CPHI India Report Forecasts New MNCs to Emerge from India’s Pharma SMEs and Japan & Africa as Key Export Growth Markets

CPHI Worldwide, organised by UBM Live, announces the findings of its Pharma Insights: India report at CPHI India (Mumbai), with a full in-depth printed report and transcripts available free of charge to attendees. The printed report ‘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 at remarkable rates, with most companies reporting double digit pace growth.

One startling trend to emerge from the report is that SMEs are now rapidly expanding and emerging as MNCs based on exports led growth strategies.

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 $100 million mark and to increae international exports. One key new region to emerge for exports is Japan, a market that 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. 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, India has vastly increased 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.

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 30 of the top pharmaceutical companies in India rose by 19.7% in the financial year leading up to March 2013.

There is also a significant shift in facility location, with some R&D programmes run in Western countries, where it is felt that technology and expertise can compensate for higher costs. 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. 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 predicted that a New Chemical Entity 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. Biocon, however, 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.



The report concludes that India is set to take an even larger share of European and US 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 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 innovate 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.

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, during 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 US as the global centre of pharma manufacturing.