Professional Documents
Culture Documents
CONTENTS
3. Nicholas Piramal 41
4. Cipla 41
5. Biocon 42
6. Serum Institute of India 42
7. Strides Arcolab 43
7. India vs. China in pharmaceuticals 44-47
1. The Chinese edge 45
2. Where India scores 46
3. The equation: Present and future 47
8. Some important articles 48-55
1. Tweaking drugs won't help cos skip price control 49
2. Cracking Japan's generics market code 50
3. India as offshore pharma destination 51
4. Dr. Reddy's net profit triples 53
9. Conclusion 56
10. Recommendations 58
11. Bibliography 60
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Growth of Indian pharmaceuticals in the world market
Introduction
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Growth of Indian pharmaceuticals in the world market
The Indian pharmaceutical sector has come a long way, being almost non-
existent before 1970 to a prominent provider of healthcare products, meeting almost
95% of the country's pharmaceuticals needs. The domestic pharmaceutical sales have
increased from Rs4bn in 1970-71 to Rs214bn in 2002, at a CAGR of 13.7% per
annum. The total Indian production constitutes about 1.3% of the world market in
value terms and, 8% in volume terms. The per capita consumption of drugs in India,
stands at US$3, is amongst the lowest in the world, as compared to Japan- US$412,
Germany- US$222 and USA- US$191.
Indian companies are putting their act together to tap the generic drugs
markets in the regulated high margin markets of the developed countries. The US
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Growth of Indian pharmaceuticals in the world market
market will remain the most lucrative market for the Indian companies led by its
market size and the intensity of blockbuster drugs going off patent. An estimated
US$45bn of drugs expected to go off patent by 2007 in US alone.
Outsourcing in the fields of R&D and manufacturing is the next best event in
the pharmaceutical industry. Spiraling cost, expiring patents, low R&D cost and
market dynamics are driving the MNCs to outsource both manufacturing and research
activities. India with its apt chemistry skills and low cost advantages, both in research
and manufacturing coupled with skilled manpower will attract a lot of business in the
days to come.
Playing a key role in promoting and sustaining development in the vital field
of medicines, Indian Pharmaceutical Industry boasts of quality producers and many
units approved by regulatory authorities in USA and UK. International companies
associated with this sector have stimulated, assisted and spearheaded this dynamic
development in the past 53 years and helped to put India on the pharmaceutical map
of the world
The Indian Pharmaceutical sector is highly fragmented with more than 20,000
registered units. It has expanded drastically in the last two decades. The leading 250
pharmaceutical companies control 70% of the market with market leader holding
nearly 7% of the market share. It is an extremely fragmented market with severe price
competition and government price control.
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Growth of Indian pharmaceuticals in the world market
The Indian patent act of 1970 amended on March 22, 2005 marks the end of a
protected era and signals a new phase in the integration of India into the global
pharmaceutical market. The new amendment seeks to make copying of post-1995
patented drugs illegal. As India enters product patent regime how will it affect the
Indian pharmaceutical industry (IPI), health care industry, legal machinery enforcing
the regulations and most importantly patients in India and the developing world given
the fact Indian drugs are exported to more than 65 countries?
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Growth of Indian pharmaceuticals in the world market
significant changes and divide within the industry. A look into organization of
pharmaceutical producers of India (OPPI) directory shows only 300 units out of
10,000 registered companies are in the organized sector. While process patent helped
to flourish IPI into a world-class generics industry, product patent regime will filter
the best from the pack and would be favorable to players with built-in scientific and
technical resources. The impact of the new regulations will not deter the Indian
pharmaceutical majors as they are already doing roaring business in the very countries
where these patent laws are strictly in force.
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Growth of Indian pharmaceuticals in the world market
It is also recognized that the cost of drugs produced in India is amongst the
lowest in the world. It is estimated that by the year 2010 industry has the potential to
achieve Rs 1, 00,000 crores in formulations with bulk drug production going up from
Rs 8000 crores to Rs 25,000 crores. Indias rich human capital is believed to be the
strongest asset for this knowledge-led industry. Various studies show that the
scientific talent pool of 4 million Indians is the second largest English speaking group
worldwide, after the US.
India today has the largest number of US Food & Drug Administration (FDA)
approved drug manufacturing facilities outside the US. In addition, Drug Master Files
(DMFs) filed by Indian companies with the FDA is 126 higher than Spain, Italy,
China and Israel put together. DMF has to be approved by FDA for a drug to enter the
US market.
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Growth of Indian pharmaceuticals in the world market
to this sector. Besides, planning commission has earmarked $34 million towards drug
industry R&D promotion fund for the tenth plan.
In the domestic market, the share of Indian companies has steadily increased
from around 20 per cent in 1970 to 70 percent now. Ranbaxy Laboratories is the
market leader in terms of revenues followed by Cipla and Dr Reddys Laboratories.
Glaxo is the only multinational to figure among the top ten pharma companies in
India.
In India, 97 per cent of drugs are off patent and are manufactured by a vast
number of companies. The key therapeutic segments include anti-infectives, cardio
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Growth of Indian pharmaceuticals in the world market
vascular and central nervous system drugs. Anti-infectives comprise the largest
therapeutic segment in India, accounting for about 26 per cent of the market.
Lets take a look at how and whom does the new rule affect with a few specific
case. A symptom of the new regulation is a dispute about the anti-blood cancer drug,
Gleevac, sold by Novartis for $2750 per month when the prohibited generics used to
cost less than one-tenth of the price. In India 24,000 new cases of this disease are
reported each year with about 18,000 patients succumbing to it. The country does not
have a strong health insurance sector as in the US to cushion the rising healthcare
cost. In addition most patients pay for medicines through their own funding and is not
backed by medical insurance schemes. Private sector provides 80% of the countrys
health care and the government role is limited with a budget of only $215 million as
per the 2005-06 budget estimates.
Since 1986 when the first case of AIDS was reported in India the affected
population has grown to 4.5 million in the late 2002. The impact of the recent
amendments will be felt in developing world as well as half the AIDS patients in the
third world rely on India's generic drug industry. Cipla, Ranbaxy Laboratories, Matrix
Laboratories, and Hetero Drugs recently announced an agreement with the Clinton
foundation to provide drugs to four African and nine Caribbean countries at a per
capita cost of about $0.37 per day. India's ministry of health is negotiating a final
price with the generic drug manufacturers in an effort to obtain drugs for India at a
price even lower than that. The 12 ARVs (anti retro-viral drugs) used for AIDS and
manufactured in India are pre-1995 period inventions. As AIDS patients develop
resistance to old drugs, new treatments will become less affordable.
If a drug is desperately needed, the new law allows the government, like the
rest of the world, to declare an emergency and cancel its patent. India had never
declared such an emergency, and for years resisted admitting that it had an AIDS
problem.
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Growth of Indian pharmaceuticals in the world market
The government-run patent office will come under pressure for the first time
in several years to streamline the entire process. As with any new administrative or
legal system, transition to a new regime will not be smooth. Can the enormously
strained Indian legal system bear the additional pressures as we enter the product
patent world?
The Indian pharmaceutical industry is fast on its road to healthy growth. The
Indian pharmaceutical sector was largely positioned as a generics market. But now it
is transforming to emerge as major contributor in the global perspective.
The drive of the Indian pharmaceutical sector towards its greater share in the
global industry is from its introduction of product patents in 2005. In the last twenty
years, patents were only granted on processes decision. This being to the
disadvantages of many multi-national companies, they exited from the country.
However, it turned advantageous to India, which enabled it to become a leading
producer of generic medicines.
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Growth of Indian pharmaceuticals in the world market
Cost advantage
Contract Manufacturing
Research and Development
Mergers and Acquisitions
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Growth of Indian pharmaceuticals in the world market
The most critical challenge facing the global pharmaceutical industry today is the
increasing cost of drug discovery and development and the increasing time to market.
This is further compounded by:
pricing pressures
re-importation pressures
Medicare/Medicaid reform
The growth of Indian pharma industry is also driven by the low drug
production costs, which are 55 percent lower than in the western countries. Another
reason of high growth rates is the system of contract manufacturing.
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Growth of Indian pharmaceuticals in the world market
Some of the companies like Dishman Pharma, Divis Labs and Matrix Labs
have been undertaking contract jobs for MNCs in the US and Europe. Even Shasun
Chemicals, Strides Arcolabs, Jubilant Organosys, Orchid Pharmaceuticals and many
other large Indian companies started undertaking contract manufacturing of APIs as
part of their additional revenue stream. Top MNCs like Pfizer, Merck, GSK, Sanofi
Aventis, Novartis, Teva etc. are largely depending on Indian companies for many of
their APIs and intermediates. The Boston Consulting Group estimated that the
contract manufacturing market for global companies in India would touch $900
million by 2010. Industry estimates suggest that the Indian companies bagged
manufacturing contracts worth $75 million in 2004.
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Growth of Indian pharmaceuticals in the world market
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Growth of Indian pharmaceuticals in the world market
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Growth of Indian pharmaceuticals in the world market
The pharmaceutical sector leads the M&As wave after information technology.
This trend is fuelled by the need to explore newer markets and products for future growth
in this industry. Further, acquisitions also act as mechanisms to alleviate regulatory
constraints in penetrating overseas markets. Hence, Indian pharmaceutical companies are
increasingly focusing on global acquisitions and are adopting the strategy of acquiring
existing generic drug marketing companies that hold valid drug licenses. The
pharmaceutical companies have been aggressively making acquisitions overseas,
especially in the US and Europe, in the past two to three years. Most of the acquisitions
have been in the generics space and have resulted in Indian firms gaining access to
manufacturing facilities in potential areas like the European Union. Industry
consolidation is considered to be a better option for inducing growth. Many organised
companies like Ranbaxy, Sun Pharma, Wockhardt, DRL and Cipla, have already adopted
the consolidation strategy in an attempt to strengthen their base in the regulated markets
by acquiring small companies in Europe and the US.
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Growth of Indian pharmaceuticals in the world market
SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats
Trends and Strategies
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Growth of Indian pharmaceuticals in the world market
SWOT Analysis
Strengths
Low cost - Indian manufacturers are one of the lowest cost producers of drugs in the
world. With a scalable labor force, Indian manufactures can produce drugs at 40%to
50% of the cost to the rest of the world. In some cases, this cost is as low as 90%.
Fluency in English speaking - Most people in India, especially those who are
educated and have advanced degrees, are fluent in English. This aptitude allows them
to communicate with most of the outside world, which is an important asset to the IPI.
The health statistics of India make it clear that India produces a sufficient number of
medical and pharmacy graduates, which contributes to the strengthening of the IPI.
Patent The Patent Act and Drug Price Control Order of the 1970s forced MNCs to
shrink their operations in India, thus providing space for indigenous pharmaceutical
companies to expand in the local market. As a result, in the past two to three decades
domestic pharmaceutical companies have established operations and are self sufficient
in all aspects. For example, Cipla Limited could provide the generic version of the
AIDS triple cocktail to impoverished South African people at $350/patient/year or at a
price that is one-thirtieth its cost in the United States. Indian patent laws allowed local
companies to set up operations to produce bulk drugs that are still under patent, by
various synthetic routes. The prevalence of this reverse engineering is controversial,
but it suggests that the IPIs chemists have a strong showing in organic/ medicinal
chemistry. The IPIs tremendous potential to produce bulk drugs will be a major asset
in future drug discovery programs.
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Growth of Indian pharmaceuticals in the world market
Weaknesses
Tag of being Copy Cats Majority of the Indian companies are dependent on
replicating drugs developed by MNCs, hence Indian companies are viewed in not so
good light.
Price Regulation - The Indian pharma companies are marred by the price
regulation. Over a period of time, this regulation has reduced the pricing ability of
companies. The NPPA (National Pharma Pricing Authority), which is the authority to
decide the various pricing parameters, sets prices of different drugs, which leads to
lower profitability for the companies. The companies, which are lowest cost
producers, are at advantage while those who cannot produce have either to stop
production or bear losses.
Slow growth - Indian pharma market is one of the least penetrated in the world.
However, growth has been slow to come by. As a result, Indian majors are relying on
exports for growth. To put things in to perspective, India accounts for almost 16% of
the world population while the total size of industry is just 1% of the global pharma
industry.
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Growth of Indian pharmaceuticals in the world market
Low entry barriers - Due to very low barriers to entry, Indian pharma industry is
highly fragmented. This makes Indian pharma market increasingly competitive.
The industry witnesses price competition, which reduces the growth of the industry in
value term. To put things in perspective, in the year 2003, the industry actually grew
by 10.4% but due to price competition, the growth in value terms was 8.2% (prices
actually declined by 2.2%)
Labour laws - Outdated and restrictive labour laws are hampering all the industries
in India and making it unviable for the MNCs to set up production base in
India.
Animal rights - Animal experiments are an essential part of pharmaceutical R&D.
Every drug molecule must be screened using animals first to determine its efficacy
and side or toxic effects. If Indian animal rights activists block the use of animals in
R&D experimentation, the IPI will be forced to turn to other countries for animal
studies. A great need exists to provide appropriate information to animal activists in
India so a balance can be struck between animal rights and human rights.
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Growth of Indian pharmaceuticals in the world market
Opportunities
Off patent drugs - Large number of drugs going off-patent in Europe and in the US
between 2005 to 2009 (approx. $80 billion) offers a big opportunity for the Indian
companies to capture this market. Since generic drugs are commodities by nature,
Indian producers have the competitive advantage, as they are the lowest cost
producers of drugs in the world.
Expansion - Opening up of health insurance sector and the expected growth in per
capita income are key growth drivers from a long-term perspective. This leads to the
expansion of healthcare industry of which pharma industry is an integral part.
Outsourcing - Being the lowest cost producer combined with FDA approved plants;
Indian companies can become a global outsourcing hub for pharmaceutical products.
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Growth of Indian pharmaceuticals in the world market
Threats
Transition from Process patent to Product patent This is the major threat
Indian pharmaceutical industry is facing. Indian companies especially medium and
small sized do not have capabilities to develop new molecules, and they may succumb
to the giants.
Other low cost countries - Threats from other low cost countries like China and
Israel exist. However, on the quality front, India is better placed relative to China. So,
differentiation in the contract manufacturing side may wane.
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Growth of Indian pharmaceuticals in the world market
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Growth of Indian pharmaceuticals in the world market
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Growth of Indian pharmaceuticals in the world market
In the year 2002 Government had formulated a new Drug Policy but the same
could not be implemented due to litigation involving it, hence the policy of 1994 still
continues to be in force. The present Policy known as the National Pharmaceuticals
Policy, 2005 has been necessitated due to several developments that have taken place
during the course of last few years as well as to address some of the major concerns as
highlighted above. Price regulation of the essential medicines is an important
component of this policy. However several other matters having a close bearing on the
pharmaceuticals sector have also been included in the policy.
The first comprehensive Drug Policy of 1978 and thereafter the Drug Policy of
1986 together with the application of process patent under the Patent Act of 1970
successfully paved the way for development of indigenous pharmaceutical industry
which went into the production of generic drugs in a big way . A conducive
environment for success was provided by the then prevailing trade and economic
policies. During the period from 1978 to 1990 indigenous industry acquired a
respectable status in terms of product range and market share. R&D was confined to
process development/innovation of existing molecules. As regards pricing, the span of
control, inclusion/exclusion of drugs under price control, methodologies adopted etc.
continued to be debated. The Government developed principles of selectivity, from
time to time, to keep the price control manageable and focused, as would be observed
from declining trend in number of drugs under price control. In 1970, almost all bulk
drugs and their formulations were under price control. In keeping with the economic
policies of the country the number got reduced to 347 bulk drugs in 1979, 142 in 1987
and finally to 74 in 1995. It would have got reduced further under the criteria adopted
in the Pharmaceutical Policy 2002; however, the same could not be implemented due
to litigation involving it.
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Growth of Indian pharmaceuticals in the world market
Following are some of the important developments that have taken place in
pharmaceutical sector after the process of liberalization of the Indian economy was
initiated by the Government in the year 1991
1) Industrial Licensing
Industrial licensing for all kinds of drugs has been abolished (it has recently been
done for the last remaining bulk drugs produced by the use of recombinant DNA
technology, bulk drugs requiring in-vivo use of nucleic acids and specific cell-tissue
targeted formulations).
However the need for obtaining manufacturing license under Drugs and Cosmetics
Act, 1940 continues for all units whether organized or small scale. The State Drug
Controllers are authorized to issue such licenses in most cases.
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Growth of Indian pharmaceuticals in the world market
4. Imports
Imports of drugs and pharmaceuticals are regulated through EXIM Policy in force and
presently all items except those requiring clearance under The Narcotics and
Psychotropic Substances Act , 1985 are allowed under OGL. Further, a centralized
system of registration has been introduced under the Drugs & Cosmetics Act and
Rules made there under, administered by Ministry of Health and Family Welfare.
These arrangements may continue to regulate imports of Drugs and Pharmaceuticals.
5. Exports
Exports are permitted in accordance with the EXIM Policy and relevant
procedures/rules formulated for the purpose by the Directorate General of Foreign
Trade. Exports are also subject to laws prevalent in importing countries. Also, the
exporters are allowed imports of inputs on duty-free basis for export production. The
industry has shown commendable export performance, the trade balance being
positive. Over the last few years the compounded annual growth rate in exports has
been 22.7 percent.
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Growth of Indian pharmaceuticals in the world market
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Growth of Indian pharmaceuticals in the world market
A. Fiscal Incentives
India is emerging as the most favored destinations for collaborative R&D
bioinformatics, contract research and manufacturing and clinical research as a result
of growing compliance with internationally harmonized standards such as Good
Laboratory Practices (GLP), current Good Manufacturing Practices (cGMP ) and
Good Clinical Practices (GCP) With the application of product patent in the case of
pharmaceuticals it is imperative for the Indian industry to accelerate its efforts in
R&D in this sector. The present level of spend on R&D (about 5% of turnover) is
much lower as compared to most of the developed countries (15 to 20%) With a view
to encourage R&D in this sector it is essential to provide suitable incentives to
industry. At the same time it is also necessary that the incentives are made use of by
those units which are genuinely engaged in R&D. As such the required incentives
would be made available with some safeguards to ensure that these are available to
the deserving cases only. The incentives available would be as under
a) The benefit of 150% weighted exemption under section 35(2AB) to be continued
till 31st March, 2015
b) Section 35(2AB) to be extended to depreciation on investment made in land and
building for dedicated research facilities, expenditure incurred for obtaining
regulatory approvals and filling of patents abroad and expenditure incurred on clinical
trials in India .
c) Reference Standard (sample under test) would be exempted from import duty
d) Reference books to be imported for R&D would be exempted from import duty.
e) Presently there are 101 specified instruments (list 28) required for R&D purposes
which are exempt from import duty. With the ever changing requirements new
instruments are required to be imported .These instruments based on the certification
of DSIR would also be exempt from import duty. The fiscal incentives are at present
only available up to 31st March, 2007. Since R&D activity has to be carried over long
periods of time, fiscal incentives would be granted over a longer period of time
extending upto 10 years i.e. upto 31st March, 2015. The above incentives would be
available to such units which fulfill the following conditions
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Growth of Indian pharmaceuticals in the world market
a) The unit should be prequalified and registered with Department & Scientific and
Industrial Research (DSIR) as R&D centre.
b) The unit should submit a statement certified by the Auditors showing the total
expenses incurred on R&D.
c) In case of claims for clinical trials, the unit should submit approval obtained from
the Drug Regulatory Authority for carrying out the trials and certificate by the CEO or
the Auditor for completion of trials.
d) In case of claims for patent filing abroad, the unit should submit relevant document
(official receipt, etc) showing the filing expenses duly certified by the CEO or the
Auditor.
e) In case of claims related to land and buildings, the unit should submit a letter
signed by the CEO confirming that the claims pertain to facilities used exclusively for
R & D.
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Growth of Indian pharmaceuticals in the world market
d) Have filed at least 10 patent applications in India based on research done in India
Companies fulfilling the above norms would be eligible for the benefit of
200% weighted deduction under 35(2AB) till 31st March, 2015 Additional incentives
under price control measures may also be considered to such companies by
Department of Chemicals and Petrochemicals. However in order to be eligible for any
of the additional incentives such companies would be expected to fulfill the following
norms
a. The unit should submit a statement signed by HRD/R&D chief or CEO certifying
the number of scientists employed through the year.
b. The unit should submit a statement certified by the CEO and the Auditor that it has
invested at least 3 per cent of the annual sales turnover or Rs 50 cr (average of the last
three years) whichever is higher, on R & D.
c. The unit should submit certified true copy of the approval granted by the Drug
Regulatory Authority of the specified countries approving the manufacturing facility
for export to their country.
d. The unit should submit particulars/documents evidencing patents filed in India
The inter-departmental Screening Committee constituted by DSIR may further
recommend additional safeguards to be taken for making available fiscal incentives to
various companies. (Comments by DST/ CSIR/DBT/DSIR)
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Growth of Indian pharmaceuticals in the world market
In order to enable India to achieve a leading position as the Drug Maker of the
World it is essential that a World class infrastructure is provided for the accelerated
growth of the industry. Added to this are the environmental concerns due to
difficulties in hazardous waste disposal by some of the bulk drug units. In order to
provide the required infrastructure it is essential to have a scheme where Central
Government, State Governments and industry are participants. A special scheme for
setting up 29 pharmaceutical parks in the country (separate for bulk and for
formulations) in the next 5 years is proposed. This would be broadly on the lines of
Scheme for Integrated Textile Parks.
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Growth of Indian pharmaceuticals in the world market
and would be able to generate exports worth Rs 2000 crores and employment of
about 6000 people .Looking to the attractive tax concessions and good infrastructure
available in these parks these are becoming popular with the industry)
.
4.5 Greater Thrust on Pharma Exports
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Growth of Indian pharmaceuticals in the world market
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Growth of Indian pharmaceuticals in the world market
The IPI, seeking to take full advantage of benefits offered by the government, has
been allocating money to R&D. Its focal points are drug discovery, development of
drug delivery systems, biotechnology, and bioinformatics. Companies are
reevaluating their strengths and emphasizing product segments that are profitable to
the company. Many companies are trimming their portfolios to focus on particular
therapeutic segments. Pharmaceutical marketing is also changing rapidly, and
pharmaceutical companies are making elaborate marketing efforts. Companies such as
Sun Pharma, Nicholas Piramal, and Dr. Reddys Laboratories have opted for
brand/company acquisition to increase therapeutic reach and market penetration. Such
specialization would make the entry of MNCs difficult. Some theorize that companies
with a strong marketing force would be attractive for possible take-over.Many
pharmaceutical companies are entering into marketing arrangements such as Hoechst
Marions agreement with Nicholas Piramal and Ranbaxys pact with Cipla, Glaxo,
and Hoechst Marion. Recent mergers and acquisitions include Nicholas Piramals
acquisition of Roche Products, a company mainly involved in diagnostic products and
Zydus Cadilas acquisition of German Remedies in India. Sanofi Synthelabo, the
second largest pharmaceutical company in France, will buy out Ahmedabad-based
Torrent Pharmaceuticals.Very recently, Dr. Reddys Laboratories signed a definitive
agreement to acquire 100% of Meridian Healthcare and BMS Laboratories, whose
primary business is manufacturing and marketing generic pharmaceuticals in the
United Kingdom
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Growth of Indian pharmaceuticals in the world market
Major Players
Ranbaxy Laboratories
Dr. Reddy's Laboratories
Nicholas Piramal
Cipla
Biocon
Serum Institute of India
Strides Arcolab
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Growth of Indian pharmaceuticals in the world market
Major players
In 1998, Ranbaxy entered the USA, the world's largest pharmaceuticals market
and now the biggest market for Ranbaxy, accounting for 28% of Ranbaxy's sales in
2005.
For the twelve months ending on December 31, 2005, the Company's Global
Sales were at US $1.178 billion with overseas markets accounting for 75% of global
sales(USA: 28%, Europe: 17%, Brazil, Russia, India and China: 29%).
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Growth of Indian pharmaceuticals in the world market
IMS Health estimated that Ranbaxy is among the top 100 pharmaceuticals in
the world and that it is the 15th fastest growing company. By 2012, Ranbaxy hopes to
be one of the top 5 generics producers in the world, and it consolidated its position
with the purchase of French firm RGP Aventis in 2003. Ranbaxy also has higher
aspirations, however, to build a proprietary prescription business in the advanced
markets. To this end, it keeps a dedicated research facility in Gurgaon staffed with
over 1100 scientists. They currently have two molecules in Phase II trials and 3-5 in
pre-clinical testing. It spent $75 million in R&D in 2004, a 43% increase over its 2003
expenditure.
Founded in 1984 with $160,000, Dr. Reddys was the first Asia-Pacific
pharmaceutical outside of Japan and the sixth Indian company to be listed on the New
York Stock Exchange. It earned $446 million in fiscal year 2005, deriving 66% of this
income from the foreign market. In order to strengthen its global position, Dr. Reddy
acquired UK-based BMS Laboratories and subsidiary Meridian Healthcare.
Although 58% of Dr. Reddys revenues come from generic drugs, the
company was committed to WTO-compliance long before the 2005 bill took effect,
and most of these products were already off patent. Dr. Reddy has long been a
research-oriented firm, preceding many of its peers in setting up a New Drug
Development Research (NDDR) in 1993 and out-licensing its first compound just
four years later. Dr. Reddys has since outlicensed two more molecules and currently
has three others in clinical trials.
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Growth of Indian pharmaceuticals in the world market
Now a company grossing $350 million per year, Nicholas Piramal started its
existence with the 1988 acquisition of Nicholas Laboratories and grew through a
series of mergers, acquisitions and alliances. The company has formed a name for
itself in the field of custom manufacturing. It cites its 1700-person global sales force
as another core strength; with its acquisition of Rhodias inhalation anaesthetics
business, Nicholas Piramal gained a sales and marketing network spanning 90
countries.
6.4 Cipla
Dr. Yusuf K. Hamied, Chairman and Managing Director
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Growth of Indian pharmaceuticals in the world market
6.5 Biocon
Dr. Kiran Mazumdar-Shaw, Chairman and Managing Director
Biocon is probably best known for its founder, Kiran Mazumdar-Shaw, who
overcame incredible gender-based discrimination to become the richest woman in
India. Originally an extension to an Irish chemicals company seeking to break into the
Indian market, Biocon is now the leading biotech in India, bringing in Rs 646.36 crore
(almost $150 million) in revenue for fiscal year 2004. It initially made its money by
producing enzymes, but Biocon recently decided to become a research-oriented
company with the goal of bringing a proprietary new drug to market.
The company went public in March 2004, and its shares were oversubscribed
by 33 times on opening day. Eight months later it launched Insugen, a bio-insulin
that is its first branded product. Biocon also has two wholly-owned subsidiaries,
Syngene and Clinigene, that perform custom research and clinical trials.
The Serum Institute of India can make the enviable claim that 1 out of every 2
children in the world is immunized with one of their vaccines. It is the worlds largest
producer of measles and DTP vaccines, and its portfolio includes other vaccines,
antisera, plasma products and anticancer compounds. The Serum Institute earned Rs
565 crore ($130 million) in revenue in fiscal year 2005, selling mainly to UN agencies
and to the Indian government. The Serum Institute is part of the Poonawalla Group,
whose holdings include a horse stud farm and manufacturers of industrial equipment
and components.
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Growth of Indian pharmaceuticals in the world market
The company has 13 manufacturing plants spread across the US, Brazil, Mexico,
Italy, Poland, Singapore and India. Strides is the first one to enter the Latin American
market. The Latin American (Latam) pharmaceutical market is a semi-regulated
market but the regulatory framework is similar to advanced pharmaceutical markets.
Their Latin operations have grown rapidly and we have become the largest Indian
pharmaceutical company in that region.
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Growth of Indian pharmaceuticals in the world market
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Growth of Indian pharmaceuticals in the world market
In the global economy, both India and China have staked claims as nations to
watch out for in the future. Both these countries along with their counterparts Russia
and Brazil (labeled as the BRIC nations) have been touted to emerge as the fastest
growing economies by 2050. While much has been said about the impact of India and
China on the dynamics of the global economy, here, we shall attempt to find out as to
which country has the edge in the global pharmaceutical space.
China has proven its capabilities in the manufacturing space and the same
advantage extends to the pharmaceutical segment as well. Being a cost-efficient
country, it has emerged as the preferred destination for outsourcing intermediates
(used in the manufacture of APIs) and Active Pharmaceutical Ingredients. Chinese
companies have forged growing relationships with top global pharma companies
(referred to as Big Pharma) in custom manufacturing and also for outsourcing older
APIs. Besides this, China also has the edge over India in the biotech field due to the
presence of high quality research institutions and the Chinese government's
commitment.
The number of DMF (Drug Master File) filings made by Chinese companies
have also been witnessing a rise in recent times, highlighting the growing interest of
multinationals in the country. In fact, India too, has been sourcing intermediated from
China for the purpose of manufacturing low cost APIs.
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Growth of Indian pharmaceuticals in the world market
That said, while China is set to provide stiff competition to India in the API
space, it still lags behind in the formulations segment. This can be gauged by the fact
that in the global generics market, while India accounts for 25% of the Abbreviated
New Drug Applications (ANDA) filed in the US market, China has yet to file a single
ANDA. India's advantage vis--vis China lies in R&D, availability of scientific
manpower, laws that have begun to recognize intellectual property and Indian
companies having alliances with global pharma companies in research, generics and
manufacturing. Even in the API space, while China has been growing at a fast pace, it
still falls behind India in terms of overall filings made until now.
Ranbaxy Hisun
Formulations presence in US Yes No
Formulations presence in EU Yes No
API presence in the US Yes Yes
API presence in the EU Yes Yes
Local formulations presence Yes Yes
Drug discovery research Yes No
DMF filings Yes Yes
ANDA filings including Para IV Yes No
Source: Newport Strategies
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Growth of Indian pharmaceuticals in the world market
Given the fact that the 'low cost distinction' is no longer a trait unique to the Indian
pharmaceutical sector with the resurgence of Chinese companies in this area, Indian
companies will have to focus more than ever on moving up the value chain. This has
to be by capitalizing on the generics opportunity (in both plain vanilla and value
added products), strengthening efforts on the NDDS and NCE research front and
continuing relationships with global pharma in research and manufacturing. At
present, on an overall basis, India does have the edge over China in terms of relevance
to the global pharmaceutical industry. That said, Indian companies need to capitalize
on the window of opportunity currently available before the competition from China
begins to pose a significant threat.
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Growth of Indian pharmaceuticals in the world market
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Growth of Indian pharmaceuticals in the world market
8.1 Tweaking drugs won't help cos skip price control OCTOBER 25, 2006
The game may soon be up for drug-makers who dodge price control by
effecting minor changes in the composition of a drug or by changing its brand name
or strength.
The proposed Drugs (Price Regulation and Control) Bill of 06 will arm the
government or a designated authority the power to forestall such changes in a drug
sold under an approved brand name, without a therapeutic justification.
Some companies have in the past got the composition of drugs altered without
any significant therapeutic value addition after National Pharmaceutical Pricing
Authority (NPPA) fixed the prices. Doxycycline, a broad-spectrum antibiotic, which
is under price control, is a classic case, which now comes in combination with lactic
acid bacillus a source of bacteria that helps in digestion.
Although the drug is still under price control, companies make gains by selling
the product at their own price till NPPA intervenes again. After a recent ET report on
this practice, the investigating wing of the Monopolies and Restrictive Trade Practices
(MRTP) Commission had swung into action and ordered a probe into the matter.
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Growth of Indian pharmaceuticals in the world market
products composition and recent alterations in them to see if they escaped price
control by such means
8.2 Cracking Japan's generics market code FRIDAY, OCTOBER 27, 2006
Indian generic makers have traditionally looked west to the US and Europe
for new markets. But those markets are becoming less attractive: with generic
penetration already high, competition is intense.
And moves by retailers such as Wal-Mart to slash prices and profit margins on
generics in the US only add to the pressure. The next big opportunity lies to the east,
in Japan, where changes in drug regulations will create a large and potentially
lucrative market for generics in the next few years.
Like its US and European counterparts, Japan has struggled to bring rising
health-care costs under control. In 2004, cheaper generics made up just 17% of the
total volume of the Japanese drug market (and 5% of the value), dramatically lower
than other developed countries (53% and 46% of drug volume in the US and
Germany, respectively).
Japans fiscal situation and demographic profile also add urgency. Healthcare
spending has increased from 6% to 9% of Japanese GDP between 1990 and 2004. The
future healthcare burden will be exacerbated as the elderly population balloons and
has medical costs four times that of the non-elderly.
Not only will Japans share of people over 65 years be among the highest in
developed countries projected to be 30%, as against 19% for US and 26% for
Germany but the Japanese will also live longer. Japan has among the highest life
expectancy in the world, especially for women.
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Growth of Indian pharmaceuticals in the world market
Regulations passed recently aim to create the right incentives to stimulate both
supply of and demand for generics. To increase generic demand, patients will now
face lower direct costs for using generics due to lower prices and out-of pocket
spending compared with branded products.
Hospitals will also have an incentive to use cheaper generics, as they will
receive a single, lump sum payment that will cover all medical costs. And doctors and
pharmacists will receive a small cash incentive for prescribing and dispensing
generics.
The strategies to increase generic substitution should yield results over the
longer term as they embody the tried-and-tested approaches used by other developed
countries. Evidence from places like the UK and Germany, with comparable health
system and incentive programmes, suggest that a pro-generics approach can boost
demand significantly.
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Growth of Indian pharmaceuticals in the world market
The two main beneficiaries of this trend have been, unsurprisingly, India and
China. And equally unsurprisingly, they are in constant, though unpublicised,
competition to claim a still greater share of the bounty.
The two countries must have a great deal in common, from an MPCs
perspective. Both boast remarkable new technical capabilities, at least in some phases
of the R&D value chain.
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Growth of Indian pharmaceuticals in the world market
After all, the great competitor China is hardly sitting idle. MPCs are fast
establishing a captive base there. Recent case in point: AstraZenecas $100 million
investment in China. Its vendor base is increasing in number and advancing
remorselessly in capabilities.
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Growth of Indian pharmaceuticals in the world market
8.4 Dr. Reddy's net profit triples FRIDAY, OCTOBER 27, 2006
Dr. Reddy's Laboratories Ltd said on Friday quarterly net profit more than
tripled, beating forecasts, helped by strong growth in the key US market and gains
from drugs exclusivity.
But the company said it may not be possible to repeat the "exceptional"
performance in the October to December quarter and beyond as the exclusivity for
two generics -- prostate cancer treating Proscar and cholesterol drug Zocor -- end in
December.
"Authorised generics' 180-day period ends December. To that extent the
revenue will diminish very significantly, but the other aspects of our business will
continue to perform," G.V. Prasad, Dr. Reddy's chief executive, told Reuters in an
interview.
Analysts said it would gain from other authorised generics.
"Although pricing pressures are existing, their authorised generic deals could
keep the revenues flowing," said Kavita Thomas, an analyst at First Global Securities,
which has an outperform rating on the stock.
Other Indian drug makers have also reported a strong performance in the July
to September quarter, helped by a surge in sales of generic drugs and strong growth in
the domestic market.
The Hyderabad-based company, India's only New York-listed drug maker, said
net profit according to U.S. accounting standards rose to 2.80 billion rupees ($61.96
million) from 890 million rupees reported a year earlier.
A Reuters poll of 10 brokerages had predicted a median profit of 1.57 billion
rupees for the firm, India's fourth-largest pharmaceuticals company.
U.S. SALES
Total revenue jumped to 20 billion rupees from 5.8 billion rupees, while
revenue from its core businesses, excluding the contribution from authorised generics
and acquisitions, grew 42 percent to 8.2 billion rupees.
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Growth of Indian pharmaceuticals in the world market
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Growth of Indian pharmaceuticals in the world market
Conclusion
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Growth of Indian pharmaceuticals in the world market
CONCLUSION
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Growth of Indian pharmaceuticals in the world market
Recommendations
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Growth of Indian pharmaceuticals in the world market
RECOMMENDATIONS
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Growth of Indian pharmaceuticals in the world market
Bibliography
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Growth of Indian pharmaceuticals in the world market
Bibliography
http://www.researchandmarkets.com/reportinfo.asp?report_id=41589&t=e&cat_id=
http://www.pharmaceutical-drug-manufacturers.com/pharmaceutical-industry/
http://www.dgciskol.nic.in/
http://en.wikipedia.org/wiki/Pharmaceuticals_%28India%29
http://www.pharmaceutical-drug-manufacturers.com/pharmaceutical-industry/
Arpit Jhunjhunwala
Contact no.9867367199
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