy chloroquine production surge in India
COVID-19 has infected over three million people and resulted in over two hundred thousand
deaths. Owing to the American government’s claim that hydroxychloroquine can act against the
novel coronavirus, its demand has skyrocketed. Currently accounting for over one-third of the
global confirmed cases, the United States is the worst affected country in the world. To counter
the deadly wave of infections, the United States government has sought assistance from the
Indian government to help it procure 20 million pills of hydroxychloroquine by the end of June.
Hydroxychloroquine market share of India is slated to be substantial in near term. Similarly,
other countries like Nepal, Sri Lanka and Bhutan have created significant demand for this drug.
Attributed to above-mentioned facts the global hydroxychloroquine market is estimated to
experience growth of over 100% in 2020.
PRE COVID EXPORTS OF HC 300499
Research in terms of market

The share of US among top 5 importers of INDIAN drugs is of 77.6%.As in this covid scenario it will be
very difficult to develop new infra for different market India should try focus on US.

Export IN USA
India fulfils 40 percent of the USA generic market demand. The demand for the generic Drug in USA is
dependent on the following factors
1) Price of the patented Drug
2) Current epidemic is linked or not
3) Patient empowerment
4) Population age
5) Purchasing power
6) No. of uninsured people in country
7) Per capita income
8) Source of drug distribution

(I have tried calculated weights of each of these factors on the jupyter notebook file*)

Exports in Africa (ACCORDING TO THE REPORT PUBLISHED IN QUARTZ)

The Africa prescription

India’s historical role in supporting a large number of relatively poorer nations—particularly in Africa
to reduce their disease burden and deal with HIV, tuberculosis, and malaria through low-cost, generic
medicines is widely acknowledged. Pharmaceutical products dominate India’s exports to Africa and
along with petroleum products, account for about 40% of total Indian exports in African markets.

Given an increasing buy-in for domestic production within African political leadership and an
expanding pharmaceutical market driven by the improved purchasing power of governments and
population, an analysis of long-term trends of pharmaceutical exports from India to African countries
has been lacking.

The import-substitution resulting from a focus on domestic production may shift the composition of
exports to Africa in favour of bulk drugs away from formulations or finished drugs, a category where
India has traditionally dominated China.
 Country Bulk drugs Formulations Total pharma
Algeria 8.35% 3.49% 5.13%
Egypt 10.24% 0.96% 2.51%
ETHIOPIA 21.61% 19.75% 20.12%
kenya 24.00% 49.19% 44.86%
Morocco 4.97% 6.07% 5.66%
Nigeria 21.34% 51.45% 44.12%
South Africa 3.00% 28.25% 21.66%
Sudan 21.33% 11.99% 12.89%
Tanzania 20.39% 67.60% 59.11%
Tunisia 8.03% 0.22% 2.17%

Demand driver for Pharma market in Africa are

1) Price of the patented Drug
2) Current epidemic is linked or not
3) Patient empowerment
4) Population age
5) Purchasing power
6) No. of uninsured people in country
7) Per capita income
8) Source of drug distribution

(I have tried calculated weights of each of these factors on the jupyter notebook file*)

What india should do in Africa?

India’s need to produce its own bulk drugs can perfectly align with its ambition to become a bulk drug
exporter to markets like Africa. India should embrace economies of scale and increase the production
of bulk drugs to aggressively compete with the Chinese in the Africa market.
Analysis shows that India has trmedous growth opportunities in—South Africa, Algeria, Egypt, and
India has room for tremendous improvement. India is already doing great In south Africa South Africa,
India serves as a source of 28.3% of imports of finished drugs, the contribution to bulk drug imports is
a meagre 3%.

Even as India strives to expand its finished drugs exports to Africa, the fact remains that in none of
these markets is India’s share of bulk drugs more than 24%. Given India’s dependency on Chinese
bulk drugs, perhaps it is time for India to help wean itself and its African trade partners off Chinese
bulk drugs as well, going beyond the mere short-term economic benefits..