Make in India - Health Reforms, Insurance, Innovations, investments & Infrastructure

INDIAN DRUG MANUFACTURERS’ ASSOCIATION

(IDMA)

DAARA B PATEL

SECRETARY-GENERAL

7th Annual

Pharmaceutical Leadership Summit & Pharmaleaders Business Leadership Awards 2014

26 December 2014

IDMA’s HQ

80 % Pharma

Corporate Office

are located

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INDIAN DRUG MANUFACTURERS’ ASSOCIATION

Founded in 1961 – now in 53rd year of service as

premier Association of the Indian Pharma Industry

Regarded in Government, Media & Industry Circles as

the ‘Voice of the National Sector’

7 Region-wise State Boards at Gujarat, Tamil Nadu &

Puducherry, Himachal Pradesh & Uttarakhand, West

Bengal, Madhya Pradesh and Telengana. Andhra

Pradesh, Karnatakaand Goa (under formation)

20 Sub-Committees, headed by Experts

Membership Strength – over 800 Members3

INDIAN DRUG MANUFACTURERS’ ASSOCIATION

Publications: IDMA Bulletin (Weekly), Indian Drugs

(Monthly) & Annual Publication

Awards presented on Annual Day for Quality Excellence,

Best Patents, Quality Research

At IDMA- PAC Awards for Eminent Analyst, Outstanding

Analyst, Young Analyst

Regular Seminars/ Workshops on Regulatory, Technical,

Medical affairs, Harmonization projects with IPC, US FDA,

USP, EDQM, ANVISA

For eg., 17th IDMA-APA Pharmaceutical Analysts

Convention was held on 26th and 27th Sept at Mumbai

Theme: ‘Challenges in Global Quality Management’ –

Chief Guest: Dr Ronald Piervincenzi, CEO, USP

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INDIAN PHARMA INC

Knowledge based Industry and one of the world's largest

and most developed

Over 10,000 manufacturing units

About 77% units make Formulations and about 23% units

make APIs

Over 60,000 formulations in market covering almost every

therapeutic segment with about 10 to 200 brands per

molecule

India with a population of 1.2 Billion is a big market for

Pharmaceuticals

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INDIAN PHARMA INC(contd…)

Medicines constitute only about 15% of total healthcare

spend in India

About 90% of India’s pharmaceutical market is made up of

branded generics and has the potential to grow at an

accelerated 15 to 20% CAGR in the next five years.

Value of India’s Pharmaceutical Market - US $ 32 billion

& set to grow to US $ 50-60 billion market by 2020

Globally ranks 4th largest in volume and 12th in value

Every third tablet consumed globally is made in India

One in every three children around the world is immunized

by vaccines made in India6

INDIAN PHARMA INC(contd…)

Exports to more than 200 countries, with major share in

regulated markets

India’s five of the largest export markets are USA, UK,

Germany, Russia and South Africa

Formulation Exports to USA at US$ 1.55 billion, to UK at

US$ 1.90 billion, to Australia at US$ 90 million7

Exports drug intermediates, Active

Pharmaceutical Ingredients (APIs),

Finished Dosage Formulations Bio-

Pharmaceuticals, and Clinical Services

across the globe

Exports at US$ 14.6 billion in 2012-13 at

CAGR of 15.2 %

• India is now among the top five pharma emerging

markets globally

• Front runner in a wide range of specialties involving

complex drugs' manufacture, development and

technology

• Generics market in India expected to grow to US$ 26.1

billion from US$ 17 billion today.

• India with 192 approvals has about 41% of all ANDA

approvals (486) from US FDA during Jan - Dec 2013 –

the largest outside USA

• India has about 10,000 manufacturing units whereas

USA has about 2,500 manufacturing units 8

INDIAN PHARMA INC(contd…)

PHARMACY OF THE WORLD

Single largest supplier of generic medicines to the world

Supplier of 70-90% of essential medicines to developing

countries

80% of medicines for AIDS issued by MSF (Doctors

Without Borders) distributed in treatment projects in over 30

countries

Provider of 70% of treatment for 87 countries under

UNICEF, The Global Fund to Fight AIDS, Tuberculosis and

Malaria, the Clinton Foundation, etc.

Manufacturer of every fifth generic drug and every third

HIV drug consumed anywhere in the world

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INDIAN PHARMA – FUTURE POSITIVE

• The need to raise the global competitiveness of the

Indian manufacturing sector is imperative for the

country’s long term-growth.

• The National Manufacturing Policy is by far the most

comprehensive and significant policy initiative taken by

the Government.

• The policy is the first of its kind for the manufacturing

sector as it addresses areas of regulation, infrastructure,

skill development, technology, availability of finance, exit

mechanism and other pertinent factors related to the

growth of the sector.

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INVESTMENT OPPORTUNITIES

• India is expected to be the third largest global market for

APIs by 2016, with a 7.2% increase in market share.

• Indian pharma companies registered 49% of overall Drug

Master Filings (DMF) filed in the US in 2012.

• CRAMS estimated at $ 8 Billion in 2015, up from USD 3.8

Billion in 2012. The market has more than 1000 players.

• The formulations industry – India is the largest exporter

of formulations with 14% market share and ranks 12th in

the world in terms of export value.

• Double-digit growth is expected over the next five years.

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MAKE IN INDIA

• India’s manufacturing sector has tremendous potential for

growth, with over 800 million below the age of 35 or less and the

need for 700 million skilled workers by 2022

• India’s demographic advantage - our labour force - is young and

expanding much faster than the general population.

• India is in the enviable position of providing manpower, even for

the rest of the world

• Only accounts for 15% of GDP at present , vis-a-vis 34% for

China, 31% for South Korea and 22% for Germany – a lot of

catching up to do

• To achieve this:

Govt. needs to work on curbing red-tapism

Making legal compliance easier and transparent

Amending regulations to make them more investor friendly

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REASONS TO INVEST

• India is expected to rank amongst the top three

pharmaceutical markets in terms of incremental growth by

2020.

• India is the sixth largest market globally in terms of size.

• India’s generic drugs account for 20% of global exports in

terms of volume, making the country the largest provider of

generic medicines globally.

• India’s cost of production is significantly lower than that of

USA and almost half of that of Europe.

• A skilled workforce as well as high managerial and technical

competence.

• Economic prosperity is likely to improve affordability for

generic drugs in the market.

• Approval time for new facilities has been drastically

reduced.13

GROWTH DRIVERS

• With increasing penetration of chemists, especially in rural

India, OTC drugs will be readily available.

• Pharma companies have increased spending to tap rural

markets and develop better infrastructure.

• Hospital business to increase from 13% in 2009 to 26% in

2020.

• Rise of lifestyle diseases in India is expected to boost industry

sales figures.

• Over US$ 200 Billion is to be spent on medical infrastructure

in the next decade.

• Rising levels of education are set to increase the acceptability

of pharmaceuticals.

• India’s patient pool is expected to increase to over 20% in the

next 10 years, mainly due to the rise in population.

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FDI POLICY

• 100% FDI is allowed under the automatic route

for greenfield projects

• For brownfield project investments, up to 100%

FDI is permitted under the government route

• The government may incorporate appropriate

conditions for FDI in brownfield cases, at the

time of granting approvals

• FDI is subject to applicable regulations and laws

• IDMA has suggested that a threshold limit of

about Rs. 1500 crores be applicable in

brownfield projects

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India's growing respect and

legal / regulatory framework

for IPR, favourable economic

policies and availability of

huge talent pool for

sustaining and growing

operations is making India an

attractive choice for global

pharma companies for

investment, tie-ups, mergers,

acquisitions.

THE INDIAN SCENARIO

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Because of patent expirations

of blockbuster drugs, Indian

firms are expected to actively

participate in the production of

generic version of these

products. Indian companies

are also ready with generic

version of biotech drugs.

Therefore, India will be able to

maintain a large basket of

quality affordable generics

with assured safety and

efficacy.

THE INDIAN SCENARIO

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ADVANTAGE INDIA

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• India is a world leader in anti-AIDS and anti-TB segments and for some of the latest medicines like Glitazones, Celecoxib, Statins, Montelukast and many anti-cancer drugs

• Bill Clinton's foundation, Clinton Health Access Initiative (CHAI) got further discounts from Indian generic manufacturers that reduced the cost of combination drug treatments for AIDS, which can reach thousands of dollars per year in the West, to as low as $120 a year per patient.

• Many Indian companies are part of this agreement where Lamivudine, Stavudine, Zidovudine, Nevirapinewill be supplied to a few African countries.

ADVANTAGE INDIA

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AFFORDABLE GENERICS

• Lower prices is a significant factor in the rapid uptake

of generics.

• In Europe generic products contribute to 50% of

market sales by volume, but contribute only 20% to

overall value sales, suggesting the huge cost benefits

brought about by generics.

• In US, generics contribute to three fourth of

prescriptions, but in value terms, the generics are just

one tenth of the market, mirroring the cost benefits

typically generated by generics.

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GENERICS – WHO FACTS

Global health situation and trends 1955-2025

• Global population was 2.8 billion in 1955 and was

estimated by WHO to reach about 8 billion by 2025

• However, latest data reveals that it is already 7.28 billion

today

• The proportion of older people requiring support from

adults of working age will increase from 10.5% in 1955

and 12.3% in 1995 to 17.2% in 2025

• In 1955, there were 12 people aged over 65 for every 100

aged under 20. By 1995, the old/young ratio was 16/100;

by 2025 it will be 31/100

• By 2025, increases of up to 300% of the older population

are expected in many developing countries, especially

in Latin America and Asia

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GENERICS TO THE FORE

• Will exceed 20% of spending in most developed

markets

• Increased generic spending in the next five years will

be driven by generic competition in new molecules due

to patent expiry.

• U.S. will see the largest expansion of generics market

spending, but 7-8% gain will largely be from new

generics as U.S. pharmacists already dispense

generics, when available

• Japan will remain the developed market with the lowest

generic share despite significant policy incentives to

increase generic prescribing and dispensing

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LARGEST SUPPLIER TO UNICEF

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• India has consistently been the largest

supplier to UNICEF since 2007.

• India was the largest supplier country in

2013, with $676 million worth of supplies

such as vaccines, pharmaceuticals,

nutrition, medical supplies

• Of the 2.83 billion purchases by UNICEF

in 2013, more than 41% were from India

• Serum Institute of India Ltd., an IDMA

Member supplied vaccines / biologicals

worth $367 million, making it the largest

supplier in India

• Other significant suppliers include

Hetero Labs, Ranbaxy Labs, Aurobindo

Pharma, Haffkine Bio-Pharma Corp.,

Micro Labs etc, all Members of IDMA.

INDIA AS PHARMACY OF

DEVELOPING WORLD – Examples

• Main procurement agencies for

developing countries depend

overwhelmingly on India

• 70-90% of essential medicines of

developing countries comes from India

• 50% of medicines procured by UNICEF

for developing countries are from India

• 75-80% of medicines distributed by

Dutch-based International Dispensary

Association (IDA) Foundation, the chief

medical supplier to developing

countries is sourced from India

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INDIA’S SUPPORT TO USA

• Over 40% of generics prescribed are from India

• India’s Generic drug producers have managed to drastically lower

prices of a range of therapeutics and saved millions of lives

• To ensure continued supply of the low cost quality generics from

India, the US FDA has opened India office

• 1 out of 5 US FDA inspections for approvals are in India

• 80% of all retail prescriptions filled in USA are for generic drugs

• 2013 report on Generic Drug Savings in US shows generics saved

the US health system a staggering $1.3 trillion in the last 10 -12

years

• Very Critical to President Obama's affordable healthcare

programme

• To overcome the shortage of cancer drugs J & J’s Doxil in USA,

the US FDA sought Sun Pharma’s help in providing their

chemotherapeutic drug Lipodox drugs from India25

CHALLENGES

• India is the 4th largest manufacturer of medicines in the world by

volume and has already adopted ' Make in India Strategy'

successfully in the context of Pharma exports

• However we are heavily dependent on APIs from China for our

formulation business. This vulnerability needs to be corrected by

heavy investment in the manufacture of APIs

• Pharma R& D is gradually moving from chemistry to biology and

it is estimated that >40% of new drugs likely to be approved by

USFDA in 2015 are going to be biologics

• Zydus Cadilla has already developed a Biosimilar for Abbott's

block buster drug Humira which has a global sales of $2 billion

• Indian companies should focus on developing and manufacturing

biosimilars, likely to be $40 billion global opportunity by 2020.

• India can aim for about 10% of this market

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NEED FOR KEY ENABLERS

To achieve global leadership position in Pharma, we need

following key enablers:

As a science based industry, Innovation forms core of its growth

strategy

An ecosystem for innovation where intellectual property is

adequately protected and enforced is a key requirement

Predictable and sustainable pricing policy based on scientific

discipline like Pharmacoeconomics

Regulatory framework harmonised with global practices and

formation of Central Drug Authority on the lines of USFDA

Strong political will to repel outdated laws e.g. amendment to

labour laws, land acquisition, D&C Act, SPE Act etc

Ease and speed of getting licenses for manufacturing – preferably

single window

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NEED FOR KEY ENABLERS

Consistency in SEZ policies

Quick passage of GST , with uniform single level of taxation in

pharma which will make India one common market and will make

significant positive impact on Pharma logistics and supply chain

Increase in government healthcare budget from 1% of GDP to at

least 4-5% ( global average 10 to 14% of GDP).

Expansion of health insurance so that people do not have to pay for

medicines from their own pocket

Commence massive reversal of brain drain and talent acquisition

programme for our scientists working in US, Europe etc as is done

by Singapore and China

Increase in govt. healthcare budget from 1% of GDP to at least 4-5%

( global average 10 to 14% of GDP)

Expansion of health insurance so that people do not have to pay for

medicines from their own pocket as 80% of them do so now28

HEALTHCARE INSURANCE REFORMS

• Healthcare in India is planned to be provided through:

State responsibility for health care

Free medical care for all

• Government has set up Rashtriya Swasthya Bima Yojana to

provide health insurance coverage for Below Poverty Line (BPL)

families

• Though not the first scheme by Govt. this scheme empowers the

beneficiary by allowing choice with freedom of choice between

public and private hospitals

• This scheme is a win-win for the user, insurer, hospital, NGO,

Govt etc – user has choice, insurer is paid premium for each

household enrolled for RSBY, hospital gets larger pool of

patients, NGOs and MFIs are paid for their services and the Govt

gets to cover a larger number of users by limiting the maximum

limit

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HEALTHCARE INSURANCE REFORMS

• Pradhan Mantri Swasthya Suraksha Yojana, is

another scheme that aims at correcting the

imbalances in the availability of affordable healthcare

facilities in the different parts of the country in

general

• Under the Scheme, six medical institutions on the

lines of AIIMS, Delhi are being set up in different

states

• Also upgrading 13 existing Government medical

college institutions in the initial phase

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ISSUES

• All projects/proposals to be considered on a long

term basis (for next 10-15 years) as Pharma industry

has a long gestation period

• Understanding between Centre and States required

for addressing issues of proper land allocation at

long lease/ subsidized rates to Pharma industry

• Land cost can be subsidised by Central to State

Govt. who will allocate land at low cost to the

industry with extended period of repayment

• Train Bank officials to appreciate Pharma industry

requirements and functioning

• Banks should provide soft loans for Infrastructure

changes @ 6% p.a. in line with international rates 2931

NEW INDIAN GOVERNMENT

• A new popular Government under the Leadership of

Shri Narendra Modi as Prime Minister of India has

been installed in May 2014

• The new Indian Government is keen to improve

healthcare facilities and health of the people.

• Is considering identifying 50 drugs for various

diseases and provide free medicines to all

• IDMA can act as a vital link in Pharmaceuticals

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INDIAN PHARMA – FUTURE POSITIVE

• Prime Minister Narendra Modi is holding

meeting of several stakeholders on

December 29th to chalk out a `specific action

plan' to implement the `Make in India'

programme

• Finance Minister Arun Jaitley and

Commerce and Industry Minister Nirmala

Sitharaman would also address the

gathering

• Pharmaceuticals has been identified as a

key sector under the programme

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GOVERNMENT INITIATIVES &

SUPPORT REQUIRED

Challenges are many and will need to be tackled with

Government initiatives & support to reach our quality

affordable medicines to all without hindrance by:

enhancing healthcare expenditure and infrastructure

setting up a ‘Lifeline Sector Funding’ of about Rs. 12,000

crores for our Intermediates, APIs and Formulations

Industries

establishing Pharma Growth Clusters

logistical support for encouraging rural penetration

upgrading infrastructure in manufacturing and research

shifting focus from market capture to market creation

encouraging greater Industry-Trade - Academia co-ordination

Reducing dependency on China for APIs

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INFRASTRUCTURE

• Infrastructure - roads, ports, railways, power and

communication - basics for growth have been

critical bottlenecks

• Govt has initiated new smart cities and industrial

clusters, being developed in identified industrial

corridors having connectivity

• NIPERs to develop as training centres for SMEs

• Training programs need to be conducted, as also

mock audit drills, such as how to face a sudden

audit

5535

SKILL DEVELOPMENT & TRAINING

• Pharmacy colleges in India churn out thousands of graduates

in Pharmacy every year.

• Most of these fresh graduates are not sufficiently trained in

various functional disciplines such as Analytical, Quality

Management, Manufacturing etc to be really employable in

the Pharmaceutical Industry

• Dearth of human resources well versed with regulatory norms

e.g. filing NDA (New Drug Application), negotiation skills,

documentation, statistical techniques, etc.

• Regulatory requirements in pharma and biotech industries

found missing in pharmacy syllabus

• LSSSDC to provide pharma industry with a sustained stream

of skilled individuals across functional areas and levels,

thereby vastly reducing costs associated with re-skilling,

attrition and low productivity.

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BASIC TRAINING

• Training facilities should be accessible across

the country

• ‘Train the Trainers’ schemes

• Government to provide funds and incentives to

encourage organisations to welcome training

and trained candidates into their workforce

• SMEs will benefit by including Compulsory

training programme

• Government can also consider providing

infrastructure support by using venues like

schools after their working hours to be used as

training centres37

IN CONCLUSION

• We estimate that, within the next few years, the Indian

Pharma Industry with Government support will:

Capture significant market-share of production Globally

Create world class manufacturing facilities backed by

contemporary technologies and regulatory practices

Raise the levels of employment to four times the

present level.

Ensure that the poorest continue to have access to

affordable medicines

Improve India’s global ranking from 3rd in volume and

14th in value to 2nd in volume and 8th in value

Create for India a strong global brand image as a safe

efficacious cost-efficient supplier of quality pharmaceuticals

IF IT IS PHARMACEUTICALS – IT IS INDIA

5538

Thank You39