Indian pharmaceutical giants have established strong presence in highly regulated markets like US and Europe with investments in research and development during the last few years. Despite regulatory issues, adverse exchange rates, price erosion and stiff competition, Indian phrma entities maintained overall export earnings in 2016-17 and further set to strengthen their presence with higher approvals by highly regulatory bodies. Further, with loss of patent exclusivity, international tie-ups, consolidation, higher approvals and launch of new affordable products facilitate Indian companies.
The overall Global market remained challenging one and every player is trying to launch innovative, cost effective products to overcome competition. The exports of pharmaceuticals from India is under tremendous pressure during 2016-17 and the situation is not likely to change in current year on account of US FDA actions. The export earnings remained stagnant at US$ 16-17 billion and same trend is expected in 2017-18. The US is the key market for growth for Indian companies and the US exports accounts for more than 34 per cent of total Indian pharma product exports. To overcome problems in highly regulated markets, Indian companies are moving to new markets in emerging countries and established strong presence.
Investments in facilities and new technology, CRAMS, out-licensing, clinical trials and focus on biosimilars may push export revenue in the coming years. The Pharmaceuticals Export Promotion Council of India (Pharmexcil) is also assisting companies to venture into African markets. At present Ethiopia, Tanzania and Zambia are important export destinations for the Indian pharma companies. There are also other areas which are still unexplored.
With rapid urbanisation, higher healthcare spending and investment, and increasing incidence of chronic lifestyle diseases, Indian pharma manufacturers set to tap new opportunities. The global spending on medicines is likely to reach US$ 1.5 trillion by 2021. India is the largest global provider of generic drugs, accounting for 20 per cent of global exports in terms of volume. Branded generics constituted nearly 70-80 per cent of the domestic market. India accounts for over 60,000 generic brands across 60 therapeutic categories and manufactures of more than 500 different APIs. Thus, India has built up strong position in the international market and emerge as major competitor.
The international pharma contract manufacturing market reached at US$ 65 billion in 2016 and likely to touch $94 billion by 2022. With higher investments in facilities and R&D efforts, Indian companies are well set to grab new opportunities from international market. The Indian contract manufacturing services sector is projected to grow three times faster than the global market at a CAGR of 18 per cent till 2018.
The Pharmabiz sample of leading 25 listed pharma companies achieved export growth of 7.5 per cent during 2016-17 despite several odds. Their sales in international markets increased to Rs. 1,05,440 crore during 2016-17 as compared to Rs. 98,130 crore in the previous year and this worked out to 65 per cent of their total sales during both years. Sun Pharmaceutical Industries remained on top with international sales of Rs. 22,203 crore during 2016-17 and was followed by Lupin Rs. 13,253 crore and Dr Reddy's Laboratories Rs. 11,593 crore. The sales in international market of these three companies worked out to 73 per cent, 78 per cent and 82 per cent of their total sales.
Natco Pharma has registered strongest export growth among sample of 25 companies. Its international business went up by 129 per cent during 2016-17 to Rs. 1,144 crore as against Rs. 500 crore in the previous year. Despite US FDA actions, Lupin's exports moved up by 34.8 per cent. Biocon, Strides Shasun and Glenmark registered export growth of over 20 per cent during 2016-17 at Rs. 2,742 crore, Rs. 3,183 crore and Rs. 5,918 crore respectively. Divi's Laboratories, Strides Shasun, Dishman Pharmaceuticals and Granules India have also registered strong growth in international business and their international sales contributed over more than 85 per cent to total sales during 2016-17.
The US FDA actions against several Indian pharm majors like Sun Pharmaceuticals, Dr Reddy's Laboratories, Lupin, Cipla, Aurobindo Pharma, Divi's Laboratories, Alkem Laboratories, Wockhardt, Biocon, Strides Shasun, Torrent Pharma, Alembic Pharma, Claris Injectables, Indoco Remedies, Granules India, Natco Pharma, Marksans Pharma, etc., during 2016 and 2017 impacted export performance. The US action put pressure on overall exports and financial working of these companies.
The exports of Dr Reddy's Labs declined by 11.4 per cent to Rs. 11,593 crore during 2016-17 from Rs. 13,080 crore in the previous year. Exports of Cadila Healthcare, Torrent Pharma, Wockhardt, Alembic Pharma and J B Chemicals also declined during 2016-17. Cipla, Divi's Labs, Ipca Laboratories, Granules India, Nectar Lifesciences and Indoco Remedies registered only single digit growth in exports during 2016-17. Dishman in a strong position to drive business growth in the CRAMS space and revenue from CRAMS increased to Rs. 1,260 crore in 2016-17 from Rs. 1,143 crore in the previous year. The CRAMS revenue of Dishman will likely to contribute 75 per cent by FY2019 as it has built up enough manufacturing capacity.
However, with higher investments in R&D activities, Indian companies secured higher number of final ANDA approvals from US FDA. In 2017, the US FDA approved highest number of ANDAs of last decade and approvals in 2017 reached at 809 upto the December 26, 2017. Similarly, tentative approval reached at 175 ANDAs. In the previous year US FDA approved only 598 ANDAs and 156 tentative approvals. Out of 809 ANDA approvals, Indian Indian companies secured 289 final ANDA approvals and 61 tentative approvals. This worked out to almost 36 per cent of total approvals. Higher approval will help Indian pharma companies to overcome competition and launch cost effective products in highly regulated markets. During last 10 years, US FDA approved total 4,966 ANDAs and Indian companies grab approvals for 1,675 ANDAs. Thus higher approvals will help them to improve exports in coming years.
Several Indian pharma companies entered exclusive global collaboration with international giants during last couple of years. Recently, Biocon has entered global collaboration with Sandoz to develop, manufacture and commercialize multiple biosimilars in immunology and oncology. Indian pharma majors like Dr Reddy's Laboratories, Cipla, Wockhardt, Lupin, etc entered in biosimilars field which will help them to enhance there presence in international markets.
Though, the Indian companies are taking steps to fight odds in the international markets, the export earnings during the first half ended September 2017 remained subdued and the trend is likely to continue in 2017-18.