Value through Innovation24 April 2014

India soon the world’s third largest economy - A country with huge potential

India is the world’s largest democracy, the second fastest-growing economy and one of the major representatives of the emerging markets. These large economies, currently developing at enormous speed, have vast potential for further growth. With increasing prosperity, changed habits and improved life expectancy, the need for medicinal therapies is also growing.

Boehringer Ingelheim has set a strategic focus on these markets and is building up its presence and commitment more strongly in these regions, with a different emphasis in each of them. In part, the market mechnisms and dynamics differ considerably from mature markets.

In the past ten years, there have been fundamentally positive changes in the economy, in government policy, regarding the prospects for trade and industry, and, more importantly, in the Indians’ attitude.

India’s diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Slightly more than half of the workforce is employed in agriculture, but services are the major source of economic growth, accounting for more than half of India’s output, with only one-third of its labour force.

The service sector is forecasted to grow at a steady 9.5 % over previous years, while the industrial sector can expect a growth rate of 9 %. The country’s biggest strength is its well-educated workforce. India has capitalised on its large, highly educated English-speaking population to become a major exporter of information technology services and software.

In the decade 2010-20, a further 120 million people in India will reach working age and pour onto the labour market, which will increase India’s share of the global working population to 28 %. With a billion plus population and an enormous reservoir of young, productive workers, India is a country that will January 2005, the product patent era was rung in. It is to hoped that data exclusivity and incremental innovation will also eventually be protected.

Guidelines on biosimilars are in progress. Changes in the regulatory environment are ensuring that patient safety is paramount and this will put an end to dubious clinic operators, thereby improving quality and compliance. Booming market India has already seen major launches of innovative medicines. Research process outsourcing is accelerating and health and pharmaceutical economics and outcomes research are slowly gaining in importance.

The over-the-counter (OTC) industry is also booming, with increased focus on rural markets, as there is also money to be earned at the base of the pyramid – you just have to know how to reach people there. IMS estimates increasingly have to be taken even more seriously in future.

The market potential is huge.
In 2010, the Indian economy recovered well from the global financial crisis – largely due to strong domestic demand. Growth exceeded 8 % year-on-year in real terms. Today, India is viewed differently worldwide. India’s gross domestic product (GDP) will this year rise to over USD 4.06 billion (based on purchasing power parity), thereby making the country to the world’s third largest economy by the end of 2011. Economic growth of 8.5 % is expected in 2010-11, compared to 7.78 % in 2009-10. With a stable government, an efficient capital market and a robust banking sector, the country is on a robust growth trajectory.

Foreign currency assets stood at USD 316 billion in mid-September 2011, compared to USD 260.5 billion in the corresponding period the previous year. Internet accessibility from mobile phones has improved. Today, 46 million people access the internet by mobile, with quarter-on-quarter growth of 15 %.

The Indian automobile industry, the seventh largest in the world, currently has a turnover of USD 73 billion, corresponding to 6 % of the country’s GDP. By 2016, turnover is expected to rise to USD 145 billion. India’s automobile industry is forecasted to grow by 11 % to 13 % in the fiscal year ending 31 March 2012.

High inflation, managing the fiscal deficit and improving the infrastructure are some of the most important factors that can impact the growth expected. Simultaneously, this is producing resilience in the Indian economy in a global economic environment facing downturn and protectionism in local markets. The country’s long-term challenges include widespread poverty, inadequate physical and social infrastructure, limited non-agricultural employment opportunities, insufficient access to basic and higher education, and housing shortages for rural-tourban migrants.