From The Summit Chair’s Desk
Yet again we come together to another mega event of The 6th Annual Pharma Legal and Compliance Summit, on 6th October 2017, NOVOTEL Hotel, Juhu Beach, Mumbai, brought to you by our very own Lex Witness – India’s 1st Magazine on Legal & Corporate Affairs.
This summit delves upon the various Emerging Trends in Indian Pharmaceuticals Industry in the areas of legal, compliance, information and technology, the last 2 being the in thing.
The Indian pharmaceuticals market is the third largest in terms of volume and thirteenth largest in terms of value, as per a report by Equity Master. India is the largest provider of generic drugs globally with the Indian generics accounting for 20 per cent of global exports in terms of volume. Of late, consolidation has become an important characteristic of the Indian pharmaceutical market as the industry is highly fragmented. The Indian pharma industry, which is expected to grow over 15 per cent per annum between 2015 and 2020, is likely to outperform the global pharma industry, which is set to grow at an annual rate of 5 per cent between the same period. The market is expected to grow to US$ 50 billion by 2020, thereby emerging as the sixth largest pharmaceutical market globally by absolute size. Indian pharmaceutical exports are poised to grow between 8-10 per cent in FY 2016-17. Overall drug approvals given by the US Food and Drug Administration (USFDA) to Indian companies have nearly doubled to 201 in FY 2015-16 from 109 in FY 2014-15. The country accounts for around 30 per cent (by volume) and about 10 per cent (value) in the US$ 70-80 billion US generics market.
India’s biotechnology industry comprising bio-pharmaceuticals, bio-services, bio-agriculture, bio-industry and bioinformatics is expected grow at an average growth rate of around 30 per cent a year and reach US$ 100 billion by 2025. Biopharma, comprising vaccines, therapeutics and diagnostics, is the largest sub-sector contributing nearly 62 per cent of the total revenues at Rs 12,600 crore (US$ 1.89 billion). The drugs and pharmaceuticals sector attracted cumulative FDI inflows worth US$ 14.53 billion between April 2000 and December 2016, according to data released by the Department of Industrial Policy and Promotion.
The Government of India unveiled ‘Pharma Vision 2020’ aimed at making India a global leader in end-to-end drug manufacture. Further, the government introduced mechanisms such as the Drug Price Control Order and the National Pharmaceutical Pricing Authority to deal with the issue of affordability and availability of medicines.
Some of the major initiatives taken by the government to promote the pharmaceutical sector in India are as follows:
- The Government of India plans to set up around eight mini drug-testing laboratories across major ports and airports in the country, which is expected to improve the drug regulatory system and infrastructure facilities by monitoring the standards of imported and exported drugs and reduce the overall time spent on quality assessment.
- India is expected to rank among the top five global pharmaceutical innovation hubs by 2020, based on Government of India’s decision to allow 50 per cent public funding in the pharmaceuticals sector through its Public Private Partnership model.
- Indian Pharmaceutical Association, the professional association of pharmaceutical companies in India, plans to prepare data integrity guidelines which will help to measure and benchmark the quality of Indian companies with global peers.
- The Government of India plans to incentivise bulk drug manufacturers, including both state-run and private companies, to encourage ‘Make in India’ programme and reduce dependence on imports of Active Pharmaceutical Ingredients, nearly 85 per cent of which come from China.
- The Department of Pharmaceuticals has set up an inter-ministerial co-ordination committee, which would periodically review, coordinate and facilitate the resolution of the issues and constraints faced by the Indian pharmaceutical companies.
- The Department of Pharmaceuticals has planned to launch a venture capital fund of Rs 1,000 crore (US$ 149.11 million) to support start-ups in the research and development in the pharmaceutical and biotech industry.
The Indian pharmaceutical market size is expected to grow to US$ 100 billion by 2025, driven by increasing consumer spending, rapid urbanisation, and raising healthcare insurance among others. The Indian government has taken many steps to reduce costs and bring down healthcare expenses. Speedy introduction of generic drugs into the market has remained in focus and is expected to benefit the Indian pharmaceutical companies. In addition, the thrust on rural health programmes, lifesaving drugs and preventive vaccines also augurs well for the pharmaceutical companies.
Going forward, better growth in domestic sales would also depend on the ability of companies to align their product portfolio towards chronic therapies for diseases such as such as cardiovascular, anti-diabetes, anti-depressants and anti-cancers that are on the rise. While this being therapeutic areas of growth, there are initiatives on the pharmacies, e-portals, start-ups and regulating the Healthcare Professionals.
A survey by money control.com, says that 2017 will see the following things in the pharma space in India.
i) Generic Pricing Uncertainty in USA Market
Profit margins of Indian companies selling generics in the US will remain under pressure in 2017 with channel consolidation under the Trump government and Indian government’s focus to make medicines more affordable. Meanwhile, the UK government’s nervous stalling over its popular mandate to withdraw from the EU means more uncertainty over regulation, mutual recognition, parallel imports, employee migration, R&D investment, and a number of other issues of considerable interest to the pharmaceutical industry. Despite the constraints, USA still remains a lucrative market with margins upwards of 20 percent. In fact in FY16 – Indian companies have clocked EBITDA margins of 27 percent – the highest over previous four years.
ii) Regulatory Scrutiny
Indian drug makers were kept busy throughout 2016 with adverse observations, warning letters and a few import alerts in extreme cases from US drug regulator. There are no two thoughts about – the rising expectation of compliance to current good manufacturing practices by USFDA. Companies have learnt the hard way – the downsides of non-compliance – that include loss of market value, fresh approvals getting stuck and the cost of remediation.
iii) Price Controls in Market
Despite heavy competition, currency volatility and other macro uncertainties, the Indian domestic pharmaceutical market was a safe bet to drug makers given the fact that market grew at 24 percent to USD 26.1 billion in 2016 and is insulated to some extent from external shocks such as currency volatility and other macro uncertainties. In 2017 – analysts expect the government to continue its price control policies under the mechanisms such as the Drug Price Control Order and the National Pharmaceutical Pricing Authority to deal with the issue of affordability and availability of medicines and aim to improve quality and streamline the approval process will continue.
iv) Mergers and Acquisitions
The year 2016 was a busy year for mergers and acquisitions. Year 2017 is expected to be no different as Indian companies try to expand into new markets, deepen their presence in existing ones, get access to manufacturing assets and fill their portfolio and technology gaps.
v) Biosimilars Growth
The years ahead will see Indian pharma companies spearheading in the generic field of the biosimilars. The lifestyle diseases are increasing and Indian biosimilar scientists are the some of the best in the field. The markets of Europe and Japan offer great potential in exploiting the biosimmilars.
So friends, with so much happening in Indian Pharma, as lawyers, in-house counsels and compliance personnel, we have a lot to share and get insight into. This event will show case you the latest developments in the pharma industry in the arena of legal and compliance and forays further into the horizon of big data analytics, digitization of healthcare, forensics and all the challenges, risks and opportunities associated with these.
We hope to see you soon at The Lex Witness 6th Annual Pharma Legal and Compliance Summit!
Wish you all the Best!
Vice President – Legal & General Counsel, Wockhardt Group
Summit Chair – PLCS 2017