India Market Report 2017...Pharma Insight India Report 2017 3 Trade data of India pharma sector (USD...

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India Market Report 2017

Domestic sales to drive generic industry growth and exports of biosimilars to drive next wave of innovation

The 2016 CPhI Indian Pharma Insight report is designed to evaluate the overall growth prospects of domestic Indian pharma companies and foreign pharmaceutical companies working within the India pharmaceutical market.

CPhI – the world’s leading pharmaceutical networking event, with over 100,000 attendees globally – is using its collective resources to create Pharma Insight reports, analysing individual parts of the pharma industry. The vision is to harness the power of CPhI’s independent position within the industry so that it can produce unbiased analysis of the global pharmaceutical industry and help to see emerging trends and bring di!erent perspectives together. The Pharma Insights series features perspectives from CPhI exhibitors, attendees and the wider industry.

To get more information on how CPhI events can drive forward growth and new business opportunities for the pharma community, please visit www.cphi.com

2 www.cphi.comPharma Insight India Report 2017

India at a Glance: Source CIA World Factbook

• Population: 1, 266, 883, 598 (July 2016 est.)• Capital: New Delhi• Chief of State: President Pranab Mukherjee (since 22 July

2012)• GDP: $2.073 trillion (2015 est.)• GDP growth rate: 7.6% (2015 est.)

• GDP per capita: $6,200 (2015 est.) • Exports: $272.4 billion (2015 est.); petroleum products,

precious stones, vehicles, machinery, iron and steel, chemicals, pharmaceutical products, cereals and apparel

• Imports: $409.2 billion (2015 est.); crude oil, precious stones, machinery, chemicals, fertilizer, plastics, iron and steel


Trade data of India pharma sector (USD billion)

Pharma sales as a percent of total healthcare spending

Public and private expenditure on healthcare (USD billion) Market share, revene, growth rates of leading companies (%). FY16

Per capita sales of pharmaceuticals

Rising share of government expenditure (USD billion)


Introduction

Renowned as the pharmacy of the world, the Indian pharma economy has been lauded for its rapid growth in recent decades. This has cooled down in recent years, but the industry is again growing strongly. Compounded annual growth is 17.6%; Indian pharma is expected to be worth 55 billion USD by 2020.1 In line with this, the life science sector in India is also expected to employ close to 3.5 million people by 2022, a 100% increase in under a decade.2 The Indian pharma industry owes its success to its bold, ambitious approach, history of innovative and an ability to constantly adapt to the dynamic global market.

Over the past "ve years, India has become the leading API and "nished dose drug exporter to the Western markets and has rapidly moved up the pharmaceutical value chain. Drug approvals given by the US Food and Drug Administration (USFDA) to Indian companies have nearly doubled from 109 (2014-2015) to 201 (2015-2016), stimulating further growth in exports to the United States and Western economies.

Additionally, the Indian government is now providing more support working hand-in-hand with its businesses to develop incentives to further boost growth. One of these is the recent relaxation of FDI rules, encouraging greater outside investment in the Indian pharma industry. As a result, there has been a renewed interest in acquisitions by overseas pharma companies looking to establish a manufacturing base in India. This trend began when Abbott acquired Piramal for 3.7 billion USD in 2010. Abbott broke the traditional model of market entry buying Piramal’s domestic generic business to sell into the Indian market. This allowed Piramal to reinvest and provide contracting services to Western markets. More recently, the Swedish CDMO, Recipharm, took the opposite approach and acquired Kemwell in order to lower production costs for some of its contract services clients, demonstrating the diversity of targets and opportunities available.

Conversely, we have also seen the big Indian players expanding overseas with deals such as Cipla’s acquisitions of Invagen Pharmaceuticals and Exelan Pharmaceuticals. However, the motivation for medium- to large-sized Indian pharma companies pursuing international acquisitions is mainly to strengthen market presence in developed and

emerging markets. As a result, there is a convergence of business models. High-margin businesses in the West are purchasing Indian companies to lower production costs; big Indian players are looking to develop higher-margin products, while retaining facilities closer to their sales markets.

India is recognised for its a!ordable, high-quality generics and as a global exporter of APIs. But, increasingly it has become more dependent on China’s cheaper API sources. The generic industry needs to remain competitive in the low-cost, low-margin "nished-dose generics market. Recently, the Indian government and pharma industry have expressed concerns over the long-run impact. If China were to cut the supply, the e!ect on production could be dramatic. 70% of India’s intermediary formulations are imported from China.3 To combat this, the government is promoting resurgence in the Indian API sector to maintain tighter control of the supply chain. The Drugs Technical Advisory Board (DTAB) has even suggested a protectionist strategy proposing a levy on imports. The Indian government is nevertheless providing domestic producers with incentives by o!ering more a!ordable land and facilities to build API parks. They hope that this will reduce manufacturing costs by a third and boost competitiveness.4

The Indian pharma market has been unable to allay suspicions from developed markets over the compromise that a!ordable drugs might have in terms of data integrity. Many professionals, however, argue that India’s pharma sector is maturing, but is close to becoming a robust regulatory environment. Once these issues are overcome, India is certain to further its international attractiveness. In the past couple of years, regulatory warning letters by the FDA have pushed pharma businesses to be more alert and comply in maintaining quality standards. These have also led government and industry to focus on improving quality. A clear example is the partnership between the CDSCO and FDA and Indian businesses, helping make approval processes for drugs and manufacturing facilities faster, more e#cient and more robust..

As the established generic sector improved, the industry is expanding into new and emerging sectors. Due to the low


margins faced in API manufacturing and the new global interest in biologic therapies, large pharma businesses in India are seeing new opportunities for expansion in the biosimilar and biotechnology sectors. The Indian biosimilar industry has grown by a staggering 30% CAGR since 2008.5 The government is also investing in the biotech industry, providing funding through the Biotechnology Industry Research Assistance Council (BIRAC) and assisting in the biotech start-ups targeting 2,000 new businesses by 2020 near treble the present "gure.6 New CDSCO guidelines add to prospects for Indian biosimilars. They provide comparable biosimilar standards to those in Europe and the United States. Signi"cant growth opportunities are a clear possibility.

Biocon is one of the top biotech companies targeting entry into the Western market. It will launch its "rst biosimilar products in Europe by 2018 and has three other products targeted for launch in the USA and Europe: peg"lgrastim, trastuzumab, insulin glargine and adalimumab. Similarly, Dr Reddy’s has four biosimilar products for both emerging and developed markets; rituximab, "lgrastim, peg"lgrastim and

darbepoetin. contract services for biologicals are another growth area; Biocon’s subsidiary, Syngene, is making big gains servicing big pharma and biotech companies.

India’s pharma industry can also "nd great potential in the growing public health sector. The middle classes across the country are expanding, leading to rapid growth in private healthcare. Public medical infrastructures are improving, as a result. National demand for pharmaceuticals is growing as a consequence; the incentives for Indian pharma companies to focus on domestic opportunities are obvious. Recent increase of lifestyle diseases, both in India and across the globe, are a new factor creating a gateway for new drug production prospects and chronic therapies for cardiovascular therapies, anti-diabetes, anti-depressants, and anti-cancers.

Over the next few years, the government’s Pharma Vision 2020 aims to make the nation a global leader in end-to-end drug manufacturing. More generally, the country is now rapidly emerging as a major contributor across the pharma supply chain from R&D through to generics.

Methodology

The Pharma Insight Report is a collection of primary data analysis conducted by UBM EMEA and UBM India. It examined 433 domestic and 65 international survey transcripts. Domestic and international perspectives have been sought as the Indian pharma industry is becoming more integrated into the global market. Both the domestic and international respondents work in varying

pharmaceutical "elds including; ingredients manufacturing, generics, CDMO/CMO, biotech or biosimilars, pharmaceutical machinery and packaging. The range of respondents from di!erent pharmaceutical companies provides an broad-based and all-encompassing analysis of the Indian pharma industry.

This report

Building upon research collected from domestic and international surveys, we aim to present a holistic picture

of recent trends, challenges and, most crucially, future opportunities for the pharmaceutical sector in India.


Analysis

Indian Pharma’s resurgenceIndian consumers are spending more on healthcare as urbanisation continues apace. Health insurance coverage continues to grow acting as a key driver for demand. In the past few years, many Indian companies have grown through overseas expansion. They are increasingly focused on meeting international product standards, particularly those of American or European markets. Acceptance in such markets has strengthened brand credibility. However, the recent CDSCO certi"cations have been key to increasing con"dence domestically helping to drive demand among country’s middle classes for Indian-made drugs.

The Indian pharma industry has recorded exponential growth rates in the past decade, but this has slowed lately due to infrastructural constraints and the evident need to boost regulatory standards. However, views of domestic manufacturers and international companies point strongly to renewed industry con"dence. A renewed period of exponential growth in both domestic sales and exports is

a distinct likelihood. Domestic respondents predict growth averaging 30.5% next year, while international respondents estimate the "gure at 24%. Interestingly, 70% of domestic and 51.5% of international respondents see domestic sales as the main driver over the next three to "ve years. This contrasts with past, export-led growth.

An analysis by sector (see charts 1 and 2) shows that both domestic and international respondents believe "nished dose (58.7% and 55.3%) and APIs (42.6% and 47.7%) will experience the fastest growth in the next few years. This is to be expected as India’s stronghold has traditionally been exports of "nished-dose drugs and APIs. Additionally, however, there are now predictions of greater utilisation of domestically sourced APIs for "nished drug manufacture. Respondents believed this synergy is contributing to the rapid growth of both sectors. Biosimilars and biologics are also expected to surge in 2017 thanks in large part to several of the larger pharma and generic players pushing forward with new products.

Chart 1: International response on which segment of the Indian pharma industry will grow fastest

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%

Other (please specify)

CRO

Innovator/Patented

Biologics / Biosimilars

API (Generic)

Finished Dose (generic)


Chart 2: Domestic response on which segment of the Indian pharma industry will grow fastest

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00%


CRO

Innovator/Patented

Biologics / Biosimilars

API (Generic)

Finished Dose (generic)

Two-tier business model in India

India is the leading exporter of "nished-dosage forms. There are two business models targeting two di!erent types of foreign market. The "rst (type 1) is the Western pharma economies, consisting mainly of the United States and Europe. In this market, India is a prime provider of complex generics, branded drugs/OTC, and biosimilars due to its cost-e#cient and high quality products. Larger pharma companies are now looking beyond these two Western markets and expanding into Japan. Japanese generic use is forecast to expand rapidly – after many years of largely on-patent drugs – yielding greater pro"t opportunities. On the other hand, India’s smaller pharma companies (type 2) have focused on developing countries as their export market; in particular, on high-volume, low-

margin generic products. Consolidation amongst these providers is likely as they try and progress up the value chain, and move into formulations with greater pro"t margins.

Moreover, with the increasing government investments in healthcare and the growing gentri"cation in India’s middle and lower classes, all companies are looking increasingly the domestic market for further expansion opportunities. Similar to global markets, the Indian pharma market is divided; lower cost and a middle-to-upper cost (branded) companies share the selling spectrum with small manufacturers targeting the lower-end and large companies focusing on the more a$uent half.

“with the increasing government investments in healthcare and the growing gentri!cation in India’s middle and lower classes, all companies are looking increasingly the domestic market for further expansion opportunities.”


What technologies are people investing in?

Domestic companies are currently investing in four main areas: • around 50% in ‘commercial scale and scale-up facilities; • around one third in ‘continuous processing’; and • just over 20% each in both ‘biologics’ and ‘aseptic/sterile’.

Over the next three-years, however, the number of companies planning to invest in biomanufacturing facilities rises to one third. It’s most notable that more expensive facilities and capabilities needed for continuous processing and biomanufacturing are being added to India’s traditional base of commercial-scale "nished-product facilities. A smaller number of companies (just under 15%) reported they are actively investing in ‘cold chain’ and ‘single use’ facilities.

APIs and the battle with China

India has traditionally been the leading API exporter for low-cost, high-volume APIs. However, in the last decade, China has emerged as a very strong contender, particularly

in developing markets, where cost considerations are the primary driver. Surprisingly, many Indian manufacturers also now rely upon Chinese-made, rather than Indian-made APIs for the production of "nished formulations due to China’s extremely low cost in certain generic classes. Indian formulations needed to remain competitive, so switched to cheaper ingredients, which allowed manufacturers to retain better pro"t opportunities in this low-margin sector

An overwhelming 86% of domestic respondents agree that the Indian generics industry as a whole needs to reduce its reliance on APIs sourced from China. On the international side, there is some ambivalence. 62.3% agree that India needs to ‘reduce its overdependence on Chinese APIs’, but a signi"cant minority, 37.7%, believed that ‘this is how global supply chains works’. This discrepancies is most likely due to Indian pharma companies more direct experience and awareness of the risks of over-dependence. In general, the key take-out is that most respondents see the threat China poses. One scenario would be if China decided to grow its generic industry. India would potentially lose a majority

“Our Pharma companies are on a par with US & European standards, but at cheaper rate, so we foresee more exports to these countries”

Chart 3: to which markets do you export?

The USA/NorthAmerica

Europe

Japan

India

CIS

Africa

South America

South East Asia

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


of certain types of API product supply chains, as well as intermediates. In some cases, China is already expanding its industry and competing with India’s "nished dose market. The majority of domestic companies (81%) believe that the Indian government needs to ‘urgently invest in domestic API facilities and provide tax-breaks and incentives to secure the Indian generics industry’ and prevent losses in market share.

There is also a growing concern over Indian businesses using APIs sourced from China; this is mainly due to their perceived lower quality. The majority of international respondents (73%) believe that APIs produced in India are of higher quality, with 42% of domestic respondents also ‘concerned about the quality of ingredients sourced from China (because of purity and critical quality attributes)’. This indicates that, whilst domestic Indian companies are concerned, international audiences perceive India’s

ingredients as of a higher quality. There is clearly a market overseas for Indian API sales, but responses suggests a preference for "nished formulations made using Indian ingredients.

Looking ahead to the next few years (see chart 3), 68% of international respondents think that India will remain ahead of China in terms of API exports. However, of this, 44% believe that India will prosper through exports in developed markets whilst China will grow in developing markets. On the other hand, 32% believe that China is either overtaking India or is already ahead of India in API exports. Chinese ingredients are capturing market share; India needs to take precautionary measures to prevent its eclipse as a leading pharma exporter to both developing and developed countries.

“A strong domestic market does not only give con!dence to local and regional manufacturers, but to the whole of the pharma industry. I think that the biggest opportunity for India to grow is to take back control of their API sourcing, instead of importing from China. The Indian industry needs to produce its own ingredients and intermediates, grow its manufacturing quality and exploit its expertise in regulated markets in order to keep growing”, noted one international respondent.”

44%

24%

16%

16% Yes – but driven by exports to developed markets, China will prosper in developing markets

Yes – they still lead the way

No – China is now overtaking India

No – China is already ahead

Chart 4: International responses on India and China in terms of API exports over next 1-2 years


Growing across the world – Acquisitions and the global pharma market

In recent years, Indian pharma has further integrated into the global pharma supply chain. According to the UBM survey, almost half (46.6%) of the work done by Indian pharma companies is for international markets. Of India’s overseas markets, the United States is the largest, and the industry is looking to cement its growth there. In 2015, USFDA approvals doubled from 109 to 201; 82.5% domestic respondents believe that this trend will continue over the coming years. There is still signi"cant con"dence in Indian products despite some recent data integrity issues.

Growth through partnering or acquisitions?

In the next 12 months, 68% of domestic respondents are looking to work with an overseas pharma company. Larger Indian MNCs are seeking to increase penetration in Western markets. Smaller-to-medium-sized companies are looking to increase skills and infrastructure through their partnerships with foreign companies.

Over the next one to three years, 36% of Indian pharma companies are planning acquisitions. Interestingly, 20% are looking at facilities in the USA and Europe with a further 7% looking at the rest of the world. Acquisition trends point to the scramble of many companies for greater size and scale. Some 25% are also looking at acquiring facilities within India itself. It seems certain there will be many domestic consolidations in the medium term.

Reasons for the prospective acquisitions are more insightful. Respondents cited typically several factors. The most popular were:

• looking to gain access to new markets (43%); • wanting to "ll strategic gaps (30%);• interest in gaining new advanced technologies (26%); and• looking to increase size (24%).

Although there is a need for consolidation amongst providers, factors other than the desire to increase size are driving decisions; principally, the practical considerations of new services, markets and o!erings. Similarly, Europe and

the United States (50% of respondents each) are the most common export markets reported. This indicates a desire amongst leading manufacturers to have facilities closer to their customers.

In comparison, a much large number of international respondents (55.5%) plan on acquiring in India. Of these:

• 58% are seeking to leverage India’s facilities for low-cost manufacturing targetting export driven sales;

• 33% are using facilities in India for a mixture of domestic and international sales and

• 24% are only focusing on domestic sales.

Chart 5: Domestic responses on plans for acquisitions in next 1-3 years

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00%

Not planning any acquisitions

Yes in India

Yes in the USA

Yes in Europe

Yes in RoW


Domestic respondents are perhaps, unsurprisingly, even more positive believing the Indian pharma industry is improving and maturing and that there will be fewer issues in the near future. The government is leading the agenda and taking a more active role in improving the quality standards. 81% of domestic respondents believe that ‘the CDSCO is moving towards more comparable regulatory standards of the EMA and FDA’. Additionally, 67% of domestic respondents believe they will be able to meet the 1st January (2018) certi"cation deadline set by the CDSCO, which will take Indian pharma one-step further in harmonizing with global standards.

Indian businesses are also implementing more quality control systems to meet regulatory standards with 88% of domestic respondents using Good Manufacturing Practice (GMP) already (see chart 6). Furthermore, some companies are also operating more advanced quality control techniques; 45% use continuous improvement and 31% use quality metrics. Both of these methods are designed to enable pharma companies to iteratively improve standards rather than just meeting minimum requirements highlighting the move towards quality cultures.

Chart 6: International responses on if CDSCO had improved con"dence in Indian-made pharmaceuticals

Nevertheless, with over half the international pharma respondents and a quarter of domestic companies looking to acquire in India there is likely to be a shortage of targets and a corresponding spike in prices for the most attractive sites. This may also make it increasingly di#cult for domestic SMEs to suitable acquire facilities as they are priced out by overseas rivals. Further Government invention maybe required to help India’s vast SME manufacturing sector upscale into large multinational companies.

Improving quality standards

In general, an overwhelming majority (92%) of international respondents would invest more, if India’s quality systems improved. However, international respondents are equally split between people thinking that CDSCO initiatives have improved the standards of Indian-made pharmaceuticals and people who believe that the industry is still in the process of improving and maturing (see chart 5). There is also a low level of scepticism (4%) over the lack of a quality culture in India. Overall, the international market is very positive and con"dent about the CDSCO and acknowledges India’s e!orts to improve its reputation.

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%

No

Yes

Wait and see


Chart 7: Domestic responses on types of quality systems used

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00%

None of the above

Quality metrics

Six-sigma

Continuous improvement

OPEX

GMP

QbD/PAT

The latest trend — biotechnology/biosimilars

Biologics and large-molecule drugs are undoubtedly the single biggest development in the pharma industry over the last decade. India, famed for its solid dose capabilities, has been quick to react and is increasing diversifying. Many Indian companies have identifed biologics as their major pro"t generator moving forwards, particularly with the cost advantages (and higher margins) that biosimilars sales will enable when exported in the US and Europe.

The new CDSCO’s ‘guidelines on similar biologics’ have been designed to facilitate this growth by improving e#cacy data and helping the industry target exports into the West through harmonized standards. Whilst many of the international and domestic respondents state that the guidelines are not yet as stringent as the EMA or the USA, they do raise the bar for Indian MNCs. Arguably, they can be a stepping-stone to improving quality cultures. Furthermore, half of international respondents believe that India’s biosimilars are already interchangeable with the West, or will be under the updated guidelines. In the past few years, companies were intent on regulating the interchangeability of biosimilars to the original biologic. However, recently, the pharma industry is seeking to also regulate interchangeability between biosimilars. Thus, it is crucial that Indian biosimilars are closely comparable to Western products to drive growth and increase market share

as the regulatory and patent positions become more de"ned over the next few years.

In the short-term, the majority of Indian-manufactured biologics growth is anticipated to come from international sales. 64% of domestic companies believe that international sales will be the main driver in the sector; of this total, just over half expect growth to ‘predominantly overseas exports, supported by domestic sales’. Conversely, only 19% believe that ‘domestic sales will be the primary agent of growth’, whilst 17% believe that the Indian-made biologics will grow due to, ‘predominantly domestic sales, supported by international activity (see chart 7)’.

Biosimilars are more expensive to make and develop (with higher barriers for entry). However, as a result they deliver a higher-margin. This is acting as a key driver in investment decisions. Many believe Indian-made biologics will be able to deliver cost bene"ts comparable with what has already been achieved for conventional generics. Furthermore, with patents for 12 biologics expected to expire by 2020, estimates suggest that the global biosimilars market could reach USD 25-35 billion by 2020.7 Indian companies have a readily-de"ned market to target and invest in over the next decade. If the drugs can be developed and approved, clearly there are virtually guaranteed sales to be had.


Chart 8: Domestic responses on Indian manufactured biologics growth

Chart 9: International responses on Indian manufactured biologics growth

There is a parallel majority consensus internationally (65%) that overseas sales will be the main driver of Indian-made biologics (see chart 8). However, with the expanding

middle classes in India there is also a growing emerging market domestically that could support some of the development costs.

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00%

Predominately domestic sales, with supporting international sales

Predominantly international sales, with supporting domestic sales

Domestic sales

International sales

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00%

Predominately domestic sales, with supporting international sales

Predominantly international sales, with supporting domestic sales

Domestic sales

International sales


What may hold India’s biotechnology sector back?

The vast majority (71.02%) of Indian pharma companies are not investing in bio-manufacturing capabilities. This is most likely attributed to the fact that many small- and medium-sized companies simply do not have the "nancial readiness to enter another pharma "eld even though consolidation may drive economies of scale. Roughly 40% of the domestic respondents stated that a ‘lack of government support was a key challenge in India’. Furthermore, 33.5% say the ‘lack of "nancial investment’ is also to blame for holding back development. Finally, there is a small but signi"cant minority (22.34%) that believes biosimilar growth is actually held back by the ‘lack of talent and expertise’ in India’s biology and chemistry sectors.

One solution is to form partnerships with Western pharma companies. The Mylan-Biocon partnership remains the ‘go to’

model; both domestic and international executives anticipate more such tie-ups in the future. 41% of international respondents believe that biologic alliances may develop between India and the West in the future, with 30% believing these will proliferate in the next three to "ve years. On the other hand, 24% believe it may only be possible if India can develop appropriate manufacturing capabilities. Domestic companies are equally positive about potential partnerships, but many expect them sooner. 38% expect more partnerships in the next few years. However,,18% believe that ‘alliances can happen, but will be slow to develop’. A further 36% are more reticent and argue that although partnerships might be possible it will ‘depends on how quickly India’s pharma industry can develop manufacturing capabilities’.

Chart 10: What are the main drag factors holding back biotechnology in India (domestic responses)

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00%


Not enough government support

Lack of biology or chemistry expertise in country

A lack of early stage funding from angel investors

How should the Government help stimulate R&D by using? “Emerging institutions with centers of excellence, capability development of existing institutions, institution-industry partnership programs, encouraging innate drug development competencies, encouraging rational approach and global acceptability of age old therapies”.


What types of biosimilar products are being developed in India?

The most common biopharmaceutical product classes in India, according to domestic respondents, mirror the major disease areas and major pharma pro"t-drivers. ‘Anticancer drugs’ (81%) and ‘enhanced immune class’ (38%) were amongst the most common types of drugs product classes being worked on. This is re%ective of the major advances

internationally in monoclonal antibodies and peptides. Interestingly, and perhaps re%ective of the huge domestic health issue in India, diabetes drugs were also seen by 63% as a primary product class being researched in the country. ‘Nervous system disorders’ (31%), ‘respiratory ‘(39%) and ‘anti-retrovirals’ (33%) completed the list.

Conclusion

Despite the recent slowing down of India’s pharma growth, many international and domestic executives in the market believe that the industry is well-set for another period of explosive growth after consolidating its services and regulatory approach. All respondents agree India is moving forward with Western regulatory and quality standards, both for solid dose and biological. This is expected to herald another period of growth in exports.

The "ndings show that industry con"dence is now extremely high. Domestic manufacturers are bullish about near term revenue prospects, averaging a predicted 30.5% growth in 2017. In the past ten years, the industry has largely expanded its dollar value through international exports. This is set to continue as a major growth factor in the near future, with more USFDA approvals in the last year (201 ANDA up from 109) paving the way for increased generics sales in the United States. However, the picture is now broader than exports. The gentri"cation of the Indian healthcare economy is leading to an unprecedented surge in demand for domestic pharma. An impressive 70% of respondents anticipate domestic sales will be the main driver of growth for Indian pharma in the next 3-5 years.

The international reputation of the country on ‘data integrity’ has also improved massively; 96% agree that the CDSCO certi"cation programmes and initiatives are helping increase compliance or could do. Even more impressive is the fact that 52% of respondents believed the CDSCO is moving toward comparability with the regulatory standards of the EMA and FDA. Interestingly, 92% of respondents stated that they would invest more in India if quality systems are improved further. As a result of these positive market conditions, 55% of international

respondents are planning acquisitions or partnerships in India over the next few years. Reasons include, the desire of international companies to ‘lower the cost of manufacturing and export pharmaceuticals out of India’ (58%), as well as overseas companies looking to sell ‘both domestically and internationally’ (33%).

The general consensus is that India will also remain as the leading exporter of APIs. Its sales will be increasingly focussed on Europe, the USA Japan and India, with China taking an increasing share of emerging economies. Domestic use of Indian made APIs should also increase and alleviate some of the supply chain risks associated with dependence on intermediate/ingredient imports from China. This will also help reinforce sales in Western markets where there is growing interest in the origin of a "nished product and the purity and robustness of the API supply chain. Emphasised by the international survey, there is much greater con"dence in the quality of Indian made APIs; this should enable the country’s larger manufacturers to maintain market-share and margins even if China begins entering the "nished product generics market. However, for the smaller, low-cost generic businesses, China is an undoubted threat in emerging economies and they may need to be acquired or focus on domestic sales to survive. As such, signi"cant consolidation is likely as the industry evolves towards biologicals and branded and high-value generic sales in advanced economies.

Overall, whilst India remains as the self-proclaimed pharmacy of the world, it is now moving towards becoming the ‘pharmacy of the world (for more advanced formulations)’. It has better formulation technologies and scientists than many of its rivals and its future growth will be


on providing mid- to high-value drug classes rather than on the very cheapest generics. This should enable margins to rise steadily and may in fact represent a much greater overall opportunity. Essentially, India’s pharma industry is gradually moving away from China as its main rival and is taking greater market share in Europe, the United States and Japan. Alongside this, the predicted vast growth in domestic drugs sales in India should provide – once consolidated – the lower-margin, low-cost generic producers with good market openings. So we will see a continuation of the traditional generic industry. However, gradually this will move towards more advanced formulations (with novel delivery systems), branded generics, combination drugs, biosimilars and even on-patent production. Additionally, in order to remain

competitive with state-supported Chinese companies, there needs to be greater encouragement for the consolidation of smaller pharma companies so that they can compete on economies of scale. India is expected to remain ahead of China in API exports over the next 1-2 years, but it will need to make further improvements in its structure in order to maintain this lead in the longer term.

Finally, the reports argued the biosimilars and biologic sector is now the hotbed of national innovation, and will see well above-market growth in India. With more biologics coming o!-patent in the near future, there is a growing opportunity for pharma companies to make increased pro"ts via biosimilars with interchangeable standards.

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4. Liu, Pearl (2016). ‘Industry to Indian government: Bulk up on API capabilities’, Focus on India: A Bio World Today

Special Reprint of CPhI India 2016. Vol 27. 5. Limaye, R. (2016). Overcoming The Barriers To Global

Biosimilar Adoption. [online] Biosimilardevelopment.com. Available at: http://www.biosimilardevelopment.com/doc/overcoming-the-barriers-to-global-biosimilar-adoption-0001 [Accessed 8 Nov. 2016].

6. Padma, T.V. (2016). ‘Start-ups getting boost in India via government support, BIRAC funding’, Focus on India: A Bio World Today Special Reprint of CPhI India 2016. Vol 27.

7. Ravi Limaye, 2016 CPhI Annual Report ‘Realizing the Promise of Biosimilars in 2020’


About CPhICPhI drives growth and innovation at every step of the global pharmaceutical supply chain from drug discovery to "nished dosage. Through exhibitions, conferences and online communities, CPhI brings together more than 100,000 pharmaceutical professionals each year to network, identify business opportunities and expand the global market. CPhI hosts events in Europe, China, India, Japan, Southeast Asia, Russia, Istanbul, Korea and South America co-located with ICSE for contract services, P-MEC for machinery, equipment & technology, InnoPack for pharmaceutical packaging and BioPh for biopharma. CPhI provides an online buyer & supplier directory at CPhI-Online.com.

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