The US $20 billion Indian pharmaceutical industry which is expected to touch US$ 55 billion in 2020, is likely to witness a slew of changes soon. These include consolidation, decrease in imports of bulk drugs and setting up dedicated pharma parks and clusters.
The Union government had unveiled 'Pharma Vision 2020' aimed at making India a global leader in end-to-end drug manufacture. Approval time for new facilities has been reduced to boost investments. Further, the government introduced mechanisms such as the Drug Price Control Order and the National Pharmaceutical Pricing Authority to deal with the issue of affordability and availability of medicines.
According to a joint study by Assocham and TechSci Research, though the industry is expected to touch US$ 55 billion by 2020. The exports may slow down to a compound annual growth rate (CAGR) of 7.98 per cent in value terms due to tightening of regulatory mechanism in top exports markets of the US, Russia and Africa.
India with 30,000 brands and 14,000 medical devices , the third largest in terms of volume and 13th largest in terms of value , has proved its capability in drug production and also an enabler for healthcare.
“ Branded generics dominate the pharmaceuticals market, constituting nearly 70 per cent of the market. Over the Counter (OTC) medicines and patented drugs constitute 21 per cent and nine per cent, respectively, of total market revenues of US$ 20 billion export to 220 countries. India is the largest provider of generic drugs globally accounting for 20 per cent of global exports in terms of volume. India enjoys an important position in the global pharmaceuticals sector. The country also has a large pool of scientists and engineers who have the potential to steer the industry ahead to an even higher level, according to the Equity Report.
The knowledge driven pharma sector with qualified workforce has consistently proved its strengths despite infrastructure bottle necks and taxation issues said Kiran Mazumdar-Shaw, Chairperson Vision Group of Biotechnology and CMD Biocon.
The country accounts for 10 lakh pharmacists employed at pharmacies and in related avenues with 25 per cent of the global disease burden, said Dr VK Subburaj, Principal Secretary, Department of Pharmaceuticals, Government of India.
The market size
According to India Ratings, a Fitch company, the Indian pharmaceutical industry is estimated to grow at 20 per cent CAGR over the next five years. It is expected to grow over 15 per cent per annum between 2015 and 2020, will outperform the global pharma industry, which is set to grow at an annual rate of five per cent the same period.
There are 584 plants registered with the USFDA and the highest for any country outside the US.
India's biotechnology industry comprising bio-pharmaceuticals, bio-services, bio-agriculture, bio-industry and bioinformatics is expected grow at an average growth rate of around 30 per cent a year and reach US$ 100 billion by 2025. Biopharma, comprising vaccines, therapeutics and diagnostics, is the largest sub-sector contributing nearly 62 per cent of the total revenues at Rs 12,600 crore or US$ 1.9 billion.
Investments
According to Ananth Kumar, Minister of Fertiliser and Chemicals, six pharmaceutical parks would be approved and established this year which would have sufficient infrastructure and facilities for testing and treatment of drugs and also for imparting training to industry professionals.
The Department of Pharmaceuticals has set up an inter-ministerial co-ordination committee, which would periodically review, coordinate and facilitate the resolution of the issues and constraints faced by the Indian pharmaceutical companies. Efforts are on to launch a venture capital fund of Rs 1,000 crore (US$ 154 million) to support start-ups in the research and development in the pharmaceutical and biotech industry.
Telangana has proposed to set up India's largest integrated pharmaceutical city spread over 11,000 acres near Hyderabad, complete with effluent treatment plants and a township for employees, in a bid to attract investment of Rs 30,000 crore (US$ 4.5 billion) in phases. Hyderabad, which is known as the bulk drug capital of India, accounts for nearly a fifth of India's exports of drugs, which stood at Rs 95,000 crore (US$ 14.3 billion) in 2014-15.
The Union Cabinet has given its nod for the amendment of the existing Foreign Direct Investment (FDI) policy in the pharmaceutical sector in order to allow FDI up to 100 per cent under the automatic route for manufacturing of medical devices subject to certain conditions.
The drugs and pharmaceuticals sector attracted cumulative FDI inflows worth US$ 13.32 billion between April 2000 and September 2015, according to data released by the Department of Industrial Policy and Promotion (DIPP).
The Union government appointed the ' Katoch Committee ' to suggest remedial action for the bulk drug industry in the country. Govt is also planning pharma zones to reduce API imports. It is making efforts to reduce dependence on imports and boost the Make in India programme. This is because 60 to70 per cent of intermediates used to manufacture APIs in the country are imported from China.
Some of the major investments in the Indian pharmaceutical sector for 2016 are Cipla's acquisition of two US-based companies, InvaGen Pharmaceuticals Inc. and Exelan Pharmaceuticals Inc., for US$ 550 million.
Glaxosmithkline Pharmaceuticals has started work on its largest greenfield tablet manufacturing facility in Vemgal in Kolar district, Karnataka, with an estimated investment of Rs 1,000 crore or US$ 150 million.
Lupin has acquired two US- based pharmaceutical firms, Gavis Pharmaceuticals LLC and Novel Laboratories Inc, in a deal worth at US$ 880 million.
Stelis Biopharma announced the breakthrough construction of its customised, multi-product, biopharmaceutical manufacturing facility at Bio-Xcell Biotechnology Park in Nusajaya, Johor, Malaysia's park and ecosystem for industrial and healthcare biotechnology at a total project investment amount of US$ 60 million.
CDC, the UK’s development finance institution, invested US$ 48 million in Narayana Hrudayalaya hospitals, a multi-speciality healthcare provider, with an aim to expand affordable treatment in eastern, central and western India.
Cadila Healthcare Ltd announced the launch of a biosimilar for Adalimumab - for rheumatoid arthritis and other auto immune disorders. The drug will be marketed under the brand name Exemptia at one-fifth of the price for the branded version-Humira. Cadila’s biosimilar is the first in class and an exact replica of the original in terms of safety, purity and potency of the product, claims the company.
Indian Immunologicals Ltd plans to set up a new vaccine manufacturing facility in Pondicherry with an investment of Rs 300 crore (US$ 45 million).
Intas Pharmaceuticals is the first global company to launch a biosimilar version of Lucentis, the world’s largest selling drug for treatment of degenerative eye condition called Razumab.
Rusan Pharma a leading manufacturer of Nicotine transdermal patches invested Rs. 100 crore at its advanced R&D centre ‘Navin Saxena Research & Technology’, clinical research organisation – ‘Quest Care’ and a specialized manufacturing unit for transdermal patches at the Kandla Special Economic Zone (SEZ).
Acquisitions & partnerships
Indian pharmaceutical firms are eyeing acquisition opportunities in Japan's growing generic market as the Japanese government aims to increase the penetration of generic drugs to 60 per cent of the market by 2017 from 30 per cent in 2014, due to ageing population and rising health costs. In 2015, Meiji Pharma Sun Pharma bought 14 of Novartis's brands in Japan for US$ 293 million.
In March this year, Biocon had announced that the Ministry of Health, Labour and Welfare (MHLW) of Japan has approved its biosimilar insulin glargine. The company through its commercial partner, FUJIFILM Pharma Co. Ltd (FFP) will now offer high quality, yet affordable, world class products to diabetes patients in Japan.
In May 2015 Medreich Ltd was acquired by Meiji Seika Pharma following the clearances from Foreign Investment Promotion Board (FIPB) and Competition Commission of India (CCI). Dr Reddy's had entered into in-licensing pact with US-based XenoPort.
Earlier, Biocon’s wholly owned subsidiary Biocon SA entered into an agreement with Laboratories PiSA S.A. de C.V (PiSA) of Mexico for the co-development and commercialization of generic recombinant human insulin (rh-insulin) for the US market. This regulated region accounts for over 40 per cent opportunity of the total US$5 billion global market which is US$2 billion.
The partnership ensues the US biosimilar guidelines which are making it clearer for products like rh-insulin. The product will be made available before 2020. In January, Biocon ‘s oral insulin Tregopil formerly referred to as IN-105 successfully completed its Phase 1 studies which validate and provide the basis for the next phase of clinical development of this important molecule. In February, Biocon received European approvals for its Rosuvastatin Calcium 5 mg, 10 mg, 20 mg and 40 mg tablets. The co mpany has stated that its Rosuvastatin Calcium is a generic equivalent of Crestor of AstraZeneca tablets, indicated for hyperlipidemia or mixed dyslipidemia.
Other buyouts included SRF Ltd acquiring Global DuPont Dymel, the pharmaceutical propellant business of DuPont, for US$ 20 million. Strides Arcolab entered into a licensing agreement with US-based Gilead Sciences Inc to manufacture and distribute the latter's cost-efficient Tenofovir Alafenamide (TAF) product to treat HIV patients in developing countries. The licence to manufacture Gilead's low-cost drug extends to 112 countries. Torrent Pharmaceuticals also inked an exclusive licensing agreement with Reliance Life Sciences to market three biosimilars in India:Rituximab, Adalimumab and Cetuximab.
Global markets eye India
US is now considering India to advance much of its research and development efforts in the area of cancer, anti microbial resistance, environmental-occupational health and injury prevention. This is viewed to take drug development and therapy to a new realm in the Indian healthcare landscape. The country’s scientific pool and patient demographics are seen to be the key factors that have led to a slew of pacts recently where the department of Health Research, Department of Biotechnology, All India Institute of Medical Sciences(AIIMS) and Indian Council of Medical Research (ICMR) signed up to collaborate with the US government and its National Cancer Institute. Particularly cancer where India accounts for 1.8 million patients, US is keen to collaborate on research projects, conduct training on development of low-cost technologies, discovery and development of new anti-cancer agents, early detection, E-health, M-health and tele-health support in dedicated public health capacity for cancer care and creation of comprehensive cancer registries.
Romania is keen to tie up with the Indian pharmaceutical companies for research and develop new drugs. It will partner with India for license acquisition to sale India's drugs in Europe and tie-up for research.
The Japanese government is also expecting foreign direct investments of nearly US$300 billion by 2020.
It has increased investment in generic drugs to reduce the growing health burden. It is now wooing Indian pharma companies to enter the region and maximize its conducive research-innovation eco-system, advanced manufacturing infrastructure and its amended Pharmaceutical Affairs Act which has drastically improved the approval process for medicine and medical devices, according Shigeki Maeda, executive vice president, Japan External Trade Organization (JETRO), Tokyo.
Challenges hampering growth
Beginning from the ban on 344 fixed dose combinations from March 12, 2016 to the regulatory and trade challenges coming in with the implementation of the Trans-Pacific Partnership(TPP) and the Transatlantic Trade and Investment Partnership (TIPP) which was reached on 5 October 2015 after seven years of negotiations by the by the 12 Pacific Rim Countries of US, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam are all seen to be serious blows for the sector.
Future holds promise
The Indian pharmaceutical market size is expected to grow to US$ 100 billion by 2025, driven by increasing consumer spending, rapid urbanization, and raising healthcare insurance among others. The growth in domestic market will come from cardiovascular, anti-diabetes, anti-depressants and anti-cancers drugs. The free healthcare programmes in many countries globally will now see a demand for generics. India is already recognized for its capability in this space and had witnessed a consistent double digit export growth in the last many years.