Even as the manufacturing and outsourcing of active pharmaceutical ingredients (APIs) and intermediates in the global market represent a $75 billion opportunity for India by 2015, the domestic API manufacturing industry is poised to grow at a rate of more than 15 per cent between 2011 and 2017.
The Asian zone representing markets of China and India have proved their competitiveness in the API space by confronting US and European Union’s long-established dominance of the global pharmaceutical contract manufacturing market. According to an estimate, India and China are projected to report for around 40 per cent of the outsourced market share for APIs, finished dosage formulations and intermediates.
The technologically high manufacturing facilities coupled with relatively low-cost and technically qualified labour give the Indian manufacturers a competitive edge in the era of increased focus for reducing drug manufacturing costs, said Dr. E. Saneesh, Research Analyst, Business & Financial Services, Healthcare, Frost & Sullivan.
The exports of APIs have also increased over the years, according to the Pharmaceutical Export Promotion Council (Pharmexcil). In the year 2012 , APIs contributed around 38 per cent of the total value of drugs exported.
It is also observed that the leading players who participated both in the API and formulations market are moving up the value chain with more focus on formulations segment.
APIs and intermediates services which accounted for 63.8 per cent of the total contract manufacturing, market in 2010 is expected to account 54.1 per cent of the total contract manufacturing market by 2017. The data from Food and Drug Administration (FDA) shows that more than 30 per cent of the Drug Master File (DMF) or marketing applications registered were from India.
Furthermore, India has the highest number of approved USFDA manufacturing facilities outside the US. This clearly shows the robust growth of the industry. Unlike the leading manufacturers who have a diverse portfolio in terms of their product offerings, the newer and smaller companies focus on niche entities, as it is observed that specializing in a particular drug paves way for higher profit margins and lesser competition, said Dr. Saneesh.
The Indian API industry meets around 70 per cent of the country's demand for bulk drugs, drug intermediates and chemicals. India is ranked second after China. “This sector is registering a growth of around 18-19 per cent annually. The main revenues are coming in from the exports. We have a clear edge over China in terms of quality and dependable supplies,” said Anjan K Roy, managing director, RL Fince Chem.
According to the Federation of Indian Chamber of Commerce and Industry (Ficci ), as China sells APIs at rock bottom prices, India pharma companies in the small and medium segment are facing a tough time when the global economic slowdown is weakening domestic demand.
"However, Indian pharma industry is known for its inherent strengths in chemistry. It has the sound technical expertise in development of chemical synthesis. India also has the largest number of USFDA approved plants outside the US and therefore only a bit of pragmatism and investment is required to strengthen India's API development programme," said Roy.
A slew of regulations
API manufacturers need to adhere to strict safety and quality standards. The APIs manufacturers in China or India for exports to the US need to have their manufacturing facilities inspected and licensed by the US FDA, according to a report by MDTV Alliance.
“If the API is intended for use in Europe, it would need to meet regulations set by the European Medicines Agency. Regular inspection outside the country of use however can prove difficult with counterfeiting and contamination being high on the list of concerns. For instance, since 2008, the FDA has considerably increased its overseas staff only to eliminate these problems. As a result, countries such as India have gained their foothold in the global market and now have around 75 FDA-approved manufacturing facilities for API synthesis,” said the MDTV Alliance report.
In 2013, the USFDA issued two guidelines for the API industry. While the first is a draft of norms on the abbreviated new drug application (ANDA) submissions :Refuse-to-Receive Standards and the other is an enforced guidance on Regulatory Classification of Pharmaceutical Co-Crystals.
In the case of India, ending June 2013, Indian pharma received 87 final approvals and 25 tentative ANDA approvals. Therefore the total ANDAs approved in first half of this year was 211 and tentative approvals were 47. Therefore the guidance on ANDA submission ? Refuse-to-Receive Standards would be an important one for the sector.
The guidance on Regulatory Classification of Pharmaceutical Co-Crystals provides applicants of new drug applications (NDAs) and ANDAs on the required data to be submitted to support the appropriate classification of a co-crystal, as well as the regulatory implications of the classification. Now Co-crystals are solids that are crystalline materials composed of two or more molecules in the same crystal lattice. The recommendations in the guidance apply to materials that the USFDA has not previously evaluated and determined to be pharmaceutical co-crystals. It does not apply to materials that the regulatory authority had previously designated as salts, complexes, or other non-co-crystalline forms.
The Indian API prowess
The Indian API prowess rests in companies like Aarti Industries, IndSwift Pharma, Ranbaxy, Cipla, Aanjaneya Lifecare Ltd, Hikal, Granules, Dr. Reddy Labs, RL Fine, Shilpa Medicare, Lake Chemicals, AstraZeneca, Biocon, Micro Labs, Bal Pharma, Strides Arcolab, Orchid Chemicals, Aurobindo Pharma, Granules India, Global Calcium, Jubilant, Resonance to name a few. These companies specialize in a range of products and have a large portfolio of products.
According to the IMAP report on pharmaceuticals global market, the pharma industry is facing a number of hurdles to growth, including ‘patent cliffs,’ which will erode $90 billion in branded sales over the 2010–14 period. Price cuts, reimbursement restrictions and growing regulatory pressure are further set to limit sales growth going forward. Factors that are largely growth neutral for pharma include US healthcare reform. However the industry’s medium-term outlook has received a boost by increased sales volume and longer exclusivity for biologics. In the long run cost-containment pressures will intensify, restricting sales growth.
According to Gurudatta G G, Chief Executive Officer, Estima Pharma Solutions LLP and a pharma consultant, the economic slowdown had impacted API sector to a certain extent. In this cenario API industry could think of opting for the route of synthesis to reduce the manufacturing cost, he added
Indian API companies have certain key strengths like technical and quality advantage over other Asian companies. Indian API companies are strong in analytical development and impurity profiling. These companies are experts in establishing the structural elucidation. Many companies are supplying reference standards to the US Pharmacopoeia Commission. Many scientists have contributed method of analysis to the US and European Pharmacopoeia, Gurudatta said.