Owing to the the immense potential it holds for generic exports, Indian pharma is increasingly looking towards the ‘Land of the Rising Sun’- Japan. With the crisis in the western world, Japan is emerging as the top slot for exports and is fast turning out be the next pharma destination for Indian companies, opine a section of pharma majors.
Considerable interest is being evinced by the Japanese pharmaceutical companies for tie-ups or joint venture efforts to source active pharma ingredients to produce its range of generics as its Ministry of Health is now insisting for low cost and high quality generics. The Japanese pharma feel that souring these from a globally recognized market like India would be the way forward, inform sources.
In fact the government is planning by 2012 to switch around 30 per cent of its prescription medicines to low cost generics. This new generics focus by the Japanese government will now spur growth of the Indian drug majors, said Anjan K Roy, president, Karnataka Drugs and Pharmaceuticals Manufacturers Association and managing director, RL Fine Chem.
Rising healthcare costs, ageing population and high cost of drug development in Japan will offer Indian generic majors more opportunities, says TS Sampath Kumar, Senior Advisor, Japan External Trade Organization (JETRO).
The Japanese market is encouraging the use of affordable generics and there is immense potential for global generic players. The market is of strategic importance, said Rakesh Bamzai, president, marketing Biocon Limited.
According to him, for Biocon, Japan market is viewed as a key growth area in the coming five years. It is looking at building partnerships not only to market its range of products but also scout for alliances in clinical research and contract research. Further, it is also working towards strong research alliances to develop novel drugs.
The major factors which are luring Indian companies to Japan are the transformation in regulatory systems, increasing use of generics with rising geriatric population, conversion of drug prescriptions to low cost generics by 2012, confidence of Indian pharma companies in Japan going by the presence of Daiichi Sankyo Co and Kyowa Pharmaceuticals.
Japan is the second single largest drug market in the world with sales of $60 billion which accounts for around 11 per cent of the global market. But the Japanese drug market so long has been growing at a significantly lower rate compared to the average world pharmaceutical markets, according to a report.
However, in the last 18-24 months, there has been a substantial regulatory transformation in the Japanese market. There were efforts to expand the market, look for acquisitions and adopt collaborative practices especially with Indian companies. In mid-2008, Japan’s third largest drug maker, Daiichi Sankyo Co. Ltd acquired a controlling stake in Ranbaxy Laboratories Ltd and the Rs 21,620 crore or $4.6 billion buyout changed face of pharma sector, say observers.
In order to make the best of the situation, Indian pharma companies are also viewing to acquire companies in Japan. These include Lupin which is now close to making its second buyout in Japan. In 2007, the company had made an acquisition of Kyowa Pharma Industry Co. Ltd. Zydus obtained a 100 per cent stake in Nippon Universal Pharmaceutical Ltd.
There are also reports of top 25 Indian companies working out a strategic entry into Japan through acquisition, collaboration or entry through distributors. These companies including Micro Labs, Bal Pharma and Biocon from Karnataka which are keen to leverage the advantage of an early entry into Japan. Dr Reddy's and Aurobindo Pharma which are already export active pharmaceutical ingredients (APIs) to Japanese generic majors will now look at offering its formulations too.
Bal Pharma, a leading Indian pharmaceutical company specializing in prescription drugs, generics, over-the-counter drugs, intravenous infusion and bulk actives is looking to tap emerging business opportunities in Japan in the areas of active pharmaceutical ingredients (API), generics and contract manufacture of formulations.
"Indian generics are in demand and we hope we will be able to penetrate into the market. Ministry of Health and Labour Welfare (MH&LW), Japan has been pressurizing the local companies to opt for generics and this is where Indian pharma companies will stand to gain," said Archana Dubey Mitra, associate vice president, API & Exports, Bal Pharma Ltd.