The Indian pharmaceutical industry is the third largest in the world by volume and fourteenth in value terms. It has absorbed modern technology and produces a variety of drugs meeting high quality standards. Last year, the industry grew at a healthy 16.5 per cent on the back of a pool of qualified and intelligent human resources, IT capabilities, appropriate infrastructure, its understanding of developed overseas markets, and last but not the least, the medley of generic drugs it offers.

A McKinsey & Company report, India Pharma 2020: Propelling access and acceptance realising true potential, predicts demand for pharmaceuticals in India to touch US$ 55 billion by 2020, up from US$ 12.6 billion in 2009. PricewaterhouseCoopers estimates that India will be among top 10 world drug makers in sales terms by 2020. In a report, Booming Generics Drug Market in India, RNCOS sees the Indian generics market as likely to grow at about 17 per cent CAGR this year.

Sedentary lifestyle leads more demand for pharmaceuticals

Demand for pharmaceuticals in India is being fuelled by the number of people leading sedentary lifestyles in fast moving environments across the country’s urban landscape. High levels of uncontrolled stress and poor and irregular diets are increasing the incidence of lifestyle-related diseases and spurring the use of remedial drugs. To add to that, India has borne the brunt of several outbreaks of epidemics or pandemic diseases (H1N1, SARS, bird flu) in the past few years.

Burgeoning demand is attracting leading pharmaceutical companies to the country. India also offers global pharma majors excellent contract research and manufacturing services (CRAMS) and co-marketing alliances aimed at boosting drug development capacity and reducing the time to market new medications. Multinational drug players facing higher costs and lower sales of patented drugs in home markets are turning to the country to cut research costs by outsourcing clinical trials and research.

Not surprisingly, foreign direct investment (FDI) by Japan in the Indian pharmaceutical industry has surged in past three years, mostly by way of mergers and acquisitions. Significant investments by Japanese firms in the country have followed policy corrections such as India’s Pharmaceuticals Export Promotion Council removing the need for overseas investors to seek a no-objection from their joint venture partner before venturing independently or tying up with another local company. Now, 100 per cent FDI is allowed via the automatic route in the pharmaceuticals and drugs industry. This also applies to the use of recombinant technology.

In 2008, Daiichi Sankyo of Japan acquired India’s Ranbaxy Laboratories, kick-starting a wave of investments in the country. Last year, Mitsui & Co Ltd revealed plans to acquire a 5 per cent stake in pharmaceuticals ingredient manufacturer Arch Pharmalabs for US$ 14.64 million. This calculated move would help Mitsui strengthen its contract manufacturing business in pharmaceuticals while also providing Arch the opportunity to enter the lucrative intermediates and active ingredients Japanese market.

Japanese Eisai and Company intends to make India a huge manufacturing hub for its global operations by setting up a massive facility at Visakhapatnam, Andhra Pradesh. Last October, the more than two centuries old Japanese drug maker Takeda announced its expansion strategy into India.

Investments by pharmaceutical companies are by no means a one way affair. Several Indian firms have ventured towards Japan as well, some hoping to cash in on the fact that several drugs patented by Japanese firms are set to go off patent. Japan’s healthcare market is worth US$ 350 billion and its pharmaceutical products imports stand at a mighty US$ 13 billion. It presents a promising market for Indian generic drug manufacturers, especially considering that generics are increasingly becoming popular due to Japan’s large ageing population and high health care costs.

Last year, Prime Minister Manmohan Singh addressed Japanese businessmen at an event by the Japanese business chamber, Nippon Keidanren saying that he believed the Comprehensive Economic Partnership Agreement would “create new opportunities for India’s pharmaceutical industry in the Japanese market, helping Japan to meet its demand for high quality and inexpensive generic medicines.”

According to Ahmedabad-based drug maker Dishman Pharma’s managing director J R Vyas, the Active Pharmaceutical Ingredient (API) market in Japan is currently dominated by US and European players, which can be slowly replaced by Indian firms which supply regulatory-compliant and cheaper versions. Dishman was recently said to be in talks with 12 generic drug makers from Japan to supply APIs for gastroenterology and anti-hypertensive drugs. Ind-Swift Laboratories, a company from Chandigarh, won the approval of the Japanese government’s Pharmaceutical and Medical Devices Agency (PMDA) to supply Pioglitazone (an anti-diabetic drug) and Risedronate Sodium (an osteoporosis drug) from its manufacturing plant at Derabassi, Punjab.

In the years to come, ongoing cutting edge research across the spectrum of medicine and medical science is likely to expand the trading avenues for pharma companies. And nowhere will such opportunities be discussed in greater detail than at the India Japan Global Partnership Summit, slated to be held from September 5 to 7 in Tokyo. This event, supported by the Governments of India and Japan and apex trade bodies in the two nations, is being organised by the India Center Foundation to mark 10 years of the announcement of India-Japan Global Partnership Agreement and pave the way forward for greater cooperation between the two nations. The Summit will offer Indian pharmaceutical firms the opportunity to interact one-on-one with potential Japanese collaborators. Beyond doubt, partnerships between Indian and Japanese pharma industries will help both attain new heights in an increasingly flat world.