Tapping the generics Tapping the generics marketmarket

P N Karlekar P N Karlekar Atul LimitedAtul Limited

““Strategies for globalization and increasing Strategies for globalization and increasing

competitiveness of the Indian agrochemical competitiveness of the Indian agrochemical

industry”industry”

~ ~ Backdrop – global agrochemical industry.Backdrop – global agrochemical industry.

~ Generics - definition~ Generics - definition

~ Importance of generics~ Importance of generics

~ Strategies of major MNCs~ Strategies of major MNCs

~ Strategies of major generic companies~ Strategies of major generic companies

~ Indian industry - snapshot~ Indian industry - snapshot

““Strategies for globalization and increasing Strategies for globalization and increasing

competitiveness of the Indian agrochemical competitiveness of the Indian agrochemical

industry”industry”

~ Indian Industry – SWOT~ Indian Industry – SWOT

~ Generic market potential for Indian Industry~ Generic market potential for Indian Industry

~ Way ahead . . .~ Way ahead . . .

~ Must happen . . .~ Must happen . . .

BackdropBackdropGlobal agrochemical industry size : US$ 30 billion Global agrochemical industry size : US$ 30 billion (~Rs.135000 Cr.)(~Rs.135000 Cr.)

Six major MNCs cover 75% market : US$22 billion Six major MNCs cover 75% market : US$22 billion (~Rs.100000 Cr.)(~Rs.100000 Cr.)

Four major generic Cos. cover 10% market : US$ 3 Four major generic Cos. cover 10% market : US$ 3 billion (~Rs.13500 Cr.)billion (~Rs.13500 Cr.)

Balance 15% covered by hundreds of other Cos. : US$ 5 Balance 15% covered by hundreds of other Cos. : US$ 5 billion (~Rs.21500 Cr.)billion (~Rs.21500 Cr.)

US$ billion

0

10

20

30

40

1990 1995 2000 2005

Generics - definitionGenerics - definition

An active ingredient off-patent in the majority of its An active ingredient off-patent in the majority of its markets.markets.

A typical product life – cycle.A typical product life – cycle.

Gro

wth

0

50

100

Year20 3010 40

Proprietary Generic Commodity

Importance of GenericsImportance of Generics

Generics’ market share : 65% Generics’ market share : 65%

US$ 20 billion (~Rs.90000 Cr.)US$ 20 billion (~Rs.90000 Cr.)

MNCs dependence on generics : 40-50%MNCs dependence on generics : 40-50%

Generics’ market is growing…Generics’ market is growing…

~~ Products introduced in 1980s and 1990s are getting Products introduced in 1980s and 1990s are getting

off-patent now.off-patent now.

~~ NCEs have reduced considerably.NCEs have reduced considerably.

~~ Mature IndustryMature Industry

Generics - examplesGenerics - examples

The examples of a few generic molecules are as The examples of a few generic molecules are as under :under :

~~ Glyphosate – introduced in the year 1972 by Monsanto Glyphosate – introduced in the year 1972 by Monsanto and having a value of US$ 3185 million.and having a value of US$ 3185 million.

~~ Imidacloprid – introduced in the year 1991 by Bayer and Imidacloprid – introduced in the year 1991 by Bayer and having a value of US$ 820 million.having a value of US$ 820 million.

~~ Chloropyrifos – introduced in the year 1965 by Dow and Chloropyrifos – introduced in the year 1965 by Dow and having a value of US$ 390 million.having a value of US$ 390 million.

~~ Mancozeb – introduced in the year 1956 by Syngenta Mancozeb – introduced in the year 1956 by Syngenta and having a value of US$ 340 million.and having a value of US$ 340 million.

Strategies of major MNCs…Strategies of major MNCs…

ImageImage

Marketing… Marketing…

~~ BrandingBranding

~~ Geographic reachGeographic reach

~~ Newer formulationsNewer formulations

~~ Strategic alliances with local marketing companiesStrategic alliances with local marketing companies

Strategies of major MNCs…Strategies of major MNCs… Marketing… Marketing…

Combination products : Extend product life and offer solutions... a few Combination products : Extend product life and offer solutions... a few

examples..examples..

~~ Metribuzin + CME (Canaopy) by DupontMetribuzin + CME (Canaopy) by Dupont

~~ MSM + Thifensulfuron + Tribenuron (Canvas) by DupontMSM + Thifensulfuron + Tribenuron (Canvas) by Dupont

~~ 2,4-D+Picloram (Tordon) by Dow2,4-D+Picloram (Tordon) by Dow

~~ Glyphosate + Picloram (Scout) by MonsantoGlyphosate + Picloram (Scout) by Monsanto

~~ Cymoxanil + Azoxytrobin (Quadris) by SyngentaCymoxanil + Azoxytrobin (Quadris) by Syngenta

~~ Difenconazole + Propiconazole (Amure) by SyngentaDifenconazole + Propiconazole (Amure) by Syngenta

~~ Imidacloprid + Azoxystrobin (Amistar admire) by BayerImidacloprid + Azoxystrobin (Amistar admire) by Bayer

Strategies of major MNCs…Strategies of major MNCs…

Marketing… Marketing…

Merging Biotechnology with generics…. Merging Biotechnology with generics….

The traits are designed in the crops in such a way that the The traits are designed in the crops in such a way that the

application of only specific generic brings the best results…..application of only specific generic brings the best results…..

~~ Monsanto’s Roundup ready soybean for GlyphosateMonsanto’s Roundup ready soybean for Glyphosate

~~ BASF’s Clear field project for Imidazolione group of products BASF’s Clear field project for Imidazolione group of products

(Imazathapyr etc..)… (Imazathapyr etc..)…

Strategies of major MNCs…Strategies of major MNCs…

PatentsPatents : :

~~ Supplementary protection certificatesSupplementary protection certificates

~~ Patent term extensionPatent term extension

~~ Novel formulation patentsNovel formulation patents

~~ Process patents (key intermediates, racemic mixtures)Process patents (key intermediates, racemic mixtures)

~~ Application patentsApplication patents

Strategies of major MNCs…Strategies of major MNCs…

Registrations :Registrations :

~~ Registration withdrawalsRegistration withdrawals

~~ Data protectionData protection

R&D thrustR&D thrust

Manufacturing alliances - Manufacturing alliances - Dupont recently acquired Khimprom to Dupont recently acquired Khimprom to

form Dupont Khimprom, a manufacturing venture in Russiaform Dupont Khimprom, a manufacturing venture in Russia

Safeguarding the access to critical intermediates.Safeguarding the access to critical intermediates.

Intermediates strategiesIntermediates strategies

Name of Name of MoleculeMolecule Key IntermediateKey Intermediate CompanyCompany

GlyphosateGlyphosate DiethanolamineDiethanolamine MonsantoMonsanto

PyrimiphosPyrimiphos DicyanodiamineDicyanodiamine SyngentaSyngenta

IndoxacarbIndoxacarb Cinchonine BaseCinchonine Base DuPontDuPont

PicloramPicloram 2-Cyanopyridine2-Cyanopyridine DowDow

ClodinafopClodinafop S-(-)2-Chloropropionic AcidS-(-)2-Chloropropionic Acid SyngentaSyngenta

CarbarylCarbaryl -Naphthol-Naphthol UCBUCB

Strategies of major generic Strategies of major generic companies…companies…

AlliancesAlliances

~~ M&A routeM&A route

Makhteshim-Agan is today one of the top ten agrochemical company based on Makhteshim-Agan is today one of the top ten agrochemical company based on

this strategy. The recent acquisitions by the company include :this strategy. The recent acquisitions by the company include :

~~ Farmoz in AustraliaFarmoz in Australia

~~ Mabeno in NetherlandsMabeno in Netherlands

~~ Biomarkt (70%) in HungaryBiomarkt (70%) in Hungary

~~ Control solutions incorporated (60%) in USA.Control solutions incorporated (60%) in USA.

Strategies of major generic Strategies of major generic companies…companies…

AlliancesAlliances

Other major M&A for the year 2005 were as under Other major M&A for the year 2005 were as under ::

~~ Aryta’s acquisition of 50% share of Volcano in SouthAryta’s acquisition of 50% share of Volcano in Southafrica.africa.

~~ Atanor’s acquisition of a Syngenta plant (fungicide) in Brazil.Atanor’s acquisition of a Syngenta plant (fungicide) in Brazil.

~~ Cheminova’s acquisition of Ospray (Australia) and Croptec (Colombia)Cheminova’s acquisition of Ospray (Australia) and Croptec (Colombia)

~~ Nufarm’s acquisition of Agrogen (Colombia) and Nuturf to C K Life SciencesNufarm’s acquisition of Agrogen (Colombia) and Nuturf to C K Life Sciences(Australia)(Australia)

~~ UPL’s acquisition of Reposo (Argentina) and Cequisa (Spain)UPL’s acquisition of Reposo (Argentina) and Cequisa (Spain)

Strategies of major generic Strategies of major generic companies…companies…

AlliancesAlliances

Marketing alliances – a few recent examples… Marketing alliances – a few recent examples…

~~ Cheminova and MAI entered into an agreement with Bayer for the worldwide Cheminova and MAI entered into an agreement with Bayer for the worldwide

distribution of Imidaclopriddistribution of Imidacloprid

~~ Valent enterd into distribution arrangement with Bayer for Fluopicolide for US Valent enterd into distribution arrangement with Bayer for Fluopicolide for US

and Canadaand Canada

~~ Arysta got the distribution rights for Clothianidin from Sumitomo for US market.Arysta got the distribution rights for Clothianidin from Sumitomo for US market.

~~ MAI entered into an agreement with Bayer for the distribution of Tebuconazole MAI entered into an agreement with Bayer for the distribution of Tebuconazole

in USA.in USA.

Strategies of major generic Strategies of major generic companies…companies…

AlliancesAlliances

Acquire marketing rights for products divested by major Acquire marketing rights for products divested by major

MNCs…MNCs…

~~ Amvac acquired Phorat from BASF.Amvac acquired Phorat from BASF.

~~ Nufarm acquired Imazamethabenz from BASF.Nufarm acquired Imazamethabenz from BASF.

~~ Sumitomo acquired Trifone from BASF Sumitomo acquired Trifone from BASF

Contract R&D and manufacturing with Major MNCsContract R&D and manufacturing with Major MNCs

Strategies of major generic Strategies of major generic companies…companies…

RegistrationRegistration

~~ Task force entry for US registration.Task force entry for US registration.

~~ Registration in high priced markets like EU, Brazil Registration in high priced markets like EU, Brazil

and Canada.and Canada.

R&D thrustR&D thrust

Indian industry - snapshotIndian industry - snapshot

Domestic market : Rs.3500 Cr. (~US$ 750 million)Domestic market : Rs.3500 Cr. (~US$ 750 million)

Exports : Rs.2000 Cr. (US$450 million)Exports : Rs.2000 Cr. (US$450 million)

Market share of MNCs : 50%+Market share of MNCs : 50%+

The balance is shared between :The balance is shared between :

~~ Basic manufacturing company (approx..100)Basic manufacturing company (approx..100)

~~ Formulators/ repackers/marketing companies (approx..200)Formulators/ repackers/marketing companies (approx..200)

Indian industry - SWOT Indian industry - SWOT

Strengths :Strengths :

Exports to a large no. of countries.Exports to a large no. of countries.

Managerial / Technical pool of professionals. Managerial / Technical pool of professionals.

Low cost manufacturing base.Low cost manufacturing base.

Quality – at par with the MNCs.Quality – at par with the MNCs.

Development of new and eco-friendly formulations.. Development of new and eco-friendly formulations..

WDG, SC, EW etc..WDG, SC, EW etc..

Technical competence…Technical competence…

Chemistry Expertise Thru’ Existing Chemistry Expertise Thru’ Existing MoleculesMolecules

CategoryCategory: : PyrethroidsPyrethroids

Technological AspectTechnological Aspect::

– Optical ResolutionOptical Resolution

– Asymmetric SynthesisAsymmetric Synthesis

– Grignard reactionsGrignard reactions

Examples: Examples: Deltamethrin, Lambda CyhalothrinDeltamethrin, Lambda Cyhalothrin

CategoryCategory: : NeonicotinoidsNeonicotinoids

Technological AspectTechnological Aspect::– High Temperature Catalytic ChlorinationHigh Temperature Catalytic Chlorination

– CyanationCyanation

– CyclizationCyclization

Examples: Examples: Imidacloprid, Acetamiprid, ThiamethoxamImidacloprid, Acetamiprid, Thiamethoxam

CategoryCategory: : CarbamatesCarbamates

Technological AspectTechnological Aspect::

– Multistep Synthesis using Catalytic ChlorinationMultistep Synthesis using Catalytic Chlorination

– Asymmetric InductionAsymmetric Induction

– Hydride ReactionsHydride Reactions

Examples: Examples: Carbofuran, BPMC, IndoxacarbCarbofuran, BPMC, Indoxacarb

CategoryCategory: : Sulfonyl UreaSulfonyl Urea

Technological AspectTechnological Aspect::– High Temperature selective phosgenationHigh Temperature selective phosgenation

– CyclizationCyclization

– Selective HalogenationSelective Halogenation

– ThioethylationThioethylation

Examples: Examples: Sulfosulfuron,Sulfosulfuron, Chlorimuron Methyl, Metsulfuron Methyl, Chlorimuron Methyl, Metsulfuron Methyl, Tribenuron MethylTribenuron Methyl

Chemistry Expertise Thru’ Existing Chemistry Expertise Thru’ Existing MoleculesMolecules

CategoryCategory: : PhenoxyPhenoxyTechnological AspectTechnological Aspect::

– High Temperature Selective HalogenationHigh Temperature Selective Halogenation– PhosgenationPhosgenation– Asymmetric SynthesisAsymmetric Synthesis– Fluorine ChemistryFluorine Chemistry

Examples: Examples: 2,4-Dichlorophenoxys, MCPA2,4-Dichlorophenoxys, MCPA

CategoryCategory: : Amino AcidsAmino Acids

Technological AspectTechnological Aspect::

– High Temperature Catalytic Chlorination with Exotic MOCHigh Temperature Catalytic Chlorination with Exotic MOC

– Catalytic OxidationCatalytic Oxidation

– Microbial OxidationMicrobial Oxidation

– High Temperature PhosphochlorinationHigh Temperature Phosphochlorination

Examples: Examples: Glufosinate, Glyphosate, PicloramGlufosinate, Glyphosate, Picloram

Chemistry Expertise Thru’ Existing Chemistry Expertise Thru’ Existing MoleculesMolecules

Indian industry - SWOTIndian industry - SWOT

WeaknessWeakness::

ImageImage

Infrastructure / labour laws.Infrastructure / labour laws.

Unhealthy competition Unhealthy competition

Global access : low price & low margin countries.Global access : low price & low margin countries.

Limited knowledge :Limited knowledge :

~~ High price marketsHigh price markets

~~ PatentsPatents

Indian industry - SWOTIndian industry - SWOT

WeaknessWeakness::

Limited financial musclesLimited financial muscles

Highly fragmented industry and hence powerless.Highly fragmented industry and hence powerless.

Lack of teamwork – a major drawback.Lack of teamwork – a major drawback.

Some important technologies are untouched.Some important technologies are untouched.

Technological areas yet to be Technological areas yet to be exploredexplored

Many intermediates/products not made in India due to lack of Many intermediates/products not made in India due to lack of attention to certain technological areasattention to certain technological areas

- Ammoxidation- Ammoxidation – Aromatic & Heterocyclic Nitrites – Aromatic & Heterocyclic Nitrites– Enzymetic ReactionsEnzymetic Reactions – Selective Hydrolysis, Esterification – Selective Hydrolysis, Esterification

Etc.Etc.– OxidationOxidation (Metal Catalyzed)- Aromatic Aldehydes, (Metal Catalyzed)- Aromatic Aldehydes,

metaphenoxy benzaldehydemetaphenoxy benzaldehyde– PhosphorylationPhosphorylation (High Temperature) – Methyl Phosphorus (High Temperature) – Methyl Phosphorus

Chloride, GlyphosinateChloride, Glyphosinate– Effluent Treatment Effluent Treatment (Microbial) – Selective towards (Microbial) – Selective towards

PHENOLICS, CYANIDES, CHLORINATED PRODUCTSPHENOLICS, CYANIDES, CHLORINATED PRODUCTS– Mercaptans Mercaptans – Ethyl, t-Butyl– Ethyl, t-Butyl

New Molecules through Biochemical ApproachNew Molecules through Biochemical Approach

– AVERMECTIN (AVERMECTIN (Insecticide, AcaricideInsecticide, Acaricide))

– VALIDOMYCIN (VALIDOMYCIN (FungicideFungicide))

– SPINOSAD (SPINOSAD (InsecticideInsecticide))

Biochemical Molecules Biochemical Molecules (Microbial Synthesis)(Microbial Synthesis)

Indian industry - SWOTIndian industry - SWOT

OpportunitiesOpportunities

Large untapped Indian market.Large untapped Indian market.

Peak product introduction was in mid 1980s Peak product introduction was in mid 1980s

to mid 1990s. A no. of them are getting off-to mid 1990s. A no. of them are getting off-

patent in the near future.patent in the near future.

Special advantage of introducing products Special advantage of introducing products

patented before 1995 even if the patent is patented before 1995 even if the patent is

internationally valid.internationally valid.

Indian industry - SWOTIndian industry - SWOT

OpportunitiesOpportunities

Product divestment by the MNCs.Product divestment by the MNCs.

For example… at the formation of Syngenta, from Novartis and For example… at the formation of Syngenta, from Novartis and

Zeneca in 2000…..Zeneca in 2000…..

~ ~ the combined number of the active ingredients of the two the combined number of the active ingredients of the two

companies totaled 121 active ingredientscompanies totaled 121 active ingredients

~ ~ by end 2002 this had been reduced to 89by end 2002 this had been reduced to 89

~ ~ the target has been to reduce this to just 76 by 2005the target has been to reduce this to just 76 by 2005

The phasing out/divestment of these brands is likely to make The phasing out/divestment of these brands is likely to make

approximately US$220 million to generic playersapproximately US$220 million to generic players

Indian industry - SWOTIndian industry - SWOT

OpportunitiesOpportunities

Indian industry’s technical competence can Indian industry’s technical competence can

be harnessed for manufacturing the products be harnessed for manufacturing the products

that have recently come out of patent or will that have recently come out of patent or will

be off-patent in the near future.be off-patent in the near future.

InsecticidesInsecticides

Existing Chemistry New

Carbofuran Asymmetric Induction Bifenthrin

Deltamethrin High Temperature Phosgenation

Gamma Cyhalothrin

Lambda CyhalothrinSelective Halogenation

(including Fluorination)

Thiochloprid

Thiamethoxam

Optical Resolution

Fipronil

Imidacloprid

Cyanation

Tefluthrin

Grignard Reaction on Bulk Scale

Indoxacarb

Lufenuron

FungicidesFungicides

Existing Chemistry New

Phosgenation Cyproconazole

Hexaconazole Fluorination Fluazinam

Propiconazole Friedel Craft’s Synthesis

Fludioxonil

TebuconazoleOxirane Synthesis Difenoconazole

Epoxidation Epoxyconazole

HerbicidesHerbicides

Existing Chemistry New

Chlorimuron Ethyl High Temperature Phosgenation

Thifensulfuron

Tribenuron Methyl ThioethylationNicosulfuron

SulfosulfuronPyrimidine Chemistry

Primisulfuron & Methyl

Metsulfuron MethylSelective Chlorination

Bensulfuron

Fluorination

Rimsulfuron

Friedel Craft’s Synthesis

Clethodim

Difiufenican

HerbicidesHerbicides(Oxacetamide, Chloroacetamide, Anilides, Acyalanines)(Oxacetamide, Chloroacetamide, Anilides, Acyalanines)

(Imidazolinone / Isoxazolidinone)(Imidazolinone / Isoxazolidinone)

Existing Chemistry New

Acylation Dimethanamide

Butachlor

Mefenacet

Alachlor

High Temperature pyridine chlorination

Clomazone

Metalaxyl

Cyanide ChemistryImuzaquin

Pyridine Chemistry Imazethapyr

Asymmetric Synthesis

Pretilachlor

Chemistry New

Picloram

Chloropyriphor

Pyrethroids

Existing

Herbicides (Phenoxy)Herbicides (Phenoxy)

Existing Chemistry New

Selective Chlorination

Clodinafop - P

2,4-D Derivatives

Fenoxaprop

MCPA Phosgenation

2,4-D B Asymmetric Synthesis

Technologies common to Technologies common to existing molecules & genericsexisting molecules & generics

Existing Chemistry New

Metsulfuron methylPhosgenation

Indoxacarb

2,4-D Acid

Cyanation

Primisulfuron Methyl

Imidacloprid

Halogenation (including Fluorination)

Chlorothalonil

Carbofuran

Epoxidation

ThiochlopridFriedel Craft’s synthesis

Clodinafop PropargylAsymmetric induction

Gamma Cyhalothrin

Bifenthrin

Chlorimuron methyl

Hexaconazole

Deltamethrin

Pretilachlor

Picloram

Pyrimidine reactions

Grignard reaction on industrial scale

High Temp. pyridine chlorination

Fermentation/ microbeal reaction

Avermectin

Clomazone

Indian industry - SWOTIndian industry - SWOT

ThreatsThreats

Low price competition from China.Low price competition from China.

Defense strategies of majors.Defense strategies of majors.

Impact of BiotechnologyImpact of Biotechnology

Resistance buildingResistance building

Obsolesces of product and technologyObsolesces of product and technology

Generic market potential for Indian Generic market potential for Indian companies…companies…

Generic market : US$20 billion (~ Rs 90000 Cr) Generic market : US$20 billion (~ Rs 90000 Cr)

Indian companies share in the generic market : Indian companies share in the generic market :

4% - US$800 million (~ Rs 3600 Cr)4% - US$800 million (~ Rs 3600 Cr)

MNCs share US$11.25 billion (~Rs 50,000 Cr)MNCs share US$11.25 billion (~Rs 50,000 Cr)

Major generics share US$3 billion (~Rs 13,500 Cr)Major generics share US$3 billion (~Rs 13,500 Cr)

Way ahead..Way ahead.. MarketMarket accessaccess....

~~ Choice of market / product.Choice of market / product.

~~ Image creation and branding.Image creation and branding.

~~ Global tie-ups and marketing alliances.Global tie-ups and marketing alliances.

~~ Overseas offices and stock points..Overseas offices and stock points..

RegistrationRegistration

~~ Data generationData generation

~~ Obtaining registration in the developed marketsObtaining registration in the developed markets

TechnologyTechnology

~~ Developing the difficult technologies for the products getting Developing the difficult technologies for the products getting

off-patent.off-patent.

~~ Mastering the art of making quality products with the lowest Mastering the art of making quality products with the lowest

input cost.input cost.

Synergistic Synergistic

partnershipspartnerships

Strategic alliancesStrategic alliances

Must happen…Must happen…

Paradigm shift in the image of our country Paradigm shift in the image of our country

for quality and the industry as a solution for quality and the industry as a solution

provider provider

Support from the Government authorities.Support from the Government authorities.

Synergistic partnershipsSynergistic partnerships

Thanks…Thanks…