In order to overcome the temporary challenges being faced in the market, the major Gujarat -based pharma players have taken a number of strong measures like higher investments in R&D, new product launches, brand building initiatives, business consolidation, focus on CRAMS, acquisitions and entry into new emerging markets. Moreover they have also undertaken steps to spread their wings in domestic as well as in the global arena.
The financial year 2016-17 and first quarter ended June 2017 was challenging. Performance of several pharma majors was dismal due to quality issues with US FDA, foreign exchange rate fluctuations, GST implementation, demonetization, competition, price cuts, limited approvals, geopolitical events and black swan events like Brexit referendum.
Overall the low cost generic drugs have captured higher share in the global market, especially in emerging market, on account of low cost and affordability. The demand for drugs for curing infection, pain, respiratory, cardiovascular and mental diseases increased in emerging markets. The demand is also increasing for oncology, autoimmune and hepatitis therapies. The Gujarat - based pharma majors are well set to increase presence in these therapies and world markets like US, Europe and emerging economies including Brazil, Russia, India, China and Mexico.
To overcome competition in the global markets and growth, these companies are considering mergers & acquisitions or joint ventures with major international players. This will help them to reduce pricing pressure, strengthen existing product portfolios and in development of pipeline. Additionally, new technologies will help to boost affordable product pipeline.
The Gujarat - based major companies like Sun Pharmaceutical, Cadila Healthcare, Torrent Pharmaceuticals, Alembic Pharma, Dishman Carbogen Amcis, Sun Pharma Advance Research Company (SPARC), Lyka Laboratories, Themis Gujarat and Lincoln Pharma and other relatively small companies are also investing in new expansion programmes. These companies are investing more in R&D and launching new products in lucrative markets.
Meanwhile, Claris Life Sciences, has transferred its injectables business to Baxter international Inc for an aggregate enterprise value of around US$ 625 million. Further, it has also sold its 20 per cent stake in Otsuka Pharmaceutical India Pvt Ltd to Otsuka Pharmaceutical Factory Inc, Japan, for a total consideration of $20 million.
R&D expenditure
Sun Pharma's R&D expenditure declined marginally to Rs 522 crore during the quarter ended June 2017 from Rs 531 crore in the corresponding period of last year. It worked out to 8.5 per cent of sales. Cumulative, it received final approval for 433 products and filings for 151 ANDAs await US FDA approval. It filed five ANDAs during the quarter under review and received eight approvals. Additionally, the pipeline includes 37 approved NDAs while five NDAs await US FDA approval.
While talking about the June quarter performance, Dilip Shanghvi, managing director, said, “Our Q1 performance was not good and not in line with our past performance due to the combined impact of increasing investments in our global specialty business, temporary disruption in our India business due to GST implementation, a challenging US generic pricing environment and the Modafinil settlement. We expect our performance to gradually improve in the second half of this year.”
Sun Pharma's R&D expenditure reached at Rs 2,314 crore during the year 2016-17, and worked out to 7.6 per cent of its sales. The R&D expenditure includes investments on account of funding the clinical development of its global specialty pipeline.
Cadila Healthcare's consolidated R&D expenditure during the year 2016-17 declined to Rs 562 crore from Rs 588 crore in the previous year. It undertook research activities in novel drug discovery and development at Zydus Research Center. It initiated Phase II clinical trials of saroglitazar magnesium (Lipaglyn) in the US for two indications viz. Non-alcoholic Steatohepatitis and severe hypertriglyceridemia. Its biologics R&D initiative includes 18 biosimilars (both in pipeline as well as launched ) and seven novel products (all pipeline). It completed Phase III clinical trials for one more monoclonal antibody (mAb) and applied for the marketing authorization in India. It also initiated Phase III clinical trials for one more product during the year. The company also received marketing authorization for seven additional vaccines from Drug Controller General of India and completed clinical trials for one more vaccine.
Cadila filed 45 ANDAs with US FDA during 2016-17 and its cumulative filings crossed 305 mark. It received approval for 10 ANDAs taking the cumulative approvals to over 110. It launched 15 new products in the US market. It acquired two ANDAs from Teva Pharmaceutical Industries Ltd. In domestic market, it launched over 75 new products including line extensions of which 17 were first-in-India launches.
Torrent Pharmaceutical received approval for three ANDAs from US FDA and total filing reached 91 ANDAs and 31 DMFs in the US. It filed 63 new product dossiers and 29 DMF in Europe. The company filed 912 patents for NDDS technology and drug discovery projects and innovative processes of API & formulations. So far it has received 361 patents from various countries. Its new discovery programme in therapeutic area of Psoriasis has been initiated. Another programme in Atopic dermatitis has progressed to early pre-clinical stage and programme in COPD has progressed to late pre-clinical phase. Its R&D expenditure reached at Rs 436 crore during 2016-17 and worked out to 9.8 per cent of its turnover.
Its most advanced discovery programme is the NCE for the reduction of cardio vascular risk. The Phase II clinical trial results have been encouraging and filing for regulatory approval in key markets to advance the next phase of clinical development are planned in the current year. Similarly, the Phase II clinical trials for the indication of diabetes associated heart failure in India and Europe has been completed.
It is setting up a green field integrated manufacturing facility for drug substances and drug products in oncology. The phase I has installed capacity of onco oral solid dosage facility of 20 million tablets, seven million capsules and ophthalmic dosage (three pieces) 10 million bottles per annum. The company has setup an additional capacity of 400 crore tablets at its Sikkim facility and commenced commercial dispatches from additional facility.
Alembic Pharma has received six ANDA approvals from US FDA during the first quarter ended June 2017 and its cumulative ANDA approvals reached at 58. It filed six ANDAs during the quarter and cumulative ANDA filing reached 101. The company had invested Rs 450 crore in R&D during 2016-17 as against Rs 356 crore in the previous year. It is actively working on more that 260 projects across its two R&D centres and expecting to file 30 ANDAs annually.
Recently, Alembic received US FDA approval for olmesartan medoxomil and amlodipine tablets. The approved ANDA is therapeutically equivalent to the Azor tablets of Daiichi Sankyo Inc. Olmesartan medoxomil and Amlodipine tablets are indicated for the treatment of hypertension alone or with other antihypertensive agents to lower blood pressure.
M&A, joint ventures & alliances
Sun Pharma has recently acquired the US based Krystal Biotech Inc., a biopharmaceutical company, for a consideration of US$ 7 million. Krystal Biotech is using gene therapy to develop treatments for patients suffering from rare debilitating disorders.
Further, Sun Pharma's wholly-owned subsidiary has entered into strategic long- term manufacturing tie-up for Tildrakizumab with Samsung BioLogics. The approximate value of the contract was around US$55.5 million. Tildrakizumab has the potential to help control the pathogenic cells responsible for the inflammatory process of psoriasis with limited impact on the rest of the immune system.
Cadila Healthcare acquired Sentynl Therapeutics Inc, a US based specialty pharma company during 2016-17. Further, it also acquired six trademarks from Organon India (Pvt) Ltd and Merck Sharp & Dohme BV to strengthen the presence in men's health, women's health, wound management and cardiovascular therapy areas. It also acquired a few trademarks from AstraZeneca group during the year to strengthen the presence in anaesthesia, gynaecology and anti-infective therapy areas. Its wholly owned US based subsidiary Zydus Pharmaceuticals (USA) Inc, has made strong presence in the US and is spreading its business.
Cadila Healthcare has setup two 50:50 joint ventures with Takeda Pharmaceuticals Co Ltd, Japan and Hospira Inc., USA (now part of Pfizer group). Zydus Takeda is manufacturing a gamut of generic APIs covering various therapeutic categories and exports exclusively to the JV partner for its generic portfolio. The company has also entered into out-licensing and distribution arrangements for biosimilars in certain emerging markets like Turkey, Russia, Indonesia and Columbia.
Cadila is operating 32 manufacturing facilities across the globe, 27 of them located in India, three in the US and one each in Brazil and Germany.
Torrent Pharma acquired Regestrone and Pregachieve brands for India from the global pharma player Novartis AG during May 2017. These brands are widely prescribed by gynaecologists for the management of abnormal uterine bleeding, peri & post-menopausal symptoms and infertility.
The company has acquired the API manufacturing unit located at Vizag during 2016-17 which is approved by the US FDA and the European regulatory authorities. This facility is a multi-product facility with a capacity to manufacture advance intermediates and active pharmaceutical ingredients. The acquisition will help the company in vertically integrating its ANDA filings in the future.
Alembic Pharma's Rs 300 crore anti-cancer manufacturing facility at Panelav, Halol was inaugurated during 2016-17. The plant has an initial manufacturing capacity of 60 million tablets/capsules and approximate 20 million vials of liquid injetable and lyophilized concentrates. This facility is designed with containment control automated standards & major equipment were imported like BOSCH from Germany, GEA from Belgium, Alexanderwerk from UK, ICOS from Italy, Tofflon from China.
The company has promoted a joint venture- Aleor Dermaceuticals Ltd with Orbicular Pharmaceutical Technologies Pvt Ltd. This alliance has increased its dermatology pipeline to 45 molecules. It is also setting up a greenfield manufacturing facility for dermatology products which is likely to go on stream by the second half of FY18.
Thus investments in R&D, expansion, higher product filings, entry into new markets and launch of new products will help to overcome present problems. Further, ageing population and life expectancy, rising income and changes in lifestyle, accessibility and affordability, growing chronic diseases etc, may lift demand.