|
Export markets, R&D - Advantage India cos
|
|
Vadlamani Venkat Murli Krishna
December 12 , 2014
|
|
|
Indian pharma advantage is primarily based on its market size - US$15.6 billion as of 2011, which is expected to grow to US$35.9 billion in 2016.
The revenue of the Indian pharmaceuticals industry is growing at a CAGR of 17.8% from 2008 to 2016. This trend is very positive and forecasts very good future for the industry at large.
Pharma exports from India are forecasted to increase more than two-fold in the next five years and the trade surplus in the pharma sector is likely to expand to US$16.5 billion by 2016.
Of this complete portfolio of drugs manufactured in India, alimentary or metabolism drugs play a leading role. Indian drugs in the sector correspond to 13% of the Indian market share while cardiovascular drugs correspond to 10% and this is currently on the increase.
As on date, Japan is leader in the pharmaceutical industry in the Asia-Pacific region and has a 50% share of the market followed by China, which is a distant second at 19% and India is the third leading player accounting to little over 10%.
The top four Indian companies that contribute to 20% of the Indian pharmaceutical sector are Cipla which has the largest share (5.2%) followed by GSK, Sun Pharma and Ranbaxy.
In research & development, the top five leading Indian players are DRL, Lupin, Sun Pharma, Ranbaxy, and Zydus Cadila. The strategy adopted by all the leading companies is based on R&D.
Made R&D an integral part of strategy
They made R&D an integral part of their functions and figured heavily in the corporate strategy. Considerable amount of budget was provided for R&D and some portion of the profits was reinvested in the R&D.
Set up new functional units dedicated to R&D
Pharma companies have set up new functional units dedicated to breakthrough R&D of new chemical entities. Nicholas Piramal, Ranbaxy, DRL and Sun Pharmaceuticals are actively converting their existing R&D units into separate subsidiaries.
Collaboration with MNCs
Collaborating with multinationals and jointly discovering drugs helped in sharing the cost of discovery. Such tie-ups created a win-win situation for both the Indian and multinational companies. E.g., DRL has entered into an agreement with ClinTec International for joint development of an anti-cancer compound, DRF 1042.
Benefit from govt initiatives
Government initiatives like New Millennium Indian Technology Leadership Initiative and Drugs and Pharmaceuticals Research Programme have benefited the companies and stimulated R&D growth. Interest in drug discovery is growing. The money spent on R&D is bearing fruit as some of the major Indian pharma firms have applied for clinical trials for around 12 new drugs in 2010. The table represents some of the Indian companies and their newly-developed molecules which are in various stages of clinical development.
The 4-pronged pharma industry of India
Active Pharmaceutical Ingredients (APIs) - As of 2010, the exports of APIs were US$8.7 billion which contributed to more than 60% of the total turnover of pharma. By 2016, India is expected to become the second-largest global player in APIs worldwide.
Contract Research and Manufacturing Services (CRAMS) - Fragmented market of more than a 1,000 players. Surged from US$2.5 billion in 2009 to over US$7 billion in 2012.
Formulations - The current domestic market is around US$10 billion and is expected to go to double digits in the next five years.
Biosimilars - From a small start of US$200 million in 2008, there has been a surge to US$500 million in 2013. The government plans to allocate US$70 million to local companies for developing biosimilars.
Evolution of Indian pharma industry
Post-Independence and prior to Indian Patent Act of 1970-India still followed the Product Patent Act as put in by the British. The industry continued to be dominated by multinationals with very little Indian participation.
1970 to mid-80s-India moves out of the British rule and Product Patent Act and moves on to the Process Patent. Lots of Indian companies start operations, and production infrastructure put in place along with export initiatives from the government.
Turn of the century from 90s to 2005-Increased R&D expenditure, liberalised economy, more prosperity and regulatory compliances.
2005 onwards-India becomes a signatory to the Product Patent Regime. Our patents develop a legal framework and we move from imitation to innovation. Indian companies launch operations in other countries, India becomes a major destination for generic drugs manufacture and higher spending on R&D due to introduction of product patents.
R&D, Advantage, India Cost Efficiency
Low costs of production and research and development boost the efficiency of Indian pharmaceutical companies.
Indian pharmaceutical companies which used to spend a little over 2% of their revenue on R&D, moved on to over 5%, which although is less by international standards of 13% and more, it is still high for the industry.
Due to its cost efficiency, India is increasingly becoming a hub for clinical trials. Indian clinical trials market is growing steadily at a CAGR of 17%. Comparative cost efficiency enhances Indian pharma exports.
Eco & growth drivers, demand drivers
Economic prosperity to improve affordability of drugs. Rising income could lead 73 million households into middle class levels. By 2017, the government plans to provide free generic medicines worth US$5.4 billion to half the population.
Market-based pricing is expected to create a better transparency in pricing and the information would be available on public domain. Price control will be on finished medicines only.
There is an increasing penetration of health insurance. It is expected to more than double by 2020. This will be through government-sponsored initiatives such as RSBY (Rashtriya Swasth Bima Yojna) and ESIC (Employees State Insurance Corporation).
N Over US$200 billion to be spent on medical infrastructure in the next decade
n Rising levels of education will lead to better acceptability of pharmaceuticals
n Acceptance to biologics and preventive healthcare to be on the rise
n Vaccines expected to grow over 20% per year in the next decade
n Newer diseases and change in lifestyles to lead to boost the demand for pharmaceuticals.
Government support
Government unveiled "Pharma Vision 2020" aimed at making India a global leader in end-to-end drug manufacture. Reduced approval time for new facilities to boost investments.
Diversified portfolio
India accounts for 10% of the global pharmaceutical production. There are over 60,000 brands spread over 60 therapeutic categories. Several multinationals have partnered Indian companies for development of new generic drugs.
In recent years, several foreign companies have made acquisitions in India to get a foothold in the country's pharma market and leverage on the technical and cost efficiency of the Indian companies.
Increasing number of companies from the developed countries are forming JVs and collaborations with Indian companies to benefit from the research and development. These investments are infusing superior capabilities to the Indian companies.
(Information compiled from BMI, Data Monitor Research, McKinsey Estimates and Aranca Research) (The author is student of pharmacology, University of Newcastle, UK)
|
|
|
|
|
|
|
|
TOPICS
|
That foods might provide therapeutic benefits is clearly not a new concept. ...
|
|
|
|
|