The Indian pharmaceutical Industry has experienced a monolithic makeover from a regime of ―process patents in the 70’s to a more modern and WTO compatible regime under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement in 2005. It is among the top science based industries in India with wide ranging capabilities in field of drug manufacture and technology ensuring quality and diversification. Currently, the Indian pharmaceuticals market is the 3rd largest in terms of volume and 13th largest in terms of value. India is the largest provider of generic drugs globally with the Indian generics accounting for 20 % of global exports in terms of volume. This report brings Industry progress from 1970, Market size, Investments, Govt.of India initiatives and Future of the Industry.
Pharmaceutical industry before 1970:
- Drug industry depending on MNC from USA and Europe for supply of Medicines
- 1970 the Indian Patent Act removed the Product Patent and implemented Process Patent
Drug Industry from 1970 – 2005:
- Many Indian pharma companies emerged
- In 1980’s many Indian pharmaceutical companies started launching the latest drugs in India at affordable price since there was no product patent
- In 1990’s India swept up more liberal economical policies soon afterwards, Indian drug industry got into aggressive drug exports
- Foreign Direct Investment (FDI) in to pharmaceutical segment was one of the prime reasons for making India as a leader in global medicine exports to regulated markets
Industry after – 2005:
- Accepted for patent regime and then process patent changed into product patent
- No Indian pharma companies could launch new molecules
- Many multinational pharmaceutical companies getting back to Indian market and establishing new drugs with too expensive price and then Indian players are pushed to invest in research and development and introduce value added old medicines.
Indian Pharma Industry – At Present:
- India is the pharmacy for the world as every 3rd pill taken in the world is from India
- Domestic Pharma market value is around 70,000 Crores from 18000 Crores in 1995 with growing by 14% annually
- The exports of pharmaceuticals from India grew to 90,000 Crores from nowhere in 1990 with growth rate of 25%.
- Total growth of the Pharma Market is around 22%.
- Highest number of USFDA approved facility (550 Plants)
- Accounts for 40% of Generic drugs in USA
- India was recognized as global leader in supply of generic UNICEF
- India is the manufacturing hub for most of the countries
- Every 3rd Drug Master Files filed in US is from India
- India’s pharmaceutical sector will touch 270000 Crores by 2020,
- The country accounted for 8 % of global production Most of the domestic pharmaceutical drug requirements are met by the domestic industry.
- Indian owned firms currently account for 70 % of the domestic market, up from less than 20 % in 1970. In 2005, 9 of the top 10 companies in India were domestically owned, compared with just 4 in 1994.
The Indian pharma industry, which is expected to grow over 15 % per annum between 2015 and 2020, will outdo the global pharma industry, which is set to grow at an annual rate of 5 % between the same period!. The market is expected to grow to US$ 55 billion by 2020, thereby emerging as the 6th largest pharmaceutical market globally by absolute size, as stated by Mr Arun Singh, Indian Ambassador to the US. Branded generics dominate the pharmaceuticals market, constituting nearly 80 % of the market share (in terms of revenues).
Overall drug approvals given by the US Food and Drug Administration (USFDA) to Indian companies have nearly doubled to 201 in FY 2015-16 from 109 in FY 2014-15. The country accounts for around 30 % (by volume) and about 10 % (value) in the US$ 70-80 billion US generics market.
India’s biotechnology industry comprising bio-pharmaceuticals, bio-services, bio-agriculture, bio-industry and bioinformatics is expected grow at an average growth rate of around 30 % a year and reach US$ 100 billion by 2025. Bio pharma, comprising vaccines, therapeutics and diagnostics, is the largest sub-sector contributing nearly 62 % of the total revenues at Rs 12,600 Crore.
Investments in the sector:
The Union Cabinet has given its nod for the amendment of the existing Foreign Direct Investment (FDI) policy in the pharmaceutical sector in order to allow FDI up to 100 % under the automatic route for manufacturing of medical devices subject to certain conditions.
The drugs and pharmaceuticals sector attracted cumulative FDI inflows worth US$ 13.85 billion between April 2000 and March 2016, according to data released by the Department of Industrial Policy and Promotion (DIPP).
Some of the major investments in the Indian pharmaceutical sector are as follows:
- India’s largest drug maker Sun Pharmaceutical Industries Limited has entered into a distribution agreement with Japan’s Mitsubishi Tanabe Pharma Corporation to market 14 prescription brands in Japan.
- Syngene International Limited will be setting up its fourth exclusive Research and Development (R&D) center named Syngene Amgen Research and Development Center (SARC) for a US-based biotechnology company Amgen Incorporation in Bengaluru.
- India’s third largest drug maker Lupin Limited plans to file its first biosimilar Etanercept for approval in Japan, world’s 2nd largest drug market, in 2017.
- Rubicon Research Pvt Ltd, a contract research and manufacturing services firm, is in advanced talks with Ever stone Capital and a few high-net-worth Individuals (HNI) to raise up to Rs 240 crore , which will be used to increase the company’s manufacturing capabilities.
- Lupin Ltd plans to acquire a portfolio of 21 generic brands from Japan-based Shionogi & Co Ltd for Rs 10.08 billion, which will help to strengthen its presence in the world’s 2nd largest pharmaceutical market.
- International Finance Corporation (IFC), the investment arm of the World Bank, plans to invest upto US$ 75 million in Glenmark, which is looking to raise around US$ 200 million for expansion and the launch of several new products in India and other emerging markets over the next 3 years.
- Cipla Limited plans to invest around Rs 600 crore to set up a biosimilar manufacturing facility in South Africa for making affordable cancer drugs and growing its presence in the market.
- Rusan Pharma, a firm which specialises in de-addiction and pain management products, plans to invest Rs 100 crore in a R&D centre and a manufacturing unit in Kandla, located in Kutch District in Gujarat.
- Pink Blue Supply Solutions Pvt. Ltd, a clinical supplies provider, has raised Rs 1.5 crore in a seed round of funding from TermSheet.io, a transaction-focused service provider for start-ups and investors.
- The Medicines Patent Pool (MPP) has signed a licencing agreement with six Indian drug makers for the generic manufacturing of four antiretrovirals (ARV) and hepatitis C direct-acting antiviral drug Daclatasvir.
- Dr Reddy’s Laboratories, one of the major pharmaceutical companies of India, has entered into a strategic collaboration agreement with Turkey-based TR-Pharm, to register and subsequently commercialise three biosimilar products in Turkey.
- Lupin has completed the acquisition of US-based GAVIS Pharmaceuticals in a deal worth US$ 880 million, which is expected to enhance its product pipeline in dermatology, controlled substances and high-value speciality products.
- Cipla Ltd, one of the major pharmaceutical and biotechnology companies in India, has acquired two US-based generic drug makers, InvaGen Pharmaceuticals Inc. and Exelan Pharmaceuticals Inc., for US$ 550 million, which is expected to strengthen Cipla’s US business.
- Emcure Pharmaceuticals has acquired Canada’s International Pharmaceutical Generics Ltd and its marketing arm Marcan Pharmaceuticals in order to boost its global expansion drive.
- Cipla announced the acquisition of two US-based companies, InvaGen Pharmaceuticals Inc. and Exelan Pharmaceuticals Inc., for US$550 million.
- Glaxosmithkline Pharmaceuticals has started work on its largest greenfield tablet manufacturing facility in Vemgal in Kolar district, Karnataka, with an estimated investment of Rs 1,000 crore (US$ 149.11 million).
- Lupin has acquired two US based pharmaceutical firms, Gavis Pharmaceuticals LLC and Novel Laboratories Inc, in a deal worth at US$ 880 million.
- Several online pharmacy retailers like PharmEasy, Netmeds, Orbimed, are attracting investments from several investors, due to double digit growth in the Rs 97,000 crore ( US$ 14.46 billion) Indian pharmacy market.
- StelisBiopharma announced the breakthrough construction of its customised, multi-product, bio pharmaceutical manufacturing facility at Bio-Xcell Biotechnology Park in Nusajaya, Johor, Malaysia’s park and ecosystem for industrial and healthcare biotechnology at a total project investment amount of US$ 60 million.
- Strides Arcolab entered into a licensing agreement with US-based Gilead Sciences Inc to manufacture and distribute the latter’s cost-efficient TenofovirAlafenamide (TAF) product to treat HIV patients in developing countries. The licence to manufacture Gilead’s low-cost drug extends to 112 countries.
The Government of India unveiled ‘Pharma Vision 2020’ aimed at making India a global leader in end-to-end drug manufacture. Approval time for new facilities has been reduced to boost investments. Further, the government introduced mechanisms such as the Drug Price Control Order and the National Pharmaceutical Pricing Authority to deal with the issue of affordability and availability of medicines.
Mr Ananth Kumar, Union Minister of Chemicals and Petrochemicals, has announced setting up of chemical hubs across the country, early environment clearances in existing clusters, adequate infrastructure, and establishment of a Central Institute of Chemical Engineering and Technology.
Some of the major initiatives taken by the government to promote the pharmaceutical sector in India are as follows:
- The Government of India plans to set up around eight mini drug-testing laboratories across major ports and airports in the country, which is expected to improve the drug regulatory system and infrastructure facilities by monitoring the standards of imported and exported drugs and reduce the overall time spent on quality assessment.
- India is expected to rank among the top five global pharmaceutical innovation hubs by 2020, based on Government of India’s decision to allow 50 per cent public funding in the pharmaceuticals sector through its Public Private Partnership (PPP) model.
- Indian Pharmaceutical Association (IPA), the professional association of pharmaceutical companies in India, plans to prepare data integrity guidelines which will help to measure and benchmark the quality of Indian companies with global peers.
- The Government of India plans to incentivise bulk drug manufacturers, including both state-run and private companies, to encourage ‘Make in India’ programme and reduce dependence on imports of Active Pharmaceutical Ingredients (API), nearly 85 % of which come from China.
- The Department of Pharmaceuticals has set up an inter-ministerial co-ordination committee, which would periodically review, coordinate and facilitate the resolution of the issues and constraints faced by the Indian pharmaceutical companies.
- The Department of Pharmaceuticals has planned to launch a venture capital fund of Rs 1,000 crore (US$ 149.11 million) to support start-ups in the research and development in the pharmaceutical and biotech industry.
Indian pharmaceutical market has lot of opportunities ahead; first part of it, the Indian pharmaceutical market size is expected to grow to US$ 100 billion by 2025, driven by increasing consumer spending, rapid urbanization, and raising healthcare insurance among others.
Secondly, India has significant export opportunities as US$ 40 billion worth of drugs in the USA and US $ 25 billion worth of drugs in Europe are going off patent. This definitely transforms to an opportunity of additional export of US$19.5bn, also cost advantage in contract manufacturing & research multi-national companies determine it forcing to shift their production bases to countries providing up such cost advantage also India has a very high potential for developing as a centre for international clinical trials due to high noticeable heterogeneity.
Thirdly, a rise in geriatric population making the India to move to low cost active pharmaceutical ingredients and formulations which are India’s strong point. Better growth in domestic sales would also reckon on the ability of companies to lineup their product portfolio towards chronic therapies as diseases in the chronic line are on the rise.
Lastly, the Government of India has taken initiatives to cut down drug prices and bring down healthcare expenses. Rapidly launch of generic drugs has continued in focus and is anticipated to benefit the Indian medicine companies. On top of these, the drive on rural health programmes, lifesaving medicines and preventive diseases programmes also auspicates well for the Indian bio pharmaceutical companies.