India has emerged as one of the most attractive business and investment destinations in the world.
For the past two decades, India has been one of the world’s fastest growing economies. In the early 1990s there was a pervasive reformation of the Indian economy, followed by the deregulation of several sectors. This eventually led to a great number of foreign company establishments and an inflow of foreign investments. Today, India is one of the biggest markets in the world, with a population of more than a billion people. In recent years the country’s GNP growth has been among the highest in the world, at more than 8 percent, and the industrial growth has been around 9 percent. By 2050, the country is estimated to become the world’s third largest economy, after China and the United States.
Growing health care market
According to a report by Deloitte, 2014 Global health care outlook, the Indian health care market is projected to grow by double-digits across sectors, driven primarily by favorable demographics. Health care spending in the country will increase 18 percent annually until 2016, according to the report by Deloitte. The growth in India’s health care industry can be attributed to several socio-economic factors, including increasing sales of generic medicines, continued growth in chronic therapies, a heightened health awareness, changing lifestyles resulting in higher incidence of lifestyle-related diseases and increasing expenditure on health care.
When it comes to the life science sector India has a strong position within several segments.
The life science landscape
India is rapidly developing and so is the technology; making India very attractive for foreign investors. The life science sector is no exception. For example, India has the world’s highest number of FDA approved manufacturing sites outside of the US, world-class facilities for generic manufacturing that comply with international standards, and low cost fermentation technology for biologics and vaccines. The Indian life science industry enjoys a very high growth rate and there is a significant interest in the industry, generating investments, collaborations, strategic alliances, mergers and acquisitions.
“The Indian life science sector is growing at a rapid pace, especially when it comes to pharmaceuticals, biotechnology and diagnostics. A lot of research and investments are being done within pharma and biotech,” says Dr. Sanjeevi Carani, Senior Advisor and Business Unit Head of Life Sciences at Business Sweden India.
Top biotech destination
According to a sector briefing by UK Trade & Investment – Biotechnology and Pharmaceutical Opportunities in India (2010), India is ranked among the top 12 biotech destinations in the world. Also, it is the third biggest in the Asia-Pacific region in terms of the number of biotech companies, according to a report by the Confederation of Indian Industry (CII) and the consultancy firm KPMG. The largest segment is biopharma, driven by an increased private and government spending. Another sector gaining ground is bioservices, where export is due to big pharma outsourcing. Export of vaccines and biogenerics is a large part of the Indian life science industry. An interesting statistic illustrating the magnitude of the vaccine segment is that every second child receiving vaccine in the world is receiving a vaccine made in India.
India has also been gaining importance as a clinical trial destination over the past years. According to market research firm Frost & Sullivan, the Indian clinical trial industry was worth USD 450 million in 2010–11. Presently it is growing at 12 percent a year and is predicted to pass the $1 billion mark in 2016, according to an article in Chemistry World. Clinical trials are often outsourced to India as the large Caucasoid population has a genetic profile similar to American and European patients. Drug companies have also been drawn to India for its technically competent workforce and low costs.
Indian companies have developed expertise in pharmaceutical formulation development and generic manufacturing, and have capitalized on the global patent cliff by capturing a substantial share of generic products marketed around the world. The country is essentially a branded generics market, with local manufacturers comprising nearly 75 percent of the total. The large Indian companies that were initially focusing on the semi-regulated markets have now started establishing their presence in the developed and regulated markets.
While local demand for pharmaceuticals is largely met by Indian companies and products manufactured in India, the demand for medical devices is met largely by multinational corporations (MNCs) and imported products, with only low-end devices manufactured by Indian companies. The medtech sector also offers good potential for growth. In 2010, around 77 percent of all medtech equipment used in India was imported. India imported medical equipment for a value of SEK 11.5 billion in 2008. Around 80 percent of the imported products are bought by the private sector.
West and south
The industry is mainly clustered in the west and the south of the country, driven by the presence of research institutes, pharmaceutical companies and investor policies of states in these regions. There are some key biotech clusters located around the country. Bangalore, in Karnataka, is considered to be the biotech capital. India houses 380 biotech companies, of which a majority (198) are in Karnataka, with 191 in Bangalore alone. Bangalore and Karnataka jointly contribute 27 percent to the revenue of the sector.
Other key clusters include Mumbai and Ahmedabad in the west (Maharashtra and Gujarat respectively), Hyderabad (Andhra Pradesh) in the south and the area in and around New Dehli in the north. The western-belt houses companies that are large pharmaceuticals with a prominent manufacturing and R&D base, and that have an active interest in pursuing the manufacture of biogenerics. Furthermore, Hyderabad has a number of vaccine manufacturers and other larger biotech companies involved in research. The regions in and around New Dehli house several key research centers and universities that are involved in research.
Understanding the culture
The success of your business efforts in India may very well depend on how you understand and get along with your Indian counterparts. A big challenge for Nordic companies thinking to enter the Indian life science market is to understand the local market as well as the cultural conditions for doing business. The way of life and way of thinking are different, not only compared to Scandinavia but also between the different regions.
“One has to bear in mind that India is not really a country, it’s a continent,” says Peter Bramberg, Vice President Head of Business Unit Health Care and Life Science at Business Sweden. “India consists of 29 different states, with different languages and cultures. Thus, it is important to be able to approach them appropriately. That is also the reason why we have offices in several parts of India, such as Mumbai, Bangalore and Dehli, with experts who can provide guidance and assistance.”
“The way you behave and the culture is very important. When you look at northern or eastern India for example, the business culture is quite different,” says Dr. Sanjeevi Carani.
It is also advisable to ponder on divergences when it comes to types of companies. According to Dr. Sanjeevi Carani, companies in India are generally made up of two categories – Indian foreign companies (multinational firms), and Indian domestic companies. The companies in the latter category are 95 percent owned by families.
“As these companies are basically family run, they often look for someone who has a long-term vision. Also, because of a family background, they are good when it comes to taking quick decisions. The Indian market is in other words quite diverse in terms of marketing and trade. It is advisable to have an Indian partner who can do a lot of legwork and marketing to reach out to people and who can make Swedish ideas reach India quickly.”
India has several strengths: favorable demographics, high levels of tertiary education, rising per capita incomes, English proficiency and a flourishing democracy. There are also, as in any country, challenges. Integration with the global economy has made India more susceptible to systemic financial shocks, for example. All these factors make India an exciting and challenging place to do business.
Business meeting checklist
- Meetings do not always start at the set time. If you have an appointment with a high-ranking representative, be prepared that the waiting time could be long.
- Meetings are often held at the company’s office and are led by the person highest in rank.
- Address your counterpart as Mr or Mrs, followed by their surname. Titles are of great importance. American titles should be replaced by British designations.
- In India, negotiations can become long and circumstantial. If you have agreed on a detail, don’t be surprised if the Indian party wishes to discuss the same issue at another meeting. What is normally accomplished during a meeting in Sweden can take three business meetings in an Indian negotiation.
- Usually, the first meeting is an opportunity to make better acquaintances and lay the foundation for forthcoming collaborations.
Source: Business Sweden