Indian Pharma Pharmaceutical firms are defying a broad-based slowdown in Indian exports. Growing demand for cheap, generic drugs is proving a particular boon, reflected in a 46% year-on-year rise in exports to the U.S. during December, the last month for which finalized data are available.Firms hope to capture a share of the $100 billion worldwide market for generic drugs.

Despite rapid growth, Indian pharmaceutical firms have attracted less recognition for their success than their counterparts in the information technology (IT) industry:

In part, this is because the world of pharmaceuticals is less transparent than that of the Fortune 500 companies targeted by the IT outsourcing industry.

Reputations have also been tainted by a series of brushes with developed market regulators, notably the November 2008 ban on U.S. imports from two of the largest facilities run by market-leading firm Ranbaxy.
 
Yet the country's pharmaceutical industry (Indian Pharma) has occupied a number of niches in foreign markets, even as the home market grows rapidly. Most expect their domestic market to grow at around 20% this year and to maintain their operating margins, which are often close to 50%. The most successful companies are becoming serious competitors and collaborators with the largest international pharmaceutical firms.

Generics push:
Apart from Ranbaxy (acquired by Dai-Ichi Sankyo of Japan in 2007) and another market leader, Matrix Pharmaceuticals, Indian Pharma has shown considerable independence and entrepreneurialism.
 
It is marked by the desire of Indian firms to acquire companies operating in profitable niches around the world rather than to be acquired themselves.
 
A key thrust for most of the medium and large firms is to capture a share of the worldwide market for generic drugs, which is valued at more than $100 billion, most notably in the lucrative U.S., European and Japanese markets:

–More than 30 Indian companies compete in this area, alongside rivals from countries such as Israel (most notably Teva), and from regions like Eastern Europe and Latin America.
 
–These companies have gained substantial experience in less regulated markets in parts of Africa, Asia and Latin America, producing off-license drugs originally produced by the large international firms.
 
They are seeking greater access to the North American market through U.S. partners and, increasingly, through their own U.S. subsidiaries.
 
While the U.S. Food and Drug Administration is now more vigilant about malpractice by Indian firms, it has not substantially slowed the growing number of approvals that are being processed for generic drugs developed in India.

Major players:
 Indian Pharma has also spawned its own contract research outsourcing industry particularly focused on the research necessary for clinical trials. This is an area of rapid growth.
Clinical trials outsourcers now have their own global presence, each serving producers with increasing levels of precision, reliability and efficiency:

A study by the Organisation of Pharmaceutical Producers of India suggests that this industry will expand from $400 million in turnover during 2007-08 to $1.3 billion in 2011-12 and $3 billion in 2015.
 
One large research company, Advinus (which is associated with the Tata conglomerate and has strong international links), recently announced a tie-up with one of the largest clinical trials companies, GVK Biosciences, part of the GVK Reddy group.
 
These are fairly new firms, but most others have built their balance sheets over some time. The oldest is Cipla, a 65-year old company with historical associations with Mahatma Gandhi that has developed a new strategy for getting retroviral and other acute disease treatments cheaply into developing countries, despite opposition from the large international drug firms.

Backed by a large and underserved domestic market, and with massive growth potential in generics exports and research outsourcing, Indian Pharma is primed for substantial expansion. Its firms will see strong growth and good operating margins this year, both in the domestic drug market and in most of their multiple international ventures.