AMSTERDAM, December 2, 2014 /PRNewswire/ --
CPhI India Report Forecasts New MNCs to Emerge From India's Pharma SMEs and Japan & Africa as Key Export Growth Markets
Indian manufacturers evolving up value chain, concentrating on high-value, low volume work and shifting some R&D programmes to Western economies. NCE launch predicted in next few years
- India's biggest companies will see growth in CRAMS services for patented products as trust in regulatory and quality standards increases
- India to increasing become a hotbed of clinical trial supply and advanced development work
- Biggest players to grow technology base through overseas acquisitions and partnering with big pharma for R&D
- Expenditures on R&D by thirty of the top pharmaceutical companies in India rose by 19.7%, with investments focused on novel drug delivery systems
- Some of India's biggest players are actively investing in R&D facilities abroad- Sun, Piramal, Lupin and Cipla
- New Chemical Entities from India to emerge in the next few years- cutting edge research underway, including innovations in creating an oral dosage form of insulin
- Huge future growth potential in Japan where Indian companies currently have limited presence, but there is predicted to be a rapidly rising use of generics
- In 2015 a significant number Indian companies will enter the African market as growth is predicted at 25% to 30% by volume per year
- Biologics and biosimilars to represent 15% of Indian market value by 2020
- India's API producers have increasingly started to shift towards high value low volume work with complex chemistry and IP challenges
CPhI Worldwide, organised by UBM Live, announces the findings of its Pharma Insights: India report at CPhI India 2014 (Mumbai), with a full in-depth printed report and transcripts available free of charge to attendees. The printed report - entitled: 'CPhI India Pharmaceuticals 2015 - Industry explorations' - was conducted by CPhI in partnership with GBR and provides a comprehensive analysis of the India pharma market.
Overall, CPhI's report shows that after relatively moderate growth in 2013, Indian companies are extremely confident about the growth potential in both the near and medium term. Outsourcing and exports are already pushing ahead again at remarkable rates, with most companies reporting double digit pace growth.
One of the most startling trends to emerge from the report is that small and medium sized enterprises (SMEs) that have traditionally relied on the domestic market are now rapidly expanding and emerging as MNCs based on exports led growth strategies. For example, Galpha Laboratories - 66% of sales this year were domestic - has seen exports expand by 400% in the last year.
Globally, the largest pharma companies in India have consolidated an exports market presence, and following these 'market makers', a second wave of Indian manufacturing firms are looking to grow beyond the $100million mark and to increasingly export internationally. One key new region to emerge for exports is Japan, a market that currently has limited overseas penetration and which is now opening its doors. Collectively Indian companies are looking at this region as the next great growth market.
Another key area will be South and Latin America, where a number of Indian exporters are currently targeting their efforts- countries like Argentina recently removed trade barriers and are welcoming Indian imports for their healthcare economy.[i] Two thirds of India's pharma industry is still coming from the SME sector and with these companies increasingly expanding into international markets, the next few years promise to see a more mature and globally dominant Indian pharma industry.
In recent years, we have seen India vastly increase its capabilities, expanding from API manufacturing to finished dosage delivery. Furthermore, India's API producers are now shifting towards high value, low volume work, with complex chemistry and IP challenges- by using this strategy in the last 2-years alone, Megafine has grown at an annualised rate of over 30%, taking its turnover past US$40 million.
Moreover, some of India's biggest companies are also investing heavily in R&D programmes to safeguard against slower growth as a result of the patent cliff- this has increasingly been across new drug delivery systems, formulation and manufacturing technology, along with biosimilars. According to IBEF, investments in India are hotting-up and industry experts say that the amount of expenditure on R&D by thirty of the top pharmaceutical companies in India rose by 19.7% in the financial year leading up to March 2013.
One conclusion that many will find surprising - and bucking historical norms - is that we are now seeing a significant shift in the location of facilities, with some R&D programmes run in Western countries, where it is felt that technology and expertise can compensate for higher costs. For example, Lupin recently invested an undisclosed amount in setting up two R&D plants in the United States, while Cipla Ltd. has said it would invest $166 million for research and clinical trials to develop drugs for respiratory and oncology related diseases in the UK. This newer multimarket approach, searching the globe for the best facilitates and skillsets to meet their growth ambitions is enabling India to complete on all levels with its rivals- whether cost, development or in terms of technical IP. The report sees this trend as a clear indication of India's MNCs ambitions in actively targeting higher profits through more complex formulations- clearly they are intent on moving in on Western rivals and being able to launch high-profit advanced formulations more quickly.
Moreover, many contributors to the report have boldly predicted that a New Chemical Entity (NCE) will emerge from India in the next few years, but most pharma companies here are still very hesitant in committing any sustained investment into true discovery programmes. However, Biocon currently has an oral formulation of insulin under development- a product that if it comes to market, will be rightly lauded as one of the greatest healthcare breakthroughs of recent times, and truly a global healthcare innovation.
Another area that will transform over the coming years is biotechnology and biosimilars, which the CPhI Pharma Insights: India report envisages further investment and expansion across, and by 2020, this part of the market will have risen up to around 15% of total sales.
But beyond the new regions targeted, the report concludes that India is set to take an even larger share of European and USA generics markets as demand expands, with generics still representing the core strength of manufacturers. Moreover, as developing nations continue to grow their healthcare systems, the market penetration across regions like Africa will expand rapidly- where total growth is predicted to expand by a remarkable 25-30% by volume per year.
All companies from the report's research praised the new Government of India's efforts for actively supporting the pharma industry. And, what is noticeable about the country as a whole, is the collective effort to reform and innovator together. Recently, Indian regulators visited the FDA to conduct training and the government is completely committed to enhancing the pharma sector's reputation globally with the launch of the Responsible Healthcare Trust. Similarly, the Indian Drug Manufacturers Association is actively encouraging its members to invest in innovation to ensure the sector stays ahead of its rivals and moves up the pharmaceutical value chain to advanced and complex formulations.
The long-term effect of this graduation up the value chain is that undoubtedly we will see more partnerships taking place between Western and Indian pharma companies- such as the ones between Mylan and Biocon, and Sun Pharmaceuticals with Merck.
In the near term, it is clear India will soon be one of the world's top producers of drugs by value (currently 12th), as well as by volume- perhaps in just a few years thanks to progressive move towards advanced formulations. However, over the long term, the report identified sustaining the industry as the Indian economy gentrifies and production costs gradually rise as a key challenge. In the future, Indian manufacturers may start using Indian (and Western) facilities as a base for complex R&D, with Indian MNCs using their experiences to move some lower margin manufacturing to cheaper regions. This model effectively sees India based companies replacing the USA as the global centre of pharma manufacturing- a bold future indeed.
"CPhI has been a key presence in India for a number of years and the event is an essential cog in internationalising this pharma hub. What's been most impressive is the ability of companies here to constantly develop themselves through new services and technologies. I would like to thank all our partners and the companies involved for their insights in this report. These findings and trends clearly show India is cementing itself as the global centre of generics and manufacturing innovations. Over the next few years, many of the companies present at CPhI India 2014, will grow into global entities supplying both western and developing markets." Rutger Oudejans, Brand Director Pharma at UBM.
For a full copy of the report, please visit: http://l.cphi.com/india2015/
Over the past three-months, CPhI and research partner GBR have conducted 98 exclusive face-to-face interviews with thought leaders from the public and private sectors whose views will shape the development of India's pharmaceuticals industry. CPhI would like to thank GBR, IBEF, Pharmexcil, the Ministry of Commerce, and the Indian Drug Manufacturers' Association (IDMA) for their full support in helping to produce this report- the most comprehensive analysis to date of the world's fastest developing pharma market.
CPhI drives growth and innovation at every step of the global pharmaceutical supply chain from drug discovery to finished dosage. Through exhibitions, conferences and online communities, CPhI brings together more than 100,000 pharmaceutical professionals each year to network, identify business opportunities and expand the global market. CPhI hosts events in Europe, Korea, China, India, Japan, Southeast Asia, Istanbul, Russia and South America and co-locates with ICSE for contract services, P-MEC for machinery, equipment & technology, InnoPack for pharmaceutical packaging and BioPh for biopharma. CPhI provides an online buyer & supplier directory at CPhI-Online.com.
For more information visit: http://www.cphi.com
The UBM Live annual schedule of Pharmaceutical events includes; CPhI and P-MEC India (2-4 December, 2014 at the Bombay Exhibition Centre- Mumbai); CPhI, ICSE, P-MEC, BioPh and Pharmatec Japan (22-24 April, 2015 at the Big Sight Exhibition Centre- Tokyo). CPhI Russia and IPhEB (27-29 April, 2015 at the VVC, Pavilion Nr 75, Moscow Russia); CPhI, P-MEC and Innopack South East Asia (26-28 May, 2015 at the Jakarta International Expo- Jakarta, Indonesia); CPhI Istanbul (3-5 June, 2015, at the Lutfi Kirdar Convention and Exhibition Centre- Turkey); CPhI, Hi and Fi, ICSE, P-MEC, BioPh and LabWorld China (24-26 June, 2015 at SNIEC- Shanghai, China); CPhI South America August 2014 at Expo Centre Norte, Sao Paulo- Brazil; CPhI, ICSE Korea (7-9 September, 2015 at the COEX- Seoul, South Korea); CPhI, ICSE, P-MEC and InnoPack Worldwide (13-15 October 2015, IFEMA- Feria de Madrid, Spain); CPhI, ICSE Korea (7-9 September, 2014 at the COEX- Seoul, South Korea); CPhI, ICSE, P-MEC and InnoPack Worldwide (13-15 October 2014, IFEMA, Feria de Madrid- Spain)
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