With the Prime Minister’s Office thrust for a dedicated ministry for pharmaceuticals and medical devices, the need of the hour is to ensure a conducive and transparent working environment for the pharma industry to succeed. Favourable policies for infrastructure, taxation and incentives are on the cards, said the Union chemicals, fertilizers and pharmaceuticals minister Ananth Kumar.
The Katoch Committee report on active pharmaceutical ingredients (APIs) is now before the Cabinet and the PMO has been urged to take it up on priority, he added.
However the minister’s statement that the Katoch Committee report on APIs has been placed before the Cabinet for approval has evoked a guarded response from the pharma industry. The industry representatives have expressed surprise and stated that a few recommendations of the Katoch Committee required clarifications.
Various industry associations had submitted their views because they felt that the Katoch Committee report mainly focused on large API units. “The small and medium enterprises(SMEs) are apprehensive about the cluster development initiative by the Union government for the APIs. The main worry is that government is looking at setting up clusters in inaccessible regions. It would cause transport and logistics pressures leading to losing out on cost-efficiencies and keeping up delivery timelines.”
“The government will now need to put in place a mechanism for the SMEs to get the full benefit of the Katoch Committee report on APIs. In fact, it is the SMEs that are the backbone of the pharma industry manufacturing landscape and therefore they cannot be ignored, Dr. Subhash C Mandal, assistant director, Directorate of Drugs Control, government of West Bengal and president, Indian Pharmaceutical Association Bengal Branch told Pharmabiz.
Recently the Indian Pharmaceutical Association had communicated to the Union government that while it insisted for the speedy execution of Katoch Committee report, it has emphasized for assistance to Brownfield projects and bulk drugs manufactured through intermediates that are not imported among others requirements.
The minister pointed that when Indian pharma accounted for every third tablet exported to global markets, its high quality contents were for prime importance. India has been exporting to all the 200 countries in the world and accounted for the highest USFDA audited plants.
Further, the minister propagated the maxim of 3As : authenticity, availability and affordability for the pharma industry to continue to strive to make a mark in the global and national arena. Efforts from the government are on to bring all the 18 therapeutic areas including cardiac, diabetes, respiratory, dermatology, hypertension, AIDS/HIV to be included into the DPCO (drug price control order )basket for poor patients in the country.
Stating that the pharma industry had a big role to play in the area of health security, Ananth Kumar pointed out that by following the rule of 3Ds: drug discovery, bulk drugs and medical devices, the sector will now need to move towards new engineering than re-engineering of drugs, work to bring down imports of bulk drugs from the current 60 per cent and adopt the concept of clusters and parks to bring down cost of product of medical devices by 30 per cent. Only if these sectors were brought under one roof, they could maximise the advantage of effluent treatment plants and power cost to save on manufacturing expenses.
Sunil Attavar, president, Karnataka Drugs and Pharmaceutical Manufacturers Association and managing director, Group Pharmaceutical Ltd, said that the major development for the state pharma is that its pharmaceutical policy which now comes under the state directorate of industries and commerce is expected to incorporate certain needs of the industry. With the government identifying Hassan and Mangaluru for the Pharma Park, events like the just concluded India Pharma 2016 early this month and the Invest in Karnataka 2016 meet from February 3-5,2016 were considered as ideal platforms to attract promising investors to set up facilities in the state.
More over the Karnataka government had also stated that it was looking at Yadgir district for bulk drug production and another location which is around 60-70 kilometres away from Bengaluru for formulation manufacture. These infrastructure development initiatives together with the state’s access to talent pool would surely bring Karnataka to the limelight.
The global market for APIs in 2013 was estimated at US$ 119.7 billion and is projected to grow at a CAGR of 6.5 per cent to a value of US$ 185.9 billion by 2020. The Asian contribution to the API industry is shared between India:33 per cent, China: 61 per cent and others:six per cent.
In the recent past, drastic in-house manufacturing cuts implemented by the pharma giants because of poor cost viability and increased productivity issues coupled with other key parameters such as high-end R&D costs and pricing issues on finished formulations have resulted in a thrust to outsource API production.
The highly profitable biological API segment is experiencing positive spikes driven by an interest evinced by the Big Pharma. Similarly oncology API comprising of high potency active pharmaceutical ingredients (HPAPIs) are expected to be a major growth drivers worldwide. There has also 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.
Furthermore, the API scenario is anticipated to show further traction in response to the evolving regulations in the markets of North America and Europe. Consequently, the gear for growth opportunity in API manufacturing segment is shifted from local markets to the second in-line emerging markets of India and China. Given their overall dominance in intermediates and API manufacturing, Chinese players can pose a serious competitive threat to their Indian counterparts, much beyond the APIs for essential drugs.
In order to keep abreast with these changes, API manufacturers are adopting novel technologies to reduce the processing time in order to yield more production. The HPAPI compounds are highly effective due to the targeted therapy. Hence, its application for cancers is a major driver. The market of North America is the largest and accounts for major share followed by Europe. But Asia is growing at a higher CAGR as compared to North America & Europe.
Indian pharma industry sees this as an opportunity as the country is known for its economical pricing and expertise supported by the large plants which have global regulatory compliance, stated industry observers.
Globally, the API industry is entering a new growth phase. From new regulations to patent expiry and Para IV focus, the API industry is experiencing unprecedented growth due to the escalation in market dynamics of competition and consolidation.
API companies will need to focus on manufacturing efficiencies and building partnerships with customers in order to succeed, according to a section of industry manufacturers across all markets of US, EU, Japan and the Asia-Pacific region.
Indian API companies like Aurobindo, Hetero Drugs, Granules, Lake Chemicals, Lupin, Divi Labs, Mankind Pharma, Shilpa Medicare, Hetero, Malladi, Dr. Reddy’s, Micro Labs, Bal Pharma, RL Fine Chem, Biocon among others are realizing and exploiting the potential of the US and the European market with a slew of products.
Valued at around 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$ 9 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. In 2014-15, the export revenues that ensued from the pharmaceuticals is estimated at around US$12 billion and is seen to increase to around US$20 billion by 2020.
The big advantage for Indian API industry in the global arena is the cost competitiveness. In India the expertise is high, based on the chemical acumen of its scientific talent. The contract manufacture and research services in India has taken off where companies like Anthem Biosciences and Syngene, a Biocon subsidiary and Jubilant in India have proved their as know-how compared to the Western countries, noted experts.
“From a global perspective, the API capability of India cannot be ignored. We account for the highest number of USFDA facilities pegged at 546 and EMA approved units besides other global regulatory agencies from Japan and Australia which enables it to take a big leap in terms of grabbing opportunity. Even though the country’s volume of production is lower compared to China, the global recognition on quality and variety of API products creates an opportunity to either partner with global players for marketing the APIs. It could also garner its revenues from being a preferred source of supply for global pharma bigwigs,”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.