OTC Pharmaceuticals in India

Industry Profile

Reference Code: 0102-0364 Publication date: December 2007

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ABOUT DATAMONITOR

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EXECUTIVE SUMMARY

EXECUTIVE SUMMARY
Market Value The Indian OTC pharmaceuticals market grew by 6.2% in 2007 to reach a value of $1.6 billion. Market Value Forecast In 2012, the market is forecast to have a value of $2 billion, an increase of 29.7% since 2007. Market Segmentation I Topical OTC medicines form the most lucrative sector of the Indian market, with a 17.6% share of the market by value. Market Segmentation II India accounts for 4.8% of the Asia-Pacific market by value. Market Share Cipla is the leading company in the Indian market, with a 16.7% share of the market by value. Distribution Pharmacies and drugstores form the most lucrative distribution channel, with a 70.9% share of the Indian market by value.

India - OTC Pharmaceuticals Datamonitor (Published December 2007) Page 3

CONTENTS

TABLE OF CONTENTS

EXECUTIVE SUMMARY CHAPTER 1

1.1 1.2 1.3

3 7
7 7 8

Market Overview

Market Definition Research Highlights Market Analysis

CHAPTER 2 CHAPTER 3 CHAPTER 4 CHAPTER 5 CHAPTER 6

6.1 6.2 6.3 6.4 6.5 6.6 Summary Buyer Power

Market Value Market Segmentation I Market Segmentation II Market Share Five Forces Analysis

9 10 11 12 Error! Bookmark not defined.

13 14 15 16 18 19

Supplier Power New Entrants Substitutes Rivalry

CHAPTER 7
7.1 7.2

Leading Companies

20
20 23

Dabur India Limited Cipla Ltd

India - OTC Pharmaceuticals Datamonitor (Published December 2007) Page 4

CONTENTS
7.3 Zandu Pharmaceutical Works Ltd 25

CHAPTER 8 CHAPTER 9
9.1

Distribution Market Forecasts

28 29
29

Market Value Forecast

CHAPTER 10 CHAPTER 11
11.1 Methodology

Macroeconomic Indicators Appendix

30 32
32 33 33

11.2 Industry Associations 11.3 Related Datamonitor Research

India - OTC Pharmaceuticals Datamonitor (Published December 2007) Page 5

CONTENTS

LIST OF TABLES
Table 1: Table 2: Table 3: India OTC Pharmaceuticals Market Value: $ billion, 2003-2007 .........................9 India OTC Pharmaceuticals Market Segmentation I: % Share, by Value, 2007 10 India OTC Pharmaceuticals Market Segmentation II: % Share, by Value, 2007 .........................................................................................................................11 India OTC Pharmaceuticals Market Share: % Share, by Value, 2007 ..............12 Key Facts: Dabur India Limited.........................................................................20 Key Financials: Dabur India Limited..................................................................22 Key Facts: Cipla Ltd..........................................................................................23 Key Financials: Cipla Ltd ..................................................................................24 Key Facts: Zandu Pharmaceutical Works Ltd ...................................................25 Key Financials: Zandu Pharmaceutical Works Ltd ............................................27 India OTC Pharmaceuticals Distribution: % Share, by Value, 2007 ..................28 India OTC Pharmaceuticals Market Value Forecast: $ billion, 2007-2012 ........29 India Size of Population (million) , 2003-2007...................................................30 India GDP (Constant 2000 Prices, $ billion), 2003-2007...................................30 India Inflation, 2003-2007 .................................................................................30 India Exchange Rate, 2003...............................................................................31

Table 4: Table 5: Table 6: Table 7: Table 8: Table 9: Table 10: Table 11: Table 12: Table 13: Table 14: Table 15: Table 16:

India - OTC Pharmaceuticals Datamonitor (Published December 2007) Page 6

MARKET OVERVIEW

CHAPTER 1

MARKET OVERVIEW

1.1

Market Definition
The OTC pharmaceuticals market values the total sales of analgesics, cough and cold preparations, indegestion preparations, topical OTC medicines, vitamins and minerals and other OTC healthcare products (anti-smoking aids, eye & ear drops, motion sickness medication, rectal medication and sleeping aids) at retail selling price (RSP) and includes any applicable taxes. Any currency conversions used in the creation of this report have been calculated using constant 2006 annual average exchange rates. Asia-Pacific comprises Australia, China, Japan, India, Singapore, South Korea and Taiwan.

1.2

Research Highlights
The Indian OTC pharmaceuticals market generated total revenues of $1.6 billion in 2007, representing a compound annual growth rate (CAGR) of 6.4% for the period spanning 2003-2007. Sales of other OTC healthcare products proved the most lucrative for the Indian OTC pharmaceuticals market in 2007, generating total revenues of $679.3 million, equivalent to 43% of the market's overall value. The performance of the market is forecast to decelerate, with an anticipated CAGR of 5.3% for the five-year period 2007-2012, which is expected to drive the market to a value of $2 billion by the end of 2012.

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MARKET OVERVIEW
1.3 Market Analysis
The Indian OTC pharmaceuticals market consistently posted relatively strong rates of growth throughout the 2003-2007 period. This trend is expected to continue over the forthcoming five years, although at a declining rate. The Indian OTC pharmaceuticals market generated total revenues of $1.6 billion in 2007, representing a compound annual growth rate (CAGR) of 6.4% for the period spanning 2003-2007. In comparison, the Japanese and Chinese markets grew with CAGRs of 2.2% and 7.1%, respectively, over the same period, to reach respective values of $11.2 billion and $13.8 billion in 2007. Sales of other OTC healthcare products proved the most lucrative for the Indian OTC pharmaceuticals market in 2007, generating total revenues of $679.3 million, equivalent to 43% of the market's overall value. In comparison, sales of cough and cold preparations generated revenues of $200.5 million in 2007, equating to 12.7% of the market's aggregate revenues. The performance of the market is forecast to decelerate, with an anticipated CAGR of 5.3% for the five-year period 2007-2012, which is expected to drive the market to a value of $2 billion by the end of 2012. Comparatively, the Japanese and Chinese markets will grow with CAGRs of 1.4% and 6.8%, respectively, over the same period, to reach respective values of $12 billion and $19.2 billion in 2012.

India - OTC Pharmaceuticals Datamonitor (Published December 2007) Page 8

MARKET VALUE

CHAPTER 2

MARKET VALUE

The Indian OTC pharmaceuticals market grew by 6.2% in 2007 to reach a value of $1.6 billion. The compound annual growth rate of the market in the period 2003-2007 was 6.4%. Table 1: Year 2003 2004 2005 2006 2007 (e) CAGR, 2003-2007:
Source: Datamonitor

India OTC Pharmaceuticals Market Value: $ billion, 2003-2007 $ billion 1.2 1.3 1.4 1.5 1.6 INR billion 51.5 54.9 58.5 62.1 66.0 % Growth

6.40% 6.60% 6.30% 6.20% 6.4%

DATAMONITOR

Figure 1:

India OTC Pharmaceuticals Market Value: $ billion, 2003-2007

$ billion 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 2003 2004 2005 $ billion

% Growth 6.6% 6.5% 6.4% % Growth 6.3% 6.2% 6.1% 6.0% 5.9% 2006 2007

Source: Datamonitor

DATAMONITOR

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MARKET SEGMENTATION I

CHAPTER 3

MARKET SEGMENTATION I

Topical OTC medicines form the most lucrative sector of the Indian market, with a 17.6% share of the market by value. In addition, cough and cold preparations generate a further 12.7% of the market's revenues. Table 2: India OTC Pharmaceuticals Market Segmentation I: % Share, by Value, 2007 % Share 43.00% 17.60% 12.70% 10.80% 10.50% 5.50% 100.0%
DATAMONITOR

Category Other OTC healthcare products Topical OTC medicines Cough and cold preparations Analgesics Vitamins and minerals Indigestion preparations Total
Source: Datamonitor

Figure 2:

India OTC Pharmaceuticals Market Segmentation I: % Share, by Value, 2007

Indigestion preparations 5.5%

Vitamins and minerals 10.5% Analgesics 10.8% Cough and cold preparations 12.7%

Other OTC healthcare products 43%

Topical OTC medicines 17.6%

Source: Datamonitor

DATAMONITOR

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MARKET SEGMENTATION II

CHAPTER 4

MARKET SEGMENTATION II

India accounts for 4.8% of the Asia-Pacific market by value. In comparison, China generates 42% of the market's revenues. Table 3: India OTC Pharmaceuticals Market Segmentation II: % Share, by Value, 2007 Geography China Japan Rest of Asia-Pacific South Korea India Total
Source: Datamonitor

% Share 42.00% 34.00% 10.30% 8.90% 4.80% 100.0%

DATAMONITOR

Figure 3:

India OTC Pharmaceuticals Market Segmentation II: % Share, by Value, 2007

India South Korea 4.8% 8.9% Rest of AsiaPacific 10.3%

China 42%

Japan 34%

Source: Datamonitor

DATAMONITOR

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MARKET SHARE

CHAPTER 5

MARKET SHARE

Cipla is the leading company in the Indian market, with a 16.7% share of the market by value. In comparison, Zandu Pharmaceutical Works Ltd generates 10.7% of the market's revenues. Table 4: India OTC Pharmaceuticals Market Share: % Share, by Value, 2007 % Share 16.70% 10.70% 8.30% 64.30% 100.0%
DATAMONITOR

Company Cipla Zandu Pharmaceutical Works Ltd Dabur India Limited Other Total
Source: Datamonitor

Figure 4:

India OTC Pharmaceuticals Market Share: % Share, by Value, 2007

Cipla 16.7% Zandu Pharmaceutical Works Ltd 10.7% Other 64.3%

Dabur India Limited 8.3%

Source: Datamonitor

DATAMONITOR

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FIVE FORCES ANALYSIS

CHAPTER 6

FIVE FORCES ANALYSIS

6.1

Summary
Figure 5: Forces Driving Competition in the OTC Pharmaceuticals Market in India, 2007

Intensity of competition

Weak

Strong

Buyer Pow er 5 4 3 2 1 0

Degree of rivalry

Supplier Pow er

Substitutes

New Entrants

Score for each force is mean of scores for its drivers. Total area & color indicates intensity of competition overall. Source: Datamonitor
DATAMONITOR

The OTC pharmaceutical market has manufacturers as players, and distributors such as pharmacies and supermarkets as buyers. Suppliers include manufacturers of active pharmaceutical ingredients, and supplier power is strong. Market entry is made more difficult by the product development costs where a new drug is concerned, and by the need to obtain regulatory approval for products. Prescription drugs are the main substitute, but the threat they pose is weak: they are frequently used in situations where no adequate OTC remedy exists. Rivalry is strong, with large research-based pharma players and major companies involved in household and personal care fighting with smaller generics manufacturers for market share.

India - OTC Pharmaceuticals Datamonitor (Published December 2007) Page 13

FIVE FORCES ANALYSIS

6.2 Buyer Power
Figure 6: Drivers of Buyer Power in the OTC Pharmaceuticals Market in India, 2007

Strength of buyer power

Weak

Strong

Product dispensability Buyer independence

Buyer size 5 4 3 2 1 0

Oligopsony threat Low -cost sw itching

Backw ards integration Financial muscle Price sensitivity

Undifferentiated product Tendency to sw itch

Scores: 1= weak driver...5=strong driver Source: Datamonitor

DATAMONITOR

This market will be analyzed taking manufacturers of over the counter drugs as market players, with the distributors of drugs, including pharmacies, general stores and supermarkets, as buyers. Globally, pharmacies and drugstores form the most important distribution channel for OTC drugs. These distributors have less buyer power than the large supermarkets, due to their smaller size. Retailers often wield significant power in supply chains. However, consumer preference for a wide availability of self-medication options forces buyers in this market to stock OTC pharmaceuticals. However, OTC drugs are much more important to the business of a pharmacy than a supermarket and as a result buyers' switching costs can differ slightly in this market. The UK-based retailer Boots has diversified into the development and manufacturing of drugs such as Ibuprofen. This form of backward integration is not common but can increase pressure on market players. Overall buyer power is moderate.

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FIVE FORCES ANALYSIS

6.3 Supplier Power
Figure 7: Drivers of Supplier Power in the OTC Pharmaceuticals Market in India, 2007

Strength of supplier power

Weak

Strong

Forw ard integration

Differentiated input

Supplier size 5 4 3 2 1 0

Oligopoly threat

Sw itching costs

Importance of quality/cost No substitute inputs

Player independence Player dispensability

Scores: 1= weak driver...5=strong driver Source: Datamonitor

DATAMONITOR

Suppliers in the market are mainly manufacturers of Active Pharmaceutical Ingredients (APIs). Market players require a wide range of specialized ingredients, which maintains supplier power. However, many large pharmaceutical companies have operations in chemical manufacturing. Teva Pharmaceuticals has established backwards integration and manufactures a number of API products and Merck & Co also has its own chemicals division. Smaller pharmaceutical companies do not operate facilities sophisticated enough to manufacture chemical ingredients themselves and therefore are often heavily reliant upon API manufacturers. Although some chemical manufacturers only supply to pharmaceutical companies, many also supply to numerous industries and develop chemicals for food ingredients, animal feed and suspensions and ceramics, reducing their dependence on revenues gained from pharmaceutical supply. APIs are most often supplied to pharmaceutical companies under contractual arrangements, increasing switching costs and enhancing the power of suppliers. Overall supplier power is strong.

India - OTC Pharmaceuticals Datamonitor (Published December 2007) Page 15

FIVE FORCES ANALYSIS

6.4 New Entrants
Figure 8: Factors Influencing the Likelihood of New Entrants in the OTC Pharmaceuticals Market in India, 2007

Likelihood of new entrants

Weak

Low -cost sw itching 5 Market grow th Undifferentiated product 4 3 Weak brands Scale unimportant 2 1 0 Little IP involved Low fixed costs

Strong

Suppliers accessible Distribution accessible

Little regulation Incumbents acquiescent

Scores: 1= weak driver...5=strong driver Source: Datamonitor

DATAMONITOR

The over the counter drug market involves a high level of specialization and expertise along with high upfront investment costs, making the market difficult to enter. The main costs are incurred from extensive clinical trials. Large companies have an advantage as scale economies can help to achieve success in the R&D process. Despite this smaller firms are prevalent in the market and can still achieve efficiency through collaborations with larger firms, which allows them to benefit from increased funds, creating more innovation and research opportunities. Smaller generic firms are common in India, where incumbents manufacture some of the countrys pharmaceutical needs. This is due to favorable policies in the country to keep drug prices low for end users in the country The most realistic entry method would be as a small generic drug firm; a much less costly business model than branded drug manufacture. In developing countries, over-the-counter drug manufacturers are much more likely to be generic firms and traditional medicine manufacturers. In these countries regulation of prescription drugs is not always distinguished from OTC drugs. However, for a medicine to be granted OTC status in countries such as the US and the UK, it must have a wide safety margin and be effective. There are opportunities for new companies in over-the-counter drugs with the strong growth of the market.

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FIVE FORCES ANALYSIS

This is being fostered by an ageing population and by a global trend toward selfmedication. There is also strong growth potential in developing markets due to the liberalization of distribution channels and increasing awareness of health issues in these regions. In the pharmaceutical industry product recalls can damage brand image and issues over the safety of drugs can impact end users decisions to purchase OTC drugs, lowering switching costs. Even in this market where some products are highly important to the end user, customer preferences can have a strong pull-through on manufacturers. However, it is unusual for an OTC drug to be withdrawn from the market due to safety issues, although there have been a few instances of this. Drugs often become over-thecounter by switching from a prescription drug, which can increase consumer confidence in the product. Overall the threat of new entrants is moderate.

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FIVE FORCES ANALYSIS

6.5 Substitutes
Figure 9: Factors Influencing the Threat of Substitutes in the OTC Pharmaceuticals Market in India, 2007

Threat of substitutes

Low -cost sw itching 5

Weak Strong

4 3 2 1 0

Beneficial alternative

Cheap alternative

Scores: 1= weak driver...5=strong driver Source: Datamonitor

DATAMONITOR

Substitutes include prescription medicines, although these are often viewed as treating more serious ailments and illnesses thus the impact of this threat is questionable. Also, pharmaceutical companies may find that it would boost their revenues to apply for OTC status for a prescription drug. Overall, the threat of substitutes is weak.

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FIVE FORCES ANALYSIS

6.6 Rivalry
Figure 10: Drivers of Degree of Rivalry in the OTC Pharmaceuticals Market in India, 2007

Degree of rivalry

Weak

Competitor size 5 Zero-sum game? Number of players 4 3 Storage costs Low -cost sw itching 2 1 0 Similarity of players Undifferentiated product

Strong

Lack of diversity Hard to exit

Low fixed costs Easy to expand

Scores: 1= weak driver...5=strong driver Source: Datamonitor

DATAMONITOR

The pharmaceutical industry is witnessing increasing consolidation leading to bigger companies and more competition. For example, Johnson & Johnson acquired Pfizer's consumer healthcare business in December 2006. Most of the leading firms are large multinationals, and their wide geographic spread reduces rivalry. However, these firms have typically high fixed costs, as drug research and development requires continued investment. Exit barriers are fairly high as most companies that manufacture OTC drugs are focused on the pharmaceutical market and are similar to one another. However, some personal care companies operate in the over the counter drugs market or even in prescription pharmaceuticals meaning that exit barriers are lowered for these companies. For example, Reckitt Benckiser owns the Nurofen and Strepsils brands after acquiring Boots Healthcare International but is also primarily involved in the production and distribution of household cleaning and personal care products. In this market, manufacturers can differentiate by demonstrating a drug has greater clinical benefit than another and also through a strong brand image. For example, Ibuprofen is a popular painkiller but Nurofen is the best-known brand of this drug and achieves strong sales. Sales growth has been sustained by innovation and extensions to the product, for example, Nurofen fast relief has recently been launched. The growth of this market mitigates rivalry somewhat. Overall, rivalry with respect to the over-the-counter drugs market is moderate.

India - OTC Pharmaceuticals Datamonitor (Published December 2007) Page 19

LEADING COMPANIES

CHAPTER 7

LEADING COMPANIES

7.1

Dabur India Limited

Table 5: Key Facts: Dabur India Limited Kaushambi, Ghaziabad 201010, Uttar Pradesh, India 91 120 398 2000 91 120 300 1000 www.dabur.com March 500096 Bombay Stock Exchange
DATAMONITOR

Address: Telephone: Fax: Website: Financial Year-End: Ticker: Stock Exchange:

Source: Company Website

Dabur India Limited (DIL) is a fast moving consumer goods (FMCG) company that develops, manufactures and distributes products in health care, personal care and food products sectors. The company primarily operates in India and has a presence in Nigeria, Egypt, Nepal, Bangladesh, UAE and the UK. The company operates through three business units: consumer care business, consumer health business and others. The Consumer Care Division (CCD) caters to six distinct segments: hair care, oral care, health supplements, digestives, home care, and skin and baby care. The hair care segment products include hair oils, mustard oil and shampoos. These products are available under brands Dabur Amla, Vatika and Anmol. In the oral care segment the products include toothpaste, tooth powder and tooth brushes. These products are available under brands Dabur, Babool, Meswakl and Promise. The health supplement products include Chyawanprash, Glucose D and Honey. The digestives segment's products comprise the Hajmola brands, Pudin Hara, Sat Isabgol and Hingoli. The skin and baby care products include Lal Tail, Dabur Gulabari, Dabur Honey Saffron soap and Dabur Ayurvedic Baby care products. The company's home care products segment comprises Odomos brand, Odonil brand and SaniFresh, a toilet cleaner. The consumer health division (CHD) deals in products on the Ayurvedic medicinal platform. The range of offerings that are based on 'grantha-based' formulations is classified into over-the-counter products (OTCs), branded ethical and generic products that include Asavs and classicals.

India - OTC Pharmaceuticals Datamonitor (Published December 2007) Page 20

LEADING COMPANIES
The others segment includes the Dabur's foods business and international operations. Dabur's food business is conducted through its wholly owned subsidiary Dabur Foods Limited (DFL). DFL focuses on juices, nectars and drinks. It also supplies food additives like garlic paste and tomato puree. A host of products are offered to institutional customers through the food services division. DFL operates in the juice and nectar space with three brands: Real, Activ and Coolers. The company has international operations in Nigeria, UAE and the US. The company operates six subsidiaries: Dabur Foods Limited, Dabur Nepal Private Limited, Dabur Egypt Limited, Dabur Oncology Plc, Dabur Finance Limited, and Dabur Overseas Limited. The company has also established a joint venture with Bongrain of France for the manufacture and marketing of specialty cheese and other dairy products through Dabur International Limited.

India - OTC Pharmaceuticals Datamonitor (Published December 2007) Page 21

LEADING COMPANIES
Key Metrics Table 6: Metric Revenues Net Income Profit Margin Total Assets Total Liabilities
Source: Company Filings

Key Financials: Dabur India Limited 2003 302.5 18.8 6.2% 141.2 49.2 2004 293.5 23.6 8.0% 95.5 32.7 2005 339.2 34.4 10.1% 119.8 39.5 2006 419.3 47.2 11.3% 137.7 28.2 2007 492.7 62.4 12.7% 147.8 42.1

DATAMONITOR

Figure 11:

Revenues & Profitability: Dabur India Limited

Revenues Net Income Profit Margin 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2003 2004 2005 Year 2006 2007 Profit Margin (%)

600 500 US$ Millions 400 300 200 100 0

Source: Company Filings

DATAMONITOR

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LEADING COMPANIES
7.2 Cipla Ltd
Table 7: Key Facts: Cipla Ltd Mumbai Central, Mumbai 400 008, India 91 22 2308 2891 91 22 2307 0013 www.cipla.com March 500087 Bombay
DATAMONITOR

Address: Telephone: Fax: Website: Financial Year-End: Ticker: Stock Exchange:

Source: Company Website

Cipla is a pharmaceutical company based in India. The company produces and markets drugs and formulations in various conventional and advanced dosage forms, including tablets, capsules, injections, ophthalmic preparations, tropical preparations, nasal preparations, rectal preparations, suspensions, syrups, drops, inhalers, powders, intermediary preparations and sprays. The company's prescription products cover such therapeutic categories as anticancer drugs, antibiotics and antibacterials, cholesterol reducers, expectorants, eye and ear preparations, hormone-related synthetic drugs, muscle relaxants, neurological products and topical costicosteroids. Cipla is also involved in the manufacture of over-the-counter products ranging from calcium preparations, cough and cold medications and food supplements to cosmetics and dental care products; the production of veterinary drugs, and the manufacture of active pharmaceutical ingredients and drug intermediates. The company sells its products in over 160 countries around the globe. The company has manufacturing facilities in Mumbai, Bangalore, Vikhroli, Patalganga, Kurkumbh, Goa and Baddi.

India - OTC Pharmaceuticals Datamonitor (Published December 2007) Page 23

LEADING COMPANIES
Key Metrics Table 8: Metric Revenues Net Income Profit Margin Total Assets Total Liabilities
Source: Company Filings

Key Financials: Cipla Ltd 2003 352.8 54.7 15.5% 269.4 245.8 2004 461.4 67.7 14.7% 339.9 312.0 2005 547.9 90.4 16.5% 404.6 370.4 2006 707.9 134.1 18.9% 562.8 519.0 2007 830.5 147.4 17.7% 766.2 694.8

DATAMONITOR

Figure 12:

Revenues & Profitability: Cipla Ltd

Revenues Net Income Profit Margin 20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2003 2004 2005 Year 2006 2007

900 800 700 600 500 400 300 200 100 0

Source: Company Filings

DATAMONITOR

India - OTC Pharmaceuticals Datamonitor (Published December 2007) Page 24

Profit Margin (%)

US$ Millions

LEADING COMPANIES
7.3 Zandu Pharmaceutical Works Ltd
Table 9: Key Facts: Zandu Pharmaceutical Works Ltd 70 Gokhale Road (South), Dadar, Mumbai 400 025, India 91 263885 430 7021 91 263885 437 5491 www.zanduayurveda.com March N/A N/A
DATAMONITOR

Address: Telephone: Fax: Website: Financial Year-End: Ticker: Stock Exchange:

Source: Company Website

Zandu Pharmaceutical Works manufactures over-the-counter Ayurvedic products, cosmetics and chemical products. Ayurveda is a Sanskrit word meaning "science of long life". It is a medical practice of healthy living with therapeutic measures. The products manufactured and distributed by the company have a particular focus on this market. The company has manufacturing facilities in six Indian locations: Mumbai, Taluka Talasari, Vapi, Unnao, Piparia and Silvassa. Products include balms, ointments and herbs (in oil-based and power preparations). These are marketed for the relief of conditions such as inflammation, inability to concentrate, minor pain, immune deficiency and infections. Zandu Pharmaceutical Works has three subsidiaries; Leopard Investments, Zandu Chemicals and Zandu Cosmetics. Leopard Investments, based in Vapi, manufactures vegetable plant extracts. Zandu Chemicals produces bulk drugs and intermediates to customer specifications. Zandu Cosmetics applies the company's Ayurvedic methods to cosmetics, manufacturing a range of natural cosmetics. The company also has affiliations with the Zandu Foundation For Healthcare (ZFHC) and the group's Research and Development Center.

India - OTC Pharmaceuticals Datamonitor (Published December 2007) Page 25

LEADING COMPANIES
The ZFHC is a non-profit charitable organization designed to research

agrotechniques and laboratory methods for pharmacognostic and phytochemical research and clinical evaluation. The unit also seeks to develop new products for the company's range. Zandu Pharmaceutical Works exports worldwide, to the US, Europe and parts of Asia and Africa, both as completed formulations and raw materials.

India - OTC Pharmaceuticals Datamonitor (Published December 2007) Page 26

LEADING COMPANIES
Key Metrics Table 10: Metric Revenues Net Income Profit Margin
Source: Company Filings

Key Financials: Zandu Pharmaceutical Works Ltd 2003 24.9 1.6 6.6% 2004 27.2 2.2 8.1% 2005 25.0 1.9 7.7% 2006 28.7 2.8 9.6% 2007 36.1 3.5 9.7%

DATAMONITOR

Figure 13:

Revenues & Profitability: Zandu Pharmaceutical Works Ltd

Revenues Net Income Profit Margin 12.0% Profit Margin (%) 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2003 2004 2005 Year 2006 2007

40 35 US$ Millions 30 25 20 15 10 5 0

Source: Company Filings

DATAMONITOR

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DISTRIBUTION

CHAPTER 8

DISTRIBUTION

Pharmacies and drugstores form the most lucrative distribution channel, with a 70.9% share of the Indian market by value. In addition, independent retailers generate a further 14.9% of the market's revenues. Table 11: India OTC Pharmaceuticals Distribution: % Share, by Value, 2007 % Share 70.90% 14.90% 7.60% 6.70% 100.0%
DATAMONITOR

Channel Pharmacies / drugstores Independent retailers Specialist retailers Other Total

Source: Datamonitor

Figure 14:

India OTC Pharmaceuticals Distribution: % Share, by Value, 2007

Other 6.7%

Specialist retailers 7.6%

Independent retailers 14.9% Pharmacies / drugstores 70.9%

Source: Datamonitor

DATAMONITOR

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MARKET FORECASTS

CHAPTER 9

MARKET FORECASTS

9.1

Market Value Forecast

In 2012, the Indian OTC pharmaceuticals market is forecast to have a value of $2 billion, an increase of 29.7% since 2007. The compound annual growth rate of the market in the period 2007-2012 is predicted to be 5.3%. Table 12: India OTC Pharmaceuticals Market Value Forecast: $ billion, 2007-2012 Year 2007 2008 2009 2010 2011 2012 CAGR, 2007-2012:
Source: Datamonitor

$ billion 1.6 1.7 1.8 1.9 2.0 2.0

INR billion 66.0 69.9 73.9 78.0 81.9 85.6

% Growth 6.20% 6.00% 5.80% 5.50% 5.00% 4.50% 5.3%

DATAMONITOR

Figure 15:

India OTC Pharmaceuticals Market Value Forecast: $ billion, 2007-2012

$ billion 2.5 2.0 $ billion 1.5 1.0 0.5 0.0 2007 2008 2009 2010

% Growth 7.0% 6.0% 5.0% % Growth 4.0% 3.0% 2.0% 1.0% 0.0% 2011 2012

Source: Datamonitor

DATAMONITOR

India - OTC Pharmaceuticals Datamonitor (Published December 2007) Page 29

MACROECONOMIC INDICATORS

CHAPTER 10 MACROECONOMIC INDICATORS

Table 13: Year 2003 2004 2005 2006 2007 India Size of Population (million) , 2003-2007 Population (million) 1057.5 1075.5 1093.6 1111.7 1129.9 % Growth

1.70% 1.70% 1.70% 1.60%

Source: Datamonitor

DATAMONITOR

Table 14:

India GDP (Constant 2000 Prices, $ billion), 2003-2007 Constant 2000 Prices, $ billion 552.7 591.9 643.2 691.1 743.5

Year 2003 2004 2005 2006 2007

% Growth

7.10% 8.70% 7.40% 7.60%

Source: Datamonitor

DATAMONITOR

Table 15: Year 2003 2004 2005 2006 2007

India Inflation, 2003-2007 Inflation Rate (%) 3.9 3.4 4.0 3.2 3.4 % Growth

-11.40% 16.90% -20.60% 7.30%

Source: Datamonitor

DATAMONITOR

India - OTC Pharmaceuticals Datamonitor (Published December 2007) Page 30

MACROECONOMIC INDICATORS
Table 16: India Exchange Rate, 2003 Exchange Rate ($/INR) 0.02143 0.02206 0.02267 0.02207 0.02393

Year 2003 2004 2005 2006 2007

Source: Datamonitor

DATAMONITOR

India - OTC Pharmaceuticals Datamonitor (Published December 2007) Page 31

APPENDIX

CHAPTER 11

APPENDIX

11.1 Methodology
Datamonitor Industry Profiles draw on extensive primary and secondary research, all aggregated, analyzed, cross-checked and presented in a consistent and accessible style. Review of in-house databases Created using 250,000+ industry interviews and consumer surveys and supported by analysis from industry experts using highly complex modeling & forecasting tools, Datamonitors in-house databases provide the foundation for all related industry profiles Preparatory research We also maintain extensive in-house databases of news, analyst commentary, company profiles and macroeconomic & demographic information, which enable our researchers to build an accurate market overview Definitions Market definitions are standardized to allow comparison from country to country. The parameters of each definition are carefully reviewed at the start of the research process to ensure they match the requirements of both the market and our clients Extensive secondary research activities ensure we are always fully up-to-date with the latest industry events and trends Datamonitor aggregates and analyzes a number of secondary information sources, including: National/Governmental statistics International data (official international sources) National and International trade associations Broker and analyst reports Company Annual Reports Business information libraries and databases Modeling & forecasting tools Datamonitor has developed powerful tools that allow quantitative and qualitative data to be combined with related macroeconomic and demographic drivers to create market models and forecasts, which can then be refined according to specific competitive, regulatory and demand-related factors Continuous quality control ensures that our processes and profiles remain focused, accurate and up-to-date

India - OTC Pharmaceuticals Datamonitor (Published December 2007) Page 32

APPENDIX
11.2 Industry Associations
World Self-Medication Industry C.I.B - Immeuble A - "Keynes", 13, ch. du Levant, 01210 Ferney-Voltaire, France Tel: 33 450 28 47 28 Fax: 33 450 28 40 24 http://www.wsmi.org

11.3 Related Datamonitor Research

Datamonitor Industry Profiles Global OTC Pharmaceuticals OTC Pharmaceuticals in the United States OTC Pharmaceuticals in Australia OTC Pharmaceuticals in Belgium OTC Pharmaceuticals in Brazil OTC Pharmaceuticals in Canada OTC Pharmaceuticals in the Czech Republic OTC Pharmaceuticals in Denmark OTC Pharmaceuticals in Europe OTC Pharmaceuticals in France OTC Pharmaceuticals in Germany

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