Indian Pharma has made impressive strides in the global arena across different business segments and has demonstrated its ability to play a leadership role in each of them. However, KPMG – CII report titled- India Pharma Inc- An Emerging Global Pharma Hub released at the Pharma Summit 2008, highlights that the sector needs to further tap opportunities where India can truly become a global pharma hub and help address challenges that it faces to get there.
India has proved itself as an excellent value proposition for global pharma companies, most of whom are leveraging on India’s cost competitiveness and large pool of technically skilled manpower. India has emerged as a preferred global supplier of high quality drugs and intermediates at very cost effective prices. Indian companies are working aggressively to get a stronger foothold across various segments such as Generics, Contract Research and Manufacturing, Services and Clinical Research Services.
Speaking on the occasion, Hitesh Gajaria, Sector Head –Pharmaceuticals, KPMG in India, said, “Amendments to India’s patent legislation in 2005 have proved to be a turning point which resulted in growth in the partnerships between Indian and foreign companies across a varied range of areas such as discovery research, development and manufacturing. This market is projected to grow at a healthy Compounded Annual Growth Rate (CAGR) of 13 percent over the next 4 years to touch USD 73 billion by 2011.”
The R&D divisions of Indian pharmaceutical companies are making the transition from reverse engineering to discovery and development of new molecules. They have displayed potential to build their expertise and capabilities and have made inroads in this space. India is now concurrently developing its New Chemical Entity (NCE) baskets and is gearing up to launch its own patented molecules globally in the future. Indian companies are increasingly collaborating with the Big Pharma through licensing and joint development agreements in order to cope with the high costs and risks associated with new molecule discovery and development.
The intense pricing pressure in the global generics market can pose serious constraints on the sustainability of this source in order to further their R&D initiatives. Many Indian companies have already or are in process of hiving off their R&D activities into separate entities in order to enhance the focus on this business segment. This demerger strategy lays the foundation for building a sustained model for carrying out successful new drug discovery R&D.
For many Indian companies, generics are still a key focus segment. India has gradually established a dominant position through its aggressive global growth strategies and its steadily improving share in the export of Active Pharmaceutical Ingredients (APIs) and formulations. More and more Indian companies are now exploring the Para IV strategy after having seen the success of the trendsetters in this space. Also the product portfolios are being revamped to include niche and specialty products that are less susceptible to competition.
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The growth of the domestic pharmaceutical industry has outperformed the growth of the global pharmaceutical industry. However, the sector is currently undergoing a challenging phase. Firstly, a large lump of their revenues are at risk as drugs worth USD 47 billion are expected to go off patent in the U.S. market alone over the next 3 years. Secondly, there has been an increased penetration of generics in global markets that have traditionally been dominated by innovator products. Further, the industry has witnessed a considerable reduction in the number of new product approvals. In 2007, the FDA approved just 19 new drugs, the lowest in 24 years. Also, the safety standards for new drug approvals have become stricter as a result of the recent withdrawals and black-box warnings received by some high-profile drugs.
“There are still a few concerns in terms of strengthening the regulatory infrastructure and framework within the country, investing in developing educational infrastructure to ensure a continued adequate skilled talent pool supply, and building stronger capabilities on the discovery front,” added Hitesh Gajaria.
About KPMG:
KPMG is the global network of professional services firms of KPMG International. KPMG member firms provide audit, tax and advisory services through industry focused, talented professionals, who deliver value for the benefit of their clients and communities.
KPMG in India has offices in Mumbai, Delhi, Bangalore, Chennai, Hyderabad, Kolkata and Pune and services over 2,000 international and national clients. The firms in India have access to more than 900 Indian and expatriate professionals.