Indian drug firms get a shot in the arm in $12-bn Australian drug market

Indian drug firms get a shot in the arm in the $12 bn Australian drug market as the Therapeutic Goods Administration (TGA), Australia agrees to accelerate the drug approval process in that country for Indian players who already have an approved plant and product from one of the stringent regulatory authorities like US, EU or Canada.

From current sales of $340 mn, the Indian firms can see a significant upside in sales; felt Dinesh Dua, former chairman of the Pharmaceutical Exports Promotion Council of India (Pharmexcil), and the MD of Nectar Lifesciences. He highlighted that only 12 percent of the Australian drug market is generic, as against 80-90 percent in the US or EU. Of this $1.5 bn generic drug market in India, Indian companies have a small share. “We believe that the generic drug market can swell to $4 bn in the next five years and the Indian players can garner a 40 percent share easily with this accelerated approval process with the TGA, Australia,” Dua said.

Dua was part of an Indian delegation comprising industry and government representatives that visited Down Under around March 28 to April 2. India has signed an interim free trade agreement (FTA) with Australia for an accelerated pathway for drug approvals.

Typically, drug approvals would take close to 255 days to a year’s time in Australia. However, the TGA has now agreed that if any Indian firm files for a dossier (product approval) which is already approved by any stringent regulatory authority like the USFDA, UK-MHRA, Health Canada, EMA (EU) etc, from a manufacturing plant which too is approved by the above, then the TGA would consider giving approvals within 45-75 days.

India has over 750 USFDA approved plants and over 4000 products which are approved by either the US or EU or any other stringent regulator. Therefore, the market for Australia now opens up for these products easily.

Dua said that TGA said that if the product dossier and the manufacturing site are approved by a Comparative Overseas Regulator (COR), then that would expedite the approval process in Australia. “If there are minor observations by any regulator on the plant etc, then the company can upload the Corrective Action and Preventive Action (CAPA) along with the product application,” Dua explained.

As such very few Indian companies have a presence in the Australian market now – Sun Pharmaceuticals, Lupin, Cipla to name a few. A Mumbai-based analyst said that Australia is a very small portion of their Rest of the World (RoW) business. “Typically, Indian pharma companies follow a business model whereby the US contributes 30-35 percent of their revenues, India contributes around 30-35 percent, and then API or bulk drug business contributes around 10-15 percent. 

Australia is a lucrative market in terms of pricing, but since the entry barriers were high and the size of the generic market small, Indian players never showed much interest,” the analyst explained.

Things are likely to change now, felt the pharmaceutical industry.

Sudarshan Jain, secretary general of the Indian Pharmaceutical Alliance (IPA) which represents the top 24 drugs firms in the country, and who was also a part of the Indian delegation to Australia, said that this interim FTA would serve as a benchmark when India will approach other countries for expedited drug approval processes, or reciprocity in drug approvals. “This is indeed a great step forward for the Indian drug industry, and the government played a crucial role in making this happen. This would now serve as a benchmark for other FTAs,” Jain said.

Australia is a market where prices are quite high. Unit prices for medicines are 4-5 times more than the US and 30-40 times more than India. Australia imports 90 percent of its medicines. “It’s a win-win for both India and Australia – they will get affordable, yet quality drugs, and Indian players will get a market with better pricing,” Jain elaborated.

Analysts feel that there is significant potential in the next two to three years.  “Australia is a developed but highly import dependent country in the global pharma market. For Indian companies, there will be significant potential for the growth over the next 2-3 years considering current small base, low cost medicines and speedy approvals for Indian drugs from the Therapeutic Goods Administration (TGA) which are already approved by US, the UK, and European Union,” said Krishnanath Munde, Associate Director, Large Corporates India Ratings & Research.

He added that even though the size of the Australian Pharma market is small (around 1 percent of the global pharma market) , this will help in diversifying the revenue base to some extent for the Indian pharma companies.