In terms of volume, India is world's second largest supplier of childhood vaccines and fourth largest supplier of pharmaceuticals. Similarly, the country's biopharmaceutical companies, with a focus on biogenerics (also known as subsequent-entry products / biosimilars / follow-on biologics) are on the path of attaining new highs on the global market. Besides, multinational companies are looking towards India not only for its sizable share of domestic market, but also for outsourcing research and development (R&D) and manufacturing. A strong growth potential and opportunities lie ahead for the Indian biopharmaceutical sector, notably in the biogeneric and contract research and manufacturing (CRAM) business.
The focus within the biopharmaceutical sector in India is directed more towards development of biosimilars. This is primarily because it requires much lower risk, R&D spend, time to market and the capability of biopharmaceutical companies to reverse-engineer the drug development process. Under the Trade-Related aspects of Intellectual Property Rights (TRIPS) agreement, the pre-1995 product patents do not apply in India. This leaves as many as 48 biologicals that were patented prior to 1995, marketable in India. Furthermore, for some drugs the innovators have not sought patent protection in India. It has created a strong opportunity for Indian companies to leverage the huge domestic market to their advantage and supply to other countries where these products are not patented.
Competing biogeneric cos
With an increase in the number of biogeneric companies, often launching the same biogeneric drug has intensified the competition in the biosimilar space. The companies are fiercely competing in the market, dropping their prices too fast and too soon, compelling innovator companies to drop their price within 2 to 3 years or even ahead of the launch of the first generic.
Biotechnology drugs, other than insulin, are free from Indian government's price control. Since the launch of first biosimilar product, the price has come down by 30 to 50 per cent and with reduction in product pricing the volume of sales has increased, enabling many biogeneric players to survive. Now the prices tend to stabilise and do not show significant drop with additional players entering. As of now, generics are worth between 45 to 75 per cent of the cost of innovator drugs.
Acceptance of biosimilars
India has by far demonstrated the greatest acceptance of biosimilars. This is reflected from the number of brands for each product type and their market share. Medical doctors and hospitals are prescribing biosimilars immediately after their launch, indicating that the biosimilars have established a good reputation among healthcare professionals. The acceptability of generics over innovator's brand can be further gauged from the market share of innovator vis-à-vis the generic brands. In the case of Filgrastim, nearly 65 per cent of market share (by volume) is dominated by generics. In the case of Erythropoietin, generic brands have taken 39 per cent of the market share. The values are cumulative of wholesale, retail and institutional sale, including tender sale. Similar trend has been observed on market entry of PEG-Filgrastim, where the data reflects sales in the last 9 months.
Quality compliance
To ensure equivalence of complex active ingredients such as proteins, the number of monographs for recombinant proteins is increasing. Indian Pharmacopoeia Commission (IPC) has recently introduced product specific monograph for 6 drug substances in Indian pharmacopoeia, a landmark achievement which was very essential. Companies marketing drug products made from these drug substances are required to meet the quality as per the pharmacopoeia standards. IPC is jointly working with United States Pharmacopoeia (USP) on monographs for a number of biotechnology products, which will be introduced soon in the USP.
Business model
Indian biopharmaceutical companies are now moving away from the risk free capital investment based on revenue generating growth model to a more risk oriented, less-revenue driven model primarily focused on valuation. In general, this has led to the evolution of a hybrid model which is product, infrastructure and service based as well as intellectual property driven.
India is currently the second largest manufacturer of childhood vaccines in the world.
There has been a strong rise in the exports of Indian biopharmaceutical products, recording an annual growth rate of 47 per cent in the past year. There has also been a lot of action abroad, with Indian companies acquiring, merging or investing in European biopharmaceutical companies to speed up their entry into European markets. The appetite to compete abroad is evident from the number of applications filed by Indian companies to sell their drugs overseas. In last year 37 per cent of the total Drug Master Files (DMFs) were filed by India, the largest share of any country.
With over 130 domestic biopharmaceutical companies, many of which are fully integrated, the global market for Indian biopharmaceutical companies have touched $1.5 billion in revenues in 2006 at a CAGR of 27 per cent. Factors influencing rapid growth include large population with high consumer base comprising middle and upper income groups. One third of this group can afford private healthcare and specialty therapies, making India the eleventh largest pharmaceutical market in value terms. Also included are factors such as regulatory and health care reforms (22 per cent increase in government spend, 200 clinical trial approvals in last 3 years) and the enforcement of the product patent regime in 2005.
Measures that are fueling rapid growth of the biopharmaceutical sector include:
■ Increase in the set up of partly public-funded biotechnology incubators and parks
■ Increase in the private venture capital, fiscal incentives and tax benefits for R&D and exports
■ Streamlining of regulatory pathway and reduction in the approval time by various regulatory agencies
■ Active role of Indian Pharmacopoeia in issuing product specific monographs
■ Increased penetration of private health insurance
■ Increase in the burden of diseases (especially lifestyle diseases)
■ Increase in per capita pharmaceutical spend
■ Modernisation and integration of patents and other intellectual property offices with adoption of electronic filing system
Backed by these favourable changes along with strong business opportunities on the domestic front, biopharmaceutical companies in India are becoming bullish, with both the push and pull factors working in their favour. This is evident from the fact that 8 out of top 10 biopharmaceuticals in India are "home-grown" companies, which are fast making their mark on the global scene. Besides, some biotechnology companies are also building capabilities to expand their contract research and manufacturing services (CRAMS) business for the regulated and non-regulated markets.
(The author is director, quality and strategic research, with Intas Biopharmaceuticals Ltd)