HPAPI an Attractive Opportunity Insight 2012

7/27/2019 HPAPI an Attractive Opportunity Insight 2012

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Indian API market has clocked up a healthy growth rate for the past few years which is expected to

continue. This article maps the overview of Indian as well as Global API & HPAPI industry alongwith current and future scenario. Furthermore, it charts out growth arenas for Indian players, whodon't want to miss out on HPAPI opportunities .

HPAPI - an attractive opportunity

Sachin Adawade

Vol. 10 Issue-1 Jan - Mar 2012Interlink Insight


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he importance of active pharmaceutical and valued at US $ 7.1bn. The Market hadingredient manufacturers in the grown at rate of 7.14% over 2008 and isTpharmaceutical industry is evolving in projected to grow at a CAGR of 5.9% over next

response to new demands from customers and 5 years and will reach US $ 133.1bn by 2015.

growing pressures from global competitors. The Indian market has shown a healthy growthMarketers are looking beyond their usual group rate of 11.56% and is projected to maintain theof suppliers. In order to tap this opportunity growth rate at 11% over next 5 years to reach acompanies need to build up their capabilities as value of US $ 13.4 bn by 2015. The share ofthey will face numerous challenges in terms of Indian market is expected to reach 11.2% ofbarriers to entry, regulatory requirements, globalmarketfrom thecurrent shareof8.5%.sizeable investments and expertise associated

(Exhibit :1)withAPIs & HPAPIsdevelopment.

North America and Europe are largest marketsaccounting for 60% of the global API Market.

rdUnderstandingAPIs & HPAPIs AsiaPacific is the 3 largest and fastest growing? APIs: Active Pharmaceutical Ingredients market, whereas Japan is a mature market.(APIs) or bulk drugs are the principal South andCentralAmerican markets have hugeingredients for finished pharmaceutical potential; the growth will be driven by Brazil.products. Mexico is a mature market and will witness? HPAPIs: HPAPIs are the High Potency slower growth.Active Pharmaceutical Ingredients. Highlyeffective at much smaller dosages and more Global API Market Drivers & Restraintsefficient in the cure of some diseases, HPAPIscan be synthetic or biotech based on synthesis Market Driversroute. On the basis of availability of patent, the Increasing influence of API participants fromHPAPIs can be Generic or Branded. This is a Emergingmarkets

niche & rapid growing segment of the API Increasing emphasison High-potencyAPIsmarket.Emerging technologies such as continuousprocessing& separationtechnology

Regulated Markets like US & Europe, haveContinuing spate ofpatent expiries

high entry barriers in terms of IPR andMarket Restraints

regulatory requirements including facilityDecline in overall R&D productivity is

approvals and Documentation. These marketsaffectingthepharmaceutical industryoffer better margins, stability & sustainable

The economic recession is expected to affectgrowth.profitabilityLess Regulated Markets offer low entryFragmented nature of the market is expected tobarriers in terms of regulatory requirementsand

limit growth prospectsIPRs. E.g. Countries in Latin America, SouthStringent regulatory requirements are likely toEastAsia,MiddleEast,Africaetc.delaytheapprovals

Currently there are about 3000 API factoriesAPIMarketwhich produce 400+ types of APIs, meetingover 90% of domestic demand. Indian APIGlobal VsIndianAPIMarketMarket with revenue of US $ 7.14bn in 2009The global market forAPIswas worth $ 91bninranks third after China and Italy in the world in2009 of which Indian API had a share of 8.5%

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LatestEstimate

77.6 83.989.9 95.2

100.8 106.8113.1 119.7

6.47.1

8.08.8

9.810.9

12.113.4

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

2008 2009 2010 2011 2012 2013 2014 2015

Indian API Market

Rest of the World API Market

Actual Projected

Figures in US $ Billion

8.5 %

IndianMkt11.2%

8491

97.9104

110.6117.7

125.2133.1


Exhibit : 1 Rest of World Vs Indian API Market


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API output. Exports contribute 51.4% manufacturing, R&D level batches tocompared to 48.6% contribution from domestic commercial batches along with automatedsales. Domestic market is projected to grow at testing equipments andsystems10 % over next 5 years and reach $ 6.15Bn by Knowledgeable, competent technical staff2015 whereas exports market is projected to capable of understanding the key factors of anygrow at 12% and reach $ 7.24Bn by 2015. regulated markets, handling regulatory(Exhibit : 2) inspections and client queries.

Large, well-educated, English-speakingLeadingAPIPlayers inIndia labour force.DRL, Ranbaxy, Biocon, Aurobindo, Orchid,

IT hub supportive to data management andDivi's Labs, Hetero Drugs, Dishman, Mylan, computationalsystem functions.Surya are the Top 10 players and hold around35% of the market share. Next 20 players HPAPI Marketaccount for about 21% ofthe total market.

GlobalHPAPIMarket FactsIndia Advantage over their global The Global HPAPI market was valued at US $counterparts: 7.5Bn in 2009 and has grown at a CAGR ofIndian companies can manufacture bulk drugs 6.3% over last 4 years. It is projected to grow at

in-house at 40% to 50% of ethical cost 8.4% CAGR, 2.5% higher CAGR over globalLarge number of regulatory approved facilities API market and reach US $ 11.9bn by 2015.by USFDA, TGA, EMEA, UK-MHRA and (Exhibit : 3)other regulatory agencies in Europe North America is a largest market with 45.6%Well equipped infrastructure, meeting share followed by Europe with 35%. Asiainternational standard design, developmentand Pacific has 9.3% share. Oncology (59%) is the

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5.9 6.36.7

7.58.0

8.69.4

10.2 11.0

11.9

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Global HPAPI Market

Actual

Projected


Latest

Estimate


Exhibit : 3


Domestic,

US $ 3.47

Bn

Exports,

US $ 3.67

Bn

API Sales

Domestic

US $ 6.15

Bn

Exports

US $

7.24 Bn

API Sales

2009

2015US $ 7.14 BillionUS $ 13.4 Billion

Consolidated

CAGR 11 %

Exhibit : 2 Indian API Market


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largest and fastest growing segment at 12.5%. Top 10 players areholding around 35%marketHormones (19%) are the 2nd largest segment shar e indic ating frag menta tion andfollowed by Glaucoma (7%). Remaining competitionsegments put together account for 15% share.The use of biotech HPAPIs is gradually Overall Indian Environment is very conduciveincreasing as the R&D work on biological for HPAPI players from infrastructure,

molecules for many therapies is gaining pace. manpower and regulatory front. The fastSynthetic HPAPIs have 85% market share penetration of novel APIs and the gradualwhereas Biologic HPAPIs have 15%. Since a expiry of their patents will create significantlarge number of HPAPI compounds are under market opportunities for developers of APIs.patent, 81% of the HPAPIs are branded The decision to enter APIs market should onlyglobally. However, Generic HPAPIs market is be made on the basis of a clearly defined long-growingata fast rate. term strategy. Indian APIs players should have

deep pockets in order to finance theIndian HPAPI Market Facts unanticipated, andshould proactively shift theirIndian HPAPI formulations market was valued focus from independent R&D to strategicat Rs. 3655.7 crores in 2011.The HPAPI market partnerships to save costs & enrich their drug

is estimated at 10% of HPAPI formulations pipelines. Greater collaboration will bemarket and is valued at Rs. 365 crores. The mutually beneficial to both Western and Indianmarket is projected to grow at 14.9% and reach companies.Rs. 608 crores by 2015.(Exhibit :4) With the advantage over global counterparts,

Indian players will surely make a mark inIna nutshell local as well as global HPAPIs markets!Indian APIs and HPAPIs industry is showinghealthy growthover theglobalmarkets ReferencesIndian HPAPI Market is projected to show a GBI Research Report on API Marketdoubledigit growthover next 5 years Bulk Drug Manufacturers Association report

Growing pricing pressure on GlobalPharma& CPA Report (Chemical Pharmaceutical Genericpatent expirywill be a majorgrowth driver Association)Prostaglandins in HPAPIs, is a small segment ORG IMS 2010-11

inIndia but is the fastest growing one. Interlink Knowledge Cell insights

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Mr.SachinAdawade, with MBAin Pharma Marketing, is an Associate Consultant at Interlink. He has a depth ofexperience in practice areas of Brand strategy, Entry strategy, Growth strategy, Business Valuation and Market

Research.

994.6 1118.4 1367.1 1568.81826.2

2125.92474.8

2880.91082.01205.5

1345.11536.1

1726.5

1940.4

2180.8

2451.0

154.3218.0

258.2

261.4

311.5

371.4

442.7

527.6

73.082.9

165.8

289.4 458.2

725.3

1148.1

1817.4

0.0

1000.0

2000.0

3000.0

4000.0

5000.0

6000.0

7000.0

8000.0

9000.0

2008 2009 2010 2011 2012 2013 2014 2015

PROSTAGLANDINS

ONCOLOGICALS

STEROIDS

HORMONES

Actual Projected

Figures are in INR crore

SEGMENTS CAGR

PROSTAGLANDINS 58.30%

ONCOLOGICALS 19.20%

STEROIDS 12.39%

HORMONES 16.41%

TOTAL 14.9 %

Exhibit : 4 Indian HPAPIs formulations Market


HPAPI an Attractive Opportunity Insight 2012

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