China and India are the significant sources for active pharmaceutical ingredients for the global pharma majors in the US, European Union and Japan. There is an increasing dependence on the two countries for supply of a wide range of high quality APIs, intermediates and excipients. While China has pursued a manufacturing led growth strategy, India has capitalized on its inherent strengths in chemistry to prove its soundness in research and submission of drug master file (DMFs).
While the Indian pharma companies filed 417 DMFs with the US FDA during the year 2012 as against 404 DMFs in the previous year, the DMF filings during the year 2010 and 2009 were at 311 and 271 respectively. This shows that the API segment is spreading its presence in market with higher filings.
Hetero Drugs Ltd filed 24 DMFs followed by Emcure Pharmaceuticals: 16, Hetero Laboratories: 15, Aurobindo Pharma and Dr Reddy's Laboratories filed 13 each, Lupin filed 12 and Cadila Healthcare 11 during 2012. Macleods Pharmaceuticals and Sun Pharmaceutical Industries filed nine DMFs each. The same trend is likely to continue in the current year also as Indian companies filed 79 DMFs during the first quarter ended March 2013. Jubilant Life Sciences filed 6 DMFs followed by Lupin and Sun Pharmaceutical five each.
Currently, China holds the numero uno status in API production and India is in the second slot. But in terms of capacities there is no comparison to the dragon land. The big advantage for China is the government support unlike India. There is considerable hand-holding for entrepreneurs which had led to the creation of massive facilities with the latest technology.
According to Dr. Kannan Vishwanath, Chairman of Aanjaneya Lifecare Ltd., the Chinese have historically been strong in high volume and commodity chemicals. The lower cost base and the continuous government support have led to their leadership in certain fields like fermentation-based and prostaglandin and steroidal-based APIs. Although China has the capital and the capabilities, its expertise in soft skills and supply of the dossiers and other technical documents required as supporting data to file DMF have tremendous short comings. India, on the other hand is way ahead of its competitors in DMF filings.
While China is far advanced in certain APIs in the antibiotics and vitamin space, India is competitive in new molecules particularly oncology and neuropsychiatry drugs which are the growth drivers in the global drug development space, said Anjan K Roy, managing director, RL Fine Chem.
According to the HSBC Emerging Market Index issued in early May 2013, China dipped in manufacturing performance where the the global economic slowdown was seen an impediment for growth. There was a decline in new export orders, raising fresh doubts about the strength of the economy after the first quarter. But China's new government under Premier Li Keqiang has signalled that it would step up infrastructure investment and this experts feel would provide support for the economy in the second quarter.
The visit by the Chinese Premier Li Keqiang has indicated in further strengthening of ties between the two countries. In the case of India ,despite the IIP data which has reported a 20-year slowdown in industrial production, the government of India has not made any efforts so for far to prevent anti-dumping of China drugs.
According to the RL Fine Chem chief Roy, the Indian government continues to be on a static mode when it comes to support the API, excipient and intermediate manufacturers.
The reality is that despite the several representations made to the Union government, it continues to support the manufacturers from China with a mere Rs. 2,000 registration per product fee. On the contrary the government of China is unrelenting to bring down the registration fee from Rs. 20,000 per product which is to be exported from India This goes to show that India supports China and neglects it own API industry which has overtaken Italy and stands second globally for the production of bulk drugs. All that we are requesting is for a level playing field, he added.
More over there has been no dialogue with the governments of the two countries on the same despite the visit of the Premier Li Keqiang in May 2013, who discussed strengthening of trade ties between the two countries.
One of the serious issues which hamper the growth is the delay in levying anti -dumping duty on the bulk drugs from China . The government has also not taken any effort to hike the registration fees of bulk drugs registered in China.
However an interesting outcome from Premier Li Keqiang visit was China's interest in increasing partnership with Indian companies and also investments by Indian companies. Currently Aurbindo, Dr. Reddys, Biocon, Cipla, Cadilla Hikal, Sun Alembic are some of the leading exporters to China, Roy noted.
While several investments were made in the pharma companies in the EU in facilities via collaboration mode, the recent stringent norms on infrastructure growth is stalled in China and many of the regions have come under a blanket ban because of environmental concerns. This has resulted in a knee jerk reaction across global investors to further invest in China and consider India as an ideal option to foray much of their contract manufacturing efforts said Manoj C Palrecha, managing director, Lake Chemicals.
Indian API industry is valued at Rs. 25,000 crore for the period 2012-13. The revenues are coming in from its 3,000 dedicated units. The big names in the space are Granules, Dr. Reddy Labs, RL Fine Chem, Shilpa Medicare, Lake Chemicals, IndSwift Pharma, Ranbaxy, Cipla, Aanjaneya Lifecare Ltd, Hikal, AstraZeneca, Biocon, Micro Labs, Bal Pharma, Strides Arcolab, Orchid Chemicals, Aurobindo Pharma, Global Calcium, Jubilant and Resonance to name a few.
While exporting to China, the State Drugs Agency and the industry are now insisting on the process reports of intermediates along with validation and drug development documents. In fact even regulators like the USFDA, MHRA and EMA do not require this information. The confidential information demanded has created a fear psychosis in trading with China. The situation is serious and we are mulling discontinuation of export itself, said Roy who was also cajoled into sharing vital data on production techniques.
Therefore, the government of India needs to address the issue of ‘Export Obligations’ and take a re-look on ‘Norm Fixation’ and rationalize the registration process and fee, he averred.
Commenting on the quality of APIs, intermediates and excipients sourced from China, Roy said though there are efforts by DCGI to conduct audits of plants, we should also insist on comprehensive documentation on similar lines what they demand.
The future of Indian API sector in China is unpredictable. It is a market which cannot be ignored and Indian companies need to have a foot print in the region.
The Union and state governments have been lackadaisical in their approach towards the industry. The industry has been impacted by power and water shortage and poor infrastructure. Added to these problems is the pollution control board allegations for non compliance of environmental laws. Definitely there is a dip in growth in API sector from 13 per cent to eight per cent.
RL Fine Chem’s Greenfield project which has received clearance failed to take off as the state government did not provide the pollution control clearances despite the allocation of land.
At present the state of affairs for API units in India is gloomy. With regards to special chemical zones, only Gujarat and Andhra Pradesh have the required infrastructure. It is high time the government extends support to its chemical industries when India is a store-house of know-how in chemistry. Lack of these are the main reasons that stop India from not being able to overtake China in the API space, said Roy.