1-India’s Pharmaceuticals Industry

8/14/2019 1-Indias Pharmaceuticals Industry

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Indias PharmaceuticalsIndustry

The Indian pharmaceutical industry isa success story providing employmentfor millions and ensuring that essentialdrugs at affordable prices are available

to the vast population of this sub-continent.

Richard Gerster


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The Indian pharmaceuticalsector has come a long way,being almost non-existentbefore 1970 to a prominent

provider of healthcareproducts, meeting almost 95per cent of the country'spharmaceuticals needs.


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The Industry today is in the front rank ofIndias science -based industries with

wide ranging capabilities in the complexfield of drug manufacture andtechnology.

It ranks very high in the third world, interms of technology, quality and range ofmedicines manufactured.

From simple headache pills tosophisticated antibiotics and complexcardiac compounds, almost every type ofmedicine is now made indigenously.


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Playing a key role in promoting

and sustaining development in thevital field of medicines, Indian Pharma Industry boasts

of quality producers and manyunits approved by regulatory

authorities in USA and UK.


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International companies

associated with this sectorhave stimulated, assisted andspearheaded this dynamicdevelopment in the past 53years and helped to put India

on the pharmaceutical map ofthe world.


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The Indian Pharmaceutical

sector is highly fragmentedwith more than 20,000registered units with severeprice competition andgovernment price control. It

has expanded drastically inthe last two decades.


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There are about 250 large units that control 70per cent of the market with market leaderholding nearly 7 per cent of the market shareand about 8000 Small Scale Units togetherwhich form the core of the pharmaceuticalindustry in India (including 5 Central PublicSector Units). These units produce the completerange of pharmaceutical formulations, i.e.,medicines ready for consumption by patients

and about 350 bulk drugs, i.e., chemicals havingtherapeutic value and used for production ofpharmaceutical formulations.


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Following the de-licensing of the pharmaceuticalindustry, industrial licensing for most of the

drugs and pharmaceutical products has beendone away with. Manufacturers are free toproduce any drug duly approved by the DrugControl Authority. Technologically strong and

totally self-reliant, the pharmaceutical industry inIndia has low costs of production, low R&Dcosts, innovative scientific manpower, strengthof national laboratories and an increasingbalance of trade.


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The total Indian productionconstitutes about 13 per cent of theworld market in value terms and, 8per cent in volume terms.

The per capita consumption of drugsin India, stands at US$3, is amongstthe lowest in the world, as compared

to Japan- US$412, Germany-US$222 and USA- US$191.


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India's US$ 9.4 billion pharmaceuticalindustry is growing at the rate of 14percent per year.

It is one of the largest and mostadvanced among the developingcountries.

The Indian pharmaceutical industry

can reach a market size of US$ 11.6billion by 2009.


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There are 74 U.S. FDA-approvedmanufacturing facilities in India,more than in any other countryoutside the U.S, and in 2005,almost 20 per cent of all

Abbreviated New Drug Applications (ANDA) to the FDAwere filed by Indian companies.


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Growth in other fieldsnotwithstanding, generics are stilla large part of the picture.

London research company Global

Insight estimates that Indiasshare of the global genericsmarket will have risen from 4 percent to 33 per cent by 2007.


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The Changing Prescription

As per WTO, from the year 2005, Indiagranted product patent recognition to allnew chemical entities (NCEs) i.e., bulk

drugs developed then onwards. This introduction of product patent regime

from January 2005 is leading into long-term growth for the future which mandatedpatent protection on both products andprocesses for a period of 20 years.


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Under this new law, India will be

forced to recognize not only newpatents but also any patents filedafter January 1, 1995. Under

changed environment, the industryis being forced to adapt itsbusiness model to recent changesin the operating environment.


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The Indian Government's decision toallow 100 percent foreign direct

investment into the drugs andpharmaceutical industry is expected to aidthe growth of contract research in thecountry.

MNCs in India is facing the problem ofhaving a very high Drugs Price ControlOrder (DPCO) coverage, weakening their

bottom lines as well as hindering theirgrowth through the launch of newproducts. DPCO coverage is expected tobe diluted further in the near futurebenefiting the MNCs.


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Emerging Trend Global pharma cos expected to launch 200-250

new drugs over next 8-10 years totaling anestimated US$ 3-5 billion

FDI inflow grew over six fold from US$ 60.7 mnin 2003 to US$ 340 mn, in fiscal year 2004 Bristol Myers Squibb, Boehringer Ingelheim and

Eisai without Indian presence earlier, have made

recent foray Indian firms tying up with foreign companies toin-license drugs


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Res earch & Develo p m en t


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Domestic Demand

The growing population of over of a billion Increasing income

Demand for quality healthcare service Changing lifestyle has led to change indisease patterns, and increased demandfor new medicines to combat lifestylerelated diseases


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Exports

Over 60 per cent of Indias bulk drugproduction is exported. Indiaspharmaceutical exports are to thetune of Rs87 billion, of whichformulations contribute nearly 55 percent and the rest 45 per cent comesfrom bulk drugs.

In financial year 2005, exports grewby 21 per cent.


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The Indian pharmaceutical market has

been forecasted to grow to as much asUS$ 25 billion by 2010 as per Organizationof Pharmaceutical Producers of India(OPPI) estimates.

However, Espicoms market projectionsforecast more modest but stable annualmarket growth of around 7.2 per cent,putting the market at US$ 11.6 billion by2009.


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Domestic pharmaceutical exports, growing at 30per cent per annum, touched a new height ofUS$4.8 billion in the financial year 2006-07. TheYears exports will push the drug sectorscontribution to Indias Forx earnings to 7.75 percent from the current 5 per cent.

The growth in drug exports, despite the pressinggeneric competition in the global markets, isattributed to increased Abbreviated New Drug

Applications (ANDAs) approvals in the USmarket and contribution from unconventional

markets in Latin America, Australia and theemerging markets in the Middle East and African Region.


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The export revenue nowcontributes almost half of the totalrevenue for the top three

pharmaceutical majors: DrReddys, Ranbaxy and Cipla.


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The other major exporters areWockhardt Limited, SunPharmaceutical Industries Ltd. andLupin Laboratories. The formulationsand exports are largely to developingnations in CIS, South East Asia,

Africa and Latin America .


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OTC The Indian market for over-the-counter

medicines (OTCs) is worth about $940million and is growing 20 percent a year, ordouble the rate for prescription medicines.

The industry's exports were worth morethan $3.75 billion in 2004-05 and they havebeen growing at a compound annual rateof 22.7 percent over the last few years,according to the government's draftNational Pharmaceuticals Policy for 2006,published in January 2006.


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Import


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The government should implement the

recommendations of Mashelkar committeeand constitute the Central Drug Authorityat the earliest.

The basic course of education should bedesigned to ensure that the newly qualifiedpharmacist has the necessary knowledgeand skills to commence practicingcompetently in a variety of settingsincluding community and hospitalpharmacy and the pharmaceutical industry.


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The pharmacy profession will makethe clinical trial industry in India to

grow to over a billion dollars in thenext five years and position itself as adestination of choice for CRO

services by way of strictimplementation of patent laws, singlewindow clearance of clinical trialprotocols by regulatory clearancesand shall accord industry status tothis sector.


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India will emerge as a major global playerin the field of pharmaceuticals exports and

as a provider of quality medicines at lowcosts. It shall also emerge as a majorplayer in the generic drugs market in USAand Europe.

India shall attain new heights in herbaldrugs research in shaping Indian Systemsof Medicine into a popular system ofmedicine of the future for holistic healthcare and ensuring health care for all -especially for the welfare of the poor.


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Indias Patents Act should ensure that itdoes not exceed the requirements ofTRIPS, and that prioritizes access tomedicines and public health, whileretaining the right to participate in thecompulsory license scenario.

India should lead a movement ofdeveloping nations and create a TRIPS

south and G-20 alliance is a step in thatdirection


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Challenges

Und erdevelop ed new m oleculed isco very prog ram Hue & cry agains t exploi ta t ion

Back l ash aga ins t ou t sourc in g

IP leakag e

Restr ic ted i tems

Reservat ion for s m al l sca le indus t r ies

No brand va lue

Gener ic com pet i t ion


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Opportunities A few important strengths are mentioned below.

Com petent wo rkforc e India has a pool of personnelwith high managerial and technical competence asskilled workforce. It has the largest English speakingpopulation in the world. Professional services are easilyavailable.

Cost-effect ive Chem ical Syn thesis Its track record ofdevelopment, particularly in the area of improved cost-beneficial chemical synthesis for various drug molecules

is excellent. It provides a wide variety of bulk drugs andexports sophisticated bulk drugs. Legal & Financial Framewo rk


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Inform at ion & Tech no logy Global iza t ion

Conso l ida t ion

L o w p r i c ed p r o d u c t s Qual i ty assuranc e

Dominance in the marke t

Self-rel iance

Low cost of production, Low R&D costs, Innovative Scientific manpower


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THANK YOU

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Documents

1-India’s Pharmaceuticals Industry