Pharmaceutical Industry an overview

(This is an extract from the lecture delivered by Shyamsunder Panchavati on 2nd September 2010 at Hyderabad) 

Content updated on 13th September 2018



Pharmaceutical Industry an overview

Human being lives in whirlpool of Industries. All the industries revolve around the living beings specially the human beings. One industry or profession that keeps the human being fit enough to wither the whirlpool and keeps the industry going is the Medical Profession. Hence the Medical Profession occupies the high pedestal in this world.

If you take a closer look at the pedestal, you will find that it is made of the Pharmaceutical Industry. Hence it is the pharmaceutical industry that gives the exalted position to the Medical Profession and is indirectly responsible for the survival & growth of Human race, the global business, the economies, GDP and all other things in the world.

Can you imagine a world without Pharmaceutical Industry???

History & Genesis of the Pharmaceutical Industry.

The earliest existence of Pharmaceutical Industry in the world can be traced to 1600 BC. Dhanvantari the first ever practitioner of medicine and surgery wrote a treatise on medicines and methods of medication. The treatise is known as Ayurveda. Ayurveda is an up-veda and considered a part of Atharva Veda. People consider him to be an incarnation of Lord Vishnu and there are many temples of Dhanvantari in India.

Modern day Allopathic medication can be traced to 17^th century.  German company Merck & co was one of the earliest Pharmaceutical organizations.  Jacob Merck who purchased a drug store in Darmstadt, Germany in 1668 established Merck & Co. Neurobion is considered one of the earliest pharmaceutical formulation products with a history of more than 300 years. In the beginning of 19^th century, United States Government confiscated most of the foreign pharma organizations and converted them to US organizations. The Bulk of the growth of pharma organizations, R&D, and development of new products took place in the later part of nineteenth & earlier part of the twentieth century.

Modern Indian pharmaceutical industry came into being when Acharya P.C. Ray set up his Bengal Chemical Pharmaceuticals in 1901. But bulk of the pharma industry was dominated by Multi Nationals from US, UK, Switzerland, Germany and others.

It was in the sixties when Indian Government replaced the product patent with the process patent that the Indian pharmaceutical Industry came into its own. In the seventies when the government formulated its new restrictive foreign policy to encourage Indian Industry, many of the multinationals were taken over by the Indian business groups like TATA, Piramal, Sarabhai, Ruia and others.

The seventies saw the unprecedented price revolution in the Indian Pharmaceutical Industry. Gautam Sarabhai whose Ambalal Sarabhai & Co took over two multinationals Squibb & Geigy drastically brought down the prices of the products.

For example during 40s “Tandril” an analgesic & anti-inflammatory tablet that cost Rs.1.00 in  when a  white collared employee’s   monthly salary was about Rs.25 to 40 cost Rs.0.25 (twenty five Paise) in 70s when a white collared employees monthly salary was Rs. 250 to 400.

Seventies also saw the emergence of a young Sardarji Dr.Parminder Singh who took over his father Ranbaxy & Co. Under his stewardship the company made rapid strides in process, products,technology and  turnover and reached the number one spot by the end of 70s beating Sarabhai,Pfizer, Glaxo and others. Though Dr. Parminder Singh is no longer alive today, Ranbaxy continues to be the number one company in India,and with its collaboration with Daiichii Sankyo of Japan, It is the fifteenth largest pharmaceutical organization in the world. Other organisations that were incorporated in 70s & 80 and made a mark on the global scene are Sun Pharmaceuticals, Lupin Laboratories, Dr. Reddy’s and others.

The size of the global Pharmaceutical Industry is $ 1,105 Billion in 2017-18 and that of Indian pharmaceutical industry  is $ 54 Billion. Encouragingly, India was rated second globally for predicted ‘pharma market growth potential’, with respondents citing high growth domestic markets and expanding manufacturing exports as key drivers. India received a score of 7.0, narrowly behind China (7.2). However, India was rated by pharmaceutical companies as having nearly twice the potential of Western European countries, significantly outpacing even the USA (6.3), Korea (6), and Germany (5.9), who finished third, fourth, and fifth respectively. “Ultimately, the fundamentals of progression in the country are extremely strong — boasting over 24,000 pharmaceutical companies, and 10,500 plants — coupled with Government support, increased investment and an improving regulatory reputation, Almost 70% of the bulk drugs produced in India are exported. After Agriculture Industry, it is the largest contributor to the country’s GDP.

However in spite of this rosy picture the per capita consumption of medicine in India though growing rapidly is still very poor. Annual per capita consumption of the medicine is approximately Rs.800.

A new pharmaceutical scenario emerged after signing of GATT in the 90s by India. The focus shifted to Research & Development. R&D processes started getting outsourced by the multinationals to the Indian organizations. This resulted in the growth of new breed of organizations who invested heavily to set up R&D infrastructure.apart from the Government CDRI & IICT many organization came into existence resulting in the creation of separate segment of the  industry  A record number of applications were received for new patents after the year 2000  and it started growing. Now the R&D process industry is growing at a very fast rate and already worth a few million and slated to cross billion dollars by 2013.

Future for pharmaceutical industry is very bright as bright as it has always been.

Shyamsunder Panchavati


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Pharmaceutical Industy an overview