The global pharmaceutical industry is undergoing a transition, driven by increasing demand (globally ageing population, increased prevalence of chronic diseases and a greater global access to pharmaceuticals), rising generic erosion (rise of emerging market players) and a need for high quality and cost-effective healthcare (Policy-makers are constantly in conflict between their need to curb rising healthcare expenditures and their desire to provide greater access to quality healthcare).

The global pharmaceutical industry owes its continued growth to the recent progress and success of the emerging markets of India, China, Brazil and Russia despite the slowdown of the developed markets. The points in India’s favour, apart from possessing the second largest number of FDA-approved manufacturing plants are: expertise to manufacture generics at substantially lower costs than small molecule innovators, strong reverse chemical engineering skills, plentiful talent, a favourable regulatory framework and domestic market that is hungry for affordable medicines, have all led to the generation of a generics powerhouse.

Recent developments of interest are: Indian companies entering the realm of research and development, better protection of intellectual property rights via a new patent regime and development of clinical trial expertise that is cost-effective (< 60%) compared to many developed nations. Based on its success in the pharma generics industry, the current theory is that India will be able to replicate the same success in biosimilars as it did with generic small molecules.

The biosimilar market presents a US$ 46 billion opportunity for generic biopharmaceutical firms as the biologic market grows to an estimated US$ 220 billion by 2016. India, a manufacturing giant, now produces 20 per cent of the world’s generics and is a threat to established generics firms. With more than 30 biosimilar companies like Dr Reddy’s Laboratories, Wockhardt, Lupin, Cipla, Reliance Life Sciences, Avesthagen, Biocon, and ZydusCadilla possessing robust pipelines at various stages of development, India is well positioned to take advantage of US$ 70 billion worth of drugs that go off patent over the next three years (2016). Currently, Insulin accounts for a major chunk of the biosimilars market, followed by erythropoietin and GCSF, with Interferon alpha, thrombolytics, plasma proteins, vaccines and others forming the rest.

Dr Reddy’s Laboratories has already launched the following biosimilars: filgrastim, peg-filgrastim, rituximab and darbepeotinalfa in 13 emerging countries. Cipla has also acquired facilities in India and China to develop biosimilars. Wockhardt is among the early entrants and has developed insulin and analogue, while Lupin is now on its way and plans to soon launch its first of two biosimilar drugs for oncology in India by the end of this year. The company currently has a total of 10 proteins in different stages of development. Avesthagen and Reliance Lifesciences are also strong contenders.

Another prime target is the upcoming oncology segment, which is seeing many companies making a play for. One example is Dr Reddy’s Laboratories with their biosimilar monoclonal antibody – Reditux, which is based off Roche’s Mabthera/Rituxan. Reditux is being sold at less than 50 per cent of the innovator drug, demonstrating how biosimilars can improve access to expensive biologics in developing countries.

Largely driven by the patent expiries, the biosimilar opportunity size though large, comes with a set of highly differentiated market dynamics (as compared to small molecule generic market space). The anatomy of a competitive entry in biosimilars consists of high technical (scientific and manufacturing) and clinical competence, driven by regulatory requirements of highly specific analytical and clinical equivalence criteria. At the same time, any company, serious in sustaining itself in this market, needs to have strong branding and promotional capabilities to drive product uptake. Given the high initial and sustained R&D investment and long ROI timelines post launch, a biosimilar company’s operations have to be driven by a long term strategy.

Biosimilars is the 'buzz' word in the Indian pharmaceutical industry. There seems to be a wave of opportunity that no Indian firm wishes to miss. Indian biosimilars recorded sales figures to the tune of US$ 200 million in 2008 and is projected to grow to US$ 580 million by 2012–13 at a CAGR of +30%. Compared to global biosimilar players, Indian pharmaceutical firms enjoy a distinct advantage of large cash flows and reasonably well established technical and clinical operations globally. The present technical capability and ‘price and time-to-market’ predicated, commercial experience however, is not enough to establish them in the biosimilar space. With the recent FDA interventions, even the quality of the Indian drug has come under strong scrutiny. Although Indian firms have demonstrated strategic intent in biosimilars, it is uncertain whether that intent is long term and driven by global biosimilar business outlook.

While developing a long term strategic intent, Indian firms need to build an overall coherent strategy around their field of play, differentiating capabilities and pursuing a viable product portfolio.

The mature and the emerging markets will show different characteristics and therefore firms need to proactively “glocalize” their strategies accordingly. The execution, i.e. defining the markets for establishing competitive presence, identifying an optimized portfolio and building appropriate level of technical, clinical and commercial competencies, need not be done organically. While organic development and ownership of competencies has a reputational advantage, opportunistic alliances is the norm in the global biosimilar partnering
landscape. There is no reason why Indian firms should not embark on the same if it confers competitive advantage.

Emerging markets present a great opportunity for Indian pharmaceutical firms owing to their historically strong presence, (entrusted) stakeholder relationships and established corporate brand in these markets. With a strong knowledge of disease epidemiology and associated market needs, Indian firms can therefore build a portfolio that will enable cost-effective access to biologicals. It would be in Indian companies’ best interest to build organic clinical research competence. It will further their brand name due to adjacency effects and it may also aid future entry into developed markets. Indian firms have mastered the art of small molecule drug development and commercialization; however, our strength in biosimilars is yet to be tested.