Pharma
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Cross-roads for pharma in India Posted 21st February 2011 in Articles, General | Register to comment Dinar Kale The Open University Over the past 50 years, the Indian pharmaceutical industry has gone from being copy-cat followers to partners of choice for multinational companies in their drug discovery research and development efforts. A shift toward weak regulatory policy in the 1970s and a protected market encouraged the growth of an industry which has emerged as a key supplier of cheap and affordable drugs to the needs of low-income users in developing countries. Since the 1990s, Indian regulatory and market environment has changed remarkably. Strengthening of regulatory regime due to the Trade Related Intellectual Property Agreement (TRIPS) in 1995 forced Indian firms to change their business strategies towards focussing on the generics market in Europe and the USA, investing in innovative R&D and targeting contract manufacturing market. Indian firms started hiring Indian scientists working in multinational pharma companies (MNC) firms to fill knowledge gaps in innovative R&D and adopted overseas acquisition strategy to acquire knowledge regarding markets, technology and regulatory skills. The value of the Indian pharmaceutical industry’s overseas acquisition has grown from just US $8 million in 1997 to $116 million in 2004. 1 Geographically the overseas acquisition by
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Cross-roads for pharma in IndiaPosted 21st February 2011 in Articles, General | Register to comment
Dinar Kale
The Open University
Over the past 50 years, the Indian pharmaceutical industry has gone from being copy-cat followers to partners of choice for multinational companies in their drug discovery research and development efforts. A shift toward weak regulatory policy in the 1970s and a protected market encouraged the growth of an industry which has emerged as a key supplier of cheap and affordable drugs to the needs of low-income users in developing countries. Since the 1990s, Indian regulatory and market environment has changed remarkably.
Strengthening of regulatory regime due to the Trade Related Intellectual Property Agreement (TRIPS) in 1995 forced Indian firms to change their business strategies towards focussing on the generics market in Europe and the USA, investing in innovative R&D and targeting contract manufacturing market. Indian firms started hiring Indian scientists working in multinational pharma companies (MNC) firms to fill knowledge gaps in innovative R&D and adopted overseas acquisition strategy to acquire knowledge regarding markets, technology and regulatory skills. The value of the Indian pharmaceutical industry’s overseas acquisition has grown from just US $8 million in 1997 to $116 million in 2004.1 Geographically the overseas acquisition by Indian pharmaceutical firms continues to be directed at companies in advanced markets specifically the US and Europe.
Rise of emerging countries and large pharma’s changing strategies
By 2010, the potential of emerging markets had come to prominence and these markets became extremely important in the global context. The IMS Health Report predicts that 17 high-performing emerging countries, amounting to around 16% of the total world market or US$123 billion in 2009, are set to form new growth markets for pharmaceutical industry overturning the established pharmaceutical order.2 As a result ‘Big pharma’ firms are entering these emerging markets by re-modelling their operations. For example, in 2010 Abbott set up a stand-alone Established Products Division (EPD) specifically for expanding the market for Abbott’s
established pharmaceutical portfolio outside of the USA, particularly focused on emerging markets.3
In 2010, GSK shifted its strategy from a traditional blockbuster model and towards driving growth from new products, emerging markets and its consumer business. In 2009 only 30 per cent of GSK’s revenue in the quarter was derived from its traditional “white pill/Western markets” business, compared with 38 per cent in the 2008. By adopting a high volume strategy in emerging markets, GSK plans to significantly reduce prices of its medicine in emerging economies in 2010.4
“In 2010, GSK shifted its strategy from a traditional blockbuster model and towards driving growth from new products, emerging markets and its consumer business.”
Challenge for Indian pharmaceutical industry
India is now among the fastest-growing emerging markets and large pharma companies have devised country-specific pricing and marketing strategies. In recent years, Merck and GSK have launched drugs and vaccines at far lower prices than in their home countries. Indian firms, which traditionally dominated domestic and emerging markets, are now increasingly facing severe competition from MNCs. This transformation has forced Indian firms to reconfigure their strategies.
Indian firms have adopted two major strategies to deal with this new emerging scenario:
A. Collaborate and not compete with MNC firms
B. Divest and consolidate
A. Collaborate than compete
Shorty after the year 2000, some Indian companies such as Dr. Reddy’s Laboratories Ltd., (DRL) adopted the more aggressive strategy of Para IV filings, which involves invalidating existing patents or producing non-infringing process through a costly process of litigation.5 It is a high risk, high return strategy due to the litigation costs involved and the 180-day market exclusivity that the firm wins on a successful challenge. DRL got its reward by winning six-month exclusivity for selling Fluoxentine 40mg capsules in US but soon received quite a few setbacks, losing the AmVaz case to Pfizer being one of them.5 After reviewing litigation and R&D cost Indian firms have discarded the high risk, high return strategy of Para IV filings and prefer generic deals with MNC firms. For example in January 2006, DRL entered into separate
agreements with Merck that allowed it to launch the authorized generic versions of Proscar® tablets (finasteride) and Zocor® tablets (simvastatin).6 Extending this strategy in June 2009, DRL entered a deal with GSK giving it access to more than 100 of DRL’s branded drugs to market in Africa, the Middle East, Asia and Latin America.7 The drugs cover cardiovascular, diabetes, oncology, gastroenterology and pain management; they’ll be manufactured by DRL and revenues will be shared.7 Similarly, in 2010 Zydus Cadila entered a licensing and supply agreement with Abbott for a portfolio of pharmaceutical products that Abbott will commercialize in 15 emerging markets, enabling the company to further accelerate its emerging markets growth.7 In addition, the beginning of 2011 witnessed Cadila Healthcare and Bayer HealthCare, unit of Bayer AG, setting up a joint venture to market Bayer’s products in the Indian domestic market, including women’s healthcare, metabolic disorders and oncology.8 The equal joint venture named Bayer Zydus Pharma would source Bayer’s existing products in India while Cadila Healthcare would contribute its healthcare drugs, diagnostic imaging and other products.
Collaboration strategies have helped Indian firms minimise risks and generate constant revenue from generic markets in advanced countries.
B. Consolidate on heath value chain
Some of the Indian companies have diverted from non-core businesses to focus and consolidate on narrow band of capabilities (Table 1). For example in 2010 top Indian pharmaceutical firm Piramal Healthcare sold its Healthcare Solution Business to Abbott Laboratories for almost $3.6 million.9 Piramal Healthcare is now investing in strengthening contract manufacturing / R&D and innovative R&D businesses while this acquisition helped Abbott in capturing market leadership in the Indian pharmaceutical market and further accelerated the company’s growth in emerging markets.
“Collaboration strategies have helped Indian firms minimise risks and generate constant revenue from generic markets in
advanced countries.”
Table 1: Large pharmaceutical firms acquisitions deals in emerging markets (Source: Annual Reports, 2009)
In 2009, Ranbaxy sold its pharmaceutical business to Japanese firm Daiichi Sankyo to fund investment in setting up a high-end chain of hospitals. Ranbaxy had a presence in 90 countries all over the world and more than 80% of its sales are from overseas markets. This acquisition augmented Daiichi’s generic product portfolio and expanded the company’s presence in the emerging markets.9
Another Indian firm, Matrix, the world’s largest supplier of generic anti-retroviral APIs (active pharmaceutical ingredients) sold its pharmaceutical business to Mylan laboratories, a major generic firm in 2006.9 This acquisition allowed Mylan to improve its geographic diversification and develop a broader therapeutic portfolio. It also allowed Matrix to become the world hub of manufacturing for Mylan albeit still its strong focus on anti-retrovirals.9
Similarly, in May 2010 Aurobindo, an Indian firm, licensed out 55 solid oral dose and five sterile injectables in 70 markets to Pfizer.9 Two months earlier, Aurobindo sold rights to 39 generic solid oral dose products in the USA and 20 in Europe, and another 11 in France, as well as rights to 12 sterile injectable products in the USA and Europe.9
These acquisitions provided large pharmaceutical firms with access to generic product development, manufacturing facilities and excellent distribution network
Implications of transformation in the Indian pharmaceutical industry
These changes in Indian pharma’s strategic direction have major implications regarding access to healthcare to low income users and the future direction of pharmaceutical policy in developing countries.
“These changes in Indian pharma’s strategic direction have major implications regarding access to healthcare to low
income users…”
These acquisitions may point towards a next phase of development for the industry that can potentially limit the role of emerging country firms, and Indian firms in particular, to being a supplier of cheap and affordable drugs to developing countries.
Whilst both large pharma and firms in emerging economies are engaging with diseases afflicting low income populations in developing countries they are doing so in conjunction with the public or not for profit sectors. It is also clear that the pharma sector is currently undergoing change and it is unclear what the current round of mergers and acquisitions will signify for emerging economy firms and for large pharma.
I’m not arguing against a role for the private sector tin constructing new approaches to engaging with the health needs of low income users in developing countries; however, we have to question whether the private sector alone can provide a durable innovation architecture that will deliver ongoing benefits and engagement over time.
These trends have also sparked debate regarding pharmaceutical policy in India and demands for protective measures are increasing. It has been reported that the Indian government is thinking about restricting foreign direct investment (FDI) to 49 per cent of a pharmaceutical company’s equity. It is clear that restrictive steps will harm the Indian pharmaceutical industry in long term, however, questions regarding access to affordable healthcare to lower income populations remains a bigger concern.
References:
1. KMPG (2006) The Indian pharmaceutical industry: Collaboration for growth, http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/Documents/The-Indian-Pharmaceutical-industry.pdf
2. IMS (2010) Pharmerging shake up – New imperatives in redefined world, http://www.imshealth.com/pharmergingreport2010.
3. Kale (2007) Internationalisation Strategies of Indian Pharmaceutical firms, IKD Working Paper 23, http://www.open.ac.uk/ikd/documents/working-papers/ikd-working-paper-23.pdf
4. Financial Times, (2009) GSK to cut drug prices for developing countries; http://www.ft.com/cms/s/0/9848b498-dd14-11de-ad60-00144feabdc0.html?nclick_check=1 last checked on 29th November, 2009
5. Athreye, S., Kale, D. and Ramani, S. V. (2009) “Experimentation with Strategy and the evolution of Dynamic Capability in the Indian Pharmaceutical Sector”, Industrial and Corporate Change 18 (4):729-59
6. Kale (2007) Internationalisation Strategies of Indian Pharmaceutical firms, IKD Working Paper 23, http://www.open.ac.uk/ikd/documents/working-papers/ikd-working-paper-23.pdf
7. Chataway, Kale and Hanlin (2010) New drugs and health technologies for low income populations: Will the private sector meet the needs of low income populations in developing countries?, IKD Working paper, 58 http://www.open.ac.uk/ikd/documents/working-papers/ikd-working-paper-58.pdf
8. Economic Times (2011) India’s Cadila Healthcare, Bayer unit to form JV, http://economictimes.indiatimes.com/news/news-by-industry/healthcare/biotech/pharmaceuticals/indias-cadila-healthcare-bayer-unit-to-form-jv/articleshow/7378122.cms
9. Chataway, Kale and Hanlin (2010) New drugs and health technologies for low income populations: Will the private sector meet the needs of low income populations in developing countries?, IKD Working paper, 58 http://www.open.ac.uk/ikd/documents/working-papers/ikd-working-paper-58.pdf
About the author:
Dinar Kale is a Lecturer of International Development and Innovation at The Open University. He can be contacted here at the following email address: [email protected].
Where next for the pharmaceutical i
Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email [email protected] to buy additional rights or use this link to reference the article - http://blogs.ft.com/beyond-brics/2011/05/17/indian-pharma-sector-coming-of-age/#ixzz1UoCJeb70
Indian pharma sector: coming of age?May 17, 2011 5:23 pm by Akanksha Awal
0
Indian pharmaceutical companies have gained an unflattering reputation of being generic drug makers with little to show in the way of new product development and innovation. But a few companies in the sector are beginning to break the mould.
On Monday Glenmark, the Mumbai-listed pharmaceutical firm, signed a licensing agreement with Sanofi, the French pharmaceutical group, for the development and commercialisation of an antibody discovered by Glenmark.
The license is for a drug which could be used for the treatment of Crohn’s disease (an autoimmune disease affecting the gastrointestinal tract) and multiple sclerosis.
The deal, which will be completed in stages, could potentially mean rewards of up to $613m for Glenmark in double-digit royalty payments, development, regulatory and commercial milestone payments. The Indian pharmaceutical firm will receive $50m from Sanofi upfront and a further $25m at the close of the transaction, while $25m will be paid upon Sanofi’s positive assessment of data from Glenmark.
Glenmark’s discovery of the molecule is still a little way off commercialisation – the drug will not be available in the market until 2017 at the earliest. But the company is one of the few operating in the Indian pharmaceutical sector that focuses on development of new drugs.
Monday’s deal is one of a series of 5 similar deals that Glenmark has signed with various European and North American pharmaceutical companies over the last five years. The corporation has 5 research centres across the world and it is developing eight new molecules for pharmaceutical drugs in the pipeline.
India’s pharmaceutical companies have long focused on the sale of low-cost generic drugs in high volumes across the world. As a result, R&D spending of Indian pharmaceutical companies
has remained low. On average, Indian drugmakers spend 3 -4 per cent of their sales on research and development activities, according to Sarabjeet Nangra, an analyst at Angel broking. In contrast, global big pharmaceutical companies invest up to 20 per cent of their sales on research and development.
Indian companies typically spend the bulk of their capital on meeting the regulatory requirements set by the US and EU drug authorities.
In the high-risk-high-reward investment pharmaceutical industry, Indian pharmaceutical corporations, including Glenmark, look to developed world markets to realize their investments, particularly at the advanced stages of drug development.
But Glenmark and a few other Indian companies, including Piramal and Sun Pharma, invest in research and development of new drugs too, said one analyst who asked not to be named.
In the past Indian pharmaceutical corporations have spun-off their research arms in deals with foreign pharmaceutical corporations who are attracted to the low cost of research in India. One the Indian side, foreign link ups have helped to increase the scale of research.
“Foreign investment and joint-ventures have definitely helped in scaling up R&D activities at Indian pharmaceutical companies, but as of now there is little that indicates that there has been commercial success out of these investments,” said Nangra.
Glenmark’s deal with Sanofi marks a significant first step for the Indian pharmaceutical sector, but it is unlikely that the deal might become a trend for the sector as a whole in the near future.
Related reading:Deal of the day: India’s $724m Moov, beyondbrics
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Publish Date: Apr, 2010
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Description Table of Content List of Figures & Tables
Pharmaceuticals has emerged as one of the leading industries in the Indian Inc., with the domestic market showing an unprecedented growth of around 9% to generate revenue of about INR 554.5 Billion (US$ 11.1 Billion) in FY 2009. This dramatic growth in the Indian pharmaceutical industry can be attributed to several factors such as growing middle class population, rapid urbanization, increase in lifestyle-related diseases and acceptance of health insurance. Besides, the product patent regime has provided ample support to the industry to sustain its growth pace despite the global economic downturn. Generic is emerging as one of the leading segments to be benefited by many drugs going off-patent in due course of time.
According to our new research report “Booming Pharma Sector in India”, the Indian pharmaceutical industry is projected to show double-digit growth in near future owing to rise in pharmaceutical outsourcing and consolidation of highly fragmented industry. As exports form major part of the pharmaceutical industry in India, leading players have started expanding their reach towards the West. Thanks to investments in R&D and thriving for more and more ANDA filings, the clinical trials market is expected to grow at blistering pace in coming years. To support this evidence, we have done an extensive research and analysis of various segments of the Indian pharmaceutical market. These segments include: Domestic & Export Market, Branded & Generics Drugs, Formulations & Bulk Drugs, etc.
The baseline for optimistic future outlook of the pharmaceutical market is improvement in access to medicines of Indian population. Emerging sectors like biogenerics and pharma packaging will also pave the way for the pharmaceutical market to continue its upward trend over the forecast period (FY 2010- FY 2013).
The report provides thorough statistical and analytical overview of the Indian pharmaceutical market. It contains information about past, present and future trends, with focus on entire structure, composition and working of the pharmaceutical market. The report extensively discusses opportunities and challenges expected to arise within and outside the pharmaceutical market. The report also analyzes emerging sectors, regulatory environment and distribution system to identify strength and weaknesses of the pharmaceutical market. It has thoroughly examined current market trends, industrial developments and competitive landscape to enable clients understand the market structure and its progress in coming years. It also gives a brief overview of demographics and healthcare profile to adjudge the pharmaceutical market in terms of demand, expenditure and possible future direction.
Not able to find d
How will 2011 pan out for the pharma sector?Published on Tue, Dec 28, 2010 at 13:07 | Source : CNBC-TV18
Updated at Mon, Jan 17, 2011 at 17:29
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In an interview with CNBC-TV18, Dr
Bino Pathiparampil, Vice President,
Institutional Equities, IIFL says, the pharma sector will continue its
outperformance into 2011.
He discusses various pharma stocks and gives his outlook going forward.
Below is a verbatim transcript of his interview with CNBC-TV18's Latha Venkatesh. Also watch the accompanying video.
Q: Are you positive on
pharma as a space in 2011? Would it be a year of some risk aversion which will make smart money come to a defensive sector like pharma?
A: Our view is that the pharma sector will continue its outperformance into 2011 for couple of reasons. One, if at all there are people who are a bit worried about the markets being high then we could see some more inflow into the pharma space, it being it a defensive sector. Generic pharma is cross cutting measure across the developed markets and we could see some defensive money coming into it.
Secondly, and more importantly, the business fundamentals also continue to look good. The growth in the domestic market continues to be
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strong; it is unlikely to be impacted by some economic recessionary pressure. Also, the growth in the US market will continue to be strong for the next two-three years for which we have improved visibility compared to last year, which would also I believe benefit the sector.
Q: Sun Pharma ranks among your top picks, what kind of price targets are you looking at and likewise for Cipla ?
A: For Sun Pharma, we don�t have a full picture of the US pipeline for the company that will play out over the next 12-18 months, it�s too early to put a specific price target which the stock could trade at the end of the year. But as of now from whatever data points we have regarding the potential upsides for the company, I have a price target of anywhere between Rs 500-550. But I believe there is more upside in store as we move along and we get more visibility on their product portfolio.
Cipla, on the other hand, is going through a phase of very slow growth, a little bit lacklustre performance over the last few quarters. Some early signs of pickup in growth rate have started showing, but I would wait for one-two more quarters to see what is the likely performance for the year ahead before I jump on to that stock.
Q: Sun Pharma in the past couple of weeks has seen a fairly decent jump, would you expect that good run to continue? Is it a buy at current levels you would think?
A: Yes, even at current levels, I would look positively at that stock. The recent outperformance has come related to a specific news flow on Eloxatin in the US that has led to some earnings upgrades. I believe there are more such positive news items waiting in the store. Generic Taxotere launch in the US could be one of them. Improvement in the operational parameters of the recently acquired Taro Pharma
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in the US could be another one.
Some news related to Caraco either improvement in the FDA issues there and ressumption of production could be another one. Delisting of Caraco could slightly improve Sun�s margins. Also, there are potentially few products, which are not yet in the market limelight, which could come up over the course of the year.
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Govt may limit FDI in pharma sector at 49%Rupali Mukherjee, TNN Jan 14, 2011, 04.39am IST
MUMBAI: The government may soon take a decision to cap foreign direct investment in the pharma sector at 49% from the 100% allowed now. Sources say there is also a thinking in the government to allow 49% foreign investment through the automatic route, and the remaining 51% be approved on a case-by-case basis through the Foreign Investment Promotion Board. At present, 100% FDI is allowed through the automatic route.
Sources said that the health ministry has been championing the move since the department of policy and promotion circulated a note in August last year raising concerns on the growing dominance of multinationals in the sector. Whatever be the outcome, the issue has thrown open a debate, with the domestic generic industry pitted against the foreign multinationals already operating in the country.
Indian Pharmaceutical Alliance (IPA), representing the domestic generic industry, feels "unbridled freedom of acquisitions of Indian companies by the originator companies (foreign MNCs) could marginalize the domestic sector".
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Says IPA director general DG Shah, "MNCs have already raised their share of the domestic market to 25% from 15% five years ago. The increasing dominance of the MNCs will hit the domestic sector in two ways. Firstly, their ability to present their issues before the policy makers will be severely compromised. Secondly, market dominance will lead to more prescriptions for the MNCs, driving away domestic companies."
Generic drug major Cipla's chairman and managing director Dr YK Hamied feels that over the next few years prices of the life-saving drugs will go up. Speaking to TOI, he said: "The Indian government must approach this issue holistically and not look at the cap on FDI in pharmaceutical sector in isolation. The Indian Patent Law allows product patents for all new molecules which have been patented after the year 1995. Many of these molecules are patented in India by MNCs and enjoy a monopoly."
This trend is already visible and over time, India will witness a large number of new molecules being launched in India and the market share of MNCs increasing steadily.
"This monopolistic pricing makes life-saving medicines inaccessible to the majority of people living in India and other parts of the world. This also places millions of lives of people at risk for those suffering from common ailments such as tuberculosis, malaria and other diseases", he adds.
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About Pharmac India 2011
Immense Potential to be unlocked…….
Pharmac India 2011 is the 2nd International exhibition of India’s prominent pharma and healthcare industry to be held between 17-19 September 2011 at Gujarat University. Exhibition Hall in Ahmedabad. It aims to bring pharmaceutical manufacturers, pharmaceutical packaging material and machinery alongwith API’s ,bio pharmaceuticals with largest suppliers, distributors under one roof to commute the best ideas about the pharmaceutical industry.
The Pharmaceutical industry has become the 3rd largest in the world in terms of volume and ranks 14th in terms of value at $20 billion.
The Indian pharmaceutical industry is growing at 9% and is expected to surge to $50 billion by the year 2015. Gujarat contributes 22% in export of pharma products and close to 50% of the total pharma manufacturing industry is in Gujarat.
Messages :
Mr. Y.C. Patel – Chairman, IDMA - GSBWe are at the beginning of an era where new contact is going to revolutionize the world I see Pharmac 2011 an international exhibition will bring together all the companies involved in the Pharmaceutical, Machinery, Packaging Industry will come together to promote their product. Pharmac 2011 is the second international exhibition organized by IDMA – GSB in association with Orbitz Exhibitors Pvt. Ltd.
I am sure that the deliberations in the exhibition will generate lots of best practices, strategies and the solutions for better pharmaceutical industries. The rates are very competitive and cautious to take advantage for the same. Henceforth, I request all the members and SME’s industries to be a part of this exhibition. I welcome all the exhibitors and my heartiest wishes to Pharmac India 2011.
Mr. Kamlesh Patel – Chairman Pharmac Committee, IDMA - GSBIDMA-GSB and Orbitz exhibition has organized Pharmac India 2011. I am very happy to consider the SME’s participation in Pharmac 2009. It gives a great opportunity for Pharma Industries to expose there potentials and branding their company products.I personally request to all members to participate and showcase there product and make this event a great success.I wish organizers a grant success.
Mr. Rupen Vikamsey - Managing Director, Orbitz Exhibitions Pvt. Ltd.It is a matter of immense pride that The Indian Drug Manufacturers'Association has entrusted Orbitz Exhibitions Pvt. Ltd. with organizingPharmac India 2011 an International Exhibition on Pharmaceutical Machinery, Pharmaceutical Packaging and material industry, API’s, Bulk drugs, and many other segments. The exhibition is an opportunity for the SME’s to display their expertise and skills beyond geographical boundaries.
Pharmac India 2011, once again presents opportunities for companies to display & demonstrate their products & services and also to the visitors from different sectors arriving from all over the country and abroad. The rates for participation are very economical and competitive.
Being the event managers and organizers we are quite confident that the 2nd edition i.e. Pharmac India 2011, will be even more fruitful andbeneficial for exhibitors & visitors.
All rights reserved by Orbitz
Scope and Importance
Over the years pharmacy has grown in the form of pharmaceuticals sciences through research and development processes. It is related to product as well as to services. The various drugs discovered and developed are its products and the healthcare it provides comes under the category of services.
Pharmacy involves all the stages that are associated with the drugs i.e. discovery, development, action, safety, formulation, use, quality control, packaging, storage, marketing, etc. This profession has a large socio-economic relevance to the Indian economy. In India this sector is among the future economy drivers. It is committed to deliver high quality drugs and formulations at an affordable price, so that majority of people can afford them.
This profession has a large socio-economic relevance to the Indian economy. In India this sector is among the future economy drivers. It is committed to deliver high quality drugs and formulations at an affordable price, so that majority of people can afford them. The transformation of the sector from conventional pharmacy to drug experts, which is both desired and necessary to reach the global standards, has already made commendable progress.
Liberalization, privatization and globalization (LPG) have helped the Indian pharmaceutical companies to achieve international recognition. It's remarkable to note that today several Indian pharma companies are approved by US FDA and are listed at NASDAQ.
The multibillion-dollar pharma industry grows mainly through knowledge wealth creation. This sector has transformed a lot over About Us | Feedback | Contact Us | XML Sitemap | Sitemap | Resources | Link to Us | Blog | Advertise with us |
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What is the scope in pharmaceutical sector for an MBA?Improve
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Answers.com > Wiki Answers > Categories > Business & Finance > What is the scope in pharmaceutical sector for an MBA?
Answer:
Improve
The following was written by Wharton College Pennsylvania. This should help.
Why an MBA
The MBA is not an end in itself, but a means to an end. It is a degree designed to give you the ability to develop your career to its fullest potential, at an accelerated pace. What will you get out of an MBA? Aside from a powerful life experience, the MBA degree should supply three main value propositions: Skills, Networks, and Brand.
Skills
These include the "hard skills" of economics, finance, marketing, operations, management, and accounting, as well as the "soft skills " of leadership, teamwork, ethics, and communication that are so critical for effective management. MBA students acquire these skills inside and outside the classroom. Since MBA programs attract people from very diverse industries and cultures, a program should be able to leverage these differences and translate them into learning opportunities.
Networks
An MBA degree program offers access to a network of MBA students, alumni, faculty, and business and community leaders. This network can be very useful when beginning a job search, developing a career path, building business relationships in your current career, or pursuing expertise outside your current field. For example, entrepreneurs need access to capital, business partners, vendors, and clients. Arts-related businesses need access to funding and strategic management in order to position themselves to be relevant in the marketplace. Global businesses need access to local business cultures as they expand their enterprises to new territories.
Brand
The MBA degree is a recognized brand that signifies management and leadership training. The particular school and type of MBA program you attend also have brand associations that can help open doors based on the school's reputation. The strength of a school's brand is based on the program's history, its ability to provide students with technical skills and opportunities for personal growth, and the reach of its alumni and industry network. A powerful brand can give you the flexibility to make changes throughout your career.
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Application & Scope of IT in the Indian Pharma Sector
1. Rajib Mukherjee
1. ↵ ‘Prabhu Niketan’ CL-234, 1st Floor, Sector-2 Salt Lake City Kolkata 700 091 West Bengal India Tel: + 91 33 23342510 e-mail: [email protected]
Abstract
This paper focuses on the use of IT systems in pharmaceutical companies and how useful IT is in present day working. The information on the pharmaceutical industry in India and its impact has been gathered from reading the relevant literature and from the internet. It is intended to help the reader to get a general understanding of IT systems' application in the pharmaceutical sector and how IT can improve organisational efficiency.
automation bio-informatics e-health ERP information technology pollution
© 2006 SAGE Publications
Pharmaceutical marketingFrom Wikipedia, the free encyclopedia
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The examples and perspective in this article deal primarily with the United States and do not represent a worldwide view of the subject. Please improve this article and discuss the issue on the talk page. (June 2011)
An advertisement for the prescription antidepressant Wellbutrin, targeted to a physician audience.
Pharmaceutical marketing , sometimes called medico-marketing, is the business of advertising or otherwise promoting the sale of pharmaceuticals or drugs. There is some evidence that marketing practices can negatively affect both patients and the health care profession.[1] Many countries have measures in place to limit advertising by pharmaceutical companies.
Pharmaceutical company spending on marketing far exceeds that spent on research.[2][3] In Canada, $1.7 billion was spent in 2004 to market drugs to physicians; in the United States, $21 billion was spent in 2002.[4] In 2005 money spent on pharmaceutical marketing in the US was estimated at $29.9 billion with one estimate as high as $57 billion.[3] When the US number are broken down 56% was free samples, 25% was detailing of physicians, 12.5% was direct to consumer advertising, 4% on hospital detailing, and 2% on journal ads.[4]
Contents[hide]
1 History 2 To health care providers
o 2.1 New Pharma Code & Guidelines o 2.2 Free samples o 2.3 Continuing medical education o 2.4 Pharmaceutical representatives o 2.5 Peer influence o 2.6 Journal articles o 2.7 Private and public insurers
3 To consumers 4 Economics 5 Regulation 6 Evolution of marketing 7 See also 8 References 9 Further reading 10 External links
[edit] History
The marketing of medication has a long history. The sale of miracle cures, many with little real potency, has always been common. Marketing of legitimate non-prescription medications, such as pain relievers or allergy medicine, has also long been practiced, although, until recently, mass marketing of prescription medications has been rare. It was long believed that since doctors made the selection of drugs, mass marketing was a waste of resources; specific ads targeting the medical profession were thought to be cheaper and just as effective.[citation needed] This would involve ads in professional journals and visits by sales staff to doctor’s offices and hospitals. An important part of these efforts was marketing to medical students.[citation needed]
[edit] To health care providers
Marketing to health care providers takes four main forms: gifting, detailing, drug samples, and sponsoring continuing medical education (CME).[3] Of the 237,000 medical sites representing 680,000 physicians surveyed in SK&A's 2010 Physician Access survey, half said they prefer or require an appointment to see a rep (up from 38.5% preferring or requiring an appointment in 2008), while 23% won't see reps at all, according to the survey data. Practices owned by hospitals or health systems are tougher to get into than private practices, since appointments have to go through headquarters, the survey found. 13.3% of offices with just one or two doctors won't see reps, compared with a no-see rate of 42% at offices with 10 or more docs The most accessible physicians for promotional purposes are allergists/immunologists – only 4.2% won't see reps at all – followed by orthopedic specialists (5.1%) and diabetes specialists (7.6%). Diagnostic radiologists are the most rigid about allowing details – 92.1% won't see reps – followed by pathologists and neuroradiologists, at 92.1% and 91.8%, respectively. [5]
[edit] New Pharma Code & Guidelines
The Pharmaceutical Research and Manufacturers of America (PhRMA) released updates to its voluntary Code on Interactions with Healthcare Professionals on July 10. The new guidelines take effect January 2009." [6]
"In addition to prohibiting small gifts and reminder items such as pens, notepads, staplers, clipboards, pill boxes, etc., the revised Code: Prohibits company sales representatives from providing restaurant meals to healthcare professionals outside their offices, but allows them to provide occasional meals in healthcare professionals’ offices in conjunction with informational presentations."[7]
1.Prohibits company sales representatives from providing restaurant meals to healthcare professionals, but allows them to provide occasional meals in healthcare professionals’ offices in conjunction with informational presentations"[8]
2.Includes new provisions requiring companies to ensure their representatives are sufficiently trained about applicable laws, regulations, and industry codes of practice and ethics.[9]
3.Provides that each company will state its intentions to abide by the Code and that company CEOs and compliance officers will certify each year that they have processes in place to comply.[10]
4.Includes more detailed standards regarding the independence of continuing medical education[11]
5.Provides additional guidance and restrictions for speaking and consulting arrangements with healthcare professionals [12]
[edit] Free samples
Free samples have been shown to affect physician prescribing behaviour. Physicians with access to free samples are more likely to prescribe brand name medication over equivalent OTC medications.[3] Other studies found that free samples decreased the likelihood that physicians would follow standard of care practices.[3]
Receiving pharmaceutical samples does not reduce prescription costs. Even after receiving samples, sample recipients remain disproportionately burdened by prescription costs [13]
It is argued that a benefit to free samples is the “try it before you buy it” approach. Free Samples give immediate access to the medication and the patient can begin treatment right away. Also, it saves time from going to a pharmacy to get it filled before treatment begins. Since not all medications work for everyone, and many do not work the same way for each person, free samples allows you to find which dose and brand of medication works best before having to spend money on a filled prescription at a pharmacy.[13]
[edit] Continuing medical education
Hours spent by physicians in industry-supported CME is greater than that from either medical schools or professional societies.[3]
[edit] Pharmaceutical representatives
Currently, there are approximately 81,000 pharmaceutical sales reps in the United States[14] pursuing some 830,000 pharmaceutical prescribers. A pharmaceutical representative will often try to see a given physician every few weeks. Representatives often have a call list of about 200-300 physicians with 120-180 targets that should be visited in 1-2 or 3 week cycle.
Because of the large size of the pharmaceutical sales force, the organization, management, and measurement of effectiveness of the sales force are significant business challenges. Management tasks are usually broken down into the areas of physician targeting, sales force size and structure, sales force optimization, call planning, and sales forces effectiveness. A few pharmaceutical companies have realized that training sales representatives on high science alone is not enough, especially when most products are similar in quality. Thus, training sales representatives on relationship selling techniques in addition to medical science and product knowledge, can make a difference in sales force effectiveness. Specialist physicians are relying more and more on specialty sales reps for product information, because they are more knowledgeable than primary care reps.
The United States has 81,000 pharmaceutical representatives or 1 for every 7.9 physicians.[3] The number and persistence of pharmaceutical representatives has placed a burden on the time of physicians.[15] "As the number of reps went up, the amount of time an average rep spent with doctors went down—so far down, that tactical scaling has spawned a strategic crisis. Physicians no longer spend much time with sales reps, nor do they see this as a serious problem."
Marketers must decide on the appropriate size of a sales force needed to sell a particular portfolio of drugs to the target market. Factors influencing this decision are the optimal reach (how many
physicians to see) and frequency (how often to see them) for each individual physician, how many patients suffer from that disease state, how many sales representatives to devote to office and group practice and how many to devote to hospital accounts if needed. To aid this decision, customers are broken down into different classes according to their prescription behavior, patient population, and of course, their business potential.
Marketers attempt to identify the set of physicians most likely to prescribe a given drug. Historically, this was done by measuring the number of total prescriptions (TRx) and new prescriptions (NRx) per week that each physician writes. This information is collected by commercial vendors. The physicians are then "deciled" into ten groups based on their writing patterns. Higher deciles are more aggressively targeted. Some pharmaceutical companies use additional information such as:
profitability of a prescription (script), accessibility of the physician, tendency of the physician to use the pharmaceutical company's drugs, effect of managed care formularies on the ability of the physician to prescribe a drug, the adoption sequence of the physician (that is, how readily the physician adopts new drugs in
place of older treatments), and the tendency of the physician to use a wide palette of drugs influence that physicians have on their colleagues.
Data for drugs prescribed in a hospital are not usually available at the physician level. Advanced analytic techniques are used to value physicians in a hospital setting.[citation needed]
Physicians are perhaps the most important component in sales. They write the prescriptions that determine which drugs will be used by people. Influencing the physician is the key to pharmaceutical sales. Historically, this was done by a large pharmaceutical sales force. A medium-sized pharmaceutical company might have a sales force of 1000 representatives.[citation
needed] The largest companies have tens of thousands of representatives around the world. Sales representatives called upon physicians regularly, providing clinical information, approved journal articles, and free drug samples. This is still the approach today; however, economic pressures on the industry are causing pharmaceutical companies to rethink the traditional sales process to physicians.
[edit] Peer influence
Key opinion leaders
Key opinion leaders (KOL), or "thought leaders", are respected individuals, such as prominent medical school faculty, who influence physicians through their professional status. Pharmaceutical companies generally engage key opinion leaders early in the drug development process to provide advocacy and key marketing feedback.[16] Some pharmaceutical companies identify key opinion leaders through direct inquiry of physicians (primary research). Recently, pharmaceutical companies have begun to use social network analysis to uncover thought leaders; because it does not introduce respondent bias, which is commonly found in primary research; it
can identify and map out the entire scientific community for a disease state; and it has greater compliance with state and federal regulations; because physician prescribing patterns are not used to create the social network.[17]
Alternatives to segmenting physicians purely on the basis of prescribing do exist, and marketers can call upon strategic partners who specialize in delineating which characteristics of true opinion leadership, a physician does or does not possess. Such analyses can help guide marketers in how to optimize KOL engagements as bona fide advisors to a brand, and can help shape clinical development and clinical data publication plans for instance, ultimately advancing patient care.
Colleagues
Physicians acquire information through informal contacts with their colleagues, including social events, professional affiliations, common hospital affiliations, and common medical school affiliations. Some pharmaceutical companies identify influential colleagues through commercially available prescription writing and patient level data.[18] Doctor dinner meetings are an effective way for physicians to acquire educational information from respected peers. These meetings are sponsored by some pharmaceutical companies.
[edit] Journal articles
See also: Medical ghostwriter
Recent legal cases and US congressional hearings have provided access to pharmaceutical industry documents revealing new marketing strategies for drugs.[19] Activities once considered independent of promotional intent, including continuing medical education and medical research, are used, including paying to publish articles about promoted drugs for the medical literature, and alleged suppression of unfavorable study results.[20]
[edit] Private and public insurers
Public and private insurers affect the writing of prescriptions by physicians through formularies that restrict the number and types of drugs that the insurer will cover. Not only can the insurer affect drug sales by including or excluding a particular drug from a formulary, they can affect sales by tiering, or placing bureaucratic hurdles to prescribing certain drugs. In January 2006, the U.S. instituted a new public prescription drug plan through its Medicare program. Known as Medicare Part D, this program engages private insurers to negotiate with pharmaceutical companies for the placement of drugs on tiered formularies.
[edit] To consumers
Only two countries as of 2008 allow direct to consumer advertising (DTCA): the United States and New Zealand.[3] Since the late 1970s, DTCA of prescription drugs has become important in the United States. It takes two main form: the promotion or creation of a disease out of a non-pathologic physical condition or the promotion of a medication.[3] Many people will inquire
about, or even demand a medication they have seen advertised on television.[who?] In the United States, recent years have seen an increase in mass media advertisements for pharmaceuticals. Expenditures on direct-to-consumer advertising have more than quintupled in the seven years between 1997 and 2005 since the FDA changed the guidelines, from $700 million in 1997 to more than $4.2 billion in 2005, according to the United States GAO (Government Accountability Office, 2006).[3]
The mass marketing to consumers of pharmaceuticals is banned in over 30 industrialized nations, but not in the US and New Zealand, which is considering a ban.[21] Some feel it is better to leave the decision wholly in the hands of medical professionals; others feel that consumer education and participation in health is useful, but consumers need independent, comparative information about drugs (not promotional information).[21] For these reasons, most countries impose limits on pharmaceutical mass marketing that are not placed on the marketing of other products. In some areas it is required that ads for drugs include a list of possible side effects, so that consumers are informed of both facets of a medicine. Canada's limitations on pharmaceutical advertising ensure that commercials that mention the name of a product cannot in any way describe what it does. Commercials that mention a medical problem cannot also mention the name of the product for sale; at most, they can direct the viewer to a website or telephone number operated by the pharmaceutical company.
[edit] Economics
Pharmaceutical company spending on marketing exceeds that spent on research.[3][22] In 2004 in Canada $1.7 billion a year was spent marketing drugs to physicians and in the United States $21 billion were spent in 2002.[4] In 2005 money spent on pharmaceutical marketing in the US was estimated at $29.9 billion with one estimate as high as $57 billion.[3] When the US number are broken down 56% was free samples, 25% was detailing of physicians, 12.5% was direct to consumer advertising, 4% on hospital detailing, and 2% on journal ads.[4] In the United States approximately $20 billion could be saved if generics were used instead of equivalent brand name products.[3]
Although pharmaceutical companies have made large investments in marketing their products, overall promotional spending has been decreasing over the last few years, and declined by 10 percent from 2009 to 2010. Pharmaceutical companies are cutting back mostly in detailing and sampling, while spending in mailings and print advertising grew since last year.[23]
[edit] Regulation
In the United States, marketing and distribution of pharmaceuticals is heavily regulated by the federal Prescription Drug Marketing Act of 1987. In general, pharmaceutical companies adhere to FDA regulatory guidelines which call for all DTC advertising and information to be accurate, to provide substantial evidence for any claims that are made, to provide a balance between the risks and benefits of the promoted drug, and to maintain consistency with labeling approved by the FDA.
[edit] Evolution of marketing
The emergence of new media and technologies in recent years is quickly changing the pharmaceutical marketing landscape in the United States. Both physicians and consumers are increasing their reliance on the Internet as a source of health and medical information, prompting pharmaceutical marketers to look at digital channels for opportunities to reach their target audiences.
In 2008, eighty-four percent of U.S. physicians used the Internet and other technologies to access pharmaceutical, biotech or medical device information – a twenty percent increase from 2004. At the same time, sales reps are finding it more difficult to get time with doctor’s for in-person details. Pharmaceutical companies are exploring online marketing as an alternative way to reach physicians. Emerging e-promotional activities include live video detailing, online events, electronic sampling, and physician customer service portals such as MDLinx and Physicians Interactive.
Direct-to-consumer marketers are also recognizing the need to shift to digital channels as audiences become more fragmented and the number of access points for news, entertainment and information multiplies. Standard television, radio and print direct-to-consumer (DTC) advertisements are less relevant than in the past, and companies are beginning to focus more on digital marketing efforts like product websites, online display advertising, search engine marketing, social media campaigns, and mobile advertising to reach the over 145 million U.S. adults online for health information.
[edit] See also
Biotechnology Disease mongering Ethics in pharmaceutical sales Food and Drug Administration Inverse benefit law List of pharmaceutical companies Medicare (United States) Medicare Part D Medicare Prescription Drug, Improvement, and Modernization Act National pharmaceuticals policy Pharmaceutical company Pharmacology Predictive analytics Prescription Drug Marketing Act (PDMA) Prescription drug prices in the United States
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Scope of Marketing JobsMarketing forms the backbone of any industry. Any company, whatever may be its mode of business, has to ultimately depend on marketing for selling its products in the market. Several domestic and international firms have been set up in India and these firms require talented and highly motivated marketing professionals. With so many choices in front of the consumers in present days, a good marketing team can help build up a company's brand name in the market. For instance, there may be several companies producing the same product but consumers of this product will buy the product of that company which has earned a good name in the market. Here in lies the effectiveness of good marketing efforts. It is all about how you present your products to the customers so as to convince them to buy your goodies.
In India, there is ample scope for freshers who want to enter the field of marketing. Each and every company requires marketing executives for marketing their products and services.
Types of Marketing JobsThere are different types of marketing jobs for freshers in India. All companies require marketing people for promoting their products and services. A fresher in marketing can work as a business development executive, marketing executive, E-marketing executive, telemarketing executive, collection executive, management/marketing trainee, marketing consultant, business development executive, customer relation executive, financial and marketing consultant, export marketing staff or showroom manager.
Eligibility for Marketing JobsIf you want to get a marketing job, you need to be a graduate in Science, Commerce or Humanities. Individuals who have done their MBA with marketing as specialization and those MBA degree holders who have the basic knowledge of product selling and business consulting are usually preferred by the employers.
Your chances of getting a marketing job in a good company increases if you have a pleasing personality, excellent communication skill, effective customer handling capability and the ability to meet targets. Interacting with the customers with empathy and passionately delivering the highest quality of exemplary service is also an important aspect of marketing.
Major Companies Offering Marketing JobsAlmost all companies, whether they are in the hospitality sector, manufacturing sector, tourism sector or pharmaceutical sector, require marketing professionals for promoting their products and services. Some of these companies include Piwania Technologies Pvt. Ltd., India Infoline, Logiciel Information Systems Pvt. Ltd., eZeeCloud Info Services Pvt. Ltd, Country Club India Pvt. Ltd., Micro Technologies (India) Limited, Packt Publishing Pvt. Ltd., Bibo Water, Bajaj Allianz General Insurance Co. Ltd., HealthB4U.Com, Goel Steel Company, INSCOL Academy and Fortis Healthcare Ltd.
Salary Package ExpectedA marketing executive can earn somewhere around Rs. 5,000 to Rs. 8,000 per month as fixed pay. Apart from this, they also get commissions and/or incentives. However, the amount of pay may vary depending upon the company you are working in, your location of workplace and your
academic attainments. Scope of Marketing JobsMarketing forms the backbone of any industry. Any company, whatever may be its mode of business, has to ultimately depend on marketing for selling its products in the market. Several domestic and international firms have been set up in India and these firms require talented and highly motivated marketing professionals. With so many choices in front of the consumers in present days, a good marketing team can help build up a company's brand name in the market. For instance, there may be several companies producing the same product but consumers of this product will buy the product of that company which has earned a good name in the market. Here in lies the effectiveness of good marketing efforts. It is all about how you present your products to the customers so as to convince them to buy your goodies.
In India, there is ample scope for freshers who want to enter the field of marketing. Each and every company requires marketing executives for marketing their products and services.
Types of Marketing JobsThere are different types of marketing jobs for freshers in India. All companies require marketing people for promoting their products and services. A fresher in marketing can work as a business development executive, marketing executive, E-marketing executive, telemarketing executive, collection executive, management/marketing trainee, marketing consultant, business development executive, customer relation executive, financial and marketing consultant, export marketing staff or showroom manager.
Eligibility for Marketing JobsIf you want to get a marketing job, you need to be a graduate in Science, Commerce or Humanities. Individuals who have done their MBA with marketing as specialization and those MBA degree holders who have the basic knowledge of product selling and business consulting are usually preferred by the employers.
Your chances of getting a marketing job in a good company increases if you have a pleasing personality, excellent communication skill, effective customer handling capability and the ability to meet targets. Interacting with the customers with empathy and passionately delivering the highest quality of exemplary service is also an important aspect of marketing.
Major Companies Offering Marketing JobsAlmost all companies, whether they are in the hospitality sector, manufacturing sector, tourism sector or pharmaceutical sector, require marketing professionals for promoting their products and services. Some of these companies include Piwania Technologies Pvt. Ltd., India Infoline, Logiciel Information Systems Pvt. Ltd., eZeeCloud Info Services Pvt. Ltd, Country Club India Pvt. Ltd., Micro Technologies (India) Limited, Packt Publishing Pvt. Ltd., Bibo Water, Bajaj Allianz General Insurance Co. Ltd., HealthB4U.Com, Goel Steel Company, INSCOL Academy and Fortis Healthcare Ltd.
Salary Package ExpectedA marketing executive can earn somewhere around Rs. 5,000 to Rs. 8,000 per month as fixed
pay. Apart from this, they also get commissions and/or incentives. However, the amount of pay may vary depending upon the company you are working in, your location of workplace and your academic attainments.
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Indian pharma industry has always been a leading industrial sector of the country, with a paralleled dominance of both domestic and foreign pharma companies. As a result of the vast potential held by the domestic industry, it was estimated to have generated revenue worth INR 655.5 Billion (US$ 13.1 Billion) in FY 2011. Growth of the industry can be attributed to prominent factors, such as growing middle class population, rapid urbanization, increase in lifestyle-related diseases, and increasing issuance of health insurance. Besides, the product patent regime has provided ample support to the industry to sustain its growth pace, despite the global economic downturn. Further, generic is emerging as one of the leading segments to be benefited by many drugs going off patent in due course of time.
According to our new research report “Indian Pharma Sector Forecast 2014”, Indian pharmaceutical industry is projected to show double-digit growth in near future owing to a rise in pharmaceutical outsourcing and rising investments by multinational companies. A large percentage of pharma products produced in India are exported, which has led the leading players to expand their reach into the Western nations. Due to the
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The baseline for optimistic future outlook of the pharmaceutical market is improvement in the access to medicines to the Indian population. The focus of the industry will shift towards capitalizing the potential of tier-III and rural areas. Emerging sectors, such as bio-generics and pharma packaging will also pave way for the pharmaceutical market to continue its upward trend during the forecast period (FY 2012- FY 2014).
The report provides thorough statistical and analytical overview of the Indian pharmaceutical market. It contains information about past, present, and future trends, with focus on entire structure, composition, and working of the pharmaceutical market. The report extensively discusses opportunities and challenges expected to arise within and outside the pharmaceutical market. The report also analyzes emerging sectors, regulatory environment, and distribution system to identify strengths and weaknesses of the pharmaceutical market. It has thoroughly examined current market trends, industrial developments, and competitive landscape to enable clients understand the market structure and its progress in coming years. It also presents a brief overview of the demographics and healthcare profile to adjudge the pharmaceutical market in terms of demand, expenditure, and possible future direction.
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Marketing
A promotional item given to a psychiatrist
Main article: Pharmaceutical marketing
Pharmaceutical companies commonly spend a large amount on advertising, marketing and lobbying. In the US, drug companies spend $19 billion a year on promotions.[16] Advertising is common in healthcare journals as well as through more mainstream media routes. In some countries, notably the US, they are allowed to advertise directly to the general public.
Pharmaceutical companies generally employ sales people (often called 'drug reps' or, an older term, 'detail men') to market directly and personally to physicians and other healthcare providers. In some countries, notably the US, pharmaceutical companies also employ lobbyists to influence politicians. Marketing of prescription drugs in the US is regulated by the federal Prescription Drug Marketing Act of 1987.
To healthcare professionals
Currently, there are approximately 81,000 pharmaceutical sales reps in the United States[37] pursuing some 830,000 pharmaceutical prescribers. A pharmaceutical representative will often try to see a given physician every few weeks. Representatives often have a call list of about 200-300 physicians with 120-180 targets that should be visited in 1-2 or 3 week cycle. The number of pharmaceutical sales reps has been shrinking between 2008 and 2010, an estimated 30% industry wide reduction has occurred and current estimates are there may only be 60,000 pharmaceutical sales reps in the United States.[37]
To insurance and public health bodies
Private insurance or public health bodies (e.g. the NHS in the UK) decide which drugs to pay for, and restrict the drugs that can be prescribed through the use of formularies. Public and private insurers restrict the brands, types and number of drugs that they will cover. Not only can the insurer affect drug sales by including or excluding a particular drug from a formulary, they can affect sales by tiering or placing bureaucratic hurdles to prescribing certain drugs as well. In January 2006, the U.S. instituted a new public prescription drug plan through its Medicare program known as Medicare Part D. This program engages private insurers to negotiate with pharmaceutical companies for the placement of drugs on tiered formularies.
To retail pharmacies and stores
Commercial stores and pharmacies are a major target of non-prescription sales and marketing for pharmaceutical companies.
Direct to consumer advertising
Main article: Direct-to-consumer advertising
Since the 1980s new methods of marketing for prescription drugs to consumers have become important. Direct-to-consumer media advertising was legalised in the FDA Guidance for Industry on Consumer-Directed Broadcast Advertisements.
Internationally, many pharmaceutical companies market directly to the consumer rather than going through a conventional retail sales channel. For example, Japan-based Kenrico markets largely though its company website.
Controversy about drug marketing and lobbying
There has been increasing controversy surrounding pharmaceutical marketing and influence. There have been accusations and findings of influence on doctors and other health professionals through drug reps, including the constant provision of marketing 'gifts' and biased information to health professionals;[38][39] highly prevalent advertising in journals and conferences; funding independent healthcare organizations and health promotion campaigns; lobbying physicians and politicians (more than any other industry in the US[40]); sponsorship of medical schools or nurse training; sponsorship of continuing educational events, with influence on the curriculum;[41] and hiring physicians as paid consultants on medical advisory boards.
To help ensure the status quo on U.S. drug regulation and pricing, the pharmaceutical industry has thousands of lobbyists in Washington, DC that lobby Congress and protect their interests. The pharmaceutical industry spent $855 million, more than any other industry, on lobbying activities from 1998 to 2006, according to the non-partisan Center for Public Integrity.[42]
Some advocacy groups, such as No Free Lunch, have criticized the effect of drug marketing to physicians because they say it biases physicians to prescribe the marketed drugs even when others might be cheaper or better for the patient.[43]
There have been related accusations of disease mongering [3] (over-medicalising) to expand the market for medications. An inaugural conference on that subject took place in Australia in 2006.[44] In 2009, the Government-funded National Prescribing Service launched the "Finding Evidence - Recognising Hype" program, aimed at educating GPs on methods for independent drug analysis.
A 2005 review by a special committee of the UK government came to all the above conclusions in a European Union context[45] whilst also highlighting the contributions and needs of the industry.
There is also huge concern about the influence of the pharmaceutical industry on the scientific process. Meta-analyses have shown that studies sponsored by pharmaceutical companies are several times more likely to report positive results, and if a drug company employee is involved (as is often the case, often multiple employees as co-authors and helped by contracted marketing companies) the effect is even larger.[46][47][48] Influence has also extended to the training of doctors and nurses in medical schools, which is being fought.[49]
It has been argued that the design of the Diagnostic and Statistical Manual of Mental Disorders and the expansion of the criteria represents an increasing medicalization of human nature, or "disease mongering", driven by drug company influence on psychiatry.[50] The potential for direct conflict of interest has been raised, partly because roughly half the authors who selected and defined the DSM-IV psychiatric disorders had or previously had financial relationships with the pharmaceutical industry.[51] The president of the organization that designs and publishes the DSM, the American Psychiatric Association, recently acknowledged that in general American psychiatry has "allowed the biopsychosocial model to become the bio-bio-bio model" and routinely accepted "kickbacks and bribes" from pharmaceutical companies.[52]
Developing world
The role of pharmaceutical companies in the developing world is a matter of some debate, ranging from those highlighting the aid provided to the developing world, to those critical of the use of the poorest in human clinical trials, often without adequate protections, particularly in states lacking a strong rule of law. Other criticisms include an alleged reluctance of the industry to invest in treatments of diseases in less economically advanced countries, such as malaria; Criticism for the price of patented AIDS medication, which could limit therapeutic options for patients in the Third World, where most of the AIDS infected people are living.
In September 2008 the Open Source Drug Discovery Network was launched in India to combat infectious diseases common to developing countries.
Patents
See also: Criticism of patents
Patents have been criticized in the developing world, as they are thought to reduce access to medicines[53]. However, under the TRIPS agreement of the World Trade Organization, countries must allow pharmaceutical products to be patented. In 2001, the WTO adopted the Doha Declaration, which indicates that the TRIPS agreement should be read with the goals of public health in mind, and allows some methods for circumventing pharmaceutical monopolies: via compulsory licensing or parallel imports, even before patent expiration[54].
In March 2001, 40 multi-national pharmaceutical companies brought litigation against South Africa for its Medicines Act, which allowed the generic production of antiretroviral drugs (ARVs) for treating HIV, despite the fact that these drugs were on-patent[55]. HIV was and is an epidemic in South Africa, and ARVs at the time cost between 10,000 and 15,000 USD per patient per year. This was unaffordable for most South African citizens, and so the South African government committed to providing ARVs at prices closer to what people could afford. To do so, they would need to ignore the patents on drugs and produce generics within the country (using a compulsory license), or import them from abroad. The Indian pharmaceutical company Cipla audaciously offered to make the drugs at 350 USD per patient per year, roughly 1/40th of the lowest price available from a patent holder, which stunned the world community. After massive international protest in favour of public health rights (including the collection of 250,000 signatures by MSF), the governments of several developed countries (including The Netherlands, Germany, France, and later the US) backed the South African government, and the case was dropped in April of that year [56].
Nigerian clinical trial
See also: Kano trovafloxacin trial litigation
In 1996, a pediatric clinical trial conducted on behalf of Pfizer tested the antibiotic Trovan allegedly without first obtaining the informed consent of participants or their parents.[57][58][59][60]
Charitable programmes
Charitable programs and drug discovery & development efforts are routinely undertaken by pharmaceutical companies. Some examples include:
"Merck's Gift," wherein billions of River Blindness drugs were donated in Africa [61]
Pfizer 's gift of free/discounted fluconazole and other drugs for AIDS in South Africa [62]
GSK 's commitment to give free albendazole tablets to the WHO for, and until, the elimination of lymphatic filariasis worldwide.
In 2006, Novartis committed USD 755 million in corporate citizenship initiatives around the world, particularly focusing on improved access to medicines in the developing world through its Access to Medicine projects, including donations of medicines to patients affected by leprosy, tuberculosis, and malaria; Glivec patient assistance programmes; and relief to support major humanitarian organisations with emergency medical needs.[63]
However, some NGOs such as Médecins Sans Frontières do not routinely accept corporate donations of medicines. More precisely, they do not become reliant on such supplies of medicines because the supply is dependent upon the fluid, profit-driven charities of said pharmaceutical companies, and thus may dry up during a critical or otherwise important time. The book An Imperfect Offering: Humanitarian Action for the 21st Century by ex-MSF president James Orbinski describes this in detail.
Pharmaceutical industry in popular culture
As for many other major industries since the middle of the twentieth century, the pharmaceutical industry has been portrayed as a global shadowy force in numerous western fiction works. Notorious films such as The Fugitive (1993) and Resident evil and novels/films such as The Constant Gardener characterize this trend.
Industry associations
European Confederation of Pharmaceutical Entrepreneurs (EUCOPE) Drug Information Association (DIA) European Federation of Pharmaceutical Industries and Associations (EFPIA) European Pharmaceutical Market Research Association (EphMRA) International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) Japan Pharmaceutical Manufacturers Association (JPMA) New York Health Products Council (NYHPC) Pharmaceutical Research and Manufacturers of America (PhRMA) Irish Pharmaceutical Healthcare Association (IPHA)
Regulatory authoritiesMain article: Regulation of therapeutic goods
International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use (ICH)
European Medicines Agency (EMEA) Therapeutic Goods Administration (Australia) (TGA) U.S. Food and Drug Administration (FDA) Ministry of Health, Labour and Welfare (Japan) Medicines and Healthcare products Regulatory Agency (MHRA) Central Drugs Standards Control Organisation (India) (CDSCO) Ukrainian Drug Registration Agency [2] Medicines Authority (Malta) [3]
Pharmaceutical Companies in IndiaIndia's emerging pharmaceutical industry has appeared as the world leader in the fabrication of standard generic drugs, ever since the Patent Act 1970 permitted India to seriously approach and contribute in the pharmaceutical market worldwide. India is the preferred nation for pharmaceutical generation, with low charges for research and development as well as production of drugs. And the pharmaceutical companies in India have made full use of the favorable environment offered by the country to make it big.
The workforce and technological proficiency of pharmaceutical companies in India ensures the growth of the industry on a global scale as well as within India. The sector is predicted to value about $3.1 billion (USD).
Growth of Indian Pharmaceutical market
In the year 2008, Indian pharmaceutical market was assessed at $7,743m which witnessed an augmentation of 4.0% over 2007. Business observers predict that the Indian pharmaceutical market will escalate at an increasing mode as compared to the global pharmaceutical market, at a CAGR of 13.2% during the fiscal years 2009-14 to reach an overall worth of $15,490m in 2014.
India has also appeared as the preferred location for the pharmaceutical companies of the world because of its towering growth scenario furnished by elderly population, alteration in disease profile, developing patent system and socio-economic circumstances.
The competition in the Indian pharmaceutical market is cutthroat and the market is divided among the top 10 pharma companies accounting for 36.1% of the overall R&H sales in the fiscal year 2008.
India began to abide by the World Trade Organization's Trade Related Aspects of Intellectual Property Rights (WTO-TRIPS) agreement and acknowledged product rights after the revision of the Indian Patent Act in January 2005. Indian firms are laying out strategies to benefit from the Japanese government proposal to endorse generic drugs to minimize healthcare charges.
Top ten pharmaceutical companies in India
(along with their 2007 turnover):
Ranbaxy Laboratories By sales India's largest pharma firm with the returns touching ` 4,198.96 crore (` 41.989 billion) in 2007
Dr. Reddy's Laboratories With a turnover of ` 4,162.25 crore (` 41.622 billion) in 2007, Dr Reddy's lab is second largest drug firm in India by sales .
Cipla Cipla generated an annual revenue of ` 3,763.72 crore (` 37.637 billion) in 2007 making itself the third largest pharmaceutical firms.
Sun Pharmaceuticals Sun Pharma Industries had an overall earnings of ` 2,463.59 crore (` 24.635 billion) in 2007.
Lupin Labs:Lupin Labs yielded total profit of ` 2,215.52 crore (` 22.155 billion) in 2007.
Aurobindo Pharma India's sixth largest pharma company by sales, Aurobindo posted ` 2,080.19 crore (` 20.801 billion) annual returns in 2007.
GlaxoSmithKlineg With 2007 turnover touching ` 1,773.41 crore (` 17.734 billion, GSK is India's seventh largest pharma firm.
Cadila Healthcare Cadila's earnings was ` 1,613.00 crore (` 16.13 billion) in the fiscal year 2007, establishing itself as India's eight largest drug company.
Aventis Pharma With an annual revenue of ` 983.80 crore (` 9.838 billion) in 2007, Aventis Pharma has made a place for itself in the top ten pharma companies in India
Ipca Laboratories Ipca is India's 10th largest pharma company by sales and in 2007 it had a turnover of ` 980.44 crore (` 9.804 billion)
Major issues concerning the pharmaceutical companies in India
Failure of the new patent system: Prerequisites associated with Sec 3(d) of the Patent (Amendment) Act 2005 restrict the copyright of an existing drug. Moreover, mandatory licensing permits Indian companies to keep producing generics of copyright products for overseas selling to underdeveloped nations.
Lack of proper infrastructure: Issues associated with regular power cuts and lack of suitable transport infrastructure will decelerate the expansion of the sector.
Inadequate funds: Restricted funding from FIs, venture capitalists and the government may decelerate the expansion of biotechnology sector in India.
Regulatory impediments: Rising of due meticulousness and conformity with product standards leads to high costs and interruption in the launch of new products.
Severe competition: Low margins and restricted capital to assist R&D is the result of intense pricing competition among local producers. This rivalry will further deepen from the joining in of the big drug companies in the Indian market to control the cost benefit and large reserve sources.
Pharmaceutical Companies in India
o Pharmaceutical Industry o Role of pharmaceutical industry o Globalization of Pharma o Biotech Companies o Aurobindo Pharma o Aventis Pharma o Biocon o Cadila Healthcare o Cipla o Dabur o Dishman Pharmaceuticals
Divi's Laboratories Dr. Reddy's Laboratories GlaxoSmithKlineg Glenmark Pharmaceuticals Ipca Laboratories JB Chemicals & Pharmaceuticals Nicholas Piramal Ranbaxy Laboratories Strides Arcolab Sun Pharmaceuticals Torrent Pharmaceuticals
Companies in India
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Globalization of Indian Pharmaceutical IndustryGlobalization of Indian Pharmaceutical Industry started in the early 1990s when the government opened its markets to foreign investments. Indian Pharmaceutical Industry's Globalization took place with the coming of the foreign companies in the sector.
Globalization means the dismantling of the trade barriers and the integration of the economies of the nations through trade in goods and services, corporate investments, and financial flow between nations. Globalization has increased the world over in recent years due to the rapid progress that has been made in the field of technology especially in communications and transport. The government of India opened its economy to foreign companies through changes in its economic policy in 1991 and this led to the Globalization of Indian Pharmaceutical Industry.
The various advantages of Globalization of Indian Pharmaceutical Industry are that it brought in huge amounts of foreign currency into the industry which in its turn helped to boost the Indian economy. With many foreign pharmaceutical companies entering the Indian Pharmaceutical Industry it increased the number of jobs that were available to the people of the country. The benefits of Globalization of Indian Pharmaceutical Industry are that the foreign pharmaceutical companies also brought in highly advanced technology into the industry and this improved the quality of medicines that were available to the people. Many Indian pharmaceutical companies took over international pharmaceutical companies such as Ranbaxy merged with Croslands, Wockhardt with Merind, and Nicholas Piramal with Sumitra Pharma. This helped the Indian pharmaceutical companies to grow and make even more profits.
The various disadvantages of Globalization of Indian Pharmaceutical Industry are that the competition increased in the Indian market between the foreign pharmaceutical companies and domestic companies. This reduced the profit levels of the Indian pharmaceutical companies as a result of which many had to close down such as Hindustan Ciba Geigy, Park Davis, Boehringer Mannheim, and Abbot. This has resulted in many people losing their jobs and in Mumbai's Thane region which is in Maharashtra more than 30,000 people lost their jobs between 1997- 1999. Further the disadvantages of Globalization of Indian Pharmaceutical Industry are that many foreign pharmaceutical companies are taking over the Indian pharmaceutical companies such as SKB merged with Sterling, Ciba Geigy merged with Sandoz, and Rhone Poulenc merged with Fashions. This has led to the fear that foreign pharmaceutical companies will take over the Indian Pharmaceutical Industry.
Globalization of Indian Pharmaceutical Industry has had some positive as well as some negative effects.
The government of India must make sure that the Indian Pharmaceutical Industry's globalization proves beneficial for the country.
Last updated on 3/18/2011
Effects on Indian Industry
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Pharmaceutical Sector
Buy Cipla Ltd With Target Of Rs 313Submitted by Piyush Diwan on Wed, 08/10/2011 - 18:37.
Company Results Pharmaceutical Sector Featured TNM Cipla Pinc Research
Mixed set of results, no near term triggers Cipla’s Q1FY12 results were a mixed bag. While growth on the sales front was disappointing in spite of increasing contribution from Indore SEZ, OPM surprised on the positive side on back of better product mix and break-even at Indore SEZ. The
company has maintained its sales growth guidance of 10% and expects OPM to sustain at current levels for FY12.
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Ranbaxy Met Big Downfall in 2011 Second QuarterSubmitted by Keshav Seth on Sun, 08/07/2011 - 00:13.
Company Updates Pharmaceutical Sector Featured TNM Ranbaxy Laboratories
On Friday, it has been reported by Ranbaxy Laboratories, which is considered as India's largest drug maker that its shares have been down by 2.51% in the second quarter. They have met a 25% fall in their net profit during the period.
Recently, it has come into knowledge that this Gurgaon- based company, in order to look out for a solution for its regulatory issues, is working with the US authorities of Food and Drug Administration and the Department of Justice. And as told by the Company, these negotiations
with the regulators are doing well.
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Piramal Healthcare to Diversify Its BusinessSubmitted by Keshav Seth on Thu, 08/04/2011 - 00:22.
Company Updates Pharmaceutical Sector Featured TNM
Ajay Piramal Piramal Healthcare
Today, the Piramal Healthcare announced its net profit of Rs 89.23 for the period of first quarter of FY12. The company’s spokesperson informed that the Company was able to book a profit as it was successful in recovering its contract research and manufacturing services (CRAMs) business.
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Pfizer Reveals a Net Profit of Rs 41.24 CroreSubmitted by Piyush Diwan on Mon, 08/01/2011 - 14:30.
Company Results Pharmaceutical Sector Featured TNM Health Pfizer
According to reports, the drug firm Pfizer has revealed a net profit of Rs 41.24, for the quarter, which ended on the 30th of June, 2011. The company had a net profit of 34.69 crore for the quarter which ended on the 31st of May, the previous year.
Also, the net sales of the company for the quarter that ended on the 30th of June 2011 is at Rs 241.87 crore, which was Rs 212.33 crore for the quarter ended May 31, 2010.
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Orchid Chemicals’ New Plans RevealedSubmitted by Piyush Diwan on Sat, 07/30/2011 - 22:38.
Company Updates Economy Pharmaceutical Sector Featured TNM Orchid Chemicals
One of the top officials of Cephalosporin bulk drug maker Orchid Chemicals and Pharmaceuticals Ltd has recently confirmed about the company's plans of investing big in therapeutic segments this year.
According to the reports, Orchid Chemicals and Pharmaceuticals Ltd is planning to invest an amount of Rs. 200 crore into formulations in niche therapeutic segments this year.
In context to same, Chairman and Managing Director Mr. K. Raghavendra Rao told the reporters while speaking on the sideline of company's annual general meeting that the proposed investment in the section has been made thinking that it would efficiently support the company's entry into therapeutic segments and at the time when manufacturing process becomes difficult comparatively.
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Glenmark Pharmaceuticals Ltd. Announces Increase in Its Net ProfitSubmitted by Sumeet Kak on Wed, 07/27/2011 - 00:08.
Pharmaceutical Sector Featured TNM Glenmark Pharmaceuticals
On Tuesday, Glenmark Pharmaceuticals Ltd. has revealed unaudited consolidated results for the quarter ended June 30, 2011. Further, it stated a net profit of Rs. 2101.08mn ended June 30, 2011 as compared to Rs. 1705.41mn for the quarter ended June 30, 2009 whereas its total income has climbed to Rs. 8808.03mn from Rs. 6948.08mn for the quarter ended June 30, 2010.
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Glenmark Pharma SA Completes its Phase-I Clinical Trials of GRC 15300Submitted by Piyush Diwan on Mon, 07/25/2011 - 13:56.
Pharmaceutical Sector Featured TNM Glenn Saldanha Glenmark Pharmaceuticals
Glenmark Pharmaceuticals SA has successfully completed Phase-I clinical trials of its new molecule, GRC 15300, which has been developed for treatment of neuropathic pain. GRC 15300 is a first in–class inhibitor for treatment of pain.
Chairman and Managing Director of the company, Mr. Glenn Saldanha, said that GRC 15300 is the first TRPV3 inhibitor across the globe. Glenmark done its Phase-1 analysis in UK and Saldanha said that they have plans to start the clinical proofing of the study.
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Shares of Lupin Fell as Jhunjhunwala Sells Shares Worth over Rs 300 CroreSubmitted by Piyush Diwan on Thu, 07/21/2011 - 13:36.
Stock Markets Pharmaceutical Sector Featured TNM Lupin
On Wednesday, the shares of Mumbai-based drug maker Lupin declined after the company revealed that billionaire Investor Rakesh Jhunjhunwala has sold his shares in the company worth more than Rs 300 crore in thefirst quarter.
The stock of lupin was traded at Rs 461.20 in the intra-day on the BSE, which was 3.7% less than its previous close.
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Biocon’s Net Profit Falls by 9%Submitted by Piyush Diwan on Thu, 07/21/2011 - 13:11.
Company Results Pharmaceutical Sector Featured TNM Biocon
The net profit of biotechnology company Biocon decreased by 9% in a year amounting to Rs 70.05 crore, but the company witnessed an increase in the sales by 10% amounting to Rs 441.68 crore. The low income earned by the company had affected the share prices of the company, marked by a fall of 2.8% at Rs 360.15 on NSE.
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USFDA Approves Fondaparinux Sodium InjectionsSubmitted by Piyush Diwan on Thu, 07/14/2011 - 00:05.
Pharmaceutical Sector Featured TNM Alchemia Dr Reddy’s
Dr Reddy's Laboratories and Brisbane-based Alchemia Ltd publicized that the US Food and Drug Administration (USFDA) has finally sanctioned the launch of their Fondaparinux Sodium injection.
These injections are a bioequivalent standard version of Arixtra and on July 11, they will be entering the US market as the company-supply was 3 %higher.
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A Closure Notice to Orchid Chemicals' Chennai PlantSubmitted by Keshav Seth on Mon, 07/11/2011 - 23:17.
Pharmaceutical Sector Featured TNM Orchid Chemicals
As told by the drug maker Orchid Chemicals & Pharmaceuticals today, in concern to the surrounding environment, the Tamil Nadu Pollution Control Board (TNPCB) has issued a closure notice to its Chennai-based manufacturing facility.
The TNPCB found the company’s Cephalosporin producing facility at Alathur in Chennai involved into some non-compliance in regard to the disposal of solid waste and thus they ordered to shut down their work there. Cephalosporin is basically the latest class of antibiotics that is
useful for treating infections in different parts of the body.
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Strides Arcolab Gets USFDA Green Signal For Polymyxin InjectionSubmitted by Keshav Seth on Sat, 07/02/2011 - 00:00.
Company Updates Pharmaceutical Sector Featured TNM Strides Arcolab
Strides Arcolab has got the green signal for an anti-bacterial drug, Polymyxin Injection which is USD 8 million drugs from the US FDA.
Arun Kumar, Vice Chairman and MD, Strides Arcolab, in an interview with CNBC-TV18 revealed that the Polymyxin is very small molecule and is in deficiency list of products which only the few drug makers are supplying.
He asserted that during the current year, the company will grow by 30-35%.
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Jubilant Life Shares High by 11.08% after Alliance with Janssen PharmaceuticalSubmitted by Sameer Kapoor on Tue, 06/28/2011 - 23:15.
Stock Markets Pharmaceutical Sector Featured TNM Jubilant Life
Jubilant Life Sciences Company has collaborated with Janssen Pharmaceutical for a drug discovery alliance for three years, targeting neuroscience area. The stock of Jubilant was at Rs. 198 that is Rs 19.80 high.
The stock of Jubilant has gone up by 11.08%, the shares have gone up by Rs 19.75 to Rs 197.95. Earlier, it was trading with 562,432 shares, whereas its 5-day average was 33,740 shares that was an
increase of 1,566.98%.
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USFDA Gives Green Signal to LevofloxacinSubmitted by Piyush Diwan on Tue, 06/21/2011 - 22:31.
Buzzing Stocks Pharmaceutical Sector Featured TNM Strides Arcolab
Drug firm, Strides Arcolab has revealed that the US Foods and Drug Administration (USFDA) has given approval to the launch of its Levofloxacininjections. These injections are synthetic fluoroquinolone antibiotic and are available in the American market.
This is the second approval received by the Sagent Strides LLC, which is a joint venture between Strides Arcolab and Sagent Pharmaceuticals. At present, Strides is developing and supplying more than 25 injectable products for the USA market, which will be marketed by the Sagent.
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Zydus Cadila to Acquire Nesher Pharmaceuticals IncSubmitted by Gaurav Mehra on Sat, 06/18/2011 - 23:57.
Business News Pharmaceutical Sector Featured TNM Nesher Pharmaceuticals Zydus Cadila
The Zydus Group unit, Cadila Healthcare Ltd, has signed a contract to acquire the assets of Nesher Pharmaceuticals Inc. The procurement consists of Abbreviated New Drug Application pipeline, some manufacturing amenities and a research and development laboratory. This acquiring includes some liabilities as well.
Nesher is an US-based pharmaceutical company which deals in niche therapies used in managing the obstacles of production and growth by
DEA-controlled substances and controlled release medications.
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Hyderabad Based Pharma Company Guilty for Illegal Trials on WomenSubmitted by Neha Malik on Fri, 06/17/2011 - 23:16.
Pharmaceutical Sector Featured TNM
Pharmacy Company of Hyderabad practiced unauthorized drug trials on the native women of Palnadu. State government’s permission is required before these tests, but the company performed the test without any prior permission.
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Novartis Hits the Stock Market with a Rise of 12%Submitted by Keshav Seth on Wed, 06/15/2011 - 13:00.
Company News Pharmaceutical Sector Featured TNM
Novartis
As per a report, Novartis, a pharmaceutical company in India was being claimed to be planning to quit from stock exchange. The company opened on Monday with a rise of 12% and there was a further increase by 2% amounting to Rs 864.95 on BSE.
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Income tax raids on pharma companySubmitted by Piyush Diwan on Sat, 05/28/2011 - 14:34.
Pharmaceutical Sector Tax Featured Chandigarh
Chandigarh, May 28 - Undisclosed income worth Rs. 55 crore (Rs. 550 million) was found during income tax raids at the premises of the Ind-Swift group, a leading pharmaceutical company in northern India, officials said Saturday.
The raids were conducted late Friday at over 15 premises of Ind-Swift group here, income tax officials here said.
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Orchid Chemicals declares 30 percent dividendSubmitted by Dalbir Sahota on Wed, 05/18/2011 - 20:51.
Company Results
Pharmaceutical Sector Featured Orchid Chemicals Chennai India
Chennai, May 18 : Pharmaceuticals major Orchid Chemicals and Pharmaceuticals Ltd Wednesday recommended 30 percent dividend for the year 2010-11.
The company closed last fiscal with a consolidated revenue of Rs. 1,786 crore and a net profit of Rs. 156 crore, as compared to Rs. 1,343 crore and a net profit of around Rs. 339 crore in 2009-2010.
During 2009-2010, the company sold its injectibles business and hence the profit figures of the current year are not exactly comparable.
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Buy Dr Reddy's Laboratories With Target Of Rs 1572Submitted by Piyush Diwan on Tue, 05/17/2011 - 13:48.
Company Results Pharmaceutical Sector Featured TNM Dr Reddy’s Pinc Research
DRL’s Q4FY11 results were ahead of estimates driven by generic Allegra D-24 and the PSAI segment. We expect generic Allegra D-24 to have contributed USD25mn (product now moved to OTC). DRL indicated that the lower growth in India was on back of price cuts in the market which provides an early signal to rising competition. Further the recurring EBIT margins were bit under pressure on back of higher SG&A and R&D cost. We continue to maintain HOLD rating with a revised TP of Rs1,572 valuing the base business at Rs1,501 (20x June’12 recurring earnings) and Rs71/share for P-IV/ limited competition opportunities.
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Pharmaceuticals in IndiaFrom Wikipedia(See original Wikipedia article ») Last modified on 10 August 2011, at 20:26
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The Indian pharmaceutical industry is the world's second-largest by volume and is likely to lead the manufacturing sector of India.[1] India's bio-tech industry clocked a 17 percent growth with revenues of Rs.137 billion ($3 billion) in the 2009-10 financial year over the previous fiscal. Bio-pharma was the biggest contributor generating 60 percent of the industry's growth at Rs.8,829 crore, followed by bio-services at Rs.2,639 crore and bio-agri at Rs.1,936 crore.[2] The first pharmaceutical company are Bengal Chemicals and Pharmaceutical Works, which still exists today as one of 5 government-owned drug manufacturers, appeared in Calcutta in 1903. For the next 60 years, most of the drugs in India were imported by multinationals either in fully formulated or bulk form. The government started to encourage the growth of drug manufacturing by Indian companies in the early 1960s, and with the Patents Act in 1970, enabled the industry to become what it is today. This patent act removed composition patents from food and drugs, and though it kept process patents, these were shortened to a period of five to seven years. The lack of patent protection made the Indian market undesirable to the multinational companies that had dominated the market, and while they streamed out, Indian companies started to take their places. They carved a niche in both the Indian and world markets with their expertise in reverse-engineering new processes for manufacturing drugs at low costs. Although some of the larger companies have taken baby steps towards drug innovation, the industry as a whole has been following this business model until the present.
Table of Contents
1 The Indian pharmaceutical industry (IPo) today
1.1 Statistics
1.2 Patents
1.3 Product development
1.4 Small and medium enterprises
1.5 Challenges
1.6 R&D
1.7 Labor force
2 Biotechnology
2.1 Relationship between pharmaceuticals and biotechnology
2.2 Biotechnology statistics
2.3 Comparison with the U.S.
2.4 Relationship with IT
2.5 Government support
2.6 Foreign investment
2.7 Challenges
3 Major players
3.1 Glenmark
3.2 Ranbaxy Laboratories
3.3 Dr. Reddy's Laboratories
3.4 Nicholas Piramal
3.5 Cipla
3.6 Serum Institute of India
3.7 Others
4 See also
5 References
6 Reference
The Indian pharmaceutical industry (IPo) today
Statistics
Top 10 Pharmaceuticals in India, as of 2010
Rank CompanyRevenue 2010
(Rs crore)Revenue 2010
(Rs billion)
1 Cipla 4,198.96 41.989
2 Ranbaxy 4,162.25 41.622
3 Dr. Reddy's Laboratories 3,763.72 37.637
4 Sun Pharmaceutical 2,463.59 24.635
5 Lupin Ltd 2,215.52 22.155
6 Aurobindo Pharma 2,081.19 20.801
7 GlaxoSmithKline 1,773.41 17.734
8 Cadila Healthcare 1,613 16.13
9 Aventis Pharma 983.80 9.838
10 Ipca Laboratories 980.44 9.8044
In 2002, over 20,000 registered drug manufacturers in India sold $9 billion worth of formulations and bulk drugs. 85% of these formulations were sold in India while over 60% of the bulk drugs were exported, mostly to the United States and Russia[25]. Most of the players in the market are small-to-medium enterprises; 250 of the largest companies control 70% of the Indian market [1]. Thanks to the 1970 Patent Act, multinationals represent only 35% of the market, down from 70% thirty years ago[20].
Most pharma companies operating in India, even the multinationals, employ Indians almost exclusively from the lowest ranks to high level management. Mirroring the social structure, firms
are very hierarchical. Homegrown pharmaceuticals, like many other businesses in India, are often a mix of public and private enterprise. Although many of these companies are publicly owned, leadership passes from father to son and the founding family holds a majority share.
In terms of the global market, India currently holds a modest 1-2% share, but it has been growing at approximately 10% per year[27]. India gained its foothold on the global scene with its innovatively engineered generic drugs and active pharmaceutical ingredients (API), and it is now seeking to become a major player in outsourced clinical research as well as contract manufacturing and research. There are 74 U.S. FDA-approved manufacturing facilities in India, more than in any other country outside the U.S, and in 2005, almost 20% of all Abbreviated New Drug Applications (ANDA) to the FDA are expected to be filed by Indian companies[21,27]. Growth in other fields notwithstanding, generics are still a large part of the picture. London research company Global Insight estimates that India’s share of the global generics market will have risen from 4% to 33% by 2007[27].
Patents
As it expands its core business, the industry is being forced to adapt its business model to recent changes in the operating environment. The first and most significant change was the January 1, 2005 enactment of an amendment to India’s patent law that reinstated product patents for the first time since 1972. The legislation took effect on the deadline set by the WTO’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, which mandated patent protection on both products and processes for a period of 20 years. Under this new law, India will be forced to recognize not only new patents but also any patents filed after January 1, 1995.[3] Indian companies achieved their status in the domestic market by breaking these product patents, and it is estimated that within the next few years, they will lose $650 million of the local generics market to patent-holders[42].
In the domestic market, this new patent legislation has resulted in fairly clear segmentation. The multinationals narrowed their focus onto high-end patients who make up only 12% of the market, taking advantage of their newly bestowed patent protection. Meanwhile, Indian firms have chosen to take their existing product portfolios and target semi-urban and rural populations[45].
Product development
Indian companies are also starting to adapt their product development processes to the new environment. For years, firms have made their ways into the global market by researching generic competitors to patented drugs and following up with litigation to challenge the patent. This approach remains untouched by the new patent regime and looks to increase in the future. However, those that can afford it have set their sights on an even higher goal: new molecule discovery. Although the initial investment is huge, companies are lured by the promise of hefty profit margins and the recognition as a legitimate competitor in the global industry. Local firms have slowly been investing more money into their R&D programs or have formed alliances to tap into these opportunities.
Small and medium enterprises
As promising as the future is for a whole, the outlook for small and medium enterprises (SME) is not as bright. The excise structure changed so that companies now have to pay a 16% tax on the maximum retail price (MRP) of their products, as opposed to on the ex-factory price. Consequently, larger companies are cutting back on outsourcing and what business is left is shifting to companies with facilities in the four tax-free states - Himachal Pradesh, Jammu & Kashmir, Uttaranchal and Jharkhand.[12]Consequently a large number of pharmaceutical manufacturers shifted their plant to these states, as it became almost impossible to continue operating in non tax free zones. But in a matter of a couple of years the excise duty was revised on two occasions, first it was reduced to 8% and then to 4%. As a result the benefits of shifting to a tax free zone was negated. This resulted in, factories in the tax free zones, to start up third party manufacturing. Under this these factories produced goods under the brand names of other parties on job work basis.
As SMEs wrestled with the tax structure, they were also scrambling to meet the July 1 deadline for compliance with the revised Schedule M Good Manufacturing Practices (GMP). While this should be beneficial to consumers and the industry at large, SMEs have been finding it difficult to find the funds to upgrade their manufacturing plants, resulting in the closure of many facilities. Others invested the money to bring their facilities to compliance, but these operations were located in non-tax-free states, making it difficult to compete in the wake of the new excise tax.
Challenges
All of these changes are ultimately good for the Indian pharmaceutical industry, which suffered in the past from inadequate regulation and large quantities of spurious drugs. They force the industry to reach a level necessary for global competitiveness. However, they have also exposed some of the inadequacies in the industry today. Its main weakness is an underdeveloped new molecule discovery program. Even after the increased investment, market leaders such as Ranbaxy and Dr. Reddy’s Laboratories spent only 5-10% of their revenues on R&D, lagging behind Western pharmaceuticals like Pfizer, whose research budget last year was greater than the combined revenues of the entire Indian pharmaceutical industry[13, 37]. This disparity is too great to be explained by cost differentials, and it comes when advances in genomics have made research equipment more expensive than ever. The drug discovery process is further hindered by a dearth of qualified molecular biologists. Due to the disconnect between curriculum and industry, pharmas in India also lack the academic collaboration that is crucial to drug development in the West[13].
R&D
Both the Indian central and state governments have recognized R&D as an important driver in the growth of their pharma businesses and conferred tax deductions for expenses related to research and development. They have granted other concessions as well, such as reduced interest rates for export financing and a cut in the number of drugs under price control. Government
support is not the only thing in Indian pharma’s favor, though; companies also have access to a highly developed IT industry that can partner with them in new molecule discovery in r&d.
Labor force
India’s greatest strengths lie in its people. India also boasts of well-educated, English-speaking labor force that is the base of its competitive advantage. Although molecular biologists are in short supply, there are a number of talented chemists who are equally as important in the discovery process. In addition, there has been a reverse brain drain effect in which scientists are returning from abroad to accept positions at lower salaries at Indian companies. Once there, these foreign-trained scientists can transfer the benefits of their knowledge and experience to all of those who work with them[13,25]. India’s wealth of people extends benefits to another part of the drug commercialization process as well. With one of the largest and most genetically diverse populations in any single country, India can recruit for clinical trials more quickly and perform them more cheaply than countries in the West[47]. Indian firms have just recently started to leverage.
Biotechnology
Relationship between pharmaceuticals and biotechnology
Unlike in other countries, the difference between biotechnology and pharmaceuticals remains fairly defined in India. Bio-tech there still plays the role of pharma’s little sister, but many outsiders have high expectations for the future. India accounted for 2% of the $41 billion global biotech market and in 2003 was ranked 3rd in the Asia-Pacific region and 11th in the world in number of biotechs.[45] In 2004-5, the Indian biotech industry saw its revenues grow 37% to $1.1 billion.[2,9] The Indian biotech market is dominated by biopharmaceuticals; 75% of 2004-5 revenues came from biopharmaceuticals, which saw 30% growth last year. Of the revenues from biopharmaceuticals, vaccines led the way, comprising 47% of sales[46]. Biologics and large-molecule drugs tend to be more expensive than small-molecule drugs, and India hopes to sweep the market in biogenerics and contract manufacturing as drugs go off patent and Indian companies upgrade their manufacturing capabilities.
Biotechnology statistics
Top 20 Biotechnology Companies in India, 2004
Rank CompanyRevenue 2004
(Rs crore)Revenue 2004 (USD millions)
1 Biocon 646 148.6
2 Serum Institute of India 565 129.9
3 Panacea Biotec 217 50.0
4 Venky's (India) Limited 188 43.2
5 Mahyco Monsanto 166 38.3
6 Novo Nordisk 135 31.0
7 Rasi Seeds 87 20.0
8 Aventis Pharma 84 19.4
9 Bharat Serums 81 18.6
10 Chiron Behring Vaccines 78 17.9
11 GlaxoSmithKline 78 17.9
12 Indian Immunologicals 72 16.6
13 Shantha Biotechnics 70 16.1
14 Novozymes 69 15.9
15 Eli Lilly and Company 68 15.7
16 Wockhardt 67 15.4
17 Bharat Immunological & Biological Corp. 53 12.3
18 Bharat Biological International 41 9.4
19 Advanced Biochemicals 40 9.1
20 Biological E 36 8.3
USD 1 = Rs 43.5Source: BioSpectrum Top 20: A threshold crossed
Most companies in the biotech sector are extremely small, with only two firms breaking 100 million dollars in revenues. At last count there were 265 firms registered in India, over 75% of which were incorporated in the last five years.[2,47] The newness of the companies explains the industry’s high consolidation in both physical and financial terms. Almost 50% of all biotechs are in or around Bangalore, and the top ten companies capture 47% of the market. The top five companies were homegrown; Indian firms account for 62% of the biopharma sector and 52% of the industry as a whole.[4,46] The Association of Biotechnology-Led Enterprises (ABLE) is aiming to grow the industry to $5 billion in revenues generated by 1 million employees by 2009, and data from the Confederation of Indian Industry (CII) seem to suggest that it is possible.[7,47]
Comparison with the U.S.
The Indian biotech sector parallels that of the U.S. in many ways. Both are filled with small start-ups while the majority of the market is controlled by a few powerful companies. Both are dependent upon government grants and venture capitalists for funding because neither will be commercially viable for years. Pharmaceutical companies in both countries have recognized the potential effect that biotechnology could have on their pipelines and have responded by either investing in existing start-ups or venturing into the field themselves.[36] In both India and the U.S., as well as in much of the globe, biotech is seen as a hot field with a lot of growth potential.
Relationship with IT
Many analysts have observed that the hype around the biotech sector mirrors that of the IT sector. Biotech colleges have been popping up around the country eager to service the pools of students that want to take advantage of a growing industry.[7] The International Finance Commission, the private investment arm of the World Bank, called India the “centerpiece of IFC’s global biotech strategy.” Of the $110 million invested in 14 biotech projects investment globally, the IFC has given $43 million to 4 projects in India.[29] According to Dr. Manju Sharma, former director of the Department of Biotechnology, the biotech industry could become the “single largest sector for employment of skilled human resource in the years to come.”[5] British Prime Minister Tony Blair was similarly impressed, citing the success of India’s biotech industry as the reason for his own country’s own biotech opportunities.[22] Malaysia is also looking to India as an example for growing its own biotech industry.[41]
Government support
The Indian government has been very supportive. It established the Department of Biotechnology in 1986 under the Ministry of Science and Technology.[47] Since then, there have been a number of dispensations offered by both the central government and various states to encourage the growth of the industry. India’s science minister launched a program that provides tax incentives and grants for biotech start-ups and firms seeking to expand and establishes the Biotechnology Parks Society of India to support ten biotech parks by 2010. Previously limited to rodents, animal testing was expanded to include large animals as part of the minister’s initiative.[10] States have started to vie with one another for biotech business, and they are offering such goodies as exemption from VAT and other fees, financial assistance with patents and subsidies on everything ranging from investment to land to utilities[19].
Foreign investment
The government has also taken steps to encourage foreign investment in its biotech sector. An initiative passed earlier this year allowed 100% foreign direct investment without compulsory licensing from the government1.[6] In April, a delegation headed by the Kapil Sibal, the minister of science and technology and ocean development, visited five cities in the U.S. to encourage investment in India, with special emphasis on biotech.[32] Just two months later, Sibal returned to the U.S. to unveil India’s biotech growth strategy at the BIO2005 conference in Philadelphia.[9]
Challenges
The biotech sector faces some major challenges in its quest for growth. Chief among them is a lack of funding, particularly for firms that are just starting out. The most likely sources of funds are government grants and venture capital, which is a relatively young industry in India. Government grants are difficult to secure, and due to the expensive and uncertain nature of biotech research, venture capitalists are reluctant to invest in firms that have not yet developed a commercially viable product.[26] As previously mentioned, India hopes to solve its funding problem by attracting overseas investors and partners. Before these potential saviors will invest significant sums in the industry, however, there needs to be better scientific and financial accountability. India is slowly working towards these goals, but it will be a while before they are up to the standards of Western investors.
India’s biotech firms share another problem with their pharmaceutical cousins: a lack of qualified employees. Biotech has the additional disadvantage of competing against IT for ambitious, science-minded students but not being able to guarantee the same compensation. An aspiring researcher in India needs 7–10 years of education covering a range of specialties in order to qualify to work in biotech. Even if a student does choose to go on the biotech path, the ineffectual curriculum at many universities makes it doubtful as to whether he will be qualified to work in the field once finished. One estimate shows that 10% of upper-echelon biotech recruits have come from foreign countries. While this is not a problem, per se, it drives up cost in a country whose competitive advantage is based on cheap, high-quality labor. Far from ending with scientists, there is also a shortage of people with a knowledge of biotechnology in related fields: doctors, lawyers, programmers, marketing personnel and others.[7,15,17]
While little has been done about the latter half of the employee crunch, the government has addressed the problem of educated but unqualified candidates in its Draft National Biotech Development Strategy. This plan included a proposal to create a National Task Force that would work with the biotech industry to revise the curriculum for undergraduate and graduate study in life sciences and biotechnology. The government’s strategy also stated intentions to increase the number of PhD Fellowships awarded by the Department of Biotechnology to 200 per year. These human resources will be further leveraged with a “Bio-Edu-Grid” that will knit together the resources of the academic and scientific industrial communities, much as they are in the U.S.[5]
Major players
Glenmark
Glenmark is a emerging leader of Indian Pharmaceutical market in sales as well in Research. Soon new chemical entities will hit the market.
Ranbaxy Laboratories
Ranbaxy is the leader in the Indian pharmaceutical market, taking in $1.174 billion in revenues for a net profit of $160 million in 2004. It was the first Indian pharmaceutical to have a proprietary drug (extended-release ciprofloxacin, marketed by Bayer) approved by the U.S.
FDA, and the U.S. market accounts for 36% of its sales. 78% of Ranbaxy’s sales are from overseas markets; its offices in 44 countries manage manufacturing in 7 countries and distribution in over 100.
IMS Health estimated that Ranbaxy is among the top 100 pharmaceuticals in the world and that it is the 15th fastest growing company. By 2012, Ranbaxy hopes to be one of the top 5 generics producers in the world, and it consolidated its position with the purchase of French firm RGP Aventis in 2003. Ranbaxy also has higher aspirations, however, “to build a proprietary prescription business in the advanced markets.” To this end, it keeps a dedicated research facility in Gurgaon staffed with over 1100 scientists. They currently have two molecules in Phase II trials and 3-5 in pre-clinical testing. It spent $75 million in R&D in 2004, a 43% increase over its 2003 expenditure.
Arun Puri is the chairman and CEO Brian Tempest is the only non-Indian on the senior management team.38,39
Dr. Reddy's Laboratories
Founded in 1984 with $160,000, Dr. Reddy’s was the first Asia-Pacific pharmaceutical outside of Japan and the sixth Indian company to be listed on the New York Stock Exchange. It earned $446 million in fiscal year 2005, deriving 66% of this income from the foreign market. In order to strengthen its global position, Dr. Reddy acquired UK-based BMS Laboratories and subsidiary Meridian Healthcare. Anji Reddy is the chairman of Dr.Reddy's.
Although 58% of Dr. Reddy’s revenues come from generic drugs, the company was committed to WTO-compliance long before the 2005 bill took effect, and most of these products were already off patent. Dr. Reddy has long been a research-oriented firm, preceding many of its peers in setting up a New Drug Development Research (NDDR) in 1993 and out-licensing its first compound just four years later. Dr. Reddy’s has since outlicensed two more molecules and currently has three others in clinical trials.
Although Dr. Reddy’s is publicly traded, the Reddy family (including founder/chairman K. Anji Reddy, son-in-law/CEO GV Prasad and son/COO Satish Reddy) holds a hefty 26% share in the company.11,44
Nicholas Piramal
The company led by Asish Mishra grossing $350 million per year, Nicholas Piramal started its existence with the 1988 acquisition of Nicholas Laboratories and grew through a series of mergers, acquisitions and alliances. The company has formed a name for itself in the field of custom manufacturing. It cites its 1700-person global sales force as another core strength; with its acquisition of Rhodia’s inhalation anaesthetics business, Nicholas Piramal gained a sales and marketing network spanning 90 countries34.
Nicholas Piramal is well-poised for the challenge of surviving in the aftermath of product patent protection. The company has respected intellectual property rights since its inception and refused
to "support generic companies seeking first-to-file or early-to-market strategies." Instead, it decided to make its own intellectual property and opened a research facility last November in Mumbai with hopes of launching its first drug in 2010 at a cost of $100,000.24,33
Cipla
Founded in 1935, Cipla is one of the oldest drug manufacturers in India. It is led by Dr. Yusuf K. Hamied, Chairman and Managing Director. Cipla burst into the international consciousness in 2000 with Triomune, an AIDS treatment costing between $300 and $800 per year that combined three antiretroviral drugs patented by three different companies in most other countries, where the cocktail sold for as much as $16,000 per year. Long before this news, Cipla had been building a strong global presence, and it now distributes its 800-odd products in over 140 countries. Privately held Cipla holds a prominent spot in its home country as well; it is the leader in domestic sales, having just unseated GlaxoSmithKline for the first time in 28 years. Revenue in 2004 totaled $552 million (using Rs 43.472 = $1) about 75% of which was derived in India.
Dr. Kiran Mazumdar-Shaw is the Chairman and Managing Director of BiocoIrish chemicals company seeking to break into the Indian market, Biocon is now the leading biotech in India, bringing in Rs 646.36 crore (almost $150 million) in revenue for fiscal year 2004. It initially made its money by producing enzymes, but Biocon recently decided to become a research-oriented company with the goal of bringing a proprietary new drug to market.
The company went public in March 2004, and "its shares were oversubscribed by 33 times on opening day." Eight months later it launched Insugen, a bio-insulin that is its first branded product. Biocon also has two wholly owned subsidiaries, Syngene and Clinigene, that perform custom research and clinical trials.3,14,31
Serum Institute of India
Main article: Serum Institute of India
The Serum Institute of India can make the enviable claim that 2 out of every 3 children in the world are immunized with one of their vaccines. It is the world’s largest producer of measles and DTP vaccines, and its portfolio includes other vaccines, antisera, plasma products and anticancer compounds. The Serum Institute earned Rs 565 crore ($130 million) in revenue in fiscal year 2005, selling mainly to UN agencies and to the Indian government. The Serum Institute is part of the Poonawalla Group, whose holdings include a horse stud farm and manufacturers of industrial equipment and components. Dr. Cyrus Poonawalla is the Chairman of the company.[4]
Others
Other important domestic companies
Glenmark Generics Ltd. Mr. Glenn Saldana, MD
Lupin Ltd :Dr. Desh Bandhu Gupta, Chairman
Sun Pharmaceuticals :Dilip S. Sanghvi, Chairman and Managing Director
Torrent Pharmaceuticals :Sudir Mehta, Chairman
Wockhardt :Habil F. Khorakiwala, Chairman
Cadila Healthcare :Pankaj R. Patel, Chairman and Managing Director
Hetero Drugs :Dr. B. Partha Saradhi Reddy, Chairman and Managing Director
Nectar Lifesciences [5] :Mr. Sanjiv Goyal, Chairman
Macleods Pharma[6] :Dr. Rajendra Agarwal, Managing Director
Intas Biopharmaceuticals :Dr. Urmish Chudgar, Managing Director
Bharat Serums[7] :Mr. Bharat V. Daftary, Chairman and Managing Director
Orchid Pharmaceuticals :Mr. K. Raghavendra Rao, Chairman & Managing Director
Zenbiz Life science
Panacea Biotec [8] :Mr. Soshil Kumar Jain, Chairman
AMN Pharmaceuticals[9] :Amndip, Chairman and Managing Director
Ajanta Pharma [10] :Yogesh Agrawal, Managing Director
Green Apple Lifesciences Limited[11] :Mitesh Mehta, Chairman
Reliance Life Sciences Pvt Ltd[12] : Mr. K.V. V. Subramaniam, President and CEO
See also
Medicine in China Pharmaceutical industry in China Pharmacology Biotechnology Pharmaceutical marketing Pharmaceutical industry National pharmaceuticals policy Opium and Alkaloid Works
© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.Collaboration for Growth 2India's pharmaceutical sector is currently undergoing unprecedented change. Much of this
is due to the country's introduction, on January 1, 2005, of a system of product patents;before that, only patents for processes were permitted to be issued, a fact that has beeninstrumental in the domestic industry's huge success as a worldwide exporter of highqualitygeneric drugs.The new patent regime has also led to the return of the pharmaceutical multinationals,many of which had left India during the 1970s. Now they are back, and looking at India notonly for its traditional strengths in contract manufacturing but also as a highly attractivelocation for research and development (R&D), particularly in the conduct of clinical trialsand other services.Both multinational companies (MNCs) and domestic players are also examining theprospects offered by the local market as the government moves forward with initiativesaimed at providing India's more than one billion inhabitants, for the first time, with access tothe life-saving drugs they need. A further huge boost to the local market is coming from therise of India's new affluent consumers, who lead more Western-style lives and are demandinginnovative drugs to treat the chronic illnesses that these changing lifestyles may produce.India's leading drug manufacturers are becoming global players, utilizing both organicgrowth, through the gradual development of their business, and mergers and acquisitions(M&A) as they seek to boost their presence in existing markets and open up new ones.However, there are significant obstacles ahead, and overcoming them will require newcommitment by both industry and government, and unprecedented levels of partnershipbetween them. This report examines how these opportunities can be realized and thechallenges met. Our research includes invaluable insights provided by a number of theindustry's leading figures. We thank them for their contributions.John MorrisGlobal ChairKPMG's Pharmaceuticals Practice
1 Letters of Introduction© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.3 Collaboration for GrowthIndia's entrepreneurial pharmaceutical manufacturers are now beginning to leveragebenefits from the introduction of the nation's product patent system on January 1, 2005.Most will be unable to develop the financial muscle necessary to embark on R&D forinnovative new products, but their scientific, technical and manufacturing skills, developedunder the country's 25-year process patent system, perfectly match the requirements ofglobal drug manufacturers that are increasingly seeking to offshore many research andmanufacturing activities previously performed in-house.At the same time, a number of the country's largest pharmaceutical companies are attainingglobal-player status as existing markets expand, and new ones open up, for high quality,affordable generic drugs. Indian firms have embarked on an unprecedented shoppingspree of overseas acquisitions to establish themselves in these highly lucrative marketsand boost their capacities, as demand continues to grow.Partnerships will also be key for Indian firms' development in their home market. Multinationalcompanies that have re-entered the market since the new product patent system seekout the domestic industry's skills and infrastructures to boost their research and manufacturingactivities in the subcontinent and also open up this vast, virtually untapped market.However, India's market development will depend, more than anything, on governmentmoves to increase the population's access to medicines, which is now extremely limited.Further price controls are not the answer; Indian prices for essential drugs are already thelowest in the world. Instead, the solution lies with pro-active measures such as publicprivatepartnerships and encouragement of R&D; for example, through industry-academiacollaborations and an official system of grants, which have proved to be of great benefit toindustry and patients elsewhere in the world.A number of leading industry figures generously gave their time to provide unique industryinsights for this report. We would like to thank the following people for their contribution:Ranjit Shahani, vice chairman and managing director of Novartis India Ltd, and president ofthe Organisation of Pharmaceutical Producers of India; Kewal Handa, managing director ofPfizer India; Satish Reddy, managing director and chief operating officer of Dr. Reddy'sLaboratories Ltd; Ajay Piramal, chairman and managing director of Nicholas Piramal; and
Pankaj Patel, chairman and managing director of Zydus Cadila.Sanjay AggarwalPharmaceutical Sector LeaderKPMG in India© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.Collaboration for Growth 41 Letters of Introduction 12 Executive Summary 53 The Indian Pharmaceutical Industry 74 Opportunities 95 Challenges 176 Indian Companies as Global Players 257 Conclusion 288 AppendicesI Indian Pharmaceutical Sector-Cross-Border Acquisitions 29II Top 10 Pharmaceutical Companies in India 31III List of Abbreviations 36Endnotes 37
Contents© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.5 Collaboration for GrowthIndia's pharmaceutical industry has been growing at record levels in recent years but nowhas unprecedented opportunities to expand in a number of fields. The domestic industry'slong-established position as a world leader in the production of high-quality genericmedicines is set to reap significant new benefits as the patents on a number of blockbusterdrugs are scheduled to expire over the next few years. In addition, more and moregovernments worldwide are seeking to curb their soaring prescription drug costs throughgreater use of generics. These opportunities are presenting themselves not only in India'straditional wealthy client markets such as the U.S. and European Union nations but also inemerging economies with vast populations such as Africa, South America, Asia, andEastern and Central Europe.In addition, India's long-established position as a preferred manufacturing location formultinational drug manufacturers is quickly spreading into other areas of outsourcingactivities. Soaring costs of R&D and administration are persuading drug manufacturers tomove more and more of their discovery research and clinical trials activities to thesubcontinent or to establish administrative centers there, capitalizing on India's highlevels of scientific expertise as well as low wages.Both multinational and local drug manufacturers could eventually benefit from the marketpotential of India's population of over one billion. A large market will likely open up as theresult of a projected boom in health insurance, an area in which the country is currentlywoefully underdeveloped. New government initiatives seek to enable the majority of thepopulation to access the life-saving drugs they need, while even greater opportunities maybe presented by the rise of the new Indian consumer. This group-urban, middle class andwealthy-live fast-paced, Western-style lives and, as a result, they are beginning to sufferfrom Western, lifestyle-related illnesses, for which they want, and can afford, innovativedrug treatments.This untapped domestic market is also highly attractive to the pharmaceutical MNCs,which recently have returned to India in large numbers (many had left when the regimeallowing process patents only was introduced in the early 1970s). Now, MNCs and domesticcompanies are starting to work together, utilizing each other's strengths for their mutualbenefit. For the foreign firms, this includes not only the Indian companies' research andmanufacturing capabilities and their much lower operational cost levels, but alsocomprehensive marketing and distribution networks operating throughout India's vastterritories.There are, however, a number of uncertainties, particularly the effects of India's new productpatent system, which was introduced on January 1, 2005. Previously, only process patentswere granted, a situation that led to India's current role as a world leader in the production
of high quality, affordable generics. The new regime may spell the end for the domesticsector's smaller players, while for others it could represent unprecedented opportunities.
2 Executive Summary© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.Collaboration for Growth 6Nevertheless, the domestic industry is still spending far too little on R&D, which mustchange quickly if it is even to begin to address these new opportunities and challenges.On the international front, the industry still has some catching up to do in terms of qualityassurance while, on the local market, pricing remains a problem.There is a need for regulatory reform in India to encourage leading global players tocontinue and accelerate the outsourcing of their R&D activities-beginning with discoveryresearch-to the subcontinent. This is particularly urgent in the face of the strong competitionfrom China, where the government has been particularly proactive in encouraging foreigninvestments in pharmaceuticals and biotechnology.In India, the industry is now awaiting developments following the January draft publicationof the government's National Pharmaceuticals Policy for 2006. The document containsproposals for far-reaching initiatives aimed at boosting the domestic industry's globalcompetitiveness, as well as improving the population's access to medicines. Indian governmentministers have also promised MNCs concrete action soon on speeding the patent approvalprocess and other crucial issues, such as the definition of patentability and compulsorylicensing.Action is required soon, if India wants to be a significant player in the global pharmaceuticalarena.© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.7 Collaboration for GrowthIndia currently represents just U.S. $6 billion of the $550 billion global pharmaceuticalindustry but its share is increasing at 10 percent a year, compared to 7 percent annualgrowth for the world market overall.1 Also, while the Indian sector represents just 8 percentof the global industry total by volume, putting it in fourth place worldwide, it accounts for13 percent by value,2 and its drug exports have been growing 30 percent annually.3
The “organized” sector of India's pharmaceutical industry consists of 250 to 300 companies,which account for 70 percent of products on the market, with the top 10 firms representing30 percent. However, the total sector is estimated at nearly 20,000 businesses, some ofwhich are extremely small. Approximately 75 percent of India's demand for medicines ismet by local manufacturing.4
According to the German Chemicals Association, in 2005, India's top 10 pharmaceuticalcompanies were Ranbaxy, Cipla, Dr. Reddy's Laboratories, Lupin, Nicolas Piramal,Aurobindo Pharma, Cadila Pharmaceuticals, Sun Pharma, Wockhardt Ltd. and AventisPharma.5 Indian-owned firms currently account for 70 percent of the domestic market, upfrom less than 20 percent in 1970. In 2005, nine of the top 10 companies in India weredomestically owned, compared with just four in 1994.6
India's potential to further boost its already-leading role in global generics production, aswell as an offshore location of choice for multinational drug manufacturers seeking to curbthe increasing costs of their manufacturing, R&D and other support services, presents anopportunity worth an estimated $48 billion in 2007.7
Over-the-Counter MedicinesThe Indian market for over-the-counter medicines (OTCs) is worth about $940 million andis growing 20 percent a year, or double the rate for prescription medicines.8 The governmentis keen to widen the availability of OTCs to outlets other than pharmacies, and theOrganisation of Pharmaceutical Producers of India (OPPI) has called for them to be sold inpost offices.Developing an innovative new drug, from discovery to worldwide marketing, now involvesinvestments of around $1 billion,9 and the global industry's profitability is under constantattack as costs continue to rise and prices come under pressure. Pharmaceutical productioncosts are almost 50 percent lower in India than in Western nations, while overall R&D costsare about one-eighth and clinical trial expenses around one-tenth of Western levels. India'slong-established manufacturing base also offers a large, well-educated, English-speaking
workforce, with 700,000 scientists and engineers graduating every year, including122,000 chemists and chemical engineers, with 1,500 PhDs.10 The industry provides thehighest intellectual capital per dollar worldwide, says OPPI.
The Indian PharmaceuticalIndustry3© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.Collaboration for Growth 8India’s top 10 branded drugs 2004:India's largest-selling drug products are antibiotics, but the fastest growing arediabetes, cardiovascular and central nervous system treatments.Source: OPPI, 2004.The industry's exports were worth more than $3.75 billion in 2004-05 and they have beengrowing at a compound annual rate of 22.7 percent over the last few years, according to thegovernment's draft National Pharmaceuticals Policy for 2006, published in January 2006.The Policy estimates that, by the year 2010, the industry has the potential to achieve$22.40 billion in formulations, with bulk drug production going up from $1.79 billion to$5.60 billion: “India's rich human capital is believed to be the strongest asset for thisknowledge-led industry. Various studies show that the scientific talent pool of 4 millionIndians is the second-largest English-speaking group worldwide, after the USA.”11
The Indian Pharmaceutical Industry in 2004Turnover: $6.02 billion, up 6.4 percent year over yearExports: $3.72 billionImports: $985.3 millionBulk drug production: $2.10 billion, with over 400 bulk drugs produced. Over 60,000formulations produced, in 60 therapeutic categoriesCapital investment: up 14.8 percent to $1.16 billionEmployment: 5 million direct, 24 million indirectSource: OPPI, 2004.
VATIn April 2005, the government introduced value-added tax for the first time and abolishedall other taxes derived from sales of goods. So far, 22 states have implemented VAT,12
which is set at 4 percent for medicines. This led to pharmaceutical wholesalers and retailerscutting their stocks dramatically, which severely affected drug manufacturers' sales forseveral months.Corex (chlorpheniramine maleate,codeine phosphate)Human Mixtard (insulin)Voveran (diclofenac sodium)Becosules (vitamin B complex, vitamin C)Taxim (cefotaxime)Asthalin (salbutamol)Sporidex (cephalexin)Digene (aluminium hydroxide,magnesium hydroxide)Betnesol (betamethasone)Althrocin (erythromycin)© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.9 Collaboration for GrowthThe main opportunities for the Indian pharmaceutical industry are in the areas of:• generics (including biotechnology generics)• biotechnology• outsourcing (including contract manufacturing, information technology (IT)and R&D outsourcing).
Generics
Prescription drugs worth $40 billion in the U.S. and $25 billion in Europe are due to losepatent protection by 2007-08. Indian firms will likely take around 30 percent of theincreasing global generics market, the Associated Chambers of Commerce and Industry ofIndia (Assocham) forecast. Currently, the Indian industry is estimated to account for 22percent of the generics world market. Low production costs give India an edge over othergenerics-producing nations, especially China and Israel, says Assocham's presidentMahendra Sanghi. He suggests that it will be easier for Indian firms to win larger genericsmarket shares overseas than at home, particularly in the U.S. and Europe.13
Indian drug manufacturers currently export their products to more than 65 countriesworldwide.14 Their largest customer is the U.S., the world's biggest pharmaceutical market.The use of generic drugs is growing quickly in the U.S. due to cost pressure by payers andthe introduction on January 1 this year of the Medicare Part D prescription benefit, givingseniors and people with disabilities prescription drug coverage for the first time. With 74facilities, India has the largest number of U.S. Food and Drug Administration (FDA)-approved drug manufacturing facilities outside the U.S. Indian firms now account for 35percent of Drug Master File applications and one in four of all U.S. Abbreviated New DrugApplication (ANDA) filings submitted to the FDA.15 Analysts at Credit Lyonnais SecuritiesAsia say they expect the number of generic drug launches by Indian companies in the U.S.to increase from 93 in 2003 to over 250 by 2008.16
In January 2006, the Indian exporters' representative body, the Pharma Export PromotionCouncil (Pharmexcil) said it planned to raise a number of concerns with the U.S. governmentover what it sees as barriers to trade with them. One is a U.S. regulation that disqualifiesIndian firms from bidding for government contracts, and another is the requirement Indiandrug manufacturers submit separate applications for each U.S. state (there is no U.S.-wideregulatory requirement), even when the firms have FDA-approved products and facilities.17
4 Opportunities© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.Collaboration for Growth 10However, India's traditional lucrative export markets may be becoming a little less secure,for a number of reasons. For example, generic prices have not been rising in the U.S.; theseniors' advocacy group AARP (formerly the American Association of Retired Persons) saysthat, of the 75 generic drugs widely used by older people that it monitors on a quarterlybasis, none had had a change in manufacturer list price during third quarter 2005 and onlythree had had increases in list price at any time during January to September 2005.18 Also,new competitive threats have arrived, such as authorized generics produced by major drugproducers, new mid-sized players, Chinese and Eastern Europe manufacturers, and fullyintegrated generics firms, which are less reliant on Indian “back-end” businesses.The U.S. continues to be an attractive market for Indian firms, despite the challenges ofprice erosion and the launch of “authorized generics” by innovator companies, says RanjitShahani, vice chairman and managing director, Novartis India Ltd, and President of theOrganisation of Pharmaceutical Producers of India. He does not see any increase in nontariffbarriers there, and in fact feels that trade between India and the U.S. is “set to rev upfollowing President George W. Bush's visit to India on March 1, 2006, with both countriesgoing all out to liberalize market access.” The major concern of the U.S. FDA appears to bethe entry of counterfeit drugs, he says, but he does not believe this to be an obstacle forreputable Indian manufacturers. Moreover, while the World Trade Organization (WTO)Doha Trade-Related Aspects of Intellectual Property rights (TRIPs) nationalemergency/compulsory license agreement presents an exporting opportunity for Indianfirms, Shahani stresses that the firms must have anti-diversion measures in place in orderto protect their reputation.“The European generics market,” he says, pointing to Dr Reddy's recent acquisition ofBetapharm of Germany for $570 million, “holds more promise.” Indian companies haveacquired over $1 billion worth of pharmaceutical companies overseas in the past year anda half and should increasingly look more aggressively at countries like Brazil, Russia and theCompany FY04 FY05 FY06Glenmark -- 7 14Zydus Cadila 12 13 6-18Orchid -- 18 18-30
Wockhardt 5 7 12-13Aurobindo 2 22 3ANDA Filings for Indian Mid-sized CompaniesSource: Cygnus Consulting & Research. Industry Insights-Pharmaceuticals, November 2004.© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.11 Collaboration for GrowthCommonwealth of Independent States, and Japan, where the markets are mature andremunerative, despite some regulatory hurdles, he notes.Also, he says, Indian firms should move up the value chain to produce innovative “supergenerics” as the once-a-day Ciprofloxacin product developed by Ranbaxy and licensed toBayer, move up from producing “generic generics” to branded generics.Biotechnology GenericsFirms based in India and China could be among the first to bring biogenerics (genericversions of biological products) to the regulated markets and faster than expected. The firstbiogeneric product was approved by the European Medicines Agency (EMEA) which refersto these products as “biosimilars,” in April 2006.IMS estimates that biotechnology products accounted for 10 percent of global pharmaceuticalsales in 2004, or about $55 billion in worldwide sales for the year.19 By 2003, the U.S.accounted for 62 percent of the global biotech drugs market, while in that year Japan'sshare of the total had fallen to 7 percent from 28 percent in 1994.20 Patents on the firstgeneration of blockbuster biopharmaceuticals are beginning to expire, and the high cost ofthese products means the generic versions will find large markets among hard-pressedgovernments and other payers. Sales of biogenerics are flourishing in the unregulatedmarkets. The only regulated-market approvals so far are in Australia, granted in October2004 for the recombinant DNA growth hormone Omnitrope, manufactured by Sandoz,as well as in the EU, granted in April 2006.No U.S. approvals are likely until 2009, says market research company Datamonitor. Thecompany has identified six key product classes-insulin, human growth factor, epoetin, colonystimulating factors (CSFs), interferon alpha and interferon beta-as being at risk frombiogeneric versions of these products and estimates that global sales of the latter shouldtotal over $2 billion by 2010.21
An early beneficiary when the regulated markets finally establish frameworks for biogenericsis likely to be Wockhardt.22 This pharmaceutical and biotechnology company was one ofthe first Indian drug manufacturers to enter the European market, achieving this through aseries of acquisitions; it now has three subsidiaries in Europe, acquiring first The WallisLaboratory in 1997 and CP Pharmaceuticals in 2003, both in the UK, then Esparma ofGermany in 2004.Biopharmaceuticals are central to Workhardt's growth strategy, and the firm expects thisarea of its business to take off in 2006. Reporting at the end of December 2005, it says ithas more than 55 registrations for biopharmaceuticals pending, and 26 approvals in 18© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.Collaboration for Growth 12countries. According to analysts at SSKI India, Wockhardt is one of the few players in India,and even globally, to have the requisite capabilities in biogenerics production.23
Export Import Bank Chairman T.C. Venkat Subramanian believes the patent expiries on11 major drugs this year could help bring a “biotechnology revolution” to India. Heforecasts that biotechnology could potentially generate revenues of $5 billion and createone million jobs by 2010, through products and services.24
BiotechnologyIn 2003-04, biopharmaceuticals accounted for 60 percent of India's total biotechnologymarket, which was worth an estimated $709 million-up 39 percent over the previous period.Investment in the sector was up 26 percent to $137 million-and exports accounted for 56percent of industry revenues. The domestic biopharmaceuticals sector grew 38.5 percentand had the largest local market share, at 76 percent, followed by bioagriculture at 8.4percent, bioservices at 7.7 percent, and industrial products at 5.5 percent and bio-informaticsat 2.5 percent.25
With 200 biotech companies and total revenues of $500 million annually, India'sbiotechnology sector is still in the relatively early stages of development. However, it isgrowing fast, with an initial emphasis on vaccines and bioservices. The industry is situated
mainly in Karnataka, although there are operations in Andra Pradesh, Hyderabad, Kerala,Maharashtra and West Bengal. The top 10 players in terms of revenues in 2004 wereBiocon, Serum Institute of India, Panacea Biotec, Nicholas Piramal, Novo Nordisk,Venkateshwara Hatcheries, Wockhardt, GSK, Bharat Serums & Vaccines, and Eli Lilly & Co,reports Burrill & Co, the U.S.-based life sciences merchant bank. As is generally the caseworldwide, most biotech companies in India have developed along the contract orcollaborative research models.Discussing the development of the domestic biotechnology market, Ranjit Shahani ofNovartis India points out that, globally, most small and medium-sized biotech enterprisesare acquired by MNCs as the quickest route into this market, and India is no exception.Government incentives are important, particularly in terms of regulatory reforms, taxincentives for R&D, the development of biotechnology parks and Special Economic Zones,etc. While India's 2005 Biotech Policy should spur investment, U.S.-style industry-academiapartnerships and cluster models are worth emulating. To this end, he says, India's February28, 2006, National Budget was a disappointment for the pharmaceutical industry, as itoffers very little in the way of incentives for R&D, which is becoming increasingly importantin the post-IPR regime.In a report published last September, the Organisation for Economic Cooperation andDevelopment (OECD) pointed to a current lack of focus on biotechnology in India, due inpart to a lack of consensus on a definition, and also that the large number of government© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.13 Collaboration for Growthagencies that deal with biotechnology have led to a duplication of research funding andpoor coordination. This needs to be addressed urgently, said the report, which also calledfor initiatives to attract India's best scientists back to the country, and more support forsmall and medium-sized enterprises to enable them to face competition from the MNCs.26
Observers also warn that India's nascent biotechnology sector could face particularly strongcompetition from China, the only developing country to participate in the internationalHuman Genome Project.27 Also, massive levels of state investment mean Chinese firms arenow producing hepatitis vaccines, recombinant insulin, interferon and other generictherapeutic biologics. As is the case throughout the industry, India is regarded as having theedge over China in terms of qualified, English-speaking employees, intellectual propertyrights, and judicial and quality standards. However, if China does emerge as the dominantbiotechnology player, this could have very serious implications for India.
OutsourcingIT OutsourcingIndia's status as an information technology superpower, with access to specialist skills and24/7 work hours, is a huge advantage as it strengthens its position as the destination ofchoice for contract research, including drug discovery. Eighty-two percent of U.S.companies overall rank India as their first-choice IT outsourcing destination, says leadinginternational clinical research organization Chiltern International,28 adding that IT and ITenabledservices (ITES) companies have been expanding their activities in India to newbusiness segments such as bioinformatics and life sciences; those doing so or planning toinclude Accenture, Intel, Satyam, Cognizant, IBM, Oracle and TCS. Wipro Spectramind,India's largest third-party offshore business process outsourcing provider, is conductingbioinformatics work for global pharmaceutical companies.“India is considered a highly promising outsourcing IT and clinical data managementdestination because of its rich talent pool, technological innovation, creditable quality,operational flexibility, cost effectiveness, time-to-market and competitive advantage,” saysDr. Umakanta Sahoo, general manager of CRO Chiltern International in India. While Indiapreviously relied on cost-effectiveness to attract customers, quality and fast response arenow dominating the business processes, adds Dr. Sahoo.29
MNCs that have already entered into off shoring contracts include Pfizer India, which hassigned a preferred provider contract for its biometrics division with Cognizant TechnologiesIndia and is also working with SIRO Clinpharm; Wyeth, working with Accenture in clinicaltrial data management; GSK, whose biomedical data sciences and clinical data managementcentre in Bangalore supports studies for the group worldwide; and Novartis, which has asoftware development centre for specialized drug development programs.© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each member
firm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.Collaboration for Growth 14India's Other Advantages for Off shoring• Low-cost skill base
• Current Good Manufacturing Practice (cGMP) and U.S. FDA compliance levels
• High visibility in generics
• High-quality, compliant manufacturing
• Strong financial position with ability to scale up
• Manufacturing capacity
• Access to new technologies
• Cost efficiency and track record
• Industry position
• Recognition of product patents
Contract ManufacturingThe global pharmaceutical market is estimated to represent a $48 billion opportunity forIndia by 200730, in terms of:• manufacturing outsourcing-supply of active pharmaceutical ingredients (APIs) andintermediates• development outsourcing-conducting preclinical and clinical trials• customized chemistry services-contract research services for compounds pre-launch.Worldwide revenues for pharmaceutical industry contract manufacturing and researchservices (CRAMS) totaled $100 billion in 2004 and will grow at an average annual rate of10.8 percent to reach $168 billion by 2009, say analysts at Frost & Sullivan. Within thistotal, the global market for contract manufacturing of prescription drugs is estimated toincrease from a value of $26.2 billion to $43.9 billion, although the over-the-countermedicines and nutritional products sector will show the fastest growth.31
The Asian region has recently been challenging North America and Europe's traditionaldomination of the global pharmaceutical contract manufacturing market: India and Chinacould potentially account for 35 percent to 40 percent of the outsourced market share foractive pharmaceutical ingredients, finished dosage formulations and intermediates.32
© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.15 Collaboration for GrowthTwo major developments suggest that Indian drug manufacturers are set to benefit froman outsourcing boom. First, such an upsurge in business always occurs when a number oftop-selling drugs come off-patent, as is about to happen. Second, the arrival of India'sproduct patent regime has increased international companies' confidence in India'soutsourcing industry. At the same time, those Indian firms that will not have the ability toinvest in R&D will be able to exploit the strengths they have developed as the world'sleading suppliers of affordable essential drugs.33
Indian successes in this area have already created some significant international developments.For example, last year, Jubilant Organosys, which has the largest CRAMS business in India,acquired Target Research Associates plus 64 percent of Trinity Laboratories and its whollyowned subsidiary Trigen Labs, all U.S.-based firms. Another large Indian firm, Bilcare Ltd,acquired its first manufacturing facility in the U.S. last year, with the purchase ofPhiladelphia-based proClinical Inc.
Contract ResearchAjay Piramal, chairman and managing director of Nicholas Piramal, expects to see significantgrowth in India's custom manufacturing business, as a result of high and rising costs toinnovative manufacturers in Europe and the U.S., and also forecasts that there will be aIndian Company International Partner Outsourced ProductsCadila Healthcare Altana Two intermediates for Altana's under-patent molecule Protonix(pantoprazole)Hikal Limited Degussa Hikal has signed an agreement with Degussa for supplyingpharmaceutical intermediates and active pharmaceutical ingredientsNicholas Piramal AMO Neutralizing tablets and sterile FFS packs (product names not disclosed)Nicholas Piramal Allergan APIs for Levobunolol (Betagen) and Brimonidine (Alphagan and Alphagan - D)Nicholas Piramal Pfizer 7-year agreement relating to R&D services under which Nicholas Piramalwill provide process development and scale up services to Pfizer's animal
health division from the latter's facilities in IndiaDishman Pharma Solvay 6 projects; the main one being for starting material and advancedintermediate for Tevetan (eprosartan maleate)Dishman Pharma AstraZeneca Intermediate for Nexium (esomeprazole)Dishman Pharma Merck Intermediate for Losartan (to be supplied to its contract manufacturer in Japan)Shasun Chemicals GlaxoSmithKline Ranitidine APIShasun Chemicals Eli Lilly Nizatidine, metohexital and cycloserine APIsKey Contract Manufacturing AgreementsSource: Citigroup Analyst Report, October 10, 2005.© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.Collaboration for Growth 16growing number of collaborations between Indian and foreign firms in the domestic market,especially involving the biotechnology sector, in a wide variety of areas such as collaborativeR&D (including drug discovery and clinical trials), co-marketing and manufacturing.India and China's drug outsourcing discovery markets combined are currently wortharound $7.3 billion and, driven by government initiatives to diversify the drug discoveryportfolio and develop infrastructure, are set to reach $19.8 billion in 2011, say analysts atFrost & Sullivan.34
In September 2004, a global innovation survey by the Economist Intelligence Unit identifiedIndia as an R&D “hotspot,” defined as a place where (1) companies are able to tap intoexisting scientific and technical expertise networks, (2) there are good links to academicresearch facilities, (3) the environment supports innovation and (4) it is easy to commercialize.Costs of pharmaceutical innovation in India are estimated as low as one-seventh of theirlevels in Europe, and the country's clinical research industry is currently worth $100 millionand growing around 40 to 50 percent annually, although some forecasts say it could beworth as much as $1 billion to Indian firms in 2008.35
Examples of R&D Inward Investments• AstraZeneca is conducting research into tuberculosis (TB) at the AstraZenecaResearch Foundation India in Bangalore. India's estimated 8.5 million TB patients36
mean clinical trials can be conducted easily and economically. Although therevenue potential for anti-TB drugs is limited as the disease mainly affects poorernations, the reduced research costs of developing the drug in India and thegoodwill associated with helping to eradicate a major disease in developingcountries still present a good business opportunity for AstraZeneca.• GSK and Ranbaxy have set up an early-stage partnership in drug research, underwhich GSK will provide the Indian firm with leads, Ranbaxy will conduct leadoptimization and animal trials, and GSK will take the drug through human trials.GSK will have exclusive rights to sell any resulting product in developed-worldmarkets, and the two firms will co-promote it in India.• Pfizer is exploring the establishment of an R&D facility and setting up an Academyfor Clinical Research in Mumbai.Costs of clinical trials in India are around one-tenth of their levels in the U.S., and it isestimated that they could be worth $300 million to India by 2010.37 Major drug producersthat are already conducting trials in India include Pfizer, estimated to have some 20 ongoingclinical trials there; GSK, with seven trials; Eli Lilly, with 17 trials; plus AstraZeneca andNovartis. As well as Chiltern, leading contract research organizations (CROs) such asQuintiles, SFBC International and ICON Clinical Research have extensive operations in India.© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.17 Collaboration for Growth“The three strategic drivers for accelerating growth of the pharmaceutical industry in Indiaare intellectual property rights-its implementation in letter and spirit; liberal drug pricingpolicies; and regulatory (as well as labor) law reforms,” according to Ranjit Shahani ofNovartis India.
Patents and Intellectual Property RightsIndia's new product patent regime is the result of the WTO's Doha Round of negotiations in2001. Final agreement was reached on TRIPs ground rules for patent protection amongWTO member countries, stating that both processes and products should be protected.Subsequently, on March 22, 2005, India's parliament approved the Patents (Amendment)Act 2005, bringing in a system of product patents backdated to January 1, 2005. The new
regime protects only products arriving on the market after January 1, 1995, abolishing theprevious process patent system established by the 1970 Patent Act.Since the introduction of product patents the MNCs have largely returned, the most recentbeing Merck & Co, which inaugurated its wholly owned subsidiary MSD India Pvt Ltd in July2005 after being absent for approximately 20 years. “With passing of the patent regime inIndia, we thought the atmosphere was conducive for business, and we are looking at bringingour products here soon,” said the subsidiary's Managing Director, Leonard Tauro. Whilethe firm did not plan to set up manufacturing facilities in India within the near future, it waslooking at R&D prospects in the country, beginning with clinical trials, he added.38
Assocham believes the new patent regime will enable the development of innovative newdrugs, which will increase profitability for MNCs. It will also force domestic players to focuson R&D, which, for those who can afford to do so, will have long-term beneficial effects, it says.39
The draft National Pharmaceuticals Policy 2006 states that the government is committedto making India's laws and policies relating to IPR, including data protection, fully compliantwith TRIPs provisions. Also, new rules are being framed under the Patents Act 1970amendments introduced from April 1, 2005, for product patents, and these will be broughtinto law soon. “Under these rules, it would be the endeavor of the government to simplifyprocedures and shorten the timelines of various approvals,” says the draft Policy.40
Kewal Handa, managing director of Pfizer India, applauds the introduction of India's productpatent regime at the start of last year as a very positive move by the government in honoringits TRIPs commitments, but adds that a number of big issues remain to be addressed.Of crucial importance is the issue of patentability, he says. The industry is keenly awaitingthe publication of the Technical Expert Group, which has been set up under the chairmanshipof RA Mashelkar, Director General of the Council for Scientific and Industrial Research, toexamine issues such as whether it would be TRIPs-compatible for the patent regime to limit
5 Challenges© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.Collaboration for Growth 18the granting of patents to New Chemical Entities or New Medical Entities involving one ormore inventive steps.The industry is also waiting to see whether the government will follow international guidelinesgoverning compulsory licensing, the process by which the TRIPs agreement permitsgovernments, in special cases, to waive the patent on a particular medicine. Elsewhere inthe world, the trade treaty allows compulsory licenses to be issued in response to a nationalemergency, but in India they may currently be invoked due to factors such as the reasonabilityof a product's price, and its potential for export and local manufacturing, amongother issues. Government policy in this area needs to be more clearly defined, said Handa.Pfizer is one of the longest-established MNCs in India and was the first to set up R&Dfacilities there, but he believes that, for R&D activities to expand as the government wishes,the industry must have high levels of confidence in the country's regulatory framework. Amajor drawback is that India offers no data protection (although it is provided by China,which also has a good patents protection regime and a bigger domestic market than India).A further disincentive is that drug prices on the Indian domestic market are the lowest inthe world.All of this means that “people are talking about India but investing in China,” says Handa.India's First Pharmaceutical Patent Goes to RocheIn March 2006, Roche became the first company in India to receive a patent under theproduct patent regime. The product patent has been granted for Pegasys(peginterferon alfa-2a) for the treatment of hepatitis C, under the country's “mailbox”facility for post-1995 inventions. The patent is valid for 20 years from May 15, 1997,during which time no other firm can launch a generic version in India.Girish Telang, managing director of Roche Scientific India Pvt Ltd, forecast thedevelopment would “usher in the next wave for the Indian pharmaceutical space, byway of a flow of newer innovative molecules in the Indian market, complemented byincreased investments in R&D towards drug development efforts.”41
Ranjit Shahani of Novartis India still sees some areas of concern with respect to IPR, despitethe arrival of the new product patent regime. Areas of concern include narrowing the definitionof patentability only to NCEs (New Chemical Entities); broadening the scope of compulsorylicensing to include affordability; and the lack of data protection. He calls for an early resolution
of these issues by the various committees now considering them, in order to helpincrease domestic as well as foreign direct investments. He also welcomes the Policy's© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.19 Collaboration for Growthproposal for a centralized National Drug Authority, rather than state-by-state FDA control;this will help uniform implementation of the law throughout the country, he says.
Pricing IssuesThe prices of 74 bulk drugs and their formulations, which account for around 40 percent ofthe retail pharmaceutical market, are controlled by the Drug Price Control Order (DPCO) of1995. The government's 2002 Pharmaceutical Policy would have reduced the numbers ofprice-controlled drugs still further, but this proposal is currently under judicial review in theSupreme Court. If it is approved, the number of price-controlled drugs is expected to drop to 25. 42
A new DPCO is expected to be introduced by the end of 2006, which will take account oftwo recent major reports-one on drug pricing, produced in November 2004 by a governmentpanel headed by GS Sandhu, joint secretary of the Department of Chemicals and Fertilizers,and the September 2005 report of the Prime Minister's Task Force on Drug Affordability,headed by Pranob Sen, Chief Adviser to the Planning Commission.Looking to the future of the domestic market, as envisioned by the provisions of thegovernment's newly proposed National Pharmaceuticals Policy for 2006, Kewal Handa ofPfizer India says that the market will be defined by the manner in which the prices of patentedproducts are controlled and, therefore, it is critical that the government gets this right.Having provided product patent protection, the government must now look at the holisticpicture and decide where value is to be created-through controlling prices or encouragingmanufacturing and research, he says.As the government's draft National Pharmaceuticals Policy, published in January 2006, isunder discussion with all, the industry hopes the last several years' trend of reducing thenumber of price-controlled drugs will continue, says Ranjit Shahani of Novartis India, andhe calls for a move away from micro-managing price controls to price monitoring. TheIndian market is highly competitive and its prices are now the lowest in the world, at almost10 percent of U.S. prices.Zydus Cadila Chairman and Managing Director Pankaj Patel describes the draft NationalPharmaceuticals Policy as confusing, noting that it emphasizes R&D but also price controlsand keeping drugs cheap. Implementation of the latter will keep the industry from movingforward, he warns.“It's tough to move ahead by looking into the rearview mirror, and that's exactly what'shappening,” he says, adding, “On one hand, there is emphasis on R&D in the Policy, which isfuturistic, but at the same time it does not address the issue of price controls, which will tiethe industry down and not allow it to accelerate the pace of growth and move forward.”© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.Collaboration for Growth 20Discussing the issue of compulsory licensing in India, Pankaj Patel notes that, globally, ithas always been a practice to approve new drugs on the basis of safety, efficacy and, lately,the economic value of drugs. India is also looking at economic criteria as well as nationalimportance for to the reasons why it could permit compulsory licensing. But it is important,he adds, that India's government has in fact never invoked these criteria, not even in thecase of Roche's anti-flu drug Tamiflu, which it could have done while still remainingTRIPs-compliant. “The provision is, therefore, more of a safeguard to ensure optimal pricingfor Indian patients, taking into account the heavy disease burden and purchasing power ofpeople in India,” he says.
Regulatory ReformsWhile he feels it is premature to discuss the proposals contained within the government'sdraft National Pharmaceuticals Policy, Ajay Piramal of Nicholas Piramal stresses that thegovernment must take steps to make the domestic industry more robust and create anenvironment that is conducive to research. The pressure to reduce prices must end, hesays. Instead, the government needs to provide incentives and allow companies to makeadditional profits that they can plough back into research.Tax incentives are also necessary to attract more foreign investment into the country, asthey have proved successful in regions such as Singapore, Puerto Rico and Ireland, he says.
The government is now starting to develop an infrastructure for clinical trials in India, withamendments made recently to Schedule Y of the Drugs and Cosmetics Rules of 1945 toallow for multicenter concurrent clinical trials in India and address the protection of trialparticipants, and the integration and quality of data. Among other developments, GoodClinical Practice guidelines have been published and made mandatory.The draft National Pharmaceuticals Policy of 2006 says the government plansthe following actions to facilitate and encourage clinical trials in India:• Early decision on data protection
• Improved regulatory infrastructure and some form of protection for undisclosedtest data• The National Toxicology Centre within the National Institute of PharmaceuticalEducation and Research to be made fully compliant with GLP norms, in order tofacilitate pre-clinical trials• Tax benefits available for R&D also to be applicable for clinical trials;
• Clinical trial samples imported into India to be exempted from payment of importduty on the basis of authorizations/licenses issued by the Drug Controller Generalof India• Direct investment in the field of clinical development and data management to bemade exempt from service tax for a period of 10 years up to 2015.Source: Indian Government draft National Pharmaceuticals Policy, January 2006.© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.21 Collaboration for Growth“The success of government moves to encourage further outsourcing activities will dependon both the new Policy and improvements to the regulatory framework, Kewal Handa ofPfizer India says. In terms of TRIPs compliancy, he urges the government to take a pragmaticview and create a truly level playing field so that all companies can operate on an equalfooting.The government must also focus more on health care spending and devise ways to givepeople access to the drugs they need. These improvements can be achieved throughpartnerships between the government and industry rather than subsidizing through pricecontrols. “However,” he adds, “currently there is no infrastructure in place to facilitate suchdevelopments.”
R&D SpendingSatish Reddy, managing director and chief operating officer of Dr Reddy´s LaboratoriesLtd, calls on the government to provide a strategy for R&D in India, with specific incentives.'Tax breaks are simply not enough,” he says. “R&D grants need to be provided in some form,and with a proper framework.”Indian manufacturers cannot fulfill their ambitions to become players on the world stageunless they make significant increases to their R&D expenditures; at 2 percent of sales,these are currently far below the global level of 10 to 20 percent. In fiscal 2005, the leadingfive Indian companies increased their R&D spending 47 percent overall to a total of $192.3million from $131 million in fiscal 2004. Within that total, individual companies' spendingrose as much as 90 percent, with Dr Reddy's amounting to 14.7 percent of its net sales.However, Nicholas Piramal and Cipla still spend less than 5 percent of their net sales onresearch, and the combined R&D expenditures of the five is still less than 3percent of Pfizer, the world's leading research-based drug manufacturer. Moreover, theaverage for the leading Indian firms represented just 5.7 percent of their net sales in fiscal2004, compared to 14.5 percent for Merck & Co. and 15.6 percent at Sanofi-Aventis.43
Also in 2004, the number of patent applications filed from India rose from 295 in 2001 to784 in 2004, while the largest users from India of the Patent Cooperation Treaty wereRanbaxy, with 121, up from 66 in 2003, and the Council of Scientific and IndustrialResearch, with 124 applications in 2003 and 69 in 2004. Other Indian PCT filings duringthe year came from Cipa (32), Jubilant Oraganosys (16), Vaman Technologis (R&D) (12),Matrix Labs (12), Hetero (10) and Wockhardt (10).44
India's new patents regime is already producing changes in terms of greater commitmentto discovery research within the industry, although a major shift for Indian firms away fromreverse engineering will not be seen for three to four years, Ajay Piramal of NicholasPiramal forecasts.© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each member
firm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.Collaboration for Growth 22Generally, however, he expects that the effects of the new patent regime on the market inIndia will be as limited as those that followed similar changes made in Poland and Brazilaround 10 years ago. Apart from some innovative therapies developed for use in nicheareas, most innovator drugs provide only marginal improvements over existing products,yet they carry very high prices. Therefore, as drug prices in India are among the lowest inthe world, these products will have only a very limited market available to them in thecountry, he says.In what was regarded as the start of a significant new trend, in September 2004, the Indianfirm Glenmark out licensed GRC-3886, a PDE4 inhibitor in development for the treatmentof asthma and chronic obstructive pulmonary disease to Forest Labs of the U.S., for $190million in staggered milestone payments and 15 percent of sales in royalties.45
Developing the Domestic Indian Pharmaceutical MarketSatish Reddy of Dr Reddy's Laboratories applauds the government's draft NationalPharmaceutical Policy for 2006's provisions on increasing access to treatments for lifethreateningdiseases, but points out that Western lifestyle diseases are currently providingthe major growth in the domestic market.India currently spends 4.5 to 5.0 percent of its GDP on health care, but public spendingaccounts for just 0.9 percent, putting the nation among the 20 lowest-spending countriesworldwide. Total health expenditures were $29.3 billion in 2004, with around 83 percentaccounted for by private providers. The balance of spending is also iniquitous; while thepoorest 20 percent of the population has double the mortality rates, malnutrition andfertility of the richest quintile, the latter group receives about three rupees for every onerupee spent on the former. Two-thirds of what the government spends on health care goesto secondary and tertiary care rather than basic services.46
Ninety-four percent of all private health spending is out of pocket, mostly at the time of theincident, and more than 40 percent of hospitalized people borrow money or sell assets inorder to cover their expenses. The remaining 6 percent of spending is provided by insurance-3.7 percent social, 1.6 percent employer-sponsored and 0.7 percent private insurance.Just 15 percent of the population has some form of insurance; an estimated 800,000,000people in India have none.47
The health insurance market was opened up to the private sector in 2000 and, since then,growth has been fast, with nearly 10.3 million policies sold in 2003-04 compared to 7.5million in 2001-02. A 40 percent compound annual growth rate (CAGR) is forecast for thehealth insurance sector over the coming years,48 making it a significant driver of the domestichealth care market, which analysts at McKinsey believe could be worth $40 billion by 2012.© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.23 Collaboration for GrowthRising levels of population and incomes, plus the arrival of new products, will continue togrow the domestic market around 10 percent a year, but there will be no dramatic changeunless there is help to improve people's access drugs, Pankaj Patel of Zydus Cadila says.In 2003, medicines accounted for just 15 percent of India's total health care spend49 andpatented drugs currently represent fewer than 5 percent of the national market. The pricesof essential drugs in India are among the world's lowest, with market growth comingmainly from volume in urban markets.Turning to the domestic market, Ranjit Shahani of Novartis India says the forthcomingprivatization of health insurance and India's fast-growing middle class will certainly boostconsumption. India's fastest-growing product segments last year were for lifestyle-relateddiseases, and the MNCs can produce innovative, patented treatments for these conditions,as well as develop treatments for developing-world diseases such as malaria, TB andHIV/AIDS.Novartis's own Institute of Tropical Diseases in Singapore, where such research is beingdone, should have been sited in India, Shahani says, but the timing was wrong-before thePatent Act was passed. He feels that Novartis is unlikely to bring such research to Indiasoon, although in February 2006 the firm opened a global R&D centre for OTC medicinesat Thane, on the outskirts of Mumbai.Ranjit Shahani applauds the National Pharmaceuticals Policy's proposal of public/privatepartnerships (PPPs) to tackle life-threatening diseases such as cancer and HIV/AIDS, butstresses that, in order for them to work, they should be voluntary, and the government
should exempt all life-saving drugs from import duties and other taxes such as excise dutyand VAT. He is, however, critical about a proposal for mandatory price negotiation of newlypatented drugs. He feels this will erode India's credibility in implementing the Patent Act inAchieve zero growth of HIV/AIDS 2007Eliminate kalar-azar 2010Reduce by 50 percent mortality due to TB, malaria and othervector- and water-borne diseases 2010Reduce prevalence of blindness to 0.5 percent 2010National health policy goals BySource: Sustaining Health with Innovative R&D and Health Infrastructure; presentation for the Commissionon Intellectual Property Rights, Innovation and Public Health (CIPIH) in New Delhi, India, November 4, 2004© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.Collaboration for Growth 24a fair and transparent manner. To deal with diabetes, medicines are not the only answer;awareness about the need for lifestyle changes needs to be increased, he adds.While industry leaders have long called for the development of PPPs for the provision ofhealth care in India, particularly in rural areas, such initiatives are currently totally unexplored.However, the government's 2006 draft National Pharmaceuticals Policy proposes theintroduction of PPPs with drug manufacturers and hospitals as a way of vastly increasingthe availability of medicines to treat life-threatening diseases. It notes, for example, thatwhile an average estimate of the value of drugs to treat the country's cancer patients is$1.11 billion, the market is in fact worth only $33.5 million. “The big gap indicates thenear non-accessibility of the medicines to a vast majority of the affected population, mainlybecause of the high cost of these medicines,” says the Policy, which also calls for tax andexcise exemptions for anti-cancer drugs.Another area for which PPPs are proposed is for drugs to treat HIV/AIDS, India's biggest healthproblem. Official estimates put the number of Indians living with the disease at 5.1 million in2003, with up to 40 percent being women and children, but others say the total is closer to8 million.50 Moreover, of the world's 150 million diabetic population, 33 million are in India.51
Among the Policy's other proposals are a 2 percent tax that would generate an estimated$1.45 billion a year to provide free medicines under health insurance schemes for the poorestIndians and also establish at least 25 “pharma parks” over the next five years: a prenegotiationpricing mechanism for patented drugs; reduced prices for bulk public drugs purchases;promoting generics by removing them from the price control regime; ceiling prices for 314drugs to be fixed based on the weighted average price of the top three brands of eachproduct by value at April 1, 2005; debranding of prescription drugs with clear evidence ofmarket dominance, defined as a market share over 70 percent; halving excise duty on allmedicines from 16 percent to 8 percent; a 15 to 35 percent cap to be introduced on thewholesale and retail trade margins of unbranded drugs that are not price controlled: theannual revision of the list of essential drugs; and moves to strengthen the drug regulatorysystem and computerize the National Pharmaceutical Pricing Authority.52
The Ministry of Chemicals and Fertilizers is also reported to be estimating production costsfor 374 essential drugs, so that their prices can be fixed, and drawing up a list of life-savingdrugs that could be brought under price control.Many of the measures intended by the government contradict the industry's wishes forfurther deregulation of the Indian pharmaceutical market. The challenge remains to provideaccess to life-threatening diseases and, at the same time, create price incentives for theR&D investments.© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.25 Collaboration for GrowthConsolidation in the global generics industry, where the top 10 players account for 27percent of the world market, is widely expected, and, following Teva's purchase of IVAX andthe takeover of Hexal by Novartis's unit Sandoz, a vast gap has been created between thesefirms and the rest of the industry. Ranbaxy is widely believed to be seeking to attain thethird position through an alliance with a major company. Wockhardt and Dr Reddy's arealso particularly active in terms of acquisitions in the generics sector.An enabling factor for Indian firms' activity overseas is their increased liquidity in the market,with increasing numbers of Foreign Currency Convertible Bond listings and private equityfindings.Drug manufacturers are currently the most aggressive overseas investors of all
Indian industries. They are pursuing foreign acquisitions due to their need to:• Improve global competitiveness
• Move up the value chain
• Create and enter new markets
• Increase their product offering
• Acquire assets (including research and contract manufacturing firms, in order tofurther boost their outsourcing capabilities) and new products• Consolidate their market shares
• Compensate for continued sluggishness in their home market.In the period from January 2004-when Ranbaxy formalized its purchase of RPG (Aventis)for $80 million, making it the fifth-largest generics supplier in France-until October 2005,Indian firms made 18 international acquisitions.53 Glenmark, Jubilant Organosys, NicholasPiramal and Ranbaxy each acquired two overseas businesses during this time, but thebiggest Indian buy was Matrix Labs' acquisition of Belgium's Docpharma for $263 millionin June 2005.Eleven of the 18 acquisitions are comparatively small, worth $5 to $30 million, but thevalue of Indian industry purchases is rising fast, having grown from just $8 million in 1997to $116 million in 2004, and this fast pace is expected to continue.54
Also, although the U.S. is the world's largest generics market, most of the purchases werein the EU. Observers believe that Indian firms consider European valuations to be morereasonable, and there is a wider price range of companies available. Use of generics isgrowing quickly in Europe, due to government price controls and other pro-genericmeasures, while the EU regulatory climate is proving a disincentive for some Europeanfirms to continue, creating buying opportunities for Indian firms.55 The three main Europeangenerics markets are Germany, France and the UK, together worth around $3 billion a year.
Indian Companies asGlobal Players6© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.Collaboration for Growth 26Notable developments during 2005 were Dr Reddy's acquisition of Roche's API businessfor $59.6 million; Nicholas Piramal's buying Avecia Custom Drug Synthesis of the UK for$16.7 million; Ranbaxy's acquisition of a 40 percent stake in Japan's Nihon PharmaceuticalIndustry; and Sun Pharma's completion of its buy of ICN Hungary for an undisclosed sum.Then in February 2006, the largest-ever acquisition by an Indian pharmaceutical companywas announced, when Dr Reddy's bought Germany's fourth-largest generics company,Betapharm Arzneimittel, from UK-based 3i for $573.6 million. Betapharm Chief ExecutiveWolfgang Niedermaier commented, “Dr Reddy's impressive pipeline of generic and innovativeproducts and its high-quality standards, combined with competitive manufacturingcosts, will help further develop our position in the German market and offer an entry platformfor the European market.”
OutlookPrice competition in generics markets is not unexpected or shocking; it is the nature of thebusiness, and the important thing is to focus on the right product mix and optimal productionprocesses, says Pankaj Patel of Zydus Cadila.He foresees huge new potential for the company from the upcoming patent expiries in itsmain regulated markets-the U.S. and Europe, particularly France. The firm also has a highprofile in Brazil, South Africa and Russia.In terms of the role of Indian firms on the global stage, Ranjit Shahani of Novartis Indiapoints to Ranbaxy, Dr Reddy's, Nicholas Piramal, Wockhardt and Lupin as having alreadyachieved this status; many of these firms' international sales are higher than their domesticturnover, he says.In terms of competition with other major emerging economies, India offers the competitive
advantages of an abundance of English-speaking scientific and technical staff, globallycompetitive IT capabilities, a sound judicial system and a vibrant democracy, which fostersinnovation, creativity and cost competitiveness. The country can use these advantagesstrategically to beat any international competition, he says, but he believes that India's realfocus should be on becoming a developed nation by 2020, and its goals should be toeradicate poverty, illiteracy and disease, rather than competing with any country.India offers the international pharmaceutical industry very high levels of expertise, butmanufacturers will not go all out to invest in the country until it also offers the rightregulatory framework, warns Kewal Handa of Pfizer India.Nevertheless, he is very hopeful that India will develop into a very good market for Pfizer.The company looks forward to being able to launch new products in the country© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.27 Collaboration for Growthsimultaneously with its global introductions, and to creating value for Pfizer globallythrough Indian manufacturing of formulations and APIs, enhanced clinical research and biometrics.Within the next four or five years, the first new drug discovery made by an Indian companycould arrive on the market, forecasts Ajay Piramal of Nicholas Piramal.He hopes that his company will have, by that time, not only launched its own in-housedeveloped product, but also increased the share of revenues accounted for by its internationalbusiness from 30 percent at present to 50 percent, and increased its position in thedomestic market, where it is currently fourth in the league of leading manufacturers.© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.Collaboration for Growth 28There has never been a more important time for India's government and its drug producers,both multinational and domestic, to work together in partnership for the good of theindustry and the nation. With its enormous advantages, including a large, well-educated,skilled and English-speaking workforce, low operational costs and improving regulatoryinfrastructure, India has the potential to become the region's hub for pharmaceutical andbiotechnology discovery research, manufacturing, exporting and health care serviceswithin the next decade.However, in order for this to happen, it is imperative that the regulatory environmentcontinues to improve. Otherwise, India needs to look to the achievements of China, wherethe government's strong commitment pro-industry policies have produced a positiveenvironment that not only offers drug manufacturers a product patent regime but also, andcrucially, data protection. India's continuing failure to do so needs to be urgently rectified.The goals set out in the Indian government's draft National Pharmaceuticals Policy for2006 in terms of domestic market development are ambitious, and will require a positivepricing environment if the country's 1 billion people are to be able to access the life-savingand innovative medicines they need. Again, partnership is key: industry leaders are keen towork with government on issues of affordability and point out that price controls will donothing to increase access to new and effective treatments.For foreign investors, collaborations with India present a huge opportunity both in terms ofjoint production for the global market and supply of the growing domestic market.Dr. Ekkehart HansmeyerHead of PharmaceuticalsKPMG in Germany
7 Conclusion© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.29 Collaboration for Growth
Appendix ICompany Focus Area Transaction Target TransactionDate ValueDishman Contract manufacturingPharma and research services April 2005 Synprotec (UK) US$3.5 millionDr Reddy's U.S. generics, specialty products,
APIs, formulations, custom synthesis May 2004 Trigenesis (USA) US$11 millionn/a BMS Laboratories and MeridianHealthcare (UK) US$16 millionNovember 2005 Roche's API Business (Mexico) US$59 millionGlenmark Drug discovery research,Pharma formulations April 2004 Klinger Lab (Brazil) US$5.2 millionMarch 2005 Uno-Ciclo (Brazil) US$4.6 millionOctober 2005 Servycal SA (Argentina) n/aHikal API's contract manufacturing September 2004 Marsin (Denmark) US$6 millionfor 50.1% stakeJubilant CRAMS, Pharma specialtyOrganosys chemicals, intermediates,formulations, medical chemistryand clinical services June 2004 PSI (Belgium) US$16 millionJuly 2005 Trinity Laboratories (along with US$20,25subsidiary Trigen Laboratories) (U.S.) million for 75%stakeOctober 2005 Target Research Associates (U.S.) US$33.5millionMatrix Labs CRAMS, generic APIs,intermediates and formulations March 2005 MCHEM (China) (JV) n/aJune 2005 Docpharma (Belgium) US$263 millionSeptember 2005 Explora laboratories (Switzerland) n/an/a Fine Chemicals Corp. (South Africa) n/aIndian Pharmaceutical Sector Cross-Border Acquisitions© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.Collaboration for Growth 30Source: Publicly available sources of informationCompany Focus Area Transaction Target TransactionDate ValueNicholas CRAMS space - ContractPiramal manufacturing, APIs, brandedformulations July 2004 Dobutrex brand acquisition (USA) n/aDecember 2004 Rhodia's inhalations business (UK) US$14 millionJuly 2005 Biosyntech (Canada) US$6 millionOctober 2005 Avecia Pharma (UK) US$16.9 millionStridesArcolab Generics, OTC and nutraceuticals July 2005 Manufacturing Plant (Poland) US$8 millionAugust 2005 Beltapharm (Italy) EUR 1.6 millionfor 70% stakeSun Pharma Branded formulations, U.S. August 2005 Two facilities from Valeant Pharma US$10 milliongenerics, APIs (Hungary, U.S.)n/a Caraco (U.S.) US$7.5 millionDecember 2005 Able Laboratories (U.S.) US$23.15 millionRanbaxy U.S. and Europe generic markets January 2004 RPG Aventis (France) US$84 million18 generic products of Efarmes S.A.n/a (Spain) n/aJune 2005 Brand-Veratide from P&G (Germany) US$5 millionTorrent Formulations, European genericmarket June 2005 Heumann Pharma (Germany) n/aZydus Cadila Contract manufacturing andgenerics August 2003 Alpharma (France) US$6.6 millionWockhardt Biogenerics, U.S. and Europegenerics market, branded generics July 2003 CP Pharma (UK) US$20 millionMay 2004 Esparma (Germany) US$11 millionIndian Pharmaceutical Sector Cross-Border Acquisitions (continued)© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.31 Collaboration for Growth
Aurobindo Pharma
Aurobindo Pharma manufactures generics and APIs in the antibiotic, antiretroviral,cardiovascular, central nervous system, gastroenterological and anti-allergy fields, andmarkets them in over 100 countries. In the quarter ended December 31, 2005, it reportedsales up 28 percent to $93.1 million over the same quarter of 2004, with sales offormulations rising 125 percent. The firm filed 10 ANDAs and 13 DMFs in the USA in thequarter, with 70 filings in other markets, bringing its total number of formulation filings to364.In January 2006, Aurobindo reported that the U.S. FDA had granted tentativeapproval for its antiretroviral Nevirapine Oral Suspension 50 mg/5 ml, qualifying the productunder President George W Bush's Emergency Plan for AIDS Relief (PEPFAR) program. Alsoin January, the World Health Organization announced the inclusion of Aurobindo'sNevirapine oral suspension 50mg/5ml and Stavudine for oral solution 1mg/ml in itsPre-qualification list - both are used as a part of first-time line treatment in pediatric AIDS.
Aventis Pharma50.1 percent of Aventis Pharma is held by European drug major Sanofi-Aventis and, in earlyApril 2006, it was reported that UB Holdings had sold its 10 percent holding in the firm toVariegate Trading, a UB subsidiary. The firm's major products are in the anti-infective,anti-inflammatory, cancer, diabetes and allergy market segments and, for the year endedDecember 31, 2005, it reported net sales (excluding excise duty) up 9.9 percent to $181.1million, with domestic sales up 9.1 percent at $129.8 million and exports increasing 12percent to $51.2 million. Sales were led by 83 percent annual growth for the diabetestreatment Lantus (insulin glargine), followed by the rabies vaccine Rabipur (+22 percent),the diabetes drug Amaryl (glimepiride) and epilepsy treatment Frisium (clobazam), both up18 percent, the angiotensin-coverting enzyme inhibitor Cardace (ramipril +15 percent),Clexane (enoxaparin), an anticoagulant, growing 14 percent and Targocid (teicoplanin),an antibiotic, whose sales advanced 8 percent.In February 2006, analysts at SSKI India described Aventis India as a “marketingpowerhouse” and forecast 13 percent and 17 percent CAGR in the firm's consolidatedrevenues and earnings, respectively, to 2007. The firm is well-placed to leverage on India'spost-patent regime, they said, adding: “with a strong R&D pipeline, the parent's willingnessto launch products in India soon after the global launch and a locally-relevant pricingstrategy, Aventis is an attractive play on the growing domestic market.”56
CiplaIndia's second-largest drug manufacturer was originally established in 1935 as TheChemical, Industrial and Pharmaceutical Laboratories. Until 2000 its business was primarilydomestic, but exports, to more than 150 countries, accounted for 45 percent of its fiscalyear 2005 sales, giving it what is probably the Indian industry's most geographically-
Appendix II© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.Collaboration for Growth 32diversified export base, say analysts at SKKI, who add that Cipla “has established itself asthe partner of choice for generic companies globally.” 57
At the end of December 2005, Cipla signed the largest product development andmanufacturing agreement in the country, when it agreed a global deal with Germanmanufacturer Boehringer Ingelheim for the development and supply of the firm'shypertension drug Micardis (telmisartan).The firm also announced at year-end that it planned to launch the first generic version ofRoche's Tamiflu (oseltamivir), which is recommended for use against the H5N1 strain of avian flu.In 2004, Cipla took over from GlaxoSmithKline as India's leading drug manufacturer interms of retail sales (although, including vaccines and institutional sales, GSK still has theleading share, at just under 6.5 percent).
Dr Reddy's LaboratoriesDr Reddy's Laboratories is an emerging global pharmaceutical and biotechnology company,which was founded by chairman Anji Reddy in 1984. It operates in over 60 countries,although India and the USA each accounts for around a third of the firm's total sales. Thecompany is already strongly present in most of the world's biggest less-regulated markets,such as Russia, China, Brazil and South Africa.For the nine-month period to December 31, 2005, the firm reported revenues up 14
percent to $387.4 million, driven by sales of APIs (up 48 percent in the third quarter and19 percent in the first nine months) and branded formulations (up 34 percent in the thirdquarter, led by growth of 34 percent in India and 35 percent in Russia). Dr Reddy's is alsoan innovator in the use of venture capital to maintain cash-flow for R&D, having received$57 million from ICICI Venture Funds to support ANDA filings for 18 months beyondFY2005 for royalties from sales in the USA.Dr Reddy's made history in February when it entered the German branded generics market,the world's second-largest after the USA, not through building a business organically therebut with the purchase of Betapharm, Germany's fourth-largest generics manufacturer, for$570 million. This is the largest overseas acquisition by an Indian pharmaceutical companyso far.Despite its size, the German generics market is not experiencing the pricing pressurewhich is currently being felt in the USA and shrinking business there. Satish Reddy from DrReddy's is still optimistic about prospects in the USA, pointing to the huge opportunitieswhich will be presented there by patent expiries on major products going forward to 2010.© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.33 Collaboration for GrowthBefore the Betapharm purchase, Dr Reddy's did not have a presence generally in theEuropean branded generics market, although it is active in the UK pure generics market.It is now looking towards expansion in Spain, France and the rest of Europe, and also to rollingout its existing product range in major regulated markets including Australia and New Zealand.
LupinLupin is one of the world's largest manufacturers of APIs and finished formulations for TB,bacterial infections and cardiovascular disease. Its products are sold in more than 50countries. For third-quarter 2006 (ended December 31, 2005), the firm reported grosssales up 51 percent to $98.9 million, with exports up 56 percent (boosted by U.S. launches)at $46.3 million and domestic sales rising 47 percent to $51.9 million For the nine monthsto end-December, sales rose 34 percent to $274.7 million, with net profit up 112 percentto $29.5 million.
Nicholas PiramalNicholas Piramal is the flagship company of Piramal Enterprises (PEL), one of India's largestdiversified business houses. It was formed in 1988 when PEL acquired NicholasLaboratories (NPIL) a small formulations company, from Sara Lee. For third-quarter FY2006 (ended December 31, 2005) the firm reported net sales of $78.3 million, up 9.2percent on the second quarter, and consolidated sales were up 17.3 percent at $89.5 million.However, net profit plummeted 69.9 percent to $5.2 million, due to lower sales of thefirm's leading brand, the controversial promethazine/codeine phosphate/ephedrine coughsuppressant Phensedyl, which has been widely abused, and the withdrawal of twovaldecoxib brands - Vah and Valto - plus a foreign exchange loss of £468,000.NPIL's strategy of opting out of early-stage generic exports, which differentiates itfrom most leading Indian firms, enables it to steer clear of IP challenges and focus onpartnering with global firms. Generally, contract manufacturing organizations operate onlyin certain segments (e.g., intermediates, APIs or formulations), but NPIL is seeking to jointhe rank of the few players offering the entire spectrum of services, notes SKKI.
Ranbaxy LaboratoriesIndia's largest pharmaceutical company is ranked among the top 10 generics manufacturersworldwide and aiming to be in the top five with sales of $5 billion by 2012. However,with the firm's recent moves to increase its size through the inorganic route, it is seen asaiming to establish itself as the world's number three generics producer much sooner. It hasmanufacturing operations in seven countries, a ground presence in 46 nations and sells itsproducts in over 100 countries. Ranbaxy has three state-of-the-art research facilities atGurgaon, near New Delhi - R&D Centers I and II focus on the development of generics andnovel drug delivery systems research, while the new R&D Centre III is dedicated to newdrug discovery research.© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.Collaboration for Growth 34The firm also has the largest R&D budget of any Indian drug manufacturer, standing at 7 percentof sales in 2004, and it plans to progressively increase this to 9 percent-10 percent by 2007.
Ranbaxy has set up a global alliance with GlaxoSmithKline in the area of drug discovery anddevelopment. Two research programs, one in the area of anti-infectives and another, in theasthma segment, are now in progress.For the year ended December 31, Ranbaxy reported sales of $1.17 billion, similar to theprevious year, but profits after tax and minority interest slumped 62 percent, largely impactedby continuing price erosion in the key U.S. market, where sales fell 22 percent to $332million. In Europe, sales rose 5 percent to $202 million, while in the BRIC countries (Brazil,Russia, India and China) they rose 11 percent to $340 million. In January, Ranbaxy's newchief executive Malvinder Singh said the firm is looking for M&A to help it reach its $2billion sales target by 2007; the goal for 2006 is an increase of 18 percent.Ranbaxy follows a strategy of aggressively challenging patents of innovator firms to drive itsgenerics business, say analysts at SKKI India, adding: “the robustness of Ranbaxy's globalgeneric model is reflected in its presence in 23 of the top 25 markets in the world includingJapan and Canada. Only Teva and Sandoz can match Ranbaxy's global generics footprint.Also, while Teva and Sandoz have built a global footprint, primarily through inorganicinitiatives, Ranbaxy's growth has so far been largely organic.”58
Sun PharmaSun Pharma, established in 1983, makes specialty pharmaceuticals and APIs for use inchronic therapy areas such as cardiology, psychiatry, neurology, gastroenterology, diabetesand respiratory conditions, sold in 26 markets worldwide. Its income for the quarter endedDecember 31, 2005 was $103.2 million compared with $73 million in the like, year-earlierperiod, and total nine-month income was $295.8 million. In February 2006, the firmannounced the demerger of its innovative R&D programs to a new company which it hasset up for this purpose. Around 25 percent-40 percent of R&D spend, which represents10 percent-11 percent of its sales, is accounted for by innovative R&D, it said.
WockhardtThe overseas ambitions of this Mumbai-based pharmaceutical and biotechnology-basedcompany have already been covered elsewhere in this report, but in mid-March 2006Wockhardt announced that it had received approval from its shareholders to raise up to$800 million, in one or more tranches, to fund further foreign purchases. Noting hiscompany's “well-known” ability to create value through acquisitions, chairman HabilKhorakiwala said the move would “empower us to seize global opportunities quickly.” Thestockholders also authorized an increase in the company's Foreign Institutional Investmentcap to 49 percent.© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.35 Collaboration for GrowthEurope has now overtaken India as Wockhardt's largest market but the USA is its fastestgrowing,and it is widely forecast that much of the $800 million will be used to fund U.S.purchases.Wockhardt's U.S. business grew more than 50 percent in the year to December 31, 2005,with six products launched there in the period, while European sales of formulations (thefirm's biggest market) rose 15 percent. Indian business was up 10 percent and the firm'sbiotechnology sales surpassed $10 million.Overall, net profits were up 20 percent for the year $57.6 million, with consolidated salesrising 13 percent to $316.5 million.In February, SSKI India analysts forecast a 16 percent CAGR in Wockhardt's consolidatedannual revenues to 2007, mainly led by an export-driven improvement in gross margins.“Increased proportion of sales from U.S. generics and biogenerics, where we believerealizations could be superior, will also contribute to the expansion in overall grossmargins,” they added.59
Zydus CadilaZydus Cadila is India's fifth largest pharmaceutical company. Cadila was founded in 1952and, following restructuring, the Zydus Cadila Group was established in 1995. For the quarterended December 2005, the firm reported net profits up 36.1 percent at $8.8 million, withtotal income ahead 17 percent at $85.5 million. The group has reported year-on-yeargrowth of 138 percent for its exports of formulations.During the quarter, the group received approvals for ribavirin capsules, promethazinetablets and tentative approval for gatifloxacin Tablets from the U.S. FDA. Then on February24, 2006, the FDA granted tentative approval for sertraline (generic version of Pfizer's
Zoloft). The company had already received approval from the French regulatory agency tomarket sertraline capsules in the French market.Chairman and managing director Pankaj Patel is aiming for Zydus Cadila to be a top 10global generic company by 2010, deriving half its revenues from international business,with growth led by Europe, the USA and then its other markets. Alliances and joint ventureswith MNCs will be a central driver of growth for the group, both internationally where italready has arrangements with Mayne pharma, Mallinckrodt and GSK and in India, where ithas tie-up with Altana, Schering AG and Boehringer Ingelheim.Zydus Cadila has received 10 generic approvals so far and has filed a total of 30 ANDAsand 35 DMFs.© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a networkof independent firms operating under the KPMG name. KPMG International provides no services to clients. Each memberfirm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.
Major Government Companies in Drugs and Pharmaceuticals Sector
Indian Drugs and Pharmaceuticals Ltd. (IDPL) – IDPL is the central pharmaceutical sector that is fully under the control of government of India. It was founded in the year 1961. The tremendous growth of the company has made a change in the development of economy of the country. It has become a role model in healthcare to various other pharmaceutical firms.
List of Drugs and Pharmaceutical Companies in Western part of India
Hindustan Antibiotics Limited (HAL) – HAL located in Pune was established during the year 1955-1956. It has also four joint sectors in the country. The company manufactures various drugs like Penicillin, Streptomycin and a number of formulations.
List of Drugs and Pharmaceutical Companies in Eastern part of India
Bengal Chemicals and Pharmaceuticals Limited (BCPL) – BPCL was formerly known as the Bengal Chemical & Pharmaceutical Works Limited. The company was known in this name from the year 1901. It started working in its present name from 1981. The company is said to be the heritage firm of Indian industries.
Bengal Immunity Limited (BIL) – The Company was formerly a sick company in the private sector with the name Bengal Immunity Company Limited. It was taken over by the Indian government in the year 1984. It has two manufacturing units in the country, one at Calcutta and other at Dehradun. The company manufactures various drugs like Sera, Vaccines and Toxiodes.
Smith Stanisteet Pharmaceuticals Ltd (SSPL) – The Company was formerly known in the name Smith Stanistreet Company Limited. This was also a financially weak company in the private sector and was taken over by Central Government in the year 1972. But it was nationalized in the year 1977. It manufactures various drugs in the form of Tablets, Capsules, Parenterals and liquid orals.
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