The Preferred Biotech Resource in Asia-Pacific
Vol 19, No 07, July 2015
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FEATURE
Indian Pharma Industry: Trends, Predictions and Challenges
Dr. Aman Trehan, Mr. Amol Gaikwad
Wockhardt Ltd.

India has always been an important contributor to the global pharmaceutical industry with its large domestic market, impressive growth rate over last few years, and due to that it has become one of the sunrise sectors of the Indian economy.

There are around 24,000 pharmaceutical (pharma) companies in India; of which 250 to 300 fall under the organized category (about 75% of the top 20 pharma companies are of Indian origin). The total pharmaceutical revenue for period 2009–2010 was above $14 billion (over $11 billion in 2008-2009) with predicted growth of 10–12% for next years. About 69% of this revenue is from exports. The industry is currently ranked 4th in terms of volume and 13th in terms of value. Indian pharma industry is presently accounted for near 8% of global production and 2% of the world pharma market share with estimated value of $17 billion. These statistics put the country in 12th place internationally, behind Korea, Spain and Ireland and ahead of Mexico, Belgium and Brazil. Among the Asian countries Indian pharma industry ranks 4th at 8% share, but now has lost some of the market share to China.

The Indian pharma industry is currently growing at 10-12% per year with growing population, specifically fast urbanization, rising old population, improving purchasing power of middle income group and the focus of the country towards innovation and research. Thanks to the technological investment, India has been able to mass produce drugs from all major therapeutic groups. The growing generics business of the pharma industry is expected to be the largest driver of growth in future too.

These characteristics present their own opportunities and challenges. In order to drive profitable growth in the future, companies will have to rethink the way they do business today. For instance, introduction of the product patent regime in India has driven pharmaceutical companies both in India and abroad to reconsider their business models and explore newer markets. We shall briefly explore the Indian pharma industry in terms of the healthcare system, domestic advantages, market overview and trends, growth drivers-resistors and future challenges.

Healthcare System in India

Socioeconomic and demographic trends

India is 2nd most populated country in the world after China, with a population of 1.2 billion. For the period 2005-2010, the birthrate of the country was almost double than that of major markets (US, Japan, UK, Spain, France, Germany and Italy). However, the life expectancy was found to remain lower than other markets to 63.5 years during the same period. The elderly population of India is growing (from 52 million in 2005 to 59 million in 2010) and is forecast to quadruple to 221 million in 2050. This ever rising population is one of the concerns as well as driver for growth of the healthcare system in India in coming years.

On the positive side most of this population figure would be occupied by the young age (25 years) population, meaning the working population and thus India would have upper hand over other developed and developing countries on the same aspect. This can also nurture the healthcare industry in India with more tax paying population and an increase in healthcare cost affordability.

In terms of disease epidemiology, although India is undergoing a transition, the rapidly increasing lifestyle and demographic changes resulting from socio-economic development are shifting the burden to non-communicable diseases. However, due to poor existing healthcare infrastructure; reorientation, scrutiny and proper management of this system will be essential if the healthcare industry in India has to boom.

Healthcare system and regulations in India

The healthcare system in rural areas has remained poor in India. The government has now started to take several measures to tackle it by increasing the number of hospitals, increasing health insurance, improving the quality of medical training and improving access to medical services in rural areas. Private insurance is restricted to only few wealthy and the community-based health insurance covering the poor population with services provided by the non-governmental sector has remained lesser. Overall, the health insurance coverage has remained low in India despite several schemes.

In India, Central Drug Standard Control Organization (CDSCO) is the drug regulatory body headed by the Drug Controller General of India (DCGI). The cost of getting approval to manufacture or import new drugs in India is around $1,200. Although India's drug regulatory process is regarded as one of the better ones among the emerging markets, from the perspective of the research-based drug industry, continuous rejection of patent linkage and product patents has refrained foreign companies from doing business in India. The compulsory licensing is another provision in India that favors the domestic companies by allowing them to manufacture and sell patented medicines on the grounds of non meeting public needs or affordability.

National Pharmaceutical Pricing Authority (NPPA) is the regulatory authority for the prescription drug market in India. Price controls are scrutinized on certain drugs by virtue of the Drugs Price Control Order (DPCO) issued by the government in 1995 under the Essential Commodities Act (ECA). The NPPA fixes and monitors the prices of all scheduled drug formulations (both manufactured domestically and imported). The prices of non-scheduled medicines (medicines that do not fall under the price control) are simply monitored for price increases. Currently there are 354 medicines on the National List of Essential Medicines (NLEM), but only 45 are scheduled drugs under the DPCO. The NLEM medicines are meant to be distributed freely, especially to the poor population through state healthcare institutes.

Generics and biosimilars market

The Indian generics market was valued at $2 billion in 2008, with generic penetration estimated at 99.8% by volume and 20% by value in 2008, the high figure is due to tranquil enforcement of IP. Indian generic companies not only market their drugs domestically, but are also a massive exporter of drugs (generated over $10 billion in 2008, IDMA, 2009). Several factors that are keeping check on growth through export generic drug shipments seizures in the EU in transit to markets such as Latin America, the growing competition from China in terms of bulk drugs (APIs), finished dose generics exports, and quality concerns associated with drugs manufactured in India.

The biosimilars market is in its early stage in India; however through the gateway of emerging markets, Indian biosimilar manufacturers are now looking at global exposure. Since the developed markets are difficult to access due to complex registration process and expensive clinical trials, agreements with MNCs can address this issue (e.g. deal between India's Biocon & Pfizer of US).

Infrastructure of the Indian Pharma Industry

India represents 8% of the global drug production by volume and 1.5% by value (IDMA, 2009). This growth is mainly driven by API and generics business done by Indian companies both domestically and internationally and as the result of this R&D spending in India has remained lower. However, the scenario has now started to change as several Indian companies are developing innovative brand drugs as well as biosomilars.

MNCs on the other side are willing to expand their business in India through partnerships, mergers and acquisitions (M&As) of Indian companies which is attracted mainly by their slowing sales in other markets and past 2011 patent cliff. However due to increased M&A trend, the Indian Drug Manufacturers Association (IDMA) proposed a new legislation in July 2010 which recommends that foreign direct investment in excess of 49% in the pharma sector should be considered by India's Foreign Investment Promotion Board on a case-to-case basis, which is again something not in favor of MNCs.

Domestic Advantages

Bolstering economy

The Indian pharma industry is projected to show significant growth in near future owing to rise in pharma outsourcing and consolidation of highly fragmented industry. India has most number of US FDA-approved manufacturing facilities and in terms of technology, quality and vast range of medicines that are manufactured; it is ranked highest amongst all the third world countries (Figure 1).

With regards to India's clinical trials market, it is growing and expected to grow at higher rate in coming years, pursuant to investments in R&D with more and more ANDA filings in US.

Rich source of knowledge

India is blessed with a wealth of R&D institutions, rich and varied bio-diversity, flourishing pharma industry, strong IT skills and vast English speaking population. Every year India produces 700,000 scientists and engineers, including chemists and chemical engineers, and 1,500 PhDs. This highly technical population has given important position to India in the global market. Moreover, this large pool of scientific talent is available at a reasonable cost and the industry provides the highest intellectual capital per dollar worldwide (The Organization of Pharmaceutical Producers of India, OPPI).

Cost affordability

The pharma production costs in India are almost 50% lower than in Western countries. The clinical trial expenses are around one-tenth and overall R&D costs are about one-eighth of the Western levels. This is particularly important when we consider the cost of developing new drugs that involve investments of around $1 billion from discovery to worldwide marketing phase.

Contract research in India is done in various areas starting with new drug discovery to clinical trials. Similar to most outsourced businesses like in China, Singapore and Eastern Europe, the most considered factor for contract research in the pharma industry is the cost advantage. It is estimated that the cost of trials for a standard drug in India is half that of the US (which can be as much as $150 million). Currently the total revenue of the clinical trials industry in India is around $500 million with annual growth of 11–13%.

Government support

India offers a favorable environment as far as taxation policies for pharma industry are concerned. The country is already offering a variety of tax concessions to the pharma sector, including tax holidays for industrial operations established in special economic zones (SEZs) or under-developed areas; deduction of profits earned from exports; liberal depreciation allowances; deduction of capital R&D expenditure; and relief on all contributions to approved domestic research institutions. The units set up in SEZs can enjoy 100% corporate tax exemption on export profits in the first 5 years of operation, 50% exemption for the next five years, and 50% exemption on the reinvested export profits in the following 5 years. Various indirect tax benefits include exemption from payment of excise duty; customs duty; central sales tax and refund or exemption of service tax. The pending new Direct Tax Code is also expected to simplify the existing tax structure. The government has also taken steps to streamline the procedures involving development of new drug molecules and clinical research.

Market Overview and Trends

Indian pharma industry was estimated to register a strong double-digit growth of 13–14% in 2013. However, it turned out to be around 19% at the end of the year, courtesy to greater penetration in rural markets, rising generic sales and growth in chronic therapies. Table 1 summarizes top 10 Indian pharma companies in 2013. There were several new drug filings, new drug launches, and phase II clinical trials throughout the year.

In 2011, Indian pharma market was valued at $11.2 billion, and it is forecast to grow to $ 27.4 billion in 2020 at Compound Annual Growth Rate (CAGR) of 16.1% (OPPI 2012). Almost 90% of the market is occupied by branded generics and it is estimated to grow at CAGR of 15-20% for the next decade. The over-the-counter (OTC) market was valued at $3 billion in 2011, and it is forecast to reach $6.6 billion in 2016 at a CAGR of 17.0% (IBEF, 2012). Due to its thriving drug manufacturing and export market, exports in 2011 amounted to $7.9 billion, which is around two third of the domestic market, and had grown at a CAGR of 15% since 2006.

The increasing population of the higher-income group in the country has opened a potential $8 billion market by 2015 for MNCs that are selling costly drugs. Besides this, the domestic pharma market is estimated to touch $20 billion by 2015. By 2015, It is further estimated that market would grow at CAGR of 12 to 14% of total value of about 20 to 24 $billion. According to the Indian Pharma 2015 report the Indian pharma industry will roll in the next decade, and put the country into the top 10 markets in the world by 2015, overtaking Mexico, Turkey and South Korea. Figure 2 represents the Indian pharma market size forecast through 2017.

Considering the signs of healthy growth, the industry can to reach $55 billion and be in the top 10 global markets by 2020, thanks to steady increase in affordability and a steep jump in market access. The market will be comparable to developed markets other than US, Europe, Japan and China and in terms of volume it could even reach on top of the chart. However, economic slowdown and pricing control can deter the market growth to reach only $35 billion by 2020 or otherwise it can also reach as high as $70 billion under aggressive growth.

This future dramatic growth of Indian pharma industry will be largely attributed to factors such as growing middle class population, increasing incomes, rapid urbanization, new medical infrastructure, rise in chronic and lifestyle-related diseases, acceptance of health insurance coverage, and launches of the patented products.

Although there was a gradual shift in the disease pattern in India and the incidence of lifestyle-related chronic diseases have increased, acute care therapies have dominated the domestic pharma market. Anti-infectives were the largest therapy group, contributing 20% of the total market in 2011, while cardiovascular and gastrointestinal diseases are the other major therapy areas. The Anti Diabetic segment had CAGR of 19% over the period 2008-13 compared to 14% for the Anti-Infective segment (Crisil forecast). This has led to MNCs such as Pfizer, Glaxo, Roche and Sanofi Aventis launching almost 15 patented products in India with an eye on such high value life style related therapeutic segments.

From different economic zone perspective half of the market will be occupied by major therapies (therapies with >50% prescriptions generated by general and clinical practitioners) by 2020. Metros (cities with >1 million population) Tier-I (towns with population between 0.1 to 1 million) markets will be the major contributors to growth. Rural market will also cater growth with faster volume penetration and hospital share can increase from current 13% to 25% in 2020.

Indian companies have now started to shift gears to become a research based industry by evaluating their potential as innovators. India based Zydus Cadila Group have recently launched their own molecule, Lipaglyn®, a novel drug targeted at diabetes not controlled by statins alone, and is the world's first medicine to be approved for diabetic dyslipidemia and hypertriglyceridemia in Type II diabetes. The company has also received approval from the US-FDA to conduct Phase-1 clinical trials of its novel compound ZYDPLA 1.

The global economic crisis in 2008 could not affect India due to relatively low dependence on exports for growth and its cautious banking policies. India is also assumed to be the only emerging economy to maintain high growth till 2050.

Drivers and Resistors of Growth

The Indian pharmaceuticals market is in the middle of exciting times. While growth has accelerated considerably, industry strategies have also changed from its self-sufficient model to a high-profile joint venture model through M&As. In order to drive access and shape the market, companies mainly required to strengthen in order to give sustainable performance, handle increasing complexity and also associate with other players. On government front require large investments to expand healthcare access.

Drivers

Global pharma companies are increasingly under pressure due to several factors such as scarcity of new drugs, increasing demand from governments for reduced healthcare costs and higher R&D costs. These global trends have far reaching implications for Indian pharma companies across the entire value chain. Indian companies need to re-look at their strategies carefully and see how best they can respond to the new scenario. Some of the ways the Indian players can take advantage of the emerging opportunities are:

(1) Leveraging the domestic market opportunity:

Emerging economies like India are expected to impel future growth as the growth in US and developed economies is expected to narrow. The key growth drivers in India as aforesaid are rising income, increasing health awareness, insurance penetration, rising government spending, shift in disease profiles and adherence to global patent norms.

Increased public and private health spending will be the key market drivers in India to 2017. Growth of the life style related or chronic therapeutic segments will impact the market as it is expected to be more amongst the middle and upper income groups. The number of poor people covered by basic health insurance will also increase. The benefits of this will largely be harvested by generics players, as patented drugs are less likely to be reimbursed under the insurance schemes. According to McKinsey, 45% of Indian population will be covered under health insurance by 2020.

Indian companies are well positioned to share this huge domestic opportunity by broadening their product portfolio and including growing therapeutic segments CNS, diabetes, and cardiovascular. Companies can now sell quality medicines to India's middle and high class while at the same time continues their focus on low value and high volume medicines.

(2) Increasing foothold in Biologics:

Amongst various deals in the biologic market, the deal between global majors Sanofi Aventis and Shantha Biotech is the important landmark as far as India's biologics market is concerned. Still there are several hurdles in biologics market due to the investment involved. But as the biologics companies in the west are now finding it difficult to raise cash under the current economic condition, the scenario presents a good opportunity for Indian pharma companies (with significant cash on their balance sheet) to explore global market.

(3) Opportunities for Mergers and Acquisitions and strategic tie-ups:

Strategic tie-ups with global companies offer several opportunities for Indian companies to create 'win-win' situations, particularly in R&D and distribution. The consolidation amongst global majors is also expected to translate into stronger competition for Indian companies, especially in the global market. With increasing interest in the generics portfolio, MNCs will look at acquisition opportunities. This may provide financially lucrative opportunities for domestic companies looking to cash in.

In recent years there have been a number of high-profile MNC acquisitions of Indian pharma companies. The first important one is the takeover of Matrix Laboratories by Mylan Inc (US) in 2006. In 2008, Japanese corporation Daiichi acquired India's largest pharma company Ranbaxy for $3.6 billion. In the following year 2009, Sanofi paid $550 million and bought stake in Indian vaccine-maker Shanta Biotech. At times MNCs have also offered purchase prices which were many times higher than the actual sales turnover of the acquired firms, for instance, in 2010 Abbott paid $3.7 billion for Piramal Healthcare, which had $400 million revenue in sales. Recently (in September 2013), after months of internal debate over whether to permit the takeover, Indian government has approved the acquisition of Indian vaccine and injectable-drug maker Agila Specialties by Mylan for $1.6 billion.

Foreign companies have also invested in Indian generics producers in terms of different strategic alliances and joint ventures (JVs). Although this has been taking place for a while now, the frequency of these deals has increased rapidly in the recent past. Table 2 summarizes some of the alliances and JVs between Indian and foreign companies. A good example of this is the partnership deal between Merck and Sun pharma. According to the deal Sun is marketing two niche anti-diabetic products of Merck, Januvia® and Janumet® in India. Due to the large number of drugs going off-patent in the next few years, this trend is expected to increase even further.

The number of global acquisitions by Indian companies for strategic objectives like technical or manufacturing expertise, distribution facilities and market share has also increased in the recent past (Table 3). The global market continues to offer these opportunities for domestic companies looking to expand their international presence.

Resistors

In order to be more globally competitive and internationally visible, the industry also needs to contend with several obstacles.

(1) Infrastructure:

Infrastructure has always been considered as a main barrier to growth of pharma industry in India. Some areas lack basic facilities such as transport, medical and education, preventing reach and penetration. The situation is improving with gradually increasing investment by government in infrastructure, but it is still seen as an investment opportunity in India.

(2) Counterfeiting:

Counterfeiting of drugs has been a major issue in the Indian pharma market. The inherent nature of the Indian market makes it difficult to carry out a systematic study that quantifies the extent of counterfeiting. A large scale survey published in December 2009 by the Health Ministry reported that spurious drug prevalence is much lower than otherwise suggested and according to which only 0.046% of all medicines sold contained evidence of being spurious. The figure is in contrast to other reports, for example one conducted by the International Pharmaceutical Federation and financed by the WHO that said 3.1% of all drugs sold in India were spurious. Steps taken by the industry to counter the threat of counterfeiting include investing in innovative packaging, using authenticity markers and sponsoring programs to increase awareness amongst patients and healthcare workers. OPPI has also carried out various initiatives to combat the situation like organizing seminars and working with the Ministry of Health towards the development of policies against spurious drugs. Despite of such measures strong enforcement of IP and legal system is also required to counter the issue of spurious drugs in India.

(3) Price Control:

Price controls are broadly cited as the most critical challenge that companies face in India. India is recognized as one of the price controlled markets in the world, as the prices and margins are monitored carefully by DPCO and supervised by the NPPA. Price controlled drugs are essential medicines such as painkillers, antibiotics and those for cancer and asthma. Such medicines contain bulk drugs, whose prices cannot be hiked by manufacturers on their own but are controlled by the NPPA. Currently there are 76 bulk drugs under the DPCO but 90% of drugs are currently outside of any price controls in India. Although the consumer organizations are demanding for the expansion of DPCO list, but the industry believes that there is enough competition for the prices to be modulated by the market itself. According to industry, price caps would inhibit the development of R&D in the country as companies would be less inclined to invest in R&D without the possibility of high returns.

(4) Manufacturing Standards:

Indian manufacturers are currently facing some scrutiny around quality issues. In 2009, the US-FDA took action against few Indian companies after conducting a series of inspections by issuing warning letters to those companies. This is a significant challenge for Indian manufactures, but some consider it as an opportunity too. Indian companies are aggressively improving their manufacturing standards, and are therefore likely to be better positioned to take advantage of the upsurge in generics production expected as patents expire in years to come. A few domestic manufacturers are also now incorporating 'Lean Manufacturing' and 'Six Sigma' principles to help them boost operational efficiency, facilitate compliance and improve quality.

(5) Intellectual Property:

India has accepted and committed to the Trade-Related Aspects of Intellectual Property Rights (TRIPS) in 1995, with implementation of the Patent (Amendment) Act in 2005. Although the act does not apply for drugs patented before 1995, it is a major step forward on the earlier patent scenario and recommendations have been made to the government regarding improvement since then. A report by 'Satwant Reddy committee' and the 'Mashelkar report' highlighted the need for data exclusivity and the prevention of patent 'evergreening'.

Some MNCs are not willing to enforce their patent rights related to their patented products due to poor confidence in India's patent system. Boehringer Ingelheim (BI) is not pursuing lawsuits against Indian companies that are manufacturing and selling generic version of its HIV drug Viramune®. However, BI did ensure that these local manufacturers adhere to good manufacturing practice (GMP) and distribute quality product.

In December 2008, the Delhi High Court's landmark judgment in favor of Bristol-Myers Squibb, the patent holder for the leukemia drug Dasatinib, restrained Hetero Drugs from manufacturing and marketing generic versions of the drug. In the past, marketing approvals were sometimes granted by the DCGI independently of the patent status of the drug in question. The judgment was an effort to establish patent linkage in India.

Despite valid patent protection to Bayer's hepatocellular carcinoma drug Nexavar®, it is facing competition from Natco Pharma. Due to the inability of the general population to afford Nexavar®, the Indian company Natco has been granted compulsory license (the manufacturing and marketing rights) by the Intellectual Property Appellate Board (IPAB). Natco is paying 6% in royalties and is able to provide Nexavar® at costs of around $170 per month against Bayer's monthly treatment costs of $5,500. In response Bayer is offering the product at reduced price (about 10% of original costs), but on the condition that this can be availed only by the patients diagnosed by licensed oncologists. Bayer has recently filed an appeal at Mumbai High Court against the IPAB decision of granting compulsory license to Natco. The IPAB's decision, if upheld by the High court, can serve two advantages, one by enhancing the quality and affordability of healthcare to patients and second by reducing the risk of parallel trade.

The most popular and recent case followed by the global IP fraternity is Novatis' Glivec® case. In April 2013, the Supreme Court of India denied a patent to Novartis for its cancer drug Glivec® for lack of improved efficacy under section 3(d) of the Indian Patent Act. The decision has spurred a new dialogue amongst the global innovator companies questioning about the patent enforcement system in India.

While the patent system in India does not seem to be favoring MNCs, some of them have decided to join hands with Indian companies to mark their presence in domestic business. Roche has entered a partnership with India's Emcure Pharms in 2012 in order to increase affordability and access to some of its blockbuster products. According to the deal, Emcure would produce Roche's breast cancer drug Herceptin® and its lymphoma and rheumatoid arthritis treatment MabThera® for domestic selling under different names and at significantly lower prices. Eventually in January 2013 the Indian government started the process of granting a compulsory license on Herceptin®.

The Indian courts deciding more against the global pharma companies, they are showing less confidence in IP enforcement system in India, and we expect that the situation will make these companies to reconsider their patented product launch and pricing strategy in India.

Future Challenges

In the recent years, global pharma industry has gone through a difficult period where shareholders, regulators, and the market have created high pressure in order to maintain sustainable growth. The Indian pharma market, being an exception to this situation is haunted with a unique and important challenge of delivering affordable health care to India's billion-plus population. Indian pharma industry at present is not only attempting to cater the domestic needs but also adopting new transformations in its business model to make its mark on the global front. Besides the aforementioned resistors, there are several other challenges that can affect the current trends. Table 4 summarizes the SWOT analysis of Indian pharma industry.

Considering the ever increasing public spending on healthcare, the government needs to increase it's spending on the healthcare from a present low of 1% of total GDP to 3%. The government should also focus on increasing penetration and access to health insurance. The government should also execute developmental plans to fulfill basic infrastructure needs, particularly those related to medical, transportation, and education. There is also a need of creating and enabling policies and regulatory framework for the launch of innovator products with the focus on price monitoring rather than price control.

From the domestic companies viewpoint, it needs to think 'out of the box' by refraining from its old copycat producer image and establish itself as the innovator of novel drugs with continuous efforts to develop modern technology in the pharma and healthcare industry.

From the recent court decisions, it is evident that India is a good example of how harsh the situation can be with regard to IP protection. It is now considered that legal system in India supports only domestic companies with justification of providing affordable medication to the Indian population. This support is given even when it goes against existing patent laws and corresponding rules of the World Trade Organization. Under compulsory licensing laws, the government allows Indian company to produce a patented product without the consent of the patent owner on the grounds including non-availability of a patented drug at a reasonably affordable price. High-cost drugs such as those for oncology and HIV have usually been targeted in the recent past and in extreme case, patents for these drugs can also be rejected. The current scenario in India is thus not appealing for foreign companies as far as enforcement of the IP is concerned and it would take them a while to regain confidence in India's IP protection laws and eventually invest more on patented drugs in India.

The future growth of the Indian pharma industry is also getting affected by accelerated growth rate of other pharma markets. In the recent past, China has emerged as one of the biggest competitor of India. The country is one of the largest bulk drug manufacturers in the world and has become favorite contract manufacturing and outsourcing destination which it is offering with the cheap price tag.

Conclusion

The economic prospects of Indian pharma market have now been well recognized by global pharma companies. As a consequence of changes to India's drug patent legislation; India's pharma industry is still undergoing a process of re-orientation. These changes have also brought back several of the multinationals who had left India in past due to the unfriendly patent system.

Indian companies' new focus is increasingly on self-developed drugs, contract research and production for western drug companies and to nurture this trend it needs to innovate more than imitate. Large manufacturers have already begun to adjust their business models and are putting greater emphasis on drug research. Even though a number of companies are well positioned in the generics market, many of them are seeking to turn into research-based firms. Leading pharma companies in India are currently spending nearly one-tenth of their revenues on R&D, hence, foreign companies are now looking at India not only for the traditional strengths in contract manufacturing but also as a highly attractive location for R&D, that includes conducting clinical trials. However, fundamental issues like poor infrastructure and quality manufacturing are still haunting domestic companies and needs to be addressed more robustly.

The acquisition of Indian pharma companies by global majors and the success of Indian firms in the generics market have been high-flying stories for the last few years. The main reason for huge growth opportunity in the Indian pharma industry is the primary reasons for this trend. However this is not the complete scenario. Indian pharma companies have global aspirations such as developing R&D capabilities, entering newer markets, exploring new drug development and even acquiring overseas companies. Despite this growth, concerns like the affordability of drugs for lower-income groups and the ability to rapidly respond to pandemics like swine flu still remain unaddressed. Risks and costs can be shared through more collaborations with MNCs that can also ascertain better results. However, the major limiting factor in attracting investment by the global pharma companies in India at present is their lower confidence in IP and legal system in India. Both the government and Industry lobby needs to balance the domestic objectives like affordability at one side and protection of IP rights of the innovator companies on the other.

Indian companies will also need to reconsider their business strategies on country to country basis considering individual value of the market, be it operating through strategic and marketing alliances or physically setting up operations in these countries.

Pharma industry trends in India at present are not only demanding, but at the same time provide new horizond for the Indian as well as overseas pharma companies. Strategies that worked in the past may not work out in the current scenario or be useful for sustainable growth in the future. Only companies that adopt fundamental changes and revise their strategies accordingly will be able to flourish in future. Overall, the Indian pharma business model is witnessing a paradigm shift, moving from a fully integrated company structure towards a future where companies use a wide range of outsourcing, contracting and partnerships to create networks of collaboration and discovery. Investing in India will be a vital component of this networked future. Companies that will be most successful in doing business in India will be those that are most expert at managing and mixing a range of contractual relationships and partnership strategies. The baseline for optimistic future outlook of the pharma market in India is improvement in access of medicines to Indian population.

With the right strategy, Indian companies are very well balanced and capable of taking advantage of these changes in order to effectively map the future. We can expect that the Indian pharma market will persistently evolve.

Disclaimer: The purpose of this paper is for discussion in area of the Indian Pharma Industry. We do not make definitive statements on the current status and represent our personal views and do not represent the views of Wockhardt or any of its past, present, or future clients

About the Author

Dr. Aman Trehan is General Manager-Global Intellectual Property & Strategic Planning at Wockhardt Ltd. In his previous assignment, he was Head-IP at Pharmaceutical Technology Centre of Zydus Cadila Healthcare Ltd. He obtained his doctorate in Pharmaceutical Sciences from Panjab University, India. He has worked in various multinational pharma companies of repute i.e. Ranbaxy, Wockhardt, and Alembic. He has undergone various specialized training courses on various aspects of Patent Law in US and Europe. His core areas of expertise include: a) IP due diligence of ANDAs/dossier filing of solid orals, topicals, pulmonary, transdermals, parenterals, ophthalmics for multiple markets including US and Europe by ensuring development of patent non-infringing technologies/inventions and providing in house opinion on patentability and non-infringement; b) Managing litigation activities which includes providing paragraph IV notice letters, strategizing course of litigation and providing interface and support to outside counsels during lawsuits and minimizing potential risks involved in litigation, managing discovery and depositions; c) Managing global patent portfolio of organization, which includes ensuring legal protection of in house developed technologies and inventions by drafting and prosecuting patent applications in different countries; d) Supporting business teams in identification of products and FTF opportunities.; e) Strategizing expansion and strengthening of company's product portfolio; f) IP Due-diligence analysis for merger and acquisitions.

Mr. Amol Gaikwad is Deputy Manager-Global Intellectual Property at Wockhardt Ltd. In his previous assignment, he was part of the Pharmaceutical Technology Centre of Zydus Cadila Healthcare Ltd and IP Cell at Cipla Ltd. He has Masters in Pharmacology from Mumbai University and has done PGDIPM from AIPS, Mumbai, India. He is an Indian Patent Agent and has undergone specialized training course on various aspects of Japanese Patent Law. He supports IP team at Wockhardt in a) Searches and patent landscape; b) Infringement Analysis and c) Drafting & Prosecution of patents.  

 

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