Contract manufacturing is one of the best options for the global pharma companies to look forward to in the wake of global recession. The attraction for the global companies to choose India as the ideal hub for contract manufacturing is the opportunity of submission of increasing number of drug master files which has grown to almost 46 per cent in 2007 from a mere 14 per cent in 2000.
In contract manufacture, India is ahead of China because of the highest number of US FDA and EU regulatory compliant units. The country also recorded the largest number of Drug Master File submissions which has been 1155 filings between 2000 & 2007 as compared to China's 329 DMFs in the same period. This has given India a head start in the area of contract manufacture of formulations over China, Kaushik Desai, CEO & director, Global Pharmatech, told Pharmabiz.
Globally, US$ 80 billion worth of drugs are expected to go off-patent by 2010.Innovators and generic companies are both increasingly facing pressure on their bottom line. Manufacturing, which represents about 30 percent of the annual cost base for a typical global pharmaceutical companies, now have an opportunity for significant cost savings by off loading contracts to India.
A visible trend is that innovators like Pfizer, Merck and AstraZeneca have already expressed their intentions to contain production costs by increasing outsourcing of manufacturing activities to emerging economies and India stands to gain in this scenario, stated Desai.
The cost of production in India is a fraction of the cost of manufacturing in the US and Europe. It also has one of the lowest manpower rates. To have a second and third shift of plant operation is difficult considering labour laws and hostile weather conditions in the US or Europe. Hence running a plant 24x7 basis is extremely difficult. This is where Indian pharma sector offers the biggest choice of labour and plant accessibility, he added.
The outsourcing opportunities unfold in contract research & development, bulk drug & formulation manufacture, co-marketing & sales, clinical trials including technical services like data management, expertise in herbal and nutraceuticals, primary packaging materials, bioinformatics, biostatistics and software development.
According to the Merrill Lynch report, global outsourcing market is valued at US$ 44 billion in 2007 and is expected to touch US$ 73 billion 2011. Globally, India is fourth largest pharmaceutical market in terms of volume and 13th in value terms. Indian contract manufacturing market is estimated US$ 1.0 billion in 2008 and is likely to grow at a CAGR of about 42 per cent to touch US$ 2.5 billion by 2010
Companies outsource because of temporary lack of capacity and with the objective to encash on core competencies of low cost destinations like India. It is found that branded companies outsource around 40 per cent of their bulk needs and 30 per cent of their drug product needs. While generic companies report outsourcing 80 per cent of bulk and nearly half of their drug product needs, said Desai.
Globally, contract manufacture market is segmented into injectables, solid & liquid dosage forms spanning across North America, Europe and Asia. Injectables are expected to show highest growth during next five years. Solid dosage form represents 47 per cent of the global market while Liquid dosage forms are projected to grow slowest in next five years.
The demand for specialized technologies and services such as sterile products, biopharmaceuticals & lyophilization is likely to drive the contract manufacturing market to a significant extent, informed Desai.
Among the notable contract manufacturers serving multinational companies in India include Piramal Healthcare, Cadila, Kemwell, Shasun, Dishman, Jubilant, Matrix, Divis, Strides, IPCA.