India's coming

New World Trade Organisation patent protection rules took effect on January 1 2005 and changed India?s position in world pharmaceuticals forever: they made it stronger.

India, for so long the ‘copycat’ king of generic drug production, is marching to a different tune – innovate, don’t imitate. Since the introduction of new patent protection rules by the World Trade Organisation, which came into effect on January 1 2005, Indian companies can no longer simply copy drugs patented after January 1995 and sell them to the world.

Making and marketing generic formulations for big regulated markets such as Australia, Europe, South Africa and the US is still a key revenue driver, but the wider-view now encompasses R&D and new chemical entities.

India already has the largest number of drug manufacturing facilities approved by the U.S. Food & Drug Administration outside the United States – now it plans to export pharmaceuticals worth $6 billion by 2010.

According to Geoff Hiscock, 
CNN’s Asia Business Editor: “Just as India has made a name globally on the strength of a vibrant information technology services sector, so too, have its drug companies made tremendous strides in the past decade. India came to pharma with similar advantages to IT – costs are low and high-quality intellectual capital is plentiful.

“For example, costs in India for scientists, doctors and laboratory analysts are about one-fifth to one-eighth of those in the United States. India also is making a name for itself as a good place for clinical trials.”

Another great advantage, especially from the point of view of foreign investors, is the fact that 100 percent Foreign Direct Investment is permitted in Indian pharmaceutical companies. That makes the pharmaceutical industry extremely lucrative as well as experienced, hungry and forward looking. It may be a world-beating combination.

India’s infrastructure

• India’s government is investing US$50 million on airports, seaports and surface transport. The railway has received a boost of US$3.5 million on four major bridges.
• India has the third largest road network in the world. There are almost three million kilometres of highways, although more than one million kilometres of these are unpaved.
• There is 63,000km of railway track throughout the country as well as 333 airports – 234 of which have paved runways.
• Port capacity is predicted to improve by 35 percent with better working practices and modernisation being introduced.
• India has 14,500 of waterways – 485km of which are canals suitable for mechanical vessels.
• The Government spent just 3.3 percent of GDP on infrastructure in 2003 – a 33 year low. This is expected to rise to 4.7 percent by 2009.
• With the exception of telecommunications, most infrastructure services are 50-100 percent higher than China. Railway transport costs three times as much in India as it does in China and electricity for Indian manufacturing is also higher – double that of the Asian giant’s costs.
• The Government and its bodies own 90 percent of the electricity supply.
• Mumbai has privatised power production and is one of the few cities in India with 24-hour power.
• Freight accounts for just over one tenth of the country’s total import value – compared with a six percent global average.

India’s pharmaceutical industry

• Annual Turnover: Rs.269 billion; Growth 6.4%
• Exports: Rs.167 billion – Over 65 countries
• Imports: Rs.44 billion; Growth 10.2%
• Bulk Drugs Production: Rs.94 billion. Over 400 Bulk drugs manufactured
• Future Market Size: McKinsey Projection 2010 – US$25 billion
• Outsourcing Opportunities: Excellent outsourcing opportunities for clinical trials, R&D, custom synthesis, technical services, e.g. Bioinformatics, etc.
• Manufacturing Facilities: Largest number of US FDA approved manufacturing facilities outside US
• No. of DMFs (Drug Master Files) filed with US FDA: 197, largest DMF filed in US
• Per Capita Drug Expenditure: Rs.250 per year
• Share of World Pharma Market: 1.8% in value, 8% in volume terms
• Global Ranking: Volume terms – 4th, Value terms – 14th
• Number of Formulations: Over 60,000 in 60 therapeutic categories
• Capital Investment: Rs.52 billion; Growth 14.8%
• R&D Expenditure: Rs.11.8 billion, 4% of sales (However, some research based companies are spending over 6% of sales on R&D)
• Ancillary Industry: Extremely well developed. All manufacturing equipment and machineries locally available
• Number of Units: About 10,000, out of which around 300 units are in the large and medium sectors
• Intellectual Capital: Third largest English speaking scientific and technical manpower in the world (highest intellectual capital per dollar)
• Employment: Direct – 5,00,000; Indirect – 24,00,000
• Price Control: 3 tier control – on Bulk Drugs, Formulations and Overall Profitability. Currently, 74 drugs under price control (40% of retail market) – Pharmaceutical Policy 2002 is currently under judicial review in Supreme Court. If cleared, likely to reduce number of drugs under price control from 74 to about 25.
• OTC Market: Approx. Rs. 42 billion, Growth 18-20%
• Alternative Medicine: Herbal, Ayurvedic, etc. – about Rs.44 billion
• Biotech Market: Total Biotech Market in India is estimated to be Rs.67 billion. About 60% of this market is accounted by Biopharmaceuticals.
• Health Infrastructure: No. of Doctors – 6,25,130; No. of Nurses – 8,36,000; No. of Hospitals – 16,000; No. of Retail Chemists – 5,00,000; Medical Colleges – 171; Primary Health Centres – 1,64,000; Medical Reps. – 3,00,000
• Top 10 Companies (based on retail sales):
  1. Cipla
  2. GlaxoSmithKline
  3. Ranbaxy
  4. Nicholas Piramal
  5. Sun Pharma
  6. Pfizer
  7. Dr. Reddy’s
  8. Zydus Cadila
  9. Sanofi-Aventis
  10. Aristo
• Top 10 Brands (based on retail sales):
  1. Corex (Chlorpheniramine Maleate, Codeine Phosphate)
  2. Human Mixtard (Insulin)
  3. Voveran (Diclofenac Sodium)
  4. Becosules (Vitamin B Complex, Vitamin C)
  5. Taxim (Cefotaxime)
  6. Asthalin (Salbutamol)
  7. Sporidex (Cephalexin)
  8. Digene (Aluminium Hydroxide, Magnesium Hydroxide)
  9. Betnesol (Betamethasone)
  10. Althrocin (Erythromycin)
• Fastest growing segments: Anti-diabetic, Cardiovascular, Central Nervous System

Courtesy Organisation of Pharmaceutical Producers of India