The Indian active pharma ingredient (API ) players who had earlier highlighted low cost manufacturing as their strength are now focusing on increasing their quality of research and production to enter a value- generation mode. The Indian companies can now manufacture bulk drugs in-house at 40 per cent to 50 per cent of the cost.
The API industry is also opting for environmentally- friendly production processes to a greater extent. There are several efforts to go green, reduce carbon footprint and decrease consumption of electricity and water. The companies are also adopting measures to decrease production of hazardous waste. Research is on to improve the processes, bring down waste from API synthesis by going in for fewer chemical reactions, disposing off solvents and look for efficient means to improve to save and protect the environment.
The API industry in India meets 50 cent of the country's demand for bulk drugs, drug intermediates & chemicals. The sector is ranked third after China and Italy. Going by the expertise in the production of APIs India is expected to over take Italy and take the second place in the world market.
The sector is registering a growth of around 18-19 per cent annually. The main revenues are coming in from the exports and we would be able to overtake Italy going by the number of drug master files (DMFs) being submitted, said Anjan K Roy, managing director, RL Fine Chem and member, Karnataka Drugs & Pharmaceuticals Manufacturers Association(KDPMA).
The scientific capability together with the advanced processes and state-of-the-art manufacturing plants have led companies to file greater number of DMFs. In the field of contract research too, Indin an pharma is known to support customers with DMFs for their dosage form approvals / and Abbreviated New Drug Application (ANDA) filings.
The Indian chemical industry was valued at $ 150 billion around Rs 7.04 lakh crore in 2013 with a nine per cent growth, according to a Deloitte report. The industry experts value the Indian API market at $ nine billion of which $ five billion is exported and the remaining goes in for formulation development.
There are over 1000 API manufacturing companies in India. Currently, 50 per cent APIs production are exported and this has led to mandatory filing of DMFs. The increasing number of Drug Master Files is a success indicator of the sector, according to pharma industry cognoscenti.
However the focus on regulated markets has posed a new set of challenges for the Indian companies. The fast growing generics market, with the increase in number of drugs going off patent till 2015-17 in the US, has generated huge competition between the Indian and overseas generic companies. The fall in quality processes of API products is also a issue to cope. Therefore units are chalking plans to face these hurdles.
According to Kiran Mazumdar-Shaw, chairman and managing director, Biocon Ltd, the efforts of Indian companies to file and receive ANDAs approvals is a testament to their research capability and the competence to succeed in the global markets. This further indicates the strategy of domestic pharma firms wanting to strengthen their product pipeline for the lucrative US market.
With the growing production orders, the domestic pharma industry is gearing up for increased international business. The semi regulated markets account for a majority of bulk drugs exports with a 60 per cent share. The major Indian companies are pursuing the regulated market as a large number of products have started losing their patent protection in these countries. Therefore these companies are aggressively filing DMFs with the drug regulators in the US and Europe.
An E&Y report has identified Ahmedabad Ankleshwar, Vapi and Vadodara in Gujarat, Mumbai, Tarapur, Aurangabad and Pune in Maharashtra, Hyderabad and Vishakhapatnam in Andhra Pradesh as major API clusters in the country. Besides this Chennai in Tamil Nadu, Puducherry, Mysore and Bengaluru in Karnataka and Panaji in Goa are the other centres where API manufacturing and research companies are based.
API majors like Dr. Reddy’s, Sun Pharma, Ranbaxy Laboratories, Aurobindo Pharma, Cadila Healthcare, Cipla Ltd, Dishman Pharmaceuticals & Chemicals Ltd, Divi's Laboratories Ltd, Hikal Ltd, Orchid Chemicals & Pharmaceuticals Ltd and Torrent Pharmaceuticals Ltd are raring to increase business in the international markets.
The need for more assistance
Despite the fact the API units are doing well, they need more assistance from the government with regards to environmental protection norms. At present India relies on China for almost 60 to 70 per cent of its intermediate needs despite the competition between the two countries in API sector, according to the E&Y report.
The key reason to depend on imports of intermediates from China for formulations manufacturing is because of the strict environmental laws. The manufacturing of intermediates requires large-scale chemical activities which goes against the current environment norms.
Last month, the Union Minister for Chemicals and Fertilisers Ananth Kumar at the India Chem 2014, organized by Federation of Indian Chamber of Commerce (Ficci) said that India has the potential to become one of the top five countries in the chemicals and petrochemicals industry.
The chemical industry is the backbone of the country and the need of the hour is a policy framework. The government is working towards this to give a fillip to the sector, he had pointed out.
Growth in categories like oncology, neuro psychiatry, diabetics, anti allergy, cardiology and nephrology are some of the focus areas for companies like RL Fine Chem, Strides Arcolab, Micro Labs, Bal Pharma, Aurobindo Pharma and Dr. Reddy’s Laboratories.
According to Sujay Shetty, Director and Leader, Pharmaceuticals & Life Sciences, PwC, the emergence of chronic diseases like cancer, diabetes, cardio vascular system (CVS) and central nervous system (CNS) disorders is likely to drive demand for newer therapies. With increasing pressures on curbing healthcare costs in the US, India’s low-cost manufacturing capabilities coupled with attention to quality are seen to be an advantage. This is where India is being preferred to manufacture APIs because the country has the highest number of FDA-approved manufacturing plants outside the US which is much sought-after by multinational companies (MNCs).
The worldwide demand for cost-effective generic drugs has lead India to become a hub for generic drug manufacturing. India accounts for over 10 percent of global pharmaceutical production, with over 60,000 generic brands across 60 therapeutic categories and it manufactures over 1000 different APIs. The country is a leader in a wide range of specialties involving the manufacture of complex drugs, reported Deloitte.
A number of pharmaceutical companies are increasing their operations in India. The main focus of the Indian companies is on countries with aging populations such as Japan, Africa and Latin America, which need cheaper drugs. It is estimated that Indian companies will benefit by about $40 billion as 46 US drug patents expire between 2014-2016.
The future of Indian API industry
The pharmaceutical industry in India is poised for a period of robust growth driven by alliances and partnerships. Therefore APIs which is the critical component of a formulation is expected to witness significant momentum in the areas of research. India is recognized for its scientific acumen and accounts for the highest number of USFDA approved facilities apart from other global regulatory audits which are successful. Therefore there would not only be promising opportunities for the contract manufacture but also research of APIs according to industry observers.