The active pharmaceutical ingredients (API) industry in India is now looking to seize a sizeable share of the rapidly growing international market. The companies will be able to succeed in the market through quality production and research abilities
The massive plants and research centres are giving international players huge cost advantage and the access to expertise. Experts view Andhra Pradesh as the second highest in terms of pharma investment in the country.
The increasing scientific capability together with the advanced processes and state-of-the-art manufacturing plants have led to a quantum jump in the the number of Drug Master Files (DMFs) filed by the API manufacturers. In the field of contract research too, Indian pharma is known to support customers with DMFs for their dosage form approvals/Abbreviated New Drug Application (ANDA) filings. India is among the top three manufacturers of APIs in the world after China and Italy.
The size of the pharma chemicals industry is about Rs 32000 crore to Rs 35000 crore ($6.61bn to $7.23bn) of the total Rs 78000 crore ($16.12bn) Indian pharma industry. Out of the total API business, almost Rs 15000 crore to Rs 18000 crore ($3.1bn to $3.7bn) comes from exports, according to the Bulk Drug Manufacturers Association (BDMA),
The industry registered around 10 to 15% growth both in API and its exports business. The country has around 600 API manufacturing companies out of which almost 500 are members of the association, Currently over 60% APIs production are exported and this has led to mandatory filing of DMFs. India is expected to touch the $10bn market in terms of API revenues as against the targeted $4.8 million. The increasing number of Drug Master Files is a clear barometer for this achievement, according to pharma industry.
Efforts by Indian companies to file and receive ANDA approvals is a testimony to the growing research capability and the competence to fair in the global markets. This further indicates the strategy of domestic pharma firms wanting to strengthen their product pipeline for the lucrative US market. With more mid-sized companies jumping into the fray, it will lead to a fierce competition. This may eventually lead to a fall in prices, stated Kiran Mazumdar-Shaw, chairman and managing director, Biocon Ltd.
With the growing production orders, the domestic pharma industry are looking for increased international business. The semi - regulated markets account for a majority of bulk drugs exports with a 60% share. The major Indian companies are pursuing the regulated markets as a large number of products have started losing their patent protection in these countries. Therefore these companies are aggressively filing DMFs with the drug regulators in the US and Europe.
According to the Ernst & Young, the share of Indian companies in the total DMF filed with the US FDA increased to 50% in 2007 from 14% in 2000. The official figures indicate that of the 6,300 active drug master files, 26% or 1,700 are from the Indian companies.
Currently pharma chemicals manufacturing units are third largest in the world after China and Italy.
The major reasons for this accelerated growth is ability to make entry into the international market more so the stringent regulated regions like US and Europe. Many companies are already US FDA and EU certified, stated Anjan K Roy, president KDPMA and managing director RL Fine Chem.
The key reason for India's success in the pharma chemicals is the economies of scale in the terms of personnel cost and innovation.
In India Andhra Pradesh is a recognized API or bulk drug capital in the country. Leading companies here are Dr Reddy's Labs, Aurobindo Pharma, Matrix Labs, the holding company of Mylan US, Divi's Labs, Natco Pharma, Neuland Labs, SMS Pharmaceuticals, Granules India, Anu's Labs, Suven Life Sciences, Vimta Labs, Avon Organics,
Celestial Labs, Jupiter Bioscience and Vivimed Labs.
The Indian companies which can manufacture bulk drugs in-house at 40% to 50% of cost and had earlier highlighted low cost manufacturing and R&D facilities as their strengths, are now focusing on quality of research, development and production to move over to value- generation mode.
At the same time the focus on some of the strictly regulated markets has also posed a new set of challenges for the Indian companies. The fast growing generics market, with the increase in number of drugs going off patent till 2012 in the US, has generated huge competition between the Indian and overseas generic companies. Therefore units are chalking out plans to face these challenges.
The E&Y report identifies Ahmedabad Ankleshwar, Vapi and Vadodara in Gujarat, Mumbai, Tarapur, Aurangabad and Pune in Maharashtra, Hyderabad and Vishakhapatnam in Andhra Pradesh as major API clusters in the country. Besides this Chennai in Tamil Nadu, Puducherry, Mysore and Bangalore in Karnataka and Panaji in Goa are the other centres where API manufacturing and research companies are based.
API majors are looking to increase their share of business in the international markets.
Even though the API units are doing well, they are looking for support from the government in terms of environmental protection norms. The key reason to depend on imports of intermediates from China for formulations is because of the strict environmental laws. The manufacturing of intermediates requires large-scale chemical activities which goes against the current environment norms. At present India relies on China for almost 60 to 70% of its intermediate needs despite the competition between the two countries in API sector, according to a report.
The increasing the domestic production of intermediates will help to decrease the production cost of formulations. This could see economies of scale to the tune of around 15% of the formulations manufacturing cost compared to the current cost which includes the cost of intermediates imported from China, the report adds.
Inspite of frequent pleas to the government , no concrete action is taken upto this time to support the sector. The industry feels that incentives, subsidies or common waste disposal facilities, would help to augment production capacities by 50% over the present capabilities.
The forward looking pharma chemicals sector is now augmenting capacity in chemical engineering and quality products for becoming an effective player in the international arena.
Internal competition is quite high especially the tough competition from China . Another critical issue is that the rebate procedures are extremely lengthy and time consuming, according to Shailesh Siroya, managing director, Bal Pharma.
Key challenges for API units is to maintain the pace of new drugs in the pipeline, ensure economies of scale, IP competence, capability of scientific pool, regulatory expertise and faster turnaround. All these factors are the major drivers of contract research business in India, said Vishnukant Bhutada, managing director, Shilpa Medicare.