Professional Documents
Culture Documents
CH 4
CH 4
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Chapter-IV
Pharma Industry is one of the prominent industry in the world with the current
world drug sales turnover of approximately 500 billion $. US market alone stand for
companies in the world approximately equals 50 % of the world sales and new
growing at a steady rate of 10-15 % every year. The total turnover of Indian
2010.Average spend on research and development in India is just 5-6 % of the sales.
There are around 3000 API units; 5000 formulations units and 2000 other units or
economy. Its position as a global player is widely acknowledged and it can boast of
adequate capabilities to cater to the global requirements. In terms of value, the Indian
pharma industry is the 14th largest producer of drugs in the world. However in terms
of volume it remains fourth largest producer of drugs. The industry is well developed
and capable of fulfilling all the healthcare needs in the country. According to available
information it produces more than 400 prominent bulk drugs that go into the making
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of more than 60,000 packs of formulations with over 600 companies in the field of
drug production.
The Indian companies supply a large number of generic bulk drugs and their
percent of the drugs procured through the U.N. Children Fund in developing countries
originates from India. In Zimbabwe, 75 percent of the tenders for medicines for all
public sector health facilities come from India. The National Drug Supply
Organisation and the state procurement agency of Lesotho buys most of important
segmental drugs from India.The leading companies in India have acquired over 20
companies across globe and the Indian Pharmaceutical industry is now becoming
global in certain end use segments. A few of the largest Indian companies have sales
relatively small as compared to annual sales of the leading MNCs of US, Europe and
This chapter is divided into the two parts. The first part deals with all general
and specific information on Indian pharmaceutical industry and the second part
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PART – 1
cost and tap the pool of skilled professionals available here. The European and
Laboratories, Nicholas and Cipla to name a few. Further with the high priced
to control cost, and this implies that they'll have to move their manufacturing
pool of skilled professionals and opportunities for both up and down stream
businesses.
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Historical preview of the Indian Pharmaceutical Industry
The Indian patent act of 1970 amended on March 22, 2005 marks the end of a
protected era and signals a new phase in the integration of India into the global
patented drugs illegal. These product patent regimes largely affect the Indian
pharmaceutical industry (IPI), health care industry, legal machinery enforcing the
regulations and most importantly patients in India and the developing world. Indian
patents and helped to establish the foundation of a strong and highly competitive
industry. This Industry is in the grip of a rigid price control framework . Still it has
common man in India and the developing world. Introduction of product patents will,
however, mark the end of a golden age for Indian pharmaceutical industry (IPI).
The new regulations will reshape the landscape of IPI forcing significant
changes and divide within the industry. A look into Organisation of pharmaceutical
producers of India (OPPI) directory shows only 300 units out of 10,000 registered
companies are in the organized sector. While process patent helped to flourish IPI
into a world-class generics industry, product patent regime will filter the best from the
pack and would be favorable to players with built-in scientific and technical
resources. The impact of the new regulations will not deter the Indian pharma majors
as they are already doing roaring business in the very countries where these patent
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Export markets increasingly drive IPI: in a turnover of US$5 billion, exports
constitute $3.2 billion and the industry is poised to grow to $25 billion by 2010
(McKinsey). The share of IPI in world pharmaceutical market is 1.0% (ranks 13th)
in value and 8% (ranks 4th) in volume terms. The global market for generic drugs
is estimated at $27 billion (2001) and the expiry of patents on drugs will be worth
$80 billion (2005) offers a huge opportunity to IPI. India today has the largest
manufacturing facilities outside the US. In addition, Drug Master Files (DMFs)
filed by Indian companies with the FDA is 126 higher than Spain, Italy, China and
Israel put together. DMF has to be approved by FDA for a drug to enter the US
market.
expenditure (as a percentage of turnover) by the IPI is low (1.9%) when compared
global giants (1016%). With transition into the new regime many Indian
companies are mobilizing their resources war chest with an increase in their R
planning commission has earmarked $34 million towards drug industry R andD
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Globally, pharmaceutical industry grew at a compounded annual growth rate
of 9.1 per cent in the last 23 years to $491 billion propelled by a string of
solution. With a slew of brand name drugs losing patent protection in the next few
years and the pressure building for pharmaceuticals to cut price, these giants find
themselves under immense strain to find new drugs and reduce price. Bringing a
new drug into the market costs a company an average of about $800 to $900
million. Some estimates show that patient recruitment and medical personnel
account for nearly 70 per cent of the clinical costs that are required to bring a drug
to absence of product patents and rigid price controls. Pharmaceutical industry did
not receive significant foreign direct investment (FDI). From August 1991 to
December 1998 this industry accounted for a meager 0.44% of the total FDI.
in the country. The second largest population in the world, a growing economy and
rising income levels makes Indian market difficult to ignore. In the domestic
market, the share of Indian companies has steadily increased from around 20 per
cent in 1970 to 70 percent now. Ranbaxy Laboratories is the market leader in terms
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In India, Still 97 per cent of drugs are off patent and are manufactured by a vast
vascular and central nervous system drugs. Anti-infectives comprise the largest
therapeutic segment in India, accounting for about 26 per cent of the market.
Gleevac (an anti-blood cancer drug), sold by Novartis for $2750 per month when the
prohibited generics used to cost less than one-tenth of the price. In India 24,000 new
cases of this disease are reported each year with about 18,000 patients succumbing to
it. The country does not have a strong health insurance sector as in the US to cushion
the rising healthcare cost. In addition most patients pay for medicines through their
own funding and is not backed by medical insurance schemes. Private sector provides
80% of the country’s health care and the government role is limited with a budget of
Since 1986 when the first case of AIDS was reported in India the affected
population has grown to 4.5 million in the late 2002. The impact of the recent
amendments will be felt in developing world as well as half the AIDS patients in the
third world rely on India's generic drug industry. Cipla, Ranbaxy Laboratories, Matrix
Laboratories, and Hetero Drugs recently announced an agreement with the Clinton
foundation to provide drugs to four African and nine Caribbean countries at a per
capita cost of about $0.37 per day. India's ministry of health is negotiating a final price
with the generic drug manufacturers in an effort to obtain drugs for India at a price
even lower than that. The 12 ARVs (anti retro-viral drugs) used for AIDS and
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If a drug is desperately needed, the new law allows the government, like the rest of the
world, to declare an emergency and cancel its patent. India had never declared such an
emergency, and for years resisted admitting that it had an AIDS problem.
the anti- holinesterse drugs are recent the price of these medicines would automatically
go up.
The government-run patent office will come under pressure for the first time in
several years to streamline the entire process. As with any new administrative or legal
system, transition to a new regime will not be smooth. Can the enormously strained
Indian legal system bear the additional pressures as we enter the product patent world?
The decades of incubation and shielding of IPI by favorable government policies and
absence of foreign competition is over. IPI is in the cross roads now and staring at a
Other significant development are the recently regulatory and much awaited
patent law changes that have lead the Indian Pharmaceutical Industry towards
surplus skilled technical workers at lower costs. At a growth rate of 9 per cent per
year, the pharmaceutical industry in India is well set for rapid expansion. As a result of
the expansion, the Indian pharmaceutical and healthcare market is undergoing a spurt
of growth in its coverage, services, and spending in the public and private sectors. The
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healthcare market has opened a window of opportunities in the medical device field
Many multinational companies have penetrated into India with an aim to market
economic liberalization policies coming to force in the 1990s and the strong
emergence of private sector in the Indian economy has heightened the pace of
important factors that draw the foreign investors towards the Indian pharmaceutical
investors and all those involved in the pharmaceutical industry and healthcare market
to have an in-depth analysis of the business prospects. It interprets the key issues that
development ofdrugs.
Assessing the market potential and opportunities with pharmaceuticals and drug
Study of the key economic factors that form the source of revenue growth and
opportunities.
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Recent and Future trends in Pharmaceutical Investments, by sector and business for
F.Y.2002-2008
Advantages of conducting clinical trials in India and factors that propel multinational
healthcareIndustry
Continued shifting of business model towards the development of high- value new
Assessing the Imports and Export of Bulk Drugs, intermediaries and formularies for
theF.Y.2002-2008
challenges faced by the pharmaceutical industry as well as the future outlook, the
global coverage of the heath care market, growth status across the country, challenges
and potential areas along with the total production and consumption of life-saving and
generic drugs. It also deals with the regulatory matters including the Indian Patent
GlaxoIndiaLtd.
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Ranbaxy Laboratories Ltd.
Cipla Ltd.
Wockhardt Ltd.
Pfizer Ltd.
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PHARMACEUTICAL COMPANIES UNDER STUDY
1. Glaxo India Ltd ( Source Annual Report 2006 and Web Sites)
which got Smithkline Beecham and Burrouws Wellcome merged in it, with presently
have moved into Phase II trials, including compounds to treat HIV, diabetes, blood
disorders and multiple sclerosis.The Company is well known for some of the
pioneering initiatives in the Country, including being the first ever pharmaceutical
company to commence manufacturing activities in India in the early part of the 20th
century.
really felt. While most of the Clinical Research activities today are concentrated
around US, Western Europe and Japan, Glaxo is continuely investing in R andD
procurement in emerging markets in Asia, Eastern Europe and Latin America. India
has been identified as a major center for clinical research across a number of disease
areas such as breast cancer, central nervous system related disorders and infectious
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diseases. The Company has made excellent progress in the last 2 years in India as
and has proved itself for its quality, speed and cost effectiveness.
Agrivet farm care and Qualigens ,the brief descriptions of the are as follows:
Pharmaceuticals business segment was Rs. 971 crores constituting 81% of the
Company.s total sales. The Indian Pharmaceuticals market grew by 5.1% this year
(Source : ORG MAT December 2003), one of the lowest growth rates in recent times.
This low growth can be attributed mainly to the slowdown in retail purchases on
account of the confusion over the introduction of VAT coupled with an industry-wide
volume and price decline. Industry growth continues to be driven by chronic segments
Pharmaceuticals sales. The growth was totally driven by the priority brands, which are
at the core of the Company?s strategy and which registered a double-digit growth.
These include brands such as Augmentin, which continues to grow from strength to
strength gaining market share and which was twice rated by IMS as the No.1 brand,
This year, the Vaccines team rolled out a novel concept of .Famili Vaccines.
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continues to enjoy its leadership position in the Dermatological, Corticosteroids and
Thyroid preparation segments in which its products are represented. In addition, the
Company has successfully in-licenced three products, viz. CCM (Calcium Citrate
Initiatives were also taken to effectively manage the life cycle of some key
year. The continued focus on field force productivity has yielded encouraging results.
There has been a substantial improvement in field force productivity in the last two
years. The Company?s field force productivity continues to be a bench-mark for the
industry.
for Company to introduce newer chemical entities of the GSK group, which will
The AFC business continues to maintain its No.1 position in the Animal
Health sector. The business has a presence in the cattle, poultry, acquaculture, canine,
equine and sheep segments with a well-established reputation for quality. With a Sales
procurement costs and reduction of expenses. Five new products were launched in the
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cattle, poultry and canine segments which helped to reduce the dependence on low
margin products. The business migrated to the JDEdwards ERP platform, which will
The QFC business holds the No.1 position in a very fragmented Laboratory
Chemicals market with an estimated market share of 29%. Net Sales grew by 16%
over the previous year with a significant improvement in Trading Profit due to an
improved product mix and supply chain initiatives. The business commands a strong
Instruments and Filtration products. The Diagnostics activity, which covers the
and HCV Elisa Kits. Sales of Laboratory Glassware, launched last year, have
registered significant growth. The launch of the Filtration products range of Pall
Corporation, US, has been well accepted in the market. The business migrated to a
new ERP platform, which will help to provide greater visibility on key performance
2. Novartis India Ltd. ( Source Annual Report 2006 and Web Sites)
In 1996 Sandoz and Ciba joined to form Novartis in one of the largest
corporate mergers in history. Since then, Novartis has been marked by many
In recent past, Novartis led the way with its breakthrough cancer drug
‘Glivec’ and equally the Glivec international patient assistance program that became
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the most generous and far reaching access program which has benefited thousands of
people globally ,suffering from chronic myeloid leukaemia and gastro intestinal
stromal tumours. In India also, Glivec has provided hope to more than 5600 people
pharmaceuticals that develops, produces and markets these drugs along with
differentiated products that restore, maintain or improve the health and well-being of
Further the financial success of Novartis in last 10 years has supported several
awards such as Golden Peacock Award for innovative services to support elimination
of Leprosy, Bombay Chamber of Commerce and industry award for the work done
against tuberculosis and Ranked by IMS Health as one of the fastest-growing global
expand its market share by introducing new products and maximizing sales.
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a. Pharmaceuticals
conventional products to combat viral and bacterial diseases across the globe.
c. Sandoz
d. Animal Health
Novartis offers a number of products for pets and farm animals, so that they
Novartis OTC has leading self-medication products for the in-home treatment
f. CIBA Vision
eyesight with their state-of-the-art contact lenses and lens care products.
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Programmes(PDP’s) . Further Novartis initiated a unique step that is setting
3. Ranbaxy Labs Ltd. ( Source Annual Report 2006 and Web Sites)
the India centric advantages to the advanced and developing countries of the
world.
worldwide with a view to help bring down the healthcare costs and also intent
to be a leading player in the global generic space in the years to come with
which is one-fifth or one seventh the cost advantage to the rest of the world .
health care market, and looks forward to enhanced growth and future business
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a. API Development and Production
For those who want to manufacture their own product or brand, without the time and
Ranbaxy can provide the API, eliminating this step from process. The key
• Competitive costs
c. Contract Manufacturing
manufacturing services including API and dosage form development, to allow focus
on marketing and selling the product. This is an efficient way to increase product line
and expertise.
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d. Sales and Marketing
Ranbaxy has set itself apart in the marketplace by the rapid growth of its product line,
its willingness to emulate complex drug formulations, and its core competencies in
commercial advantage as many of the high-profit branded drugs with expiring patents
over the next few years are in the categories where Ranbaxy has proven its expertise.
Ranbaxy has a self-contained marketing group that works to co-market products (the
same chemical under different brands), and co-promote products (the same brand
name carried by two different companies). The company has marketed their services
out to other companies, as they perform all of the steps in the pharmaceutical process
Ranbaxy’s commitment to quickly expanding the breadth and depth of their product
e. Marketing Strategies
One of the key tasks for the department is to identify/look out for various
Care / Internet marketing are few of the key areas that the department is looking to
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f. Licensing
Ranbaxy’s treasure hunt is all set to strike gold with new drugs in the pipeline. The
4. Nicholas Piramal India Limited ( Source Annual Report 2006 and Web Sites)
Nicholas Piramal India Limited( NPIL) is the flagship company of the Rs. 2500 crore
(US $ 500 million) Piramal Enterprises (PEL), one of India's largest diversified
business houses. The Group is headed by Mr. Ajay Piramal, who is also the Chairman
of NPIL, and among the most respected names in Indian industry.The company was
formed when the Piramal Group acquired Nicholas Laboratories, a small formulations
company in 1988 from Sara Lee. It has followed a multi-pronged strategy to integrate
and maximize synergies with the planned acquisitions and develop and consolidate its
come from its strong brand building, selling and distribution, manufacturing and
are quite unique in the Indian context as only few Indian Pharmaceutical have
exhibited such a strong and consistent record in successfully and ethically managing
joint ventures and alliances as Nicholas has. Further Nicholas has one of the widest
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product portfolios in India, spanning nine key therapeutic areas, including the Cardio-
Nicholas Tree constitutes presently 15divisions . These Divisions offers wide variety
of product range that Nicholas possesses. The name of these divisions are as follows:
4. Annant 12. MS
8. Critical Care
Nicholas’s policy of respecting IPR and managing partnerships, in keeping with both
the letter and the spirit of written agreements, has been widely respected and
commended by its partners. The company is also making forays into Biotechnology in
key therapeutic areas for which it has formed several global alliances.
For 2005-06, Nicholas recorded a turnover of Rs 14.1 billion and profits after tax were
Rs 1.7 billion. Its biggest brands that maintained lead in the pharma business includes
Phensedyl, Ismo, Supradyn, Gardenal, Stemetil, Haemaccel and Rejoint -these bring in
67 per cent of the business, while its secondary brands which include Paraxin, Flagyl
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An aggressive player in the pharma industry, Nicholas in the last 15 years has grown
to its leadership position through a series of well managed acquisitions, mergers and
alliances. Some of its major acquisitions include the Indian operations of Roche
Products Ltd., Boehringer Mannheim India Ltd., Hoechst Marrion Roussel Ltd,'s
Research Centre, Rhone Poulenc India Ltd., ICI India Ltd.'s Pharma Division and
Nicholas has joint ventures and alliances with some of the finest global names in the
UK; Gilead Sciences, USA; Cheissi, Italy; and IVAX Corp; UK.
Nicholas's core strengths are its 2700-strong field force that offers it the depth and
width in the Indian market with successful brand building. Today together with its
joint ventures, it has 16 brands among the top 300 in the Indian Pharma Industry.
Nicholas have state-of-the-art manufacturing plants. Its Hyderabad plant is the only
one in India to have USFDA approval for the entire facility, it is also accredited and
approved by MCA of UK, TGA of Australia and the European and Canadian Drug
organisations like Allergan, Novartis, Solvay and IVAX, among others, which use it
Piramal through its wholly owned subsidiary NPIL Pharmaceuticals Limited, has
emerged as one of the leading custom manufacturing organisations across the world.
Today, Nicholas, is well poised to take advantage of the opportunities that will
emerge in the bulk actives and intermediates market for contract manufacturing at
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attractive price points of both on patent and off patent drugs for the regulated markets
of Europe, US and Japan. The company's track record and credibility in respecting IPR
is extremely good and is respected globally. Nicholas also has major investments in R
The research strategy of Nicholas is unique and different from the other Indian
companies who are also targeting original drugs. It is leveraging the power of
networks and itsr motto is to “build partnerships that prosper”. The partnerships with
academia and global innovators are helping nicholas build unique strengths and
expertise. In addition, it has build up a natural product library of over 50,000 microbial
strains and 6000 plants from the bio-diverse regions of India. We believe this is a
Science, These collaborations helped the company in its progress towards a new drug
molecule. Their recent research collaboration with Eli Lilly has created a new
analogous to a “relay race” where Lilly will discover a new drug, file patents and
“pass the baton” to Nicholas for taking it through to Phase II clinical trials.
Nicholas goal is to make Indian drug discovery reach the global market for a price
between US$ 50-100 million. The decided pathway for that is by leveraging the power
of networks, effectively using information technology, and using the large patient base
for clinical trials and betting on the creation of intellectual property and fostering
global partnerships.
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To sum up Pharmaceutical industry is the most important growing segment of Indian
industry. Glaxo, Novartis, Ranbaxy and Nicholas are the most prominent organisations
of this segment as per the various reports and available statistics. These organisations
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NOTES
www.pharmaceutical-drug-manufacturer.com/pharmaceutical-industry visited in
2006,Feb 2007.
www.novartis.com visited in June ,August 2005 ,August, October 2006 and Feb
2007.
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