Introduction:

• India is a critical player in the global pharmaceutical industry. It is the world’s largest supplier of generic medications, accounting for 20% of the worldwide supply by volume and supplying about 60% of the global vaccination demand. The Indian pharmaceutical sector is worth USD 42 billion and ranks 3rd in terms of volume and 13th in terms of value worldwide.
• Major segments of the Indian Pharmaceutical Industry include generic drugs, OTC medicines, bulk drugs, vaccines, contract research & manufacturing, biosimilars, and biologics. Hard capsule shells are largely used by pharmaceutical and food supplement companies as a container for administering medicines and food supplements.
• Indian pharmaceutical sector supplies over 50 of the global demand for various vaccines, 40 of the generic demand in the US, and 25 of all medicine in the UK The domestic pharmaceutical industry includes a network of 3 000 drug companies and 10 500 manufacturing units.
• The growth of the industry is dependent on the growth in the manufacturing of pharmaceuticals and food supplement companies domestically and globally. Capsules are solid pharmaceutical dosage form that contains medicinal agent within hard or soft soluble container or shell which is formulated to increase the bioavailability of poorly soluble drugs.
• Manufacturing of empty capsules uses two basic ingredients, gelatin - which is extracted from porcine bovine species, and HPMC (hydroxypropyl methylcellulose) globally known as “Hypromellose”, which is derived from natural plant-sourced cellulose. Hard gelatin capsules held 59% of the overall global empty capsules market in FY21.
• Although the cost of manufacturing HPMC capsules is very high, due to the shift toward vegetarian products in the vitamins and supplement industry, the pharmaceutical market is moving toward vegetarian capsules. This is also due to the challenge of raw materials as there has been an escalation in gelatin prices by 20% post-lockdown.
• India imports gelatin from 31 countries. In FY21 gelatin imports stood at USD 39 billion compared to USD 42 billion in FY20, which represents a decrease of 7.7%. In FY21 53% of gelatin was imported from China. 

Market Overview:

• The global pharmaceuticals market is expected to grow from USD 1,454.7 billion in FY21 to USD 1,587.1 billion in FY22 at a CAGR of 9.1%.  The market is expected to reach USD 2,135.2 billion in 2026 at a CAGR of 7.7%. Indian pharmaceutical market was valued at USD 42 billion in FY21 and is likely to reach USD 65 billion by FY24 and further expand to reach USD 130 billion by FY30 expanding a CAGR of 12% from FY21-FY30.
• The Global Empty Capsules Market size was estimated at USD 2,089.2 million in FY21, USD 2,252.4 million in FY22, and is projected to grow at a CAGR of 7.9% to reach USD 3,312.9 million by FY27.
  
• Indian pharmaceutical exports stood at USD 24.4 billion in FY21 and USD 22.2 billion until February FY22. India is the 12th largest exporter of medical goods globally, and its pharmaceutical sector contributes 6.6% to the total merchandise exports.
  
• Till the end of September 2021, total pharma export has been USD 11.8 billion (₹ 87,864 crores) as against total import of USD 4.6 billion (₹ 33,636 crores), thereby generating a trade surplus of USD 7.2 billion (₹ 54,228 crores).
• The Indian pharma industry employs over 2.7 million people either directly or indirectly and ranks 14th in terms of value globally.
• India has the highest number of United States Food and Drug Administration (USFDA) compliant Pharma plants outside of the USA. There are 500 API manufacturers contributing about 8% of the global API Industry.
• India is the largest supplier of generic medicines with a 20% share in the global supply by manufacturing 60000 different generic brands across 60 therapeutic categories.

Key Drivers:

• The encapsulation of nutraceutical products has been moving away from gelatin capsules towards HPMC capsules due to gelatin shortage. Many health-conscious consumers (the primary market for the vitamin and supplement industry) prefer vegetarian products, which has given an additional advantage to vegetarian capsules over gelatin capsules. Apart from nutraceuticals, the branching out of the pharmaceuticals industry into the cosmeceuticals sector also has significant potential for the empty capsules market. Indian Nutraceutical market to grow from the current $4 billion FY22 to $18 billion by FY25.
• India’s generic drugs account for 20% of global exports in terms of volume, making it the largest provider of generic medicines globally. The generic drug market accounts for around 70% of the Indian pharmaceutical industry. India supplies more than 40% of generics to the US market.
• Technology is increasingly becoming a part of healthcare. Apps that help users take their health into their own hands, so to speak, have flooded the market, as well as other digital innovations in health, that are increasing consumer awareness and growing the pharmaceutical market. There are close to 50 e-Pharmacies in India and an estimated market size of USD 0.5 billion as in FY19 which is approximately 2-3% of the total Indian pharmacy sales. The market is expected to grow at a compounded rate of 44 % to reach USD 4.5 billion by FY25.
• Medical Infrastructure - India’s generic drugs account for 20% of global exports in terms of volume, making it the largest provider of generic medicines globally. The generic drug market accounts for around 70% of the Indian pharmaceutical industry. India supplies more than 40% of generics to the US market. Hospitals’ market size is expected to increase by USD 200 billion by FY24. India’s medical devices market stood at USD 10.3 billion in FY20. The market is expected to increase at a CAGR of 37% from FY20 to FY25 to reach USD 50 billion. 
• Research and Development are vital to most industries but a priority for the pharmaceutical industry. It allows companies to make new medicines to address evolving complex and specialized disorders. Many new drugs are being introduced into the market. As a result, these drugs are highly purchased by the people, providing further growth to the industry. 
• India’s OTC drugs market stood at USD 7.6 billion in FY21 and is estimated to grow at a CAGR of 19.4% to reach USD 18.5 billion in FY26, driven by a shift in consumer attitudes towards self-medication, product advancements, and pharmaceutical preferences for OTC drugs over prescription drugs.
  

Key Trends:

• Small Molecules are a key driver for biopharmaceutical sales and account for approximately 60% of global market revenue. Demand is driven by improved global access to medicine, demographic trends, public health initiatives, pricing reviews, and new drug launches.
• Due to the increase in non-communicable diseases like cancer, diabetes, lung disorders, etc., there is a high demand for alternate therapeutical segments like nutraceuticals, homeopathy, ayurveda, etc. as a supplement. As most of these formulations being powder based, capsules are the preferred dosage form as it is easy to fill and masks the taste.
• The global Nutraceuticals market witnessed consistent growth post the pandemic. It includes food ingredients that provide medical or health benefits to prevent diseases while boosting the overall immune system. The global nutraceutical market is projected to grow at a CAGR of 7.5% during the period FY22-FY27. 
• The Indian nutraceuticals market is expected to grow from an estimated USD 4 billion to USD 18 billion by the end of FY25. The dietary supplements segment constitutes over 65 % of the nutraceutical market, and it is growing at a rate of 17 % each year.
• Indian pharmaceutical companies are entering into Active Pharmaceutical Ingredient (API) manufacturing because the commercialization of this segment will allow companies to enter into the production of bulk drugs. There are 500 API manufacturers contributing about 8% of the global API Industry. The Indian API industry is valued at ₹798 billion in FY20 and is projected to reach ₹1,307 billion by FY26, at a CAGR of 8.5% between FY20-FY26.

Competitive Landscape:

• ACG Worldwide an Indian pharmaceutical company is among the world leaders in capsule manufacturing with a presence in 138 countries across 6 continents. ACG is the world's largest integrated supplier of solid dosage products and services with a manufacturing capacity of 120 billion capsules per annum.
• The installed capacity of Empty Hard Gelatin Capsule in India is 100 billion capsules per annum. Healthcaps India leads the market with an installed capacity of 19 billion capsules per annum. Natural Capsules is equipped with a manufacturing capacity of 16 billion per annum taking the position of the second-largest manufacturer of capsules in India. Sunil Healthcare has an installed capacity of 13.8 billion capsules per annum. Followed by Medi Caps which has the capability of producing 7.5 billion empty capsules per annum in FY22.