The global economic slowdown is providing business opportunities for India and China and it will be beneficial for both if the drug majors of the these countries could collaborate to tap the subdued developed economies. In an age of open economy, collaboration, integration and co-operation are the cornerstones, says industry cognoscenti.
The two countries have the highest global population offering market for all types of pharmaceuticals covering APIs, excipients and intermediates, finished dosage
forms including generics. Since there is ample scope for taping business , it would be beneficial for for both the nations to collaborate and move ahead, they aver.
China and India are the leading players in bulk drugs, accounting for more than 40 per cent of global bulk drug production. China is the largest bulk drug supplier and India is second. Part of China's competitive advantage comes from the operating environment and government aid . This has enabled Chinese manufacturers to benefit from economies of scale. China is also better endowed with raw materials such as phosphorous, potassium and sulphur. So it can produce bulk drugs at 10 per cent of the cost in developed countries.
“The changing dynamics of global pharmaceutical industry has enabled India and China to lure global investors. As these countries are known for their low cost quality drug manufacturing abilities many American and European countries are looking to invest in these countries to cut their growing manufacturing costs. In this scenario the Indian pharma industry should utilize the CPhI China as an opportunity. The event is an apt platform for the Indian entrepreneurs to have interactive meetings with the movers and shakers (new and emerging players) in China's pharma industry. In order to compete with China, our entrepreneurs should learn new and innovative methods adopted by the Chinese entrepreneurs and implement the same by adding more value to it", said Appaji, Director General, Pharmexcil.
As the Government of India and Republic of China are working to strengthen the business environment between the two countries under the Strategic Economic Dialogue (SED), the Indian government has called for greater market access for pharmaceuticals.
Commenting on the SED and strengths of India and China in pharmaceuticals, Dr Tarun Gupta, managing director, Joint Force Pharmaceuticals Ltd, a trading company in Hong Kong said that the two countries are showing a clear indication of interdependency. “While India is sound in chemistry, China has its prowess in fermentation. But the biggest advantage for India is the availability of its qualified scientific English speaking pool which allows easy submission of documentation, along with a dependable quality standard in place because of stringent regulatory clearances.”
China falls short here despite its impressive and large production volume capability. The dragon land has a long way to go in terms of regulations although its State Foods and Drugs Administration (SFDA) is now gearing up for strict rules and norms to be adhered to. It will take a minimum seven years for China to catch up with India in document submission and in following regulations, according to industry observers.
API Spring 2012 which was held at Hefei recently also created a foundation for stronger global partnerships through Global Buyers Port (GBP) & Sino India Partnership Programme(SIPP).
The event held between April 25 and 27 created an environment for collaboration between the Republic of China and the world. The three events are thriving to explore the future for the industry. The platform has provided the pharma industry to join up a chain in terms of segmentation in the exhibiting zone.
The Sino-Indo Partnership Programme (SIPP) launched this year is built as a bridge for co-operation between domestic and global buyers. Further the exposition has given an insight to update regulation, marketing information and display innovation in design and manufacture.
SIPP enables India and China a green channel to work closer and have a better understanding of the requirements and the challenges in conducting businesses. The dialogues with prospective customers could help us comprehend the market, according to an official
“We are looking to widen relations with not just local players but those in the developed world too. The financial gloomy across the world is providing business opportunities for India and China and we need to see how if collaborations with drug majors of China will work to jointly tap the subdued developed economies, he added.
Indian companies are assessing the sourcing potential to import of APIs, and offer it to contract research and manufacture service (CRAMS) majors in India. “ In addition, we are also hoping to lay our hands on in-licensing, develop co-market, product development strategies and look at better delivery timeline schedules,” said GBP participants.
Presently India and China are the most preferred CRO destinations in Asia and are likely to witness substantial growth in CRO as the rising global R&D expenditure, decrease in R&D allocation and increasing research outsourcing would drive growth for the Indian CRAMS industry. There is no doubt that CRAMS would become another outsourcing story which is set to make it big in the coming years.
The factors which could make India, a pharma powerhouse are the low cost manufacture of quality products and an effective supply chain. It would be a welcome situation if the major issues facing the Indian pharma industry could also be addressed.
India is poised to be a key destination for Big Pharma to outsource activities owing to . its inherent advantages such as high quality, low cost manufacturing and cheap availability of knowledge resources. The main reason for the spurt in outsourcing is due to the fact that Big Pharma now wants to perform only core activities like R&D and marketing.
The country’s large pool of qualified English speaking people and large hospitals and highest number of USFDA approved plants pegged at over 180 facilities are driving the business. Now the non- core activities like chemical syntheses, clinical trials and manufacturing are being outsourced as these activities can be performed in a much more cost-effective way with quality standards from countries like India and China. In some other cases some part of the process has to be outsourced since everything cannot be performed in-house. Thus the varying needs of the Big Pharma have led to the blossoming of the CRAMS industry.
Since the business of pharma has been recession resistant primarily because healthcare is indispensable, there is great potential in reciprocal cooperation in pharmaceutical research and manufacture, said Rajeev Verma, general manager, materials, IndSwift Laboratories Ltd, a participant at the SIPP.
The big drawback for China is the poor English comprehension. But the large plants, availability of uninterrupted power supply and extensive government support in industrial development in China are no match to India. If the Union government does not speed up in its economic policies, China will catch up with India in about three to four years, informed Verma.
At the same time the most worrying aspect of Indian pharmaceutical industry today is its growing dependence on China. Most of the Indian pharmaceutical manufacturers are dependent on China for more than 80 per cent of their APIs and drug intermediates. The main reason for this is lower prices offered by Chinese companies.
“If one looks at the API imports during the last five years, Indian companies have doubled. In 2010-11, imports crossed $7 billion, of which China has a 60 per cent share, while on the other hand India's bulk drug production has fallen to 35 per cent of its consumption, from about 70 per cent," said O.R.S. Rao, Director, Cygnus Business Consulting and Research.
But if the situation continues for some more years, India will have to face a challenging task ahead as over-dependence on China for its pharmaceutical raw material may prove fatal if Chinese regulators force their exporters to hike their prices. Hence Indian importers should keep an option of developing those raw materials here in India. For this, the state and central government should support the Indian bulk drug and API manufacturers, say industry observers.
The low cost availability of APIs from china is making the Indian companies to dangerously over depend on that country. This trend has seen an erosion of API manufacture in India, mainly due to the unhealthy competition from China due to dedicated large volume production plants sponsored by the state. Moreover the transaction costs in China are far lower than what is prevalent in India.
The API industry in India requires whole-hearted support from the Government in terms of realistic costing and price controls. Also strong support from Indian formulators in sourcing their API requirements indigenously will make a lot of difference to hard hit API manufacturers, say experts.