PHARMACEUTICAL

INDUSTRY
IN INDIA

HUMERA
JAGADEESWAR
SAJAN
SUDHAKAR
Introduction
◙ The first Indian , Bengal Chemicals and
Pharmaceutical Works, which still exists today as one
of 5 government-owned drug manufacturers, appeared
in Calcutta in 1930.

◙ For the next 60 years, most of the drugs in India were

imported by multinationals either in fully-formulated
or bulk form.
◙ The government started to encourage the growth of
drug manufacturing by Indian companies in the early
1960s, and with the Patents Act in 1970, enabled the
industry to become what it is today.

◙ This patent act removed composition patents from

food and drugs, and though it kept process patents,
these were shortened to a period of five to seven
years
 The Indian pharmaceutical industry at $6.5 billion and
growing at 8-10% annually, is the 4th largest
pharmaceutical industry in the world, and is expected to
be worth $12 billion by 2008.

 Its exports are over $2 billion. India is among the top five
bulk drug makers and at home, the local industry has edged
out the Multi-National companies whose share of 75% in
the market is down to 35%.

 Trade of medicinal plants has crossed $900M already.

 There are 170 biotechnology companies in India, involved
in the development and manufacture of genomic drugs,
whose business is growing exponentially.
 India Advantage
 Large skill base
Experts in process chemistry
Long history of reverse engineering

 Vast talent pool

Sheer number of scientists
Motivated & English speaking
Large number of trained Indians returning home from North
America and Europe

 Unmatched cost competitiveness

Lower cost of infrastructure and skilled manpower
Vertical integration
Strong local industry
◦ Growing expertise with international regulatory compliance
◦ High quality manufacturing with abundant capacities

Speed
◦ Very strong entrepreneurial spirit
◦ Hungry for growth and recognition
◦ Quick learners and fast movers

Availability of capital
◦ Stock market has seen unprecedented growth in the last decade
◦ Continues to be bullish on the pharma industry
 Indian Pharmaceutical Evolution
Phase V
Innovation and
Phase IV Research
Phase III Growth Phase •New IP law
Development •Rapid expansion
•Discovery
Phase of domestic market
Research
Phase II •International
•Process
Government •Convergence
development market
Phase I Control development
•Indian Patent Act •Production
Early Years –1970 infrastructure •Research
•Market share •Drug prices creation orientation
domination by capped •Export initiatives
foreign companies •Local companies
•Relative absence of begin to make an
impact
organized Indian
companies

1970 1980 1990 2000 2010

VALUE Moving up the Value Chain

Innovative
Products
Generic
exports to
under- Generic Specialty
developed exports to Products
developed
&
countries
API developing
Exports countries

TIME
Some of the Pharmaceuticals in India
 Emerging Trends & Opportunities
Geographic Convergence
◦ Established and growing destination for Generic product
development and manufacturing
◦ Leading Indian companies seeking overseas markets and global
scale

Generic – Innovator Convergence

◦ Leading Indian companies trying to climb the value chain into
innovative research
◦ India developing into a Drug Discovery services outsourcing
destination
Generic Product Development & Manufacturing
Destination
 Leader in API DMF filings in the US
◦ Jan-Jun 2006 – 175 of the 601 DMF’s filed were by Indian companies
◦ 2005 - 313 of the 946 DMF’s filed were by Indian companies
 Leaderin capital investments - largest number of US FDA approved
manufacturing facilities (outside the US)
 Almost 20% of ANDA filings in the US

 No place like India for generics R&D and manufacturing of API’s &
formulations
 India’s biggest assets – cost, speed & scientists – churning out generics
faster than you can say ‘copy’
 In 5 years, 30-35% of the global demand for generic products is expected
to be met by India
Leading global/regional generic players
establishing a presence:
◦ Teva – acquired an Indian co in 2003, setting up new
development centre & another manufacturing facility
◦ Sandoz – development centre, 3 manufacturing
facilities, more than 1000 employees
◦ Actavis - development centre, acquired CRO (Lotus)
◦ Mylan – acquired controlling stake in Matrix last
month for US$ 736 mn
◦ Ratiopharm – development centre, manufacturing
facilities
 INDIAN PHARMACEUTICALS INDUSTRY
OVER YEARS

The industry has grown at a compounded annual growth rate (CAGR) of

13% during the last five years.
 Indian companies seeking overseas markets
and global scale
 Aggressive Growth Strategies
◦ For building a global scale – Ranbaxy aims to be one of the Top 5
◦ For market entry – acquiring local co or setting up subsidiaries

 Recent M&A activity – size of deals growing

◦ Ranbaxy going after acquisitions in US & Europe
 Acquired 3 companies in Europe in March/April 2006
◦ Terapia (Romania) for US$ 324 million
 Raising 1.5 billion to fund further acquisitions
◦ Dr. Reddy’s
 Acquired Betapharm (Germany) for US$ 570 million in March 2006
◦ Matrix (now part of Mylan)
 Acquired Docpharma (Belgium) for US$ 263 million in 2005.
 Partnership opportunities
◦ Large number of large and mid-sized Indian companies with
world-class generic product development and manufacturing
capabilities and facilities
◦ Lot of under-utilized manufacturing capacities
◦ These companies prefer focusing attention & resources on some
key markets (US/EU) and look for partners in other markets

◦ Opportunities for supplementing pipelines, filling pipeline gaps

and reducing/optimizing cost of development and cost of goods:
 In-licensing products
 Dossier and API development
 Contract Manufacturing
 Contract Research – pilot & pivotal bio-equivalence studies
◦ Opportunities for out-licensing and supplying products to leading
Indian companies for other markets
 Generic – Innovator convergence
 Increasing number of Indian companies moving up the value chain from
generic to NDDS/NCE research
 Low cost development/manufacturing to Low cost innovation

 Some examples:
◦ Ranbaxy
 1 project in Phase II
 1 project in Phase I
 7 projects in Pre-Clinical – 2 with GSK
◦ Dr. Reddy’s
 3 projects in Phase II
 2 projects in Phase I
 4 projects in Pre-Clinical
◦ Glenmark
 2 projects in Phase II – deals with US$ 190 million signed
 4 projects in Pre-Clinical
 Drug Discovery Services Outsourcing
 Global outsourcing market:
◦ US$ 15-20 billion – Manufacturing
◦ US$ 3-4 billion – Research (informatics, chemistry services & chemical
custom synthesis)
 Big pharma is entering into deals with Indian companies to lower
their cost of R&D
◦ Collaborative R&D – GSK - Ranbaxy
◦ Service outsourcing - Wyeth – GVK, Jubilant, Lilly – Suven
 Global discovery services companies are looking at India to
retain their cost advantages
◦ Albany Molecular & Nektar have already established a presence
 Indian
industry hoping to see 3-4 global discovery services
companies emerging out of India
 Drug Discovery Services Outsourcing

Leading Indian Service Providers:

◦ Contract Manufacturing – Jubilant, Shasun, Divi’s
◦ Clinical Research – Syngene (Biocon), Aurigene (Reddy’s),
Synchron
◦ Bio-informatics & other IT services – TCS, Satyam,
Infosys, GVK Bio, Jubilant
◦ Drug Discovery/Medicinal Chemistry – Aurigene, Divi’s,
Syngene, Suven, GVK Bio
◦ Pre-clinicals – Vimta, Lambda
◦ Central laboratory services – SRL Ranbaxy, Vimta
 Key Partnership Considerations
 Supplier/Partner mapping/selection
◦ Capability / Keenness / Reliability / Competitiveness
◦ Key team members – development, regulatory & commercial
 Optimal Number of Partners
◦ Strategic – markets/product lines
◦ Opportunistic – product specific
 Relationship management
◦ Relationship oriented culture
 Contract negotiation
◦ Clear distribution of responsibilities and timelines
◦ Demand performance - penalties for not meeting deliverables
 Project management
◦ Regular visits and video/teleconferences a must
Market structure
Bio-Pharmaceuticals
• Bio Pharma market is valued USD 1.3 million in 2007.
• Vaccines is the largest segment of Biopharma
accounting for 50% of the sectoral revenue.
• India is leader in global vaccine market (over 33%
market as per E&Y 2007 report) . India is the largest
producer of recombinant Hepatitis B vaccine in the
world
• Vaccines market in India in 2007 was USD 0.65
million registering a 40.26% growth over the previous
year.
Diagnostics contributed 19% with USD 0.25 million
market size in 2007 ,over 50% growth over previous
year.
• Therapeutics, 3rd largest contributed 14% of the total
biopharma sales –USD 0.18 million in revenues,
growth of 28% in 2007.
• In 2007 Biopharma contributed USD 0.65 million
worth exports.
THANQ