The 20 companies examined in this report had
combined sales of more than US$17.4 billion in their most recently reported
fiscal year, which generally concluded on 31st March 2012. Ranbaxy reported
revenue of Rs.99,769 million (US$2,145 million) for the calendar year ended
31st December 2011, making it the leading company in terms of revenue. Of the
companies listed, 18 reported improved sales over 2010/11.
New
Guidance on Biosimilar Manufacture
In 2012, new “Guidelines on Similar Biologics” were
published. The Guidelines were prepared by the Central Drugs Standard Control
Organisation and the Department of Biotechnology, and lay down the regulatory
pathway for a biologic claiming to be similar to an already authorised
reference biologic. The Guidelines apply to both locally-developed and imported
products, although the precise approval process differs in each case. The
document notes that a reduction in testing and data requirements at the preclinical
and clinical level is likely to be possible for a biosimilar, however, ‘it is
essential that the testing of the similar biologic be sufficient to ensure that
the product meets acceptable levels of safety, efficacy and quality to ensure
public health’.
A number of Indian companies are active in the
biologics segment of the pharmaceutical market. Leading indigenous
biotechnology companies include Biocon and Panacea Biotech, which ranked first
and third in terms of revenue in the BioSpectrum-ABLE Biotech Industry Survey
2010. The Serum Institute of India was in second place. Unsurprisingly, the
Indian biotech industry has its sights set on the regulated biosimilars markets
of the EU and US. However, no Indian company has yet achieved a biosimilar
approval in the EU and the US market remains in its infancy. A more realistic
target for most companies, at least for the time being, is the domestic and
emerging markets for biosimilars.
Where
have all the outbound mergers gone?
Many Indian companies have pursued an aggressive
acquisition policy in order to accelerate market growth or acquire
manufacturing capacity. Prior to the economic downturn in 2008, this policy
could be clearly seen with 10 acquisition/controlling stake deals announced in
the year. Pressure on prices and variable performance have firmly put a lid on
this activity, Sun Pharma’s eventual control of Taro being one of the few deals
to go through since. Inward investment has equally been affected as interest in
Indian companies has cooled. Matrix – one of the more acquisitive companies –
was purchased in 2007 by Mylan. Now rebranded Mylan Laboratories, one of the
better known names in India pharma has now gone.
Focus
on…current and future markets
India’s
domestic market: not achieving necessary growth
With a population of over one billion and a growing
middle class in excess of 300 million people with disposable income and
increasing healthcare expectations, the domestic formulations market has enormous
potential for growth. But India is a country of wide economic divide and while
a growing number of people can afford to pay for good quality private
healthcare, for the bulk of its vast rural population all but basic healthcare
provision will remain out of reach for the foreseeable future. However,
domestic pharmaceutical companies are reporting increased penetration in
smaller towns and rural areas. Rising household income and improvements in
health infrastructure and delivery systems will continue to support long-term
growth in the pharmaceutical market. Nevertheless, India’s domestic market will
not grow at the required rate to sustain the industry’s revenue needs and
production capacity and so Indian pharma companies will remain export focused
in the medium term.
International
Developments
US
Market: the prize market for Indian companies
The USA remains the largest generic market and the
most sought after target for Indian companies involved in the generic business,
and market growth has been sustained in recent years by a large number of
patent expirations. As the Indian majors have gained experience in the US, they
have been able to exploit opportunities provided by Paragraph IV filings and
specialty generics with fewer competitors. Over the last decade the number of
ANDAs approved increased dramatically. During the three year period between
January 2002 and December 2004, the FDA approved 72 ANDAs for Indian
pharmaceutical companies and their US subsidiaries and the numbers have
increased year-on-year, to peak at 132 in 2008. Since then, the number of
annual approvals has dropped slightly, to 119 in 2011 and 127 in 2012.
UK:
One of Europe’s strongest generics markets
Over 80% of prescriptions in the mature UK market
are fulfilled generically. The UK has always been a focus for Indian companies
with nine companies running 11 manufacturing sites. Between January 2009 and
January 2010, Indian companies had more than 260 marketing authorisations
approved by the UK’s Medicines and Healthcare Regulatory Agency (MHRA) for a
wide range of products. During this period, Ranbaxy received 55 approvals; Dr
Reddy’s received 54; Aurobindo received 39; and Lupin received 25.
Europe:
wider generic adoption is good news for Indian companies
The UK and Germany have been promoting generic use
as a way of containing healthcare costs for years and a number of Indian
companies are active in these markets. Others, such as France, Italy and Spain,
have more recently begun to explore the use of generics to curtail burgeoning drug
bills. Government initiatives have been introduced to increase the use of
generics and reduce prices as part of wider austerity measures. These generic
markets are still relatively small but growing and there are a number of Indian
companies currently monitoring them.
When
will they act and will prevaricating harm their long-term potential?
Russia:
an import dependent market which is to the advantage of Indian companies
Russia is an important market for India’s
pharmaceutical industry. In 2012, the Russian pharmaceutical market was
estimated at US$26,551 million at retail prices. The market is characterised by
strong import growth which rose by a CAGR of 18.7% in US dollar terms over
the 2007-11 period. The heavy reliance on imports has been to Indian companies’
benefit and India’s pharmaceutical exports to Russia amounted to US$534 million
in 2011, of which US$517 million were retail formulations – this makes
Russia India’s second most important export market after the USA. Among the
leaders in this trade were Dr Reddy’s in gastrointestinal, cardiovascular and
anti-infective drugs, while the leading areas for the company with
biosimilars are immunology and oncology. Glenmark Russia is among the top 20
pharmaceutical companies in the dermatology segment and one of the fastest
growing pharmaceutical
companies in Russia.
South
Africa
The generics market in South Africa has grown
markedly in recent years as the government has continued to promote the
low-cost sector as a means of improving access to medicines for the country’s
vast poor population. India’s exports to South Africa amounted to US$310
million in 2011, of which US$267 million were retail formulations. To
illustrate Indian company success, Lupin stated in its 2012 annual report that
it was one of the fastest growing of the top ten companies in South
Africa, recording growth of 40% in revenues to Rs.2,554 million (US$55 million)
from its subsidiary, Pharma Dynamics. The company ranked fifth among generic
pharmaceutical companies in South Africa.
India
as a research base: balancing need and research investment
India’s acknowledged strengths make it an ideal
regional base, particularly for R&D and for commercialisation in select
markets in which India already has a significant presence. With its vast population,
comparatively low cost, fast turnaround and expertise in statistical analysis,
India is also an attractive base for Phase III clinical trials.
Several multinationals are already using or plan to
use India as a base for clinical research, particularly for specific diseases
with a significant local patient base, such as tuberculosis. Companies such as
GSK and Eli Lilly have been collaborating with domestic companies for R&D,
while others have been utilising Indian contract research organisations. In the
future, it is likely that an increasing number of companies will set up
research centres in India and use the country as a hub for multi-centric global
trials. Others will take advantage of the services offered by India’s emerging
CROs.
The Foreign Direct Investment (FDI) policy,
introduced in 2001, allows 100% FDI in the pharmaceutical industry. By 2011,
however, the move aimed at encouraging foreign investment had become a cause
for concern and the FDI policy was placed under review.
The Ministry of Health fears that continued takeover
of Indian pharmaceutical companies by multinationals will adversely affect the
domestic industry and push prices up, leading to essential medicines becoming
more expensive. This could impact public health programmes, including the
Universal Immunisation Programme.
According to a September 2011 report in the online
version of The Hindu, the Ministry has recommended that prior approval of the
Foreign Investment Promotion Board be made mandatory and that steps should be
taken to channel foreign investment into green-field projects. The report
states that, since 2001 when 100% FDI was first allowed in the pharmaceutical
sector, just 10% has gone to green-field projects. At the government’s request,
Ernst & Young is conducting a study on the impact of the recent takeover of
Indian pharmaceutical companies, and its report is deemed likely to be placed
before the Economic Advisory Council to the Prime Minister.
