Despite the numerous regulatory challenges inordinate delays in getting clearances for export permissions, distance between countries, inadequate logistics,problems in identifying local partners, exorbitant registration charges and language barrier prevailing in the 12 countries of Common Wealth of Independent States (CIS), these nations are progressively being viewed as a promising destination for Indian pharma companies.
Indian companies are keen on increasing presence and visibility in this region created in December 1991 uniting Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan and Ukraine,primarily because of the good value proposition for the branded and generic formulations and a few active pharmaceutical ingredients (APIs).
Currently the Indian pharma companies having presence in the region include Ranbaxy, Dr. Reddy’s Micro Labs, Cadila, USV, Anglo French, Life Line Industries, Biocon, Lupin, Ajantha Pharma, Aurobindo, JB Chemicals, Shreya Life Sciences and The Himalaya Drug Company to name a few.
“The region is an important destination in the growth strategy of Indian pharma companies and the need of the hour is to optimally tap the potentials of these markets, said Arun Gabba, head, Viva Remedies, a trading company helping Indian pharma enterprises to enter the region and set up trading operations there.
“We handle much of the logistics and the interactions between CIS customers and Indian pharma companies,” said Gabba at a telecon with Pharmabiz.
The Russian market is expected to grow at an average of 13.6 per cent in the next couple of years. Russia which is also part of the BRIC nations is expected to be among the world’s largest economies by 2050. Russia's total drug market was worth around US $11.7 billion in 2007. The sale of patented drugs contributed to 31.2 per cent of the total market. This is expected to increase to 34.6 per cent by 2012 which provides a unique opportunity for Indian pharma companies .
Just like India, the Russian market is largely made up of generics. Disease parameters are similar. These cover infectious diseases including Chronic Obstructive Pulmonary Disease (COPD) and tuberculosis, life style disorders like cardiac, diabetes as well as neuropsychiatric disorders.
Though the population is small , there is a huge spending on healthcare which has enabled the pharma industry to have a fast growth track. There is also a compulsory medical insurance scheme which has given a fillip to exports from countries like India, according to market sources.
In the wake of the global economic slow down, Indian pharma is now looking to gear up presence in the region which has proved to be a tough entry owing to stringent regulations and lack of English speaking officials. Despite this , the biggest advantage is that there is no price control which is a big attraction to the trade. There is a huge demand for not only generics and branded formulations but also active pharma ingredients which is required to support the local manufacturers there.
Especially during the recession, Indian pharma companies are augmenting their reach with their range of branded formulations. While in the US and EU there is more demand for generics, the CIS government initiatives to have the best solutions in healthcare will provide leading Indian drug brands good opportunities for growth there , said Gabba.
While the size of the CIS market is valued at $2 billion growing at around nine per cent, Indian exports to CIS constitute about 30 per cent of this.
The drugs in demand are anti spasmodic, anti histamines, antibiotics to insulin and rheumatic arthritis. Therefore Indian pharma has a lot to look forward to in Russia said Gabba.
"While Indian formulations and APIs are already having good demand , there is also a renewed interest for herbal drugs and nutraceuticals from these regions,” said members of Karnataka Pharmaceutical and Drug Manufacturers Association (KDPMA).
"If a company is already engaged in marketing the drugs in the European Union, then it will have no difficulty in entering the region, said Rakesh Bamzai, president, marketing, Biocon Ltd.
In order to help the Indian pharma maximize its earning from the CIS, the government of India is also providing support like reimbursement of 50 per cent of the product registration costs to the companies, which register their products in CIS. This reimbursement process is done through Pharmexcil as was done earlier. There are also efforts by CIS countries to carry out audit of Indian units. If the regulators are convinced about the plants, exports would be even faster, said KDPMA .
In order to be a friendly nation in the international trading arena, CIS nations are putting in efforts to reorganize their regulatory requirements to meet the growing quality needs. However, if Indian companies are already trading in the US and European Union, they will have the first mover advantage in the region. High quality standards and perseverance are the factors that would provide more opportunities in the region, said KDPMA.
There are also efforts by Pharmexcil to set up a warehouse in Russia so that small to medium Indian pharmaceutical can access this market.Currently, pharma companies engaged in activities here have to face competition from the domestic players, who are now emerging as a potential threat for formulation exports. However, there is immense scope for bulk drugs. The accepted products in CIS depend on the disease profile in the region. Of late, the population in CIS countries is suffering from fast life syndromes and lifestyle disorders which have led to a rise in sales of diabetes and cardiac drugs. Moreover cold climatic conditions also trigger depression and anxiety disorders, which increase CNS drug prescription.
In order to capitalize on the demand, pharma companies in Karnataka like Micro Labs,Bal Pharma, The Himalaya Drug Company and Strides Arcolab are orienting itself towards strategic brand creation in related disease segments, said a pharma consultant.
Micro Labs has established its presence in the region since 1990 through a full -fledged office in the Russian Federation. The company exports branded generic versions of different antibiotics, gastroenterology, cardiology, anti-diabetics, central nervous system (CNS) and pain management to CIS,according to sources in Micro Labs.
Bal Pharma is present in the region through agents. Archana Dubey Mitra, associate vice president, API & Exports, Bal Pharma Ltd. said that CIS is an encouraging base for exports in the future. “Therefore we intend to look at forays in a phased manner”, she added.
The herbal major The Himalaya Drug Company in Bangalore, earning a sizeable portion of export earnings from this region, also is keen on capitalising on the growing market in the CIS . Its flagship product Liv 52 is doing extremely well in the Russian market and is a household name there.
Strides Arcolab , one of India’s leading integrated manufacturer and exporter of finished pharmaceutical dosage forms, is another player keen on increasing presence in the Russian market.