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The Indian Pharmaceutical Industry and a Critical Analysis of Ranbaxy's Strategies to Build a Global Presence

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The Indian Pharmaceutical Industry and a Critical Analysis of Ranbaxy's Strategies to Build a Global Presence

THE INDIAN PHARMACEUTICAL INDUSTRY AND A CRITICAL ANALYSIS OF RANBAXY’S STRATEGIES TO BUILD A GLOBAL PRESENCE

(I) THE INDIAN PHARMACEUTICAL INDUSTRY – A GENERAL INTRODUCTION

The pharmaceutical industry is currently acknowledged as one of the leading industries in India. The growth rate has been significant and has recently accelerated substantially due to new products launched in recent years. Almost 3000 new products were launched between 2002 and 2004, with sales estimated at US$280mn.The domestic pharmaceutical output has increased from Rs.4bn in 1970-1971 to Rs.290bn in 2003 at a compound growth rate of 13.7 percent per annum.

India is ranked among the top 15 drug manufacturing countries in the world. Globally, the output of India ranks 4th in terms of volume and 13th in terms of value.12 The Indian pharmaceutical industry, however, only has a one percent share of the world pharmaceutical export market. India’s export market is expected to strengthen substantially in the coming years and how a domestic player like Ranbaxy is expaning its wings abroad the this project attempts to study.

At the domestic level, the Indian pharmaceutical industry is self-reliant in drug manufacture, evident in its ability to meet 95 percent of the country’s pharmaceutical needs. One vital characteristic of the industry is that drug prices in India are arguably amongst the lowest in the world.

Before we do a SWOT Analysis , let us understand the current governmental framework that shapes the policies for the industry.

Drug Policy in India Of 1986

The Drug Policy of 1986, which was titled "Measures for Rationalisation, Quality Control and Growth of Drugs & Pharmaceuticals industry in India" was evolved under the dynamic guidance and leadership of late Shri Rajiv Gandhi. This was done after a detailed examination of the various issues. The main objectives of the Drug Policy, 1986 are as under :

a. ensuring abundant availability, at reasonable prices of essential and life saving and prophylactic medicines of good quality;

b. strengthening the system of quality control over drug production and promoting the rational use of drugs in the country;

c. creating an environment conducive to channelising new investment into the pharmaceutical industry to encouraging cost-effective production with economic sizes and to introducing new technologies and new drugs; and,

d. strengthening the indigenous capability for production of drugs.

2. For meeting the requirements of medicines for health needs at reasonable prices and strengthening the indigenous base, the Government has, over the years been guided by the above Policy. Implementation of the main policy provisions has been through the I(D&R) Act on Industrial Licensing aspects and through Drugs(Prices Control) Orders under the Essential Commodities Act in regard to the pricing mechanism. The Drug Policy has also given the policy frame work in regard to Quality Control and Rational Use of Drugs. Enforcement of quality and standards in medicines is done through the provisions contained in the Drugs & Cosmetics Act, which is administered by the Ministry of Health and Family Welfare, Government of India.

Since 1986, the Drug Industry has grown significantly, as mentioned earlier, in terms of production of bulk drugs and formulations. In many cases manufacture of bulk drugs has also been established from the desired basic stage. It is estimated that in case of bulk drug production the contribution of small scale sector is approximately 30 per cent of the total production in the country. It may also be mentioned that the pharmaceutical sector has been able to carve a special niche for itself in the international market as a dependable exporter of bulk drugs.

Research & Development:

The Drug Industry is a highly R&D oriented sector in which there is a very high rate of obsolescence. This sector has also been identified as one of the thrust areas for exports. There is, therefore, need to ensure that the technologies used in the country are cost effective and efficient. It is necessary to attract greater investment into this sector in order to update the existing technologies and for bringing into the country technologies which are not currently available. At the same time it has to be noted that the Indian companies have achieved considerable stature in terms of production as well as in marketing ability and indigenous technology has also reached a commendable level in

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