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OBJECTIVES:To identify opportunities & enablers. To create a road map for India Pharma Inc. to realize its full potential and to become globally competitive. Project India as an emerging integrated global pharma hub. Address global challenges that impact India pharma Inc. Chart a roadmap for global alliances.


BUSINESS SEGMENTS :Foreign generics markets. Domestic Pharma market. Contract Research And Manufacturing Services. Clinical research services. New Chemical Entity (NCE) discovery and development. Biopharmaceuticals.

INTRODUCTIONMcKinsey is the preeminent management consulting firm. Since 1993, the India office has served leading companies, nonprofits, and governments McKinsey serves as an adviser to the worlds leading businesses. It is widely recognized as a leader and one of the most prestigious firms in the management consulting industry They hire the best talent and provide them with unrivalled opportunities to grow and have world-shaping impact McKinsey has over 8,700 consultants in 90 consulting offices across 50 countries

TRENDS IN GLOBAL PHARMA MARKET The rise of emerging market:1)Markets like-Brazil,China,India,Russia and Turkey account for 70%of this growth.(exb 1) 2)Global players have significantly increased investments in these markets.(exb 2)

Innovative approaches in R&D: 1)Around 70% compounds are not recovering cost of capital. 2)Distributing risks by investing in minority bets. 3)engaging in risk sharing partnerships and out-partnering of assets.(exb 3)

Outsourcing and off-shoring to control costs:1)Outsourcing to low cost countries has potential to change cost structures. 2) Exit from manufacturing APIs .(exb 4) 3)Outsourcing of R&D lags behind manufacturing activities. (exb 5)

The rise of biologics: 1)Future leadership driven by biologics.(exb6) 2)Biologics are expected to account for 30% of revenue of major pharma companies. 3)In 2012 ,9 of the top 20 drugs are expected to be biologic . (exb 7)

INDIA S UNIQUE POSITION IN GLOBAL PHARMA MARKET Strong and sustainable growth momentum Diversities of business opportunities Strong process chemistry skills Local industry and entrepreneurship opportunities

Diverse market backed by strong fundamentals:1)Indian pharma market is to reach US$40 billion mark by 2015 2)Nearly 60% of growth will be driven by shifts in income demographics and rise in medical infrastructure.(exb 8) 3)Well distributed across business segments and provides multiple options to specialise and succeed.

Competitive manufacturing cost structure: 1)Cost of manufacturing APIs in India can be 50% lower than in developed markets.(exb 9) 2)Quality and availability of chemists and scientists in India is among the best in the world.(exb 10)

Experimentation in business model innovation: 1)India an ideal centre for experimentation. 2)Global players can test ,incubate and export business model in other emerging markets.such as branded generics and comprehensive care for treatment of chronic diseases.

Successful domestic industry create partnership opportunities: 1)Domestic industry is strong and entrepreneurial 2)Responsible for building industry talent and infrastructure 3)Industry offers meaningful partnership opportunities for international players in their global businesses.

THE INDIA ADVANTAGE INDIA owns a unique position in global pharmaceutical industry. Indian pharmaceutical industries potential Current ---> US$ 20 billions. Expected ---> US$ 40 billions. Yet the extent of India Advantage is to be fully comprehended and captured. SPANS 3 AREAS: 1. Domestic market. 2. Manufacturing. 3. Research.

There are broad spectrum of opportunities to take advantage of for growth. Collaboration between industry players enhances these opportunities. The opportunities are 1. Capturing domestic market. 2. Leveraging India s manufacturing competitiveness. 3. Leveraging India s R&D.

1. Capturing domestic market. Unlike other developed markets , indian market is not growing in only one primary direction but it is growing in multiple direction , thereby opening diverse market segments.

2. Leveraging India s manufacturing competitiveness. Global pharmaceutical outsourcing industry is expected to grow to USD 100 billion by 2015. India has the potential to capture 8 to 10% of pharma industry by 2015. This potential distributed across segments along 4 dimensions: 1. Stage of production 2. Stage in product lifecycle.

3. Technology type. 4. Customer segment.

1. Stage of production API s & Intermediate => 70% of USD 8 -10 billion. FDF s => remainder. 2. Stage in product lifecycle. Mature and Generics => more than half of the drug potential On patent drugs => 25-30% of the potential.

3. Leveraging

India s R&D.

India s potential in R&D is underscored by it s large talent pool of process chemists, a large and diverse patient pool across therapeutic areas, world-class hospitals and trained investigators for clinical trails, and IT talent for bio-statistical and analytical capabilities. India s R&D will be one of the top 5 innovation hubs in next ten years. Focus will be on 2 areas: 1. NCE R&D 2. PROCESS & LIFECYCLE R&D.

India s R&D potential is less certain. It faces strong competition from emerging R&D hubs like Singapore, China & Israel. Achieving India s true potential will require a visionary outlook by government.

CHALLENGES AHEADLow Health Care & insufficient Infrastructure eg: Additional 2 million beds to match the standards of other major developing nations Limited Access to Insurance Insurance covers only 10% of population Shortage of Specialized Talent Significant shortage of physicians, nurses & support staff

Funding Gaps Lack of Government Funds

Aspects Related to Production Quality Average or Substandard quality

IMPERATIVES FOR STAKESHOLDER Domestic companies Improvement in manufacturing and formulation development Front-end skills such as brand marketing, PLC enhancement , scientific selling need to be upgraded Avoid temptation of attempting too much and stretching their resources

GLOBAL PHARMA COMPANIESChange mindsets and deep commitment from the highest levels in global management. Need to step-up investments to capture domestic market opportunity. Adopt India business model, relax margin expectation for period of few years. Collaboration with domestic players,.

GOVERNMENT AND INDUSTRY REGULATORSMore investment on healthcare, education, research infrastructure To promote greater innovation, shapes the country vision and accelerates development efforts To facilitate greater insurance coverage To harmonise regulatory framework on important issue such as patent related matter and clinical research