The pharmaceutical industry in India meets around 70 of the countrys demand for bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and injectibles. There are about 250 large units and about 8000 Small Scale Units, 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.
As discussed in earlier chapters about the Indian Pharmaceutical sector which is highly fragmented with more than 20,000 registered units. It has expanded drastically in the last two decades. The leading 250 pharmaceutical companies control 70% of the market with market leader holding nearly 7% of the market share. It is an extremely fragmented market with severe price competition and government price control. North Indian states & UT's are also engaged in production of pharmaceutical products, few states like Himachal Pradesh, Uttaranchal, are also providing tax holidays so as to motivate the pharma companies to enhance their production facilities, more over the climatic conditions and other macro factors are suitable for the growth of pharma and especially biotech., Industries in these two states. Table2.14 shows the state wise distribution in north India.
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FiG.-2.6 :STATE- WISE DISTRIBUTION OF PHARMACEUTICAL SECTOR IN INDIA, 2010-11 . graph3.JPG
Source: Annual report: 2010-11
The above map of India shows the state wise distribution of pharma units, as per annual report-2010-11, of Department of pharmaceuticals, Ministry of chemicals & fertilizers, Government of India. We can compare with table no: 2.15. The distribution of pharmaceutical units in north Indian states has increased substantially as compared to year, 2000-01.
Table: 2.9: STATE- WISE DISTRIBUTION OF PHARMACEUTICAL SECTOR IN NORTH INDIA - 2000-01
NO. OF UNITS(numbers)
TOTAL PRODUCTION (Rs Lakh)
Source: ISID WORKING PAPER, 2007/02.
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. The Pharmaceutical Industry, with its rich scientific talents and research capabilities, supported by Intellectual Property Protection regime is well set to take on the international market.
The key players in Indian market (excludingÂ their parent group financials andÂ operations) with there are as of operations in the industry's avenues are enumerated below in Table 2.9.
The main areas segmented for the industry are: Â Domestic Generics, Developed market generics (also called the regulated markets), Emerging market generics (also called the ROW or the LRMs), CRAMS, Biosimilars or Biogenerics, Drug discovery (Novel Drugs), Vaccines and MedicalÂ Device.
India's domestic Pharma market, which was valued at approximatelyUS$12 bn in 2010, and showed a strong growth of 21.3% for the twelve months ending September 2010, 14. PwC estimates that over the next 10 years, the domestic market will grow toUS$49 bn,a compounded annual growth rate (CAGR) of 15%, with the potential to reachUS$74 bn, a CAGR of 20%, if aggressive growth drivers kick in Viz. the double digit GDP growth rates, the government policies supporting the R&D investments, insurance sector reforms and growth, the pricing controls leading to the drugs' affordability even by the major rural markets Â but as of now the rural markets contribute to only 17% of the sales so there's a huge market unleashed and the improvements in the patented drugs sale in the domestic market due to increasing per capita income ofÂ India.
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Table: 2.9: KEY PLAYERS IN INDIAN PHARMACEUTICAL MARKET
PHARMACEUTICAL MARKET KEY PLAYERS IN INDIAN
The highly fragmented Indian pharmaceutical industry has around 30,000 players, out of which 330 are in organized sector. Indian pharmaceutical industry exports its products to more than 200 countries, including highlyregulated markets of Europe, Japan, USA and Australia. The cGMPs developed by the industry,regulators and government agencies like USFDA (USA), WHO (Geneva-Global), ANVISA(Brazil), MCC (South Africa), TGA (Australia), SFDA (China), DCGI (India) others likecountry specific Ministries of Health facilitate the production of different dosage forms at thehighest of their global standards. Indian firms (and firms with Indian subsidiaries) have grabbed revenues out of a few major operational segments of industry sub division Viz. from US Market& Non US but International Market formulations, Domestic formulations, and CRAMS and others as shown in theÂ representation table:2.16.
2.9 TOP PHARMAEUTICAL COMPANIES IN INDIA: A SHORT REVIEW
There are five government-owned companies the Indian public sector. These companies are the Indian Drugs and Pharmaceuticals, Hindustan Antibiotics Limited, Bengal Chemicals and Pharmaceuticals Limited, Bengal Immunity Limited and Smith Stanistreet Pharmaceuticals Limited. Some of the major Indian private companies are Alembic Chemicals, Aurobindo Pharma, Ambalal Sharabhai Limited, Cadila Healthcare, Cipla, Dr Reddy's, IPCA Laboratories, Jagsonpal Pharma, J.B. Chemicals, Kopran, Lupin Labs, Lyka Labs, Nicholas Piramal, Ranbaxy Labs, Matrix Laboratories, Orchid Chemical and Pharmaceuticals, Sun Pharmaceuticals, Ranbaxy Laboratories, Torrent Pharma, TTK Healthcare, Unichem Labs, and Wockhardt.
The foreign companies in India include Abott India, Astra Zeneca India, Aventis Pharma India, Burrough-Wellcome, Glaxo SmithKline, Merck India, Novartis, Pfizer Limited, and Wyeth Ledele India and many more.
India also exports pharmaceuticals to numerous countries around the world, including to the U.S., Germany, France, Russia and UK.
Since our major concern is relationship marketing in pharmaceutical industry, so a short review of Indian companies is presented which was observed during the research study and also an integral to our topic concern. Tableâ€¦.. Shows the some of major pharma companies in India, doing a good business worldwide.
YEAR OF ESTABLISHMENT
The company was incorporated in 1961 and went public in 1973.In June 2008, Daiichi Sankyo acquired a 34.8% stake in Ranbaxy for a value $2.4 billion. In November 2008, Daiichi-Sankyo completed the takeover of the company from the founding Singh family in a deal worth $4.6 billion by acquiring a 63.92% stake in Ranbaxy.
Ranbaxy is among the top 100 pharmaceuticals in the world and that it is the 15 th fastest growing company.
It is consolidating its position to become the top 5 generics producer in the World, with the purchase of French firm RGP Aventis in 2003. It keeps a dedicated research facility staffed with over 1100 scientists. They currently have two molecules in Phase II trials and 3-5 in pre-clinical testing.
The Company is aggressively pursuing its internationalization strategy it has also gained market leadership in India, leveraging its strong brand building skills.Ranbaxy exports its products to 125 countries with ground operations in 46 and manufacturing facilities in seven countries.
In 2011, Ranbaxy Global Consumer Health Care received the Pharma OTC Company of the year award.
For the year ended Dec 31, 2006, the Company's Global Sales were at USD 1,340 Million. Overseas markets accounted for around 80% of global sales.
The Company's largest market, USA with the sales of USD 380 Million, while Europe and BRICS (Brazil,Russia, India, China, South Africa) countries contributed USD 194 Million and USD 477 Million to global sales.
The addition of Ranbaxy Laboratories extends Daiichi-Sankyo's operations - already comprising businesses in 22 countries. The combined company is worth about $30 billion.
In 2010, Company registered a gross profit of rs17070.9 million as compared to rs.3924.1 million in, 2001.
GLOBAL PRESENCE/MARKETING NETWORK
Ranbaxy has an expanding international portfolio of affiliates, joint ventures and representative offices across the globe with a presence in 23 of the Top 25 pharma markets of the world. It has robust operations in USA, UK, France, Germany, Russia, India, Romania and South Africa, and is strengthening its business in Japan, Italy, Spain and several other markets in the Asia Pacific.
The Company has successfully concluded 15 acquisitions since 2004, including 8 in 2006 (4 in Europe, 1 in the US, 2 in India and 1 in South
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Africa). Ranbaxy will continue to look at target acquisitions in US, Europe, India and emerging markets based on value and synergies that can be unlocked from such transactions.
By 2012, Ranbaxy hopes to be one of the top 5 generics producers in the world. The Company will focus on increasing its momentum in the generics business in its key markets of US, Europe, BRICS and Japan through organic and inorganic routes.
Table:2.11 Dr. Reddy's Laboratories
Dr. Reddy's Laboratories
Year of Establishment
The company was Founded in 1984 with US $160,000
Dr. Reddy's is a vertically integrated, global pharmaceutical company with proven research capabilities and presence across the pharmaceutical value chain. They manufacture Active Pharmaceutical Ingredients (API) and Finished Dosage forms. In addition, the drug discovery arm of the company conducts basic research in the areas of diabetes, cardiovascular, inflammation and bacterial infection. Dr. Reddy's was the first Asia-Pacific pharmaceutical outside of Japan and the sixth Indian company to be listed on the New York Stock Exchange. 58 per cent of Dr. Reddy's revenues come from generic drugs. Dr. Reddy's has long been a research-oriented firm. It had set up a New Drug Development Research (NDDR) in 1993 and out-licensed its first compound just four years later. Dr. Reddy's has since outlicensed two more molecules and currently has three others in clinical trials.Revenues for fiscal 2007 were USD 1.51 billion .The net revenue had increased to US$ 1.6billion in 2011 with net income of US $ 248million in 2011.
Global Presence/ Marketing network
They market their products globally, with a focus on United States, Europe, India and Russia.
-.Acquires Benzex Laboratories Pvt. Limited in 1988 to expand its bulk actives business.
- Acquisition of American Remedies Limited, a pharmaceutical company based in India. In 1999.
- Dr. Reddy's Laboratories become India's third largest pharmaceutical company with the merger of Cheminor Drugs Limited, a group company in 2001.
- Conducts its first overseas acquisition - BMS Laboratories Limited and Meridian Healthcare in UK in 2002.
-Acquires Roche's API Business with a total investment of USD 59 million in 2005.
-Acquires betapharm- the fourth-largest generics company in Germany for a total enterprise value of â‚¬ 480 million in 2006.
Future Prospects - Dr Reddy's Laboratory Licensing deal with Novo Nordisk Open to brand acquisitions ,bulk prices haven't bottomed out as yet
Table:2.12 Nicholas Piramal
Piramal healthcare (Nicholas Piramal)
Year of Establishment
Established in 1988
Nicholas Piramal started its existence with the 1988 acquisition of Nicholas Laboratories and grew through a series of mergers, acquisitions and alliances. The company has formed a name for itself in the field of custom manufacturing. It cites its 1700-person global sales force as a core strength. It is well-poised for the challenge of surviving in the aftermath of product patent protection. The company has respected intellectual property rights since its inception.
The company grossing USD 350 million per year. It gained a revenue of INR3,671.05 crore (US$732.37 million) in 2010-11,with a net income of INR481.74 crore(US$96.11 million) in 2010-11.
Global Presence/ Marketing Network
Nicholas Piramal gained a sales and marketing network spanning 90 countries.
Recently, the UN Conference on Trade and Development's World Investment Report 2011 ranked Piramal Healthcare's CMO (contract manufacturing) business vertical as number five in the top 10 pharmaceutical contract manufacturers worldwide; and was awarded the number one position amongst all Indian CMOs
The company started its existence with the 1988 acquisition of Nicholas Laboratories and grew through a series of mergers, acquisitions and alliances. It has recently acquired Rhodia's inhalation anaesthetics business.
Nicholas Piramal is well-poised for the challenge of surviving in the aftermath of product patent protection. It decided to make its own intellectual property and opened a research facility in Mumbai with hopes of launching its first drug in 2010 at a cost of USD 100,000.
Year of Establishment
In 1935, Founded by nationalist Indian scientist Khwaja Abdul-Hamied, the, Chemical, Industrial & Pharmaceutical Laboratories was set up, which came to be popularly known as Cipla. It was officially opened on September 22, 1937 when the first products were ready for the market.
Today they have 31 world-class manufacturing facilities spread across the country, with dedicated plants for Oncology products, Hormones, Inhalers, Carbapenems, and Cephlosporins, among others. They more than meet the stringent international standards, such as that of US FDA, MHRA-UK, TGA Australia, Bfarm-Germany MCC-South Africa, WHO, TPD-Canada.
Cipla produces one of the widest ranges of products and dosage forms in the world today, everything from tered-dose inhalers, pre-filled syringes, trans-dermal spray patches, lyophilized injections, nasal sprays, medical devices, and thermolabile foams. Whether it is constantly extending our product range or consistently introducing innovations, the mission is always to make the life of the patient better.
Revenue in 2004 totaled USD 552 million (using Rs 43.472 = USD1) about 75 per cent of which was derived in India. It recorded a revenue of INR6,422.88crore (US$1.28 billion) IN 2011,with a net income of rs960.39 crore(US$191.6 million) in 2011.
Global Presence/ Marketing Network
cipla has been building a strong global presence, and it now distributes its 800-odd products in over 170 countries.
Mainly focused on the domestic market, Cipla has largely refrained from big-ticket acquisitions overseas, new molecules research and patent challenges.
Cipla started with a vision to build a healthy India. And along the way realised, that in their own small way, they could contribute to making the world a healthier place. They will continue to bring a smile on as many faces as they can to heal the world as much as they can.
Year of Establishment
Biocon India is incorporated as a joint venture between Biocon Biochemicals Ltd. of Ireland and an Indian entrepreneur, Kiran Mazumdar-Shaw in 1978.
Biocon is India's premier biotechnology company. Headquartered in Bangalore Biocon has evolved from an enzyme company to a fully
integrated biopharmaceutical enterprise, focused on healthcare. Biocon strategically focuses its activities on its bio-pharma business verticals that include APIs, biologicals and proprietary molecules.
Biocon Limited and its two subsidiary companies, Syngene International Limited and Clinigene International Limited form a fully integrated biotechnology enterprise specializing in biopharmaceuticals, custom research and clinical research.
Total Revenues is Rs 9.9 billion for the year-ended 31 st March, 2007, which increased to INR28.14 billion (US$561.39 million) in 2010-11 with a net income of INR3.68 billion (US$73.42 million) in 2010-11.
Global Presence/ Marketing Network
Biocon's integrated business approach has enabled the company to establish a significant presence in the global biopharmaceutical market
via its product offerings and customized, high value solutions at any stage in the lifecycle of a drug-from discovery to market.
It was Among Top 20 Indian companies in Forbes 'Best Under A Billion' list in 2009.
It received Bio-Excellence Award 20100, for Outstanding Achievement in the Healthcare Sector at Bangalore Bio.
In 2007, Biocon made a strategic decision to divest its historic enzymes business to Novozymes A/S of Denmark.
Consistent with their long-term growth strategy, Biocon remains committed to building biotherapeutics franchise through their own R&D efforts. To further enhance their IP and technology platforms, they have made and investment of Rs. 764 million in R&D, which is a 76% increase over the previous fiscal.
Table:2.15 Aurbindo pharma
Year of Establishment
Aurobindo Pharma was born of a vision. Founded in 1986 by Mr. P.V.Ramaprasad Reddy, Mr. K.Nityananda Reddy and a small, highly committed group of professionals
The company became a public venture in 1992. It commenced operations in 1988-89 with a single unit manufacturing semi synthetic penicillins (SSPs) at Pondicherry. Aurobindo Pharma had gone public in 1995 by listing its shares in various stock exchanges in the country. The company is the market leader in semi-synthetic penicillin drugs. It has a presence in key therapeutic segments like SSPs, cephalosporins, antivirals, CNS, cardio-vascular, gastroenterology, etc.
Revenue reached US$865.19(million)e
Global Presence/ Marketing Network
Aurobindo Pharma has identified international operations, catering to over 100 countries, as a major engine of growth and expanding global network of marketing and manufacturing operations across countries like China, Brazil, Japan, Netherlands, South Africa, Thailand, UK, USA, Russia, Netherlands and many more which will further expand its international reach.
The company's robust product portfolio is spread over 6 major product areas (encompassing Antibiotics, Anti-Retro Virals, CVS, CNS, Gastroenterologicals, and Anti-Allergics) with around 65 APIs in the non-antibiotics and over 55 APIs in the antibiotic segment.
It ranks among the top 5 pharma companies in India and is a multi product, multi technology, transnational company. Today, the Company's products are serving consumers in India and over 100 other countries.
Subsidiaries in strategic pharmaceutical markets have positioned it to ride the challenges, powered by the strengths, the brilliance and hard work of its global workforce, stellar track record, ever-growing infrastructure and cost-competitiveness.
-Planning to further penetrate through joint ventures/subsidiaries/organic means into China, Brazil and other Latin American countries.
-Emerging as a leading player in global high quality innovative speciality generic formulations and domestic brand segments.
- Develop a broad portfolio of DMFs/ANDAs through non-infringing processes and intellectual properties and become a significant player in the generics market, especially in the regulated markets.
-Aurobindo will be good formulation company with the largest Active Pharmaceutical Ingredients manufacturer under CGMP qualified plant.
TABLE-2.16: TOP 20 PUBLIC LISTED LIFE SCIENCE COMPANIES IN INDIA
REVENUE(2011) in Million USD
Dr. Reddy's Lab
GSK Pharmaceuticals ltd.
Orchid chemicals & pharmaceuticals ltd.
Source:wikipedia.org/wiki/Pharmaceutical industry in India.
Table-2.17: Top 20 Bio pharmaceutical & Biotechnology Companies in India as of 2011.
REVENUE, 2011 (USD MILLION)
Serum institute of India
Nuziveedu seeds pvt.ltd.
Reliance life sciences
Bharat biotech international
Indian immunological ltd.
2.10 Advantages for Pharmaceutical Industry in India.
In India, Pharmaceutical Marketing moving to a new era, where relationship with key customers is very vital for achievement of targets.Â Companies have moved on from being primarily sales-oriented to now realizing the significance of services marketing with the focus on cross selling. In this era, importance of Customer Relationship Department cannot be ignored and the success of organization depends upon it. This department is responsible for providing service to the customer, who may be doctor, chemist and patients. Successful implementation of relationship development strategy is the only key to achieve higher returns in terms of money and image in Indian market.
The Indian government's policies are open to foreign investments and the country is fastly developing necessary infrastructure for economic growth.
The factors which make India a favorite destination for pharmaceuticals are:
1) Competent workforce: India has a pool of personnel with high managerial and technical competence as also skilled workforce. It has an educated work force and English is commonly used. Professional services are easily available.
2) 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.
3) Standard Legal & regulatory Framework:
The current state of legal and regulatory environment of pharmaceutical industry is a result of several statutes enacted over a period of more than a hundred years. India has a 53-year-old democracy and hence has a solid legal framework and strong financial markets. There is already an established international industry and business community. Moreover Indian pharmaceutical market and medical practitioners, be it govt. or private, works under legal framework and bound by law through various acts as in table: 2.21 like Indian medical council act, consumer protection act, drug and cosmetics act, dangerous drug act, drugs control act, drug price control act, pharmacy act, nursing home acts etc. thus increases trustworthiness and sustainability of Indian health and pharmaceutical market.
TABLE-2.21: The Regulatory environment of the pharmaceutical industry in India.
OPIUM ACT, 1878.
POISION ACT, 1919.
DANGEROUS DRUGS ACT, 1930.
THE DRUGS AND COSMETIC ACT, 1940.
THE PHARMACY ACT, 1948.
THE FACTORIES ACT, 1948.
THE INDUSTRIAL DEVELOPMENT AND REGULATION (IRDA) ACT,1951.
THE DRUGS AND MAGIC REMIDIES (OBJECTIONABLE ADVT.) ACT, 1954.
INDIAN MEDICAL COUNCIL ACT,1956.
THE TRADE AND MERCHANDISING ACT, 1958.
THE MRTP ACT, 1969.
THE DRUG PRICE CONTROL ORDER, 1969.
THE PATENT ACT, 1970.
THE FORIENGH EXCHANGE AND REGULATION (FERA) ACT, 1973.
THE CONSUMER PROTECTION ACT,1986.
4) Information & Technology: India has a good network of world-class educational institutions and established strengths in Information Technology.
Computers ability to store, retrieve and correlate enormous quantity of inform luminous had made them ideally suited to manage and maintain voluminous amount of medical information. Although use of computers hampers the traditional set up of relationship between producers to customers/consumers as they, to some extent, potentially altering the traditional manner that marketers and patients use to communicate with medical practitioners and vice versa. Computers shown to have significant impact on physician- patient communication process (great batch et.al. 1995). Now a days pharma. marketers are communicating with customers and end users via e-mail or provide online information about their product line and product usages through their websites; they seek doctors who have websites that allow convenient periodic interactions for sales promotion, answers to frequently asked questions related to products and they want physicians who use internet based sources to support clinical decision making. But most of the pharma marketers today are not prepared to meet these new health care consumers' demands. For them, consumer driven health care has not yet arrived. In other words, pleasing customers, retaining their loyalty and having medical practioners spreading the word about various services they receive are likely to remain the bedrock of patient-physician relationship for many years to come.
Favorite destination for clinical trials: MNC's account for almost 70 per cent of the trials in India. Most of them have their own CROs. Indian CROs mainly do the work of domestic companies and small and medium drug companies from the US and Europe
India is also fast becoming a favorite clinical trial destination due to:
ï‚· A favorable regulatory environment
ï‚· Ease of patient recruitment
ï‚· Large diversity in patient pool
ï‚· Low costs
ï‚· Adherence to ICH-GCP guidelines
ï‚· Presence of qualified and knowledgeable investigators
ï‚· Access to latest laboratory tests and equipment
ï‚· Capability in clinical trial data analysis
ï‚· Good knowledge of the regulatory requirements of various countries
At present, India does not allow Phase-I of clinical trials, in which a drug is first experimented on a human being. This is another reason for lack of growth for the sector, say industry experts. As per the current trend shows that Singapore, Korea, China and south East Asia are the most preferred destinations for clinical trials. India is yet to have a favorable regulatory environment and infrastructure to allow the risky Phase-1Â trials. DCGI had earlier come out with a comprehensive clinical trial inspection programme, with specific guidelines and checklists to make trial regulations more stringent and uniform. At present, trials are based on guidelines brought out by the Indian Council of Medical Research and the office of DCGI. India had amended Schedule Y of the Drugs and Cosmetics Act in 2005 to create a conducive environment for doing trials in India, but specific laws are yet to be in placeÂ to effectively regulate trials in the country.
2.11 IPR AND ITS EFFECTS ON INDIAN PHARMACEUTICAL INDUSTRY
Indian Pharmaceutical Intellectual Property Right
Across the widest cross-section of views on Patents and Indian Pharma Industry, there is complete consensus on one area. Everyone, without exception, agrees that the Patents Act, 1970 which came into effect in 1972, was instrumental in providing the impetus for laying foundations of a strong manufacturing base of both formulations and bulk actives (as well as intermediates) in India. The Indian pharma entrepreneurs also deserve kudos for rising to the occasion and living up to the expectations and confidence reposed in them by the Government.
Provisions of the 1970 Act, which helped the National pharmaceutical industry to grow at a double digit pace. Special amended Provisions for pharmaceuticals, deleting product patenting (retaining process patenting), Introducing Licenses of Right, liberal Compulsory Licensing provisions, reduction of Patent protection period from 14 years to 7 years (from date of application) and 5 years (from date of sealing) in the Patent Act, 1970, virtually kept pharmaceutical patents out of protection and open for commercialization for anyone at will. Consequently, there was no interest for international applicants to file Pharmaceutical patent applications in India. While being active in "reverse engineering", with a weak patent system, the Indian Pharmaceutical Industry was not at all keen on innovative research and patenting. Keeping in view the changes in trade and commercial practices, globalization of trade, need for simplification and harmonization of trademarks registration systems etc., also a comprehensive review of the Trade and Merchandise Marks Act, 1958 was made and a Bill to repeal and replace the 1958 Act has since been passed by Parliament and notified in the Gazette on 30.12.1999. This Act not only makes Trade Marks Law, TRIPS compatibility but also harmonizes it with international systems and practices.
All the lacunas were also removed by the introduction of new agreement on patent and intellectual property rights and at present the importance of intellectual property in India is well established at all levels- statutory, administrative and judicial. The agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) came into force from 01 January 1995. It lays down minimum standards for protection and enforcement of intellectual property rights in member countries, which are required to promote effective and adequate protection of intellectual property with a view to reducing distortions and impediments to international trade. India, as a developing country, had a transition period of five years (with effect from 01January, 1995), i.e., till 01 January 2000 to apply the provisions of the Agreement.
Some Key Features of the Indian Patents Act of 2005
â€¢Re-introduction of product patents for drugs, medicines and foods, including products of chemical reactions.
â€¢Patent term made 20 years from the date of submission of the complete specification
â€¢Statutory publication of patent applications after 18 months of the priority date.
â€¢Provisions made for early publication on request
â€¢Creation of an appellate board for appeals
â€¢New definitions of some terms relevant to the pharmaceutical industry, including
'Inventive step, new invention and pharmaceutical substances
â€¢Reduction in number of drugs under price control to 28 as against 74
â€¢100 per cent foreign investment automatically permitted
â€¢Abolishment of industrial licensing for bulk drugs, intermediates and formulations
â€¢Automatic approval for Foreign Technology Agreements
â€¢The patent (Third amendment) Act, 2005
â€¢Revision of schedule Y to permit conduct of phase II-IV clinical trials in India
â€¢Amendment of schedule M to make industry compliance to good manufacturing practices
â€¢Stringent measures for makers of spurious drugs
â€¢Creation of pharma R&D fund with a total corpus of US$ 33.3 million.
â€¢Concessional Industrial Package for pharmaceutical manufacturers in certain hilly states.
â€¢Constitution of India Pharmacopoeia Commission
â€¢Creation of Export Promotion Council "Pharmexcil"
â€¢Tax exemptions at par with IT.
â€¢Reduction in peak custom duties from 30 per cent to 25 per cent
â€¢Increase on rate of depreciation on life saving equipment from 25 percent to 40 percent.
â€¢Tax holiday for R&D companies.
All in all, Indian market is again getting attractive for foreign pharmaceutical firms as market is now more profitable after induction of new patent laws and with new patent laws in place, the market scenario has changed as compare to earlier low cost of domestically produced drugs with government controlled prices and absence of patent regulations.
2.12 Contract manufacturing and product outsourcing
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. Under this new law, India will be forced to recognize not only the new patents but also any patent 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 (fig.-2.9)
FIG: 2.9. Opportunities for Indian pharmaceutical industry
Indian Pharmaceutical Industry
SOURCE: surveys-reports /Indian pharmaceutical industry@.www.cci.in
The Indian pharmaceutical industry is now discovering new opportunities of growth in clinical research, contract research, manufacturing and innovation opportunities. This path can lead the Indian pharmaceutical industry to huge success endeavors.
Research & Development is the key to the future of pharmaceutical industry. The pharmaceutical advances for considerable improvement in life expectancy and health all over the world are the result of a steadily increasing investment in research. There is considerable scope for collaborative R & D in India. India can offer several strengths to the international R & D community. These strengths relate to availability of excellent scientific talents who can develop combinatorial chemistry, new synthetic molecules and plant derived candidate drugs. The R & D expenditure by the Indian pharmaceutical industry is around 1.9 per cent of the industry's turnover, which is a little low as compared to foreign research based pharmaceutical companies. However, now that India is entering into the Patent protection area, many companies are spending relatively more on R & D.
When it comes to clinical evaluation at the time of multi-center trials, India is providing a strong base considering the real availability of clinical materials in diverse therapeutic areas. According to a survey by the Pharmaceutical Outsourcing Management Association and Bio/Pharmaceutical Outsourcing Report, pharmaceutical companies are utilizing substantially the services of Contract Research Organizations (CROs).
Indian Pharmaceutical Industry, with its rich scientific talents, provides cost-effective clinical trial research. It has an excellent record of development of improved, cost-beneficial chemical synthesis for various drug molecules. Some MNCs are already outsourcing these services from their Indian affiliates for years; these firms have made their ways into the global market by researching generic competitors to patented drugs and following up with litigation to challenge the patent. This approach remains untouched by the new patent regime and looks to increase in the future. However, those that can afford it have set their sights on an even higher goal i.e., new molecule discovery. Although the initial investment is huge, companies are lured by the promise of hefty profit margins and the recognition as a legitimate competitor in the global industry.
Emerging Model to Capture the Outsourcing OpportunityFig:2.10 Business model
Traditional Business Models in Indian Pharmacy
Model 1: Integrated Operations
Model 2: In House Manufacturing and Marketing of own products
Emerging Business Models in Indian Pharma Industry
Model-4: Manufacturing for
Model 3: contract R & D
Model 5: Contract/Co-Marketing Alliance
DD & D
DD&D: Drug Discovery and Development
CTO: Clinical Trials Organization
CM: Contract Manufacturing
The focus of Indian pharma companies is also shifting from process improvisation to drug discovery and R&D. The Indian companies are setting up their own R&D setups and are also collaborating with the research laboratories like CDRI, IICT etc
To adapt to this new patent regime, the industry is exploring business models, different from the existing traditional ones (Fig: 2.23).
New Business Models include:
â€¢ Contract research (drug discovery and clinical trials)
â€¢ Contract manufacturing
â€¢ Co-marketing alliances
Indian companies are proving to be better at developing APIs than their competitors from target markets and that too with non-infringing processes. Indian drugs are either entering into strategic alliances with large generic companies in the world of off-patent molecules or entering into contract manufacturing agreements with innovator companies for supplying complex under-patent molecules
Outsourcing in the fields of R&D and manufacturing is the next best event in the pharmaceutical industry. Spiraling cost, expiring patents, low R&D cost and market dynamics are driving the MNCs to outsource both manufacturing and research activities. India with its apt chemistry skills and low cost advantages, both in research and manufacturing coupled with skilled manpower will attract a lot of business in the days to come.
The Indian companies are putting their act together to tap the generic drugs markets in the regulated high margin markets of the developed countries. The US market remains to be the most lucrative market for the Indian companies led by its market size and the intensity of blockbuster drugs going off patent. An estimated US$45 billion of drugs had gone off patent by 2007 in US alone. The Indian pharmaceutical industry is also getting increasingly U.S. FDI compliant to harness the growth opportunities in areas of contract manufacturing and research. Indian companies such as Ranbaxy, Sun Pharma, and Dr. Reddy's are increasingly focusing on tapping the U.S. generic market.
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.
The Indian government is also giving the biotechnology sector a big push by bringing out for the first time a comprehensive national biotechnology policy. Biotechnology in India is developing in cluster zones that have reputable and established public life science research institutes at their centers. Various state governments are also individually coming out with their own biotechnology policies and are actively setting up biotechnology parks to facilitate research in new therapeutic options using cutting-edge technology. Hence, drug discovery outsourcing will be an option at which MNCs will be looking while evaluating India's collaborative R&D attractiveness. As India is becoming an increasingly attractive destination for R&D activities in the pharmaceutical industry. A variety of factors, from changing IP and patent laws, via favorable cost/skill ratios, to the past success of outsourcing in the IT fields, have converged to create a compelling business opportunity for Indian companies in pharmaceutical R&D. Global pharmaceutical companies can exploit this opportunity by developing an 'India Strategy' to enhance and complement their existing R&D efforts and playing a key role in promoting and sustaining development in the vital field of medicines.
2.13 INDIA TO EMERGE AS LEADING DESTINATION TO OUTSOURCE DRUG PRODUCTION
After studying the domestic pharmaceutical market, position of export and import, India's competitive strength and standard rules & regulation, including IPR's protection laws in earlier sections. Indian Pharma Industry boasts of quality producers and many units approved by regulatory authorities in USA and UK. 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. It can easily be predicted that Indian pharmaceutical industry is on fast track to become world leader in drug production.
The reasons why India has emerged as an inviting destination for outsourcing drugÂ production:
Over 80 per cent of the 38 big and medium-sized pharma companies across the world rated, India higher than China, Eastern Europe, Puerto Rico, Singapore and Ireland.
India offers a significant cost-quality proposition in end-to-end research and development, with potential savings of over 60 per cent as compared to the US, coupled with a strong supply of skilled manpower and capital efficiency.
The country has close to 100 manufacturing facilities approved by the FDA, the largest after the US.
Drug production outsourcing industry to grow over 43% annually, thrice the global growth rate.
Diminishing numbers of new drugs, as against existing drugs going off-patent, high research and development costs, and pressure to reduce healthcare costs are forcing big pharmaceuticals to rope in strategic partners to contain manufacturing and drug development expense.
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