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The Company͛s generic business remains challenging due to increased competition from India and
Eastern Europe. The segment has inherent risks with regard to patent litigation, product liability,
pricing pressure, increasing regulation and compliance related issues. The business could be
negatively affected if innovator pharmaceutical companies are successful in limiting the use of
generics through aggressive legal defence as well as authorized generics deals, development of
combination products and over-the-counter switching.
In view of the number of patent expiries coming up in the near future, sales of patent expiry drugs in
the US as well as in Europe represent significant opportunity for all generics and API manufacturers.
However, obtaining 180-days exclusivity is getting increasingly difficult in the US, and the generics
market is becoming rapidly commoditized. Increasingly, the original patent holder firms are tying up
with other firms to launch generics in the 180 day exclusivity period or launching a generic version of
their own. After the 180 day exclusivity period, the competition is extremely high and the drugs
often become commoditized.
The Contract Research and Manufacturing Services (CRAMS) industry is estimated to be earning
revenues of $850 million annually. Over the last five years, CRAMS industry has been contributing
close to eight percent to the total Indian pharmaceutical business. Factors like a vast expanse of
specialty hospitals with state-of-the-art facilities (nearly 700,000 hospital beds and 221 medical
colleges); large English speaking population and rich talent pool; diverse population and diverse gene
pool; increasing number of chronic diseases and a combination of diseases characteristic of
developing and the developed countries is expected to propel the CRAMS industry to grow at a CAGR
of over 25 percent in the next five years. A PMG report has identified CRAMS as a key revenue driver
for the Indian Pharmaceutical industry.
Most of the big pharmaceutical companies do not maintain a complete set up to include the
different aspects of drug discovery. On the contrary, they prefer outsourcing certain aspects of the
drug development process to CROs. Apart from this, the other reasons giving rise to a missing link in
the value chain which subsequently triggers outsourcing by pharmaceutical companies are:
ͻ Focus on core competencies
ͻ Temporary lack of facility
ͻ Virtual existence of companies
ͻ Lifecycle management
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The research and development value chain includes primarily the identification validation of the
target molecule for a given disease, trials, manufacturing and distribution. The drug discovery
process is time consuming and expensive, requiring scientists to synthesize and test tens to hundreds
of thousands sometimes millions of compounds in the hope of finding one that will interact with the
body in the desired way. Understanding how molecules interact with one another is the key to drug
discovery. Drug discovery boils down to finding a small molecule ʹ the drug ʹ that interacts in an
optimal fashion with a large bimolecular target or receptor.

Once doctors identify a physiological condition they would like to modify, biologists work to
determine the molecular biochemistry that controls the condition. Once biologists discover the
target which controls the biochemical process, drug discovery shifts from biology to chemistry.
Discovering a new drug requires taking the biological target, or receptor, that the biologists
identified and discovering a compound that will fit that target and thus alter the body͛s chemical
state.

Companies in India can add value for international firms during the initial six phases while the
distribution of the drug cannot be outsourced. The clinical trials of molecules on a large scale would
require the involvement of hospitals in order to meet the minimum requirement of patients for the
trials.

Target Target Lead
re Clinical Clinical Trials Manufacturing Distributio

Identification alidation Discovery Trials

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