The exports of active pharmaceutical ingredients from India is expected to record huge growth in the coming years especially by leveraging the growing generics market in US, Europe and Japan, says business consultants.
According to a report of the Tata Strategic Management Group, published last month, the APIs exports from India is expected to reach USD 12.75 billion in 2012 from USD3.75 billion recorded in Financial Year (FY) 2007. Sourcing data from Cris infac, the research arm of the credit rating company - Credit Rating Information Services of India Limited (CRISIL), the group study explains that the major growth driver for the exports is expected from the operations in regulated markets especially through exports to the innovator companies.
With the expertise on the chemical processing and standard operation facilities the industry, which is currently selling almost 90 per cent of its total ingredients production, is on a venture to explore the markets in US, Europe and Japan. The increased concerns of the pharmaceutical companies, regulatory authorities and the customers in these markets about the quality standards of bulk drugs, intermediates and excipients used in the drugs is giving an edge to the Indian API players in exports to these region.
"The share of API exports to innovator companies in regulated markets is expected to increase from Seven per cent of total exports in FY 2007 to 15 per cent by FY 2012," predicts the report. The rise is expected to be driven by the stronger patent safeguards being adopted by India and increasing confidence of foreign players in the Indian regulatory framework and technical capabilities, comments the Tata group report.
During FY 2007, the Indian API industry has exported 45 per cent of its products to the regulated market while the rest of 54 per cent was catered to the pharma industry in semi regulated markets. Out of the USD3.75 billion exports from the total production of USD4.1 billion in the year, 39 per cent of the ingredients where marketed in the generic markets.
The study predicts a shift in the focus of Indian companies to the regulated markets by 2012, with almost 65 percent of the exports to the regulated market whereas the share of exports to semi regulated market will come down from the current 54 per cent to 35 per cent. The growth of generic market in the regulated market, with a large number of products expected to expire their patent protection in the coming five years, will be an attraction for the Indian exporters in these countries.
"Our API players are exploring the opportunities in the generic market growth. However, the reports show that the API manufacturers are getting more competitive when compared to its competitors in other API hubs to capture the regulated markets, including the needs of the innovator companies," averred an industry source. The increase in number of regulatory approvals from US and European Union to the Indian manufacturing plants also shows the shift of focus of Indian API manufacturers from the semi regulated to the much regulated markets.
Top Indian companies like Dr Reddy's, Sun Pharmaceuticals and Wockhardt have considerable amount of API production catering to both the in-house and exports activities. For instance, 40 per cent of Dr Reddy's sales in the FY07 were from the API business even as sales of APIs have contributed 19 per cent of Wockhardt's revenue. Almost 18 per cent of the revenue of Sun Pharma in the same period was from API business, according to the report. As evident, the sales of APIs from the top companies are mainly catered to the regulated markets like US, Europe and India, reveals the report.