Heeding to the plea of the pharmaceutical sector which has been seeking the government support for the revival the active pharmaceutical ingredients (APIs) sector for the past few years, the Indian government has embarked upon on a major initiative for making the industry economically viable and globally competitive.
In order to strengthen the API sector, the Indian government has appointed the Katoch Committee to study the problems plaguing this sector. After a thorough investigation, the committee has submitted a report to the government which is awaiting final approval by the central cabinet.
According to Union ministry of chemicals & fertilizers Ananth Kumar “Once the cabinet approves the committee report, we shall have a new policy for APIs in the country and cut our excess dependence on the Chinese APIs. Our main aim is to make India self reliant in the bulk drug segment. To be globally competitive, the manufacturing cost of the Indian industry must come down at least to 30 per cent. Once we are able to achieve this, our formulations industry will perk up and then we can compete with the other players like China, Latin America and European companies”.
To ensure that the API sector takes a leap and to infuse confidence among the investors of the segment, the central government has announced the setting up of six API clusters and four mega parks. “Though of late the government has taken a strong step to pep up the API sector, the bulk drug sector is reeling under pressure and is totally dependent on Chinese APIs. With the new government initiatives, we are hoping for good days ahead,” said a spokes person from BDMA.
Already, the Telangana and Andhra Pradesh governments have taken big steps like setting up of a pharmacity of about 11,000 acres in Hyderabad and an industrial cluster in Ananthapur for the bulk drugs. Though the cluster development plans by the state governments are laudable, the policy initiatives by the central government are essential to propel these schemes to higher levels.
As per the Katoch Committee recommendations, the central government is focusing on ensuring that industry has access to land at affordable costs. Further it is also looking to provide common facilities like effluent treatment plants among others. “To boost the API sector, the central government has announced Rs. 20 crores to each cluster having a minimum of 10 companies. There is also a proposal of setting of four mega complex parks, but the central government has yet to announce it. If these initiatives are taken up with vim and vigour, the API sector will get a big boost and it will help industry to manufacture APIs at economical prices and this will also help the exporters to compete globally,” opined Dr. P.V. Appaji, Director General of Pharmexcil.
Not just in Andhra Pradesh and Telangana, recently the Karnataka government has also allocated 100 acres of land to set up pharma parks to cater to the API sector.
In Telangana, the IDPL was India’s largest bulk drug producer of APIs prior to 1990, but with the advent of privatization and globalization, the IDPL lost its sheen and it paved way for the private players. But with the SC ban, it was hit hard and totally became dependent on Chinese APIs.
But again now, with the central government initiatives to boost the API sector, it is looking to revive the IDPL in Hyderabad and is also looking to set up a pharma park in the IDPL campus.
The government is also working on another important aspect which is the creation of skilled workforce specific to this sector. It has announced the setting up of six NIPERs in different parts of the country including Karnataka, Madhya Pradesh and Andhra Pradesh. The key reason for fast-tracking the NIPERs is to enable an environment for drug discovery which is currently costly and time- consuming.
The growth of API sector
Though the Indian pharma sector has grown from a mere $ one billion in 1994 to $30 billion in 2015, the sector has failed to have an all - inclusive growth. For it's next level of growth on the global stage, the industry needs to achieve the 3As like authenticity, availability and affordability. For this the government needs to have a regular dialogue with the pharma industry.
The move by the government to create an enabling environment and ensure a win-win situation will begin with its approval of the Katoch Committee report.
The API industries in India include domestic and in-house consumption as well as exports. API manufacturers in India are trying to strengthen marketing in regulated markets by different means viz., by focusing on the improvement of production yields; especially of critical products, through process modification, by increasing the productivity of high volume products through capacity re-balancing, by increasing sales in international market etc. Manufacturing standards in India are compliant with many international regulations. In addition, improvements in the technological capabilities of the country have enabled many manufacturers to venture into the highly regulated markets of the US and Europe.
The present status
The Indian API manufacturing segment can be divided into two sectors, 1) innovative or branded and, 2) generic or unbranded. In 2009, the global generic drug market was estimated at US$ 84 billion, of which the market share of the US was about 42 per cent.
The last year, India’s generic drug industry was estimated at US$ 19 billion and it was ranked third globally, which contributes to about 10 per cent of global pharmaceutical production. In India, pharmaceutical manufacturing units are largely concentrated in two states viz Maharashtra and Gujarat, which account for about 45 per cent of the total number of pharmaceutical manufacturing units in India.
The generic APIs market is expected to continue to rise faster than the branded or innovative APIs, by 7.7 per cent per year and is expected to reach $30.3 billion in 2016. Asia-Pacific is expected to show the fastest growth rates of 10.8 per cent per year. The 24 fastest growing markets will include 11 in Asia-Pacific, seven in Eastern Europe and CIS, four in Africa-Middle East and two in Latin America.
According to a report, the market share held by Indian API manufacturers in the global API market (generic APIs and branded/innovator APIs) was 6.5 per cent in 2005, which has been increased at the rate of 12.0 per cent till 2010, and is expected to increase to at the rate of 22 per cent by 2015. India’s share of the global generic API merchant market has increased from 13.5 per cent in 2005 to 22.1 per cent in 2010 and was expected to increase to 33.3 per cent by end of 2015. Export sales of generic APIs from India increased at an average of rate of 18.9 per cent during 2005–2010.
On a geographic basis, the highest growth rate for APIs between 2008 and 2012 was in Asia-Pacific (excluding Japan), which had experienced average annual growth rate of 13.9 per cent, followed by the Middle East with 8.7 per cent average annual growth and Eastern Europe and the Commonwealth of States (CIS) with 8.2 per cent average annual growth, according to a recent report. India’s supply to the US market increased from $255 million in 2008 to $1.12 billion in 2012 at an average annual rate of 44 per cent. Asia Pacific accounted for 39.6 per cent of the global generic API merchant market in 2012.
China is the largest consumer on a country basis of generic API in the merchant market, accounting for 23.7 per cent of the global total, surpassing the North American market as a whole (21.9 per cent) and the US (20.4 per cent). India exports generic APIs to developed countries and the exports account for 41.6 per cent of total sales in India as compared to 24.7 per cent in China. India is the second largest supplier of generic APIs to the US market with a 24.4 per cent share, according to the CPA report. India is also increasing its supply to Western Europe, accounting for 19.2 per cent of the supply to the region.
India’s role and global perspective
In the global active pharmaceutical ingredients market, India plays an important role and a dominant role in the US generic pharmaceutical industries, which is about the half of the certified dossiers filed globally for active pharmaceutical ingredients.
Significant active pharmaceutical ingredient manufacturers are located around Asia, specifically in India and China. Presently, there are more than 1600 active pharmaceutical ingredient manufacturers operating in these two countries. Some of the leading active pharmaceutical ingredient manufacturers in India are GlaxoSmithKline, Teva Active Pharmaceutical Ingredients (TAPI), Dr. Reddy's Laboratories, Aurobindo Pharma, Lupin, Ipca, Cipla, Divi's Laboratories, Sandoz, Ranbaxy, Matrix, Sun Pharma, BASF and Pfizer.
Ipca has emerged as one of India's top exporters of API with nearly 25 per cent of the turnover coming from APIs. About 75 per cent of API products are exported in regulated markets like the US, Canada, Europe and Australia. For over 20 years, Ipca has been playing a lead role in the Indian APIs market, both in the anti-malarial and anti-hypertensive therapeutic segments. Domestic majors like Dr Reddy's Laboratories, Aurobindo Pharma, Ipca Laboratories, Alembic Pharmaceuticals, Glenmark Pharmaceuticals, Jubilant Life Sciences, and Shasun Pharmaceuticals have established strong presence in these markets and are set to capture future opportunities.