There are multiple areas where India lags behind Asian peers, with the country's public health expenditure is among the lowest at 3% of the gross domestic product and has been on a downtrend since 2014, according to Bernstein Research.
Even among its neighbours and other developing economies, this is one of the lowest-spending percentages, with countries like China, Mexico and Vietnam over 5% each and Brazil at 9.6% of the GDP, the research firm said in March 26 note.
"Looking only at India's spending over the years, the trend is even more disappointing as the percentage spend on healthcare has dropped from 3.7% of (the) GDP in 2013 to 3% in 2019," it said.
In terms of the number of drugs under development in each country, India does not even feature in the top 25, with less than 5% of all drugs being developed undergoing development in India, it said. "Even Brazil, Mexico, and Russia appear in all the lists, but India lags considerably in the patent publications race and innovation in general."
Resting On Past
The Indian pharmaceutical market is known for its generic medicines and low-cost vaccines. It is the third largest in terms of volume and 14th in value terms, contributing 1.72% to the GDP. The market, currently $42 billion, can reach $65 billion by 2024 and $130 billion by 2030, according to Bernstein.
India's pharmaceutical exports in the last financial year were $25.4 billion and it accounts for 20% of the global exports in generic drugs. The U.S. is one of the key markets for India, where 25% of the plants are FDA-registered, more than any other country besides the US itself, the note said.
In the U.S. generics market, Indian players dominate with six of the top 10 players (by prescriptions) and 10 of the top 20 being Indian companies.
Bernstein has an 'outperform' rating on Cipla Ltd., Sun Pharmaceutical Industries Ltd., Biocon Ltd., Gland Pharma Ltd.; a 'market-perform' rating on Lupin Ltd., Aurobindo Pharma Ltd., Dr. Reddy's Laboratories Ltd. and Alkem Laboratories Ltd.; and an 'underperform' rating on Abbott India Ltd. and Divi's Laboratories Ltd.
India has been a major player in the vaccine space and holds about 40% of the global manufacturing capacities, much higher than China and developed nations, it said.
The big delta in capacity and demand also allows India to export vaccines to other countries, especially other low-income and emerging economies of the world.
India's vaccine dominance came into play during the coronavirus pandemic as well and it was an active player in the response against Covid and the fightback included multiple collaborations that helped not only Indians but people across the world, the research firm said.
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