Post on 09-Jun-2020
transcript
Pharma�Summit�2007India�Pharma�Inc.�–�A�Continuing�Success�StoryNovember�2007
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 1
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 2
Executive Summary & Acknowledgements 01
Domestic Pharmaceutical Market 03
Global Generics Industry 15
Contract Research and Manufacturing Services
(CRAMS) 29
Research and Development 39
Growth Through Collaborations 47
Annexures 51
Table�of�Contents
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 3
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 4
The�Indian�pharmaceutical�industry�has�achieved�significant�momentum�in�the
last�few�years,�making�its�presence�felt�in�the�global�market�primarily�through�its
focus�on�global�generics�markets.
It�is�now�well�positioned�for�sustainable�growth�and�expansion�and�companies�in
India�are�identifying�diverse�business�models�as�a�means�to�participate�in�the
global�growth�potential.�The�domestic�market�also�has�strong�underlying�growth
drivers�such�as�increasing�spend�on�healthcare,�increasing�penetration�of�health
insurance�and�changing�disease�profile�which�should�sustain�the�double�digit
growth�witnessed�over�the�last�year.�
On�the�international�front,�Indian�generic�manufacturers�are�playing�an�important
role�in�the�global�consolidation�process.�They�are�also�increasing�their�market
presence�across�regulated�as�well�as�semi-regulated�markets,�through�organic�as
well�as�inorganic�means.�In�spite�of�increasing�competitive�intensity�on�account
of�continued�pricing�pressure,�several�significant�opportunities�are�being
leveraged�by�Indian�generic�players.�
Contract�Research�and�Manufacturing�Services�(CRAMS),�is�becoming�one�of�the
most�promising�opportunities�for�the�Indian�pharma�industry.�Global�pharma
companies�are�finding�pioneering�ways�to�attain�cost�efficiencies�across�the�value
chain.�India,�with�its�intrinsic�competitive�advantages,�remains�one�of�the�most
preferred�outsourcing�destinations�and�is�now�playing�a�vital�role�in�manufacturing
as�well�as�drug�development�value�chain�of�various�innovator�pharma�companies.
Enactment�of�patent�product�regime�offers�multiple�growth�opportunities�for
MNC�pharma�companies�in�the�medium�to�long�term.�India�has�not�only�become
an�important�market�for�launching�their�global�blockbusters,�but�also�a�strategic
destination�for�conducting�global�clinical�trials�and�making�it�a�significant
component�of�their�global�drug�development�value�chain.
Following�the�patent�product�regime,�many�Indian�pharma�companies�have
embarked�on�Research�and�Development�(R&D)�to�achieve�sustainable�long�term
advantage.�These�companies�are�now�adopting�innovative�funding�models�to
advance�their�R&D�activities.�
Strategic�alliances�have�been�one�of�the�preferred�routes�adopted�by�Indian�as
well�as�MNC�pharma�companies�while�foraying�into�new�markets�and
geographies,�as�well�as�in�the�development�and�sourcing�of�new�products�and
molecules.�Such�partnerships�enable�companies�to�capitalize�on�the�associates’
knowledge�and�understanding�of�the�local�market,�technical�know-how�as�well�as
provide�them�with�ready�access�to�a�strong�distribution�and�supply�infrastructure.�
Executive�Summary�andAcknowledgements
01
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 5
However,�there�are�a�few�structural�impediments�and�constraints�that�may�affect
the�future�growth�potential.�
Ambiguity�in�regulations�vis’�a�vis�patents�and�regulatory�threat�of�extending�the
span�of�price�control�may�hinder�growth�in�the�domestic�market�and�government
actions�in�different�markets�will�be�key�considerations�for�generics�players.
Strengthening�the�IPR�infrastructure�and�culture�will�benefit�the�CRAMS�industry
and�new�drug�development�and�investment�in�research�and�development�can�be
further�driven�by�access�to�funds.
The�Indian�pharmaceutical�industry�is�at�a�critical�juncture�given�its�inherent
strengths�and�its�ability�to�be�a�dominant�player�in�the�global�pharmaceutical
industry.�If�the�government,�industry�and�corporates�can�act�together�to�drive
reforms�that�strengthen�knowledge�and�compliance�enabling�companies�to�follow
differentiated�business�models,�India�will�be�positioned�to�emerge�as�one�of�the
leading�pharmaceutical�markets�of�the�world.
This�knowledge�paper�prepared�by�KPMG�in�partnership�with�CII,�presents�the
latest�trends�and�insights�on�the�Indian�pharmaceutical�industry.�We�hope�this
report�will�be�immensely�helpful�to�key�stakeholders�of�the�pharmaceutical�and
healthcare�market�and�provide�them�with�an�in-depth�analysis�of�the�business
prospects.
A�number�of�eminent�industry�stalwarts�made�time�to�provide�valuable�insights
for�this�report.�We�would�like�to�acknowledge�and�thank�the�following�people�for
their�contribution�(in�alphabetical�order):
Dr.�Brian�Tempest,�Chief�Mentor�and�Executive�Vice�Chairman�of�the�Board,Ranbaxy�Laboratories�Ltd.�
Dr.�Hasit�Joshipura,�Vice�President,�South�Asia�and�Managing�Director,�IndiaGlaxoSmithKline�Pharmaceuticals�Ltd.
Dr.�J�M�Khanna,�Executive�Director�&�President,�Life�Sciences,Jubilant�Organosys�Ltd.
Mr.�Kewal�Handa,�Managing�Director,�Pfizer�Ltd.
Mr.�Pankaj�Patel,�Chairman�and�Managing�Director,�Cadila�Healthcare�Ltd.
Mr.�Ranga�Iyer,�Managing�Director,�Wyeth�Ltd.
Mr.�Ranjit�Shahani,�Country�President,�Novartis�India�Ltd.
Dr.�Swati�Piramal,�Director,�Strategic�Alliances�&�Communications,�Nicholas�Piramal�India�Ltd.
02
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 6
Introduction
The�Domestic�pharmaceutical�market�is�going�through�a�transformation,�led�by
strong�underlying�growth�drivers�and�has�witnessed�robust�growth�over�the�last
couple�of�years.�While�this�growth�was�driven�mainly�by�an�increasing�spend�on
healthcare,�on�account�of�rising�disposable�income,�increasing�penetration�of
health�insurance�and�changing�disease�profile,�regulatory�reforms�also�provided�a
significant�boost.�The�industry�has�grown�at�a�CAGR�of�13�percent�from�
2002-2007�and�is�expected�to�grow�at�a�CAGR�of�16�percent�over�2007-2011.
“I think by and large, the market will grow in double digits given
that the penetration level of modern medicine in the country is low
and the fact that the health insurance sector is growing rapidly.
Everywhere else in the world, economic growth is linked to
increased longevity. So that being the case, I would say that there
will be growth. Healthcare in general will grow and therefore the
pharmaceuticals market will grow. And this growth would be led by
prescription and volume and not price,” says Dr. Hasit Joshipura.
Domestic�Pharmaceutical�Market
Source: Crisil Research
03
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 7
Growth Drivers
Strong Economic Growth
The�prospects�of�the�Healthcare�and�Pharmaceuticals�industry�are�strongly�linked
to�economic�growth.�Over�the�last�couple�of�years,�the�pharmaceuticals�industry
has�grown�at�approximately�1.5-1.6�times�the�growth�of�economy.�The�rise�in
disposable�income�has�a�positive�impact�on�healthcare�spend.�In�2005,�6.2
percent�of�disposable�income�was�spent�on�healthcare�as�compared�to�2.8
percent�in�1995.
“There is a view that if the GDP of a country grows by 1 percent the
pharma industry grows by approximately 2 percent. So if you are
going to have 8-10 percent growth in the GDP, the pharma industry
will grow in double digits. This growth would primarily be led by
expansion of healthcare services”, says Dr. Brian Tempest.
This�augurs�well�for�the�pharma�industry,�as�the�strong�economic�momentum�is
expected�to�continue�and�the�Indian�economy�is�expected�to�grow�by�8–9
percent�in�the�next�few�years.
Improving Healthcare Infrastructure
Both�healthcare�delivery�and�infrastructure�segments�are�going�through�a
structural�change�with�the�entry�of�corporates.�Significant�investments�have�been
lined�up�in�the�domains�of�organized�pharmacy�chains�and�private�hospitals.��In
addition�to�Metros�even�B�and�C�category�towns�are�witnessing�sizeable
investments.�Many�pharma�companies�have�expanded�their�sales�force�in�order
to�cater�to�these�untapped�markets.
04
Source: CSO, IMS
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 8
“Following factors will drive the growth of the domestic market:
Increase in disposable income, newer therapeutic segments, newer
markets, and semi-urban and rural areas. Last but not the least is
health insurance. Also, the growth in the domestic market would be
based on volumes rather than price,” says Mr. Ranga Iyer.
At present, organized players account for a meager 2 percent share of the
pharma retail market. It is expected that with the advent of modern retailing
in India, increasing investments in this space will multiply the availability
and accessibility of pharma products. The organized pharmacy chains will
not only capture an increasing percentage of the total market but will also
expand the market with value added services and enhanced offerings. The
culmination of all these factors is expected to further drive the growth of the
domestic pharma market.
Increasing penetration of health insurance
At�present,�only�4�percent�of�the�healthcare�costs�are�borne�by�the�insurers�in
India�as�against�80�percent�in�developed�economies.�With�increasing�health
insurance�penetration�in�India,�this�is�set�to�change�and�going�forward,�a�larger
proportion�of�expenses�will�be�paid�by�insurers�and�consumption�of�sophisticated
drugs�is�likely�to�become�more�affordable.
Expansion Plans of prominent pharmacy chains
Company Expansion Plans
Apollo 1000�stores�by�2008
Subhiksha 1000�stores�by�Dec.�2007
Medicine�Shop 500�outlets�by�2009;�700�by�2010
Dabur�HealthWorld 1,000�HealthWorld�stores�in�400�cities�in�next�five�years
Guardian�Lifecare 250�stores�by�Mar�2008�and�3,500�by�March�2015
Frank�Ross�Limited 100�stores�by�2010
Morepen�Laboratories 8�stores�in�2007�and�80�by�2011
Source: Credit Suisse Investment Report, April 2007; Press Articles
05
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 9
At�present,�the�health�insurance�penetration�is�estimated�at�approximately�10
percent�in�India�and�is�expected�to�double�in�the�next�five�to�seven�years.�This
increasing�penetration�will�help�expand�the�pharmaceuticals�market�in�two�ways.
One,�it�will�increase�the�access�to�more�sophisticated�and�expensive�drugs;�and
two;�it�will�also�make�basic�drugs�more�accessible�through�wider�coverage.�This
augurs�well�not�only�for�domestic�pharma�companies�but�for�MNC�pharma
companies�as�well;�as�increasing�health�insurance�will�also�help�expand�the
markets�for�patented�products.
“The growth in the domestic market will be driven by volume. The
small to medium size players are growing their presence in
untapped tertiary markets while MNC’s are expected to grow
through introduction of high value products. As Insurance gets more
liberalized as in the west and further growth in health infrastructure
in this country will be key factors to drive growth”, says Mr. Ranjit
Shahani.
06
Source: Industry
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 10
Changing Therapeutic Mix
The�existing�therapy�mix�is�tilted�towards�acute�diseases.�However,�in�the
medium�to�long�run�the�domestic�pharmaceutical�market�will�be�largely�driven�by
the�increasing�prevalence�of�the�chronic�segment.��Increasing�urbanization,
changing�lifestyles�and�ageing�population�will�drive�the�growth�of�this�segment.
In�most�cases,�ailments�in�the�chronic�segment�are�recurring�in�nature,�which
ensures�regular�consumption�of�medicines�for�the�lifetime�of�the�patient.�Going
forward,�therapies�for�treating�cardiovascular�diseases�and�diabetes�are�expected
to�have�one�of�the�highest�growth�rates.�
“50 percent of the industry is still anti Infective plus metabolism and
respiratory products. Standards of sanitation and hygiene in this
country are low. As long as this issue is not tackled, you cannot
expect acute disease to come down. CNS, CVS and other chronic
disease are also growing along with this,” says Mr. Ranga Iyer.
Source: Crisil Research
07
Source: IMS
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 11
Dr. Hasit Joshipura also feels that, “both segments, anti infectives
and respiratory will continue to grow. At the same time due to
change in Indian life styles in cities, which are getting more akin to
those in western countries, the disease profile will also change. So
you will have chronic and life style disease such as CVS, CNS and
diabetes also growing”.
In�terms�of�the�geographical�distribution�of�the�Pharma�market,�23�Metro�cities
account�for�approximately�a�quarter�of�the�market.�Class�I�towns—�comprising
300�towns�altogether—�account�for�about�one-third�of�the�market.�Rural�markets
which�account�for�21�percent�of�the�total�market�have�been�increasingly
becoming�an�important�market�for�big�pharma�companies.��Though�rural�markets
are�dominated�by�acute�segments,�chronic�segments�have�slowly�started�making
inroads.�
“The domestic Indian pharmaceutical market is expected to grow at
11-12 percent and will primarily be driven by the launch of new
products and market expansion strategies. Domestic companies will
also continue to grow through acquisitions, joint ventures,
leveraging low operational costs and outsourcing. However, price
control mechanisms and ambiguity in the policy environment may
constrain market growth”, says Mr. Kewal Handa.
Source: Merck Presentation
08
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 12
Mr. Kewal Handa also feels that, “Though patented products will be
introduced in India, the domestic market will predominantly remain
a branded generics market. By 2015, it is estimated that the share of
patented product will be about 10 percent.”
Government Initiatives
The�Government�has�introduced�several�development�programmes�to�improve
the�access�to�and�quality�of�the�healthcare�services�in�the�country.�The�National
Rural�Health�Mission�(NRHM),�introduced�by�the�government�to�provide�basic
healthcare�amenities�in�the�rural�areas,�is�expected�to�increase�the�access�to
drugs�in�the�rural�areas.�In�Budget�2007-08,�the�budgetary�allocation�to�health
was�increased�by�22�percent�to�INR�1,52,910�million.
Launch of Patented Drugs
After�the�product�patent�regime�was�introduced�in�India�in�2005,�the�domestic
pharma�industry�has�witnessed�the�launch�of�around�11�patented�products�by
multinational�companies.
This�number�is�expected�to�grow,�as�MNC�pharma�companies�are�already
planning�significant�patented�launches�over�the�next�few�years.�Various�industry
estimates�suggest�that�by�2015,�patented�drugs�will�account�for�10-15�percent�of
the�domestic�pharma�market.��
Key Patented Molecules launched in India (till March 2007)
Product Company Therapeutic Category Launch date Current Status
Vfend Pfizer Anti-Infective Feb-05 On�Patent
Avandia GSK Anti-Diabetic May-05 On�Patent
Viagra Pfizer Erectile�Dysfunction Dec-05 On�Patent
Lyrica Pfizer Neuropathic Feb-06 On�Patent
Caduet Pfizer Cardiovascular Feb-06 On�Patent
Carvedilol GSK Cardiovascular Mar-06 Off�Patent
Genotropin Pfizer Endocrine�Disorders Mar-06 On�Patent
Tamiflu Roche Influenza Apr-06 On�Patent
Pegasys Roche Hepatitis�C May-06 On�Patent
Avalide Sanofi�Aventis Cardiovascular Jul-06 On�Patent
Ambien Sanofi�Aventis Insomnia Jan-07 Off�Patent
Source: CRISIL Research
09
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 13
However,�ambiguities�in�the�patent�laws�remain�with�respect�to�issues�such�as
data�protection,�pre-grant�and�post-grant�opposition�and�patenting�of�derivatives.
“When GSK introduced patented products in 2005, there were lots of
sceptics. But we still launched the products. The interest of the
government is to globalize the country and all the signs are there,
and therefore I do expect that the steps will be such that they will
not take India back but they will continue this path of integrating
India into global economy. And I think the one indicator that the
global pharma players are sitting up and taking notice is the number
of new entrants. Companies that were not present in India are now
establishing businesses in India. So these are all indicators that the
people are hopeful that these changes would continue in a direction
that would facilitate innovative companies to operate in this country
with protection of their intellectual properties,” says Dr. Hasit
Joshipura.
“The domestic market will continue to be attractive. The patent law
today is not the best we have. But I think it will get better. I think it
will become more positive,” says Mr. Ranga Iyer.
“The full impact of the patent laws will be felt only after 2010, says
Mr. Ranga Iyer, because anything patented after 1995 only is eligible
to be patented in this country and if it takes the normal cycle of 12
years to get a molecule out, then it will come out only in 2007- 08 in
the western countries. It will take another 1-2 years for it to come to
India. I think all companies during the last 3 to 4 years have
launched one or two products per year. This is a lot for MNC pharma
vis a vis history”.
Key Considerations
Need for Public–Private Partnership (PPP)
At�present,�a�principal�share�(almost�75-80�percent)�of�the�total�healthcare
expenditure�by�the�country�is�incurred�by�the�private�sector,�while�the�public
sector�finances�the�balance.�On�the�other�hand,�affordability�and�accessibility�of
the�latest�and�quality�drugs�continues�to�be�one�of�the�major�issues�for�a�large
section�of�the�population�and�for�the�country�as�a�whole.�Both�the�public�as�well
as�private�sectors�have�recognized�this�as�a�serious�concern�and�are�looking�at
PPPs�as�a�sustainable�model�to�cater�to�the�growing�demand�of�medicines
across�all�sections�of�society.��
10
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 14
“70 percent people in this country do not have access to modern
medicine. 700 million people in a population of 1 billion. That is a
problem that the government needs to solve. There has to be a
public private partnership to reach medicines to these 700 people,”
says Mr. Ranga Iyer.
Mr. Ranjit Shahani also has similar opinion, according to him,
“Approximately 65 percent of the population does not have access to
medicines. The government should focus on improving access to
improve healthcare.”
Spurious / Sub-standard drugs
At�a�time�when�India�is�moving�towards�becoming�a�preferred�manufacturing
base�for�global�pharma�companies,�the�menace�of�spurious�and�substandard
drugs�could�give�a�negative�image�to�the�country.�According�to�the�Mashelkar
committee�report,�the�industry�faces�a�loss�of�around�INR�40�billion�due�to
substandard�drugs�and�a�WHO�report�suggests�that�35�percent�of�spurious�drugs
of�the�world�are�being�produced�in�India.�Spurious�and�counterfeit�drugs�are�a
major�public�health�hazard.�
Government�needs�to�accelerate�the�legislative�reforms�to�curb�the�menace�of
counterfeit�drugs.�“This is one of those issues that needs to be tackled
as the industry comes of age. It is not just spurious drugs; it is
pharmacovigilance per se.” says Dr. Hasit Joshipura.
11
Source: Edelweiss Investment Report, April 2007
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 15
Price Controls
Uncertainties�regarding�the�Draft�Pharmaceutical�Policy�2006,�which�proposes�to
bring�354�essential�drugs�under�the�purview�of�Drug�Price�Control�Order�(DPCO)
continues�to�be�an�area�of�acute�concern�for�the�industry.�The�pharma�industry
feels�that�regulation�should�try�to�simulate�the�"effects�of�competition"�and�price
control�should�not�be�imposed�on�drugs�where�the�"effects�of�competition"
already�exist.�The�proposed�policy�would�significantly�increase�DPCO’s�span�of
control�from�the�existing�25�percent�to�approximately�50-60�percent�of�all
medicines�produced.�
Some�of�the�notable�views�from�the�industry�as�follow.
“Artificially imposed constraints of any kind will hamper the growth.
Industry is responsible enough to make sure that pricing will not
spiral out of control. And again in this country where you have 50
brands for each molecule, there is an inbuilt mechanism to control
prices.” says Dr. Hasit Joshipura.
Dr. Hasit Joshipura also feels that, “it is the concern of governments
world over that the medical costs should be affordable. And if prices
go out of hand then it is not desirable. Certainly some monitoring
should be there.”
“By subsidizing and controlling prices, the government is actually
subsidizing these for the rich also. Because they are the people
buying it. Access is the problem in this country and not the price.
You improve the access of medicines to the poor and lots of these
problems could be solved,” says Mr. Ranga Iyer.
“The market is growing and it will continue to do well except for one
thing and that could be public policy. If the government does not
have a progressive policy then that perhaps could hamper the
growth. Fundamentals are strong and if the policy is progressive
then it will augur well for the industry. The industry needs good
legislations and price monitoring by the government would be a
forward looking step as compared to price control,” feels Dr. Swati
Piramal.
12
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 16
Mr. Kewal Handa feels that, “India needs a locally relevant
healthcare policy. It is imperative that the government broadens the
focus from controlling the price of medicine, which is just one
element of the healthcare expense cycle, to investing in other critical
elements such as improving primary healthcare infrastructure and
availability of doctors. Investments in preventative measures will
reduce the overall diseases incidences thus resulting in lower
healthcare costs.”
“Price controls would constraint the growth of the market. However,
price monitoring may be an effective way to manage prices”, feels
Mr. Ranjit Shahani.
High fragmentation
The�domestic�formulations�market�is�predominantly�a�branded�generics�market
and�intensely�competitive,�with�the�presence�of�several�players,�including�small
scale�companies.�The�top�10�companies�account�for�only�37�percent�of�the
market.��This�shows�the�level�of�fragmentation�in�the�industry.��Given�this
industry�structure,�brands�franchise,�field�force�strength�and�product�innovation
become�critical�success�factors�to�operate�in�this�market�place.
“In a market that is only selling copied products, the importance of
strong brands is very crucial and vital and the only way to grow in
the future. Otherwise how do you differentiate between 18 different
molecules? All you can look at is the brands,” says Dr. Swati Piramal.
A�report�by�the�Institute�for�Studies�in�Industrial�Development�(ISID),�a�national-
level�policy�research�organization�in�the�public�domain,�mentions�that�in�2000-01
there�were�approximately�2872�pharma�units�in�India�and�out�of�these�91�percent
were�small�manufacturing�enterprises.�
13
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 17
However,�the�amendments�made�by�the�government�to�the�Schedule�M�which
deals�with�standard�manufacturing�practices,�will�help�in�establishing�quality
standards�and�uniformity�across�manufacturing�practices.
“I don’t see consolidation happening in a massive way in the near
future. Many of them are family run businesses and they are doing
well. They have no reason to give up their business. It’s a
fragmented industry all over the world and why should it be
different here,” says Dr. Swati Piramal.
Mr. Ranjit Shahani feels that “consolidation will happen in the longer
term – by 2010. However, current high valuation expectations and
emotional attachments due to them being largely family run
organizations, are the key reasons why you do not see consolidation
in the short term”.
Conclusion
India’s�domestic�pharmaceutical�market�is�at�an�inflection�point.�The�strong
underlying�growth�drivers�offer�enormous�opportunities�for�domestic�as�well�as
MNC�pharma�companies.�However,�an�inclusive�and�growth�oriented�public�policy
regime�will�ensure�that�this�growth�is�sustainable.�
14
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 18
Global�Generics�Industry
Introduction
Over�the�last�few�years,�Indian�pharma�companies�have�been�scaling�up�their
presence�in�the�non-traditional�business�segments�such�as�drug�discovery�and
development,�contract�research�and�manufacturing,�etc.,�and�are�focusing�on
building�their�competencies�in�every�area�of�the�pharma�value�chain.�However
generics�continue�to�remain�the�mainstay�of�the�industry.�Indian�companies�are
increasingly�advancing�beyond�domestic�boundaries�and�are�aggressively
focusing�on�making�their�mark�in�the�global�generics�space.�In�order�to�reduce
their�dependence�on�the�U.S.�market,�Indian�pharma�companies�are�now�entering
new�and�under-served�generics�markets�across�different�geographies�such�as
Japan,�South�Africa,�European�and�Commonwealth�of�Independent�States�(CIS)
countries�and�Latin�America.�While�the�global�generics�industry�continues�to
remain�under�severe�pricing�pressure,�the�Indian�generic�drug�makers�continue�to
spread�their�wings�across�different�international�markets.
Growth Drivers
Trend towards an increased use of generics
Globally,�the�trend�towards�an�increased�use�of�generics�is�on�the�rise�and�is
expected�to�open�up�tremendous�opportunities�for�generics�players�as
governments�in�many�countries�encourage�the�shift�to�generics�on�the�back�of
rising�pressure�on�healthcare�budgets.�Globally,�the�generics�industry�is�expected
to�grow�at�a�Compound�Annual�Growth�Rate�(CAGR)�of�11�percent�between�2006
and�20101 and�touch�USD�94�billion�by�2010.��At�present,�India�has�only�10
percent�market�share�in�this�industry.
Regulated Markets
U.S.�-�The�world’s�largest�generics�marketThe�U.S.�market�is�still�by�far�the�largest�pharma�market�in�the�world�and
accounts�for�over�28�percent�of�the�world’s�generics�market.2
In�spite�of�severe�pricing�pressure�and�declining�profitability,�the�U.S.�market�will
continue�to�be�attractive.�Drugs�worth�USD�65-70�billion�are�expected�to�go�off
patent�in�the�next�four-five�years.
1 Crisil Research
2 SSKI Investment Report, March 2007
15
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 19
Given�the�opportunity�and�challenges�in�this�market,�it�is�evident�that�the�success
of�Indian�players�in�the�U.S.�market�will�largely�depend�on�their�ability�to�offer
value-added�generics�products�and�their�specialization�in�business�development
through�partnerships,�strategic�alliances�and�joint�ventures�(JV).
European�Union�(EU)�–�regulatory�reforms�to�drive�growthMost�European�markets�such�as�France,�Italy,�Belgium,�Spain�and�Germany�are
highly�regulated�and�have�low�levels�of�generics�penetration.�Rising�healthcare
expenditures�in�these�countries�is�becoming�a�key�concern�for�most�European
regulators.�Several�reforms�and�regulatory�changes�have�been�introduced�in�the
last�couple�of�years�to�encourage�an�increased�use�of�generics.�These�markets
are�largely�branded�generics;�hence�pricing�pressure�is�limited�as�compared�to
the�U.S.�market.
These�regulatory�changes�coupled�with�a�significant�number�of�drugs�going�off
patent�over�the�next�few�years,�has�opened�up�a�big�opportunity�for�Indian
generics�makers.�Many�Indian�companies�have�already�made�their�mark�in�these
markets�while�others�are�pursuing�aggressive�strategies�to�foray�into�these
markets,�primarily�through�their�inorganic�initiatives.�
16
Source: Motilal Oswal Investment Report, April 2007
Source: Motilal Oswal Investment Report, April 2007 Source: Motilal Oswal Investment Report, April 2007
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 20
Japan�–�Low�generics�penetration�and�Government�legislation�to�drivegrowthJapan,�the�world’s�second�largest�pharmaceutical�market,�has�lured�many�Indian
companies,�in�spite�of�its�low�generics�penetration�rate.�The�Japanese�pharma
market�was�valued�at�USD�65.2�billion�in�2006.3 At�present,�generics�account�for
approximately�17�percent�of�the�market�by�volume�and�5�percent�by�value.�It�is
expected�to�grow�to�USD�14�billion�by�2010.4 The�government�is�actively
introducing�reforms�and�measures�to�encourage�low�cost-high�quality�generics
drugs,�with�the�objective�to�cut�the�increasing�healthcare�spending.
Indian�companies�are�looking�at�significant�opportunities�in�the�Japanese�market.
The�growth�of�the�generics�industry�in�Japan�is�expected�to�be�driven�by�a�rapidly
ageing�population,�increasing�healthcare�expenditure�and�government�reforms.
Since�2002,�the�Japanese�government�has�introduced�several�legislations�to
promote�the�use�of�generics�drugs.�The�generic�substitution�law—�which�was
introduced�in�April�2006—�is�one�of�them.�It�is�expected�to�be�a�key�engine�to
expand�Japan’s�generics�drug�market�and�enable�medical�institutions�to�dispense
generic�drugs.
Emerging Markets- gaining traction
Emerging�markets�such�as�Russia�and�the�CIS�nations,�Eastern�Europe;�Brazil�and
other�Latin�American�countries�and�South�Africa�are�increasingly�being�viewed�as
highly�remunerative�markets.�
Presence of Indian companies in Japan
Indian Company Remarks
Ranbaxy Entered�into�a�JV�with�Nippon�Chemiphar,�a�medium�sized�pharma�companyfocused�on�generics,�to�strengthen�its�presence�in�Japan’s�generics�market
Lupin Acquired�Kyowa,�a�Japanese�generics�company�ranked�amongst�the�top�10generics�companies�
Strides�Arcolab Entered�into�a�JV�with�SORM�Co.�for�long-term�supply�of�generic�drugs,�Over-the-Counter�(OTC)�and�nutraceutical�products
Zydus�Cadila Acquired�Nippon�Universal�to�gain�access�to�a�manufacturing�base�anddistribution�network
Source: Motilal Oswal Investmenr Report, April 2007; Company websites and Press articles
3 Datamonitor Report, December 2006
4 Motilal Oswal Investment Report, April 2007
17
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 21
Many�of�these�markets�are�primarily�branded�generics�markets�and�have�high
entry�barriers,�and�are�thus�subject�to�lesser�competition.�As�a�result,�these
markets�offer�better�price�realizations�and�stable�margins.�The�demand�in�these
markets�is�further�driven�by�favorable�demographics,�increased�healthcare
spending�and�improving�healthcare�infrastructure.�
“Regulated Markets are the largest markets and their role will
always remain important. But, as and when there are opportunities
in other markets, people that have entered the regulated markets
will also look at these markets. Some of the emerging nations and
semi regulated markets offer better opportunities in terms of
profitability than the regulated markets,” says Mr. Pankaj Patel.
South�AfricaSouth�Africa�is�perceived�as�a�very�promising�market�for�several�Indian�generics
makers.�The�South�African�pharma�market�was�valued�at�USD�1.3�billion�in�2006.
This�market�is�expected�to�grow�at�a�CAGR�of�5.5�percent�over�the�next�five
years�and�touch�USD�1,698�million�by�2011.5 It�is�predominantly�dependent�on
imports�and�the�generics�market�accounts�for�around�40-45�percent�of�the�total
market.�
Hence�South�Africa’s�pharma�market�has�become�one�of�the�prime�emerging
markets�for�Indian�generics�players.�Several�players�have�established�their
presence�in�this�market�through�subsidiaries,�JVs,�acquisitions,�or�marketing�and
distribution�agreements.�Some�of�the�leading�Indian�companies�which�have
already�capitalized�on�the�opportunities�in�this�market�include�Cipla,�Dr.�Reddy’s,
Ranbaxy�and�Wockhardt.
5 Espicom Business Intelligence World Pharma Market, January 2007
18
Source: Citigroup Investmenr Report, May 2007
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 22
Russia�and�other�CIS�nationsThe�Russian�pharmaceuticals�market�was�valued�at�USD�7�billion�in�2006.6 It�is
one�of�the�fastest�growing���pharmaceuticals�markets�in�the�world.�Russia’s
generics�market�is�around�30�percent�of�the�total�market.7 It�is�a�semi-regulated
market,�offering�high�and�stable�returns.�Other�attractive�CIS�markets�include
Ukraine,�Kazakhstan,�Belorussia,�Uzbekistan�and�Azerbaijan.
The�reforms�in�healthcare�systems�and�the�shift�to�generics,�clubbed�with
favorable�demographics�such�as�a�large�population�base,�high�per�capita�income,
as�well�as�low�entry�barriers�compared�to�the�U.S.�is�expected�to�augur�well�for
companies�focused�on�this�region.�
JB�Chemicals,�Ranbaxy,�Lupin,�Lyka�Labs,�IPCA�Labs,�Plethico�have�established
their�presence�in�Russia.�Investments�are�in�the�form�of�JVs�and�manufacturing
facilities�in�Russia,�Ukraine�and�Uzbekistan.�Competition�for�Indian�companies�in
these�regions�is�from�the�neighboring�European�generics�players.
Brazil�and�other�Latin�American�marketsThe�Brazilian�market�has�caught�the�fancy�of�many�Indian�companies�in�the
recent�years.�In�fact,�approximately�50�percent�of�the�JVs�and�partnerships
between�India�and�Brazil�are�formed�in�the�pharma�sector.�
6 Economist Intelligence Unit
7 Espicom Business Intelligence World Pharma Market Fact Book
Source: Express Pharma
19
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 23
Generics�accounted�for�14.2�percent�of�the�estimated�USD�11�billion�market�in
2006.�Although�India’s�pharma�exports�to�this�market�stood�at�only�3�percent�of
the�total�pharma�exports�in�FY07,�this�market�is�expected�to�generate�significant
opportunities�in�the�near�future,�driven�by�the�recent�de-recognition�of�the�patent
for�antiretroviral�drugs�and�promotion�of�generics.�
Other�markets�of�Latin�America�which�have�attracted�many�Indian�companies�are
Argentina,�Mexico�and�Chile.�These�semi-regulated�markets�offer�stable�returns
and�higher�margins�as�compared�to�regulated�markets.
India’s competitive position
Indian�companies�have�already�proved�their�mettle�in�the�fiercely�competitive
global�generics�space.�India�has�a�share�of�around�23�percent�in�the�total
Abbreviated�New�Drug�Application�(ANDA)�approvals�and�48�percent�of�the�total
Drug�Master�Files�(DMF)�filings.8 India’s�cost�advantage�is�highly�compelling.�This
fact,�coupled�with�strong�chemistry�and�regulatory�skills�and�the�largest�no.�of
USFDA-approved�plants�outside�the�U.S.,�makes�India�one�of�the�most�dominant
players�in�the�global�generics�space.
Indian Company Presence in Brazil
Ranbaxy Formed�a�JV�Ranbaxy�S.P.Medicamentos�(with�local�partners)
Dr.�Reddy’s Established�a�subsidiary�Dr.�Reddy's�Farmaceutica�Do�Brazil�Ltda
Glenmark Established��wholly-owned�Brazilian�subsidiary�Glenmark�Farmaceutica�Ltd.Acquired�Laboratorios�Klinger
Zydus�Cadila Established�Zydus�Healthcare�Brasil�Limitada�to�market�formulations�in�BrazilAcquired�Quimica�e�Farmaceutica�Nikkho�do�Brasil�Ltda�(Nikkho)
Wockhardt Established�a�sales�and�marketing�subsidiary�Wockhardt�Farmaceutica�do�BrasilLtda
Strides Has�set-up�two�manufacturing�units�(Cellofarm�Ltda)
Source: Company websites, Indo-Brazilian Commercial Relations Report, December 2006 and Press articles
8 Crisil Research
20
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 24
In�order�to�remain�competitive�and�maintain�their�dominance,�Indian�players�have
realigned�and�restructured�their�operating�paradigms�reflected�in�lean�cost
structures,�vertically�integrated�models,�geographically�diversified�presence,�vast
product�baskets�and�increasing�presence�in�niche�segments.
“Yes, the competition is rising; it took Ranbaxy 4-5 years to get
established, so it will take 4-5 years for the Chinese to get
established. China is incredibly strong in terms of intermediates and
API but in formulations, India’s share is increasing. One out of every
four ANDAs is from India. But competition from China will begin by
2008. And it will be very important to be competitive on costs. There
are pricing pressures, but there are good profits to be made. The
good thing not to forget is the branded generics, which is a growth
oriented sector,” says Dr. Brian Tempest.
Enhanced focus on niche specialties
Indian�players�are�now�focusing�on�capturing�emerging�opportunities�in�certain
niche�specialties.�These�segments�offer�higher�and�more�sustainable�margins
which�can�compensate�for�the�intense�pricing�pressure�in�the�generics�segment.
Source: Merrill Lynch Investment Report, November 2006
21
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 25
The�table�below�shows�some�of�the�high�growth-high�profit�niche�segments
identified�by�Indian�companies.
Building Para IV pipelines
Aggressive�Para�IV�filings�and�teaming�up�with�innovator�pharma�companies�for
launching�authorized�generics�is�also�gaining�momentum.�Indian�generics�giants
such�as�Ranbaxy�and�Dr�Reddy’s�have�already�tasted�the�success�of�these
strategies�and�have�reported�significant�gains�by�winning�the�180-day
exclusivities.�To�give�an�example,�Ranbaxy�won�the�180-day�exclusivity�for
Simvastatin�80�mg,�an�anti-cholesterol�drug�in�the�U.S.�This�exclusivity�period
gave�the�company�a�share�of�approximately�56�percent�of�that�market.�Sun
Pharma�and�Glenmark�are�the�latest�entrants�in�the�high�risk-high�reward�Para�IV
filings�space.
Developing Niche portfolio
Ranbaxy�Laboratories� NDDS�products,�Branded��Generics
Sun�Pharmaceuticals� Controlled�Substances
Dr.�Reddy's�Laboratories Biologics,�Dermatology
Nicholas�Piramal� Controlled�Substances,�Bio-fermentation-based�products
Wockhardt� EPO,�Insulin
Biocon� Immunosuppressant,�Oral�Insulin,�Monoclonal�Antibodies
Glenmark� Dermatology,�Controlled�substances
Zydus�Cadila�� Anti-Cancers
Lupin� Cepharlosporins�(Steriles�and�Oral)
Aurobindo�Pharma Lifestyle�drug�formulations
Source: Merrill Lynch Investment Report, November 2006
Ranbaxy Dr. Reddy's Sun Pharma Glenmark
No.�of�filings�with�FTF�position 20 18 6 3
Innovator�sales�for�FTF�(USD�bn) 26 10 6�to�8 3
Source: Analyst Reports
22
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 26
Global Consolidation
The�consolidation�drive�that�has�accelerated�over�the�last�two�years�continued
unabated�this�year�as�well�–��a�prominent�one�being�Mylan’s�acquisition�of
Merck’s�generics�business.�Most�of�these�companies�have�made�it�to�the�top
league�by�aggressively�pursuing�the�inorganic�route.�Today,�the�top�10�global
generics�companies�collectively�have�a�market�share�of�over�50�percent�of�the
global�generics�market.�This�is�likely�to�have�a�positive�effect�and�reduce�pricing
pressure�in�the�global�generics�market,�to�some�extent.
The�enthusiasm�for�acquisition�has�been�driven�by�a�series�of�factors�such�as
attaining�scale,�geographic�diversification�by�venturing�into�new�markets,
expanding�product�portfolios,�building�new�therapeutic�specializations�and
strengthening�supply�chain�capabilities.�
Acquisitions by Indian Companies
The�augmented�risk�appetite�of�the�Indian�players�is�reflected�in�their�aggressive
acquisition�strategy�and�increased�leveraged�funding�activity,�over�the�last�few
years.�
In�continuation�of�their�strategy�of�growth�through�the�inorganic�route,�this�year
also,�the�pharma�industry�was�buzzing�with�heightened�Merger�and�Acquisition
(M&A)�activities.�This�is�driven�by�the�growing�ambitions�of�Indian�companies�to
strengthen�their�competitive�position�and�consolidate�their�presence�in�the
generics�space.�The�primary�drivers�that�would�sustain�profits�for�generics
companies�given�the�pricing�pressure�are�market�penetration�and�access�to
diverse�markets.�Hence,�growth�through�the�inorganic�route�has�been�the�most
sought�after�strategy�for�not�just�the�large�players�but�also�the�medium�and�small
companies.�
While�most�of�the�acquisitions�were�focused�on�the�European�markets,
companies�have�concluded�deals�in�the�emerging�markets�of�South�Africa,�Brazil
and�Thailand.�One�of�the�notable�trends,�is�Indian�companies�are�now�increasingly
targeting�front-end�marketing�and�distribution�companies,�in�order�to�strengthen
their�position�in�the�entire�value�chain.
23
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 27
The�table�below�explains�the�strategic�rationale�of�some�of�the�prominent�acquisitions�concluded�by�Indian�companies�in
the�last�one�year.
Cross-border acquisitions by Indian companies
Date Target Name Target Country Acquirer NameDeal Value
USD mnRationale
Oct-06 PinewoodLaboratories Ireland Wockhardt�Ltd. 150
Entry�into�Ireland�and�to�consolidate�its�positionin�U.K.�and�Germany.
Leverage�on�Pinewood’s�marketing�network�andoffer�a�wider�basket�of�products
Oct-06 CantabriaPharma�SL Spain Wanbury�Ltd. 62.6 Entry�into�the�European�generics�market
Dec-06Be-TabsPharmaceuticals
South�Africa RanbaxyLaboratories�Ltd. 70
Strengthened�Ranbaxy’s�South�Africanoperations.
Be-Tabs�is�South�Africa’s�largest�penicillinmanufacturers�and�the�fifth�largest�genericsplayer
Dec-06 Genemedix�(74percent�stake) U.K. Reliance�Life
Sciences 63.2Access��to��GeneMedix’s�manufacturing�andclinical�research�facilities�to�launch�bio-similarsportfolio�in�European�markets
Dec-06 PharmacinInternational� Netherlands Aurobindo
Pharma�Ltd. NA Access�to�several�key�European�markets�andwiden�product�portfolio
Jan-07 BiosciencesCo�Ltd. Thailand Dabur�Pharma
Ltd. NAAccess�to�the�marketing�and�distributionnetwork�for�Thailand’s�rapidly�growing�oncologymarket
Mar-07 MedicamentaAs
Czech�Republic(and�Slovakia
GlenmarkPharmaceuticalsLtd.
NA Entry�into�the�Czech�Republic�and�Slovakiamarkets
Apr-07NipponUniversalPharmaceutical
Japan Cadila�HealthcareLtd. NA
Leverage�on�Nippon’s�manufacturing�base�andstrong�distribution�network�to�gain�access�to4,000�hospitals�and�clinics
Apr-07 Negma�LeradsSas France Wockhardt
Limited 265Entry�into�the�French�market�and�access�toNegma’s�portfolio�of�172�patents�anddistribution�network
May-07Disapa�S.p.Afermentationfacility
Italy Strides�Arcolab NA Access�to�a�U.S.�FDA�and�EU�approved�facilitywith�strong�technology�and�fermentation�skills
May-07
Quimica�eFarmaceuticaNikkho�doBrasil�Ltd
Brazil Cadila�HealthcareLtd NA Entry�into�Brazil’s�branded�generics�space
Aug-07Biomeda�Group(51�percentstake)
Bulgaria Elder�Pharma 5Entry�into�the�Bulgarian�market�and��expansionof�the�product�portfolio�to�other�Europeanmarkets
Note: In May 2007, Sun Pharma announced the acquisition of Taro for USD 454 million. The deal is pending closure. The Acquisition will expand Sun’s U.S.portfolio and strengthened its Research and Development (R&D) activity and add 170 scientists to Sun’s existing team. Taro has a strong focus on the U.S. andCanadian markets.
Source: Analyst Reports, Press articles, Company websites
24
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 28
Acquisitions of Indian assets by international pharma
companies
It�has�become�a�strategic�imperative�for�global�pharma�companies�to�make�India
an�integral�part�of�their�manufacturing�value�chain�to�maintain�lean�cost�structures
and�combat�intense�competition�in�the�global�generics�industry.�Global�generics
players�such�as�Mylan�and�Actavis�have�acquired�Indian�assets�to�create�a�strong
back-end�for�their�global�supply�chain.�
“Generics industry will continue to be very attractive. India's
position is very strong. There are lots of products coming in, lots of
governments worried about rising health costs. Pricing pressure is
increasing and there is focus on the issue. If you don't have a
business in India, I can not see the company surviving in the future. I
really think that you need an Indian part of the business. So, you
may be Indian or you are based outside of India but you require an
Indian operational base or you will loose. So there is optimism
about the generic business which is still going to be there,” says Dr.
Brian Tempest.
Global�pharma�companies�have�been�sourcing�Active�Pharmaceutical�Ingredients
(API)�and�formulations�from�India�through�tie-ups�with�Indian�manufacturers.
However,�acquisitions�provide�them�with�greater�control�and�flexibility�and�access
to�the�same�resources�available�to�Indian�drug�manufacturers.�
Foreign companies are
acquiring Indian assetsRationale
Actavis�acquired�themanufacturing�facilities�ofGrandix�and�Sanmar
• Grandix�provided�Actavis�access�to�low�cost�manufacturing�facilities,�to�develop�andmanufacture�products�for�U.S.�and�Europe�as�well�as�re-launch�older�products�atcompetitive�prices�from�the�facilities
• The�Sanmar�acquisition�provided�Actavis�a�U.S.�FDA�approved�facility�and�the�ability�todevelop�and�manufacture�its�own�APIs
Mylan�acquired�a�majoritystake�in�MatrixLaboratories
• Matrix’s�acquisition�is�expected�to�significantly�enhance�the�backward�integrationcapabilities�of�Mylan�and�strengthen��its�supply�chain�capabilities
• Provided�Mylan�an�access�to�the�emerging�markets�of�India,�China,�Africa�and�also�Europe(through�the�distribution�network�of�Matrix’s�Docpharma�subsidiary)
Teva�acquired�RegentDrugs • Regent�Drugs�provided�Teva�access�to�API�manufacturing�facility�for�its�global�needs
Watson�Pharmaceuticalsacquired�Mumbai-basedSekhsaria�Chemicals
• The�acquisition�was�part�of�Watson’s�strategy�to�expand�its�presence�in�India.�It�providedWatson�access�to�facilities�such�as�process�R&D,�contract�manufacturing�and�development;and�manufacture�of�API�and�intermediates
Watson�acquired�DrReddy’s�Goa�formulationfacility
• Watson�produces�solid�dosage�generic�products�for�the�U.S.�market�from�this�plant
Source: Press articles, Analyst Reports
25
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 29
Key Considerations
Pricing Pressure and Increasing Competitive Intensity
The�global�generics�industry�continues�to�reel�under�pressure�with�intense�
price-led�competition,�and�the�entry�of�smaller�players�has�further�intensified�the
competitive�intensity.�Though�the�generics�segment�continues�to�grow�at�a�rate
higher�than�the�global�pharmaceutical�market,�the�operating�environment�is
becoming�increasingly�competitive.�U.S.,�the�leading�generics�market,�is
witnessing�intense�competitive�pressure�with�several�new�players�entering�this
space�leading�to�price�erosion�to�the�tune�of�95-98�percent�in�some�instances
“Given the fact that there are newer players entering the fray, in
addition to the existing players, we can expect the generics space to
become a more competitive one,” feels Mr. Pankaj Patel.
While�the�long�term�business�drivers�are�intact,�the�near�term�prospects�seem
challenging.�However, Mr. Pankaj Patel feels that the generics market
will expand. It is a growing market and opportunities still exist. The
severe pricing pressure will continue and eventually it will become a
volume game. The key factors that will become very important to
succeed in the generics business will be the ability to differentiate
oneself in terms of technological development and cost optimization.
Taking care of these two aspects would have a positive impact for
companies.
Managing Growth in multiple markets
One�of�the�key�issues�to�be�dealt�with�while�achieving�geographical
diversification�is�to�manage�growth�in�multiple�markets.�Not�only�big�players�but
even�mid�and�small�sized�Indian�pharma�companies�have�started�foraying�into
regulated�as�well�as�non-regulated�markets.�Each�of�these�markets�has�unique
characteristics.��It�is�a�challenging�task�to�develop�a�strong�presence�and�acquire
scale�in�each�of�these�markets.�The�success�of�companies�in�these�markets�will
depend�on�factors�such�as:
– Entry�strategy
– Ability�to�comply�with�regulatory�complexities
– Building�product�portfolio�based�on�disease�profile�of�each�country.
“It’s not just managing multiple markets, but the complexities in
terms of supply chain and regulatory requirements that make the
task of managing growth a challenging one,” says Mr. Pankaj Patel.
26
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 30
Competition from China
It�is�becoming�increasingly�difficult�for�India�to�ignore�China.�China�is�emerging�as
a�strong�competitor�on�the�back�of�its�cost�competitiveness,�strong�government
support�(in�the�form�of�incentives),�implementation�of�GMP�norms,�aggressive
focus�on�exports�and�the�soaring�consolidation�drive�to�build�large�Chinese
pharma�giants.�In�fact,�China�is�thought�to�be�the�preferred�contract�research
destination�over�India.
In�some�aspects,�however,�China�lacks�the�required�specialization�in�some�areas
such�as�finished�formulations,�regulatory�compliances�for�regulated�markets�and
Intellectual�Property�Rights�(IPR)�development.�In�terms�of�U.S.�FDA�approved
plants,�China�is�still�far�behind�India.�India�is�also�leading�in�terms�of�the�number
of�DMF�filings.�While�India�has�filed�1,155�DMFs�between�January�2000-June
2007,�China�has�filed�only�329�in�the�same�period.�In�2007�itself,�India�has�filed
110�DMFs,�which�is�nearly�thrice�that�of�China’s�38�filings.9
“China has always tried to compete on price, so they could pose a
threat to India in the Generics Market. However, they are still six
years away from doing anything significant as far as generics are
concerned. Apart from China there is no other country that could
pose a serious threat to India,” says Mr. Pankaj Patel.
9 Crisil Research
27
Source: Crisil Research
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 31
Integration Issues
Finding�a�target�and�acquiring�it�is�just�one�aspect�of�a�deal,�what�is�equally
important�is�the�ability�to�successfully�integrate�the�target�with�itself.�Some�of
the�key�concerns�of�the�integration�process�involve�people�management,
managing�cultural�differences�and�aligning�the�goals�and�ambitions�of�the�staff
members�with�the�vision�of�the�merged�company.�Going�forward,�the�successful
implementation�of�planned�growth�strategies�will�also�depend�on�how�well
companies�manage�the�integration�process.
Conclusion
These�are�very�exciting�times�for�Indian�generics�players.�On�one�hand,�the
mainstay�of�the�Indian�players,�the�U.S.�market,�is�experiencing�intensely
competitive�business�environment,�and�on�the�other�hand,�semi-regulated�and
emerging�markets�are�expected�to�become�new�growth�markets.�While,
operational�restructuring�and�realignment�of�business�models�will�help�Indian
players�survive�the�competitive�environment�in�the�U.S.�and�European�markets,
their�increasing�presence�in�other�promising�markets�will�further�enhance�their
market�share�in�the�global�generics�industry.�
28
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 32
Introduction
Pharmaceutical�companies�are�increasingly�realizing�the�benefits�of�outsourcing.
Until�the�late�1990s,�companies�developed�their�products�in-house�and�only
shared�select�information�with�third�parties.�However,�in�recent�times,�increased
competition,�weaker�product�development�pipelines,�fewer�approvals,�the�need�to
accelerate�the�time-to-market�of�new�products,�and�pricing�pressures�have
compelled�pharmaceutical�companies�to�re-examine�their�priorities�and
increasingly�include�outsourcing�as�part�of�their�model�structure�for�business
operations.
CRAMS,�considered�as�one�of�the�most�promising�medium�to�long�term
opportunities�for�the�Indian�pharma�industry,�is�gaining�momentum.�In�recent
times,�the�CRAMS�segment�has�witnessed�heightened�activities�on�the�back�of
increasing�deal�flows,�presence�of�global�Contract�Manufacturing�Organizations
(CMOs)�and�Contract�Research�Organizations�(CROs)�and�emergence�of�new
players.�Global�pharma�companies�are�finding�innovative�ways�to�capture�cost
efficiencies�across�the�value�chain�and�are�resorting�to�outsourcing�of�core�as
well�as�non-core�processes.�India,�with�its�inherent�competitive�advantages,
stands�as�one�of�the�most�preferred�outsourcing�destinations�for�a�range�of
activities�and�is�now�becoming�a�critical�component�in�manufacturing�as�well�as
the�drug�development�value�chain�of�various�innovator�pharma�companies.��
Contract�Research�andManufacturing�Services�(CRAMS)
29
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 33
Growth Drivers
MNC�pharma�companies�are�increasingly�focusing�on�realigning�their
manufacturing�activities�in�order�to�concentrate�on�core�activities�such�as�R&D
and�brand�building�-�thereby�reinforcing�the�potential�for�cost�savings�through
contract�manufacturing.�At�the�same�time,�existing�global�CRAMS�players�are
facing�adverse�business�conditions,�on�account�of�increasing�regulatory
compliances�on�environmental�issues�and�competition�from�low�cost�countries.�
MNCs - leveraging on their Indian subsidiaries for global
support
The�introduction�of�the�product�patent�regime�has�opened�up�dual�opportunities
for�global�pharma�companies�in�India.�While�on�one�hand�the�regime�has�made
India�one�of�the�most�promising�pharma�markets�(on�account�of�the�favorable
demographics�and�increasing�income�levels),�on�the�other,�it�has�boosted�India’s
capabilities�as�an�emerging�off-shoring�destination�for�providing�end�to�end
pharma�outsourcing�services.�
“India is already an attractive destination and to sustain this,
building capacity is going to be a key factor. It is not just about cost
arbitrage, because beyond cost arbitrage, it would be the ability to
offer large intellectual capital in numbers which no other country can
do. We have to be competitive in terms of regulations and the speed
at which we turn things around,” says Dr. Hasit Joshipura.
Company Remarks
MerckReduction�of�the�workforce�by�5,100�people�(47�percent�frommanufacturing)
Eli�Lilly Comprehensive�restructuring�package:�greater�reliance�oncontract�manufacturing
Sanofi�Aventis Sells�manufacturing�plants�in�Puerto�Rico�and�France
Pfizer� USD�4�bn�cost-savings�plan:�25�percent�reduction�inmanufacturing�plants�by�2008
Source: Citigroup investment Research, May 2007
30
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 34
“India is an attractive choice for outsourcing. The attractiveness of
demographics and cost advantage are key. However the ambiguity
in patent law and bureaucracy can be inhibitors of growth. Key areas
for outsourcing in India are bio informatics, lead optimization and
clinical trials. Currently India is getting the lower end of these
activities, however companies will slowly move to outsourcing
higher end of their activities here once we demonstrate value
through lower cost and also reduce the time to market”, feels Mr.
Ranjit Shahani.
Global�pharma�MNCs�are�increasingly�enhancing�the�scope�for�outsourcing�of
their�operations,�related�to�research�and�manufacturing�to�their�Indian
subsidiaries.�Accordingly,�they�are�increasingly�leveraging�on�their�facilities�in
India.�
Some�of�the�key�operations�for�which�India�is�evolving�as�an�important
outsourcing�base�include:
Support for global R&D functions
In�order�to�improve�R&D�productivity�and�curb�escalating�costs,�MNC�pharmacompanies�are�capitalizing�on�their�existing�low�cost�facilities�in�India.�ManyIndian�subsidiaries�are�already�playing�a�vital�role�in�the�global�R&D�programmesof�the�parent�company.�
Outsourcing of manufacturing operations to the Indian subsidiaries
Pharma�MNCs�that�have�renewed�their�interest�in�the�Indian�markets�have�set�uplow�cost�manufacturing�facilities�in�India�that�meet�international�standards.�Whilethey�continue�to�expand�their�presence�in�the�domestic�markets,�many�of�themare�simultaneously�using�these�facilities�as�off-shoring�hubs.
Using India as a export base for other countries
Pharma�MNCs�are�also�increasingly�using�India�as�a�base�for�exports�not�only�tothe�immediate�neighboring�markets,�but�also�to�other�markets�around�the�worldsuch�as�Japan,�South�Africa,�Latin�America�and�Europe.
Clinical Data Management for global drug discovery and research functions
Pharma�MNCs�are�also�exploiting�India’s�competencies�in�the�field�of�InformationTechnology�and�its�strong�and�low�cost�IT�skill�sets;�by�setting�up�centers�for�theirglobal�clinical�data�management�functions�in�India.
The�India�pharma�industry�is�positioning�itself�as�the�provider�of�value�addedservices�such�as�support�for�early�phase�discovery,�research,�clinical�tests,�andsynthesis�of�custom-made�intermediates�or�even�finished�APIs,�elaboration�ofgenerics�dossiers�bundled�with�the�supply�of�the�formulated�drug�product,�etc.�ataffordable�prices.�Accordingly,�many�MNC�pharma�companies�have�alreadystarted�taking�advantage�of�this.
31
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 35
The�table�below�illustrates�the�various�activities�outsourced�by�MNC�pharma�companies
Company Remarks
GlaxoSmithKline (GSK)
R&D
In�2006,�GSK�India�was�involved�in�16�global�clinical�studies.�Going�forward,�GSK�India�isplanning�to�play�an�important�role�in�the�parent’s�global�drug�discovery�programme.�India�hasbeen�recognized�as�one�of�the�prime�centers�for�clinical�research,�especially�for�therapeuticsegments�such�as�oncology,�psychiatric�disorders�and�infectious�diseases.�It�is�also�involved�inthe�custom�synthesis�for�drug�discovery�and�research�initiatives�of�GlaxoSmithKline�R&D�atU.K.,�Italy,�and�U.S.
Exports
India�is�being�used�as�a�base�for�the�export�of�bulk�drugs�to�key�markets�such�as�Japan,Mexico,�France,�Germany,�Holland,�U.K.,�South�Africa�and�Denmark.
Clinical Data Management Center
It�has�set�up�a�center�for�clinical�data�services�with�Data�Management,�Biostatistics�andScientific�Writing�functions�to�support�the�clinical�R&D�activities�of�GlaxoSmithKline�Biologicalsworldwide.
PfizerR&D
Conducts�clinical�research�on�behalf�of�Pfizer�Global�Research�and�Development�(PGRD)worldwide�development�teams.��Approximately�3/4th�of�the�clinical�research�portfolio�is�relatedto�Phase�II�and�Phase�III�studies,�while�the�balance�pertains�to�the�research�essential�for�thelocal�registration,�launch�and�marketing.
Export Base
India�is�also�used�as�a�base�for�exports�to�other�countries.
AventisOutsourcings�of�mainly�APIs�by�the�parent�company�as�well�as�sales�to�Russia�are�the�two�keycomponents�of�exports.
AstraZenecaHas�set�up�a�process�R&D�facility�focused�on�tuberculosis�in�Bangalore,�the�first�outsideSweden�and�U.K.
Novartis Novartis�is�increasingly�using�India�as�a�base�for�exports�to�other�countries.
Novo Nordisk It�is�planning�to�set�up�a�global�data�management�center.
Sanofi Aventis
Planning�to�make�India�one�of�its�largest�bases�for�clinical�research.�It�set�up�a�dedicated�IndianClinical�Research�Unit�(CRU)�in�April�2006.�It�has�been�assigned�17�studies�in�severaltherapeutic�areas�till�date.�Sanofi�is�planning�to�send�almost�100�percent�of�its�feasibilitystudies�for�Phases�II�and�III�trials�to�the�Indian�CRU.�
32
Source: Press articles, Company websites
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 36
Contract Manufacturing
Contract�Manufacturing�represents�the�largest�opportunity�within�the�CRAMS
space.�India,�with�its�efficient�labor�pool�and�large�number�of�USFDA�compliant
manufacturing�plants�outside�the�U.S.,�is�expected�to�garner�a�major�share�of�this
large�opportunity.�At�present,�the�global�manufacturing�outsourcing�opportunity�is
estimated�at�USD�20�billion�and�is�expected�to�reach�USD�31�billion�by�2010.
The�four�main�components�of�the�global�outsourcing�market�are�intermediates,
APIs,�custom�synthesis�and�formulations/dosage�forms.�It�is�estimated�that
approximately�40�percent�of�outsourcing�demand�is�for�the�manufacturing�of
APIs.
Source: Citigroup Investment Research, May 2007
Source: Crisil Research
33
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 37
Having�a�presence�across�various�segments�of�the�contract�manufacturing�space
is�important�and�helps�to�capitalize�on�opportunities�provided�by�this�space.
Though�Custom�Chemical�Synthesis�(CCS)�and�the�intermediates�space�offers
limited�scale�and�volume�but�strong�chemistry�skills�at�this�stage�is�a�significant
step�in�getting�increasingly�involved�with�the�overall�drug�development�process
and�developing�relationships�with�MNC�pharma�companies.
“Well integrated players certainly will have an advantage. The clients
will certainly prefer players who could be contracted for all the
disciplines and segments,” says Dr. J M Khanna.
For�Indian�contract�manufacturing�players,�opportunities�exist�on�two�
fronts
-�capture�a�larger�share�of�the�opportunities�created�because�of�the�shift�from�
in-house�manufacturing�to�outsourcing�by�innovator�pharma�companies�and
-�foray�into�western�countries�by�acquiring�existing�contract�manufacturing�players
in�the�western�countries.�
Acquisitions�are�not�new�to�Indian�pharma�companies.�The�success�of�the
generics�players�can�very�well�be�attributed�to�the�large�acquisitions�they�have
made�to�foray�into�western�countries�–�especially�in�the�European�region.�Indian
contract�manufacturing�players�have�also�opted�for�the�inorganic�route�to�growth
and�have�made�strategic�acquisitions�to�gain�scale�and�strengthen�customer
relationships.
“Acquisition is also a philosophy. Ambition of the management to
grow is an important factor. Acquisition is a quicker way of achieving
higher revenues. Organic growth may also result in higher revenue
growth however, it takes time and it can be slow. It depends on the
management, how they want to grow,” feels Dr. J M Khanna.
Acquirer Target Country Deal Value (USD mn)
Nicholas�PiramalAvecia
Pfizer’�Facilty
U.K.
Morpeth,�U.K.
18
38
Shasun�Chemicals Rhodia’s�CCS�business U.K. 5
Jubilant�OrganosysTarget�Research�Associates
Hollister�Steir�Laboratories
U.S.
U.S.
33.5
122.5
Dishman�Pharma Carboogen�Amcis Switzerland 74
Dr.�Reddy’sLaboratories Roche’s�Facility�in�Mexico Mexico 61
Source: Citigroup investment Research, May 2007
Notable acquisitions in the CRAMS segment
34
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 38
Considering�that�some�of�these�assets�were�not�doing�well�due�to�a�bloated�cost
structure�and�inadequate�focus,�Indian�companies�were�able�to�acquire�them�at
reasonable�valuations.�With�proper�operational�realignment�and�rapid�scale�up�in
contracts,�most�of�these�acquisitions�are�now�proving�to�be�earnings�accretive.�
Contract Research
Contract�Research�also�offers�significant�opportunity�to�the�Indian�pharma
industry�which�is�becoming�a�global�R&D�hot-spot�for�innovator�pharma
companies.�The�global�contract�research�opportunity�was�pegged�at�USD�14
billion�in�2006�and�is�expected�to�reach�USD�24�billion�by�2010.�Declining�R&D
productivity,�coupled�with�an�increasing�number�of�products�going�off�patent�is
expected�to�drive�the�growth�of�the�contract�research�segment.�
“Besides manufacturing, outsourcing of discovery services will also
start happening sooner rather than later. However, it would be a
function of the experience that some of the earlier innovators have
had and how competitive the country is as against other countries
such as China, Singapore, Brazil, etc.” says Dr. Hasit Joshipura.
Given�the�conducive�regulatory�environment,�strong�chemistry�innovation�skills,
large�and�diverse�patient�pool;�and�availability�of�players�providing�ancillary
services�such�as�bio-informatics,�clinical�data�management�and�bio-statistics;�the
contract�research�market�in�India�is�expected�to�grow�at�a�CAGR�of�30-35�percent
during�2006-2011.��At�present,�contract�research�for�new�drug�discovery�accounts
for�60�percent�of�the�total�market�while�the�balance�40�percent�is�for�generic
drugs.�
Source: BiotechFinances.com
35
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 39
Clinical Research
At�present,�a�majority�of�clinical�trials�conducted�in�India�are�for�Phase�II�and
Phase�III.�Further,�Phase�I�trials�are�not�permitted�in�India�for�new�drug
substances�discovered�in�other�countries�unless�Phase�I�data�from�other
countries�is�made�available�to�Indian�authorities.�However,�the�government�is�in
the�process�of�considering�the�recommendation�of�the�Drug�Technical�Advisory
Board�(DTAB)�to�allow�Phase�I�clinical�trials�for�the�drugs�discovered�abroad.�If
this�happens,�then�it�will�enable�the�Indian�CRAMS�industry�to�provide�a�wide
range�of�drug�discovery�services.
The�advent�of�the�product�patent�regime�in�2005�has�provided�the�much�needed
impetus�to�the�growth�of�the�clinical�research�and�clinical�trials�segment.�Many
MNC�pharma�companies�have�made�India�their�R&D�hub�-�especially�for�clinical
trials.�India�is�also�becoming�a�preferred�destination�for�clinical�trials�given�that�it
offers�a�huge�patient�base�afflicted�by�both�tropical�diseases�as�well�as�lifestyle
diseases.�Patient�recruitment�in�India�is�also�faster�than�other�semi-�regulated�and
regulated�markets.
Following�the�move�of�their�global�customers,�international�CROs�have�also
forayed�into�the�Indian�market.�Some�of�the�prominent�ones�include�Quintiles,
SBFC�International,�ICON�Clinical�Research�and�i�GATE�Clinical�Research
International.
Source: acrohealth.org
36
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 40
Government Support
On�the�regulatory�front,�the�government�is�also�trying�to�promote�the�growth�of
this�industry�by�providing�tax�exemption�on�all�services�carried�out�by�the
contract�research�and�clinical�trials�industry.��This�step�is�likely�to�further�boost
clinical�trial�outsourcing�to�India.
Key Considerations
Efficient execution of contracts
Given�that�the�Indian�CRAMS�industry�is�still�evolving,�the�industry�experiences�a
rather�long�gestation�period�due�to�a�longer�time�taken�for�awarding�contracts.
Further�time�spent�on�registration�and�other�regulatory�processes�can�extend
final�delivery�timelines�by�almost�two�additional�years�in�the�initial�phase.
The�Indian�CRAMS�industry�also�needs�to�focus�on�building�strong�and
sustainable�client�relationships�and�improving�the�quality�of�service�with�respect
to�meeting�delivery�timelines,�upholding�ethics,�and�the�ability�to�offer�
value-added�services.
“Execution of CRAM deals also depends on how we exploit the
technical capabilities and how we manage broader issues such as
people and ethics. These things are still not in full control. We are
holding back. The day we start it and demonstrate it, we will attract
more business,” feels Dr. J M Khanna.
Building a strong technology platform and long term
partnerships
Considering�the�large�opportunity�and�strong�growth�drivers,�several�Indian�mid
sized�companies�have�forayed�into�this�segment.�
“The CRAMS segment is becoming commoditized with more
number of players entering the segment and people constantly
driving down prices. Therefore, even in this segment technology and
research will play a part. Developing the best technology, focusing
on a few large deals and building long term partnerships, will help in
achieving success in this segment,” says Dr. Swati Piramal.
37
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 41
Training and Infrastructure
Education�pertaining�to�contract�research,�including�discovery�services�and
clinical�trials,�needs�to�be�given�high�priority.�An�adequate�physical�infrastructure
coupled�with�specialized�training�and�an�industry�wide�accreditation�system�will
help�balance�the�demand-supply�equation�in�this�rapidly�growing�industry.��
IPR Compliances
Issues�related�to�data�exclusivity�and�confidentiality�are�still�areas�of�concern�for
most�clinical�trials�sponsors.�Stronger�IPR�compliances�will�instill�greater
confidence�in�MNC�Pharma�companies�and�will�further�boost�the�CRAMS
segment.�
“We need to speed-up the patent process, infrastructure has to be
ramped up and more clarity on the data exclusivity factor needs to
be provided. If you were to bring more and more R&D into this
country, then these are the issues one has to consider,” says Dr.
Hasit Joshipura.
Conclusion
Today,�what�was�once�considered�a�potential�opportunity�is�now�being�translated
into�real�numbers.�In�recent�times,�the�pharma�industry�has�seen�has�seen�an
emergence�of�significant�opportunities�in�the�form�of�increase�in�outsourcing
contracts.�Indian�companies�are�now�witnessing�increasing�visibility�in�this
business�–�from�one-off�contracts�to�becoming�preferred�vendors�with�assured
revenue�streams.�
One�of�the�most�notable�trends�is�a�formation�of�a�proper�eco-system�that�will
support�the�growth�of�this�industry�on�a�sustained�basis.�Emergence�of�domestic
players,�increasing�presence�of�global�CROs,�well�developed�IT�infrastructure,
encouraging�regulatory�environment�and�well�established�Knowledge�Process
Outsourcing�(KPO)�industry.��A�combination�of�all�these�factors�will�take�this
nascent�industry�to�the�next�level.
38
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 42
Introduction
Research�on�New�Chemical�Entities�(NCEs)�and�New�Drug�Delivery�Systems
(NDDS)�is�steadily�becoming�an�integral�part�of�the�strategy�of�Indian�pharma
companies,�who�want�to�build�a�sustainable�long�term�advantage.�Over�the�last
couple�of�years,�the�discovery�R&D�segment�has�gained�significant�momentum
and�discovery�R&D�pipelines�of�several�players�have�expanded�substantially.�At
present,�as�many�as�10-12�companies�have�molecules�under�various�stages�of
development.�R&D�investments�by�Indian�companies�have�also�increased
significantly�and�now�account�for�as�much�as�7-9�percent�of�sales�for�leading
pharma�companies.�It�is�expected�that�investment�in�R&D�is�expected�to�rise�to
USD�500�million�in�2010�and�USD1.2�billion�by�2015.10
“I believe India will be recognized as a research hub, it may not
happen very soon. There are tremendous opportunities for people to
get into this innovative business, as the cost of conducting research
in India is significantly lower. But we still don’t have great respect
for innovation and this will take time to evolve. There has to be a
cultural change and societal change to make this happen. So India
would be the place for research, but perhaps in the long term,” feels
Mr. Pankaj Patel.
Growth Drivers and Trends
India’s�competitive�advantage�in�offering�strong�chemistry�innovation�skills�at
significantly�lower�costs�has�lured�many�multinational�innovator�pharma
companies�to�make�India�a�major�component�of�their�global�drug�discovery�value
chain.�
Key�aspects�of�R&D�initiatives�of�Indian�pharma�companies�are�the�various
collaborations�and�innovative�funding�models�that�are�being�adopted�by�each�one
of�them.�Research�on�NCEs�is�relatively�a�new�field�for�Indian�pharma�companies,
which�have�traditionally�relied�on�their�process�engineering�skills�and�is�fraught
with�uncertainties�and�demands�considerable�financial�resources.�Collaborative
research,�through�in-licensing�and�out-licensing�helps�in�accessing�the�vast�pool
of�resource�capabilities�of�MNC�Pharma�companies.��This�also�allows�Indian
pharma�companies�to�build�resources�for�expanding�their�research�pipeline.
In-licensing�and�out-licensing�transactions�are�gaining�strategic�importance�with
MNC�pharma�companies�making�it�an�integral�part�of�their�business�models.�This
not�only�helps�in�boosting�their�weak�short�to�mid-term�growth�prospects�by
swiftly�filling�gaps�in�their�pipelines�but�also�helps�in�saving�time�for�conducting
early�stage�R&D�process.
Research�and�Development
39
10 Press Articles
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 43
Prominent�deals�in�collaborative�research
Indian
CompanyMolecule Indication Nature of deal Global Partner Remark
Glenmark
GRC�3886 Asthma,COPD Out-licensing Forest�Labs
Out-licensed�to�Forest�Labsfor�USD�190�mn�for�NorthAmerican�markets
GRC�3886 Asthma,COPD Out-licensing Tejin�Pharma Out-licensed�to�Teijin�Pharma
for�Japanese�markets
GRC�8200 Type�IIDiabetes Out-licensing Merck�KGaA
Out-licensed�to�Merck�KGaA,Germany�for�the�NorthAmerican,�European�andJapanese�markets.
Dr�Reddy’s
DRF�1042� Cancer JointDevelopment ClinTec�International� Co-development�and
commercialization�agreement
DRF�2593 Type�IIdiabetes
JointDevelopment Rheoscience�A/S Co-development�and
commercialization�agreement
Ranbaxy RBX�11160 Anti-malarial JointDevelopment
Medicines�forMalaria�Venture(MMV)*
Co-development�andcommercialization�agreement
Nicholas Pre�clinical�drugcandidate NA In-licensing NA Global�clinical�development
Alembic NDDS�forKeppra®�XR
Anti-epilepticdrug Out-licensing UCB,�Belgium
Out-licensed�for�milestonepayments�of�USD�11�millionand�royalty�on�futureworldwide�net�sales
Suven Pre�clinical�drugcandidate CNS Joint
Development Eli�Lilly
Partnering�deal�with�Eli�Lillyfor�early�phase�research�forDiscovery�of�NCEs�in�the�CNSarena
*this joint venture has been discontinued
Source:�Company�websites,�Analyst�reports,�Press�articles
40
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 44
MNC Pharma’s quest for in-licensing
For�MNC�pharma�companies,�in-licensing�is�the�most�sought�after�strategy�to
arrest�declining�R&D�productivity.�Over�the�last�couple�of�years,�many�MNC
pharma�companies�have�stepped�up�their�in-licensing�activities.�Novartis�has
more�than�320�ongoing�collaborations�across�19�countries�while�Astra�Zeneca�has
in-licensing�partnerships�with�more�than�50�companies.�Globally,�leading�pharma
companies�are�witnessing�increasing�dependence�on�in-licensed�products�to
augment�sales.�In�2005,�revenues�from�licensed�products�accounted�for�24.4
percent�of�the�total�sales�of�the�top�55�pharma�companies�as�against�20.7
percent�in�2002.�Datamonitor�estimates�that�by�2010,�these�companies�will
derive�as�much�as�29�percent�of�their�total�sales�from�in-licensed�products.�
Source: Datamonitor, April 2006
41
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 45
Collaborative Research
Indian�CROs�with�advanced�research�capabilities�and�value�added�service
offerings�are�going�beyond�their�pure�service�led�models�to�an�incentive�based
structure.�Advinus�Therapeutics,�a�CRO�promoted�by�the�Tata�Group,�is�one�such
example.�It�has�entered�into�an�in-licensing�cum�joint�development�agreement
with�Merck�for�the�development�of�two�drugs�in�the�metabolic�disorder�segment.
In�addition�to�the�USD�75�million�milestone�payments,�upon�commercialization,
Advinus�will�also�receive�royalty�on�drug�sales.��In�another�example,�India’s
biotech�major,�Biocon,�has�entered�into�a�USD�300�million�deals�with�BMS�to
develop�a�new�research�center�employing�400�scientists�for�providing�discovery
and�pre�clinical�support�to�BMS.
De-mergers
De-merging�of�R&D�assets�into�a�separate�company�is�one�of�the�most�notable
trends�among�Indian�pharma�companies.�The�objective�being�–�to�enhance�the
focus�on�the�drug�discovery�business�and�generate�resources�by�roping�in
strategic�investors�to�take�molecules�to�advance�stages�of�development.
“You take the R&D assets of all the Indian companies together and
the market cap that the stock market is ascribing to them today. By
2015, these assets would have an approximate value of USD 65
billion. But, if you create a separate company specifically for
research then value could be as high as USD 100 billion by that time.
So the de-mergers would add significant value,” says Dr. Swati
Piramal.
Dr. Swati Piramal also feels that, “Generics Discovery and CRAMS
should be separate. You can't do both. In discovery, your scientist is
asked to be creative and find a new innovation. The mandate of the
scientist is broad and ensuring that it won't infringe on anyone's
patent. In CRAMS the mandate to your scientist is different. The
mandate is to make an existing patent or innovation better. So the
approach is different.”
42
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 46
Key Considerations
Need for partnering
New�drug�discovery�is�a�costly�and�lengthy�process.�It�takes�anywhere�between
(approximately)�10-12�years,�for�a�new�drug�to�reach�the�market�from�the
laboratory�and�costs�approximately�USD�800�million�to�1.2�billion.�Indian�players
have�been�funding�their�research�pipelines�through�resources�generated�from�the
generics�business�which�is�facing�intense�price�competition.�This�makes�it
particularly�difficult�for�Indian�pharma�companies�to�drive�the�entire�process�of
drug�discovery�all�the�way�to�the�stage�of�marketing.�Indian�pharma�companies
are�well�placed�to�do�early�stage�research�but�lack�the�financial�strength�to�take�a
promising�new�molecule�to�advanced�stages�of�development.�
Globally,�the�R&D�business�is�becoming�tougher�with�declining�productivity�and
spiraling�costs.�On�the�regulatory�front,�product�approval�norms�are�becoming
stricter.�Both�Indian�pharma�companies�and�global�innovator�pharma�companies
realize�the�benefits�of�partnering.
Strategic R&D Demergers
Company Strategic�Rationale
Sun
• To�provide�scope�for�independent�collaboration�and�expansion
• To�offer�investors�an�option�to�separately�hold�investments�in
businesses�with�different�investment�and�return�characteristics,
depending�on�what�matches�their�risk�and�return�expectations.
Dr Reddy’s
• To�rapidly�advance�the��existing�as�well�as�future�NCE�assets�through
Phase�II�trials�and�seek�out-licensing,�co-development�or�joint
commercialization�opportunities
• To�aggressively�accelerate�new�discoveries�to�clinical�development�in
the�areas�of�Metabolic�Disorders�and�Cardiovascular.
Nicholas Piramal
• To�enhance�the�focus�on�the�NCE�Business
• Improve�profitability�of�core�business�such�as�CRAMS�and�domestic
formulations
• Funding�flexibility�–�to�explore�innovative�financing�mechanism
including�strategic�investors.
Ranbaxy
• To�create�an�independent�pathway�for�Drug�Discovery�Research
• Operational�freedom�and�flexibility�for�new�growth�opportunities
• Provide�a�platform�for�increased�collaboration.
Source: Company websites, Analyst reports, Press articles
43
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 47
“Companies are investing, trying to partner with various companies to dotesting of compounds and take it to a pre- clinical level. This will developand will be more like an investment for the future. There are fewcompanies that are already doing that. As an industry we can learn thistesting of new compounds. This is a weak area and which we need andshould build. When that is done, I think India will be benefit,” says Dr. JM Khanna.
Partnering�with�a�MNC�Pharma�company�helps�in�taking�new�compounds
through�all�the�phases�of�clinical�trials�right�till�the�launch�of�the�molecule.�This
strategy�considerably�reduces�payback�period�and�helps�Indian�companies
develop�specialization�to�consistently�generate�new�innovative�compounds
through�in-house�R&D.
“Research and Development offers a lot of advantage to India and this iswhere India can create a priority structure and reorient the business.There is plenty of scope for R&D Collaboration. We could undertakeresearch in full-scale therapeutic areas or collaborate in specific or partialresearch and development projects. Another area for collaboration couldbe for products that are not so important for large pharma companies,but still relevant for others. The MNC Pharma companies would not beinterested in these products because of their limited market size but thiscould be an area of interest for Indian companies,” feels Mr. Pankaj Patel.
Need for Regulatory Impetus
The�government�and�other�regulatory�bodies�can�play�a�significant�role�in
determining�the�success�of�drug�discovery�research�in�India.�One�form�of
government�support,�would�be�the�PPP�models�that�can�give�the�much�needed
impetus�to�this�segment.�The�PPP�model�can�help�companies�finance�the
molecules�across�different�stages�of�development,�provide�support�for
conducting�clinical�trials�and�get�faster�regulatory�approvals.�The�public�sector�will
also�stand�to�benefit�by�getting�access�to�drugs�of�high�therapeutic�use�meant�for
mass�distribution,�at�significantly�low�costs.
44
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 48
“There are lots of government laboratories, like Central Drugs, NCL
and Hyderabad Labs that do drug discovery. The government fund
and grants that go for these labs should be aligned with the
industry, especially for drug discovery. The generics industry was
supported by the government when the industry started in the 60s
and 70s and 80s. This is the time when the government should
support the industry for drug discovery, wholeheartedly. I think there
is lot of knowledge and experience available. And the government
should help in a similar way they did it for the generics industry 20
years ago. They should come forward and see how they can help in
new drug discovery,” says Dr. J M Khanna.
From�the�MNC�Pharma’s�perspective,�some�of�the�regulatory�aspects�regarding
the�IPR�regime�still�remain�an�area�of�concern�and�there�is�need�to�bring�India’s
IPR�regime�in�conformance�to�the�world�class�IPR�standards.
“‘Pharmaceuticals’ is a knowledge based industry and India offers a
unique skill advantage to the global research community. Taking a
cue from China, which has received $117 billion in foreign
investments (in comparison to $17 billion received by us), the Indian
government has to create an investor friendly environment with
clear and transparent policies. Fostering a culture of innovation by
providing incentives to companies to invest in R&D will enable us to
capitalize on the significant opportunities present in the field of
clinical research and manufacturing,” says Mr. Kewal Handa.
Funding Constraints
Most�of�the�Indian�pharma�companies�that�are�involved�in�new�drug�discovery�are
also�focused�on�the�generics�business�as�well�as�the�domestic�formulations
market.�Globally,�the�generics�business�is�witnessing�relentless�pricing�pressure
on�the�back�of�intense�competition�and�fewer�product�launches.�At�the�same
time,�the�competitive�intensity�in�the�domestic�market�is�also�high�due�to�severe
price-based�competition�and�a�high�level�of�fragmentation.�Considering�these
factors,�resource�generation�for�investment�in�R&D�activities�is�becoming
increasingly�challenging.
45
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 49
“Funding is the biggest constraint. It takes lot of money to develop a
new drug and chances of failure are also high. If the prices of the
drugs in the domestic market are controlled then there is very little
money left for research. We are the only country in the world where
this is happening. China, Korea, Israel, Taiwan, they all encourage
research. If we don’t do it, then the money doesn’t go to research.
But if it does go to research, then with much less cost we can do
much more because of our inherent advantages,” says Dr. Swati
Piramal.
Conclusion
India�is�expected�to�play�a�vital�role�in�the�global�R&D�space�and�collaborative
research�is�expected�to�be�the�future�of�the�new�drug�discovery�process�in�India.
This�is�reinforced�by�the�increasing�collaborations�between�Indian�and�MNC
pharma�companies.�Going�forward,�this�trend�will�continue�to�gather�momentum.
However,�success�would�largely�depend�on�proper�partner�selection�and�well
structured�alliances.
46
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 50
The�pharma�industry�is�regarded�as�one�of�the�most�globalized�industries.�The
Indian�pharmaceutical�industry�has�the�ability�to�exploit�the�opportunity�inherent
in�the�global�industry�at�various�points�in�the�value�chain�from�raw�materials,
intermediates�and�active�pharmaceutical�ingredients�at�one�end,�to�generic�and
outsourced�formulations�and�drug�discovery�and�development�at�the�other�end.�In
order�to�rapidly�integrate�with�the�global�pharma�industry,�Indian�pharma�players
have�entered�into�various�collaborations�in�almost�every�area�of�the�pharma�value
chain,�be�it�drug�discovery�and�development;�manufacturing,�sales�or�distribution.�
Post�the�introduction�of�product�patents�in�Indian�legislation,�the�domestic�market
has�become�even�more�attractive�to�pharma�MNCs�that�have�now�started
collaborating�with�domestic�players�through�in�licensing�deals�and�marketing
alliances.�
For�MNCs�pharma�companies�that�are�augmenting�their�market�presence�(after
the�new�product�patent�system),�by�utilizing�domestic�industry's�skills�and
infrastructures�to�boost�their�research�and�manufacturing�activities,�partnerships
will�be�crucial�to�penetrate�the�tertiary�and�rural�markets.�
This�enables�the�MNC’s�to�utilize�the�vast�marketing�and�distribution�networks�on
the�Indian�players�while�these�alliances�enable�Indian�companies�to�access�a
wider�knowledge�base�and�a�diverse�product�range.�
Growth�Through�Collaborations
47
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 51
Generic�players�are�using�collaborations�as�a�market�expansion�tool.�Various�JVs
have�been�formed�between�Indian�and�international�pharma�players�to�strengthen
their�manufacturing�capabilities�and�technology,�and�leverage�on�the�partner’s
experience�in�product�filings,�regulatory�compliance�and�local�market�knowledge
and�penetration.�Recently,�many�Indian�pharma�companies�have�formed�JVs�for
expanding�in�semi-regulated�markets.
“Collaboration as a trend will continue to grow. It is a market
expansion tool,” says Dr. Hasit Joshipura.
Collaborations�and�partnerships�are�critical�drivers�for�CRAM’s�players.�It�is
important�for�companies�to�demonstrate�the�ability�to�respect�the�values�and
ethics�of�the�partner�as�this�will�encourage�MNC’s�to�begin�outsourcing�the
processes�that�reside�at�the�higher�end�of�the�value�chain.�For�companies�to
successfully�exploit�the�benefits�of�these�alliances�it�is�also�critical�to�have�a
substantial�involvement�of�senior�management�as�well�as�allocation�of�necessary
resources�to�achieve�success.�
“Cross border alliances especially after the (amended) Patents Act
have and will continue to increase. Whether it is research alliances,
in-licensing or out-licensing it will sky rocket. This is happening
world wide. It is with partnerships we can learn. Cultures of both
sides have to be looked at seriously whether the company whom
you are signing with is akin to your values. You have to be very
careful about ethics,” says Dr. Swati Piramal.
In-licensing�and�out-licensing�agreements;�and�joint�drug�discovery�and
development�are�the�most�prominent�R&D�collaboration�models�adopted�by
Indian�as�well�as�MNC�Pharma�companies�to�advance�their�R&D�initiatives.�This
not�only�enables�companies�to�strengthen�the�resource�pool�but�also�reduces�the
risks�associated�with�failures.�
“Collaborations are going to explode because of synergies. There are
lots of mid sized companies in Europe, Japan and U.S. that are keen
on collaborating with Indian companies to explore various
opportunities,” says Dr. Brian Tempest.
48
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 52
Conclusion
Collaborations�have�played�a�very�important�role�in�the�growth�of�the�Indian
pharma�companies.�Be�it�the�domestic�market�or�international,�the�co-existence
of�collaboration�and�competition�has�now�become�an�inherent�characteristic�of
the�Indian�pharma�industry.�Companies�have�identified�collaborations�as�a�faster
growth�tool�than�building�their�own�infrastructure.
Today,�pharmaceutical�companies�operate�in�multiple�markets�spanning�multiple
segments�and�with�varied�business�models.�Collaborations�will�be�critical�to
success�in�such�a�dynamic�business�environment.
49
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 53
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 54
Annexures - Profiles
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 55
Educational Background
Dr.�Brian�Tempest�has�acquired�his�CSci,�CChem,�MRSC,�BSc�and�PhD.
Professional Experience
Dr.�Tempest�has�worked�in�the�pharma�industry�for�the�last�36�years.�During�this
time,�he�has�worked�for�several�pharma�majors,�including�Glaxo�&�Searle,�around
the�world�and�joined�Ranbaxy�12�years�ago.�During�this�period,�Ranbaxy�has
transformed�from�a�small�company�focused�on�the�India�domestic�market,�to�a
top�10�global�generic�company.�Dr.�Tempest�lives�in�New�Delhi,�India�and�has
been�President,�Managing�Director�&�Chief�Executive�Officer�and�is�presently�the
Chief�Mentor�&�Executive�Vice�Chairman�of�the�Board.�Dr.�Tempest�is�one�of�a
few�westerners�to�hold�a�leadership�position�in�an�Indian�blue�chip�MNC,�and�has
an�unusual�insight�into�India.
Dr.�Tempest�is�also�a�Honorary�Professor�of�the�Management�School�at�Lancaster
University,�U.K.,�and�he�sits�on�the�Editorial�Board�of�the�Journal�of�Generic
Medicines.
Dr.�Brian�W.�TempestChief�Mentor�&�Executive�Vice�Chairman�of�the�BoardRanbaxy�Laboratories�Ltd.
Brian Tempest
52
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 56
Educational Background
Dr.�Joshipura�is�a�graduate�in�Electrical�Engineering�from�VJTI�-�Bombay
University�and�a�Post�Graduate�from�Indian�Institute�of�Management�-
Ahmedabad.�He�has�completed�his�Doctorate�programme�at�the�School�of
Management�at�IIT�Mumbai.�
Professional Experience
After�having�spent�about�three�years�with�the�Tata�Administrative�Services,�Dr.
Joshipura�has�spent�about�16�years�with�the�Unilever�Group�of�companies�in
India�and�held�positions�of�increasing�responsibility�in�commercial,�sales,
marketing�and�business�management�functions.�He�joined�the�pharmaceutical
business�of�Johnson�&�Johnson�Ltd.,�as�President�&�Executive�Director�in
October�2001,�a�position�he�held�until�August�2006.��Dr.�Joshipura�was�also�the
Chairperson�for�the�Corporate�Contributions�Programme,�as�well�as�the�lead�for
Government�Affairs�for�the�Johnson�&�Johnson�group�of�businesses�in�India.��
Other Achievements
Dr.�Joshipura�brings�considerable�management�experience�in�both�consumer
healthcare�and�pharmaceuticals�and�is�ideally�placed�to�lead�GSK�India�in�the
patent�era.��He�is�also�an�Executive�Committee�Member�of�the�Organisation�of
Pharmaceutical�Producers�of�India�(OPPI)�and�has�been�recently�nominated�by
the�Board�of�Governors�VJTI�to�their�Senate.
Dr.�Hasit�JoshipuraVice�President,�South�Asia�and�Managing�Director,�IndiaGlaxoSmithKline�Pharmaceuticals�Ltd.
Hasit Joshipura
53
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 57
Educational Background
Dr.�Khanna�completed�his�M.Sc�in�Organic�Chemistry�from�the�Agra�University
and�obtained�the�first�rank�for�the�same.�He�went�on�do�his�Ph.D�in�Drug
Discovery�research�at�the�Central�Drug�Research�Institute�in�Lucknow.
Professional Experience
Dr.�Khanna�was�an�Executive�Director�in�Ranbaxy�in�(Guanzhou�China)�Ltd.�China.
He�was�also�the�Chairman�of�Ranbaxy�Pharmaceuticals�Inc.�in�Princeton,�U.S.�In
addition,�he�was�with�Ranbaxy�Labs�Ltd.,�New�Delhi�for�23�years,�where�at�the
time�of�his�retirement,�Dr.�Khanna�was�its�President.
Other Achievements
Dr.�Khanna�created�a�world�class�R&D�Infrastructure�at�Ranbaxy�Labs�Ltd.��He
was�also�responsible�for�the�development�of�several�complex,�non-infringing�and
cost�effective�technologies�and�products�including�Agro-chemicals,�dosage�forms
etc.�He�was�also�actively�involved�in�drug�discovery�research�and�the�publication
of�research�publications�and�patents.
Dr.�J.M.�KhannaExecutive�Director�&�President,�Life�Sciences�Jubilant�Organosys�Ltd.
J M Khanna
54
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 58
Educational Background
A�qualified�Management�Accountant�and�Company�Secretary,�and�with�a
Masters�Degree�in�Commerce�from�Sydenham�College,�Mumbai,�Mr.�Handa has
completed�the�Pfizer�Leadership�Development�Program�from�Harvard�University
and�the�Senior�Management�Development�Program�from�IIM,�Ahmedabad.�He
has�also�done�a�course�on�Marketing�Strategy�from�Columbia�Business�School.
Professional Experience
Mr.�Handa�is�Managing�Director,�Pfizer�Limited,�a�pharmaceutical�company�that
discovers�and�develops�drugs,�provides�information�on�prevention,�wellness,�and
treatment.�Under�his�leadership,�the�company�is�now�aggressive�in�its�growth
plans�and�has�launched�several�new�products.�Mr.�Handa�is�aiding�the�closer
alignment�of�Pfizer�India�with�its�parent�company.�Today,�Pfizer�has�adopted�a
focused�method�of�targeting�doctor�customers�and�building�therapeutic
specialization.�
Mr.�Handa�joined�Pfizer�16�years�ago.�Prior�to�becoming�the�Managing�Director,
he�was�Pfizer’s�Executive�Director,�Finance�and�was�responsible�for�strategically
guiding�the�company�through�two�mergers�with�Parke�Davis�-�Warner�Lambert
and�Pharmacia�respectively.
Other Achievements
Mr.�Handa�is�a�reputed�industry�expert�who�takes�the�lead�on�key�issues�that
concern�the�pharmaceutical�sector.�As�Vice�President�of�the�Organisation�of
Pharmaceutical�Producers�of�India�(OPPI),�he�has�been�at�the�forefront�of�the
industry’s�efforts�to�resolve�issues�pertaining�to�the�pharmaceutical�sector.�He
has�recently�been�appointed�as�the�President�of�All�India�Management
Association.�He�is�a�Committee�Member�of�the�Confederation�of�Indian�Industry
(CII),�the�Bombay�Chambers�of�Commerce�and�Industry�(BCCI),�and�the�past
President�of�Bombay�Management�Association�(BMA).�Mr.�Handa�was�awarded
the�‘India�CFO�2004�–�Excellence�in�Finance�in�an�MNC’�by�International�Market
–�Assessment�Group�and�has�recently�won�the�Bharat�Shiromani�Award.
Mr.�Kewal�HandaManaging�DirectorPfizer�Limited
Kewal Handa
55
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 59
Educational Background
Mr.�Pankaj�Patel�holds�a�Masters�Degree�in�Pharmaceutics�and�Pharmaceutical
Technology.�
Professional Experience
Mr.�Pankaj�Patel�is�the�Chairman�&�Managing�Director�of�Zydus�Cadila,�a�global
healthcare�provider�and�one�of�India’s�leading�healthcare�companies.�With�over�30
years�of�experience�in�the�Indian�pharmaceutical�industry,�Mr.�Patel�combines
both�research�and�techno-commercial�expertise.�He�has�published�35�research
papers.�Mr.�Patel�has�been�the�guiding�force�behind�the�group’s�fast�tracked
growth.�From�a�turnover�of�INR�250�crores�in�1995,�the�group’s�turnover�today
stands�at�over�INR�1800�crores.�For�his�innovative�business�practices�that�have
accelerated�Zydus�Cadila’s�growth,�Mr.�Pankaj�Patel�was�declared�the�‘Pharma
Man�of�the�Year’�by�the�Federation�of�Indian�Industry�and�Economists�(FIIE)�in
2004.
Other Achievements
Mr.�Pankaj�Patel�is�associated�with�industry�associations�such�as�Indian
Pharmaceutical�Alliance,�Indian�Drug�Manufacturers�Association,�Federation�of
Indian�Chamber�of�Commerce�&�Industry�(FICCI),�Basic�Chemicals,
Pharmaceuticals�and�Cosmetics�Export�Promotion�Council�(CHEMEXCIL)�etc.�He
also�officiated�as�the�President�of�Gujarat�Chamber�of�Commerce�and�Industry
for�the�year�2006�–�07.
Mr.�Pankaj�Patel�is�also�actively�involved�in�various�educational�institutions�and�is
on�the�advisory�committees�and�academic�councils�of�leading�pharmaceutical
colleges�and�management�institutes.
Mr.�Pankaj�R.�PatelChairman�&�Managing�DirectorCadila�Healthcare�Ltd.
Pankaj R. Patel
56
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 60
Educational Background
Mr.�Iyer�holds�a�Post�Graduate�degree�in�Commerce�and�MBA�in�Finance�from
Bombay�University.
Professional Experience
Mr.�Iyer�is�the�Managing�Director�of�Wyeth�Limited,�a�subsidiary�of�Wyeth�U.S.
He�joined�Wyeth�in�1980�and�rose�to�become�its�Managing�Director�in�the�year
2000.�Before�becoming�Managing�Director,�he�has�held�various�positions�of
increasing�responsibilities�in�Finance�and�Commercial�functions.
Other Achievements
Mr.�Iyer�is�the�President�of�Organisation�of�Pharmaceutical�Producers�of�India
(OPPI)�and�is�also�the�Managing�Committee�Member�of�Bombay�Chamber�of
Commerce.
Mr.�Ranga�IyerManaging�DirectorWyeth�Ltd.
Ranga Iyer
57
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 61
Educational Background
Mr.�Shahani�did�his�Mechanical�Engineering�from�IIT�Kanpur�and�then�went�on�to
complete�his�MBA�from�JBIMS,�Bombay.
Professional Experience
Mr.�Shahani�started�his�career�with�ICI�in�India�in�their�businesses�of�Fibres�&
Speciality�chemicals.�Later,�he�rose�to�the�position�of�General�Manager�with�ICI�/
ZENECA�U.K.,�overseeing�their�Asia�Pacific�and�LatAm�operations�for�their
Petrochemicals�and�Plastics�division.�This�was�followed�by�a�period�as�CEO�at
Roche�Products�Limited,�after�which�he�moved�to�Novartis�in�India�in�1997,
following�the�merger�of�Sandoz-Ciba.�At�present�he�is�Country�President
responsible�for�the�overall�operations�of�the�Novartis�Group�of�Companies�in
India.
Other Achievements
Mr.�Shahani�was�President,�Organisation�of�Pharmaceuticals�Producers�of�India
(OPPI)�from�2001-2007,�and�is�currently�President�of�the�Bombay�Chamber�of
Commerce�and�Industry,�President,�Swiss�Business�Forum,�and�was�on�the
Council�of�the�International�Federation�of�Pharmaceuticals�Manufacturers
Associations�(IFPMA,�Geneva).��He�is�a�thought�leader�in�the�Pharmaceutical
Industry�and�has�been�actively�involved�in�lobbying�for�a�strong�Product�Patent
law�in�the�country;�and�Data�Protection�and�liberalization�of�the�price�control
mechanism�for�Pharmaceuticals.��He�has�also�strongly�canvassed�for�deterrent
legislation�against�counterfeit�drugs.
Mr.�Ranjit�ShahaniCountry�PresidentNovartis�India�Ltd.
Ranjit Shahani
58
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 62
Educational Background
Dr.�Swati�Piramal�received�her�medical�degree�from�the�University�of�Bombay.
She�went�on�to�complete�her�Doctorate�in�Industrial�Medicine�in�Mumbai.�Dr.
Piramal�then�got�her�Masters�in�Public�Health�from�the�Harvard�University,�U.S.
Professional Experience
As�Director�of�Nicholas�Piramal,�Dr.�Piramal�looks�into�R&D,�Strategic�Alliances,
Communication,�Knowledge�Management,�Public�Policy�amongst�other�things.
She�is�also�responsible�for�starting�and�leading�the�team�for�Strategic�Research
Planning,�Discovery�Research�and�Chemical�Process�Development.�
Dr.�Piramal�headed�the�task�force�to�rapidly�implement�ERP�solutions�for�meeting
MRP�II,�world�class�manufacturing�standards.
Dr.�Piramal�was�a�Member�of�the�Committee�set�up�by�Shri�Yashwant�Sinha�to
transform�India�into�a�Knowledge�Power.�She�has�written�papers�on�Drugs�Price
Control,�Biotechnology�Regulation�on�Biosimilars,�and�a�paper�on�Data�Protection
Laws�in�2000�to�help�influence�India’s�positions.��Another�position�paper�on
Patentability�has�been�published�in�2007.
Acquired�and�set�up�new�pathology�laboratories�across�India,�to�be�part�of�a
chain�offering�PCR/Histopathology/Immunological�specialized�tests.��
Other Achievements
Dr.�Piramal�founded�the�Gopikrishna�Piramal�Memorial�Hospital�in�1983,�a
charitable�Hospital�with�services�for�the�under-privileged.��She�also�started�the
new�sports�sciences�wing�at�the�hospital,�with�a�high�tech�human�performance
laboratory.�The�Prime�Minister�has�nominated�Dr.�Piramal�as�a�member�on�the
Board�of�the�Council�of�Scientific�and�Industrial�Research�(CSIR).�She�is�also�an
expert�member�of�the�Planning�Commission,�Govt.�of�India�and�Vice�President�of
ASSOCHAM.�Dr.�Piramal�is�also�on�the�board�of�companies�such�as�LIC,�ICICI
Bank,�SBI�Capital�Markets�and�others.
Dr.�Swati�A.�PiramalDirector,�Strategic�Alliances�&�CommunicationsNicholas�Piramal�India�Ltd.
Swati Piramal
59
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 63
The�Confederation�of�Indian�Industry�(CII)�works�to�create�and�sustain�an
environment�conducive�to�the�growth�of�industry�in�India,�partnering�industry�and
government�alike�through�advisory�and�consultative�processes.�
CII�is�a�non-government,�not-for-profit,�industry�led�and�industry�managed
organisation,�playing�a�proactive�role�in�India's�development�process.�Founded
over�112�years�ago,�it�is�India's�premier�business�association,�with�a�direct
membership�of�over�6500�organisations�from�the�private�as�well�as�public
sectors,�including�SMEs�and�MNCs,�and�an�indirect�membership�of�over�90,000
companies�from�around�350��national�and�regional�sectoral�associations.
A�facilitator,�CII�catalyses�change�by�working�closely�with�government�on�policy
issues,�enhancing�efficiency,�competitiveness�and�expanding�business
opportunities�for�industry�through�a�range�of�specialised�services�and�global
linkages.�It�also�provides�a�platform�for�sectoral�consensus�building�and
networking.�Major�emphasis�is�laid�on�projecting�a�positive�image�of�business,
assisting�industry�to�identify�and�execute�corporate�citizenship�programmes.
Partnerships�with�over�120�NGOs�across�the�country�carry�forward�our�initiatives
in�integrated�and�inclusive�development,�which�include�health,�education,
livelihood,�diversity�management,�skill�development�and�water,�to�name�a�few.�
CII's�theme�of�"Building�People,�Building�India"�puts�the�spotlight�on�Human
Resource�Development:�making�people�more��efficient,�entrepreneurial�and
innovative,�to�make��India�and�Indian�industry�even�more�competitive,�across�all
sectors�of�the�economy�and�all�sections�of�society,�at�all�levels��Global,�National,
Regional,�State�and�Zonal.�
With�57�offices�in�India,�8�overseas�in�Australia,�Austria,�China,�France,�Japan,
Singapore,�UK,�USA�and�institutional�partnerships�with�240�counterpart
organisations�in�101�countries,�CII�serves�as�a�reference�point�for�Indian�industry
and�the�international�business�community.
Summit Websites:
http://www.pharmasummit.biz
About�Confederation�of�IndianIndustry�(CII)
60
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 64
KPMG�is�the�global�network�of�professional�services�firms�of�KPMG�International.
Our�member�firms�provide�audit,�tax�and�advisory�services�through�industry
focused,�talented�professionals�who�deliver�value�for�the�benefit�of�their�clients
and�communities.�With�nearly�113,000�people�worldwide,�KPMG�member�firms
provide�services�in�148�countries.
The�member�firms�of�KPMG�International�in�India�were�established�in�September
1993.�As�members�of�a�cohesive�business�unit,�they�respond�to�a�client�service
environment�by�leveraging�the�resources�of�a�global�network�of�firms,�providing
detailed�knowledge�of�local�laws,�regulations,�markets�and�competition.�We
provide�services�to�over�2,000�international�and�national�clients,�in�India.�KPMG
has�offices�in�India�in�Mumbai,�Delhi,�Bangalore,�Chennai,�Hyderabad,�Kolkata�and
Pune.�The�firms�in�India�have�access�to�more�than�2000�Indian�and�expatriate
professionals,�many�of�whom�are�internationally�trained.�We�strive�to�provide
rapid,�performance-based,�industry-focused�and�technology-enabled�services,
which�reflect�a�shared�knowledge�of�global�and�local�industries�and�our
experience�of�the�Indian�business�environment.
About�KPMG�in�India
61
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 65
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 66
in.kpmg.com
KPMG�in�India
MumbaiKPMG House, Kamala Mills Compound448, Senapati Bapat MargLower ParelMumbai 400 013Tel: +91 22 3989 6000Fax: +91 22 3983 6000
Delhi4B, DLF Corporate ParkDLF City, Phase IIIGurgaon 122 002Tel: +91 124 307 4000Fax: +91 124 254 9101
BangaloreMaruthi Info-Tech Centre11-12/1, Inner Ring RoadKoramangalaBangalore 560 071Tel: +91 80 3980 6000Fax: +91 80 3980 6999
ChennaiNo.10 Mahatma Gandhi RoadNungambakkamChennai 600 034Tel: +91 44 3914 5000Fax: +91 44 3914 5999
HyderabadII Floor, Merchant TowersRoad No. 4, Banjara HillsHyderabad 500 034Tel: +91 40 2335 0060Fax: +91 40 2335 0070
KolkataPark Plaza, Block F, Floor 671 Park StreetKolkata 700 016Tel: +91 33 2217 2858Fax: +91 33 2217 2868
Pune703, Godrej CastlemaineBund GardenPune 411 001Tel: +91 20 305 85764/65Fax: +91 20 305 85775
KPMG�Contacts
Pradeep UdhasHead - MarketsTel: +91 22 3983 6205e-Mail: pudhas@kpmg.com
Hitesh GajariaHead - PharmaTel: +91 22 3983 5702e-Mail: hgajaria@kpmg.com
CII�Contact
Darryl DasilvaDirector - Western Region105 Kakad Chambers132 Dr A B RoadWorliMumbai - 400 018Tel: +91 22 2493 1790e-Mail : darryl.dasilva@ciionline.orgWebsite :www.cii.in
©�2007�KPMG,�an�Indian�Partnership�and�a�member�firmof�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.All�rights�reserved.KPMG�and�the�KPMG�logo�are�registered�trademarks�ofKPMG�International,�a�Swiss�cooperative.�Printed�in�India.
The�information�contained�herein�is�of�a�general�nature�and�is�not�intended�to�address�the�circumstances�of�any�particular�individualor�entity.�Although�we�endeavor�to�provide�accurate�and�timely�information,�there�can�be�no�guarantee�that�such�information�isaccurate�as�of�the�date�it�is�received�or�that�it�will�continue�to�be�accurate�in�the�future.�No�one�should�act�on�such�informationwithout�appropriate�professional�advice�after�a�thorough�examination�of�the�particular�situation.
Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM Page 67