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Perspectives on building technology businesses and AcceleratorIndia from Cartezia

Indian Pharma: an industry in rapid transition

Friday, June 27, 2014

The Indian pharma market is in a state of rapid transition. Following the introduction of product patents, several multinational companies are expected to launch patented drugs in India, notwithstanding residual anxieties about compulsory licensing. The Indian market is also set to change with the growth in ‘lifestyle diseases’ boosting the sale of drugs in this segment. Pharma companies have also increased spending to tap rural markets and develop better medical infrastructure. Changes in distribution will also impact the sector; for example, increased penetration of chemists, especially in rural regions of India, would make OTC drugs more easily available.

The other big factor driving change will be Patent Expiry; between 2013 and 2017 patent drugs worth nearly US$200 billion are estimated to go off-patent leading to a huge surge in generic products.

All these factors will create change across the Indian pharma industry. The major changes are likely impact the following areas, creating many new opportunities:

Research and development

  • Indian pharma companies now spend 2 per cent of their total turnover on R&D, which is an important milestone
  • Expenditure on R&D is likely to increase due to the introduction of product patents, as companies need to develop new drugs to boost sales

Export revenue

  • The pharmaceutical export market in India is thriving due to the strength in generics
  • The Indian Pharmaceuticals Exports Promotion Council expects pharma exports to reach US$25 billion in 2016

Joint ventures

  • Multinational companies are collaborating with Indian pharma firms to develop new drugs; these partnerships now also include innovative Indian SMEs
  • Pfizer, for example, has partnered with AurobindoPharma to develop generic medicines
  • Six leading Indian pharmaceutical companies have formed an alliance ‘LAZOR’ to share their best practices, so as to improve efficiency and reduce the operating costs

Expansion by Indian players abroad

  • Cipla, the largest supplier of anti-malarial drugs into Africa, has set up a plant for production of anti-retroviral and anti-malarial drugs in Africa
  • Ranbaxy, now the fifth-largest pharmaceutical company in South Africa, has installed a new manufacturing facility in Johannesburg

Private-Public Partnerships in R&D

  • The Indian Government plans to involve the private sector in R&D mainly for sectors like vaccines, drugs and pharmaceuticals, super-computing, solar energy and electronic hardware
  • The government has invested US$1.1 billion in the Public-Private Partnership fund to support R&D in India

Patents Act

  • Amendments to the Patents Act, 1970, to make it TRIPS compliant
  • Increased incentives to domestic firms to conduct R&D
  • Increased likelihood of technology transfer from developed nations

Product Patents

  • The introduction of product patents in India in 2005 has boosted the discovery of new drugs
  • India has reiterated its commitment to IP protection following the introduction of product patents, although question marks remain over recent compulsory licensing rulings