The Indian API industry, which is known for its technological strength, processing skills and cost cutting, would be one of the major beneficiaries of the growth of global generic market, according to industry sources. Currently, the API industry in the country is worth more than Rs 8000 crore ($2 billion), according to Bulk Drug Manufacturers Association (BDMA) officials. BDMA is the country's single exclusive consortium of API manufacturing companies.
"The capacity of the industry to produce APIs for its own consumption and for exports is a good measure of its strength and maturity," noted Dr Y K Hamied, chairman and managing director, Cipla Ltd, in a recent article.
The global API market with a growth rate of 7.5 to 10 per cent would open up nearly Rs 48000 crore ($2 billion) market for Indian bulk drug manufacturers in 2015, says Satish Khanna, group president-API, Lupin Ltd. In a recent specialty chemicals conclave at Mumbai, he said that the API and fine chemicals industry in the country offers more than $20 billion (approx Rs 80,000 crore) opportunity, with $10 billion (approx Rs 40,000 crore) potential for domestic supply and another $10 billion in global API market. The global API market has the potential to grow from around 48 billion to 80 billion in 2015, he added.
A study conducted by Cygnus Business Consulting and Research published in 2007 depicted that the Indian bulk drug market is fragmented with top 10 companies contributing 44 per cent of the market. There are about 1,323 companies accounting for the balance 56 per cent. According to the study, nearly 70 per cent of the bulk drugs manufactured is exported to more than 50 countries.
Leading the flock
The major Indian API companies are intensively exploring the regulated market with more regulatory filings and alliances with global majors in manufacturing and marketing APIs. The companies are also keenly following the research pipeline to bring in new chemical entities (NCEs) in an effort to win the global market.
The increased frequency of drug master file (DMF) submissions by the Indian companies is an epitome to the interest of domestic players in the regulated markets.
According to the information available from US Food and Drugs Administration (FDA), Indian companies have almost 1500 DMF submissions out of more than 8500 total drug master filings with the administration.
The report available from industry sources show that the leading companies like Dr Reddy's, Aurobindo, Cipla and Matrix have more number of filings out of the 1171 DMFs filed with US FDA till December 2006. While Dr.Reddys top the list with 103 DMFs (9 per cent of the total filings carried out by India), Aurobindo ranks second with 99 DMFs (8.5 per cent). Cipla with 87 filings (7.4 per cent) and Matrix with 71 DMFs (6 per cent) occupy the third and fourth positions, respectively.
"Patent expiry is a potential opportunity for Indian API sector," says Prashant Tewari, managing director, USV Ltd. "We are planning to come up with 10 important APIs in the next five years as soon as the patents of these products expire," says this decision maker for the leading company in metformin manufacturing. Supporting Tewari's comment, the API and formulations major Dr Reddy's Laboratories noted: "In view of the number of patent expiries coming up in the near future, sales of patent expired drugs in US as well as in Europe represent significant opportunity for all generics and API manufacturers."
While the pharma majors were on a spree to bring in business from overseas companies, some of the Indian companies have over past several years strategically developed expertise in manufacturing APIs and formulations to offer the entire range of products in a basket. Many of these companies have excelled in production of certain bulk drugs to satisfy the needs of global pharma market. For instance, according to a WHO report (2007) on antiretroviral (ARV) bulk drug sources, the major suppliers of APIs in the world includes the Hyderabad-based Aurobindo Pharma Ltd, Matrix Laboratories and Hetero Laboratories with comprehensive product baskets.
These players offer abacavir, didanosine, efavirenz, indinavir, lamivudine, lopinavir, nelfinavir, nevirapine, ritonavir, saquinavir, stavudine and zidovudine in one basket for the global clients. The list also reveals that the other companies that have product ranges next to these Indian companies are the China-based Mchem Laboratory and Zhejiang Huahai.
Apart, some of the Indian companies have also placed themselves as top producers of bulk drugs in certain therapeutic areas. The Mumbai-based Lupin Ltd is the largest manufacturer of anti-Tuberculosis (anti-TB) drugs and APIs, including ethambutol, rifampicin, rifamycin and pyrazinamide, while USV Limited is the largest generic manufacturer of anti-diabetic metformin worldwide. USV currently occupies 30 per cent of the total metformin market, which is growing at a rate of 8 to 10 per cent per annum.
Incorporated in 1981, the Hyderabad-based Virchow Laboratories Limited is the largest producer of Sulfamethoxazole, which is used to treat a broad range of infections in the world. The company claims that it satisfies more than 80 per cent of the worldwide Sulfamethoxazole requirement from its facility. The Chennai-based Malladi Drugs and Pharmaceuticals Ltd is the largest manufacturer of Ephedrine and Pseudoephedrine salts in cough and cold API segment.
Alliances & buyouts
The alliances of Indian companies with foreign partners in the recent past illustrate the advances of domestic firms in this regard. Several overseas companies are ready to partner with India in various levels of manufacturing and testing the APIs.
Some of the latest deals include agreement between the Mumbai-based Hikal Ltd and the global pharma major Pfizer Inc and multi-year contract between the Mumbai-based Arch Pharmalabs and the Dutch ingredients firm DSM Anti-Infectives to manufacture generic APIs.
What can be termed as the latest in the list, Swiss-based Nycomed decided to transfer its bulk drugs manufacturing from its Austrian and German units to India by amending provisions of an existing joint venture (JV) with Ahmedabad-based Cadila Healthcare Ltd - Zydus Nycomed Healthcare Pvt. Ltd. The JV was amended on this regard in the first half of March 2008. This would bring in manufacturing of 18 APIs from Nycomed to the Indian manufacturing facility of the JV company. The JV company was set up in 1999 at Navi Mumbai to manufacture key starting materials for the production of Pantoprazole, which is used to treat heart burn.
The number of Indian companies pursuing acquisition in US, European Union countries as a back-end support for its business in the regulated market is gradually increasing. In 2006, Nicholas Piramal India Ltd (NPIL) acquired an integrated API and formulations site of Pfizer Inc at Morpeth, UK. The company has also re-aligned its strategy on the facility, with restructuring the manpower recently.
While Indian companies are investing further in existing facilities and some of the majors trying to set up operations in developed countries, the overseas firms continue to line up for Indian operations and acquisitions. The acquisitions took place in 2007, for instance the buyout of two manufacturing facilities in Maharashtra by the US-based Albany Molecular Research, Inc (AMRI) and take over of the API division of Chennai-based Sanmar Specialty Chemicals by Iceland-based Actavis Group, asserts role of Indian API players in global pharmaceutical market.