The Indian active pharmaceutical ingredient (API) industry is pulling out all stops to tap the emerging opportunities in the global markets by developing novel APIs through collaborations and entering into contract manufacturing agreements.

Valued at US$ 120 billion, globally there are around 7, 000 APIs of which US share is 45 per cent. India has over 2,000 API manufacturing units producing nearly 1,500 APIs, which is estimated at US$ nine billion. Out of this nearly 50 per cent is for export. India has the opportunity to grow this business and increase its global market share. Indian pharma industry is the front runner in science sectors. The key strengths of the Indian industry are the sound knowledge of chemistry , access to competent and technologically sound work force, which has enabled it to gain a strong foothold in the global API market.

Now with the government of India efforts to focus on a ‘Made in India’ strategy, the API industry is all poised to reach the desired levels of growth by 2020 .

The API industry would see a further boost in terms of developing a strong product pipeline with the arrival of poly pills. There are several Indian API players engaged in advanced research of the active ingredients used to produce a combined tablet for blood pressure and cardiovascular disease. But since these companies are in the process of applying for patents, no details can be disclosed at this stage, said Anjan K Roy, managing director, RL Fine Chem and member Karnataka Drugs and Pharmaceutical Manufacturers Association.

Further, there is also a big opportunity for Indian APIs to manufacture Angiotensin II receptor antagonists or sartans used in drugs for hypertension, diabetic nephropathy and congestive heart failure. Some of the APIs are osartan, candesartan, irbesartan, telmisartan, olmesartan, valsartan and eprosartan. India also has the expertise in dermatology and dental APIs. Therefore by 2020,the Indian API industry could compete with China head-on and be a preferred partner for global players in the space, said Roy.

In 2013, Biocon’s US FDA-approved API Cymgal provided an edge in post-transplant antiviral agent market. The company has developed a US Food and Drug Administration (FDA) grade API. The company is the only player in the country with a US FDA API other than the drug innovator Roche.

In February 2012, Hikal Pharmaceutical manufacturing site in Gujarat received the US FDA approval for its pharmaceutical intermediates and API manufacturing site located in Jigani, Bengaluru.

Another company based out of Kakinada in Andhra Pradesh was Tyche Industries which received EU-GMP approval from German Regulatory Authority for 11 APIs.

The industry is now in an enviable spot and is striking to corner the orders coming in from the patent expiry drugs valued at over $60 billion. The companies are also looking to garner a substantial share from the regulated markets of the US and EU which are facing increasing pricing pressures due to presence of low cost providers in developing markets, excess big pharma capacity, and backward integration by certain generic companies.

Beginning from 2013 , there are a slew of new regulations introduced : from the USFDA recent norms on Regulatory Classification of Pharmaceutical Co-Crystals to the EMA guidelines on exposure limits for production of varied medicinal products in shared facilities and the Central Drugs Standard Control Organisation (CDSCO) the guidance document for the issue of Written Confirmation (WC) certificate for active substances exported to the European Union (EU) for medicinal products for human use, in accordance with Article 46(2)(b) of EU Directives No. 2001/83/EC.

In fiscal 2013-14, the API sector constitutes over Rs. 65,000 crore of the Rs. 130.000 crore Indian pharma industry. Some of the key players are Ranbaxy, Dr. Reddy’s, Granules, Hikal, Lupin, Cipla, Indoco Remedies, Glenmark Wockhardt, Lake Chemicals Pvt. Ltd., Shilpa Medicare, Torrent, Indoco Remedies, Orchid, Aurobindo Pharma, Strides Arcolab-Sequent ,Biocon, Aarti Industries, IndSwift Pharma, Micro Labs, Bal Pharma, RL Fine Chem, Apotex, Bairy Chemicals, Juggat Pharma and Resonance Labs.

According to D&B Research, the Indian pharmaceutical industry is fragmented with more than 10,000 manufacturers in the organized and unorganized segments. While 77 per cent of these are engaged in production of formulations, the remaining 23 per cent are in the API space. Overall growth outlook for the Indian drugs and pharmaceutical industry appears positive.

API manufacturers are likely to benefit as market dynamics have undergone a major change. The patent expiry provides a significant opportunity for supply of APIs to manufacturers of generic drugs. There are also increased opportunities in outsourcing of bulk drugs by multinational pharmaceutical companies. These opportunities have led the Indian API industry to focus on core competencies and access to novel technologies, said the ICRA report.

The global economic slowdown now increased the growth possibilities particularly for API from the emerging economies such as India and China The recession has restricted the growth of Innovative sector in developed economies such as the U.S and Europe, which has helped to fuel the growth in the in these markets, said Anjan K Roy.

“ The role of Indian API manufacturers in the global pharmaceutical supply chain is gradually evolving 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 specialised 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, ICRA report added.

The API market is facing a period of exceptional growth because of patent expiry factor is slated to drive the revenues, said GG Gurudatta, CEO, Estima Pharma

According to Deloitte in its report on Life Sciences Outlook ‘ Optimism tempered by reality in a new normal’, the companies are altering their business models as they are increasingly sourcing APIs from low-cost locations globally. However, monitoring the quality of these APIs is difficult and thus, a cause for concern.

Going by the slew of new regulations coming in the USFDA, European Union and MHRA, and the Drugs Control General of India also ensuring that APIs quality are maintained, Indian pharma is confident to take on the global markets with more vim and vigour, said members of the Karnataka Drugs & Pharmaceutical Manufacturers Association.

In order to tap the upcoming opportunities, the Indian API industry has also turned to environmentally friendly production processes. There are several efforts to go green, reduce carbon footprint and reduce electricity consumption and water. The companies have also measures in place to decrease hazardous waste. Research is on improve the processes, bring down waste from API synthesis, going in for fewer chemical reactions to dispose-off solvents and look for efficient means to improve and save the environment.

Leading API manufacturers such as Merck, AstraZeneca and GlaxoSmithKline are also moving away from multifunctional plants and instead opting for specific activities at specific sites. In this way, there are serious concerns as to how any centralized control could function as after all an API manufactured by one company, in one country, with the excipient manufactured in another by a different company, then packaged and distributed by another company altogether makes the route rather difficult to monitor or control according to a report.

There is also the focus on developing High Potency Active Pharmaceutical Ingredients (HPAPIs). There has been a paradigm shift in the use of innovative drugs to that of low-cost API drugs after the economic recession, thereby causing a positive impact on the overall growth of the API market.