Pharmabiz
 

Regulatory changes open up new opportunities

Nandita Vijay, BangaloreThursday, November 11, 2010, 08:00 Hrs  [IST]

Commonwealth of Independent States (CIS), one of the fastest growing markets in the world for pharmaceuticals, is now being increasingly viewed as a market of the future for Indian pharma companies. The changes in the regulation of pharmaceutical products carried out in mid-April this year in the region has given a fillip to trade , according to industry observers.

Since the opportunities for growth are more defined, there is business for every segment of the industry to grow which makes CIS one of the best markets to do business, they point out.

In order to give a further thrust to the trade with CIS, the region which is represented by 12 countries of Russia, Ukraine, Kazakhstan, Belarus, Azerbaijan, Uzbekistan, Turkmenistan, Georgia, Armenia, Tajikistan, Kyrgyzstan and Moldova, the  Union government is also chalking out a  bilateral business arrangement.

According to an industry analyst, “the new regulations allows companies in CIS to upgrade  and be on par with the EMEA guidelines. The quality of submissions will improve. However it will lead to an increase in the cost of drug development and registration making it viable only for large companies to be present in the region. Therefore, we could see large pharma companies from India consolidating their presence in the region. In the case of small and medium companies, the trading in the region is viewed as difficult going by the focus on branded generics. However, there is opportunity for contract manufacture and co-development and supply  for such enterprises. Going by the emergence of formulation companies here, Indian active pharma ingredients companies can make a mark here” .

The markets of Russia and Ukraine alone contribute about 70 per cent of the total business. The large companies have strategic business initiatives in the region which is now facing intense competition from the local Russian companies including those from the East European region who are present here. These companies are Krka Pharma, Zentiva, Geodeon Richester, Pol Pharma and Teva, he added .

The smaller markets of Kazakhstan, Belarus, Azerbaijan, Uzbekistan Moldova and Georgia are largely driven by price  bargain and not mature markets. Moreover, the sales of pharmaceuticals here  are carried out by local distributors with no global distributors. Therefore the market size still indicates that large, medium and small companies from India could still look for a slice of business from here, he opined.

Companies from India which have a substantial presence in the region are Dr. Reddy’s ,Ranbaxy, Dishman, JB Chemcials, Shreya, Lupin, Biocon, The Himalaya Drug Company to name  a few.

The new regulations in the CIS, according to Rakesh Bamzai, president, marketing , Biocon Ltd, has opened up a new world of opportunities. From the levy of $10,200 or Roubles 3,00,000 for the single fee to be paid for new drug regulation to the 210 days of clearance period for registration process and the mandatory clinical trials , all indicate the transparency in the trade. This is a big boon for large companies. “We also welcome the change for ‘orphan’ drugs  prescribed to cure rare diseases. This will allow the patients to get drugs at a faster pace if there is a separate category for medicines used in serious conditions”, he said.

Since Indian pharma is known to adhere to stringent guidelines in the regulated markets, following the needs of CIS markets would not be a problem and the new regulations would have a positive impact on the biotech and pharma sector, added Bamzai.

Biocon has been in the region for the last five years in Russia and Ukraine which are viewed as promising trading hubs for its future. However at present the company's CIS foot print is small and product registrations are under progress, said Bamzai.

According to Archana Mitra Dubey, associate vice president, Exports, Bal Pharma Ltd, the new regulations imposed by CIS favour only the large pharma and restrict the growth of mid-sized players. Moreover with quality of standards of drugs being monitored through clinical trials and dossier submissions, cost of registration are also on the rise. The companies in the small and medium segment will now need to identify the drugs to be marketed in the region from the revenue maximization angle.

Dr Reddy's has also made efforts to strengthen its presence in the CIS through in-licensing deals. During October- end , it had entered into an agreement with Cipla for exclusive marketing rights of a portfolio of OTC and prescription products in the Russian and Ukraine markets. As per the agreement, Dr Reddy's has initiated the sales and promotion of the portfolio of products from Q2 FY11 in select therapy areas in Russia. Launch in Ukraine will take place in the next calendar year.

The company has also entered into an agreement with UK - based Vitabiotics Ltd for a range of nutraceutical products for Russia and select CIS countries. The agreement provides Dr Reddy's exclusive marketing rights to two of Vitabiotics leading products- Jointace and Dietrim. Vitabiotics will supply these products on a long-term basis from its facilities in Europe.

"The agreements give us access to a good number of Rx products and OTC brands with existing sales that will immediately add to our revenues from the Russian and CIS market. We see long - term synergies as Dr Reddy's has strong sales and marketing network and our partners have a basket of products already registered and distributed in these markets. With strong brands, increasing growth in the Rx, OTC and hospital segments and our association with top tier distribution partners, the agreements will add to our growth ambitions in the Russia and CIS markets,” said Satish Reddy, managing director and COO, Dr Reddy's.

Pharmabiz had reported in mid August that following a slew of incentives from CIS to encourage local production from 2015, India was looking at Russian drug manufacturers to explore opportunities for joint production initiatives.

In order to encourage local production, Russia’s industry and trade minister, ViktorKhristenko, had also announced €3.1 billion assistance to local and foreign drug companies until 2012, which is two thirds of the total cost.

The Russian Association of International Pharmaceutical Manufacturers estimates that global pharma firms are prepared to spend a combined €795 million for establishing production facilities in Russia.

On July 12, Russia released an approved list of 57 drugs that would be locally manufactured. These include oncology, cardiovascular diseases, hepatitis B and C, Gaucher’s disease, multiple sclerosis, antibiotics, anti-tumour, anti-inflammatory and anaesthetics.

According to data available, India ranks fifth in supply of formulations and sixth in bulk drugs to Russia with exports earnings valued at US$ 2 billion.

Russian government has decided to start the process of becoming self-sufficient by initiating local manufacturing of key formulations although it will affect Indian exports to a great extent. The Indian manufacturers need to redefine their long - term export strategies and aggressively look for other international untapped markets. It is not very clear whether the facilities will also be put up for APIs which follows formulations. Indian companies will have good prospects to export more APIs for formulations. Those with registered products in Russia will have a head start in co-partnering. This move will create opportunities for Indian machine manufacturers and project consultants as several new projects will be in pipeline in Russia.

The institutes imparting pharmacy courses will have one more area to look i.e.or development of professionals as project consultants for Russia, said Kaushik Desai, chairman, Industrial Pharmacy Division, Indian Pharmaceutical Association.

According to Jatish N Seth, secretary, Karnataka Pharmaceutical and Manufacturers Association and director, Srushti Pharmaceuticals, it is high time Indian pharma adopts a business model to maximize opportunities arising out global changes.

 
[Close]