Transcript of Presentation by Ganesh Nayak, COO and Executive Director, Zydus Cadila.
- Slide 1
- Presentation by Ganesh Nayak, COO and Executive Director, Zydus
Cadila
- Slide 2
- Challenges for healthcare system Expectation of high quality
healthcare Facilities and infrastructure High quality affordable
medicines Demographic changes more people will require prolonged
care Lifestyle changes Increased prevalence of chronic diseases
(substantial part of overall healthcare costs) Rising healthcare
costs
- Slide 3
- Pharmaceutical spending Pharmaceutical spending, as % of total
health spending Source: WHO statistics In developing countries
drugs are largest household and second largest public expenditure
for health
- Slide 4
- How to control pharmaceutical spending? Generics are the key to
reducing pharmaceutical expenditure by offering a low cost
alternative to expensive Brands
- Slide 5
- Generics Generics are pharmaceutical products that contain
already marketed and well established drugs, they are Intended to
be interchangeable with originator products Usually manufactured
without a license from original manufacturer or originator Marketed
after patent validity or any other market exclusivity of original
product is over Marketed under a non-proprietary name (INN or other
approved name) or under brand names (branded generics) Generics
makes government or household spend less without any compromise on
quality or safety Depending on the market prices of generics could
be 30%-90% lower than originator products US even provides 180 days
market exclusivity to a generic product that challenges an existing
granted patent
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- Role of Generics Source = UNAIDS, B. Samb, 2000 UN Drug Access
Initiative Domestic production Accelerated access initiative
Generic offers Introduction of generic products reduced cost of
antiretroviral therapy by as much as 95% in just three years
??
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- Emergence of India Unavailable (23) Sophisticated industry,
significant research (10) Innovative capability (17) Active
ingredients & finished products (13) Finished products from
imported ingredients (84) No pharmaceutical industry (42) Source:
UNIDO: The world's pharmaceutical industries. an international
perspective on innovation, competition and policy. 1992 In early
nineties India was recognized as an insignificant player in terms
of pharma manufacturing capabilities
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- Transformation in less than 10 years Unavailable (23)
Sophisticated industry, significant research (10) Innovative
capability (17) Active ingredients & finished products (13)
Finished products from imported ingredients (84) No pharmaceutical
industry (42) In less than ten years India is ranked at par with
US, Japan and many European countries in terms of manufacturing and
innovation capabilities but with an EDGE
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- The Indian Pharma Evolution Phase II Government Control Indian
Patent Act 1970 Process patents Drug prices capped Local companies
begin to make an impact Phase III Development Phase Process
development Production infrastructure creation Export initiatives
Phase IV Growth Phase Rapid expansion of domestic market
International market development Research orientation Phase V
Innovation and Research New IP law Discovery Research
19701980199020002010 Phase I Early Years Market share domination by
foreign companies Relative absence of organized Indian
companies
- Slide 10
- The Indian advantage Large skill base Experts in process
chemistry Long history of reverse engineering Vast talent pool
Sheer number of scientists Motivated & English speaking Large
number of trained Indians returning home from North America and
Europe Unmatched cost competitiveness Lower cost of infrastructure
and skilled manpower Vertical integration
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- The Indian advantage Strong local industry Growing expertise
with international regulatory compliance High quality manufacturing
with abundant capacities Speed Very strong entrepreneurial spirit
Hungry for growth and recognition Quick learners and fast movers
Availability of capital Stock market has seen unprecedented growth
in the last decade Continues to be bullish on the pharma
industry
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- India - Value proposition Process chemistry skills Vast talent
pool Lower costs World class manufacturing base Globally harmonized
regulations InnovationQuality PriceCompliance This is how the India
Advantage transforms into four critical components of value
proposition for the customer INNOVATION. QUALITY, PRICE and
COMPLIANCE"
- Slide 13
- India - Building capabilities Values in US$ Mio Source: Company
Reports, CLSA Asia Pacific Capex Net Fixed assets Indian companies
have taken combined total capex of over US$2.60 Bn between FY05 and
FY09 The net fixed assets have grown by about 50% to US$1.6 Bn
between this period Most of the capex have been in USFDA approved
plants in anticipation of huge generic opportunity India has the
highest number of USFDA approved plants outside US Low cost
manufacturing and huge capacities are likely to put severe pricing
constraints Capabilities are being built across the spectrum of
dosage forms Huge investments in building USFDA plants Highest
number of USFDA approved plants Source: USFDA, Internal Analysis,
Industry Reports
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- India - Building capabilities Annual Cumulative Number of API
facilities approved between 2000 and 2009 quadrupled More than 170
API facilities approved by USFDA existed till 2009 Number of these
projects were backward integration projects High Backward
Integration Capabilities Gaining dominance in global API business
by filing almost 40% of all DMFs filed with USFDA (share of only 2%
in 1996) Cumulative filings at the end of 2009 stands at 1200 and
significant number of filings have happened till date Largest
number of DMF filings DMF Filings from India % of total filings
Source: USFDA, Internal Analysis, Industry Reports
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- India - Building capabilities Source: USFDA, Internal Analysis,
Industry Reports Significant increase in the number of companies
directly filing ANDAs Each company has been filing around on an
average 18-20 ANDAs every year including niche dosage forms Host of
these companies are vertically integrated and have strong domestic
business to manufacturing scale More companies entering global
markets ANDA Filings from India % of total filings Indian companies
are filing close to 250 ANDAs compared to 30-40 in 2001 (this is
32% of total filings with USFDA) Many of these filings are for
niche dosage forms where Indian companies had not be traditionally
strong Large contribution in ANDA filings
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- India - Leading pricing revolution BrandGenericCompany US Price
(US$ per unit) per unit Indian Price (US$ per unit) Indian Price as
% to US Price Lipitor Zocor Norvasc Celebrex Zyprexa Paxil Vioxx
Zoloft Pravachol Fosamax Atorvastatin Simvastatin Pfizer Celecoxib
Olanzapine Paroxetine Rofecoxib Sertraline Pravastatin Alendronate
Pfizer Merck Pfizer Eli Lilly Glaxo Merck Pfizer BMS Merck 3.10
3.80 1.30 2.40 8.30 2.44 2.47 2.21 2.50 15.3 0.35 0.11 0.18 0.24
0.11 0.26 0.33 0.70 11.30 9.30 8.50 4.60 2.10 9.90 4.40 11.90 13.20
4.60 Indian drug prices are lowest in the world Source: CLSA Asia
Pacific-Markets
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- India - Where the cost advantage comes from? Cost advantage
extends well beyond labour cost Cumulative impact (costs are lower
by 30%-40%) Upfront capital costs of setting up a project 25%-50%
lower than in other developed markets Easy access to locally
fabricated cost effective equipment High quality technology &
engineering skills Continuous process improvement by the Indian
companies due to highly competitive local market and low pricing
This Achieved through either an efficient manufacturing process or
through better yields Huge talent pool of scientists and skilled
workforce available Average labour costs are approximately
one-fifth of costs in developed countries Quality at par with the
international standards Cost of developing an ANDA is lower due to
lower input costs and lost cost of scientific & intellectual
capital Cost of filing DMFs and ANDAs is 50%-60% lower than in US,
Europe and many other regulated markets Capital Efficiency Filing
Costs Process Engineering Manpower Costs
- Slide 18
- Product development costs - A case example R&D spend on
Generics (US$ Mio) Teva Mylan Alpharma Ranbaxy 247 69 81 39 ANDAs
Filed Spend/ANDA (US$ Mio) Dr.Reddys33 Zydus Cadila17 53 17 10 29
14 12 4.70 4.10 8.10 1.30 2.50 1.40 Source: Annual Reports, CLSA
Asia Pacific-Markets Indian companies spend significantly lower
than amount their global counterparts in developing ANDAs due to
lower upfront capital investments in building R&D
infrastructure and low cost talent pool of high quality scientists
Indian companies can derive good returns even on products where
market size is small and not of much interest to larger companies
(this is evident from increasing trend to file DMFs for off- patent
products
- Slide 19
- India Presence across value chain Chemicals & intermediates
Commodity bulk actives High end APIs Commodity Generic Formulations
Specialty Formulations NDDS NCE Indian companies have strong
presence across the pharma value chain thus increasing scope of
areas where India advantage can be successfully leveraged Contract
manufacturing and outsourcing of the APIs and commodity generics is
attractive option to leverage costs advantage of Indian companies
Product development & marketing alliances, custom synthesis,
contract research and clinical trails are good options to leverage
both cost and skills Leverage Costs Leverage Skills
- Slide 20
- Thank You