Jan Aushadhi's Role in the Generic Medicine Revolution
The Indian pharmaceutical industry is the largest provider of generic medicines worldwide, along with being known for affordable vaccines and generic drugs. Currently valued at only Rs 10,000 crores, the generic medicine industry includes major players like Cipla and Alkem, alongside the government's ambitious initiative, the Jan Aushadhi Scheme.
This scheme aims to benefit the common man by providing generic medicines at least 50% cheaper, and in some cases up to 90% cheaper. But do lower prices equate to lower profits?
Let's delve into how the Jan Aushadhi Scheme is contributing to boosting revenue in the pharmaceutical industry.
What is the Jan Aushadhi Scheme?
Initiated by the Department of Pharmaceuticals in 2008, the Pradhan Mantri Bharatiya Janaushadhi Pariyojana (PMBJP) was launched to provide affordable, quality medicines to the general public across the country. According to an interview with Ravi Dadhich, CEO of the Pharmaceuticals and Medical Devices Bureau of India (PMBI), conducted by TV18, the government's target for the upcoming financial year is to open 20,000 new Jan Aushadhi pharmacies. This initiative aims to ensure that not only the poor but everyone has access to medicines at affordable prices.
Impact of the Scheme on Pharma Companies
In the last five years, the number of Jan Aushadhi stores has increased ninefold, with sales reaching up to Rs 850 crores by December 2022. The availability of medicines has also increased 3.6 times, reaching 1,759. These figures indicate the success of the Jan Aushadhi Scheme.
However, is this the whole story? HDFC Securities suggests that challenges such as medicine shortages and stock inadequacies still exist. Moreover, some people remain sceptical about the quality of cheaper medicines.
What Does It Mean for Investors?
The Jan Aushadhi Scheme presents a significant opportunity for the Indian pharmaceutical industry. It is expected to help expand the market for generic drugs, which could be an attractive area for investors. Leading companies like Cipla, Alkem, and Dr Reddy's Laboratories are playing a crucial role in the production of generic drugs. However, investors should be mindful that the scheme also poses some challenges, such as medicine shortages and quality control. Therefore, it is essential to assess these challenges and companies before investing.
What’s Next?
It's a matter of pride that India is the world's largest supplier of generic drugs, along with being known for affordable vaccines and medicines. With a rapid growth rate of 9.43% over the past nine years, the Indian pharmaceutical industry now ranks third globally in terms of volume. According to the Invest India portal, the Indian pharmaceutical industry is estimated to reach up to $65 billion by 2024 and could surpass $130 billion by 2030, more than doubling the current figure.
Teji Mandi (TM Investment Technologies Pvt Ltd) is a SEBI registered Research Analyst (RA). Information in this article should not be construed as investment advice. Please visit www.tejimandi.com to know more.