| Chairman and managing director of Zydus Cadila Healthcare Pankaj R Patel said, "We have just signed a memorandum of understanding with an Italian major Zambon Group, which will outsource pharma products from us. With this, Zydus Cadila is looking seriously at opportunities in this sector. Though a comparison between IT outsourcing and outsourcing in pharma sector is difficult, I believe Indian pharmaceutical companies have immense potential in this segment." |
| Apart from active pharmaceutical ingredients (APIs), offshoring is set to increase due to the medical billing pattern prevalent in the US. While most companies invest heavily in innovative research and development (R&D), the cost of manufacturing in the US is also on the higher side, thus pushing up prices. In this regard, Indian companies see a bright future in offshoring for contract R&D and manufacturing generics. |
| "Any pharmaceutical company in India having approval of the foreign regulatory authorities will have an edge for contract manufacturing. Even for marketing their products in India international pharma companies are is the process of tying up with Indian companies as they need the permission of the local authorities," said D B Modi, chairman, Pharmaceuticals Export Promotion Council (Pharmexcil) of India. |
| "We are at present negotiating with various global pharma majors for contract manufacturing for APIs, and formulations as well. With Indian drug companies setting up bases for the manufacture of APIs and formulations, most of the overseas generic companies are looking towards outsourcing from the country," said Kamlesh Udani, executive director, technical and production, J B Chemicals and Pharmaceuticals, on Friday. |
| The pharmaceutical industry in India is fragmented with about 10,000 manufacturing units, of which 300 are in the organised sector. The top 10 companies make up for more than one-third of the market. The revenue generated by the industry are approximately $5 billion which is growing at an average rate of 10 per cent over the last five years. |
| While formulations account for around 35 per cent of this industry, bulk drugs make up for the balance. The Indian pharma industry accounts for about one per cent of the world's pharma sector in value terms and eight per cent in volume terms, which suggest that it has a huge potential to grow in value term. |
| However, the annual per capita drug expenditure is still among the lowest in the world. "Global pharma majors will have two mode of operations in the country. First they will manufacture their drugs in the country through contract manufacturing and will market it in the regulated markets abroad or may market the drugs or formulations in the Indian market through their own distribution network," said Modi. |
| In recent past Indian companies have targeted international markets and have extended their presence there. |
| While some companies are doing bulk drug exports, some have moved up in the value chain and export formulations and generic products. |
| Total exports from the country stood at Rs 14,100 crore in 2003. The country also offers exports opportunities for clinical trials, R&D, custom synthesis, technical services like Bioinformatics. |
| "Contract manufacturing has huge potential in India and with the beginning of the patent regime, global pharma majors are eyeing India as the most suitable destination. International companies are forming marketing tie-ups with various Indian companies," said, J R Vyas, managing director, Dishman Pharmaceuticals and Chemicals. |
| The fortunes of Indian pharma industry are significantly influenced by regulations. Indian companies capitalised on the absence of product patents in the country and mastered the art of making generics version of the patented drugs at very low cost. |
| "The government will have to ensure about the data protection of the clinical trials in India that will encourage global pharma companies to enter into contract manufacturing in India," said Vyas. |
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