The Indian pharma industry, which has gained the distinction of the ‘pharmacy of the world’, has played a critical role in bringing down the healthcare spends of governments in developed and emerging markets In fact, ‘one in every five generic drugs’ consumed in the US are provided by the Indian pharma industry.
Eyeing the burgeoning global market, now the Indian Pharma Inc is pulling out all stops to take the industry to the next level of growth. With improved quality compliance there is a growing attention not just on emerging but also on the developed markets. The industry is moving up the value chain ramping up the launch of complex generics and speciality products.
The R&D initiatives are paying off as Indian companies have a seen an almost 51 per cent increase in abbreviated new drug applications (ANDA) approvals from USFDA in 2017.
The Union Government on its part is now strengthening its regulations and has revised the Drugs & Cosmetics Act. From the Make in India initiative to spur the establishment of pharma clusters and eradication of multiple taxation system, India is considered as a low cost production destination in the world. India’s cost of production is nearly 33 per cent lower than that of the US. Labour costs are 50–55 per cent cheaper than in western countries. The cost of setting up a production plant in India is 40 per cent lower than in western countries.
Cost-efficiency continues to create opportunities for Indian companies in emerging markets and Africa. India has a skilled workforce as well as high managerial and technical competence in comparison to its peers in Asia. India has the second largest number of USFDA-approved manufacturing plants outside the US with about 2,633 FDA-approved drug products.
However, the sector is passing through a rough patch now. The sector's troubles over the past 24 months include pressures, FDA clampdowns, strengthening of the Indian rupee, domestic regulatory uncertainty and US President Donald Trump’s new policies. This has forced the Indian industry to focus on cost optimisation and productivity improvement initiatives to protect profitability.
“The rising number of players targeting the US generics market, and the falling number of products going off-patent over the past few years have driven significant crowding and pricing pressure in US generics market. Yet, the increased focus of Indian players on developing complex generics and speciality products to wean off competitive and pricing pressures will support medium-term earnings growth,” according to a JM Financial Report.
Further, the report states, “President Trump administration’s emphasis on bringing down drug prices and localising manufacturing is counter-intuitive. However, if implemented, the impact can be cushioned by India’s cost leadership and presence of onshore facilities in the US".
A strong rupee and disruptions in the domestic market owing to demonetization and goods and services tax (GST) have contributed to sub-par financial performance that has been reflected in stock price performances. This according to JM Financial has resulted in a reset in market expectations for key pharma players.
India Pharma & India Medical Device 2018
Reflecting the major changes taking place in the Indian pharma landscape, the third international conference and exhibition on pharmaceuticals industry and medical devices, 'India Pharma & India Medical Device 2018', will be held in Bengaluru from February 15-17, 2018.
The event is being organized by the Federation of Indian Chambers of Commerce and Industry (Ficci) in collaboration with the Department of Pharmaceuticals (DoP). The theme for this year is ‘Affordable, Quality Healthcare.’
The Union minister for Chemicals & Fertilizers, Ananth Kumar, will be inaugurating the three-day mega-event and will be addressing the gathering in the presence of dignitaries such as Union Health Minister JP Nadda, Karnataka chief minister Siddaramaiah and Minister of State for Chemicals & Fertilizers, Mansukh L Mandaviya.
India Pharma & India Medical Device 2018 will bring key stakeholders of the pharma and medical devices sectors under one roof, with hundreds of delegates and 50 hosted delegates from other nations attending the event. Over 300 companies and 50 start-ups will showcase their products at the grand exhibition. The event will also see more than 90 eminent industry leaders speak at various sessions lined up over three days.
More than 20 international drug and device regulators will be participating in the meet with Indian regulators. Ministerial delegations from CIS and BIMSTEC countries will also attend the event. A key highlight of India Pharma & India Medical Device 2018 is a workshop by World Health Organization on “Regulatory System Strengthening and Prequalification updated by WHO.” A conference will also be organized by Nasscom on “Digital Transformation through Innovation in Pharmaceutical, Medical Devices and Healthcare Industries.” The event will see a round-table of pharma and medical devices CEOs with the Union Minister Ananth Kumar.
India Pharma & India Medical Device Awards will be announced to honour excellence and innovation in the field of pharmaceuticals and medical devices.
For three days, the event will host sessions with themes like Discovering Innovative Medicines in India; Making India a Part of Global Supply Chain in Medical Devices; Opportunities, Challenges and Regulatory Requirements in the Development of Biologics; Opportunities & Challenges for Stem cells & Regenerative Medicine; Emerging Global Trends in Self Care and Relevance of OTC Regulatory Framework for Indian Public Healthcare System; a Sub-sectoral Approach to Make in India; and Moving towards API Self Sufficiency.
The event provides a platform where participants can learn about the best practices and global experiences, interact with industry leaders, exchange innovative ideas and explore areas of collaboration between the various stakeholders in the pharmaceutical industry.
Pharma remains a sunshine sector
The sector with a market size of US$ 20 billion remains a sunshine sector. Indian MNCs need to be agile to every profitable drug going off-patent which enables high capacity R&D to innovate to get to ANDA stage. Addition of R&D and regulatory capacity will see new incremental jobs in 2018.The top five Indian pharma companies spent nearly $1.2 billion on R&D in FY 2017. This is a six-fold increase from seven years ago. Much of it gets invested in talent capacity building said Anil Kumar ET, co-founder, Xpheno.
It would also lead to more roles in manufacturing and production especially in generics space. Business analytics, marketing & communication would continue to be few roles in demand at Indian pharma MNCs. With focus on quality and due to the US FDA regulations, QA, QC & Regulatory affairs roles will see a continuous demand, he added.
The ‘Pharma Vision 2020’ campaign is aimed at making India a global leader in end-to-end drug manufacture. Important announcements have been made, including that of the setting up of chemical hubs across the country, early environment clearances in existing clusters, adequate infrastructure, and the establishment of a Central Institute of Chemical Engineering and Technology. There are also plans to incentivise bulk drug manufacturers to help reduce dependence on imports of API. These and many other steps will definitely help India strengthen its position in the global pharma market. More importantly, there is also an increasing level of focus on innovation, R&D, the creation of indigenous technology and also gaining crucial technical know-how through joint ventures and technical collaborations. The government aims to make India among the top five global pharmaceutical innovation hubs by the year 2020. This is a positive step which would help Indian companies gain market access globally, said Kaushal Sampat, President & Managing Director – India, Dun & Bradstreet.
To reduce healthcare costs and improve accessibility, the Union government has been implementing price controls and promoting the use of generic drugs which could hurt the profitability of Indian pharma industry. However, quality issues around generics and strong branding/marketing by larger players will limit the impact. We expect the impact of demonetization and GST implementation to be transient and expect Indian pharma companies to rebound to growth trajectories in in the second half of 2018. The Draft Pharma policy too is positive, states the report.
The increased scrutiny of facilities and tighter norms affected operations of several of facilities resulting in loss of earnings, with a delay in launches and incremental remediation costs. The focus on being cGMP compliant has increased over the past few years and we believe most Indian players are close to resolving their regulatory snags, stated the JM Financial report
Biocon, as India’s first and largest publicly listed biopharmaceutical company, has taken the lead to develop affordable biosimilars to address the unmet needs of patients in the area of chronic disease like diabetes, cancer and autoimmune disorders. It has successfully developed India’s first indigenously developed rh-insulin in 2004 and provided it as an affordable therapy for people with diabetes in India and several emerging markets across the globe, thus becoming the fourth largest insulins player globally. Recently, Biocon’s glargine pen was introduced in Japan. It was the first biosimilar from India to be launched in the developed market of Japan. Biocon’s biosimilar trastuzumab for breast cancer is already making a difference in the area of affordable cancer care in India as well as some emerging markets. Today it has a diverse portfolio of 10 molecules including insulins and monoclonal antibodies under global clinical development in partnership with Mylan, which positions Biocon as a frontrunner in the area of biosimilars.
According to Kiran Mazumdar Shaw, CMD, Biocon, globally, biologics are playing an increasing role in addressing unmet medical needs in the areas of chronic diseases like oncology, autoimmune and diabetes. Ten of the top 15 global pharma products in 2016 were biologics, which reflects the growing importance of this class of drugs. While biologics such as insulins and monoclonal antibodies have emerged as a class of highly effective transformational life-saving drugs targeted at chronic diseases, more often than not the high cost of these therapies pushes them ‘out of reach’ for many patients.
Biosimilars, which are follow-on versions of innovator biological products with similar levels of quality, safety and efficacy, can provide an affordable alternative to this expensive therapy, thus enabling greater access for both patients and governments across the world. The global biosimilars market is expected to reach US$ 25-35 billion by 2020, she added.
According to Dr. Manoj Nerurkar, Chief Operating Officer (COO), Syngene International, “India has traditionally been a major hub for pharmaceuticals manufacturing with the highest number of USFDA approved manufacturing facilities outside the USA. In recent years, it is also steadily strengthening its position in the contract research area . There is an increasing effort by the industry to move up the value chain by focusing on quality, scientific innovation and higher productivity. With increasing preference for integrated ‘one-stop-solution’, CROs like Syngene are well established as a full-fledged R&D and manufacturing partner.”
Improving growth prospects
According to Dilip Surana, chairman and managing director, Micro Labs, the cost advantage and availability of quality technical talent will boost Indian pharma industry’s growth prospects in the regulated markets of US and EU.
Even as Indian companies are looking to market their products in the regulated markets, there is also a growing interest to set up manufacturing units overseas. However it is not feasible for Indian pharma to manufacture everywhere. Since the manufacturing costs in countries like the US are exorbitant, this is going to be a challenge
“However, even if Micro Labs has not looked an investment in a greenfield project yet in US, we are scouting for an existing business or plant to acquire. We have kept our options open to consider any well functioning facility or any other plant where we can add value. In Europe too we have been growing organically. Even here, we are looking at opportunities. Now unless it makes sense, we are not going to be aggressive on acquisitions anywhere, be it the US, Europe or India,” added Surana.