CPhI India Report identifies two-tier manufacturing market and predicts increased acquisitions

CDSCO certification has improved international repute of India, but domestic companies call for urgent Government support to invest in API facilities

CPhI released the findings of the 2017 India Pharma Market Report which identified a two-tier manufacturing market and forecast increased acquisitions by Indian companies, along with a notable improvement in the international reputation of Indian-made pharmaceuticals. However, domestic companies also called for urgent Government support to invest in API facilities.

Reportedly, the report consolidated opinions from 500 domestic and international companies and identified four main areas Indian pharma companies are investing in – with 50 per cent raising funds this year for ‘commercial scale and scale-up facilities’; around one third for ‘continuous processing’; and just over 20 per cent each in both ‘biologics’ and ‘aseptic/sterile’. Over the next three-years, however, the number of companies planning to invest in biomanufacturing facilities rises to one third. It’s notable that the more expensive facilities and capabilities needed for continuous processing and bio-manufacturing are being added to India’s traditional base of commercial-scale finished-product facilities.

The report reveals that over the next one to three years, 36 per cent of Indian pharma companies are planning acquisitions; 20 per cent are looking at facilities in the US and Europe, with seven per cent exploring options in the rest of the world. Domestic acquisitions also point towards a scramble amongst many SMEs for greater size and scale, with some 25 per cent also looking at facilities within India itself.

The report also highlighted that the international reputation of the country on ‘data integrity’ has also improved massively; 96 per cent agree that the CDSCO certification programmes and initiatives are helping increase compliance. Even more impressive is the fact that 52 per cent of international respondents believed the CDSCO is moving toward comparability with the regulatory standards of the EMA and FDA.

A major concern highlighted amongst domestic companies (86 per cent) was an over reliance on Chinese ingredients within the finished formulations sector. In fact, the majority of domestic companies (81 per cent) believe that the Indian government needs to ‘urgently invest in domestic API facilities and provide tax-breaks and incentives to secure the Indian generics industry’ and prevent losses in market share.

Chief amongst the growth drivers reported are strong domestic sales in the next two to three years, generic APIs exports, as well as finished formulation for developed markets. Finally, 41 per cent of international respondents believed that more biologic alliances – similar to the Mylan-Bocon partnership – may develop between India and the West in the future, with 30 per cent believing these will proliferate in the next three to five years.

One interesting perspective on the India finished dosage sector is the identification of a two-tier system, with business models targeting different types of foreign market. The first type is targeting predominantly the Western pharma economies, consisting mainly of the US and Europe. Larger pharma companies are now looking beyond these two Western markets and expanding into Japan, as generic use is forecast to expand rapidly – after many years of largely on-patent drugs – yielding greater profit opportunities. On the other hand, India’s smaller and medium sized pharma companies have focused on developing countries as their export market; in particular, on high-volume, low-margin generic products. Consolidation amongst these providers is highly likely as they try and progress-up the value chain, and move into formulations with greater margins – companies also require a certain size and financial flexibility to invest in the newer types of products coming into the market, predicts the report.

Finally, the report argued the biosimilars and biologic sector is now the hotbed of national innovation, and will see well above-market growth in India. With more biologics coming off-patent in the near future, there is a growing opportunity for pharma companies to make increased profits via biosimilars with interchangeable standards.

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