India Pharmaceutical Industry

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Indian Pharmaceutical Industry
Business Environment

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Agenda
• • • • • • • History Indian Pharmaceutical Evolution Facts and Figures Regulatory Framework Current ongoing activities SWOT Analysis The India Advantage

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History
• Bengal Chemicals and Pharmaceutical Works, Calcutta, the first Indian pharmaceutical company established in 1901 • Still exists as one of the 5 government owned drug manufacturers • Next 60 years saw most of the drugs imported from multinationals

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History contd.
• The government started to encourage growth in early 1960’s • Introduction of Patents Act, 1970 ▫ Removal of composition patents from food & drugs ▫ Process patents were shortened to 5-7 years

• Lack of patent protection made it undesirable for MNCs who had so far dominated Indian market

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Indian Pharmaceutical Evolution
Early Years Government Control Development Growth Innovation & Research

Before 1970 • Market share dominated by foreign companies

• Relative absence of organized Indian companies

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Indian Pharmaceutical Evolution
Early Years Government Control Development Growth Innovation & Research

1970 - 1980 • Indian Patent Act, 1970

• Drug prices capped
• Local companies begin to make an impact

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Indian Pharmaceutical Evolution
Early Years Government Control Development Growth Innovation & Research

1980 - 1990 • Process development

• Product infrastructure creation
• Export initiatives

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Indian Pharmaceutical Evolution
Early Years Government Control Development Growth Innovation & Research

1990 - 2000 • Rapid expansion of domestic market

• International market development
• Research orientation

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Indian Pharmaceutical Evolution
Early Years Government Control Development Growth Innovation & Research

2000 – 2010 and beyond • New IP law

• Discovery Research
• Convergence

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Moving up the value chain
* Active Pharmaceutical Ingredients ‡ Specialty products include hormones, steroids, peptides etc

Specialty Products‡

Innovative Products

API Exports*

Generic Exports to developing countries

Generic exports to developed countries

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Facts & Figures
• 4th largest in terms of production • US $8 billion market value (2% of world’s pharmaceutical market) • Expected to grow to US $12 billion by 2010 • Average growth rate of 7.2% seen in recent years

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Facts & Figures contd.
• Pharma output has increased 10 times in past 15 years

• Produces 20-24% of the world's generic drugs (in terms of value) • Market is highly competitive and fragmented with the top 10 players accounting for 36.1% of the total sales in 2008

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Facts & Figures contd.
• Has employed approximately 2.86 million people and has around 20,053 units countrywide • Accounts for about 2.91% of total FDI into the country • Manufactures over 400 bulk drugs and roughly 60,000 finished medicines used in different formulations.

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India’s Top 10 Pharmaceutical companies
Ranbaxy Laboratories

Dr. Reddy’s Laboratories
Cipla Sun Pharma Industries Lupin Labs Aurobindo Pharma GlaxoSmithKline Pharma Cadila Healthcare Aventis Pharma Ipca Laboratories

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The Regulatory Framework
• The Indian pharmaceutical industry is highly regulated, essentially on three aspects:

Patents

Price

Quality

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Patents
• India's 1970 patent law recognised only patents on processes, not products.

• This enabled Indian firms to use alternative methods to produce cheap "generic" copies of drugs that were patented in other countries.

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Patents
• But after joining the World Trade Organization in 1995, India had to change its patent laws by 1 January 2005 to meet its commitments under the WTO's agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) • The new bill, finally passed by the Indian Parliament, now recognises both product and process patents.

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Price Control
• Drug Price Control Order (DPCO) ,...
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