Traditional pharma companies in the country like Ranbaxy, Dr Reddy's Labs, Sun Pharma, Nicholas Piramal, Zydus Cadila and Unichem are actively considering making bulk drugs business as one of their revenue models and are exploring the possibilities of buying out API manufacturing facilities from existing players or setting up fresh facilities, it is learnt.
RPG Life Sciences, which was on the verge of selling off its pharma division now no longer wants to sell its business citing good opportunities abroad in the bulk drugs segment after more drugs go off-patent.
Pharma analysts claim that about 10 per cent of the country's pharma companies are reemphasizing upon bulk drugs manufacturing.
These companies are mainly eyeing the US markets. "As several drugs would go off patent in the next 2-3 years, the global market for bulk drugs is expected to reach about $ 85 billion. Indian companies are eyeing this market," said Dr V V L N Sastry, country head, Firstcall India Equity Advisors (FIEA), a Mumbai-based investment advisors for FIIs.
"It takes only Rs 50 crore for putting up a bulk drug facility and a turnover of Rs 100-200 crore could be achieved in case of bulk drugs, which is not possible in case of formulations," said an analyst based at a Mumbai-based equity analyst and brokerage outfit.
As the IPR scenario in India will become stricter after 2005, more MNCs would contract out the manufacture of bulk drugs to Indian companies. "India can provide technologically intensive, non-infringing processes of manufacturing at one-fifth of the cost to these companies," said sources at Lupin.
The new interest of the pharma companies comes after success demonstrated by traditional contract manufacturers like Suven Pharma, Shasun Chemicals, Divis Labs, Dishman Pharma, Jubilant Organosys and Hikal. The export market of these companies is growing at about 20 per cent annually.