Pressure on the big multinational pharmaceutical companies, mandating them to evolve a model with optimum use of resources and cost-cautious operations would now open opportunities for Indian pharma, stated Subodh Priolkar, president, 63rd IPC, and regional managing director, Colorcon Asia.
In his presidential address at the event in Bengaluru which kicked off the scientific sessions, Priolkar addressed the theme of the 63rd IPC: 'Vision 2020: India: The Pharma Powerhouse’.
“There is a massive and aggressive cost cut-down initiative being planned by Big Pharma in the regulated markets. Their strategy is to reduce costs by US$ 2 billion by closing five research facilities, shutting down or selling three manufacturing facilities and reducing 10 per cent of workforce which is estimated to be around 10,000 people,” he said.
The clarion call across the Big Pharma is to ‘outsource as much as 30 per cent of manufacturing which is the double the effort from the current 15 per cent to facilities in Asia, mainly India and China’; to ‘reduce costs by US$ 900 million by 2011 by reducing 11 percent of global workforce which cover over 7,000 jobs; to issue stop production orders in most of its 23 manufacturing sites and start outsourcing to China, India and East Europe; to close its in-house production of Active Pharmaceutical Ingredients (APIs) for conventional drugs; and to start outsourcing more advanced manufacturing & logistic operations, Priolkar informed.
Further, there is intense effort to bring down cost by US$ 1.5 billion through a restructuring program targeting sales and manufacturing. In fact globally 28 plants cease to exist and the 80 plants currently operating are expected to be reduced further by 2011. Global big pharma is now looking to outsource the manufacture of off-patent products and the outsourced drug candidates to eventually in-house discovered drugs.
Over the next few years, big pharma would also look to bring down general and administrative operations by simplifying, standardizing outsourcing processes and services which will help to save another US$ 1.5 billion over next 3 years.
There will also be a marked reduction in the number of its brands and mature products portfolio by 60 percent over the next four years ensuing out of more than half the number of manufacturing facilities by being shut down in 2010.
Therefore there is immense pressure on big pharmaceutical companies. With drugs worth US$35 billion going off patent in 2012 will now see increased penetration of generics in markets where innovators have traditionally been strong. There is drastic reduction in drug approvals from US FDA. With regulations becoming more stringent, the pharmaceutical companies have to do extensive work on safety profile of the drug as well as robustness of the formulation.
All of these have led to tremendous escalation in the new drug development costs, said Priolkar adding that India has every chance to capitalize the opportunity to become a Pharmaceutical Superpower in 2020 and a hub for all pharmaceutical manufacturing & research needs. To achieve this it will need to over-haul the pharma education system; making it more relevant to the changing needs of the profession, he concluded.