Indian active pharmaceutical ingredients (API) industry is hurtling fast to the centre stage through making use of the very best of quality standards as well as filling into the supply gap created by the recent adverse incidents with the Chinese AP sector.
The Indian companies have a number of US Food and Drug Administration (FDA) and European Directorate for the Quality of Medicines and Healthcare (EDQM) approved manufacturing plants in their kitty, ensuring the quality control standards of the western pharma clients. Industry experts consider it as the major factor of the industry's growth. Besides, the industry also expects that the recent aspersions cast on the Chinese chemical industry by the quality conscious regulated markets will become a boon for the Indian bulk drug firms to cash in on contract manufacturing and research sector in the long run.
"Where the API industry in India is having its edge is the regulatory and environmental compliance capability. If our benchmark is European standards, which is the most stringent on quality standards, the Indian companies are getting more and more close to the European quality standards," say Smitesh Shah, chairman and managing director of Mumbai-based Calyx Chemicals and Pharmaceuticals Ltd.
In the recent past, a large number of companies have scaled up their operations in order to meet both the domestic and the export demands. All the companies dealing with bulk drugs are becoming cost competitive without compromising the quality standards. The Indian companies are increasing the use of automation in all parts and this is actually making the players in the country more competitive in the world market, commented Shah.
"Many of the Indian companies are currently focusing on building up facilities which comply with quality standards of the most regulated markets. The quality standards complied with good manufacturing practices and the cost effective process re-engineering and process innovation are the key factors which lead the Indian manufacturers in the near future," according to Shaharsh Rao, vice president - corporate and planning with the Hyderabad-based Neuland Laboratories. He added that with these specifications, more pharmaceutical manufacturers from regulated market are expected to come forward to tie-up with Indian companies in bulk drug manufacturing sector.
The API players have to go forward with the quality upgradation process and should focus on speciality segments to win the global market, comments Prasad Mangipudi, vice president - API sales, Aurobindo Pharmaceuticals Ltd, Hyderabad. "The Indian companies should focus on improving quality standards of their facilities so that they should not have to face a quality related issue in the regulated markets even in future. The companies should also create an economy subscale to develop core competencies in niche areas and speciality products to hold the market share," he added.
According to the Bulk Drug Manufacturers Association (BDMA) officials, the Indian API industry is currently estimated at Rs14000 to Rs15000 crore (US $3.5 billion approx.) and is growing at a rate of around 30 per cent. Even as the many of the companies are confident of their strength in quality compliance and customer care measures, the Indian bulk drug industry is importing almost 70 per cent of the intermediates and 20 per cent of bulk drugs from the bulk drug capital, China.
As a result, with the Chinese government imposing strict environmental regulations on the chemical factories in the country prior to Beijing Olympics 2008, the Indian companies both in formulation manufacturing and bulk drugs industry are in apprehension on shortage of pharma raw materials in the country in the coming few months. The increase in cost of raw materials due to the rocketing of crude oil and the stringent regulations in China has also made the Indian companies in a fix, with the strict price control norms in the country blocking any sudden increase in drug prices.
However, some sources from the industry foresee the issue as an opportunity for India to retrospect upon the drawbacks of the Indian API industry. "The Beijing Olympics has brought realty check on the internal regulatory affairs of China, thus giving a major leeway to the Indian pharmaceutical industry," responded Vinod Chitalia, CEO, Lifeline Industries Limited, Mumbai.
According to Shah, who is the vice chairman of Pharmaceutical Exports Promotion Council (Pharmexcil), the government has already prepared a concept paper analysing the drawbacks of Indian industry in becoming a global major in pharmaceutical industry. The government may soon put forward a proposal for public-private partnership to increase the production of quality APIs and intermediates in the country.
"With our standards becoming closer to the European standards, there will be a fully developed hybrid model which make the US and European companies interested to collaborate with India. Once the backward integration being completed, the outsourcing activities in API sector are definitely going to lead the industry," said an industry source. Meanwhile, the industry sources also comment that the Indian companies should focus more on the innovation and re-engineering chemistry part of the API sector, while China will remain as the leading bulk drug manufacturer for several years with their huge manufacturing capacity.
Meanwhile, the API companies across the board in the country are preparing themselves to file more number of Drug Master Files (DMFs) with US FDA. For instance, approximately US $80 billion worth products are expected to go off patent in the coming three to five years. This is for the first time in the past several decades that such a large chunk of generic opportunity is opening for the generic manufacturers. The Indian companies, including the major players like Dr Reddy's and Aurobindo Pharma are looking forward to redeem their share from this business.
Reports show that the leading companies like Dr Reddy's, Aurobindo, Cipla and Matrix have more number of filings out of the total of more than 1500 DMF filings by Indian pharmaceutical companies. Meanwhile the recent incident in which the Indian major Ranbaxy laboratories was booked by the US FDA on alleged fabrication of data on drug filings has increased the vigil of the American regulator on the Indian manufacturers.
"The US FDA is likely to put pressure on the Indian companies based on the issue in the coming years and we should be ready to face these inspections with blocking all the loopholes in quality standards," commented a source from a major pharmaceutical company.
The growth in the size of generic market in European countries and Japan also lures the generic oriented Indian firms to file more molecules for regulatory approvals in these countries. Along with this, the increasing domestic demand due to the cost cutting efforts of the Indian formulation manufacturers will also support the bulk drug industry in India to grow high, added sources.