Pharma Industry Be

Pharmaceuticals Industry

Introduction  The

first Indian pharmaceutical company -Bengal Chemicals and Pharmaceutical Works -Calcutta in 1930  It still exists today as one of 5 governmentowned drug manufacturers  For the next 60 years, most of the drugs in India were imported by multinationals either in fully-formulated or bulk form

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The government started to encourage the growth of drug manufacturing by Indian companies in the early 1960s

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The Patents Act in 1970  removed composition patents from food and drugs, and kept process patents  these were shortened to a period of five to seven year

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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

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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. The Indian pharmaceutical industry has witnessed a growth rate of about 10% over the last few years and is expected to touch US$ 12 billion by 2010.

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Pharmaceutical industry has given employment to approximately 2.86 million people and has around 20,053 units. Indian pharmaceutical industry manufactures over 400 bulk drugs and roughly 60,000 finished medicines used in different formulations.

Classification of Indian pharmaceutical industry 

organized and unorganized sectors 

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Accounting for over 70% of total sales, the organized sector has about 250 manufacturing and formulation units On the basis of management control, the organized sector can be further classified into MNCs and Indian companies.

On the basis of the product manufactured  

Bulk drugs Formulations

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Formulations constitute nearly 81% and bulk drugs account for the remaining 19%. Indian pharmaceutical industry has about 2400 licensed manufacturers and more than 100,000 drugs.

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On the basis of formulations  Prescription medicines  Over-the-counter medicines

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On the basis of formulations patent  Branded formulations  Generics

SWOT Analysis of Pharma Sector 

Strengths            

Cost effective technology Strong and well-developed manufacturing base Clinical research and trials Knowledge based, low- cost manpower in science & technology Proficiency in path-breaking research High-quality formulations and drugs High standards of purity Non-infringing processes of Active Pharmaceutical Ingredients (APIs) Future growth driver World-class process development labs Excellent clinical trial centers Chemical and process development competencies

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Weaknesses       

Low Indian share in world pharmaceutical market (about 2%) Lack of strategic planning Fragmented capacities Low R&D investments Absence of association between institutes and industry Low healthcare expenditure Production of duplicate drugs

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Opportunities          

Incredible export potential Increasing health consciousness New innovative therapeutic products Globalization Drug delivery system management Increased incomes Production of generic drugs Contract manufacturing Clinical trials & research Drug molecules

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Threats   

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Small number of discoveries Competition from MNCs Transformation of process patent to product patent (TRIPS) Outdated Sales and marketing methods Non-tariff barriers imposed by developed countries

Manufacturing opportunities

Key Opportunities Segments

Indian Pharmaceutical Aldorado

Contract Research

Innovation opportunities

Clinical Research

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Research & Development 

Government has taken various policy initiatives to strengthen R & D in the pharma sector.

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Fiscal incentives are awarded to R & D units towards the development of new drug molecules, clinical research, new drug delivery systems, new R & D set ups and infrastructure provision.

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Certain leading R & D companies have increased their Research and Development spending to over 5 percent of their turnover in comparison to an average spending of 2 per cent.

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Pharma units interested in obtaining Income Tax Exemption under Section 35(2AB) need to get their Research and Development unit recognized by CSIR.

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A Pharmaceutical R & D Promotion Fund to the tune of Rs150 crore has been established for promoting R & D in the pharma sector.

India’s Cost Competitiveness key advantage Western companies able to provide a step down of 3040% in cost by a mere site transfer to India

Low cost heaven India

Companies in India able to reduce the upfront capital cost of setting up a project by 25-50% Indian companies have been able to establish USFDA

Lower Filing Cost

approved plants at about 50% lower capital costs Benefit of continuous cost reduction through process re-

Process Innovation

engineering. India’s huge resource of skilled scientists, available at a

Manpower Cost Advantage fraction of the cost in developed countries Capital efficiency

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Current Scenario 

There now exists a whole new world of markets for Indian pharma companies

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Innovation, through more value to the user, through efficiencies in distribution, logistics and product promotion

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The Indian pharmaceutical industry ranks   

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4th in terms of volume (with an 8 per cent share in global sales) 13th in terms of value (with a share of 1 per cent in global sales) Produces 20-24 per cent of the world's generic drugs (in terms of value

17th in terms of pharmaceutical export value

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Drugs worth $ 190 billion in annual revenues would be vulnerable to generics

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The global generics market is expected to grow at about 15 percent to reach $ 70 billion in the year 2008.

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The rise in generics gives way to specialty products such as hormones, steroids, peptides and biosimilars.

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Global pharma industry would see revenue growth of only 5% to reach $ 735 billion in the year 2008.

Top 10 Pharmaceuticals in India, 2008 Rank

Company

Revenue 2008 (Rs crore)

Revenue 2008 (USD millions)

1

Ranbaxy

4,461

1,026

2

Dr.Reddy’s Laboratories

1,933

444

3

Cipla

1,842

423

4

Ashwin Dalvi India

1,387

319

5

Aurobindo Pharma

1,260

290

6

GlaxoSmithKline

1,228

282

7

Lupin Laboratories

1,180

271

8

Sun Pharmaceutical Industries Mar 2007 2,375

550

9

Cadila Healthcare

1,091

251

10

Wockhardt

980

225

Source: Pharmaceutical Sales Busters

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Future of the Pharmaceutical Industry 

For the first time, the seven largest markets will contribute to just 50 percent of growth, while seven emerging markets—Brazil, China, India, Mexico, Russia, Indonesia, and Turkey—will contribute to nearly 25 percent of growth worldwide.

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With market value of about US$ 45billion in 2005, the generic sector is expected to grow to US$ 100billion in the next few years.

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Clinical Research Outsourcing (CRO), a budding industry valued over US$ 118 million per year in India, is estimated to grow to US$ 380 million by 2010

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The future of Indian pharmaceutical sector is very bright because of the following factors: 

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Clinical trials in India cost US$ 25 million each, whereas in US they cost between US$ 300-350 million each. Indian pharmaceutical companies are spending 30-50% less on custom synthesis services as compared to its global costs. In India investigational new drug stage costs around US$ 10-15 million, which is almost 1/10th of its cost in US (US$ 100-150million)

Treatment to prevention, from generalised to personalised medicine, from distribution chain to direct consumer sales and from multilateral to unilateral regulatory regime.

Conclusion India has the capability to become a global pharma hub by exporting domestically produced generic products and positioning itself as an off shoring destination for clinical and pre-clinical research and other support services. There is tremendous potential in the Indian pharma market itself. Consumer spending on healthcare went up from 4 per cent of GDP in 1995 to 7 per cent in 2007. That number is expected to rise to 13 per cent of GDP by 2015.

Thank You! 1-C Aakash Acharya , 01 Aruna Krishnamurthy , 11 Ishita Bhagat , 21 Manas Majumdar, 31 Rakesh Roy, 41 Diksha Rai, 61