In order to give an overall boost to the active pharmaceutical ingredients (API) sector and reduce the dependence on the dragon land, the API manufacturers are awaiting the government support, for which the industry has been clamouring for a long time.
According to the Central Drugs and Standards Control Organisation , around 84 per cent of APIs manufactured in India are imported, of which 60 per cent are from China. However India is ranked third in API manufacture after China and Italy. A slew of programmes like the Make in India and Start-up India along with the much-awaited Katoch Committee report on APIs are yet to actually take off.
The Union government is also looking to reduce the dependence of APIs from China. A media report indicated that plans are being put in place by the NITI Aayog along with the ministries of health, commerce and industry, and chemicals and fertilisers based on the instructions from the Prime Minister’s Office.
“After the PMO’s intervention, at least two meetings have been held over the past week, one between senior officials in the ministries of health, commerce & industry and chemicals & fertilisers and the NITI Aayog. The other, between representatives from the pharmaceutical industry and the health ministry which identified the comparative advantages that Chinese manufacturers enjoy, stated the report.
“ We do see the interest but nothing has come out so far,” pointed out API companies who are keen to see positive support for the sector. The industry is known for its large exports of generics where API’s are either manufactured in the country or imported. It is waiting for government to increase the import duty on APIs from China.
In 2015, Minister for Chemicals and Fertilisers Anant Kumar stated that with the PMO office mulling the approval of the Katoch Committee report on APIs along with a dedicated ministry for pharmaceuticals and medical devices, the need of the hour was to ensure that every effort was made for the pharma industry to succeed in a conducive and transparent working environment. Favourable policies like for infrastructure, taxation, and incentives are on the cards.
Minister Kumar also pointed that when Indian pharma accounted for every third tablet exported to global markets, its high quality contents were for prime importance. India has been exporting to 200 countries in the world and accounted for the highest USFDA audited plants.
The global API demand
The global demand for active pharmaceutical ingredient market was valued at US$148.22 billion in 2015, is expected to reach US$ 213.84 billion in 2021 and is anticipated to grow at a CAGR of 6.3 per cent between 2016 and 2021, according to a report by Zion Research .
The market for API is expected to have the highest growth rate in the forecast period. However, strict regulations are one of the major challenges faced by the global API market. Such regulations are predominantly well defined in developed regions such as North America and Europe. Vendors in this market space are supposed to obey the detailed procedures prior to product commercialization.
The branded drug segment accounted for the largest share in 2015. Different therapeutic application of the API market includes cardiology, oncology, anti-inflammatory, gastrointestinal and others. The oncology segment is anticipated to grow at the highest growth rate in coming years due to increasing prevalence of cancer worldwide.
North America is leading market for API and acquired the largest share in 2015. Asia-Pacific region is expected to emerge as fastest growing region due to low operation costs and high investments in medical research. Furthermore, the high cost of trained labour and energy are the most important factors that enforced European market to move their base to develop countries such as India and China.
The global active pharmaceutical ingredient market encompasses geographies such as North America, Asia-Pacific, Europe and Rest of the World. North America accounted for the largest segment of the global active pharmaceutical ingredients market in 2014 due to the fact that North America is the leading consumer of APIs and API exporters consider North America as the most lucrative market. India and China are the major suppliers of APIs to North America due to low production and labour costs. Moreover, biologics have become one of the top-selling drugs in North America. Thus, the expected market entry of biosimilars with the flexible regulatory process would boost the API market in North America.
The API market in the US displays a high level of competition, with mergers and collaborations between various key players such as Teva Pharmaceutical Industries Ltd., Sandoz a division of Novartis AG, Mylan, Inc., and Allergen plc. Additionally, demand for biological APIs is high in the region, as technological developments in the pharmaceutical industry are paving the way for newer biotechnology drugs. These expansion strategies intensify the competition between the global players, which is a result of expected high growth in the API market.
In Europe, pharmacists are offered incentives for substituting branded drugs with generic versions, which contributes to the growth of the API market in the region. Regulations also play a vital role in the API market, as the law disallows development of generic APIs in Europe until patent expiry. However, the governments of various countries in Europe have started supporting the manufacture of generic drugs post the financial crisis. Patent expirations of major blockbuster drugs in Europe during the forecast period would fuel the growth of the API market in the near future.
Demand for generic drugs is increasing not only in developed countries but also in developing and underdeveloped countries in South America and Africa. Brazil’s health authority Agência Nacional de Vigilância Sanitária (ANVISA) allows the procurement or manufacturing of APIs only for companies registered with ANVISA. Moreover, foreign companies find it difficult to enter the generics market in Brazil, as nearly 80 per cent of the market is controlled by the four local companies namely, EMS, Medley, Eurofarma and Ache/Biosintetica.
API prowess of India
From a global perspective, the API capability of India cannot be ignored. “We account for the highest number of USFDA facilities pegged at 546 and EMA approved units besides other global regulatory agencies from Japan and Australia which enables us to take a big leap in terms of grabbing opportunity. Even though the country’s volume of production is lower compared to China, the global recognition on quality and variety of API products creates an opportunity to either partner with global players for marketing the APIs. It could also garner its revenues from being a preferred source of supply for global pharma bigwigs,” said GG Gurudatta, CEO, Estima Pharma.
Higher quality, coupled with cost-containment, makes an India increasingly attractive for API outsourcing. In fact, India has been known as one of the leading global players with the filing of large number of DMFs (drug master files) and dossier registrations for active pharmaceutical ingredients, with several manufacturing facilities approved by the regulatory authorities of developed countries.
India is the second largest API market in the Asia-Pacific region and China is its main competitor.
API manufacturers in India are trying to strengthen their marketing in regulated markets by different mean. These include focusing on the improvement of production yields, especially of critical products, through process modification, by increasing the productivity of high volume products , by escalating sales in international market, by introduction of high potency API used in oncology etc. Manufacturing standards in India are acquiescent with many international regulations. In addition, innovation in the technological capabilities of the country have enabled many manufacturers to endeavour into the highly regulated markets of the US and Europe.
The total global and Indian generic market is approximate US$ 86 billion and US$ 20 billion in 2014 respectively. In India, pharmaceutical industry is mainly established with 45 percent of production coming out of two states of Maharashtra and Gujarat.