With more patents lining up towards its expiry date within the next five years, the Indian API manufacturers are keenly following the strategy to come up with generic forms of the active ingredients to grab the opportunity.

The Indian active pharmaceutical ingredients (API) companies, which focuses mainly on the more regulated markets of US and European Union, are emphasising their strength on value based high quality products for low cost, as against the comparatively lower cost bulk drug manufacturing strengths of Chinese pharmaceutical firms.

"In view of the number of patent expiries coming up in the near future, sales of patent expiry drugs in the U.S. as well as in Europe represent significant opportunity for all generics and API manufacturers," comments the API and formulations major Dr Reddy's Laboratories. The company's Integrated Product Development Organization (IPDO) is currently working on 40 API development projects, in which 25 are new APIs.

The API business of the company grew by 44 per cent from Rs 8,238 million recorded in 2005-06 to Rs 11,827 million in the financial year 2006-07. Each of six API products sold over Rs 500 million in the year in which three over Rs. 750 million and one, sertraline, fetched revenue worth Rs. 2,461 million, according to the company sources.

"Patent expiry is a potential opportunity for Indian API sector. We are planning to come up with 10 important APIs in the next five years as soon as the patents of these products expires," says Prashant Tewari, managing director, USV Ltd. The Mumbai based company, world leader in meformin (anti diabetic) business, is currently scaling up 11 API products and another 7 are under development stage.

The APIs in the development stage would enter the market as and when the patent of the relevant products expires. The company is planning to pick up Rs 100 crore - business by leveraging the generic boom, he added.

Sharing the view in its reports, the Mumbai based Unichem Laboratories comments "Unichem is also expected to benefit from some of these emerging opportunities in the near future with its expanded capacity and its increased focus of API business approach". The API business of the company recorded a turnover of Rs 638 million in FY 2006-07 as compared to Rs 537 million in the previous fiscal.

The trend will be one among the factors to carry the Indian API industry to claim as the second largest player in merchant APIs, supplanting its Italian counterparts. In the next five years more than 70 major drugs are expected to come off-patent in the major markets of the US and Europe. Patent expiries of blockbusters like antipsychotic Risperdal, antidepressant Effexor (venlafaxine), Fosamax (alendronate) under bisphosphonates, proton pump inhibitors Prevacid (lansoprazole) and Pantozol (Pantoprazole), Nexium (esomeprazole) and angiotensin II receptor antagonist Cozaar (losartan) are expected to drive growth for generic companies in the regulated markets.

According to the latest Frost & Sullivan study, US Generic Pharmaceuticals Market Outlook, the generic market which has earned revenues of USD 24.71 billion in 2006 is estimated to reach USD 49.49 billion in 2013 at US alone.

"Having a strong API backbone not only ensures steady supply of raw materials for captive consumption, but could also develop into a successful business unit by itself and contribute significantly to the growth of the company," further adds the study. This may lead to acquisition of low cost manufacturing facilities in India and China by global majors in the coming years, it opines.