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India To Emerge Leading Pharma Market Of The World

Indian pharmaceutical industry, which has grown at 1.5 to 1.6 times the growth of the economy over the past couple of years, is well positioned for sustainable growth and expansion. The industry has grown at a CAGR of 13 per cent from 200-2007 and is expected to grow at a CAGR of 16 per cent over 2007-2011, according to a Pharma Inc- a Continuing Success Story".

The rise in disposable income has a positive impact on healthcare spend. In 2005, 6.2 per cent of disposable income was spent on healthcare as compared to 2.8 per cent in 1995. This augurs well for the pharma industry, as the strong economic momentum is likely to continue with the Indian economy expected to grow by 8-9 per cent in the next few years.

On the international front, Indian generic drug makers are playing an important role in the global consolidation process and are augmenting their market presence across regulated as well as semi regulated markets through their organic as well as inorganic initiatives. 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. India with its intrinsic competitive advantages, remains as 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.

According to John Morris, Head, Global Pharmaceutical Practice, KPMG, "The Indian pharmaceutical industry is at a critical juncture given its inherent strengths and its ability to be dominant player in the global pharmaceutical industry. 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".

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 issue and competition from low cost countries.

According to the report, Pharma Multinationals are also increasingly using India as a base for export not only to the immediate neighbouring markets, but also to other markets around the world such as Japan, South Africa, Latin America and Europe. Pharma multinationals are also expliting India's competencies in the field of Information Technology and its strong and low cost IT skill sets; by setting up centres for their global clinical data management functions in India.

On Contract Manufacturing, the report says that at present, the global manufacturing outsourcing opportunity is estimated at US$ 20 billion and is expected to reach US$31 billion by 2010. The global contract research opportunity was pegged at US$14 billion in 2006 and is expected to reach US$24 billion by 2010. The contract research also offers significant opportunity to the Indian pharma industry which is becoming a global R&D hot-spot for innovator pharma companies. The global contract research opportunity was pegged at US$ 14 billion in 2006 and is expected to reach US$ 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.

Regarding clinical research, the report says that at present, a majority of clinical trials conducted in India are for phase II and phase III. 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 drugs discovery services.

On the regulatory front, the government is also trying to promote the growth of this industry by providing a 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.

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. Currently, 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 per cent of sales for leading pharma companies.

New drug discovery is a costly and lengthy process. It takes any where 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. 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.

(Ref: The Chronicle Pharmabiz dated November 8, 2007)

SMEs Applying For CE Tag On Products May Get Govt Aid

The Centre, which is encouraging quality upgradation of small and medium enterprises (SMEs) through a slew of incentives, plans to offer more sops to improve their product's ratings in the world market. The government is toying with the idea of providing monetary support to SMEs in getting CE (Conformite Europeene) certificates for their products, a move that is expected to boost exports to Europe. Before making up its mind on the new offer, the ministry of micro, small and medium enterprises (MSME) has sought a proposal from one of its arms, the MSME Development institute. At present, the ministry provides grants to SMEs for getting ISO certificates for manufacturing processing. The grant is provided for adoption of ISO certificates in the series of 9001, 14001 and HACCP at the rate of Rs 75,000 or 75% of the standardization implementation cost, whichever is higher.

(Ref : The Economic Times dated December 13, 2007)


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