During the last couple of years the multinational pharmaceutical companies in India have started consolidating their operations following the implementation of regulatory changes by the government. The new regime which aims to guarantee patent rights to innovative products came into being from January 2005. The product patent regime, marking a new era in the Indian pharmaceutical horizon has built up a strong confidence among the foreign players.
Several new firms are looking at India as an important base for future growth. Today, India triumphs with the largest number of US FDA approved manufacturing cGMP facilities in the Asian continent, easy availability of talent pool, large market size, greater scope for cost effective clinical trials and R&D efforts. Further, fast development with huge investments in infrastructural facilities in the country created healthy business atmosphere for growth.
Outsourcing from India is gaining ground as the Indian companies have successfully established their brand image in the international market. Contract manufacturing and research will play crucial role in future growth as several MNCs are taking advantage of cost effectiveness. Intensifying generic competition in international market, slower rate of development of new blockbuster drugs, patent expiration, higher cost of clinical trials and cost-cutting measures adopted by several nations will generate additional interest to shift business operations in India.
Major MNC pharma companies are buoyant over investing in India. In the last six months or so, MNCs who have shown interest to invest in the country include companies like Merck & Co, BMS, Astra Zeneca, Chiron Corporation, Daiichi, Eisai, Teva, Ivax, Pliva and Apotex. The investments are being made in the areas like contract research, clinical research, discovery research, marketing, and manufacturing.
The companies are eyeing the cost competitiveness of the Indian market without compromising the quality aspect. There is also the important aspect of India implementing WTO regime post 2005. India, with its varied genetic pool and naïve population is once again a favorite destination for clinical research.
These companies are looking at the option of setting shops in India as they view the country as a cost effective yet qualitative destination for doing research to support our drug discovery channel. Merck has awarded discovery research contracts to Indian CROs like Chembiotek Research International, GVK Biosiences, Syngene, and Sanmar Specialty Chemicals.
Daiichi Pharma Co, Japan has also set up a marketing office in the country for marketing the company's innovative pharmaceutical products in India. The company is also looking for partners in contract research in India. In future, when the IPR regime is fully implemented, the company is planning to set up manufacture base in India for its key anti-cancer and anti-infective products.
AstraZeneca International is planning to invest around $ 35 million during the next five years in its Bangalore-based India subsidiary AstraZeneca India. The investment will be mainly utilised in its tuberculosis research programme at AstraZeneca Research Centre (AZRC) in Bangalore and for the purpose of conducting clinical trials in India for the new molecules discovered at the company's research centres in US and Europe. The company is also planning to conduct clinical trials in India for eight new molecules in the areas such as oncology, respiratory diseases, diabetes, and neuropsychiatry. International vaccine major Chiron Corporation has commenced full-fledged marketing operations in the country.
Besides these pharma majors, international CROs have also initiated the process of setting up their bases in the country. Kendle, a US-based CRO has already set up its office and is in the process of commencing operations in the country. Other international CROs like Icon, Pharmolam, Pharmanet, PPD Pharma Company, and Omnicare are looking at expansion in India.
The Tokyo-based $4.5 billion-company, Eisai Co, Ltd has established its pharmaceuticals marketing subsidiary, Eisai Pharmaceuticals India Private Ltd (EPIL) at Mumbai during October 2004. EPIL is planning to sell and promote pharmaceuticals developed by Eisai including Aricept, an Alzheimer's disease treatment, and Aciphex/Pariet, a proton pump inhibitor, and other pharmaceuticals.
The newly established subsidiary company will establish a production-cost structure that enables the company to operate in the pharmaceutical market in India, and will provide a stable supply of quality products and appropriate product information for safe and proper usage to meet the medical needs of Indian patients.
MSD Pharmaceuticals, an Indian arm of Merck & Co, USA, has introduced Zienam, a broad spectrum antibiotic in the Indian pharmaceutical market Zienam is a highly effective drug in the treatment of patients who have developed resistance to antibiotics. MSD Pharma is planning to invest in sales, marketing and research operations. MSD is establishing an Indian medical and clinical research division which will co-ordinate research projects with clinical investigators in India's leading hospitals and universities.
According to estimates, manufacturing in India could be done at one-fifth of the US, and one-third of European costs. R&D could be done in India at one-third of the US & European costs, whereas clinical research could be done at one-fifth of western costs.
Currently there are ten listed MNCs viz GlaxoSmithKline Pharmaceuticals, AstraZeneca Pharma, Pfizer, Aventis Pharma, Abbott India, Merck, Solvay Pharma, Novartis, Fulford, and Wyeth Ltd in India. These companies consolidated their position and now set to launch new patented products in the country.
It is interesting to see how the MNCs are growing in India with significant growth in profitability. The eight multinational pharmaceutical companies operating in India with year ending during Nov-Dec 2005 posted mixed trend in respect of profitability. Although the net profit of these companies has taken a jump of 22.1%, thanks to extra-ordinary items, the profit before interest, depreciation taxation and other adjustment improved only by 9.3%. AstraZeneca Pharma, GSK and Pfizer announced strong performance, but Aventis Pharma, Abbott India and Solvay Pharma failed to generate positive growth and put pressure on aggregate working of MNCs in 2005.
The net sales of eight MNCs viz., Abbott India, AstraZeneca Pharma, Aventis Pharma, Fulford (India), GlaxoSmithKline Pharma, Merck, Pfizer, Solvay Pharma increased only by 9% to Rs 4233 crore during the year 2005 from Rs 3885 crore in the previous year. Another two MNCs, i.e. Novartis India and Wyeth are ending their years in March and not taken in sample. Out of eight MNCs, AstraZeneca, Fulford (India) and Solvay Pharma achieved double-digit growth in net sales during 2005.