Research And Development On Indian Pharmaceutical Industry

Global Animation Industry

Indian Pharmaceutical Industry: Issues and Opportunities

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Global Animation Industry

Indian Pharmaceutical Industry: Issues and Opportunities

ABSTRACT Indian

pharmaceutical

is

resulted in the Indian pharmaceutical players

undergoing fast paced changes. The Indian

offering their products at some of the lowest

Generics market is witnessing rapid growth

prices in the world. The quality of the

opening up immense opportunities for firms.

products is reflected in the fact that India has

This is further triggered by the fact that

the highest number of manufacturing plants

generics worth over $40 billion are going off

approved by US FDA, which is next only to

patent in the coming few years which is

that in the US. Multinational companies

close to 15% of the total prescription market

have traditionally dominated the industry,

of the US. The Indian pharmaceutical

which is another trend seeing a reversal.

companies have been doing extremely well

Currently, it is the Indian companies which

in developed markets such as US and

are dominating the marketplace with the

Europe,

being

local players dominating a number of key

Ranbaxy, Dr. Reddy’s Labs, Wockhardt,

therapeutic segments. The market is also

Cipla, Nicholas Piramal and Lupin. The

very fragmented with about 30,000 entities

companies have their strategies in place to

and the organized sector consisting of about

leverage

appropriate

300 entities. Consolidation is increasing in

values existing in formulations, bulk drugs,

the industry with many local players

generics, Novel Drug Delivery Systems,

building a global outlook and also growing

New Chemical Entities, Biotechnology etc.

inorganically

The industry ranks fourth globally in terms

acquisitions.

notable

industry

among

opportunities

and

these

through

mergers

and

of volume and in terms of value, it is ranked thirteenth. The industry has thrived so far on reverse engineering skills exploiting the lack of process patent in the country. This has

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Global Animation Industry

Indian Pharmaceutical Industry: Issues and Opportunities

PRESS RELEASES

1. “Indian Pharmaceutical Industry to Figure: Break-up of Indian Pharmaceutical &

cross US $ 10 Billion by 2008”

Biotechnology Industry

2. “Market for patented drugs in India to cross US $ 3 Billion by 2008” 3. “Market for generic drugs in India to

Projected break-up of Indian Pharmaceutical & Biotechnology Industry

cross US $ 7.5 Billion by 2008” 20.0

Figure: Size of Indian Pharmaceutical and biotechnology Industry

18.0 16.0 14.0 12.0 Patented

10.0

Market Size of Indian Pharmaceutical & Biotechnology Industry (US $ Billion)

Generics

8.0

16.0

6.0

14.0

4.0

12.0

2.0

10.0

0.0 2003 2004 2005 2006 2007 2008 2009 2010 2009 2010 Sales

8.0

R&D 6.0 4.0 2.0 0.0

2003

2004

2005

2006

2007

2008

2009

2010

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Global Animation Industry

Indian Pharmaceutical Industry: Issues and Opportunities

SAMPLE PAGES research (Ranbaxy & DRL), and the top

RESEARCH AND

five have announced plans. In the drug

DEVELOPMENT

development

process

in

pharmaceutical

company

a

any typical

The Key to success in this industry is

product takes 7-10 years, and $350-500

research & development. R&D is the

million internationally but the statistic

starting of the industry value chain and

varies greatly with the disease type.

is also the most important value creator. Companies that involve in R&D do so in specific areas. They chose specific therapeutic areas to target based on their strengths

in

the

market,

and

the

PROCESS RESEARCH OR REVERSE ENGINEERING

This entails research on the process by which the drug is made and making modifications to the process. Here a

commercial potential.

company typically copies the molecule KINDS OF RESEARCH

of another company and develops a highly

BASIC R&D

cost

effective

method

of

producing that molecule. It is much less new

expensive to conduct since they do not

molecules from scratch. It is highly

need to conduct any discovery research

capital intensive in nature as it relies on

or clinical trials. Till now this has been

a great deal of automation. There are

the focus of most Indian players.

This

involves

discovering

only a handful of Indian players that are able to conduct some form of basic

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Global Animation Industry

Indian Pharmaceutical Industry: Issues and Opportunities

ANALOGUE OR DISCOVERY RESEARCH

NDDS RESEARCH

Companies modify an existing molecule

NDDS (New drug delivery system)

or a new one that has not been

entails delivering existing drugs in a

commercialized

accessing

novel method. Indian companies are

international patent databases, to arrive

looking to research NDDS systems to

at a new molecule.

new drugs being developed. This takes

after

BIOTECHNOLOGY RESEARCH

3 years, at a cost of between US $ 10 and 20 Million. An NDDS could fetch

It aims at establishing the link between

you a patent if it is a new concept, and if

ones genes and the diseases one has and

it is an improvement it could give you

could one day determine the best drug

market exclusivity for 3 years in the US.

for an individual based on ones genetic makeup. Most of these companies are

R&D IN INDIA

however doing reverse engineering in

The Indian industry has attained cost advantages in process research used for generic drugs & value added generics production, which accounts for 60-80 percent of total sales. This cost advantage is in the fact that:

the biotech area, and there is very little basic biotech research in India. BRINGING OUT A GENERIC DRUG

Bringing a generic product to the market requires equivalency tests to the product

•

already in existence in the market. The process is much cheaper, and takes less time. This process is known as the Abbreviated

New

(ANDA) process.

drug

Application

Most infrastructure facilities are much cheaper in India than in developed countries.

•

Indian scientists can be attracted at much cheaper rates than their US counterparts. The more value added basic research methodologies are being pursued by

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Global Animation Industry

Indian Pharmaceutical Industry: Issues and Opportunities

very few players like Ranbaxy & Dr. Reddys who are willing to take the risk

Company

2004

of investing millions in building research capabilities and developing molecules.

Ranbaxy

6%

Cipla

4%

The Table below shows the investment of various Indian pharmaceutical companies in R&D. As seen below Indian Industrial firms spend 0.57 % of

Dr Reddys Labs

4.4%

their turnover on R&D expenditure, compared to an average of 12-18 % spent by the top international pharmaceutical companies. Investments made in R&D by the Indian pharmaceutical companies would yield 3-4 molecules a year, which is a very small number. There is very little private initiative to invest in R&D. The government continues to bear the burden, with industry chipping in with 10% to 12%. This also evident in the data of patent granted in the country where the top firms granted patents are mostly MNCs. Indian industry instead mastered the art of reverse engineering to gain competitive advantage, as the industry structure did not provide incentives to invest in basic research.

(DRL) Sun Pharma

4%

Torrent Pharma

6.4%

Lupin

1%

Workhardt

10.5%

Nicholas Piramal

0.7%

Industry Average

2%

R&D investment of Indian pharmaceutical companies

Traditionally the Indian pharmaceutical firms have not focused on R&D due to: •

Lack of Product Patent protection: The delayed adoption of TRIPS in India is cited as the major impediment to the possible investment by international companies in India.

•

Inadequate profit base: The price control has squeezed the profit margins making it difficult for Indian and international

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Global Animation Industry

Indian Pharmaceutical Industry: Issues and Opportunities

companies to cull out and invest sizable sums in R&D. The

companies in India is much less than 6% on sales in sharp

profitability of Indian companies is also much lower than

contrast to the 18% profit margins common to international

international levels. The pre-tax profit margin of pharmaceutical

companies.

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