Indian Active Pharmaceutical Ingredient (API) manufacturers have maintained the momentum of filing Drug Master Files (DMFs) in the US with higher investments in cGMP facilities, research and development and talent pool during last couple of years.
Factors like better infrastructure, cost-effectiveness, contract research and manufacturing services and tie-ups with international players assisted the API players. India remains one of most favoured API destinations globally. Despite several odds like stiff competition, slowdown in world economy, cost-cutting measures in highly regulated market and adverse foreign exchange rates, Indian API players dominated market share after China. Indian producers are well set to grab the upcoming opportunities from expiration of patents in next few years.
Indian companies filed 269 DMFs in the US during the first nine months ended September 2012. The major companies like Hetero Drugs, Emcure Pharmaceuticals, Aurobindo Pharma, Dr Reddy's Laboratories, Lupin, Macleods Pharmaceuticals filed more than 8 DMFs. Further, Hetero Labs, Unimark Remedies, Neuland Laboratories, MSN Laboratories, Alembic Pharmaceuticals, Apotex Pharmachem India Pvt Ltd and CTX Life Sciences Pvt Ltd also filed 5-7 DMFs during the first nine months of 2012. The total DMFs filed by the Indian companies stood at 404, 311 and 271 during the year 2011, 2010 and 2009 respectively. This shows that the investments started yielding results and Indian companies have able to file more and more DMFs.
The API forms the most vital part of any finished dosage product. The overall API market was valued at US$101 billion in 2011 and is expected to grow at a CAGR of 7.9 per cent from 2011 to 2016.
APIs are extensively used in many therapeutic segments such as cardiovascular, central nervous system disorder, oncology, gastrointestinal, etc with low profit margins as compared to formulation products.
The Indian API market is highly fragmented with presence of major players. The excess capacity and presence of many players putting pressure on bottom line of API manufacturers. However the patent expiration to the tune of US$85 billion in next couple of years will give necessary boost for the growth in API segment. Further, worldwide growth in biotech segment may offer additional push for API growth. The contract research and manufacturing services (CRAMS) offered by major Indian companies is also providing strong support.
Due to low margins in APIs business due to competition, several Indian players moved over to formulation manufacturing back by investments in R&D during last couple of years. These players are using APIs to cater captive consumption and filing own dossiers with regulatory authorities. The Indian companies focus continued on developing commercially viable and novel (non-infringing/patentable)process know-how for APIs. Considering the growth potential, many players are planning expansion of the API manufacturing capacity in the country..
Ranbaxy has four API manufacturing facilities across India. It supplies top-of-the-line APIs to leading innovator and generic pharmaceutical companies in more than 65 countries covering a wide range of therapeutic segments like cardiovasculars, anti-infectives, anti-diabetics, CNS, anti-virals and dermatology. Its API business grew at 26 per cent with sales of US$144 million during the year ended December 2011.
Ranbaxy supplied API to launch generic Atorvastatin, the world's largest selling drug in the US. Its Tonsa facility is catering to the entire API demand for the US and other markets. It also supplied API for Esomeprazole, another big global molecule to AstraZeneca for the US market. The Toansa plant was upgraded for the expected US launch of Valsartan in September 2012.
Aurobindo has established strong presence in pharmaceutical chain, manufacturing and marketing APIs and generics. Its APIs sales registered 14.5 per cent growth during 2011-12 to Rs 2063 crore. The company commissioned a new API unit to cater exclusively to the Japanese market. Nearly 30 new products are under development at its R&D centre. It has robust product portfolio spread over major products areas and has global presence. It has 200 APIs with diversified product portfolio in life-style disease, anti-AIDS, anti-infectives and pain management with paediatric products and technology. Its six units for APIs and four units or formulations are designed for the regulated markets.
Dr Reddy's Laboratories has filed 68 DMFs in 2011-12. Of these , 14 each were filed in US, Europe and 40 in other countries. The cumulative filing reached at 543 DMFs at the end of March 2012. The sales of company's pharmaceutical services and active ingredients increased by 21 per cent to Rs 2,381 crore. The growth was led by sale of active ingredients to generic customers and a strong recovery of customer orders in the services segment.
Shasun Pharmaceutials, a Rs 1000 crore pharma major and largest manufacturer of Ibuprofen globally, is a leading supplier of APIs and it covers the entire lifecycle of a product at all scales from the pre-clinical and clinical phases to validation and commercial supply. It filed DMFs in 2009 to sell the API for Sevelamer and Colesevelam when they becomes generic in 2013-14 to US companies interested in producing the formulations. It has several other APIs under development, products which will turn generic in the next three to five years. Its API and intermediate business on consolidated basis contributed close to 55 per cent of the turnover and on standalone basis. They contributed close to 79 per cent of the total sales.
The company's API units at Puducherry and Cuddalore contributed to over 50 per cent of the company's turnover. The company's facilities underwent inspections by US FDA, EDQM, DMA, UK MHRA, PMDA and other regulatory organizations and received approvals. The Cuddalore unit's current API portfolio includes ibuprofen, nizatidine, ranitidine, gabapentin, olanzapine and cycloserine amongst others.
Cadila Healthcare has received minor setback and its API sales declined by 18 per cent to Rs 285 crore during the year ended March 2012 due to of price erosion in the key international markets higher capacity allocation to internal requirements for manufacturing of finished formulations. It filed 10 DMFs in the US taking the cumulative US DMF filings to 107.
Lupin's API business generated revenues of Rs 849 crore during the year ended March 2012 and remains a global leader in therapeutic areas such as cephalosporins, cardiovasculars and the anti-TB space. It maintained its leadership position in products like rifampicin, pyrazinamide and ethambutol, as well as in cephalosporins like cephalexin, cefaclor and their intermediates over a decade. It filed 12 DMFs taking the cumulative total to 123 DMF filings and received approval for 16 DMFs during 2011-12. The company also filed 130 EDMFs/COSs and JDMFs. Its API process research programme supports the company's generics research programme by developing new APIs that are either a first or by developing APIs that reduce costs dramatically. It is focusing on developing specialized and complex APIs like prostaglandins, hormones and a new class of ARV's.
Ipca Laboratories has posted APIs sales of Rs 550 crore during the year ended March 2012, a strong growth of 15 per cent, as against Rs 479 crore in the previous year. Nearly 74 per cent of the APIs and intermediates business is coming from exports. Though quantitative API production was up by 21 per cent, the increased captive consumption of APIs due to substantial growth in the international formulations business restricted the sales volume of the APIs. The company has obtained certificate of suitability (COS) of 40 APIs as compared to 34 in the previous year from European Directorate for Quality Medicines. It is exporting APIs to 95 countries across the globe. It has commercialized six new APIs during FY'12. It filed 61 DMFs during 2011-12 as against 57 in the previous year.
Divi's Laboratories, a Rs 1875 crore plus company, is engaged in manufacture of generic APIs, custom synthesis of active ingredients for innovator company and other speciality chemicals like peptides and nutraceuticals. Over 70 per cent of sales constitute supplies to regulated markets in Europe and USA .It has a total 36 DMFs with US FDA and 190 EDMFs and 13 CoS with various European Union authorities. It filed a total number of 22 patents in India and 17 in USA for generic products. Some of the capex programmes taken up at the existing units have become operational during the year. Its DSN SEZ Unit, involving an investment of Rs 213 crore, has also become operational during 2011-12. It added eight new products to is product portfolio of which three are generic APIs and intermediates and five are custom synthesis APIs and intermediates.
Thus, the Indian major API players have posted more than satisfactory growth in there API business and strengthen there position in international market. The cost cutting measures implemented in highly regulated market and expiration of patents will give boost to generic segment which ultimately will push the demand for APIs in coming years.