Professional Documents
Culture Documents
a) Introduction
From an era (Pharma 1.0) of blockbuster drugs, global Pharma market has moved into the
current era (Pharma 2.0) that is focussing on emerging markets opportunity and Genericisation.
Many factors are driving this change. Western economies are decelerating and a large chunk
of Healthcare costs are public funded. Though governments acknowledge healthcare provision
to be strategically important, their willingness and ability to pay for it is subject to the current
economic slowdown. Simultaneously R&D productivity at global pharma giants has been at
historic lows leaving them grappling with a patent cliff and need to discover newer avenues of
growth.
In such a scenario, emergence of E7 markets (also known as BRICKMT for Brazil, Russia, India,
China, South Korea, Mexico & Turkey) that is forecast to generate per-capita GDP growth of
6.9% a year till 2020, made it an attractive destination for global pharma industry. It is
estimated that E7 pharma sales is projected to grow by 10.7% all though 2008 to 2020. With an
estimated size of $260.9 bn by 2020, E7 markets are expected to contribute 21% to global
pharma sales, doubling its contribution of 10.5% in 2008.
The emerging markets growth opportunity
Mkt Size (USD Bn)
Mkt contri %
CAGR
2008
2020
2008
2020
%
Global
732.7
1244.2
100%
100% 4.5%
E7
76.8
260.9
10%
21% 10.7%
ROW
110.7
288.9
15%
23% 8.3%
These factors have created a momentum that is shifting the focus of global pharma business to
Genericisation & emerging markets (ROW & E7). As a result of these dynamics, Generics
business is expected to grow at 8.5% CAGR from 2008 to 2020, in contrast to overall projected
growth of just 4.5%.for global pharma sales.
India with its traditional advantage of low cost of skilled manpower and innovation, is well
poised to benefit in this scenario. There are approximately 250 large units and about 8000 small
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scale units that meet around 70% of the countrys demand for bulk intermediates, API &
formulations.
Indian pharma industry has also been a significant force in global pharma markets. Over the
last three years, exports of pharmaceuticals (largely generics) have grown at over 21.5% (CAGR)
and now accounts for over $13bn in annual sales.
Being a leading player in generics, India already has a huge presence in the highly regulated
Pharma markets like US & Western Europe. Highlighting Indias dominance, nearly 40% of
Abbreviated New Drug Applications (ANDA) received by the USFDA in 2012 were from India,
with a further 87 confirmed and another 25 already received between January and June 2013.
While Indian pharmaceutical products are exported to 200 countries, almost two thirds of
Indian generic exports are to the highly regulated markets (e.g. the US and Europe). Exports to
highly regulated markets is primarily from 546 USFDA approved company sites and 166
companies with CEPs from EDQM.
Thus in value terms, Indian Pharma exports have inadequate contribution from Indian
Pharmaceutical SMEs and is skewed towards highly regulated markets, leaving markets like
ROW countries relatively underserved.
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Tariff barriers
o Increased tax rates for imported products
Non-Tariff barriers
o Banning import of products with more than 2 local manufacturers
o Preferential interest rates for new manufacturing projects
o Differential regulatory requirements for imported and locally produced
products. Bioequivalence is required for imported formulations and formulated
bulk premix but not for locally produced formulations
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ASEAN
(Indonesia, Cambodia, Malaysia, Laos, Myanmar, Philippines, Singapore, Thailand, Vietnam & Brunei Darussalam)
Its major objectives includes the harmonisation of technical guidelines and regulatory
requirements applicable to the ASEAN pharmaceutical industry & development of Common
Technical Documents with a view to arriving at Mutual Recognition Arrangement (MRAs).
GCC
(KSA, UAE, Qatar, Kuwait, Oman, Bahrain..)
The GCC countries agreed to adopt the Common Technical Document (CTD) framework in 2009
and have since progressively moved towards its implementation. They also have a unified
streamline approach for plant and product registrations.
Historically manufacturers have been reluctant to adopt stacked sourcing model as they are
not keen to part with the intellectual property. However it is slowly gaining acceptance as this
model aids manufacturer to open up a market for their finished products, which in normal
course of events was unavailable due to local government policy of promoting local
manufacturing. The manufacturer gets a long term commitment for revenues and is able to
generate significant revenues before actual formulation tech transfer.
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Thus stacked sourcing agreements can ensure a win-win situation for the Indian manufacturer
as well as the buyer. Typically, buyers in ROW market would find it difficult to convince a large
pharma company for such an agreement, as it would require change in company policies and
approvals at multiple levels. In contrast, the buyer may find it easier to work with a owner
driven Pharma SME that is expected to have faster decision making and is more amenable to
flexible business models.
To effectively deliver on the stacked agreement, manufacturer needs to build n-1
capabilities, offer an integrated solution through a network of suppliers (discussed in next two
sections) and build capability to execute formulation technology transfer.
Execution of formulation tech transfer many a times suffers due to lack of protocols within
manufacturer organization on how to execute such projects. Formulation tech transfer is more
than just providing dossier documents / SOPs or demonstrating three validation batches at
client locations. Manufacturer should take following measures to ensure smooth execution of
formulation tech transfer projects
Create an internal SOP for formulation tech transfer procedures based on WHO
Guidelines on transfer of technology in Pharmaceutical manufacturing that addresses
following areas
o
o
o
o
o
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o
o
documentation
Qualification and validation.
These formulation tech transfer projects, should have a project manager to drive the whole
initiative towards timely successful completion. Ideally the project manager should have cross
functional reach across the manufacturing organization.
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Bioequivalence Though a significant cost, some countries insist that BE study data for finished
product be submitted before approval is granted for import of either finished product or even
formulated bulk premix. Considering the business potential and individual market of interest a
decision to generate the same can be taken.
API from DMF & Non-DMF source For core products, a manufacturer can consider preparing
registration dossiers for formulation using API from both DMF and non-DMF source. This can
provide flexibility to offer differential prices depending on the regulatory requirement of the
importing country.
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Reference NRA approval - Plant approval from stringent regulatory authorities like USFDA, TGA
Australia, UK MHRA, can enable exemption from plant audits in large number of countries.
However typically this route entails high cost, huge efforts and in many cases manufacturers
infrastructure may not be geared to face audit from such SRA.
However similar strategy can be employed with lower resources, within regional clusters. In
many cases, an approval of reference NRA makes approval from other countries within that
cluster significantly easy.
For example, if a manufacturer is targeting Middle East markets than approval by Jordan NRA
(JFDA) provides automatic approval in Syria and facilitates approval within Middle East.
Similarly, for a manufacturer targeting LATAM markets approval by any one of the four
reference NRAs can facilitate approvals in other countries. The four reference NRAs for LATAM
are ANVISA Brazil, ANMAT Argentina, COFEPRIS Mexico, INVIMA Colombia,
o Embassy legalized
o Choose Neutral venue of arbitration
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f) Conclusion
ROW markets can offer a comparatively easier learning curve for exports market access to
Indian Pharma SMEs. ROW markets offer higher margins compared to domestic markets and
can become a significant contributor to a Pharma SMEs top line and bottom line. Indian
Pharma SMEs can leverage their relatively nimble decision making process to create
organizational processes that endow competitive advantage to it compared to its bigger peers.
Profitable growth of Pharma SMEs is necessary not only to ensure continued self-reliance of
India in healthcare segment
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