Indian bio-pharmaceutical companies are well positioned to leverage the opportunity offered by blockbuster drugs going off patent over the next few years.
The leading bio pharma companies in the country in this space are Biocon, Ranbaxy, Dr. Reddy's Nicholas Piramal, Shanta part of Sanofi Aventis, Bharat Biotech, Panacea, Biological Evans, Pfizer, Novo Novo Nordisk and GSK.
Indian pharma players not only do have an FDA-approved pipeline but are also equipped with a strong, cost-effective production ecosystem. With the US, world's largest pharma market, turning to generics to decrease pressure on the healthcare budget costs and the pipeline of new drugs in the US drying up as the FDA becomes cautious in granting approvals, Indian generics manufacturers can make huge gains said Kiran Mazumdar-Shaw, chairperson, Karnataka Vision Group on Biotechnology and chairman and managing director, Biocon Ltd.
Moreover, global companies are adopting cost-cutting strategies to increase margins after the economic meltdown. They are striving to discover and develop drugs at lower costs by embracing outsourcing and contract research, which will help India's highly price-competitive clinical research and manufacturing activities thrive.
Apart from exports, the domestic consumption of medicines is slated to increase with the increasing income levels of India's growing middle class. So, overall the Indian pharma companies can look forward to a significant spurt in growth.
"We would see more partnerships and alliances on the generics front like those forged between Pfizer and Aurobindo, Claris and Strides, and GlaxoSmithKline and Dr. Reddy's Laboratories. We do not envisage the need for MNCs to set up R&D or manufacturing facilities in India for generics since they already have the marketing infrastructure which they may use to roll out generics. Emerging markets like India are certainly a large generics opportunity which MNCs are keenly eyeing. Collaborative partnerships with Indian companies are a win-win for both parties and give MNCs a cost-effective entry point through their existing marketing network, she added.
The future will see the therapeutics grow to a much larger segment with the emergence of bio-similars or generic biologics. Plans for the growth of this segment are underway. There are challenges because global pharma is going to resist entry of bio-similars, primarily because the regulatory issues in the US are yet to be resolved. There will also be direct competition from the global pharma companies which are acquiring assets and companies in bio-similars, said Dr. Vijay Chandru, chairman & CEO, Strand Life Sciences and President, Association of Biotechnology Led Entrepreneurs(ABLE).
Global sales of biotechnology drugs crossed the $ 100 billion mark in 2008 with several drugs achieving blockbuster status (annual sales in excess of $ 1 billion). The sector has been growing in excess of 15 per cent over the last several years outperforming the pharmaceutical sector by a wide margin. Such strong performance evokes interest from the investment community especially since the industry has not yet evolved completely, said Amit Chander, Head of Investments - Pharma and Healthcare, Baring Private Equity Partners India.
The pharma exports are going to scale new heights in the next few years. Indian companies already have a substantial presence in the United States and in several European countries. India also enjoys a favourable presence in emerging markets like Russia, Latin America and Africa, which are also critical for growth. The pharmaceutical sector has seen increased volume of exports in the recent years. Indian companies and their subsidiaries have also secured approvals for several Abbreviated New Drug Applications (ANDAs) in the US.
Even as MNCs enter into tie-ups with Indian companies for the domestic market, Indian players are likely to continue expanding their global foot-print through M&As. These acquisitions may not be transformational - instead, they will add to strategic capabilities by helping the player gain intellectual property assets or access to marketing and distribution networks. A good example is Biocon's acquisition of its partner, Nobex Corporation, an IP company in the United States. The acquisition provided the company a valuable IP platform as well as ownership of our oral insulin and oral BNP programmes for the treatment of cardiovascular disease.
There are four clear trends that indicate that the industry is gearing up to meet the present-day challenges of poor R&D productivity and emerging market opportunities by opting strategies that involve portfolio diversification to include products with shorter regulatory timelines. For example, diagnostics, devices, new drug delivery systems, vaccines, generics, bio-similars, etc. The focus is on emerging markets to deliver topline growth. There would also be acquisition of late stage R&D assets to fill depleting R&D pipelines with programmes that can accelerate time -to- market and reducing the risk and cost of R&D with new models of risk sharing, co-development programmes and outsourced research services.