The Indian Pharma Companies has emerged as a strong generic player since the Indian Patent Act has been introduced in 1970. Earlier only process patents are allowed but from 2005 onwards India has shifted towards the product patent regime which has put the industry on a new growth trajectory. There are immense opportunities for Indian generics firms in regions, such as the US, Europe, Japan, and Africa. The US is the largest pharmaceutical market in the world and high healthcare cost calls for the availability of cheap medicines. Moreover, branded drugs going off-patent in coming years are likely to create a huge market for generic drugs. Same is the case with other regions also, who are looking towards India as a supplier of quality driven generics. Up till now the Abbreviated New Drug Application (ANDA) for marketing the generic drug has increased steadily with about more than a third of the ANDA approvals were by Indian firms and we expect the growth to continue over the next five years also.
Currently the Compound Annual Growth Rate (CAGR) has been growing at 14-16 percent and in the next few years the generic era will continue to attract more companies thus intensifying the competition. Another key trend in the Indian pharma Industry is the declining R&D productivity. The industry is facing severe pressure on account of reducing number of blockbuster drugs coming into the market coupled with declining R&D productivity due to the rising drug discovery and development costs, as well as increasing sales and marketing expenses. With only “Lipitor” as a single blockbuster drug reaching an excess on $1 billion, there has been a slow down in the new drug launches in the near future thus opening up the generic opportunity. Strengthening intellectual property laws and regulatory reforms are encouraging multi-nationals to take increased interest in this market and significantly increase scale of investments.
The increasing spread of generics is opening up a stupendous opportunity globally. Most generics markets worldwide are set to report double-digit growth and going forward generics are expected to constitute a much larger share of the total pharma market and by 2020, India will become one of the top three generics drug makers in the world.
Other potential areas include bio-pharmaceuticals, contract research and manufacturing, and new drug research. The Biopharma sector makes for a huge part of the Indian biotechnology industry $1.9 billion in 2009-2010 to be precise, accounting for 60% of the $3 billion revenues of the biotech industry as a whole. Vaccines are of largest share among Biopharma products with 60% contribution. With world class R&D facilities and cost cutting capabilities India is attracting contract research outsourcing projects which is an add-on to the Biopharma sector growth. According to a study undertaken by research firm RNCOS; the biopharmaceuticals industry in India will grow at a CAGR of about 13% between 2010-2011 and 2012-2013. The Biopharma sector is comprised of 200 companies involved mainly in the production of vaccines, therapeutic drugs, animal biologicals, statins and diagnostics. Vaccine production is the most profitable, with five of the top ten companies in the Biopharma segment dealing primarily in vaccines. Vaccines account for approximately 60% of total Biopharma products.
India only has a handful of dedicated Biopharma companies which manufacture monoclonal antibodies, which primarily include cancer drugs, insulin, growth hormones and cell culture to produce vaccines. The low cost of manufacturing renders India as an attractive destination for contract research, and the availability of a large patient pool makes it appealing for clinical trials, which contributes the most, in terms of revenue, to the contract research segment. At present, Indian pharma industry is rapidly scaling up its presence in the innovative R&D space. Though there is a long way to go for Indian pharma companies to achieve a vital position in the global R&D landscape, companies are adopting collaborative research strategies such as in-licensing, out-licensing and joint development with international companies to ramp up their NCE/NDDS pipelines. By 2020 Indian Pharma would have gained substantial experience and expertise in the area of new drug discovery and development and certainly would have launched some of its molecules globally. Further strengthening of IP regime by policy makers and a forward looking regulatory regime will play a very important role in determining the success of Indian pharma industry.