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01-03-2012, 11:58 AM
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The Indian Pharmaceutical Industry
The Indian Pharmaceutical Industry

Letters of Introduction
© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network
of independent firms operating under the KPMG name. KPMG International provides no services to clients. Each member
firm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.
3 Collaboration for Growth
India's entrepreneurial pharmaceutical manufacturers are now beginning to leverage
benefits from the introduction of the nation's product patent system on January 1, 2005.
Most will be unable to develop the financial muscle necessary to embark on R&D for
innovative new products, but their scientific, technical and manufacturing skills, developed
under the country's 25-year process patent system, perfectly match the requirements of
global drug manufacturers that are increasingly seeking to offshore many research and
manufacturing activities previously performed in-house.
At the same time, a number of the country's largest pharmaceutical companies are attaining
global-player status as existing markets expand, and new ones open up, for high quality,
affordable generic drugs. Indian firms have embarked on an unprecedented shopping
spree of overseas acquisitions to establish themselves in these highly lucrative markets
and boost their capacities, as demand continues to grow.
Partnerships will also be key for Indian firms' development in their home market. Multinational
companies that have re-entered the market since the new product patent system seek
out the domestic industry's skills and infrastructures to boost their research and manufacturing
activities in the subcontinent and also open up this vast, virtually untapped market.
However, India's market development will depend, more than anything, on government
moves to increase the population's access to medicines, which is now extremely limited.
Further price controls are not the answer; Indian prices for essential drugs are already the
lowest in the world. Instead, the solution lies with pro-active measures such as publicprivate
partnerships and encouragement of R&D; for example, through industry-academia
collaborations and an official system of grants, which have proved to be of great benefit to
industry and patients elsewhere in the world.
A number of leading industry figures generously gave their time to provide unique industry
insights for this report. We would like to thank the following people for their contribution:
Ranjit Shahani, vice chairman and managing director of Novartis India Ltd, and president of
the Organisation of Pharmaceutical Producers of India; Kewal Handa, managing director of
Pfizer India; Satish Reddy, managing director and chief operating officer of Dr. Reddy's
Laboratories Ltd; Ajay Piramal, chairman and managing director of Nicholas Piramal; and
Pankaj Patel, chairman and managing director of Zydus Cadila.
Executive Summary
© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network
of independent firms operating under the KPMG name. KPMG International provides no services to clients. Each member
firm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.
Collaboration for Growth 6
Nevertheless, the domestic industry is still spending far too little on R&D, which must
change quickly if it is even to begin to address these new opportunities and challenges.
On the international front, the industry still has some catching up to do in terms of quality
assurance while, on the local market, pricing remains a problem.
There is a need for regulatory reform in India to encourage leading global players to
continue and accelerate the outsourcing of their R&D activities-beginning with discovery
research-to the subcontinent. This is particularly urgent in the face of the strong competition
from China, where the government has been particularly proactive in encouraging foreign
investments in pharmaceuticals and biotechnology.
In India, the industry is now awaiting developments following the January draft publication
of the government's National Pharmaceuticals Policy for 2006. The document contains
proposals for far-reaching initiatives aimed at boosting the domestic industry's global
competitiveness, as well as improving the population's access to medicines. Indian government
ministers have also promised MNCs concrete action soon on speeding the patent approval
process and other crucial issues, such as the definition of patentability and compulsory
licensing.
Action is required soon, if India wants to be a significant player in the global pharmaceutical
arena.
© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network
of independent firms operating under the KPMG name. KPMG International provides no services to clients. Each member
firm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.
7 Collaboration for Growth
India currently represents just U.S. $6 billion of the $550 billion global pharmaceutical
industry but its share is increasing at 10 percent a year, compared to 7 percent annual
growth for the world market overall.1 Also, while the Indian sector represents just 8 percent
of the global industry total by volume, putting it in fourth place worldwide, it accounts for
13 percent by value,2 and its drug exports have been growing 30 percent annually.3
The “organized” sector of India's pharmaceutical industry consists of 250 to 300 companies,
which account for 70 percent of products on the market, with the top 10 firms representing
30 percent. However, the total sector is estimated at nearly 20,000 businesses, some of
which are extremely small. Approximately 75 percent of India's demand for medicines is
met by local manufacturing.4
According to the German Chemicals Association, in 2005, India's top 10 pharmaceutical
companies were Ranbaxy, Cipla, Dr. Reddy's Laboratories, Lupin, Nicolas Piramal,
Aurobindo Pharma, Cadila Pharmaceuticals, Sun Pharma, Wockhardt Ltd. and Aventis
Pharma.5 Indian-owned firms currently account for 70 percent of the domestic market, up
from less than 20 percent in 1970. In 2005, nine of the top 10 companies in India were
domestically owned, compared with just four in 1994.6
India's potential to further boost its already-leading role in global generics production, as
well as an offshore location of choice for multinational drug manufacturers seeking to curb
the increasing costs of their manufacturing, R&D and other support services, presents an
opportunity worth an estimated $48 billion in 2007.7
Over-the-Counter Medicines
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.8 The government
is keen to widen the availability of OTCs to outlets other than pharmacies, and the
Organisation of Pharmaceutical Producers of India (OPPI) has called for them to be sold in
post offices.
Developing an innovative new drug, from discovery to worldwide marketing, now involves
investments of around $1 billion,9 and the global industry's profitability is under constant
attack as costs continue to rise and prices come under pressure. Pharmaceutical production
costs are almost 50 percent lower in India than in Western nations, while overall R&D costs
are about one-eighth and clinical trial expenses around one-tenth of Western levels. India's
long-established manufacturing base also offers a large, well-educated, English-speaking
workforce, with 700,000 scientists and engineers graduating every year, including
122,000 chemists and chemical engineers, with 1,500 PhDs.10 The industry provides the
highest intellectual capital per dollar worldwide, says OPPI.
The Indian Pharmaceutical
Industry
3
© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network
of independent firms operating under the KPMG name. KPMG International provides no services to clients. Each member
firm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.
Collaboration for Growth 8
India’s top 10 branded drugs 2004:
India's largest-selling drug products are antibiotics, but the fastest growing are
diabetes, cardiovascular and central nervous system treatments.
Source: OPPI, 2004.
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.
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: “India's rich human capital is believed to be the strongest asset for this
knowledge-led industry. Various studies show that the scientific talent pool of 4 million
Indians is the second-largest English-speaking group worldwide, after the USA.”11
The Indian Pharmaceutical Industry in 2004
Turnover: $6.02 billion, up 6.4 percent year over year
Exports: $3.72 billion
Imports: $985.3 million
Bulk drug production: $2.10 billion, with over 400 bulk drugs produced. Over 60,000
formulations produced, in 60 therapeutic categories
Capital investment: up 14.8 percent to $1.16 billion
Employment: 5 million direct, 24 million indirect
Source: OPPI, 2004.
VAT
In April 2005, the government introduced value-added tax for the first time and abolished
all other taxes derived from sales of goods. So far, 22 states have implemented VAT,12
which is set at 4 percent for medicines. This led to pharmaceutical wholesalers and retailers
cutting their stocks dramatically, which severely affected drug manufacturers' sales for
several months.
Corex (chlorpheniramine maleate,
codeine phosphate)
Human Mixtard (insulin)
Voveran (diclofenac sodium)
Becosules (vitamin B complex, vitamin C)
Taxim (cefotaxime)
Asthalin (salbutamol)
Sporidex (cephalexin)
Digene (aluminium hydroxide,
magnesium hydroxide)
Betnesol (betamethasone)
Althrocin (erythromycin)
© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network
of independent firms operating under the KPMG name. KPMG International provides no services to clients. Each member
firm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.
9 Collaboration for Growth
The main opportunities for the Indian pharmaceutical industry are in the areas of:
• generics (including biotechnology generics)
• biotechnology
• outsourcing (including contract manufacturing, information technology (IT)
and R&D outsourcing).
Generics
Prescription drugs worth $40 billion in the U.S. and $25 billion in Europe are due to lose
patent protection by 2007-08. Indian firms will likely take around 30 percent of the
increasing global generics market, the Associated Chambers of Commerce and Industry of
India (Assocham) forecast. Currently, the Indian industry is estimated to account for 22
percent of the generics world market. Low production costs give India an edge over other
generics-producing nations, especially China and Israel, says Assocham's president
Mahendra Sanghi. He suggests that it will be easier for Indian firms to win larger generics
market shares overseas than at home, particularly in the U.S. and Europe.13
Indian drug manufacturers currently export their products to more than 65 countries
worldwide.14 Their largest customer is the U.S., the world's biggest pharmaceutical market.
The use of generic drugs is growing quickly in the U.S. due to cost pressure by payers and
the introduction on January 1 this year of the Medicare Part D prescription benefit, giving
seniors and people with disabilities prescription drug coverage for the first time. With 74
facilities, India has the largest number of U.S. Food and Drug Administration (FDA)-
approved drug manufacturing facilities outside the U.S. Indian firms now account for 35
percent of Drug Master File applications and one in four of all U.S. Abbreviated New Drug
Application (ANDA) filings submitted to the FDA.15 Analysts at Credit Lyonnais Securities
Asia say they expect the number of generic drug launches by Indian companies in the U.S.
to increase from 93 in 2003 to over 250 by 2008.16
In January 2006, the Indian exporters' representative body, the Pharma Export Promotion
Council (Pharmexcil) said it planned to raise a number of concerns with the U.S. government
over what it sees as barriers to trade with them. One is a U.S. regulation that disqualifies
Indian firms from bidding for government contracts, and another is the requirement Indian
drug manufacturers submit separate applications for each U.S. state (there is no U.S.-wide
regulatory requirement), even when the firms have FDA-approved products and facilities.17
4 Opportunities
© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network
of independent firms operating under the KPMG name. KPMG International provides no services to clients. Each member
firm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.
Collaboration for Growth 10
However, India's traditional lucrative export markets may be becoming a little less secure,
for a number of reasons. For example, generic prices have not been rising in the U.S.; the
seniors' advocacy group AARP (formerly the American Association of Retired Persons) says
that, of the 75 generic drugs widely used by older people that it monitors on a quarterly
basis, none had had a change in manufacturer list price during third quarter 2005 and only
three had had increases in list price at any time during January to September 2005.18 Also,
new competitive threats have arrived, such as authorized generics produced by major drug
producers, new mid-sized players, Chinese and Eastern Europe manufacturers, and fully
integrated generics firms, which are less reliant on Indian “back-end” businesses.
The U.S. continues to be an attractive market for Indian firms, despite the challenges of
price erosion and the launch of “authorized generics” by innovator companies, says Ranjit
Shahani, vice chairman and managing director, Novartis India Ltd, and President of the
Organisation of Pharmaceutical Producers of India. He does not see any increase in nontariff
barriers there, and in fact feels that trade between India and the U.S. is “set to rev up
following President George W. Bush's visit to India on March 1, 2006, with both countries
going all out to liberalize market access.” The major concern of the U.S. FDA appears to be
the entry of counterfeit drugs, he says, but he does not believe this to be an obstacle for
reputable Indian manufacturers. Moreover, while the World Trade Organization (WTO)
Doha Trade-Related Aspects of Intellectual Property rights (TRIPs) national
emergency/compulsory license agreement presents an exporting opportunity for Indian
firms, Shahani stresses that the firms must have anti-diversion measures in place in order
to protect their reputation.
“The European generics market,” he says, pointing to Dr Reddy's recent acquisition of
Betapharm of Germany for $570 million, “holds more promise.” Indian companies have
acquired over $1 billion worth of pharmaceutical companies overseas in the past year and
a half and should increasingly look more aggressively at countries like Brazil, Russia and the
Company FY04 FY05 FY06
Glenmark -- 7 14
Zydus Cadila 12 13 6-18
Orchid -- 18 18-30
Wockhardt 5 7 12-13
Aurobindo 2 22 3
ANDA Filings for Indian Mid-sized Companies
Source: Cygnus Consulting & Research. Industry Insights-Pharmaceuticals, November 2004.
© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network
of independent firms operating under the KPMG name. KPMG International provides no services to clients. Each member
firm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.
11 Collaboration for Growth
Commonwealth of Independent States, and Japan, where the markets are mature and
remunerative, despite some regulatory hurdles, he notes.
Also, he says, Indian firms should move up the value chain to produce innovative “super
generics” as the once-a-day Ciprofloxacin product developed by Ranbaxy and licensed to
Bayer, move up from producing “generic generics” to branded generics.
Biotechnology Generics
Firms based in India and China could be among the first to bring biogenerics (generic
versions of biological products) to the regulated markets and faster than expected. The first
biogeneric product was approved by the European Medicines Agency (EMEA) which refers
to these products as “biosimilars,” in April 2006.
IMS estimates that biotechnology products accounted for 10 percent of global pharmaceutical
sales in 2004, or about $55 billion in worldwide sales for the year.19 By 2003, the U.S.
accounted for 62 percent of the global biotech drugs market, while in that year Japan's
share of the total had fallen to 7 percent from 28 percent in 1994.20 Patents on the first
generation of blockbuster biopharmaceuticals are beginning to expire, and the high cost of
these products means the generic versions will find large markets among hard-pressed
governments and other payers. Sales of biogenerics are flourishing in the unregulated
markets. The only regulated-market approvals so far are in Australia, granted in October
2004 for the recombinant DNA growth hormone Omnitrope, manufactured by Sandoz,
as well as in the EU, granted in April 2006.
No U.S. approvals are likely until 2009, says market research company Datamonitor. The
company has identified six key product classes-insulin, human growth factor, epoetin, colony
stimulating factors (CSFs), interferon alpha and interferon beta-as being at risk from
biogeneric versions of these products and estimates that global sales of the latter should
total over $2 billion by 2010.21
An early beneficiary when the regulated markets finally establish frameworks for biogenerics
is likely to be Wockhardt.22 This pharmaceutical and biotechnology company was one of
the first Indian drug manufacturers to enter the European market, achieving this through a
series of acquisitions; it now has three subsidiaries in Europe, acquiring first The Wallis
Laboratory in 1997 and CP Pharmaceuticals in 2003, both in the UK, then Esparma of
Germany in 2004.
Biopharmaceuticals are central to Workhardt's growth strategy, and the firm expects this
area of its business to take off in 2006. Reporting at the end of December 2005, it says it
has more than 55 registrations for biopharmaceuticals pending, and 26 approvals in 18
© 2006 KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network
of independent firms operating under the KPMG name. KPMG International provides no services to clients. Each member
firm of KPMG International is a legally distinct and separate entity and each describes itself as such. All rights reserved.
Collaboration for Growth 12
countries. According to analysts at SSKI India, Wockhardt is one of the few players in India,
and even globally, to have the requisite capabilities in biogenerics production.23
Export Import Bank Chairman T.C. Venkat Subramanian believes the patent expiries on
11 major drugs this year could help bring a “biotechnology revolution” to India. He
forecasts that biotechnology could potentially generate revenues of $5 billion and create
one million jobs by 2010, through products and services.24


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30-06-2012, 06:13 PM
Post: #2
RE: The Indian Pharmaceutical Industry
We are in the field of software.Mainly for pharma like SALES AND DISTRIBUTION and MR Reporting
01-09-2012, 03:55 PM
Post: #3
RE: The Indian Pharmaceutical Industry
PHARMACUTICAL INDUSTRY


.doc  PHARMACUTICAL.doc (Size: 61.5 KB / Downloads: 41)

INDUSTRY PROFILE

THE HISTORY OF PHARMACUTICAL COMPOUNDING

The History of the Pharmacy and Pharmacology dates back to the medieval times with priests, both men and women, who ministered to the sick with religious rites as well. Many peoples of the world continue the close association of drugs, medicine, and religion or faith. Specialization first occurred early in the 9th century in the civilized world around Baghdad. The notion of an Egyptian origin has a certain romantic appeal, but in all likelihood the word "pharmacy" and its many cognates derive, like so many other scientific terms, from the Greek.

GREEK NATURAL PHILOSOPHY

The first culture to consider these ideas scientifically was that of the Greeks. From the time of Thales, about 600 BC, Greek philosophers were making logical speculations about the physical world rather than relying on myth to explain phenomena. Thales himself assumed that all matter was derived from water, which could solidify to earth or evaporate to air. His successors expanded this theory into the idea that four elements composed the world: earth, water, air, and fire.

THE INDUSTRIAL REVOLUTION

The rapid change from hand methods to machine methods of production that characterized the Industrial Revolution found a ready application in pharmacy, especially under the impact of the scientific developments of the nineteenth century. Phytochemistry and synthetic chemistry created new derivatives of old drugs and new chemical entities of medicinal value that strained the capacity of the individual pharmacy. Large scale drug manufacturing had its strong hold on society with the advent of machines and patents.
The progress made by this new industry is demonstrated by the catalogue of the American firm G.D. Searle, which by the late 1880’s listed 400 fluid extracts, 150 elixirs, 100 syrups, 75 powdered extracts, and 25 tinctures and other drug forms.

THE TWENTIETH CENTURY PHARMACIST

The most notable change in pharmacy in modern times has been the virtual disappearance of the preparation and compounding of medicines. Whereas in the 1920s, 80 percent of the prescriptions filled in American pharmacies required a knowledge of compounding, by the 1940s the number of prescriptions requiring compounding had declined to 26 percent. As far back as 1971, only 1 percent, or less, of all prescriptions combined two or more active ingredients.

Pharmaceutical Industry

Marketing changed dramatically in the 1990s, partly because of a new consumerism. The Internet made possible the direct purchase of medicines by drug consumers and of raw materials by drug producers, transforming the nature of business. In the US, Direct-to-consumer advertising proliferated on radio and TV because of new FDA regulations in 1997 that liberalized requirements for the presentation of risks. The new antidepressants, the SSRIs, notably Fluoxetine (Prozac), rapidly became bestsellers and marketed for additional disorders.
Drug discovery is the process by which potential drugs are discovered or designed. In the past most drugs have been discovered either by isolating the active ingredient from traditional remedies or by serendipitous discovery. Modern biotechnology often focuses on understanding the metabolic pathways related to a disease state or pathogen, and manipulating these pathways using molecular biology or Biochemistry. A great deal of early-stage drug discovery has traditionally been carried out by universities and research institutions.
Drug development refers to activities undertaken after a compound is identified as a potential drug in order to establish its suitability as a medication. Objectives of drug development are to determine appropriate Formulation and Dosing, as well as to establish safety. Research in these areas generally includes a combination of in vitro studies, in vivo studies, and clinical trials. The amount of capital required for late stage development has made it a historical strength of the larger pharmaceutical companies.

Increasing Political Attention:

Over the years, the industry has witnessed increased political attention due to the increasedrecognition of the economic importance of healthcare as a component of social welfare. Politicalinterest has also been generated because of the increasing social and financial burden ofhealthcare. Examples are the UK’s National Health Service debate and Medicare in the US..

The Social Dimension:

Good health is an important personal and social requirement and the unique rolepharmaceutical firms play in meeting society’s need for popular wellbeing cannot be
underestimated. In recent times, the impact of various global epidemics e.g. SARS, AIDS etchas also attracted popular and media attention to the industry. The effect of the intense mediaand political attention has resulted in increasing industry efforts to create and maintain goodgovernment-industry-society communications.

Technological Advances:

Modern scientific and technological advances in science is forcing industry players to adapt everfaster to the evolving environments in which they participate. Scientific advancements have alsoincreased the need for increased spending on research and development in order to encourageinnovation.

Legal Environment:

The pharmaceutical industry is a highly regulated and compliance enforcing industry. As aresults there are immense legal, regulatory and compliance overheads which the industry has toabsorb.

Increased Competition:

A major issue facing the industry is the intense competition and the changing face the
pharmaceutical market. The industry has seen a legion of new market entrants, increased
competition among key players and industry consolidation. A host of large-scale mergers andacquisitions have taken place over the last two decades. Competitive advantage within theindustry is being constantly redefined and to maintain their presence, key industry players arebeing forced to revamp their organisational structure, overcome huge barriers in R&D, clinicaltrials simply to ensure continuity and maintain profitability.
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