Evolution of Pharmaceutical Industry: A global Indian & Gujarat perspective

Most of today's major pharmaceutical companies were founded in the late 19th and early 20th centuries. Key discoveries of the 1920s and 1930s, such as insulin and penicillin, became mass-manufactured and distributed. Global pharmaceutical market is highly dynamic and is characterized by greater levels of R&D expenditure and extensive regulation of its products. Global pharmaceutical sales are estimated to be US$ 643 billion in 2006, a growth of 7% over the previous year. All of these changes are ultimately good for the Indian pharmaceutical industry, which suffered in the past from inadequate regulation and large quantities of spurious drugs. They force the industry to reach a level necessary for global competitiveness. At the time of independence in 1947, India’s pharmaceutical market was dominated by Western MNCs that controlled between 80 and 90 percent of the market primarily through importation. Approximately 99 percent of all pharmaceutical products under patent in India at the time were held by foreign companies and domestic Indian drug prices were among the highest in the world. According to industry estimates, a great chunk --almost 40 per cent --of machinery used in the pharmaceutical manufacturing in India is produced in Gujarat. This creates a very good local and global opportunity for Gujarat in the manufacturing of pharmaceutical machinery, given its strong and well established engineering sector, points out a recent study titled Gujarat Pharma-Industrystriding into the future, KPMG, India The strong growth prospects of the pharmaceutical exports segment and growing demand from the domestic market, will further fuel growth in the pharmaceutical machinery sector. However, Gujarat's engineering sector is highly fragmented, especially the pharma-machinery manufacturing segment. Due to the highly fragmented nature, there is a dearth of pricing power and critical scale. This in turn restricts the ability to produce the technology-driven products required for operating in global markets.