ECONOMICS PROJECT
THE NATURE OF PHARMA INDUSTRY SUPERVISOR - DR DEBADUTTA PANDA PANDA
Submitted By: Asis !"#d$t%"&'(A)HP*+(,
1 | Page
INDE
PAGE PAGE NO 1) Overview
3
2) Introduction
3
3) Market Structure
4
3 (a) Market Size
4
3 (b) Entr co!t
"
4) Indu!tr #oncentration 4 (a) $r %edd&! 'aboratorie!
"
4 (b) 'uin
*
4 (c) #i+a
,
4 (d) Aurobindo P-ar.a
/
") 0our ir. concentration ratio
1
) erinda-+ir!c-.an erinda-+ir!c-.an Inde5 (I)
1"
*) I 6S 0O7% 0I%M #ON#EN8A%8ION #ON#EN8A%8ION
1*
,) $rawback! o I and our ir. concentration ratio
1,
/) #onc+u!ion 1) %eerence! 11) E5-ibit!
2 | Page
1, 1/ 1/
OVERVIE. 8-e Indian -ar.aceutica+! .arket i! t-ird +ar9e!t in ter.! o vo+u.e and t-irteen +ar9e!t in ter.! o va+ue: a! er a -ar.aceutica+! !ector ana+!i! reort b e;uit .a!ter< 8-e .arket i! do.inated .a=or+ b branded 9eneric! w-iccon!titute near+ * to , er cent o t-e .arket< >it- !uc- a raid ace in 9rowt- and deve+o.ent it i! be+ieved t-at India&! -ar.aceutica+ !ector wi++ touc- 7S ?," bi++ion b 22< 'ookin9 at it! 9rowt- otentia+ .an new !tart u co.anie! want to enter t-i! !ector -owever t-i! i! not ea!< 8-e re!ence o e5i!tin9 +aer! wit- 9reat .arket !-are .ake u diicu+t or new entrant! to enter and !urvive < A+!o t-e to ir.! are into vertica+ inte9ration a! we++ a! -orizonta+ inte9ration to increa!e t-eir oeratin9 eicienc and e5and t-eir ootrint! in India a! we++ a! ot-er orei9n countrie!<
INTRODUCTION India i! a.on9 t-e to !i5 9+oba+ -ar.aceutica+ roducer! in t-e wor+d< 8-e countr@! -ar.aceutica+ indu!tr account! or about 1<4 er cent o t-e 9+oba+ -ar.aceutica+ indu!tr in va+ue ter.! and 1 er cent in vo+u.e ter.!< India i! e5ected to beco.e one o t-e .a=or driver! in rovidin9 -ea+t-care to a++ w-i+e contro++in9 t-e everincrea!in9 -ea+t-care !end o bot- deve+oed and deve+oin9 nation!< Accordin9 to a !urve conducted recent+ it wa! ound t-at t-ere are 1:" .anuacturin9 unit! and over 3: -ar.a co.anie! in India: w-ic- are 9rowin9 at an e5cetiona+ rate< A+!o due to t-e enor.ou! otentia+ 9rowt- o !ector it i! be+ieved t-at t-e !ector .a ace new entrant! < 8-e .arket i! do.inated .a=or+ b branded 9eneric! w-ic- con!titute near+ * to , er cent o t-e .arket< O8# .edicine! and atented dru9! are i.ortant art o t-i! indu!tr<
3 | Page
Fig 1: Showing Revenue share of Indian pharmaceutical subsegments
MAR!" S"R#$"#R! Mar%et si&e "he Indian pharmaceutical industr' is fragmented with more than 1()((( manufacturers in the organised and unorganised segment* Pharmaceutical manufacturing units are mostl' located in states of Maharashtra) +u,arat and Andhra Pradesh* "hese states account for about ./ of the total number of pharmaceutical manufacturing units in India * According to the $onfederation of Indian Industries 0$II) there are around 2)((( small and medium enterprises 0SM! units) accounting for about 3(/ of the total number of the pharmaceutical units in India*
"he Indian pharmaceutical industr' is estimated to grow at 4( per cent compound annual growth rate 0$A+R over the ne5t 6ve 'ears) according to India Ratings) a Fitch +roup compan'* 7ith this potential one can e5pect new entrants into the mar%et as well as e5it of certain non pro6table companies or there ac8uisition or merging with the ma,or pla'ers who want to e5pand their foot prints in the sector* 9owever their 4 | Page
sustainabilit' will be the %e' * "he pharma sector is alread' dominated b' e5isting large cap companies such as #PI; ) $IPA ) A#R<=I;>< P9ARMA) >r* R!>>?@S aboratories td ) S#; P9ARMA ) M?A; A=
!;"R? $
Industr' $oncentration
5 | Page
Indian -ar.aceutica+ indu!tr i! do.inated .o!t+ b t-e +ar9e ca co.anie! w-o -ad e5anded t-eir re!ence in t-e .arket b t-eir uni;ue roduct ie+ine($ru9!) and b e5andin9 ootrint! b ac;uirin9 co.anie! ro. India a! we++ a! ro. re!t o t-e wor+d to increa!e t-eir roduct ie+ine and e5and t-eir network < Sector +eader! over a eriod o ti.e -ave ac-ieved econo.ie! o !ca+e and econo.ie! o !coe w-ic- reduce! t-eir +on9 run avera9e co!t and t-ereore increa!e! roitabi+it< A+!o t-e ac;ui!ition and .er9in9 activitie! b t-e e5i!tin9 +aer! -ave -e+ed t-e. to cature new .arket and e5and t-eir .arket !-are<
D% Reddy/s 0"b$%"t$%ies
D%1 Reddy/s 0"b$%"t$%ies: i! a .u+tinationa+ -ar.aceutica+ co.an ba!ed
in derabad: 8e+an9ana: India< 8-e co.an wa! ounded b An=i %edd< $r< %edd&! .anuacture! and .arket! a wide ran9e o -ar.aceutica+! in India and re!t o t-e wor+d< 8-e co.an -a! over 1/ .edication!: active -ar.aceutica+ in9redient! (API!) or dru9 .anuacture: dia9no!tic kit!: critica+ care: and biotec-no+o9 roduct!< In order to e5and it! ootrint in %u!!ia $r< 6 | Page
%edd&! or.ed a =oint venture wit- t-e countr&! bi99e!t -ar.aceutica+! roducer: io.ed in 1//2 < A+!o to e5and it! oeration! in India it ac;uired A.erican %e.edie! 'td< in 1///< 8-i! ac;ui!ition .ade %edd@! t-e t-ird +ar9e!t -ar.aceutica+ co.an in India: ater %anba5 and G+a5o< %ecent+ to e5and it! oeration $r %edd&! ac;uired 7# PA%MA in e+9iu. to enter into e+9iu. .arket and e5and it! .arket !-are<
0UPIN
0u2i# P"%m"3euti3"4s : Inc< i! t-e 7
'i.ited: w-ic- i! a.on9 t-e to ive -ar.aceutica+ co.anie! in India< 8-e co.an -a! a !tateot-eart %B$ center in Pune and i! a +eadin9 9+oba+ +aer in Anti8: #e-a+o!orin! (antiinective!) and #ardiova!cu+ar dru9! (A#Ein-ibitor! and c-o+e!tero+ reducin9 a9ent!) and -a! a notab+e re!ence in 7 | Page
t-e area! o diabete!: antiin+a..ator and re!irator t-era< 8-e co.an i! invo+ved in 9eneric dru9! a! we++ a! API< 8-e co.an -a! .ore t-an *" 0$A arova+! and -ave beco.e one o t-e a!te!t 9rowin9 -ar.aceutica+ co.anie! < E5andin9 t-e roduct orto+io: 'uin P-ar.aceutica+!: Inc< i! 9eared to i+e 2 or .ore AN$A&! er ear in !o.e o t-e o++owin9 area!C Ora+ and in=ectab+e ce-a+o!orinD #ardiova!cu+arD #ontro++ed re+ea!e AN$A&!D Para9ra- I6&!< >it- t-i! t-e tr to cature .ore .arket !-are b e5andin9 t-eir roduct ie+ine < A+!o co.an -a! .ade .an ac;ui!ition! and -a! a+!o e!tab+i!-ed .an !ub!idiarie! or better oeratin9 eiciencie!< 'uin&! recent ac;ui!ition o Gavi! P-ar.a wi++ -e+ it to e5and it! network in 7SA<
CIP0A
8 | Page
#i+a i! an Indian -ar.aeutica+ indu!tr wit- it! re!ence in .ore t-an 1, countrie!< It i! invo+ved in t-e roduction o API and 0PI< A+!o t-e are invo+ved in t-e roduction o .an er!ona+ care o roduct! !uc- a! E!cita+ora. : 'a.ivudine and 0+utica!one roionate< 8-e co.an !e++! it! roduct to .ore t-an 1, co.anie! and -ave !ub!tantia+ .arket !-are in t-o!e countrie!<
AUROBINDO PHARMA
9 | Page
Au%$bi#d$ P"%m" 0imited i! a -ar.aceutica+ .anuacturin9 co.an -ead;uartered in I8E# #it: derabad: India< 8-e co.an .anuacture! 9eneric -ar.aceutica+! and active -ar.aceutica+ in9redient!< 8-e co.an@! area o activit inc+ude! !i5 .a=or t-eraeuticroduct area!C antibiotic!: anti retrovira+!: cardiova!cu+ar roduct!: centra+ nervou! !!te. roduct!: 9a!troentero+o9ica+!: and antia++er9ic!< 8-e co.an .arket! t-e!e roduct! in over 12" countrie!< $ue to it! re!ence in dierent countrie! a+on9 wit- a uni;ue dru9! roduct ie+ine it -a! e!tab+i!-ed it! !e+< %ecent+ t-e ac;ui!ition o Inte++ectua+ Proert B Marketin9 Aut-orization!: wit- 8A$ Ita+: a 9eneric co.an re9i!tered in Ita+ wi++ 9ive Aurobindo an acce!! to .ore t-an * read to .arket roduct! w-ic- wi++ a!t track Aurobindo@! entr into t-e Ita+ian 9eneric .arket< A+!o in t-e +a!t ew ear! t-e co.an -a! .ade a nu.ber o ac;ui!ition to increa!e t-eir oeratin9 eicienc and a+!o to enter into new .arket and cature .arket !-are t-ere<
F$u% Fi%m C$#3e#t%"ti$# R"ti$ It .ea!ure! -ow .uc- o t-e tota+ outut in an indu!tr i! roduced b t-e our +ar9e!t co.anie! in t-at indu!tr< 8-i! .et-od -e+! u! to redict t-e .arket !tructure or a articu+ar indu!tr <
8-ere are nu.ber o actor! t-at redict t-e .arket !tructure t-e!e areC ', 8-e nu.ber o ir.! t-at co.ete in a .arket )) 8-e !ize o t-e ir.!< +, 8ec-no+o9ica+ and co!t condition!< *, $e.and condition! (, Entr and E5it co!t 10 | P a g e
8-i! .et-od i! oten u!ed b .ana9er! to +ook at t-e !tructure o indu!tr and decide w-et-er to enter or not deendin9 uon t-e co.etition< 8-e -i9-er t-e concentration o our ir.! tou9-er i! t-e co.etition a! .a=orit o t-e .arket !-are i! 9rabbed b t-e.< 0or t-e -ar.aceutica+ indu!tr to our ir.! and t-eir .arket !-are or t-e ear 213 and 214 are 9iven in tab+e 1< C$m2"#y N"me
I#dust%i"4 s"4es&)5'+,
I#dust%i"4 s"4es&)5'*,
CHAN!E IN SA0ES
!RO.TH PERCENT
MAR6ET SHARE IN )5'+&7,
MAR6ET SHARE )5'*&7,
D%1 Reddy/S 0"b$%"t$%ies 0td1 0u2i# 0td1
8))*+
9(89
'*+*
';1**+*)98 *
;1)*'5;* ;
;1(;
;5*+81
8;*;)19
;)''81'
8))(*1)
Au%$bi#d$ P"%m" 0td1 T$t"4 3$#t%ibuti$# by t$2 * Ote%s
(**1
;'(+'19
)*1'8+'89+ + '*15(*8); 9 +518((98+( 8
1)55;( ( 1+(*5*'9 * *18')8)( * )*1))*98( ;
18('
Ci24" 0td1
';5+*1 + '5'+1 ' '8;1 +
;(1+;;(5'* +
;+1(+9
1**' (15) )1*
T"b4e ': S$
i%m 3$#t%ibuti$# t$<"%ds te t$t"4 s"4e1
0ro. t-e tab+e it can be !een t-at or t-e eriod 213 to our ir.! accounted or near+ 24<"Fo t-e tota+ indu!tr !a+e! w-erea! or t-e ear 214 t-e accounted or near+ 2<"F a 9rowt- o about 2F < A+!o ro. t-e tab+e we !ee t-at ro. t-e ear 213 to 214 !a+e! and .arket !-are or eac- o t-e co.anie! -ave increa!ed -and!o.e+< 8-e rea!on or t-i! i! t-e introduction o new dru9! into t-e .arket : better oeratin9 eicienc due to econo.ie! o !ca+e and econo.ie! o !coe and a+!o b ac;ui!ition! o ot-er ir.! b t-e!e co.an w-ic- -e+ed t-e. to e5and t-eir re!ence and increa!e t-eir .arket !-are< 0ro. t-e tab+e we a+!o ob!erve t-at a.on9 t-e!e 4 co.anie! Aurobindo -ar.a !-owed .a5i.u. 9ain! in ter.! o 9rowt- on ear on ear ba!i! b near+ 31F< A+!o it! .arket !-are -a! increa!ed a +ot ro. 4<,F to "<F < 8-e ac;ui!ition o NA8%O' and ot-er -ar.a co.anie! -a! -e+ed it to e5and it! 11 | P a g e
IN
!-are< A+!o ro. t-e tab+e it&! c+ear t-at #i+a i! t-e +a99ard e5andin9 it! !-are =u!t b a !.a++ account 1 8-e our ir. concentration i! a+!o !-own be+ow in t-e or. o ie c-art! and i! !u..ari!ed in t-e or. o tab+e or bot- t-e ear!<
Four frm concentration
four 6rm concentration for 4(1B0/C 4./
othersC 3./
12 | P a g e
>r* Redd'@S aboratories td*C 3/ upin td*C D/ $ipla td*C D/ Aurobindo Pharma td*C ./
Four frm concentration
four 6rm concentration for 4(10/C 4D/
othersC 3/
13 | P a g e
>r* Redd'@S aboratories td*C 3/ upin td*C 3/ $ipla td*C D/ Aurobindo Pharma td*C D/
C$m2"#y N"me
MAR6ET SHARE IN )5'+&7,
MAR6ET SHARE IN )5'*&7,
CONCENTRATION RATIO&)5'+,
CONCENTRATION RATIO&)5'*,
$r< %edd&S 'aboratorie! 'td< 'uin 'td<
*<241*4 * <2*" " <3"441/ 4 4<,12,2" 4 *3<"3*/*3* 4
*<""3"3/*
<*241*
<*""3"4
<,"13333"
<2*
<,"13333
<442"***1
<3"441*
<442"***
"<2*123
<4,12,2
<"2*12
*"<3**"143
<*3"3*/*3*
<*"3**"14
#i+a 'td< Aurobindo P-ar.a 'td< Ot-er!
T"b4e ): F$u% >i%m 3$#3e#t%"ti$# %"ti$ "#d tei% m"%?et s"%e
owever P-ar.aceutica+ indu!tr i! ver co.etitive in nature< e!ide! t-e!e our co.anie! t-ere are .an ot-er indu!trie! t-at too or. an i.ortant art o t-e .arket !ize< 8-e!e inc+ude! P-ar.aceutica+ 9iant! !uc- a! SUN PHARMA @ MY0AN 0ABORATORIES @ CADI0A HEA0THCARE @ 14 | P a g e
!0ENMAR6 PHARMACEUTICA0S@ SERUM INSTITUTE OF INDIA @ TORRENT PHARACEUTICA0S @ BIOCON and .an .ore w-ic- -a!
!ub!tantia+ .arket !-are< e+ow tab+e !-ow! t-e .arket !-are o to 1" ir.! <
C$m2"#y N"me
I#dust%i"4 s"4es&)5'+ ,
I#dust%i"4 s"4es&)5'* ,
CHAN!E IN SA0ES
!RO.TH PERCENT
MAR6ET SHARE IN )5'+&7,
MAR6ET SHARE IN )5'*&7,
D%1 Reddy/S 0"b$%"t$%ies 0td1 0u2i# 0td1
8))*+
9(89
'*+*
';1**+*)98 *
;1)*'5;* ;
;1((+(+9;
;5*+81 8;*;)1 9 ;)''81' 8))(*1 ) (**1 ;'(+'1 9 ();9+1 8881 ; ;
';5+*1+ )*1'8+'89+ + '5'+1' '*15(*8); 9 '8;1+ +518((98+( 8 '59+ +51*8)85+8 )
1)55;( ( 1+(*5*'9 * *18')8)( * *1('***9+ (
18('+++*9 8 1**)(;;;' ' (15);(')8 + (1+9(((*+
**;91
*99*1
(5'(
''1))*+'9
+19+(*+(* 8
+189)+*5'' (
+5+*+
+'(
);)
)*)
+*''18 99*918
)51;5++(8 + *51+**(98
)*91 8
+)98;1 (
(';1;
)*1)+'((* (
)1;+*5)'9 9 )1';)8;' 8 )1++)'*985 (
)18;8;; + )1;'59;(9 ; )1(8+;()9( *
)8)591
+);8)1 9
*(;+1+
'1)''8(9
)1*8(*+;) 9
)1(;;);'
)*'8)1 )
)9)8)1 (
('551+
)'159''++' (
)1'+5(98+8
)1)9+((85* '
)8*;1 ;
)5;+1 '
-;;*1
)188('++* ;
)1+(**(58 (
)15*)'8''5 +
Ci24" 0td1 Au%$bi#d$ P"%m" 0td1 My4"# 0"b$%"t$%ies 0td1 R"#b"y 0"b$%"t$%ies 0td1 Me%=ed C"di4" He"4t3"%e 0td1 Se%um I#stitute O> I#di" 0td1 T$%%e#t P"%m"3euti3"4 s 0td1 I23" 0"b$%"t$%ies 0td1 Su# P"%m"3euti3"4 I#ds1 0td1 !4"$smit?4i#e P"%m"3euti3"4 s 0td1 15 | P a g e
Dii/S 0"b$%"t$%ies 0td1 !4e#m"%? P"%m"3euti3"4 s 0td1 Bi$3$# 0td1
)'*';1 *
)()*1 ;
+8*;1+
';19+*+'
'188;55);* *
'19;88+55 '
'9;581 +
)+(+1
+8)81+
'91*)*8'58 ;
'1;+*)5; (
'18*+(59)5 '
';8'
)5)(;
)(;
'*1(9+'' 9
'1((;85+)( 9
'1(8++8+ *
T"b4e+: De2i3ts t$2s '( 3$m2"#ies "#d tei% s"%e i# te se3t
%$0ro. tab+e two it i! evident t-at to 1" co.anie! -a! a tota+ .arket !ize o near+ "1F< A+on9 wit- t-e!e -ar.aceutica+ 9iant! t-e re!ence ot-er !.a++ and .ediu. !ized -ar.aceutica+ co.anie! !uc- a! Stride! Arco+ab: Natco P-ar.a: Granu+e! India: Mark!an! P-ar.a and .an .ore w-ic- are e5andin9 at a raid rate t-rou9- -orizonta+ inte9ration i! a+!o a t-reat or t-e new entrant!< A+!o ro. tab+e we can !ee t-at eac- o t-e!e co.anie! are co.etin9 wit- eac- ot-er to cature .ore and .ore .arket !-are< 8-i! tou9- co.etition a+on9 wit- t-e re!ence o Giant! -ar.aceutica+ indu!trie! and t-e caita+ and +abour inten!ive nature o indu!tr .ake! it diicu+t or new entrant! to enter and !urvive <
He%>i#d"4-Hi%s3m"# I#de &HHI, It i! one o t-e .o!t co..on .et-od u!ed to .ea!ure .arket concentration< It i! ca+cu+ated b !;uarin9 t-e .arket !-are o eac- ir. co.etin9 in a .arket: and t-en !u..in9 t-e re!u+tin9 nu.ber!< 8-e I i! e5re!!ed a!C I !1H2 !2H2 !3H2 <<< !nH2 (w-ere !n i! t-e .arket !-are o t-e itir.)< 8-e va+ue o I +ie! between to 1< 8-e c+o!er a .arket i! to bein9 a .onoo+: t-e -i9-er t-e .arket&! concentration and +ower i! t-e co.etition< 0or e5a.+e: t-ere were on+ one ir. in an indu!tr: t-at ir. wou+d -ave 1F .arket !-are: and t-e I wou+d e;ua+ 1: (1H2): indicatin9 a .onoo+< Or: i t-ere were t-ou!and! 16 | P a g e
o ir.! co.etin9: eac- wou+d -ave near+ F .arket !-are: and t-e I wou+d be c+o!e to zero: indicatin9 near+ erect co.etition<
B(. B(( 4E. 4E( 42. 42( 43. 43( 4D. 4D( 4..
99I F
99I F
In ca!e o -ar.aceutica+ indu!tr I inde5 va+ue ca.e out to be );) >$% )5'+ "#d +5' >$% )5'*<8-i! !.a++ va+ue o I inde5 !u99e!t t-at t-e indu!tr i! -i9-+ co.etitive< 8-i! data !u99e!t t-at t-e .arket i! oen or t-e new entrant!< ut due to -i9- caita+ and +abour inten!ive nature o t-e indu!tr a+on9 wit- t-e re!ence o 9iant! -ar.aceutica+ co.anie! a+on9 wit- t-e e5an!ion o .id and !.a++ ca -ar.a co.anie! entrant! !-ou+d t-ink twice beore enterin9< A+!o t-i! !.a++ va+ue re!u+t! becau!e o t-e re!ence o +ar9e nu.ber o co.anie! in t-e !ector w-ic- are i9-tin9 to e5and t-eir .arket !-are and to !urvive< A+!o deeer ana+!i! o t-e tab+e !-ow! t-at t-eir e5i!t! ir.! w-ic- -a! +o!t t-eir !-are over t-e a!t 2 ear!< 8-i! cou+d be due to oor or ineicient oeratin9 eicienc or due to .arket e5an!ion b t-e 9iant! in t-e !ector< 8-ereb decrea!in9 t-eir !-are or ru+in9 t-e. out o t-e !ector< 8-ou9- t-e !ector -a! enor.ou! otentia+ or 9rowt- w-ic- .i9-t attract entrant! but t-eir abi+it to c-a++en9e 9iant! and abi+it to cature .arket !-are wou+d be t-e ke<
17 | P a g e
A+!o i we co.are I inde5 or t-e two ear! we wou+d !ee t-at I inde5 or 214 9rew b near+ 1F<8-e o!!ib+e rea!on or t-i! cou+d be t-e -orizonta+ and vertica+ inte9ration .et-od! o++owed b e5i!tin9 9iant! and !.a++ and .ediu. enterri!e! (SME) unit! to increa!e t-e .arket re!ence and do.inance < 8-ou9- t-e I va+ue i! !.a++ or t-e indu!tr !ti++ t-e indu!tr i! an e5a.+e o o+i9oo+i!tic .arket w-ere .a=orit o t-e rice! are deter.ined b t-e to co.anie! o t-e !ector or t-e one w-ic- -ave a !i9niicant .arket !-are< A++ o t-e!e co.anie! are .utua++ interdeendent co.anie!< >-ic- .ean! i one ir. c-an9e! it conduct: ot-er ir.! in t-e indu!tr -ave an incentive to react to t-e c-an9e< Moreover t-e P-ar.aceutica+ ir.! o++ow! !trate9ic interaction a.on9 ir.! beore rai!in9 t-e rice! o dru9! to !ee -ow t-eir co.etitor! react to it<
8-e 9ra-ica+ rere!entation be+ow !-ow! t-e 9rowt- rate at w-ic- t-e to 1" co.anie! o t-e !ector -ave 9rown ro. 213 to 214<
18 | P a g e
.(
(
B(
4(
1(
(
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%$HHI VS FOUR FIRM CONCENTARTION Out o t-e two .et-od! di!cu!!ed above to !ee .arket !tructure o an indu!tr t-e I va+ue 9ive! .ore inor.ation about t-e .arket !tructure and co.o!ition t-en t-e 0our ir. concentration ratio .et-od< 8-i! -aen! becau!e t-e our ir. concentration i! ba!ed on t-e .arket !-are! o on+ to our ir.! in an indu!tr < It doe!n&t take into account t-e t-e !ub!e;uent co.anie! w-ic- .i9-t or. an i.ortant .arket !-are< In our ca!e w-i+e ca+cu+atin9 our ir. concentration we ne9+ected t-e ot-er -ar.aceutica+ 9iant! !uc- a! SUN PHARMA @ CADI0A HEA0THCARE @ BIOCON : TORRENT PHARMACEUTICA0 etc w-ic- a+!o -ave an i.ortant .arket !-are< >-erea! I take! into account t-e .arket !-are o a++ t-e ir.! in an indu!tr< I i! ba!ed on !;uared .arket !-are! : w-i+e t-e our ir. concentration ratio i! not< A! a re!u+t I +ace a 9reater wei9-t on ir.! wit- +ar9e .arket !-are! t-an doe! t-e our ir. concentration ratio< 8-e!e actor! can +ead to dierence! in t-e rankin9 o ir.! b t-e #4 and t-e I<
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1) I and 0our ir. concentration ratio take! into account on+ +oca+ .arket!< 8-e i9nore t-e orei9n i.ort! b ot-er ir.! re!ent acro!! t-e 9+obe< 8-i! tend to over!tate t-e true +eve+ o concentration in indu!trie!< 2) Inde5e! o .arket !tructure ba!ed on nationa+ data tend to undere!tate t-e de9ree o concentration w-en t-e re+evant .arket are +oca+ 3) Product! ie+ine +a an i.ortant ro+e to cature .arket !-are< 8-e ir. wit- .ore nu.ber o roduct! tend! to cature .arket !-are .ore t-an t-e ir. wit- +e!! no o roduct!< 8-u! co.ari!on roce!! beco.e! diicu+t to .ea!ure t-e concentration o ir. < 8-e co.an wit- .ore nu.ber o roduct! tend! to cature .ore o .arket !-are a! co.ared to ot-er< 4) #+a!!iication o roduct! on t-e ba!i! o t-eir te! i! an e!!entia+ re;uire.ent or better interretation o data< Product! t-at are con!idered to be !a.e !ub!titute! be+on9 to !a.e indu!tr
C$#34usi$#- P-ar.aceutica+ indu!tr in India -a! enor.ou! otentia+ o 9rowt-< 8-i! 9rowt- otentia+ tend! to attract a +ar9e nu.ber o co.anie!< owever beore enterin9 t-e !-ou+d !tud t-e concentration o indu!tr : .arket !ize and de.and and !-ou+d be ab+e to oreca!t t-e de.and< 8-e re!ence o e5i!tin9 Giant -ar.aceutica+ co.anie! w-o -ave catured t-e .arket !-are t-rou9- -orizonta+ and vertica+ inte9ration and a+!o -a! increa!ed t-eir oeratin9 eicienc t-rou9- econo.ie! o !ca+e and econo.ie! o !coe tend to .ake diicu+t or new entrant! to co.e and !urvive < A+!o t-e +abour inten!ive and caita+ inten!ive nature o indu!tr and t-e o!!ib+e -i9- !unk co!t a!!ociated wit- it tend! to di!coura9e new co.anie! to enter into t-e .arket< 8-ou9- t-e 9overn.ent i! encoura9in9 new !tartu to co.e but t-eir !u!tainabi+it i! t-e ke actor<
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