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Pharma Industru Outlook

In: Business and Management

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Pharmaceutical industry outlook:
The pharmaceutical industry in India, once considered a defensive player has emerged into one of the highest growth providers for Indian economy. With a growth of more than 17% on year-on-year basis since 2010, the healthcare industry is contributing to about 10% of GDP.
During last decade, large global pharmaceutical companies have merged or formulated joint ventures with many Indian companies to tap into emerging markets and take advantage of economical resources as well as higher growth prospects. This led Indian pharmaceutical companies to shift their focus from generics to R&D based business model. Current spending on research and development (R&D) is about 12-15% of revenue - an increase from 5-8% of revenue for the industry a decade earlier. The expanding on R&D is justified with growing aging, newly emerged areas of medical need and the diseases now common across the developing and developed countries due to global warming.
Global warming has brought diseases like malaria, cholera, diphtheria and dengue to more developed regions, existing in warmer areas. Similarly, respiratory illnesses like asthma and bronchitis in cooler regions. The number of people with diabetes in developing countries has risen from 84m in 1995 to 228m in 2025.
338m of the people living in the E7 countries (China, India, Russia, Brazil, Mexico, Indonesia and Turkey) are at least 65 years of age, compared with 155m of the people living in the G7 countries (USA, Japan, Germany, UK, France, Italy and Canada). E7 countries have grown by 300% in terms of real GDP: $5 trillion to $15 trillion. The global pharmaceuticals market is about $800 billion and 17% of the sales come from E7 countries. Although G7 countries can afford higher costs for the healthcare compared to the people in the E7 countries, the growth of the healthcare spending in E7 is faster than G7.
Outlook for Indian pharmaceutical industry seems to be bright after Rahul Gandhi led government decided to relax taxation on R&D related activities in healthcare.

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