Report: Indian drug market to reach $20B

India's fast-growing economy, expansion in health care insurance and infrastructure, to grow national drug sales to triple by 2015.

By Aaron Smith, staff writer

NEW YORK ( -- The Indian drug market is expected to triple in size by 2015, to $20 billion in annual sales, according to a report released Wednesday by international consulting firm McKinsey & Co.

The report said India will undergo a "significant transformation" to become one of the top 10 pharmaceutical markets in the next decade.

The country's fast-growing economy, with an enviable GDP growth of 8 percent, is expected to be a key factor in driving the pharma market. The report said that 40 percent of the projected growth can be attributed to the doubling of disposable incomes and the expansion of the Indian middle class.

In addition, improvements in medical infrastructure - like rural hospitals and clinics - would contribute to 20 percent of the projected growth, while the strengthening of health insurance within the country would contribute to 15 percent of the growth, the report said.

India is already home to of the world's most prominent makers of generic drugs - Dr. Reddy's Laboratories (up $0.31 to $15.53, Charts) and Ranbaxy Laboratories (down $0.32 to $8.57, Charts) - which compete with U.S.-based makers of name-brand drugs like Merck & Co., Inc. (up $0.56 to $50.33, Charts, Fortune 500) and Pfizer Inc. (up $0.29 to $24.53, Charts, Fortune 500)

But to fuel more growth in the Indian pharma market, the national government should lend a helping hand, said study co-author and McKinsey director Gautam Kumra.

Kumra said the Indian government needs to create an infrastructure to expand healthcare throughout the country, to rural hospitals and clinics. He said the government should also do more to support R&D and health insurance coverage.

Kumra said that 90 percent of the Indian population is uninsured and must pay out-of-pocket for pharmaceuticals and healthcare services. Helping to accelerate the growth of private insurers in India would drive up drug sales, he said.

But Kumra added that there are formidable challenges to expanding health insurance in the country, because many Indian workers are in the hard-to-reach "unorganized sector," which includes subsistence farming and cottage industries. Top of page