India’s Active Pharmaceutical Ingredient (API) industry with its reputed track record of supplying quality products coupled with complex synthesis capabilities, is increasing its participation in the supply of late stage intermediates to innovator companies the world over. Ind Swift Laboratories Ltd (ISLL), a leading global player in APIs and advanced intermediates , in line with its strategy of transforming its business with focus on regulated markets, is in the process of developing products that are expected to go off-patent in the US and European markets post 2012. N R Munjal Vice Chairman and Managing Director Ind Swift Laboratories Ltd, in an email interaction with Nandita Vijay, gives an overview of the API industry in India and the company’s key strengths in the space . Excerpts:
How would you describe the growing role of APIs in India and global markets?
The Indian API or bulk drug manufacturers are gaining traction in the global pharmaceutical supply chain with increasing presence in synthesis and manufacture of late stage intermediates and APIs. Traditionally, innovators have frequently opted to perform final stages of API synthesis in-house or partner with specialized European suppliers while outsourcing early stage intermediates to Indian manufacturers. However, in recent times, the reputed track record of Indian companies in supplying quality products coupled with complex synthesis capabilities has enabled increasing participation in supply of late stage intermediates to innovator companies.
The domestic bulk drug industry is poised to benefit from the impending patent expiries in the regulated markets including many blockbuster drugs leading to increase in generic penetration; thereby providing a significant opportunity for supply of APIs to manufacturers of such generic drugs coupled with increased outsourcing of bulk drugs by multinational pharmaceutical companies
What are India’s prospects in the global markets?
India's pharmaceutical industry is now the third largest in the world in terms of volume. Its rank is 14th in terms of value. Between September 2008 and September 2009, the total turnover of India's pharmaceuticals industry was US$ 21.04 billion. The domestic market was worth US$ 12.26 billion. As per a report by IMS Health India, the Indian pharmaceutical market reached US$ 10.04 billion in size in July 2010. A highly organized sector, the Indian pharma industry is estimated to be worth $ 4.5 billion, growing at about eight to nine per cent annually to reach US$ 55 billion in 2020 from US$ 12.6 billion in 2009. This was stated in a report title "India Pharma 2020: Propelling access and acceptance, realizing true potential" by McKinsey & Company. In the same report, it was also mentioned that in an aggressive growth scenario, the pharma market has the further potential to reach US$ 70 billion by 2020
Due to increase in the population of high income group, there is every likelihood that they will open a potential US$ 8 billion market for multinational companies selling costly drugs by 2015. This was estimated in a report by Ernst & Young. The domestic pharma market is estimated to touch US$ 20 billion by 2015. The healthcare market in India is to reach US$ 31.59 billion by 2020. The sale of all types of pharmaceutical drugs and medicines in the country stands at US$ 9.61 billion, which is expected to reach around US$ 19.22 billion by 2012. Thus India would really become a lucrative destination for clinical trials for global giants.
The Indian pharmaceuticals market is expected to reach US$ 55 billion in 2020 from US$ 12.6 billion in 2009. This was stated in a report title "India Pharma 2020: Propelling access and acceptance, realizing true potential" by McKinsey & Company. In the same report, it was also mentioned that in an aggressive growth scenario, the pharma market has the further potential to reach US$ 70 billion by 2020
What are the latest developments at Ind-Swift in the API space?
In line with its strategy to transform its business with focus on regulated markets, ISLL is in the process of developing products that are expected to go off-patent in the US and European markets post 2012 onwards. The company has filed 21 Drug Master Files (DMFs) with the US FDA and 234 DMFs with European authorities. It has so far received five and over 30 DMF approvals in the US and Europe, respectively. ISLL is developing several new products across therapeutic categories with major focus on anti-cancer, anti-diabetic and anti-psychotic in alliance with major generic companies operating in regulated markets. With focus on regulated markets and a growing pipeline of niche, complex chemistry molecules the company is well geared to enter the market with a product portfolio of over 25-30 products.
In addition to regulated markets, ISLL has presence in semi-regulated markets in Latin America, Middle East and Asia Pacific (excluding India). The company has also formed a subsidiary in the Middle East and entered into a joint venture with a company in Iran to expand its operations in the Gulf countries. Although, markets in these geographies are likely to drive growth driven by new product launches, the company’s focus is on Japanese market and evolving generics opportunities in that market augurs well. It has been present in the Japanese markets for the last four to five years and has recently received approvals from Japan’s PMDA for Pioglitazone and Risedronate. The company is working with 8-10 top generic companies in Japan and expects business to scale-up from 2013 onwards
Which are the markets these products are being exported to?
Exports, which comprise around 45 per cent of revenues are primarily to unregulated and soft regulated markets. We currently export to 45 countries. Some of the major export destinations are (Turkey, Jordan, Syria, Egypt, Iran in the Middle East; Slovenia, Cyprus, Greece, Croatia in Central & Eastern Europe, Brazil, Chile, Argentina, Columbia in Latin America and China, Japan, Korea, Taiwan in Asia Pacific. Exports would be the key growth driver going forward, as our effort is to tap the growing generics opportunity in the regulated markets of US, Western Europe which should start bearing fruit.
Which are the fast growing and lucrative markets for the APIs of the company?
ISLL is positioned as one the leading manufacturers of clarithromycin API, a macrolide antibiotic that is used in the treatment of infection caused by certain micro-organisms leading to pharyngitis/tonsillitis. The company derives nearly 30 per cent of its turnover from macrolides and generates nearly 20 per cent of its revenues from a single molecule: clarithromycin, a second-generation macrolide antibiotic.
In addition to antibiotics, other therapy segments wherein ISLL has a presence are cardiovascular that chips in 15 per cent of sales and Anti-Histamine contributes (five per cent). In the cardiovascula segment, the company manufactures mainly atorvastatin and clopidogrel, which are the leading molecules in the space and are expected to go off-patent in the near term. In fact, Clopidogrel (brand name – Plavix) is the second-largest API by sales for ISLL, contributing about Rs. 71.6 crore or nine per cent of total revenues in FY10. The product is under patent in the US and is expected to go off-patent in 2011, which is likely to result in strong growth in volumes on back of increase in generic penetration.
Atorvastatin under brand name Lipitor is the largest selling drug in the world with $ 11.4 billion in 2009. With the product expected to go off-patent in United States in the near term, the demand for Atorvastatin is expected to grow substantially as prices decline with the entry of generics.
At present, ISLL sells both atorvastatin in the advanced intermediate form and API in Eastern Europe and Latin America. In 2009-10, Atorvastatin was the third-largest product for ISLL. Besides these products the other major fastest growing products of Ind-Swift labs are Fexofenadine, Nitazoxanide, Ivabradine& Cinacalcet
What is the USP of Ind-Swift apart in this space?
ISLL’s key strengths include its leadership position in Clarithromycin API which is a macrolide antibiotic in semi-regulated markets. The company’s leading presence in certain molecules with large business are expected to go off-patent in the near term. There is scope to expand product pipeline comprising several complex, difficult-to-manufacture high-value APIs. It has established relationship with leading generic players in Eastern & Central European markets. Sizeable investments in R&D to foray into regulated markets along with significant experience of its management team are some of its strengths which sets it apart from the other API players.
What are the challenges for companies in the space?
Stiff competition, limited pricing power ,low profitability, patent & regulatory issues are the major challenges. Continuous availability of raw materials especially those which are presently imported from China are the other challenges for companies in the space.