The stiff price competition in international generic market, stringent approval norms of regulatory authorities, reduction in budget for healthcare by several governments, enhanced mergers and acquisitions activities, rising cost of selling and distribution, legal cases and adverse exchange rates put pressure on pharmaceutical industry during the year 2005-06. To overcome these problems, the Indian pharma majors changed their business strategy and focused more and more on R&D, expansion and upgradation, filing of DMFs and ANDAs, research collaborations, marketing tie-ups and aggressive launching of products.
This strategy played well and Indian pharma companies pushed their export earnings significantly during the last couple of years. The contribution of exports in total turnover for leading 25 pharma companies during 2004-05 and 2003-04 remained same at 47 per cent despite changing marketing conditions. The exports of leading 20 companies for the year 2005-06 went up by 18.7 per cent to Rs 10,3910 crore from Rs 8,757 crore in the previous year. The exports figure is likely to improve with more and more companies are spreading their international presence. Even the small Indian companies have set up facilities in export processing zones.
The Indian companies have presence in almost all major markets with large product basket in key therapeutic segments, well organized manufacturing infrastructure with necessary approvals from international regulatory authorities, a strong back up of skills amongst scientists and technical staff. Further, with the strong financial position, Indian companies have set to achieve inorganic growth by mergers and acquisition in foreign countries.
Though the export performance of majority Indian pharma companies improved during the year 2005-06, few companies like Ranbaxy Laboratories, Biocon and IPCA Laboratories received setback due to stiff competition. Wockhardt Ltd and Shasun Chemicals managed single digit growth in exports during 2005-06. Nicholas Piramal, Torrent Pharma and Unichem Laboratories recorded over 50 per cent growth in exports. Aurobindo, Cipla, Lupin achieved export growth in the range of 40-50 per cent.
At present, global output of Indian pharma industry ranks fourth in terms of volume and thirteenth in terms of value and it is set to move up the value chain by overhauling its strategies to suit the new patent regime. Several drugs are coming off patent in the next few years and Indian pharma segment has well positioned to take advantage of the opportunities with strong front-end, development, partnerships and pipeline.
According to IMS Health, the global pharmaceutical market grew by 7 per cent to US $ 602 billion in 2005. The 10 major markets continued to dominate and accounted for 81 per cent of the total global pharmaceutical market in 2005.The emerging markets of China, Korea, Mexico, Russia and Turkey, experienced double-digit growth, clearly outpacing global performance. As per the IMS forecasts the total pharmaceutical market is expected to expand at a compounded annual growth ate of 5-8 per cent over next five years. North America and Europe are projected to grow at 5-8 per cent; Asia-Pacific/Africa at 9-12 per cent, Latin America at 7-10 per cent and Japan 3-6 per cent. Thus, there are several emerging opportunities for Indian companies.
Drug development is a long and winding road that requires skillful navigation to demonstrate the safety and efficacy of a drug. Mounting pressure on the global pharmaceutical sector to bring down the cost of drug development has opened up large global opportunities for Indian companies. The upgradation of facilities as per regulatory standards and cost effectiveness assured high returns from international market. With growing competition in generics in US and Europe, few Indian companies received setback during 2005-06, but overall exports were improved. Further, the income from CRAMS, licensing fees and joint ventures is likely to move up in the next couple of years as several MNCs are looking at Indian companies as their partners.
Nicholas Piramal India (NPIL) recorded significant growth of over 74 per cent in exports during the year ended Mach 2006 to Rs 220 crore from Rs 126 crore. The company has taken a conscious decision not to be present in early-to-market generics. It plans to grow its global sales primarily by entering into long-term custom manufacturing agreements with innovator companies. It made huge investments in the custom manufacturing business. The company entered fresh agreement with multinational companies like AstraZeneca and Pfizer International, LLC.
Nicholas acquired Avecia Pharmaceuticals, UK, Torcan Chemical Ltd, Canada and part holding in Reaxa Ltd, UK. Avecia Pharma is a global custom manufacturing player focused on providing custom chemical synthesis and manufacturing services to innovator pharmaceutical and biotechnology companies.
Torrent Pharmaceuticals (TPL) has developed a strategy and built infrastructure and capabilities focused on tapping new opportunities in the generic segment. The manufacturing facilities are upgraded to meet stringent quality assurance standards of the highly regulated developed countries; at the same time maintaining the competitive cost advantage. Its international operations are focused on five thrust areas: Brazil & Latin America, Russia & CIS countries, Europe, North America and Rest of the World comprising of less regulated countries of Africa and Asia.
The company's exports on FOB basis went up sharply by 66.2 per cent to Rs 134.42 crore from Rs 80.87 crore in 2004-05. In Latin America, it operates through its subsidiaries, Torrent do Brasil Ltda., Brasil (TDBL) and Laboratories Torrent SA de CV, Mexico. TDBL has launched 20 products and has show substantial growth in the sales during 2005-06. The company has also doubled it's sales force in the other regions so as to increase doctor coverage. TPL incorporated Laboratorios Torrent SA de CV during March 2006 to enable the company to seek registrations of its products in Mexico and subsequently launch a basket of products in the cardiovascular, central nervous systems and oral anti-diabetes area.
TPL is set to launch 10-12 products in Brazil by the middle of 2007. Its performance in the Russia market showed a quantum jump during the year 2005-06. Entry into other CIS countries like Ukraine and Kazakhstan also bolstered the sales. Besides 15 products in these markets, it is planning to launch 4 new products shortly. TPL also incorporated a wholly owned subsidiary in Japan to cover the generic market in the country effectively for future business prospects.
The export earnings of Cipla, the second largest Indian pharma company, has taken quantum jump during year 2005-06 to Rs 1,513 crore from Rs 1,053 crore in the previous year, a growth of around 44 per cent. This constitutes 50 per cent of total sales and it currently exports to nearly 170 countries. It has a strong presence in the developing countries. The company is following business strategies of collaborations with its international business partners to develop and supply products to the regulated and developed markets.
The company has entered into partnerships for 123 products with a number of partners in the USA alone. It has filed over 170 registrations in Europe, principally or marketing its drug formulations in the continent. In addition, Cipla has approvals for over 4000 drug formulations in the emerging markets, including South & Central America, the Middle East and Africa.
Cipla intends to leverage its technological advantage developed over 70 years to maintain its leadership position in the domestic market while striving to expand its business in other markets. It will retain its focus on result-driven research work to develop and enhance know-how for new drug delivery systems and manufacturing process both for APIs and drug formulations.
Dr Reddy's Laboratories (DRL) is spreading its wings by acquisition in the foreign countries and its international operations accounted for 66 per cent of its revenues in 2005-06. The company completed the acquisition of the betapharm Group in Germany, a fourth largest generics pharmaceutical company, for a total consideration Euro 483 million. Betapharm has a portfolio of 145 market products and several more in the pipeline. This gives a strong foothold in the large German Generics market.
Further, the company acquired Roche's active pharmaceuticals ingredients manufacturing facility in Mexico also with its order books in November 2005. The company acquired three off-patent brands from Protein Design Labs. And entered into development alliances for expanding its pipeline in oral solids as well as alternate dosage forms. DRL entered in to a deal with Merck & Co. Inc., - the first of its kind from India - to sell the authorized generic versions of Zocor and Proscar if the 180-day marketing exclusivity is granted to the first filer on either product.
DRL's generics pipeline comprised 49 ANDAs pending with US FDA till end of March 2006. It's total DMFs now stand at 151 - 81 filled in the US 28 in Canada and 42 in Europe. The company received 5 final approvals and 7 tentative during 2005-06.
In the US generics segment, DRL's key priority is to build critical mass that can create a sustainable growth engine for the long-term. However, Europe, remained its single largest geography and it has put in place a new leadership team to design and implement a pan-European strategy focused on building a significant presence in key markets. DRL is exploring various business development opportunities in Spain, Italy and France.
Orchid Chemicals & Pharmaceuticals, with world-class facilities for development and manufacture APIs and finished dosage forms, pushed is exports earning by 19.4 per cent to Rs 621 crore during 2005-06 from Rs 520 crore in the previous year. The company achieved a higher trajectory of growth with revenues and profits posting significant increases. Entry into the US generics market with premium cephalosporin finished dosage forms was a key growth driver.
The company is the only player to offer on a global basis a complete portfolio of all the cephalosporins, first in API form and more recently in finished dosage forms spanning sterile injections, tablets, capsules and oral suspensions. It has built an unmatched core competence in manufacturing injectable products, both in API and finished dosage forms. This has naturally translated into a leadership position for Orchid in the global injectable antibiotics space.
The company filed 30 DMFs and 25 ANDAs with US FDA, which includes 5 DMFs and 2 ANDAs in the relatively recent non-penicillin, non-cephalosporin (NPNC) space. The regulatory filings in the NPNC space are set to accelerate from the current fiscal year. It counts of 25 DMFs and 23 ANDAs in the antibiotics domain represents the largest antibiotic regulatory filing portfolio in the country, and among the largest globally.
The company has also robust presence in the API domain in China, Asia, Russia, CIS, Latin America, Middle East and Africa and has an emerging presence in the finished formulations domain in Russia, CIS and Asia. Its China based joint venture NCPC Orchid Pharmaceuticals Company achieved turnover of US$ 37 million during 2005-06.
Wockhardt Ltd consolidated its export market by acquiring units in foreign countries. It acquired Wallis Laboratory during 1998 in UK, the second largest generic market in Europe. This was followed up with the acquisition of CP Pharmaceuticals in Wales during 2003. In 2004 the company acquired Esparma GmbH in Germany. With these acquisitions, Wockhardt's export to Europe accounted for 41 per cent of its sales during 2005.
The company's sales to USA accounted for 11 per cent of its total sales. Its formulation sales in US improved by 50 per cent during the year ended December 2005. The company is selling 11 products in the US and also started marketing products for other companies. It filed 16 ANDAs, nine of them for injectables. It improved its market share in several key products in the US and entered the OTC segment or the first time.
The company is now spreading its wings in emerging markets like South East Asia and Pacific, Middle East, South America and Africa. Wockhardt's export earnings improved marginally by 3.9 per cent to Rs 320.17 crore during 2005-06 from Rs 308.10 crore in the previous year. With huge investment in biotechnology, Wockhardt is set to launch new product in the international market. This will further strengthen its position.
Glenmark Pharmaceuticals is present in over eighty countries across the globe, with some of its subsidiaries and representative offices in USA, UK, Switzerland, Brazil, South Africa, Nigeria, Russia, Philippines and Malaysia. In addition the company markets its APIs in over fifty countries across the globe. The company is entering new tie-ups with strong regional and global players for the development and approval of its NCEs and generating licensing revenues. It has recently concluded two deals for Oglemilast (GRC 3886) with Forest Laboratories, Inc. for North America and Teijin Pharma Ltd for Japan.
The company's formulation sales in US touched to US$ 12.92 million during 2005-06. It expanded both organically and inorganically into thirteen additional countries. Glenmark filed 7 DMFs in US. Its overseas formulation business increased to Rs 239.24 crore as compared to Rs 105.42 crore in the previous year, and mainly constitutes of revenue from the USA, Latin America and other parts.
Glenmark's US subsidiary Glenmark Pharmaceuticals Inc. posted revenues of Rs 57.25 crore, largely dominated by sales of the three in-licensed products - Napproxen, Nitroglycerin and Fosinopril Sodium. It launched fourth in-licensed product, Esterified Estrogen and Methyl Testosterone in the US market. Glenmark has received US FDA approvals for two generic ANDAs, Fluconazole and Zoinisamide. The production is expected to start at its Goa and Ankleshwar plants. The company also entered into a collaboration agreement with InvaGen Pharmaceuticals, Inc for the join development, filing and marketing of seven generic pharmaceutical products for the US market.
Sun Pharmaceuticals consolidated its position in the International market by acquiring a 170-acre site in Tiszavasvari, Hungary, from Valeant Pharma for vertical integration. Further, it also acquired Cranbury, NJ USA to manufacture controlled substance dosage forms and a site at Bryan, Ohio, USA to make semi-solids, pastes and liquids. The company filed new products in international markets to offer a pipeline that supports its current product basket. The number of active registrations stood at 463, with 730 products being marketed. The company is looking out for more acquisition in the US and other international markets in the current year.
Some of these international filings are for complex delivery system based products, like the anticancer liposomal doxorubicin lipodox, and lupride, the one and three-month depot injectable used in cancer and fertility treatments. The company has demerged its innovative part of its R&D in to a separate company and likely to stepped up its investments in the current year.
The company's exports on FOB basis increased by 32.8 per cent to Rs 365.21 crore during 2005-06 from Rs 275.10 crore in the previous year. Its international sales of formulations increased by 37 per cent and were 29 per cent of its revenues. Export revenue of formulations amounted to Rs 503.6 crore during 2005-06 as against Rs 368.07 crore. The export of speciality API was 11 per cent of revenues, backed by increasing sales of APIs to regulated markets. Export of branded prescription products (non-US markets) grew by 54 per cent, across 26 markets. Its US subsidiary recorded sales growth of 29 per cent with increasing sales of its key product lines.
Aurobindo Pharma, a Rs 1450 crore Hyderabad based Indian pharma major, made a strategic entry with its generic formulations in the premium markets of USA & Europe and participated in the PEPFAR program initiated by the US Government. It has consolidated its strengths in the less regulated and emerging markets. The company is holding 27 product approvals from US FDA (inclusive of tentative) and approvals for 3 products each from EDQM, UK MHRA and health Canada. It filed applications for over 160 patents in various countries.
Aurobindo acquired UK based Milpharm Ltd, the generic formulation pharma company engaged in marketing generic formulations mainly in the UK market. Milpharm is holding over one hundred marketing authorizations approved by UK MHRA for various segments - CNS, CVS, GI, diabetology, anti-fungal, anti-bacterial, oncology, macrolides, cephalosporins and SSPs, anti diabetic, NSAIDS and others.
The company also acquired cGMP and US FDA approved facility in Dayton, New Jersey, USA, for US $ 19 million. This facility has fully integrated state-o-the-art facility with R&D capabilities and or manufacture of formulations and distribution. The company is exploring more acquisition in US and Europe in the coming years.
The company's product portfolio is spread over six major therapeutic/product areas viz., antibiotics, anti-retrovirals, CVC, CNS, Gastroenterologicals, and anti-allergics. Its 65 API products are in the non-antibiotics and 55 APIs in the antibiotic segment. Aurobindo has 13 products in it's ARV portfolio, This has made it easier for the countries participating in the PEPFAR program to place order at a single window. The company has set up subsidiaries and joint ventures at various strategic locations to take advantage of the available opportunities.
Ranbaxy Laboratories, a highest exporter of Indian pharma products and one of the top 10 global generic players, suffered setback on export front during 2005-06 mainly due to lower export earnings from US due to fierce competition. Its exports on FOB basis declined by 4.7 per cent to Rs 2,224 crore from Rs 2,335 crore in the previous year with adverse pricing pressure.
Ranbaxy entered into new markets, such as Canada & Italy, and increase its stake in its Japanese Joint Venture during 2005-06 from 10 per cent to 50 per cent. It has also realigned and strengthened its business units, and is actively pursuing various options to augment its global operations. The company is also looking at in-licensing, co-marketing and research collaborations in NDDR to boost its operations.
The company has strong largest product pipeline pending with US FDA. It has 110 approved ANDAs in USA and 59 ANDAs are pending with FDA. The company commenced its production in Canada during 2005-06 and introduced 8 new products. It has consolidated its position in Europe, it launched 12 new products in France.The revenues in BRICS countries increased by 12 per cent to US$ 364 million.
The company launched its first generic injectable product Imipenem +Cilastatin in China and it introduced Ciprofloxacin recently. In Japan, Ranbaxy launched its first generic product in Japan during 2005-06 despite stringent quality standards of the Japanese regulatory agencies.
Lupin Ltd invested funds for building capacities and infrastructure with major thrust on R&D during last couple of years. The company has created its presence in several markets through a combination of own supply, subsidiaries, partnerships and alliances. Its basket of products, including APIs, intermediates, formulations and branded drugs cover many important and growing therapeutic segments. While making strong inroads into certain life-style segments, the company continues o be a well-recognised global leader in the anti-TB and anti-infective segments.
The company's exports on FOB basis increased by 40.5 per cent to Rs 761.10 crore during 2005-06 from Rs 541.81 crore. Its sales of finished dosages in US market, through its subsidiary - Lupin Pharmaceuticals, Inc, increased to Rs 223 crore in 2005-06. Its Suprax barnd received good response in the US market. Lupin has continued its focus on the CIS region and strengthens its position in countries such as Russia, Belarus, Ukraine, Kazakhstan, Uzbekistan and Azerbaijan. Further, the company has adopted the strategy of entering into alliances, joint ventures and synergistic partnerships in other markets like Africa, Middle East and Latin America.
The company entered an agreement with GSK Philippines for promoting Lupin's Anti-TB products in Philippines. It also signed MOU with Aspen Pharmacare Holdings, Ltd., South Africa for establishing a 50-50 percent joint venture to develop, manufacture and globally market selected anti-TB products. The company received approval for its plant from the Gulf Corporative Council. Lupin also signed agreement with Kyowa Pharmaceutical Industry Co Ltd to market finished formulations in Japan and it is positioning itself to tpa the fast growing generics opportunity in this market.