1-India’s Pharmaceuticals Industry

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India’s Pharmaceuticals Industry :

India’s Pharmaceuticals Industry “The Indian pharmaceutical industry is a success story providing employment for millions and ensuring that essential drugs at affordable prices are available to the vast population of this sub-continent.” Richard Gerster

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The Indian pharmaceutical sector has come a long way, being almost non-existent before 1970 to a prominent provider of healthcare products, meeting almost 95 per cent of the country's pharmaceuticals needs.

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The Industry today is in the front rank of India’s science-based industries with wide ranging capabilities in the complex field of drug manufacture and technology. It ranks very high in the third world, in terms of technology, quality and range of medicines manufactured. From simple headache pills to sophisticated antibiotics and complex cardiac compounds, almost every type of medicine is now made indigenously.

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Playing a key role in promoting and sustaining development in the vital field of medicines, Indian Pharma Industry boasts of quality producers and many units approved by regulatory authorities in USA and UK.

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International companies associated with this sector have stimulated, assisted and spearheaded this dynamic development in the past 53 years and helped to put India on the pharmaceutical map of the world.

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The Indian Pharmaceutical sector is highly fragmented with more than 20,000 registered units with severe price competition and government price control. It has expanded drastically in the last two decades.

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There are about 250 large units that control 70 per cent of the market with market leader holding nearly 7 per cent of the market share and about 8000 Small Scale Units together which form the core of the pharmaceutical industry in India (including 5 Central Public Sector Units). These units produce the complete range of pharmaceutical formulations, i.e., medicines ready for consumption by patients and about 350 bulk drugs, i.e., chemicals having therapeutic value and used for production of pharmaceutical formulations.

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Following the de-licensing of the pharmaceutical industry, industrial licensing for most of the drugs and pharmaceutical products has been done away with. Manufacturers are free to produce any drug duly approved by the Drug Control Authority. Technologically strong and totally self-reliant, the pharmaceutical industry in India has low costs of production, low R&D costs, innovative scientific manpower, strength of national laboratories and an increasing balance of trade.

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The total Indian production constitutes about 13 per cent of the world market in value terms and, 8 per cent in volume terms. The per capita consumption of drugs in India, stands at US$3, is amongst the lowest in the world, as compared to Japan- US$412, Germany- US$222 and USA- US$191.

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India's US$ 9.4 billion pharmaceutical industry is growing at the rate of 14 percent per year. It is one of the largest and most advanced among the developing countries. The Indian pharmaceutical industry can reach a market size of US$ 11.6 billion by 2009.

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There are 74 U.S. FDA-approved manufacturing facilities in India, more than in any other country outside the U.S, and in 2005, almost 20 per cent of all Abbreviated New Drug Applications (ANDA) to the FDA were filed by Indian companies.

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Growth in other fields notwithstanding, generics are still a large part of the picture. London research company Global Insight estimates that India’s share of the global generics market will have risen from 4 per cent to 33 per cent by 2007.

The Changing Prescription :

The Changing Prescription As per WTO, from the year 2005, India granted product patent recognition to all new chemical entities (NCEs) i.e., bulk drugs developed then onwards. This introduction of product patent regime from January 2005 is leading into long-term growth for the future which mandated patent protection on both products and processes for a period of 20 years.

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Under this new law, India will be forced to recognize not only new patents but also any patents filed after January 1, 1995. Under changed environment, the industry is being forced to adapt its business model to recent changes in the operating environment.

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The Indian Government's decision to allow 100 percent foreign direct investment into the drugs and pharmaceutical industry is expected to aid the growth of contract research in the country. MNCs in India is facing the problem of having a very high Drugs Price Control Order (DPCO) coverage, weakening their bottom lines as well as hindering their growth through the launch of new products. DPCO coverage is expected to be diluted further in the near future benefiting the MNCs.

Emerging Trend :

Emerging Trend Global pharma cos expected to launch 200-250 new drugs over next 8-10 years totaling an estimated US$ 3-5 billion FDI inflow grew over six fold from US$ 60.7 mn in 2003 to US$ 340 mn, in fiscal year 2004 Bristol Myers Squibb, Boehringer Ingelheim and Eisai without Indian presence earlier, have made recent foray Indian firms tying up with foreign companies to in-license drugs

Research & Development :

Research & Development

Domestic Demand :

Domestic Demand The growing population of over of a billion Increasing income Demand for quality healthcare service Changing lifestyle has led to change in disease patterns, and increased demand for new medicines to combat lifestyle related diseases

Exports :

Exports Over 60 per cent of India’s bulk drug production is exported. India’s pharmaceutical exports are to the tune of Rs87 billion, of which formulations contribute nearly 55 per cent and the rest 45 per cent comes from bulk drugs. In financial year 2005, exports grew by 21 per cent.

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The Indian pharmaceutical market has been forecasted to grow to as much as US$ 25 billion by 2010 as per Organization of Pharmaceutical Producers of India (OPPI) estimates. However, Espicom’s market projections forecast more modest but stable annual market growth of around 7.2 per cent, putting the market at US$ 11.6 billion by 2009.

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Domestic pharmaceutical exports, growing at 30 per cent per annum, touched a new height of US$4.8 billion in the financial year 2006-07. The Year’s exports will push the drug sectors contribution to India’s Forx earnings to 7.75 per cent from the current 5 per cent. The growth in drug exports, despite the pressing generic competition in the global markets, is attributed to increased Abbreviated New Drug Applications (ANDAs) approvals in the US market and contribution from unconventional markets in Latin America, Australia and the emerging markets in the Middle East and African Region.

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The export revenue now contributes almost half of the total revenue for the top three pharmaceutical majors: Dr Reddy’s, Ranbaxy and Cipla.

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The other major exporters are Wockhardt Limited, Sun Pharmaceutical Industries Ltd. and Lupin Laboratories. The formulations and exports are largely to developing nations in CIS, South East Asia, Africa and Latin America .

OTC :

OTC The Indian market for over-the-counter medicines (OTCs) is worth about $940 million and is growing 20 percent a year, or double the rate for prescription medicines. The industry's exports were worth more than $3.75 billion in 2004-05 and they have been growing at a compound annual rate of 22.7 percent over the last few years, according to the government's draft National Pharmaceuticals Policy for 2006, published in January 2006.

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The Policy estimates that, by the year 2010, the industry has the potential to achieve $22.40 billion in formulations, with bulk drug production going up from $1.79 billion to $5.60 billion.

Import :

Import

Vision 2020 :

Vision 2020 The Indian pharmaceutical industry shall ensure that essential drugs at affordable prices are available to the vast population of this sub-continent and also continue providing employment for millions. India shall implement all the rules and regulations, which guide, monitor and control the activities of the providers of the healthcare system in the country and shall examine the way to bring them up to international standards

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The government should implement the recommendations of Mashelkar committee and constitute the Central Drug Authority at the earliest. The basic course of education should be designed to ensure that the newly qualified pharmacist has the necessary knowledge and skills to commence practicing competently in a variety of settings including community and hospital pharmacy and the pharmaceutical industry.

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Continuing professional development must then be a lifelong commitment for every practicing pharmacist. Concept of National schools of pharmacy should be established to develop and introduce model curriculum. Pharmacists should become knowledgeable to participate in medication management and outcome monitoring. Pharmacy profession should orient concept of pharmacy practice at community and hospital pharmacies through appropriate training and compensation

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The pharmacy profession will make the clinical trial industry in India to grow to over a billion dollars in the next five years and position itself as a destination of choice for CRO services by way of strict implementation of patent laws, single window clearance of clinical trial protocols by regulatory clearances and shall accord industry status to this sector.

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India will emerge as a major global player in the field of pharmaceuticals exports and as a provider of quality medicines at low costs. It shall also emerge as a major player in the generic drugs market in USA and Europe. India shall attain new heights in herbal drugs research in shaping Indian Systems of Medicine into a popular system of medicine of the future for holistic health care and ensuring health care for all - especially for the welfare of the poor.

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India’s Patents Act should ensure that it does not exceed the requirements of TRIPS, and that prioritizes access to medicines and public health, while retaining the right to participate in the compulsory license scenario. India should lead a movement of developing nations and create a TRIPS south and G-20 alliance is a step in that direction

Challenges :

Challenges Underdeveloped new molecule discovery program Hue & cry against exploitation Back lash against outsourcing IP leakage Restricted items Reservation for small scale industries No brand value Generic competition

Opportunities :

Opportunities A few important strengths are mentioned below. Competent workforce India has a pool of personnel with high managerial and technical competence as skilled workforce. It has the largest English speaking population in the world. Professional services are easily available. Cost-effective Chemical Synthesis Its track record of development, particularly in the area of improved cost-beneficial chemical synthesis for various drug molecules is excellent. It provides a wide variety of bulk drugs and exports sophisticated bulk drugs. Legal & Financial Framework

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Information & Technology Globalization Consolidation Low priced products Quality assurance Dominance in the market Self-reliance Low cost of production, Low R&D costs, Innovative Scientific manpower

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THANK YOU ashwanivig@yahoo.com

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