Assessment of

pharmaceutical
API and speciality
chemicals Industry
in India
May 2023
Table of contents
1 Macroeconomic assessment ............................................................................................................................. 3

1.1 Global macroeconomic assessment .............................................................................................................. 3

1.2 India’s macroeconomic assessment .............................................................................................................. 6
2 Assessment of pharmaceutical API industry in India ...................................................................................15

2.1 Overview of global pharmaceutical API industry .......................................................................................... 15

2.2 Overview of Indian pharmaceutical API industry ......................................................................................... 16
3 Global chemical and speciality chemical industries .....................................................................................23

4 Indian chemical and speciality chemical industries ......................................................................................29

4.1 Indian chemical industry ............................................................................................................................... 29

4.2 Indian speciality chemical industry ............................................................................................................... 29
4.3 Competitive landscape for Indian speciality chemicals industry .................................................................. 33
5 Overview of ketene and diketene derivatives industry .................................................................................34

5.1 Market size of ketene, diketene and derivatives industry ............................................................................ 35

5.2 Player landscape .......................................................................................................................................... 36
6 Assessment of Competitive landscape ...........................................................................................................38

6.1 Competitive landscape for Indian pharmaceutical API industry ................................................................... 38

Consulting 2
1 Macroeconomic assessment

1.1 Global macroeconomic assessment

Global gross domestic product (GDP) growth estimated at 2.9% in 2023 and 3.0% in 2024 amid
the Russia-Ukraine conflict, elevated inflation and financial sector distress

As per the International Monetary Fund’s (IMF) April 2023 update, global growth is expected to moderate from
3.4% in 2022 and 2.8% in 2023 before settling at 3.0% in 2024. This is 0.1 percentage points lower for 2023 than
projected in January 2023, the downward revision is mainly due to financial sector distress in major economies like
US and Euro area. Economic slowdown is expected mainly due to financial systems instability, broadening inflation
pressures, the Russia-Ukraine conflict and the slowdown in China. According to the IMF, The forecast of low
growth in 2023 reflects the rise in central bank rates to fight inflation especially in advanced economies as well as
the war in Ukraine. The decline in growth in 2023 from 2022 is driven by advanced economies; in emerging market
and developing economies, growth is estimated to have bottomed out in 2022. Growth is expected to pick up in
China with the full reopening in 2023. The expected pickup in 2024 in both groups of economies reflects gradual
recovery from the effects of the war in Ukraine and subsiding inflation.

As per the IMF update, In most economies, amid the cost-of-living crisis, the priority has been on achieving
sustained disinflation. With tighter monetary conditions and lower growth potentially affecting financial and debt
stability. Accelerating COVID-19 vaccinations in China would safeguard the recovery and ease the bottlenecks
created in the supply chains,

Trend and outlook for global GDP (2015-2023P, $ trillion)

120 8.0%
6.3%
5.0%
3.4% 3.3% 3.8% 3.6% 3.4%
2.8% 2.8% 3.0%
80 2.0%

-1.0%
-2.8%
40 -4.0%

-7.0%
76.0 78.4 81.4 84.4 86.7 84.3 89.6 92.7 95.3 98.1
0 -10.0%
2015 2016 2017 2018 2019 2020 2021 2022 2023P 2024P
GDP ($ trillion) GDP growth (%)

Note: P: Projection
Source: IMF economic database, World Bank national accounts data, OECD national accounts data, CRISIL MI&A

Consulting 3
Global inflation declining but remain elevated amid financial sector distress
As per the IMF, inflation have shown declining trend from mid-2022 although it still remain elevated and the
monetary policy stance by the central bank is expected to remain restrictive for longer in the medium term to tackle
sticky inflation. For 2023, inflation is estimated at 4.7% in advanced economies and 8.6% in emerging market and
developing economies. This is 0.1 and 0.5 percentage points higher than projected in IMF’s January 2023 forecast
for advanced economies and emerging economies respectively. Although a gradual resolution of supply-demand
imbalances and a modest pickup in labour supply are expected in the baseline, easing price inflation eventually.

Trend and outlook on consumer prices

12
9.9
10
8.6

8 7.3
6.5
5.9
6 4.9 5.1 5.2
4.7 4.4 4.7 4.4
4.3
4 3.1
2.6
1.7 2 1.9
2 1.4
0.7 0.7
0.3
0
2015 2016 2017 2018 2019 2020 2021 2022 2023P 2024P 2028P

Advanced Economies Emerging and developing economies

Note: P: Projection
Source: IMF, CRISIL MI&A

Global per capita GDP

Global GDP per capita logged 3.7% CAGR between 2016 and 2022, as per IMF data. In the case of India, it was
~5.6% CAGR between 2016 and 2022. From 2022 to 2025, the IMF projects global per capita GDP to grow at
~4.2% CAGR. During the period, India’s per capita GDP is expected to sustain a higher growth trajectory of ~8.2%
CAGR. India’s per capita GDP is expected to rise the fastest by 2025 among the key economies.

Per capita GDP at current prices for key economies

2016 to
Regions 2016 2017 2018 2019 2020 2021 2022 2025P
2022
US 57,840 59,879 62,788 65,077 63,577 70,160 76,348 84,601 4.7%
Euro area 25,946 27,562 29,703 29,286 28,314 32,228 32,319 36,801 3.7%
UK 41,276 40,667 43,378 42,797 40,347 46,422 45,295 52,001 1.6%
China 8,063 8,760 9,849 10,170 10,525 12,572 12,814 15,901 8.0%
Japan 39,411 38,903 39,850 40,548 40,118 39,883 33,822 38,333 -2.5%
India 1,714 1,958 1,974 2,050 1,913 2,234 2,379 3,012 5.6%
World 10,361 10,886 11,421 11,472 11,048 12,479 12,875 14,549 3.7%
Source: IMF, CRISIL MI&A

Consulting 4
India regained the top spot as the world’s fastest growing economy in 2021 among key nations
India was one of the fastest-growing economies in 2018 and 2019. In 2020, all countries, including developed ones
such as the US and the United Kingdom (UK), except China, saw their GDP contracting due to the pandemic
impact. India’s GDP shrank 5.8% in fiscal 2021 (financial year: April-March). In 2021, GDP growth of all major
economies rebounded as economic activities resumed and also due to the low base of 2020. Among the major
economies, India, with a growth rate of ~9.1%, was the fastest growing in 2021, followed by China with 8.4% in
2021. The country also overtook the UK as the fifth largest economy in the word in the April-June quarter of 2022
and register GDP growth of 6.8% in 2022.Going ahead, India is expected to grow faster than China in 2023 and
2024. The country also overtook the UK as the fifth largest economy in the word in the April-June quarter of 2022.
India’s GDP is expected to grow at 5.9% in 2023 and 6.3% in 2024 as per the IMF forecast.

Real GDP growth by geographies

Regions 2017 2018 2019 2020 2021 2022 2023P 2024P

US 2.3 2.9 2.3 -2.8 5.9 2.1 1.6 1.1

Euro area 2.6 1.8 1.6 -6.1 5.4 3.5 0.8 1.4

UK 2.4 1.7 1.6 -11.0 7.6 4.0 -0.3 1.0

China 6.9 6.8 6.0 2.2 8.4 3.0 5.2 4.5

Japan 1.7 0.6 -0.4 -4.3 2.1 1.1 1.3 1.0

India* 6.8 6.5 3.9 -5.8 9.1 6.8 5.9 6.3

World 3.8 3.6 2.8 -2.8 6.3 3.4 2.8 3.0

Note: P: Projection as per IMF update
*Numbers for India are for financial year (2020 is FY21 and so on) and as per IMF forecast. CRISIL GDP forecast for India:
FY22: 8.7%, FY23: 7.0% and FY24: 6.0%
Source: IMF economic database, World Bank national accounts data, OECD national accounts data, CRISIL MI&A

Consulting 5
1.2 India’s macroeconomic assessment

India’s GDP logged 5.4% CAGR over fiscals 2012-2022

In 2015, the Ministry of Statistics and Programme Implementation (MoSPI) changed the base year for calculating
India’s GDP from fiscal 2005 to fiscal 2012. Based on this, the country’s GDP logged an 10-year CAGR of 5.4%,
reaching Rs 147 trillion in fiscal 2022 from Rs 87 trillion in fiscal 2012.

In fiscal 2022, the economy recovered from the pandemic-related stress, aided by the resumption of economic
activities and less stringent restrictions related to Covid-19. The economy faced challenges in the last quarter of
fiscal 2022 owing to geopolitical pressures, resulting in higher inflation levels. With the resumption of economic
activities and healthy trade flow, GDP growth was at a healthy 8.7%, albeit on a low base.

Real GDP growth in India (new series)

200 8.0% 8.3% 11.0%

7.4% 8.7% 7.0%
6.4% 6.8% 6.5%
5.5% 8.0%
160 3.7%
5.0%
120 2.0%

80 -1.0%

-6.6% -4.0%
40
-7.0%
87.4 92.1 98.0 105.3 113.7 123.1 131.4 139.9 145.2 135.6 147.4 157.7
0 -10.0%
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21RE FY22PE FY23AE
GDP at constant prices (FY12) in Rs trillion y-o-y GDP growth rate

Note: PE: Provisional estimates; RE: Revised estimates; AE: Advance estimates
Source: Provisional estimates of national income 2021-22, Central Statistics Office (CSO), MoSPI, CRISIL MI&A

India’s GDP grew 8.7% on-year in fiscal 2022

As per the provisional estimates released by the National Statistical Office, India’s real GDP grew 8.7% in fiscal
2022, lower than 8.9% it had estimated in February 2022. The growth is largely a reflection of a lower base (as the
economy had shrunk 6.6% in fiscal 2021). It is noteworthy that given the large output loss in the past fiscal, GDP is
1.5% above the pre-pandemic (fiscal 2020) level. Over fiscals 2012-2022, GDP clocked 5.4% CAGR.

While provisional estimates show a mild reduction in the overall size of GDP for fiscal 2021, estimates for private
final consumption expenditure (PFCE) and gross fixed capital formation (GFCF) – the two major demand drivers –
were marginally notched up. The latter suggests the government’s continued focus on capital expenditure (capex).
PFCE is still just 1.4% above the fiscal 2020 level and was the slowest to recover. Moreover, it faces strong
headwinds from rising inflation.

Consulting 6
CRISIL estimates India’s GDP to grow 7.0% in fiscal 2023

While recovery continues to gather pace, the economy is facing multiple risks. Global growth is projected to slow as
central banks in major economies withdraw easy monetary policies to tackle high inflation. This would imply lower
demand for our exports. Together with high commodity prices, especially oil, this may deal a trade shock for the
country. High commodity prices, along with depreciating rupee, indicate higher imported inflation.

The second quarter fiscal 2023 data reflected how global slowdown had begun to spill over to the Indian economy.
Long-term growth movements suggest that despite diverging now, India’s growth cycles have been remarkably
synchronised with that of advanced economies since the 2000s. Major developed economies are expected to fall
into a shallow recession by next year. S&P Global expects the US GDP to swerve from a growth of 1.8% in 2022 to
negative 0.1% in 2023, and the European Union from 3.3% to 0% driven by tight financial conditions induced by
rate hikes of US Federal Reserve, and the European energy crisis. This will weaken the export prospects for India,
thereby weighing on domestic industrial activity.

GDP forecasted to grow 6.0% in fiscal 2024

Domestic demand has stayed relatively resilient so far, it would be tested next year by weakening industrial activity.
It will feel the pressure from increasing transmission of interest rate hikes to consumers as well, and as the catch-
up in contact-based services fades. Also, rural income prospects remain dependent on the vagaries of the weather.
Therefore, increasing frequency of extreme weather events remains a key monitorable. While lowering demand for
Mahatma Gandhi National Rural Employment Guarantee Act jobs is an encouraging sign for the rural economy
from a job perspective, depressed wages are a matter of concern for rural demand. Because of these factors,
CRISIL projects GDP growth to slow to 6% in fiscal 2024 from 7% in fiscal 2023, with risks to the downside.

Real GDP growth (% on-year)

FY24P 6.0%

FY23PAE 7.0%

FY22PE 8.7%

-6.6% FY21RE

FY20 3.7%

FY19 6.5%

FY18 6.8%

FY17 8.3%

FY16 8.0%

FY15 7.4%

FY14 6.4%

FY13 5.5%

Note: PE: Provisional estimates; RE: Revised estimates; AE: Advance estimates , P: Projected
Source: Advance Estimates of National Income, 2020-21, CSO, MoSPI, CRISIL MI&A

Consulting 7
PFCE to maintain dominant share in India’s GDP

PFCE at constant prices clocked 5.5% CAGR between fiscals 2012 and 2022, maintaining its dominant share in
the GDP pie at ~57% or Rs 83,779 billion. Factors contributing to growth included good monsoons, wage revisions
due to the implementation of the Pay Commission’s recommendations, benign interest rates and low inflation.
However, it declined in fiscal 2021 to Rs 77,637 billion on account of the pandemic, when consumption demand
was impacted on account of strict lockdowns, employment loss, limited discretionary spending and disruption in
demand-supply dynamics. In fiscal 2022, it increased 7.9% to Rs 83,779 billion, forming 56.9% of GDP as some of
the restrictions were eased and economic activities resumed.

PFCE (at constant prices)

105,000
104,790
104,580
104,370
104,160
103,950 57.5%
103,740
103,530
103,320
103,110
102,900
102,690
102,480
102,270
102,060
101,850
101,640
101,430
101,220
101,010
100,800
100,590
100,380
100,170
99,960
99,750
99,540
99,330
99,120
98,910
98,700
98,490
98,280
98,070
97,860
97,650
97,440
97,230
97,020
96,810
96,600
96,390
96,180
95,970
95,760
95,550
95,340
95,130
94,920
94,710
94,500
94,290
94,080
93,870
93,660
93,450
93,240
93,030
92,820
92,610
92,400
92,190
91,980
91,770
91,560
91,350
91,140
90,930
90,720
90,510
90,300
90,090
89,880
57.3% 57.2%
89,670
89,460
89,250
89,040
88,830
88,620
88,410
88,200
87,990
87,780
87,570
87,360
87,150
86,940
86,730
86,520
86,310
86,100
85,890
85,680
85,470
85,260
85,050
84,840
84,630
84,420
84,210
84,000
83,790
83,580 57.0%
83,370
83,160
82,950
82,740
82,530
82,320
82,110
81,900
81,690
81,480
81,270
81,060
80,850
80,640
80,430
80,220
80,010
79,800
79,590
79,380
79,170
78,960
78,750
78,540
78,330
78,120
77,910
77,700
77,490
77,280
77,070
76,860
76,650
76,440
76,230
76,020
75,810
75,600
75,390
75,180
74,970
74,760
56.9% 56.9%
74,550
74,340
74,130
73,920
73,710
73,500
73,290
73,080
72,870
72,660
72,450
72,240
72,030
71,820
71,610
71,400
71,190
70,980
70,770
70,560
70,350
70,140
69,930
69,720
69,510
69,300
69,090
68,880
68,670
68,460
68,250
68,040
67,830
67,620
67,410
67,200
66,990
66,780
66,570
66,360
66,150
56.7%
65,940
65,730
65,520
65,310
65,100
64,890
64,680
64,470
64,260
64,050
63,840
63,630
63,420
63,210
63,000
62,790
62,580
62,370 56.5%
62,160
61,950
61,740
61,530
61,320
61,110
60,900
60,690
60,480
60,270
60,060
59,850
59,640
59,430
59,220
59,010
58,800
58,590
58,380
58,170
57,960
57,750
57,540
57,330
57,120
56,910
56,700
56,490
56,280
56,070
55,860
55,650
55,440
55,230
55,020
54,810
54,600
54,390
54,180
53,970
53,760
53,550
53,340
53,130
52,920
52,710
52,500
52,290
52,080
51,870
51,660
51,450
51,240
51,030
50,820
50,610
50,400
50,190
49,980
49,770
49,560
49,350
49,140 56.2% 56.2% 56.2%
48,930
48,720
48,510
48,300
48,090
47,880
47,670
47,460
47,250
47,040
46,830
46,620
46,410
46,200
45,990
45,780
45,570
45,360
45,150
44,940
44,730
44,520
44,310
44,100
43,890
43,680
43,470
43,260
43,050
42,840
42,630
42,420
42,210
56.1% 56.1% 56.1%
42,000
41,790
41,580
41,370
41,160
40,950 56.0%
40,740
40,530
40,320
40,110
39,900
39,690
39,480
39,270
39,060
38,850
38,640
38,430
38,220
38,010
37,800
37,590
37,380
37,170
36,960
36,750
36,540
36,330
36,120
35,910
35,700
35,490
35,280
35,070
34,860
34,650
34,440
34,230
34,020
33,810
33,600
33,390
33,180
32,970
32,760
32,550
32,340
32,130
31,920
31,710
31,500
31,290
31,080
30,870
30,660 55.8%
49,104

51,791

55,573

59,127

63,814

69,002

73,307

78,504

82,597

77,637

83,779

90,215
30,450
30,240
30,030
29,820
29,610
29,400
29,190
28,980
28,770
28,560
28,350
28,140
27,930
27,720
27,510
27,300
27,090
26,880
26,670
26,460
26,250
26,040
25,830
25,620
25,410
25,200
24,990
24,780
24,570
24,360
24,150
23,940
23,730
23,520
23,310
23,100
22,890
22,680
22,470
22,260
22,050
21,840
21,630
21,420
21,210
21,000
20,790
20,580 55.5%
20,370
20,160
19,950
19,740
19,530
19,320
19,110
18,900
18,690
18,480
18,270
18,060
17,850
17,640
17,430
17,220
17,010
16,800
16,590
16,380
16,170
15,960
15,750
15,540
15,330
15,120
14,910
14,700
14,490
14,280
14,070
13,860
13,650
13,440
13,230
13,020
12,810
12,600
12,390
12,180
11,970
11,760
11,550
11,340
11,130
10,920
10,710
10,500
10,290
10,080
9,870
9,660
9,450
9,240
9,030
8,820
8,610
8,400
8,190
7,980
7,770
7,560
7,350
7,140
6,930
6,720
6,510
6,300
6,090
5,880
5,670
5,460
5,250
5,040
4,830
4,620
4,410
4,200
3,990
3,780
3,570
3,360
3,150
2,940
2,730
2,520
2,310
2,100
1,890
1,680
1,470
1,260
1,050
840
630
420
210
- 55.0%

FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21RE FY22PE FY23AE
PFCE at constant prices (FY12) in Rs. billion PFCE as % of GDP

Note: PE: Provisional estimates; RE: Revised estimates; AE: Advance estimates
Source: MoSPI, CRISIL MI&A

India saw robust growth in per capita income over fiscals 2012-2020

India’s per capita income, a broad indicator of living standards, rose from Rs 63,462 in fiscal 2012 to Rs 96,522 in
fiscal 2022, logging 5.2% CAGR. Growth was led by better job opportunities, propped up by overall GDP growth.
Moreover, population growth remained stable at ~1% CAGR. However, in fiscal 2021, the indicator declined 9.7%
on-year owing to the impact of Covid-19. Despite a 7.5% on-year growth seen in fiscal 2022, in absolute terms, it is
yet to recover to pre-pandemic levels.

Per capita net national income at constant prices

FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21RE FY22PE FY23AE

Per-capita
net national 63,462 65,538 68,572 72,805 77,659 83,003 87,586 92,133 94,270 85,110 91,481 96,522
income (Rs)

On-year
3.3 4.6 6.2 6.7 6.9 5.5 5.2 2.3 -9.7 7.5 5.5
growth (%)
Note: PE: Provisional estimates; RE: Revised estimates; AE: Advance estimates
Source: Second Advance Estimates of Annual National Income, 2020-21, CSO, MoSPI, CRISIL MI&A

Consulting 8
India’s per capita GDP grows faster than global average

Global GDP per capita clocked a CAGR of 2.2% between 2012 and 2021, as per the IMF data. Meanwhile, India’s
corresponding figure registered a CAGR of 5.5%.

Per capita GDP at current prices

CAGR
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2012-
2022

India per-
capita
GDP at 1,444 1,450 1,574 1,606 1,733 1,981 1,998 2,072 1,933 2,280 2,466 5.5%
current
prices ($)

World per-
capita
GDP at 10,738 10,918 11,077 10,333 10,386 10,917 11,489 11,559 11,156 12,616 13,396 2.2%
current
prices ($)

Source: IMF, CRISIL MI&A

India’s population is projected to log 0.8% CAGR between 2020 and 2030

India’s population grew to ~1.2 billion according to Census 2011, at a CAGR of 1.9% during 2001-2011. As of 2010
census, the country had about 246 million households.

According to the United Nation’s (UN) World Urbanization Prospects, 2022 revision, India and China, two of the
most populous countries, accounted for nearly 36% of the world’s population in 2021. The report projects India’s
population to increase at a CAGR of 0.8% from 2020 to 2030 to reach 1.5 billion by 2030. According to UN reports
India is expected to surpass China to become most populous country in April 2023. In April 2023, India’s population
is expected to reach 1.425 billion people, matching and then surpassing the population of mainland China.

India’s population growth

Population (billion)
1.7 1.51
1.5 1.40
1.32
1.24
1.3
1.06
1.1
0.87
0.9 0.70
0.7 0.55
0.45
0.5
0.3
0.1
-0.1 1960 1970 1980 1990 2000 2010 2015 2020 2030P
Note: P: Projected
Source: UN Department of Economic and Social Affairs, World Population Prospects 2022, CRISIL MI&A

Global population to log 0.7% CAGR between 2020 and 2050

According to the latest UN population estimates, world population grew 1.1% on-year in 2020, or by 82 million

Consulting 9
people, to reach a global total of 7.8 billion. In the coming decades, slowdown in population growth is projected to
continue. The population is expected to grow 0.7% between 2020 and 2050.

Global population growth rate

Population Annual growth rate
(Million) (%)
Group of economies
2015– 2020–
2015 2020 2050 2020
2020 2050
World 7427 7841 9709 1.1% 1.0% 0.7%
High income countries 1216 1244 1282 0.5% 0.3% 0.1%
Middle income countries 5570 5869 7024 1.1% 0.9% 0.6%
Low Income countries 610 699 1367 2.8% 2.8% 2.3%
Source: World Population Prospects 2022, CRISIL MI&A

Urbanisation in India likely to reach 40% by 2030

India’s urban population has been rising over the years and is expected to continue with rise in economic growth.
From ~31% of the total population in 2010, it is projected to rise to nearly 40% by 2030, according to a UN report
on urbanisation.

India’s urban vs rural population

100%

80%
67% 65% 60%
77% 74% 72% 69%
60% 82% 80%

40%

20% 33% 35% 40%

23% 26% 28% 31%
18% 20%
0%
1960 1970 1980 1990 2000 2010 2015 2020 2030P

Share of urban population (%) Share of rural population(%)

P: projected
Source: World Urbanization Prospects: The 2018 Revision, UN, CRISIL MI&A

People from rural areas move to cities for better job opportunities, education, and quality of life. The entire family or
only a few individuals (generally an earning member or students) may migrate, while the other members continue
to live in their rural home.

India’s youth to account for ~39% of its population by 2030

As per the UN’s 2022 Revision of World Population Prospects, India’s youth (0-24 years) accounted for nearly half
its population in 2010, significantly higher than that for some of its peers (Brazil at 42.5%, China at 35.1% and the
Russian Federation at 29.7%). The fact that ~31% of the population is aged below 15 indicates that a high
proportion of the country’s young population is expected to remain so in the coming years.

Consulting 10
This share is, in fact, expected to reach ~39% by 2030, and remain significantly higher than that of its peers (Brazil
at 31.5%, China at 25.4% and the Russian Federation at 27.7%). This also indicates higher proportion of
population entering the workforce.

Age-wise population break-up for key countries

Country 0-14 years 15-24 years 25-49 years 50-69 years 70+ Total
Brazil
2010 24.8% 17.7% 37.6% 15.6% 4.4% 100%
2020 20.8% 15.6% 38.3% 19.5% 5.8% 100%
2030P 18.2% 13.3% 37.4% 22.6% 8.4% 100%
China
2010 18.5% 16.6% 40.3% 19.0% 5.7% 100%
2020 18.0% 11.4% 37.6% 25.5% 7.5% 100%
2030P 13.1% 12.3% 34.0% 28.6% 12.0% 100%
India
2010 31.0% 19.1% 33.9% 12.9% 3.1% 100%
2020 26.1% 18.2% 36.2% 15.5% 3.9% 100%
2030P 22.3% 16.2% 38.0% 17.9% 5.5% 100%
Russian Federation
2010 15.2% 14.6% 37.2% 23.2% 9.8% 100%
2020 17.7% 9.8% 37.4% 25.5% 9.7% 100%
2030P 15.4% 12.4% 33.8% 25.2% 13.3% 100%
UK
2010 17.6% 13.1% 34.8% 22.9% 11.6% 100%
2020 17.8% 11.6% 32.5% 24.4% 13.7% 100%
2030P 15.4% 12.2% 31.9% 24.5% 15.9% 100%
US
2010 19.9% 14.1% 34.1% 22.8% 9.1% 100%
2020 18.5% 13.1% 33.0% 24.7% 10.7% 100%
2030P 16.4% 12.5% 33.2% 23.0% 14.8% 100%
P: projected
Source: United Nations, Department of Economic and Social Affairs, Population Division (2022); World Population Prospects
2022, CRISIL MI&A

Indian population’s median age to be 30.9 years by 2030

According to the UN, the global median age rose to ~30 years in 2020 from ~20 years in 1970. This is lower than
the median age in developed countries such as the US (37.5 years) and the UK (39.5 years). Interestingly, India’s
median age is 27.3 years, indicating a favourable demographic dividend. Furthermore, it is the lowest among its
BRIC peers: Brazil (32.4 years), Russia (37.4 years), and China 38.6 years.

This trend is expected to continue up to 2030, implying strong potential for an increase in income, and basic and
healthcare spending, with a large proportion of the population being employed.

Consulting 11
Median age trend across key countries
Country 1970 1990 2010 2015 2020 2030P
Brazil 17.3 21.5 28.2 30.3 32.4 36.5
China 18.0 23.7 34.1 35.6 37.4 42.7
India 18.3 20.0 24.0 25.5 27.3 30.9
Russian Federation 29.7 32.2 36.9 37.6 38.6 42.1
UK 33.2 34.8 38.5 39.0 39.5 41.6
US 27.2 31.8 36.1 36.6 37.5 39.7
World 20.3 23.0 27.3 28.5 29.7 32.1
Source: United Nations, Department of Economic and Social Affairs, Population Division (2022); World Population Prospects
2022, CRISIL MI&A

India’s GVA continues to record healthy growth

On the supply side, gross value added (GVA), a much better measure of the economic performance, grew 8.1%
(compared with 4.8% de-growth in fiscal 2021). In absolute terms, real GVA was Rs 136 trillion in fiscal 2022, up
from Rs 125.9 trillion in fiscal 2021, and is expected to reach Rs 145.1 trillion in fiscal 2023, as per the advance
estimates.

GVA at constant fiscal 2012 prices)

Share in Annual growth

Rs trillion FY21RE FY22PE FY23AE
GVA FY23 in FY23

Agriculture, forestry and fishing 20.5 21.1 21.8 15% 3.5%

Mining and quarrying 2.9 3.3 3.3 2% 2.4%

Manufacturing 22.5 24.7 25.0 17% 1.6%

Utility services 2.9 3.1 3.3 2% 9.0%

Construction 9.6 10.7 11.7 8% 9.1%

Trade, hotels, transport, communication and

21.5 23.9 27.1 19% 13.7%
services related to broadcasting

Financial, real estate and professional

29.6 30.9 32.8 23% 6.4%
services

Public administration, defence and other

16.3 18.4 19.8 14% 7.9%
services

GVA at basic prices 125.9 136.1 145.1 6.7%

RE: revised estimate, AE: advanced estimate
Source: CRISIL MI&A

GVA for chemicals and chemical related products including pharmaceuticals have seen healthy growth over the
last few years owing to higher manufacturing output achieved by the country. The GVA for chemicals and chemical
related products including pharmaceuticals have registered growth of ~7.1% CAGR from fiscal 2015 to fiscal 2020.
At the same time the share of this segment in manufacturing and overall economic GVA have also seen increasing

Consulting 12
trend.

GVA for chemicals and chemical related products at constant fiscal 2012 prices)

FY15-
Rs trillion FY15 FY16 FY17 FY18 FY19 FY20 FY20
CAGR

GVA for chemicals and chemical

products including 2,148.8 2,310.1 2,558.1 2,640.0 2,939.0 3,022.3 7.1%
pharmaceuticals

Y-o-Y growth - 7.5% 10.7% 3.2% 11.3% 2.8% -

Share in manufacturing GVA 12.8% 12.1% 12.5% 12.0% 12.6% 13.3% -

Share in total GVA 2.2% 2.2% 2.3% 2.2% 2.3% 2.3% -

India’s exports increased at 4% CAGR between fiscals 2012 and 2022

India achieved an all-time high annual exports of USD 679 billion in fiscal 2022, up 35% from USD 498 billion in
fiscal 2021. Merchandise and services exports clocked a steady 4% CAGR during the mentioned period. The
steady rise in exports can be attributed to India becoming a major manufacturing hub for key products as well as
the central government’s push for local manufacturing of key goods.

Trend in India’s exports (merchandise + services)

$ billion
800 CAGR 4% over FY12-22
670

600 538 527

468 499 498
448 446 466 440
417
400

200

0
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22

Source: Ministry of Commerce, CRISIL MI&A Research

India’s Industrial Index of Production grew steadily before the pandemic

India’s industrial production increased steadily from a base of fiscal 2012, as a result of higher traction in economic
activities, particularly in the manufacturing segment. IIP fell in fiscals 2020 and 2021 owing to the pandemic-related
stress, but recovered in fiscal 2022 with resumption economic activities. It is expected to hold ground this fiscal
amid global economic challenges.

Consulting 13
Trend in IIP (base FY12)

%
6.0 4.6 4.4
4.0 3.8
4.0 3.3 3.3
2.2
2.0
0.0
-2.0 -0.8
-4.0
-6.0
-8.0
-10.0 -8.5
FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22

Source: Ministry of Commerce, CRISIL MI&A Research

Consulting 14
2 Assessment of pharmaceutical API industry in India

Bulk drugs/Active Pharmaceutical Ingredients (API) serve as raw materials for manufacturing finished dosage
forms or formulations. US Food & Drug Administration defines a bulk drug as any substance which is an active
ingredient in a finished dosage. However, the term does not include intermediates used in the synthesis of the bulk
drug itself.

Bulk drugs/
Chemical Active
Formulation
Intermediaries pharmaceutical
ingredients

2.1 Overview of global pharmaceutical API industry

The global API market is connected through supply chains across the different parts of the world. The supply
chains for API are constantly evolving according to demand-supply trend in the industry. Price and regulatory
compliances are also one of the key elements that affects the global API market. The global API market consists of
regional hubs in which manufacturers specialize in producing different types of ingredients for different sections of
the global pharma market. In Asia particularly in China, the API industry is known for low-cost, high-volume API
manufacturing and it is one of the key global source for the global pharmaceutical industry. However with covid-19
related disruptions pharmaceutical players are looking for alternate sourcing destinations like India which has
skilled workforce and low cost manufacturing capabilities. European API Manufacturing players on the other hand
are specialized in production of specialized, highly potent, APIs for the global market.

As the pharmaceutical industry is evolving, various countries and regulators have implemented stringent
regulations on developing high quality APIs, thus enhancing the potential clinical effectiveness of the final product
and at the same time maintain the environmental safety standards. As a result, many companies are outsourcing
API manufacturing and Asia-pacific region has witnessed strong growth in API manufacturing due to its cost-
effectiveness. Large number of manufacturers have their bases located in China and India which is propelling many
global pharmaceutical industries to seek partnerships with manufactures in these countries. The advantage of
technical know-how and capabilities for largescale manufacturing, is expected to drive the growth in the Asia-pacific
markets like India and China.

Consulting 15
2.2 Overview of Indian pharmaceutical API industry
The pharmaceutical API industry in India is ranked third-largest globally in terms of volume, behind China and Italy
– About 35 per cent of API and intermediaries produced in India are exported and the remaining API and
intermediaries are sold in the domestic market, including captive consumption by several large formulation players.
India is the largest provider of generics drugs globally contributing to ~20% in global supply by volume of generics
drugs.

In the Indian pharmaceutical API industry, players adopt different business models to cater to the demand in the
domestic as well as export markets. Bulk drugs are exported either under a contract manufacturing service
between Indian manufacturers and global innovator companies or are merely supplied on a trading basis. The latter
method is generally followed when exporting to semi-regulated markets or while supplying bulk drugs for
manufacture of off-patent drugs in regulated markets. Typically, regulated markets offer higher profits than semi-
regulated markets.

Exports to regulated markets also occur in the nature of contract manufacturing for on-patent and off-patent drugs.
Besides, bulk drugs are also supplied (in smaller quantities) during drug development to innovator companies.
Players operating in this segment earn higher margins as compared to other exporters. The margins vary according
to the player's area of expertise; for example, custom synthesis carries very high margins compared to supply for
manufacture of off-patent drugs.

The nature of Indian bulk drug exports to regulated markets has also changed over a period of time. Initially,
exports were routed through merchants. Increasingly, most medium and large-sized exporters are directly exporting
to generic or innovator companies in regulated markets. Further, profitability is higher for players who supply bulk
drugs for manufacturing on-patent drugs in regulated markets as compared to players who supply bulk drugs for
generics' manufacture.

In terms of imports, Indian API industry still relies on imports for specific products. High dependence on Chinese
imports is a concern for the domestic pharmaceuticals industry. The covid outbreak has been detrimental in
revealing the consequences of a supply disruption from China and its potential impact.

Therefore, the central government has earmarked ~Rs 100 billion for the bulk drug industry, including Rs 30 billion
for promotion of bulk drug parks (for next five years) and Rs 69.4 billion towards production-linked incentive
scheme for promotion of domestic manufacturing of critical KSMs/Drug Intermediates and APIs in the country (for
next eight years).

Consulting 16
Revenue model adopted by bulk drug players

Supply (on trading Regulated/semi-

Domestic
basis) regulated markets
APIs

Export Custom sysnthesis

Contract
On-Patent drugs
manufacturing

Off-patent drugs

Source: CRISIL Research

API industry in India to grow at 9-11% CAGR between fiscal 2022 and 2027
The overall API industry in India grew from Rs. 781 billion in fiscal 2017 to Rs. 1179 billion in fiscal 2022 registering
a CAGR of 8.5% in rupee terms. Growth in the industry was supported by growth in formulation manufacturing in
India. The formulation industry also grew at healthy pace during the same period and API imports grew at a tepid
pace during the period under consideration. Thus the domestic API and intermediaries industry was supported by
demand in formulation, manufacturing by local players and backward integration by large formulation players.

Going forward the API industry is expected to clock a CAGR of 9-11 % between fiscal 2022 and fiscal 2027, largely
driven by growth in API exports, which is expected to deliver a healthy growth during the period under
consideration.

Consulting 17
Overview of API industry in India (incl. exports)

2,000 (Rs. billion) 1800-1900

1,800

1,600

1,400 1,310
1,179
1,200 1,115
987
1,000 920
781 800
800

600

400

200

-
FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY2023E FY2027P

Note: E-Estimated, P: Projected

Source: DGCIS, CRISIL Research

2.2.1 Overview of paracetamol API industry in India

Paracetamol (Acetaminophen-C8H9NO2), is the most commonly taken analgesic worldwide and is recommended as
first-line therapy in pain conditions by the World Health Organization (WHO).It is also used for its antipyretic effects,
helping to reduce fever. This drug was initially approved by the U.S. FDA in 1951 and is available in a variety of
forms including syrup form, regular tablets, effervescent tablets, injection, suppository, and other forms.
Paracetamol is often found combined with other drugs in many over the counter (OTC) allergy medications, cold
medications, sleep medications, pain relievers, and other products.

Paracetamol API industry in India to grow at 5-7% CAGR between fiscal 2023 and 2027
The paracetamol API industry (Domestic consumption+ exports) grew from Rs. 22 billion in fiscal 2017 to Rs.39
billion in fiscal 2023.The paracetamol API market growth was mainly supported by growth in pain and analgesics
therapy area which focuses on treatment of common fever, cough and cold as well as volume rise coupled with
strong realization levels for players. The paracetamol API demand saw uptick in fiscal 2022 owing to pent up
demand due to covid-19 and extensive usage of common cold and fever drugs during the second wave of covid-19.
Also, the boost in export demand due to supply restrictions in China gave opportunities for Indian manufacturers to
tap the potential export market.

Some of the paracetamol API based products like Dolo and Crocin saw huge demand during the pandemic giving
rise to the strong demand in the domestic market. Increased sales of these fever medicines saw demand for
domestically manufactured APIs in fiscal 2021 and fiscal 2022.The past growth in the paracetamol API has been
supported by moderate increase in the volume consumption coupled with the price rise.

Going forward the paracetamol API industry is expected to clock a CAGR of 5-7% between fiscal 2023 and fiscal
2027, largely driven by the demand from domestic formulation manufacturers as well as export markets. The
demand in the domestic market can be attributed to rise of OTC segment and self-care for some of the common

Consulting 18
ailments like fever and cold which are key application areas for paracetamol API as well as price rise caused by the
rising raw material costs for manufacturing paracetamol API. The price rise in the paracetamol API space is often
reflected in the formulation price rise of formulations which is often revised to the tune of wholesale price index for
the year 2022 the WPI was ~10% and hence going forward price rise is expected in paracetamol formulations
market which will also see similar price rise trend in the paracetamol API market.

Overview of paracetamol API industry (incl. Exports)

60 (Rs. billion)
50-55
50

39
40 36

30 25 25
24
22 22
20

10

0
FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023E FY2027P
Note: E-Estimated, P: Projected
Source: DGCIS, CRISIL Research

In coming years India is expected to see traction of manufacturing capacities for some of the key APIs majorly
owing to the PLI scheme introduced by the government to reduce the import dependency from China. In the
paracetamol API space as well, which is one of the key APIs for manufacturing finished dosage formulations there
has been capacity addition by players to cater to the domestic as well as export demand. Players are augmenting
their capacities for paracetamol API mainly to cater to the export demand from some of the regulated markets like
USA and Europe .Formulation players in these regulated markets opting for China plus one strategy to diversify
their supply chains and India being one of the key destinations for pharmaceutical manufacturing, there has been
thrust in domestic API manufacturing to cater to this demand.

2.2.2 Overview of Pain and analgesics therapy are in Indian domestic formulation industry
Analgesics are medications used in the management and treatment of pain. They include several classes of
medications (acetaminophen, nonsteroidal anti-inflammatory drugs, antidepressants, antiepileptics, local
anaesthetics, and opioids). Some of the key molecules in pain and analgesics therapy area in Indian domestic
formulation market includes Paracetamol, Aceclofenac + Paracetamol + Serratiopeptidase and Ibuprofen +
Paracetamol, Paracetamol + Tramadol, Diclofenac + Paracetamol.

Pain and analgesics therapy area have seen traction in recent years owing to covid-19 related demand with
common fever medications generating healthy demand in the Indian domestic market. .Some of the key brands in
pain and analgesics therapy area includes Volini, Dolo, Zerodol and Combiflam. The pain and analgesics therapy
area have grown at 4.1% CAGR from fiscal 2017 to fiscal 2022.

Formulations sales in Indian domestic formulation industry (Rs. billion)

Consulting 19
Therapy Name FY17 FY18 FY19 FY20 FY21 FY22 CAGR
FY17-FY22
Pain and
80.4 83.1 89.9 98.2 95.5 98.5 4.1%
Analgesics

Source: AIOCD AWACS, CRISIL Research

Growth drivers and recent trends for Indian bulk drugs industry

India enjoys cost advantage over regulated markets

API and intermediaries manufacturing costs are significantly lower in India than in the regulated markets of the
United States (US) and Europe, as illustrated in the chart below. China is a major exporter of API and
intermediaries intermediates globally as it enjoys competitive advantage due to government support, coupled with
low power and labour costs. On the other hand, India is a preferred destination for the procurement of active
pharmaceutical ingredients (APIs), especially in regulated markets, compared with China. This is on account of its
advanced process chemistry skills, which aid the manufacture of API and intermediaries and complex
intermediaries.

Cost of manufacturing drugs in India, China, Europe and US

Country/Region Costs in units
USA 100
Europe 85-90
India
-US FDA approved plants 45-50
-Others 35-40
China 35-40
Note: Costs indexed to US
Source: CRISIL Research

Highest number of US FDA-approved facilities outside the US, leads US DMF submissions
India has the highest number of US Food and Drug Administration (FDA) approved facilities outside the US. The
country also has skilled manpower and advanced process chemistry skills. Some API and intermediaries
manufacturers have forward-integrated into pre-formulations (pelletisation / granularisation of API and
intermediaries before they are converted into finished dosages) as well.

Though China is a major destination for API and intermediaries manufacturing, it has a major share primarily in the
manufacturing of API and intermediaries intermediates. India has consistently maintained its leadership in drug
master file (DMF) submissions. India had approximately 40% share in the DMFs filed in the year 2020 which
proves the capability of Indian players to meet required export quality standards for regulated markets. A DMF is an
indicator of the API and intermediaries manufacturing capabilities of players (in terms of quality standards
maintained at their facilities for processing, packaging, storage of drugs, etc.), which is used by global
pharmaceutical companies that are outsourcing production activities (innovators).

Consulting 20
products to aid growth
A focus on speciality products and niche molecules would aid the growth of API and intermediaries players. Players
have a healthy pipeline of complex generics and limited competition products, which are difficult to manufacture but
command a higher premium. The pricing pressure is also expected to normalise in regulated markets in the coming
years.

Further, the supply disruption from China is expected to aid business opportunities for API and intermediaries
players in the global market. Also, recent quality issues related to Chinese APIs have slightly dented the country's
image globally, which would in turn boost business for India, the next largest and cost-effective API supplier after
China. Some multinational corporations (MNCs) are looking at alternative sources for API and intermediaries
procurement following Chinese issues.

New technology adoption a key monitorable in the Indian pharmaceutical industry

Indian pharmaceutical industry still adopting when it comes to employing newer technologies in the research and
manufacturing processes. Automation and artificial intelligence are some of the key technological trends in the
industry. World health organization also recommends application of automated systems right from documentation
to the manufacturing of formulations. Moreover, pharmaceutical companies place a premium on working with API
manufacturers that can ensure a high degree of regulatory compliance, which decreases execution risk. Newer
technology helps in process efficiencies which can aid Indian API players but implementing those changes will be a
key monitorable for Indian API industry.

Outsourcing of API and intermediaries from MNCs to continue

In view of high operating expenses, CRISIL Research believes MNCs will look at API and intermediaries
outsourcing to control cost and improve profitability. Margins of global innovator players dipped substantially from
2015 to 2018. Going ahead as well, MNCs are likely to continue outsourcing API and intermediaries manufacturing
to India as India is one of the key destination for low cost pharmaceutical manufacturing and also has substantial
manufacturing capabilities in the pharmaceutical manufacturing space.

Regulatory boost for domestic industry

The Union Cabinet, on March 21, 2020, approved the below schemes for the development of the Indian API and
intermediaries sector. These schemes are aimed at providing regulatory boost to the sector by reducing
manufacturing cost of API and intermediaries. One of the major factors for China’s dominance in API and
intermediaries is the regulatory support it gets from its government, with common facilities across plants and
various subsidies being provided, which helps them bring down the cost considerably. With the newly announced
schemes, the Indian government is also looking at creating common infrastructure facilities and reduce
dependence on some critical drugs.

Name of the scheme Details

Consulting 21
 Name of the scheme Details

• Tenure: FY21 to FY30

• Financial outlay: Rs. 69.4 billion
• Scheme applicable for greenfield projects
• Financial incentive to be provided for 41 identified key products
which cover all 53 identified API's
Production-Linked Incentive
• The net worth of applicant (including that of group companies) as
on date of application >=30% of total proposed investment
• Maximum number of selected applicants: 136
• The incentive under scheme shall be applicable only on sales of
eligible product to domestic manufacturers

• Tenure: FY21 to FY25

• Financial outlay: Rs. 30 billion
• Three API and intermediaries parks will be supported under the
scheme
Creation of API and intermediaries parks • Maximum grand-in-aid for one API and intermediaries park will be
limited to Rs. 10 billion
• Minimum 50% of land area for API and intermediaries
manufacturing units
• 3 states to be selected through challenge method

Source: PIB, CRISIL Research

The above mentioned schemes are aimed at providing regulatory boost to the sector by reducing manufacturing
cost of API and intermediaries. One of the major factors for China’s dominance in API and intermediaries is the
regulatory support it gets from its government, with common facilities across plants and various subsidies being
provided, which helps them bring down the cost considerably. With the newly announced schemes, the Indian
government is also looking at creating common infrastructure facilities and reduce dependence on some critical
drugs.

In addition, the ‘China plus one’ strategy, resulting in a number of multinationals undertaking proactive steps to
reduce dependence on China for their manufacturing operations and looking at India as an alternative options,
provides the opportunity for manufacturers in India, including domestic formulations focused CDMOs, to capture a
larger market share. Accordingly, the Government of India has approved the Production Linked Incentive scheme
for pharmaceuticals for fiscal 2021 to fiscal 2029, which is expected to promote innovation for development of
complex and high-tech products, including products of emerging therapies as well as improve accessibility and
affordability of medical products. The PLI scheme’s objective is to enhance India's manufacturing capabilities by
increasing investment and production and contributing to product diversification to high value goods in the
pharmaceutical sector.The PLI scheme also specifically covers complex generic drugs and patented drugs or drugs
nearing patent expiry.

Consulting 22
3 Global chemical and speciality chemical industries

Global chemical industry size ($ trillion)

Decline due to
Covid-19 impact
CAGR 2.2%
4.50
3.83 4.15 3.96 3.82 3.98
3.71

2016 2017 2018 2019 2020 2021 2026P

P: projected , Data for each calendar year

Note: Industry size excluding pharmaceuticals

Source: CRISIL MI&A Consulting

Global chemical industry by segment ($ trillion) CAGR

2021-2026

3.71 3.98 4.50

13% 13% 13% 2.5%
10% 11% 11%
17% 19% 21% 2.5%

4.6%
60% 57% 55%
1.8%
2016 2021 2026P
Basic chemicals Speciality chemicals Agricultural chemicals Consumer chemicals

P: projected , Data for each calendar year

Source: CRISIL MI&A Consulting

India’s positioning in the global chemical industry

As of 2020, the Indian chemical industry had a share of ~3% in the global chemical industry. It is ranked sixth at the
global level and fourth in Asia. The country ranks eighth in global export of chemicals (excluding pharmaceutical
products) and seventh in global import of chemicals (excluding pharmaceutical products).

Chemical exports
Exporters Exports ($ bn) Share in world exports (%)
Regions/ countries 2021 2005 2010 2021
EU 1,263 50.0% 46.0% 45.6%
US 270 10.9% 11.2% 9.7%
China 260 3.2% 5.2% 9.4%

Consulting 23
Exporters Exports ($ bn) Share in world exports (%)
Regions/ countries 2021 2005 2010 2021
Switzerland 144 4.0% 4.3% 5.2%
South Korea 101 2.5% 2.9% 3.6%
Japan 95 4.8% 4.6% 3.4%
UK 70 5.2% 4.3% 2.5%
India 62 1.0% 1.4% 2.2%
Singapore 60 2.4% 2.3% 2.3%
Saudi Arabia 46 1.0% 1.3% 1.6%
Above 10 2,371 85.0% 83.4% 85.6%
Source: World Trade Organization (WTO Statistical Review, 2022)

Chemical imports
Exporters Imports ($ bn) Share in world imports (%)
Regions/ countries 2021 2005 2010 2021
EU 1,038 41.4% 37.9% 36.2%
US 329 11.4% 10.1% 11.5%
China 262 6.7% 8.5% 9.2%
Japan 88 3.3% 3.5% 3.1%
UK 81 4.7% 4.0% 2.8%
India 78 1.2% 2.0% 2.7%
South Korea 65 2.1% 2.3% 2.3%
Brazil 64 1.3% 1.8% 2.2%
Switzerland 62 2.3% 2.1% 2.2%
Canada 62 2.8% 2.4% 2.2%
Above 10 2,130 77.1% 74.6% 74.4%
Source: World Trade Organization (WTO Statistical Review, 2022)

The size of the Indian chemical industry, excluding fertilisers and pharmaceuticals, was $115-120 billion in fiscal
2021. Including fertilisers and pharmaceuticals, it was $160-180 billion.

Global speciality chemical market to log 4-5% CAGR by 2026

Speciality chemicals are low-volume, high-value chemicals with specific applications classified based on end-user
industries. They can be single-chemical formulations or entities whose composition affects how the end-product
performs and is processed. The major distinction between speciality chemicals and commodity chemicals is that
speciality chemicals are produced through extensive R&D and typically are synthesized using multiple step
reactions as compared to one or two steps in the case of commodity chemicals. A speciality chemical has only one
or two primary applications, whereas a commodity chemical may have hundreds of varied applications. These high-
value compounds are created via speciality chemistry and are employed in a variety of essential goods for
consumers and business, including medications, agricultural chemicals, and performance chemicals. In the
speciality chemical industry, custom synthesis is a common service provided to customers.

Consulting 24
Comparison between commodity and speciality chemicals
Parameters Commodity chemicals Speciality chemicals
Single basic chemicals; starting materials for Formulations of chemicals containing one or
Type
the chemical industry, standardized product more fine chemicals as active ingredients
Petrochemicals, basic chemicals, heavy
Adhesives, agrochemicals, biocides, catalysts,
organic and inorganic chemicals (ammonia,
dyestuffs and pigments, enzymes, electronic
chlorine, sulphuric acid, also includes lead-
Sub-categories chemicals, flavours and fragrances, food, and
based products – lead stabilizers), large
feed additives, speciality additives (includes
volume monomers, commodity fibres, and
calcium zinc, other mixed metal PVC stabilizers)
plastics

Rs 200-800/kg for usual speciality chemicals,

Pricing indications Rs 30-150/kg with potential for significantly higher per kg
pricing for niche products

High volume production (in thousand ton/

Produced in limited quantities (10-500 ton/
Production year); mass produced in continuous-process
year); blended in customised batches
plants, using standardised reactions
Multiple steps (2 or more); for synthesis of
Manufacturing steps Limited steps (1 or 2) intermediates and APIs, steps can range
between 5 and 20
Usage Based on their versatility as raw materials Based on specific functionality
Source: CRISIL MI&A Consulting

Barriers to entry in the speciality chemical industry are typically high. The specialised nature of products leads to
significant differentiation. Substantial R&D requirements, technical know-how, capital intensity service capabilities,
customer relationships, and engineered or regulated specifications also create important barriers to entry. Although
these barriers are not homogeneous across the industry, most speciality chemical companies enjoy the benefits of
one or more of them.

The speciality chemicals industry was valued at $750-770 billion at the global level in 2021. The segment clocked
3-4% Compound annual growth rate (CAGR) over 2016-21. Agrochemicals and performance chemicals contribute
the highest to the global speciality chemical revenue pie, accounting for 8-10% share each in 2021. The use of
agrochemicals is rising because of increasing demand for agro products, led by population growth and improving
propensity to buy owing to rapid industrialisation globally.

Global speciality chemical industry classification (2021)

Speciality chemical classification (% share in global market)
Agrochemicals 8-10%
Performance chemicals (includes multiple sub-segments) 8-10%
Construction chemicals 7-8%
Home and personal care chemicals 6-7%
Electronic chemicals 6-7%
Dyes and pigments 6-7%
Flavours and fragrances 5-6%
Polymer and plastic additives 4-5%
Food additives 4-5%

Consulting 25
Pharma intermediates 4-5%
Textile chemicals 3-4%
Speciality coatings 3-4%
Oilfield chemicals 3-4%
Others 18-33%
Note: The performance chemical segment includes various sub-segments, such as antioxidants, anti-wear additives, flotation
agents, solvents, surfactants, emulsifier, solvents, and chemical intermediates

Source: CRISIL MI&A Consulting

In 2020, the global speciality chemicals space declined 3-4% on-year because of the outbreak of Covid-19.
However, the segment is estimated to have recovered in 2021. Between 2021 and 2026, the market is expected to
grow at 4-5% CAGR to $950-970 billion.

Global speciality chemical market size ($ billion)

CAGR 3-4% CAGR 4-5%

950-970

750-770
630

2016 2021 2026P

P: projected | Data for each calendar year

Source: CRISIL MI&A Consulting

APAC – key contributor to global speciality chemical market in 2021

Developed countries (particularly the US) and emerging countries in Asia-Pacific (APAC) have seen a significant
shift in the speciality chemical industry in the past two decades. This has mainly been due to stricter environmental
norms in western countries, coupled with cost advantages enjoyed by companies in emerging markets in terms of
logistics and labour. The shift is also because companies are relocating closer to demand centres and optimising
their supply chains. In 2021, APAC accounted for majority of the global speciality chemical market, with a share of
48-50%, followed by North America and Western Europe.

Market share of key countries in speciality chemicals in 2021

Consulting 26
 RoW, 15%
China, 26%

Other Asia, 11%

India, 4%

Japan, 8%
North America, 21%

Western Europe, 15%

Source: CRISIL MI&A Consulting

China’s chemical industry performance

Growth of China’s chemical industry ($ billion)

CAGR: 2013-2021: 6.0%

CAGR: 2021-2026P: 4.0%

2,396
1,970
1,829
1,529
1,238

2013 2017 2020 2021 2026P

P: projected | Data for each calendar year

Source: CRISIL MI&A Consulting, Cefic (European Chemical Industry Council)

The Chinese chemical industry logged 6% CAGR over 2013-21. The industry is expected to clock a relatively
slower CAGR of ~4% over 2021-26. Chemical demand growth is expected to taper in the consumer goods and
electronics industries. Meanwhile, the automotive sector is expected to drive demand.

China’s speciality chemical market is eroding

China’s speciality chemical market has been on a downtrend in recent years, primarily because of environmental
norms introduced by the government which led to the closure of several chemical plants as well as recent global
geo-political tensions with the US and most corporates either planning or in the process of implementing supply
chain diversification strategies.

The Chinese government started implementing stricter environmental protection norms from January 2015 to
control pollution and has imposed strict penalties on polluting industries, including chemicals. As a result, capital
and operating expenditures of chemical companies are rising, making the output less competitive in the export

Consulting 27
market. China’s chemical exports have been on a downtrend since 2015. In 2017, ~40% of the chemical
manufacturing capacity in China was temporarily shut down for safety inspections, with over 80,000 manufacturing
units charged and fined for breaching emission limits. While exports rose in 2017 and 2018, as most plants
restarted production, the trend has again turned south over the past two years. Domestic demand is also declining
because of slowing economic growth. China’s economy is expected to grow at a relatively slow pace in the coming
years, resulting in reduced domestic demand.

Trend in China’s chemical exports ($ billion)

106.2

80.0
73.7 72.2
63.6 60.2 64.7
54.3

2014 2015 2016 2017 2018 2019 2020 2021

Note: Data for each calendar year
Source: UN Comtrade. Export of goods under HS codes 28 and 29 considered

Indian market expected to grow sharply as compared to other regions

By region-wise demand, India’s speciality chemical industry is expected to post 10-12% CAGR over 2021-26 owing
to rising demand from end-user industries, along with tight global supply on account of stringent environmental
norms in China. In contrast, markets such as the North America, Europe and Japan are expected to clock less than
3% CAGR over the next five years because of industry saturation in these regions. China’s speciality chemical
industry saw historic growth rates of ~20% and above until 2013, driven by a low-base effect. It exhibited a
moderate CAGR of 9-10% over 2013-21 and is expected to witness a relatively slow CAGR of 4-6% over 2021-26.

Region-wise growth in speciality chemicals (2021-26, CAGR)

10-12%

4-6%
4-5%

2-3%
1-2%
1%

China North America Western Europe Japan India Global

Source: CRISIL MI&A Consulting

Consulting 28
4 Indian chemical and speciality chemical industries

4.1 Indian chemical industry

Indian chemical industry development ($ billion)

360
304

231
163 178

107

FY11 FY18 FY19 FY22 FY25P FY27P

Note: Market size including (Biotech, Pharmaceuticals), Market size is based on consumption

P: Projected

Source: Department of chemicals and petrochemicals

The Indian chemical industry is a key constituent of the country’s economy, accounting for 2.28% of the GVA
(including pharmaceuticals) for all economic activities in fiscal 2020 compared with 2.23% in fiscal 2015. In 2020, it
ranked sixth in the world in terms of revenue (excluding pharmaceuticals) and accounted for 2.7% of the global
chemical industry compared with 2.5% in fiscal 2010. The Indian chemical industry is expected to double at 9.3%
CAGR over fiscals 2019-25.
CAGR
Indian chemical industry by sub-segments FY22-FY27

14% 15% 15% 15% 11.0

22% 26% %
27% 28% 11.1
29% 28% 27% 27%
%
10.6
35% 32% 31% 30%
%
9.7%
FY15 FY21 FY22 FY27P
Bulk Chemicals Petrochemicals Speciality Chemicals Fertilizers

Note: Segments excluding Pharmaceuticals

P: Projected

Source: CRISIL MI&A Consulting

4.2 Indian speciality chemical industry

The Indian speciality chemicals industry, accounting for ~26% of the overall chemicals industry (excluding
pharmaceuticals), was worth $29 billion in fiscal 2020. The industry expanded at 6.7% CAGR over fiscals 2015-20,

Consulting 29
driven by an increase in domestic offtake from various end-user industries and rising exports. However, in fiscal
2021, the industry declined 3.4% on-year because of a slowdown in economic activity and the consequent decline
in demand from end-user industries. The industry exhibited recovery in fiscal 2022 with an estimated worth of $33.5
billion. The Indian speciality chemical industry is expected to reach $51 billion by fiscal 2026, growing at 11.1%
CAGR over 2022-26.

Indian speciality chemicals industry’s trajectory ($ billion)

4.9% CAGR 11.1% CAGR

6.7% CAGR 51

39
33.5
29 28
21

FY15 FY20 FY21 FY22 FY23P FY26P

P: Projected

Note: Market size is based on consumption

Source: CRISIL MI&A Consulting

Major sub-segments within the speciality chemicals market (value terms) in fiscal 2022
Segments Market value ($ billion) Market share %
Dyes and pigments (colorants) 5.36 16.0%
Paints and coatings 4.52 13.5%
Agrochemicals 4.86 14.5%
Speciality polymers 2.85 8.5%
Plastic additives 1.34 4.0%
Home care surfactants 1.34 4.0%
Construction chemicals 1.01 3.0%
Textile chemicals 1.01 3.0%
Flavours and fragrance 0.67 2.0%
Water chemicals 0.67 2.0%
Cosmetic chemicals 0.67 2.0%
Paper chemicals 0.67 2.0%
Others 8.38 25.0%

Source: CRISIL MI&A Consulting

Note: CRISIL MI&A Consulting considers personal care ingredients, polymer additives, water chemicals, textile chemicals,
construction chemicals, surfactants, and flavours and fragrances as speciality chemical categories.

The speciality chemicals industry presents significant entry barriers, including customer validation and approvals,
expectation from customers for process innovation and cost reduction, high quality standards and stringent

Consulting 30
specifications, as well as various client and regulatory approvals that are required to be obtained.

Key speciality chemical segments and growth drivers

Segments Segment overview and growth drivers

Agrochemicals
The agrochemicals sector consists of key chemicals which find use in the agriculture sector, with
almost 98% of the all the products classified under pesticides. Pesticides can be further classified,
basis the specific target organisms, into insecticides, herbicides, fungicides, and others. Crisil MI&A
consulting expects the overall growth in the agriculture sector to drive demand for agrochemicals in
the medium-term. Additionally, strong export demand from international markets such as Brazil and
the US are further expected to support demand growth. One of the key trends in the sector has been
India’s evolution as a key player in the global market. The overall diversification by the western
consumers, especially the effort to move away from supply-chain dependencies on China, has
boosted India’s overall exports of agrochemicals, which is estimated to have grown at a CAGR of 12-
13% over fiscal 2017-2022. Agrochemicals sector is expected to grow at 9-10% CAGR between fiscal
2022 and fiscal 2027.
Construction
chemicals Construction chemicals include concrete admixtures, adhesives and sealants, waterproofing
chemicals, flooring chemicals, chemicals for repair, rehabilitation, and others. Growth of construction
chemicals is largely linked to overall spending in the construction industry. In India, share of
construction chemicals in overall construction is ~1% compared with global average of 4-5%.
Investments in key end user industries, such as infrastructure and real estate (residential, commercial,
and retail, healthcare and education), supported 9-11% CAGR of construction chemicals between
FY17-22. The construction chemicals industry is expected to grow 13-15% on year this fiscal (FY23)
because of an increase in construction spending, led by infrastructure.
Colorants
The colorants industry is expected to grow 9-11% in FY23, after posting healthy growth of 24-27%
during last fiscal over a lower base. Demand from the domestic end user industries led by
automobiles and construction will drive the colorants sector growth. The US, China, Bangladesh, and
the EU to continue to remain key export destinations for India. However, slowdown in global economy
to be a key monitorable
Surfactants
The personal care segment, which primarily consists of soap and shower products, moisturizers etc.
accounts for almost 15-18% of the overall surfactant segment. The home care segment accounts for
almost 35-40% of the overall surfactants demand in India, consisting of products such as detergents.
The industrial and the institutional cleaning segment accounts for almost 30-35% of the overall
revenues for the surfactants segment. The surfactants demand has been growing at a strong pace
over the last five years, although demand was impacted in the fiscal 2020 owing to the onset of the
pandemic. However, demand rebounded in fiscal 2021 on the back of partial recovery of economic
activities. Going forward, Crisil MI&A consulting expects the overall demand for surfactants to grow by
12-14% in fiscal 2023, driven by increasing penetration on the back of increasing hygiene awareness
as well as improvement in disposable income of households.
Polymer additives
Polymer additives are used to provide stabiliser antioxidant, flame retardant properties, amongst
others. Growth in the polymer additives industry is driven by plastics and other end-user industries.
Polymer additives comprise 1-5% by weight in plastics products. Increasing disposable income from
urban dwelling and increasing per capita spend on key end use segments such as consumer
durables, automobiles, and construction segment to drive growth going forward.

Source: CRISIL MI&A Consulting

Consulting 31
Favourable global factors

China, a major player in commodity chemicals, has seen reduced focus on speciality chemicals. China’s speciality
chemicals market has seen a downturn in recent years due to various factors. Most prominent being the
introduction of stringent environmental norms, which has led to the shutdown of several chemical plants. Also, the
Chinese government has mandated the construction of compulsory effluent treatment plants and imposed green
tax on the chemicals industry to combat pollution. This coupled with increasing wage costs are pushing the capex
and opex costs upwards, making Chinese chemical companies less competitive in the export market. Going
forward, these factors are expected to play out in favor of India’s speciality chemicals industry, since exports will
trend up over the next few years.

India is well-positioned to drive growth in the speciality chemicals industry, given its abundant supply of labour,
land, feedstock, and established legal and regulatory framework. Indian companies with strong safety, health and
environment measures, robust R&D and project management, and integration are well-poised to leverage
opportunities in this space.

Capex in speciality chemicals to increase 50% on-year in FY23

A revival in domestic demand and continuing robust exports will spur a 50% on-year increase in the capex of
speciality chemicals manufacturers in FY23 to Rs 6,000-6,200 crore. That would also be well above the Rs 5,000
crore spent before the pandemic in fiscal 2020, a CRISIL Ratings study of 106 rated speciality chemicals
manufacturers, which account for a fourth of the sector’s annual revenue of ~Rs 3 lakh crore, shows.

Export growth is expected to accelerate to 17-18% from 12-13% in fiscal 2021, owing to the competitive positioning
of players, recovery in global demand, and the China-plus-one strategy of customers. In addition, owing to the
impact of the pandemic on the global supply chain and geopolitical tensions, suppliers are looking to diversify and
expand sourcing of products from different manufacturers across economies, including India, to minimise disruption
on their operations. Domestic growth is likely to surge to ~20%, riding on strong demand from agrochemicals, fast-
moving consumer goods (FMCGs), pharmaceutical and textile sectors, as well as a rise in discretionary spend.

Figure 1: Domestic and export revenue growth development of Indian speciality chemical companies

20%
16% 27%
12% 20% 12%
17.50%
13% 5%
5.50%
7% 1%
FY17 FY18 FY19 FY20 FY21 FY22

Domestic revenue growth Export revenue growth

Notes: Based on 106 CRISIL-rated players (25% of sector’s annual revenue)

Source: CRISIL MI&A Consulting

Key growth drivers for the Indian chemicals industry

• Per capita consumption of chemicals in India is lower compared with western countries. Hence, there is
considerable scope for new investment
• A large population, huge dependence of the domestic market on agriculture, and strong export demand are the
industry’s key growth drivers

Consulting 32
• The shift in the geopolitical landscape and global supply chain preference from China can provide India with a
platform for converting challenges into opportunities
• The domestic market has significant growth potential with rising GDP and purchasing power
• World-class engineering and strong R&D capabilities

4.3 Competitive landscape for Indian speciality chemicals industry

Low in volume but high in value, speciality chemicals are a critical input for a range of industries. Apart from being
utilised as raw material by textile companies and being added for formulations by pharmaceutical players, these are
used in agriculture, plastics, construction, paints, and packaging, among others.

The speciality chemicals sector is an important part in the overall functioning of the Indian economy, producing
various intermediaries that form raw material for numerous important end usage industries. From furniture used by
the direct consumers to thermo-plastics used in automotive sectors, the speciality chemicals sector forms critical
linkages for multiple key end-use sectors such as agriculture, textiles, plastics, construction, paints, packaging etc.
The table below shows brief overview of some of the key listed players in the Indian speciality chemicals sector.
Brief overview of speciality chemicals players in India
Company name Key geographies Manufacturing Products/business segments
catered facilities
USA, Europe, Middle 6 Aromatics, Bulk Chemicals and Intermediates,
East, Asia Pacific and Colors, Crop Protection, Floras,
Atul Ltd South America Pharmaceuticals, Polymers
North America, Europe, 3
Aliphatic Amines, Amine Derivatives, other
Alkyl Amines Chemicals Ltd Middle East, Asia Pacific
speciality chemicals
(AACL) and South America
North America, Europe, 2
Refrigerants, Inorganic and organic fluorides and
Navin Fluorine International Middle East and Asia
CDMO services
Ltd. Pacific
2 Speciality Aromatics, Speciality monomers, Butyl
US, Europe and Asia
Vinati Organics Ltd. phenols, other polymers
2 Acetyl
America, Europe, Africa,
Intermediates, Speciality
Asia Pacific, Middle East
Laxmi Organics Ltd Intermediates, Emerging Chemistries
Note: The list above is an indicative list and not an exhaustive list
Source: Company reports, company websites, CRISIL MI&A

Consulting 33
5 Overview of ketene and diketene derivatives industry

Introduction to ketene and diketene derivatives

Ketene (systematic name ethenone) is a colorless, toxic gas with a “penetrating” odor, according to the Merck
Index. It is soluble in essentially all organic solvents, but it decomposes in water to form acetic acid. It is only
reasonably stable at low temperatures (−80 °C). It must therefore always be prepared for each use and processed
immediately, otherwise a dimerization to diketene occurs or it reacts to polymers that are difficult to handle. In
industrial chemistry, ketene is produced by the dehydration reaction of acetic acid. Ketenes are used in the
production of various chemical compounds such as acetic anhydride and diketene.

Diketene is a colorless liquid produced by dimerization of ketene. It is a highly reactive building block that can be
combined with numerous other chemical compounds to make a wide range of products. Based on derivatives, the
diketene market is segmented into various class of compounds such as arylamides, alkylamides, dihydroacetic acid
(DHS) and salt and others. Diketene esters are expected to maintain their dominance because they are used
extensively in both agrochemicals and pharmaceutical products, mainly as intermediaries.

Ketene and diketene derivatives application

Diketene derivatives have a wide range of applications in high-growth sectors such as pharmaceuticals (including
vitamins), agrochemicals, cosmetics, plasticizers, dyes, and pigments. The agrochemical and pharmaceutical
industries collectively account for 70–75% of the diketene derivatives applications.

Ketene and Diketene derivatives usage across applications

Application Brief usage overview

Pharmaceutical products Ketene and diketenes derivatives are used as intermediates in the synthesis of many
drugs such as acetaminophen, paracetamol, ibuprofen, and naproxen and are also
used in the manufacturing of a wide range of antimicrobial and chemotherapeutic
products

Agrochemicals In the agrichemical sector, ketene and diketene derivatives are widely used for soil
fertilization, weed and pest control, and crop protection. Acetoacetanilides is a type
of diketene derivative that has antibacterial, antifungal, and antiprotozoal properties.

Dyes and Pigments (colorants) Preparation of azo dyes- arylide yellow and diarylide pigments, diketenes react with
amines to form acetoacetanilides which are important precursors for mostly yellow,
orange, red azo dyes, and azo pigments.

Food and Feed Used in food preservatives, food (sweeteners) and feed additives (olaquindox)

Polymer Used as co-promoters in the production and modification of polymers

Cosmetics & beauty products Ketene and diketene derivatives are used as intermediates in the production of
various skin care products, such as anti-aging creams, moisturizers, and lotions.
Some ketene and diketene derivatives, such as 2,3-Butanedione, are used in the
production of hair dyes. Diketene derivative, Dehydroacetic acid (DHS) is used as

Consulting 34
 stabilizer for cosmetic products due to its fungicide and bactericide activity.

Coatings and Adhesives Diketene derivatives are used as co-promoter used in the polymerization of
unsaturated polyester resins for coatings and adhesive applications.

PVC stabilizer Diketene derivative, dehydroacetic acid (DHS), is also used as an additive for PVC-
stabilizers

Source: CRISIL MI&A Consulting

5.1 Market size of ketene, diketene and derivatives industry

Global ketene, diketene and derivatives market is between 3.9-4 billion USD in CY2022

Global market for ketene, diketene derivatives is 3.9 to 4.0 billion USD in CY2022 and is estimated to grow at 4-5%
CAGR to reach 4.5 to 4.6 billion USD by CY2025. The global market for only diketene and derivatives is estimated
between $1.3 to $1.4 billion in CY2022 and is anticipated to expand at a 4-5% CAGR to reach $1.5 to 1.6 billion by
CY2025. Increasing adoption of agrochemicals in developing countries is fueling the growth of the diketene
derivatives market across the globe. With rising population, demand across the industries including food and
beverages, pharmaceuticals, aromatics, and agrochemicals have increased, which in turn has triggered the
demand for diketene derivatives.

Global ketene, diketene and derivatives market (USD billion)

6
CAGR 4-5%
5.5
5 4.5-4.6
4.5 3.9-4
4
3.5
3
2.5
2
1.5
1
CY2022 CY2025P

P: Projected

Source: CRISIL MI&A Consulting

Indian market for ketene, diketene and derivatives to reach 270-290 million USD by fiscal 2025

India market for ketene, diketene and derivatives is estimated at 270-290 million USD in fiscal 2022 which is
projected to increase at 6-7% CAGR to reach 330-340 million USD by fiscal 2025. India market for only diketene
and diketene derivatives is estimated at ~180 million USD in fiscal 2022. The market is projected to increase at 6-
7% CAGR to reach 210-220 million USD by fiscal 2025. India consumes about ~28,000 TPA of diketene, out of
which ~40% is imported. Imports are made from US, China, and Europe. Key companies which are exporting
diketene derivatives to India include Lonza and Nantong Acetic Acid.

Growth of the pharmaceutical industry and the increasing number of API units in India, as well as demand from the
agrochemical industry, are collectively expected to boost demand for diketene derivatives and, as such, drive their

Consulting 35
market growth.

India ketene, diketene and derivatives market (USD million)

360
330-340
340
320
300 270-290
280
260
240
220
200
180
FY2022 FY2025P

P: Projected

Source: CRISIL MI&A Consulting

5.2 Player landscape

Global manufacturing landscape

Global ketene derivative market is highly fragmented due to the nature of the product. Some of the key
manufacturers in the global diketene derivatives market include Lonza, Celanese, Eastman Chemicals, Daicel
Corporation, Nantong Acetic Acid Chemical, Ningbo Wanglong Tech, Xinhua Pharmaceuticals, Anhui JinHe
Industrial and Laxmi Organic Industries.

India manufacturing landscape

In India, the domestic manufacturing landscape is characterised by the presence of two manufacturers. Laxmi
Organic Industries is the leading manufacturer of ketene, diketene, and their derivatives, with a market share of
55% in the domestic market. The company has a portfolio of 34+ products in this segment, which includes diketene
derivatives, including esters, acetic anhydride, amides, arylides, and others.

Jubilant Ingrevia, another marquee player in the speciality chemicals industry, has commissioned its Phase 1
facility, with a 7,000 TPA Diketene derivatives facility at its manufacturing site in Gajraula, in fiscal 2022 (Q4). The
company achieved utilisation of 40–50% in Q2 of FY23 and plans to increase its utilisation by FY24. Presently, the
company has launched two derivatives (esters and amides), which are building blocks for molecules that find
applications in pharmaceuticals, agrochemicals, nutraceuticals, and dyes. The company plans to launch 15 more
derivatives over the next three years.

Consulting 36
Consulting 37
6 Assessment of Competitive landscape

6.1 Competitive landscape for Indian pharmaceutical API industry

In this section, CRISIL has compared key competitors in the Indian pharmaceutical API Industry. CRISIL has
considered some of the key players operating in Indian pharmaceutical API industry and who have comparatively
similar product portfolio. Data in this section is obtained from publicly available sources, including annual reports
and investor presentations of listed players, regulatory filings, rating rationales, and/or company websites. The
financials used in the competitive section are re-classified by CRISIL based on the annual report and financial
fillings by the players.
The manufacturing landscape for paracetamol API industry in India is concentrated with presence of few players.
Sri Krishna Pharmaceuticals Ltd., Granules India Ltd., Farmson Pharmaceuticals Gujarat Pvt. Ltd., Meghmani LLP,
Para Products Pvt. Ltd. and Valiant Labs Ltd. are some of the paracetamol API manufacturers in the Indian market.
The overall capacity for paracetamol manufacturing in India is approximately 6,000 metric tonnes per month as per
industry estimates.

Company name Date of incorporation Registered office/

Headquarters
Farmson Pharmaceutical Gujarat Private Ltd. 1974 Gujarat, India

Granules India Ltd. 1991 Hyderabad, India

Meghmani LLP 2010 Gujarat, India

Para Products Private Ltd. 1998 Gaziabad, India

Sri Krishna Pharmaceuticals Ltd. 1974 Hyderabad, India

Valiant Laboratories Ltd.* 1980 Mumbai, India

Note: The list above is an indicative list and not an exhaustive list,
*-Company converted from Bharat chemicals (Founded in 1980) to Valiant Laboratories Ltd in 2021
Source: CRISIL MI&A

6.1.1 Operational overview

Company name Key geographies Manufacturing Business
catered facilities Segments/ Services offered
Farmson Pharmaceutical 3
NA Active pharmaceutical Ingredients (API)
Gujarat Private Ltd.
Granules India Ltd. India, Europe, Latin 6 Active pharmaceutical Ingredients (API),
America, North America Formulations
Meghmani LLP NA 1 Active pharmaceutical Ingredients (API),
1 Active pharmaceutical Ingredients (API),
Para Products Private Ltd. NA
Formulations
Sri Krishna Pharmaceuticals 5
NA Active pharmaceutical Ingredients (API)
Ltd.
Valiant Laboratories Ltd. NA 1 Active pharmaceutical Ingredients (API)

Note: NA: Not available, The list above is an indicative list and not an exhaustive list
Source: Company reports, company websites, CRISIL MI&A

Consulting 38
 • Valiant laboratories Ltd Operates in a business segment of manufacturing pharmaceutical APIs. The
company manufactures paracetamol API which is used in preparation of various finished formulations like
oral dosages, capsules, IVs etc.

• Valiant laboratories Ltd have 1 manufacturing facility in India for manufacturing paracetamol API/bulk drugs

6.1.2 Financial overview

Financial snapshot key competitors considered (FY22)

Company name Operating Income OPBDIT PAT

INR CAGR INR million CAGR INR CAGR

million FY2020- FY2020- million FY2020-
FY2022 FY2022 FY2022
Farmson Pharmaceutical
20,103.4 67.0% 7,055.5 113.1% 4,934.7 112.8%
Gujarat Private Ltd.
Granules India Ltd. 32,384.4 18.4% 6,488.2 13.1% 3,865.1 -6.7%

Para Products Private Ltd. 1,765.1 60.8% 106.9 61.4% 36.2 92.1%

Sri Krishna Pharmaceuticals

8,757.3 40.0% 703.4 29.9% 352.2 46.5%
Ltd.
Valiant Laboratories Ltd. 2,905.0 78.3% 420.5 145.5% 273.1 187.1%

Note: The list above is an indicative list and not an exhaustive list, The latest financials for Meghmani LLP is not available on
MCA and hence it is not considered in the financial analysis.
Source: Company reports, company websites, CRISIL MI&A

Financial ratios of key competitors considered (FY22)

Company name Interest
Operating Net profit
ROCE Gearing coverage Current
profit margin margin
(%) (Times) ratio ratio
(%) (%)
(Times)
Farmson Pharmaceutical
35.1 24.5 80.6 0.0 119.0 3.1
Gujarat Private Ltd.
Granules India Ltd. 20.0 11.9 16.5 0.4 40.5 1.5

Para Products Private Ltd 6.1 2.0 39.2 0.5 1.9 1.3
Sri Krishna Pharmaceuticals
8.0 4.0 12.5 0.7 11.7 1.6
Ltd.
Valiant Laboratories Ltd.
14.5 9.4 38.0 0.8 72.6 3.6

Note: n.m.- Not meaningful, The list above is an indicative list and not an exhaustive list, The latest financials for Meghmani LLP
is not available on MCA and hence it is not considered in the financial analysis.
Ratios calculated as per CRISIL MI&A standards are described below:
OPBDIT margin = OPBDIT / operating income
Net profit margin = Profit after tax / operating income
RoCE = Profit before interest and tax (PBIT) / [total debt + adjusted net worth (includes only goodwill as part of
intangible net worth) + deferred tax liability]
Gearing ratio = Adjusted Debt / Adjusted Net worth
Interest coverage ratio = Profit before depreciation, interest and tax / (interest + finance charges)
Current ratio = Current assets / Current liabilities

Source: Company reports, company websites, CRISIL MI&A

Consulting 39
6.1.3 Key observations
• During fiscal 2022, Valiant laboratories Ltd has recorded an operating income of INR 2,905.0 million and a
net profit of INR 273.1 million

• Valiant laboratories Ltd has recorded a OPBDIT of INR 420.5 million in fiscal 2022
• Over the period, from fiscal 2020 to 2022, operating income for Valiant laboratories Ltd has grown at a
CAGR of 78.3%.
• In terms of profitability, for fiscal 2022, Valiant laboratories Ltd recorded operating profit margin of 14.5%
and net profit margin of 9.4%.

• In terms of return ratio’s, Valiant laboratories Ltd has the ROCE of 38.0% in fiscal 2022.
• Valiant laboratories Ltd has a gearing and interest coverage ratio of 0.8 times and 72.6 times respectively
for fiscal 2022.

Consulting 40
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