Global Generics : Pharmaceutical Industry Report 2015

DEPARTMENT OF PHARMACEUTICAL MANAGEMENT
NATIONAL INSTITUTE OF PHARMACEUTICAL EDUCATION AND RESEARCH
S.A.S. NAGAR, PUNJAB, INDIA.
GLOBAL
GENERICS
2015
SUPERVISED BY:
SUBMITTED BY:
Vikas Soni
Bishwjit Ghoshal
Chandravadan Pandya
Pottu Rohith Kumar
(Pharmaceutical Management, 2014-16)

GLOBAL GENERICS 2015
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[1]- GENERIC DRUGS
[2]- GLOBAL GENERICS: FACTS AND FIGURES
A. Key therapeutic segments: an overview
B. Growth analysis of key therapeutic areas
C. Growth of global generic market
D. Pharmemerging markets
E. Global share of generics in developed markets
F. Key market drivers
G. Patent cliff
H. Key pharmaceutical drugs losing patent protection in U.S. (2010-2017)
I. Key blockbuster drugs losing patent protection in Europe (2010-2017)
[3]- MERGERS & ACQUISITIONS
[4]- COMPETITIVE LANDSCAPE
[5]- INDIAN GENERIC MARKET
A. Scope of Generic in Indian pharmaceutical market
B. Branded Generics Dominate the Indian Pharmaceutical Market
C. Drivers of Growth of Generics in India
D. Key Industry Challenges
E. Future Directions and Trends
[6]- REGULATORY ENVIRONMENT: US, EUROPE & INDIAN GENERIC
REGULATIONS
[7]- SWOT ANALYSIS OF INDIAN GENERIC DRUG INDUSTRY
[8]- FUTURE CHALLENGES
[9]- STRATEGIC RECOMMENDATIONS FOR SUCCESS
[10]- REFERENCES

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GENERIC DRUGS:
A generic drug is defined as a drug that is comparable to a brand/referral listed
drug product in dosage form, strength, quality and performance characteristics
and intended use.
According to the United States Food and Drugs administration (USFDA) generic
drugs are identical or within an acceptable bioequivalent range to the brand
name counterpart with respect to pharmacokinetic and pharmacodynamic
properties.
WHY ARE GENERICS LOW IN COST?
Before we answer the above question, we will have to understand the costs
involved in the making of a new drug molecule.
 The development of a new drug molecule is a long, tedious and expensive
project. The research divisions of pharmaceutical companies spend years
studying the biological and biochemistry aspects of the disease in question
in order to come up with a method to attack the disease.
 Once the biology of the disease is understood, medicinal chemists begin to
prepare possible chemical entities. Based on the initial results, the chemists
prepare improved moieties.
 After the chemical is invented by the chemists that itself takes years of
research, the drug is evaluated for toxicity, efficacy and other properties in
the animal models (rats, guinea pigs, dogs, etc.) This evaluation may last for
several years.
 Once the drug passes the toxicity studies, it is brought for clinical trials that
consists of 3 phases:
 Phase 1- Includes testing of drug on 20-40 diseased individuals. This
phase may take up to several months.
 Phase 2- Includes testing of drug on 100-300 participants. This phase
takes around 2 years to complete.
 Phase 3- Involves testing of drug on 1000-3000 participants. This is
the longest phase and takes 1-4 years to complete. Has the lowest
success rate.

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 At the end of clinical trials, the company submits data to FDA which then
decides whether to approve the drug or not.
Due to the time involved and the complex procedures involved, the average cost
of developing a new drug is now well in excess of $1 billion. And, because the
patents are granted during the initial research phase of investigation, the
company is generally left with approximately 10 years of patent in which it
expects to recover its cost. This is the reason why the prescription drugs are very
costly.
When we talk about generics, companies incur fewer costs in creating generic
drugs (only the cost to manufacture, rather than the entire cost of development
and testing) and are therefore able to maintain profitability at a lower price. The
whole developmental cost i.e. cost of innovation, toxicity studies, clinical trials are
not borne and hence the cost decreases to a large extent.
GLOBAL GENERICS: FACTS AND FIGURES:
GLOBAL
GENERICS
The global generic
pharmaceutical
market is worth over
$150 billion and is
growing at CAGR
(2013-2018) of 8.4%
The top 10 global
generic
pharmaceutical
companies account
for 47% market
share
Blockbuster Drugs
to lose patents
between 2010 and
2017
Over the next 5 years,
Emerging markets will
grow at 15-20% and
matured markets at 6-
10% growth
The top 8 global
markets comprise
80% of the total
generic sales

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KEY THERAPEUTIC SEGMENTS: AN OVERVIEW
The main therapeutic segments covered by generic pharmaceutical companies
include:
 CNS
 Cardiovascular
 Dermatology
 Genitourinary/Hormonal Drugs
 Respiratory
 Rheumatology
 Diabetes
 Oncology
 Others
Out of the above segments, Cardiovascular and CNS are the two largest market
segments that are covered by the generic companies.
GROWTH ANALYSIS OF KEY THERAPEUTIC AREAS
1. Cardiovascular- The cardiovascular segment of drugs form the most rapidly
growing market for generic drugs. The main contribution towards this
regard has been provided by the expiry of patents of most of the CVS drugs.
2. CNS- The CNS segment will also see a fast growth of its market in the
following years. The reason for the growth is rapid patent expiry of several
key anti psychotics and antidepressants.
3. Oncology- The oncology segment is expected to rise in the upcoming years.
The reason for the growth can be attributed to patent expiry of oncology
drugs worth $10 billion.
4. Diabetes- This is one sector which can see a decline in the years coming.
Intense competition, promotion of branded drugs and new innovative
formulations such as inhalable insulin are likely to inhibit the growth of
generics.

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5. Respiratory- The respiratory segment will see a fast growth in the next five
years as almost half of the global asthma and COPD market drugs are set to
lose their patents by 2016.
GROWTH OF GLOBAL GENERIC MARKET
There has been a large shift of the companies from the prescription drugs to
generic drugs. The expenditure in generic drugs have increased from 2005-2015.
 Brands accounted for nearly two thirds of global pharmaceutical spending
in 2010. But, as the patents expire in developed markets, this share is
expected to decline.
 When we talk about developing countries, their main focus has always
been on generic drugs due to the large R&D costs incurred in development
of prescription drugs. Since, these developing countries are paving their

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way into the pharmemerging markets, it would contribute to their generic
share of spending.
 Global generic expenditure is expected to increase to $415.35Bn in 2015 as
compared to $234Bn in 2010.
70% of the expenditure on generic drugs is expected to be outside developed
markets.

PHARMEMERGING MARKETS: A NEW AVENUE OF GROWTH FOR GENERICS
10%
20%
70%
$605Bn
Others Generics Branded
9%
27%
64%
$856Bn
Others Generic Brand
8%
39%53%
$1,065Bn
Others Generics Branded
2005
5555
2010
2015
Source: IMS Market Prognosis, April 2011

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 The biggest driver of growth for the generics in the upcoming years will be
the pharmemerging markets owing to the technological development and
economic reforms in these countries.
 Generic expenditure is expected to increase by $47Bn, approximately 60%
from increased utilization of existing generic products and 40% from newly
available generics.
 Despite the patent expiries in coming years, brands will compete with new
inventions and organic products.
GLOBAL SHARE OF GENERICS IN DEVELOPED MARKETS

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When we talk about the growth of generics, it is not restricted to pharmemerging
markets exclusively. The coming years will see a growth in expenditure in generics
by the developed countries also.
According to the report of IMS health, increased generic spending would be there
in the next 5 years owing to the generic competition in new molecules due to
patent expiry.
The U.S. will see the largest expansion of generic markets spending, but 7-8% gain
will be there from the new generics, as US pharmacists already dispense generics
when available, 93% of the time.
South Korea, with its well-developed domestic industry, will continue to spend
the most on generics as a share of their spending.
Japan, will remain the developed country with the lowest generic share despite
significant policy incentives to increase generic prescribing and dispensing.

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KEY MARKET DRIVERS
As we have seen in the previous sections, generic pharmaceutical market is
increasing at a fast pace. A number of factors can be attributed to this growth.
The drivers involved have been of the same effect globally.
The main drivers involved in the growth of this sector include:
A. Patent expiry of key blockbuster drugs worth $150 billion
B. New provisions introduced by the Government aimed at the growth of this
industry
C. Changing population demographics and lifestyle patterns
D. Mergers and acquisitions taking place in the sector
PATENT EXPIRY OF KEY BLOCKBUSTER DRUGS
Patent expiries are good news for consumers and generic market as they will be
getting rights to manufacture the drugs whose manufacturing and selling rights
were with the parent company due to the patent granted to them. This would
reduce the price of the products as the monopoly would be reduced and
customers will ultimately be benefitted.
PATENT CLIFF
Patent cliff is a term used to describe the phenomenon of drugs approaching their
patent expiration date, resulting in steep decline in the sales of branded drugs as
generics enter the market and undercut the price, thereby capturing the market
share earlier served by the branded drugs.
GLOBAL GENERIC PHARMACEUTICAL MARKET- PATENT CLIFF
Over the next five years, drugs that are producing approximately $137 billion of
revenue are expected to face generic competition. At the same time, new
innovative products for the treatment of osteoporosis, respiratory ailments,
cancer are not expected to generate the sales as generated by those losing
patents in that period.

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Over the next few years, market will be impacted by numerous payer actions
including price cuts on existing drugs, the raising of standards of the existing
products, and the provision of incentives for the prescribers and pharmacists to
drive a shift to generic products
The graph above represents the sales value of drugs losing patents in coming
years. From the graph, we can infer that the year 2011 has been the year in which
majority of the blockbuster drugs lost their patents leading to a loss of around
$42 billion to Pharma companies. This phenomenon is going to continue in the
future as more and more drugs will lose their patents.
The succeeding sections will tell about the pharmaceutical products undergoing
patent expirations from 2010-2017 in 2 major markets:

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A. U.S.
B. EUROPE
KEY PHARMACEUTICAL DRUGS LOSING PATENT PROTECTION IN U.S. (2010-2017)
2010 2011 2012 2013 2014 2015 2016 2017
Atorvastatin Clopidogrel Irbesartan Duloxetine Aripiprazole Epoetin alfa
(Procrit/aprex)
Adalimumab Oseltamavir
Docitaxel Goserelin Montelukast Filgrastim Celecoxib Ematinib
mesylate
Ezetimibe -
Donezepil Latanoprost Peginterferon
alpha 2a
Insulin Lispro Darbepoetin
alpha
Pregfilgrastim Lopinavir
with
Ritonavir
-
Fluticasone
propionate
with
Salmeterol
Xenofoate
Levofloxacine Rosiglitazone Interferon
beta-1a
(Avonex)
Esomeprazole
Magnesium
Rituximab Olmesartan
Medoxomil
-
Gemcitabine Olanzapine Rosuvastatin Interferon
beta-1a
(Rebif)
Glatiramer
Acetate
Trastuzumab - -
Losartan Pioglitazone Sildenafil Rebiprazole - - - -
Pantoprazole Quetiapine Tolterodine Risedronate Infliximab - - -
- - Valsartan Simvastatin
with
ezetimibe
Raloxifene - - -
- - Candesartan
Cilexitil
Tacrolim U.S. Telmisartan - - -
- - Enoxaparin Oxaliplatin Tiotropium - - -
- - Epoetin beta - - - - -
- - Escilatopram
oxalate
- - - - -
- - Etanercept - - - - -

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KEY BLOCKBUSTER DRUGS LOSING PATENT PROTECTION IN EUROPE (2010-2017)
Drugs France Germany Italy Spain U.K.
Anastrazole 2010 2010 2010 2010 2010
Aripiprazole 2011 2011 2011 2011 2011
Atorvastatin 2011 2011 2011 2011 2011
Candesartan
Cilexetil
2012 2012 2012 2012 2012
Celecoxib 2014 2014 2014 2014 2014
Clopidogrel 2013 2013 2013 2013 2013
Darbepoetin alfa 2014 2014 2014 2014 2014
Docetaxil 2010 2010 2010 2010 2010
Donezepil 2012 2012 2012 2012 2012
Duloxetine 2012 2012 2012 2012 2012
Escitalopram
Oxalate
2014 2014 2014 2014 2014
Esomeprazole
Magnesium
2010 2010 2010 2010 2010
Etanercept 2014 2014 2014 2014 2014
Ezetimibe 2017 2017 2014 2017 2017
Fluticasone
Propionate with
Salmeterol
Xinofoate
2013 2013 2013 2013 Invalidated
Glatiramer Acetate 2015 2015 2015 2015 2015
Imatinib Mesylate 2016 2016 2016 2016 2016
Infliximab 2014 2014 2014 2014 2014
Insulin Glargine 2014 2014 2014 2014 2014
Insulin Lispro 2010 2010 2010 2010 2010
Interferon beta 1a
(Rebif)
2013 2013 2013 2013 2013
Irbesartan 2013 2013 2013 2012 2013

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Levofloxacin 2011 2011 2011 2012 2011
Lopinavir with
ritonavir
2016 2016 2016 2016 2016
Montelukast 2012 2012 2012 2012 2012
Mycofenolate
mofetil
2010 2010 2010
Expired
(2007)
2010
Olanzapine 2011 2011 2016 2011 2011
Olmesartan
Medoxomil
2017 2017 2017 2017 2017
Oseltamavir 2017 2016 2017 2017 2016
Oxaliplatin 2013 2013 2013 2013 2013
Pegfilgrastim 2017 2017 2017 2017 2017
Peginterferon alfa-
2a
2013 2013 2013 2013 2013
Pioglitazone 2011 2011 2011 2011 2011
Quetiapine N.M. 2012 2012 2012 2012
Rabeprazole
Expired
(2007)
2012 2012 2012 2012
Risedronate 2010 2010 2010 2013 2010
Rituximab 2013 2013 2013 2013 2013
Rosiglitazone 2013 2013 2013 2013 2013
Rosuvastatin 2017
Not
Mentioned
2012
Not
Mentioned
2017
Sildenafil 2013 2013 2013 2013 2013
Telmisartan 2013 2017 2017 2013 2017
Tiotropium 2016 2015 2014 2015 2012
Tolterodine 2012 2012 2012 2012 2012
Trastuzumab 2012 2012 2012 2012 2012
Valsartan 2011 2011 2011 2011 2011
Zoledronic Acid 2012 2012 2012 2012 2012
CHANGING POPULATION DEMOGRAPHICS
(a) Population Growth
World population is expected to increase by 1 billion in the next 12 years
(CAGR 1%). Most of the growth will result in developing regions. As the
population will increase, more people will be subjected to diseases and

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hence it would profit the healthcare sector including the generic industry in
the long run.
(b)Aging Demographic
Globally, one of the fastest growing demographics includes the people over 60
years of age. The growth rate of the older population (1.9%) is significantly
higher than the total population (1.2%). With more than 90% of seniors relying
on prescription medicine on a regular basis, we can believe that the aging
demographic will be a long term driver for the healthcare industry including
generic market.

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MERGERS & ACQUISITIONS: A NEW STRATEGY TO
TACKLE THE STORM
Despite the increased spending in the generic sector, the companies are facing
tighter margins due to fierce competitions and strict policies followed by the
government. To tackle these problems, the Generic companies have adopted the
Mergers & Acquisitions strategy that is not only increasing their product
portfolio, but also allowing them a chance to enter into new domains of
treatment.
In the Pharmaceutical industry, innovations and rich pipelines are generally the
key to success. Also, these branded or prescription drugs usually have large
margins than generics, the Generic companies try to inculcate them in their
portfolio either by research and development or by mergers & acquisitions.
As we can see, for the top 5 players in the Generic market, generic drug making is
not their solo business.
 Teva Pharmaceuticals has a robust specialty medicines portfolio that takes
about 41% of their annual sales in 2013. Copaxone, their leading innovative
product alone took 22% of sales.
 Mylan has transformed itself with significant acquisitions from US only,
generic only company into a global, well diversified, vertically integrated
company.
Some examples of the major mergers & acquisitions by the generic companies are
as follows:
A. ACTAVIS ACQUIRED ALLERGAN
Actavis, in 2014 acquired Allergan Inc. making it one of the largest drug
makers by sales, offering a range of eye, skin and stomach drugs. The
company is expected to have a market capitalization of $128 billion which is
about 12 times Actavis’ value before acquisition of Allergan. Actavis

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projected that the combined company would achieve at least 10% growth
in the revenue.
B. MYLAN ACQUIRED ABBOTT’S BRANDED GENERICS BUSINESS
Mylan acquired Abbott Laboratories’ main branded generics business in an
equity deal valued at $5.3 billion. Under the terms of the deal, Abbott will
sell the business, which operates in Japan, Canada, and Europe, Australia
and New Zealand for 105 million shares or 21% of the expanded company.
As for Mylan, it gets hold of an attractive portfolio of more than 100
specialty and branded generic pharmaceutical products in five major
therapeutic areas. - Cardio/metabolic, gastrointestinal, anti-
infective/respiratory, CNS and women’s/ men’s health.
C. SUN PHARMA ACQUIRED RANBAXY
Sun Pharma’s acquisition of Ranbaxy in a landmark deal of $4 billion
transaction, marks the coming together of two major generic
pharmaceutical companies to make the world’s fifth largest generic
manufacturer by sales. Sun Pharma is betting on Ranbaxy’s presence in
India and emerging markets, it is also aiming to fix the glitches and uncover
asset value in future from the US-FDA barred facilities.
D. MYLAN ACQUIRED PERRIGO
Mylan, one of the biggest generic drug makers acquired Perrigo,
manufacturer of many of the store brand over the counter drugs sold at
pharmacies. Under the offer, Mylan would pay $205 a share in cash and
stock for Perrigo. A 25% premium over Perrigo’s stock price. A combined
company would have big businesses in specialty pharmaceuticals, generic
drugs, over the counter medications and nutritional products, and more
than $15 billion in annual sales.

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COMPETITIVE LANDSCAPE
Generic Pharmaceutical market: Ranking of top 5 companies by their revenue in
2012
RANK COMPANY
1 TEVA
2 NOVARTIS (SANDOZ)
3 MYLAN
4 ABBOTT
5 ACTAVIS

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1. TEVA PHARMACEUTICALS
 Headquarters:
Petah Tikva, Israel
 Specialization:
CNS: Strong emphasis on Multiple Sclerosis, Neurodegenerative
Disorders and pain management
Respiratory: Asthma, Chronic Obstructive Pulmonary Disorder and
Allergic Rhinitis
 Products:
Adderall; Alprazolam; Amikacin; Atorvastatin; Augmentin; Baclofen;
Diazepam; Escitalopram; Famciclovir; Pravastatin; Prednisolone, etc.
 Revenue:
Teva had an annual sales of $20,317 million in 2012 and $20, 314
million in 2013. On the sales, company earned a gross profit of
$10,652 million and $10,707 million respectively.
2. NOVARTIS (SANDOZ)
 Headquarters:
Basel, Switzerland
 Specializations:
Cardiovascular Systems; Anti-Infective for systemic use; Central
Nervous System; Alimentary tract and metabolism; Respiratory
system; Blood and blood forming organs’ Anti-neoplastic agents and
immunomodulating agents.

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 Products:
Amoxicillin/Clavulanic Acid; Omnitrope; Enoxaparin Sodium Injection;
Acetylcysteine; Fentanyl; Omeprazole; Tacrolimus, etc..
 Revenue
Sandoz achieved a net sales of $9.2 billion, an increase by 5% driven
by double digit retail generics in Western Europe, Japan and
emerging markets in 2013.
3. MYLAN
 Headquarters:
Cecil Township, Pennsylvania
 Specializations:
Cardiovascular, Respiratory, Allergy and Psychiatric therapies.
 Products
Metoprolol; Acebutolol; Acetaminophen; Albuterol; Ipratropium;
Alprazolam; Amitriptyline; Benazapril; Atenolol, etc.
 Revenue
Mylan earned a revenue of $6.97 billion in FY 2013, seeing an
increase from $6.80 billion in 2012.

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4. ABBOTT
 Headquarters
North Illinois, Chicago, United States
 Specialization
Gastroenterology; Women’s health; Cardiovascular; Pain/CNS;
Respiratory; Influenza vaccine
 Products
Levothyroxine; Biaxin (clarithromycin); Lupron (leuprolide); Luvox
(fluvoxamine); sevoflurane; Teveten (eprosartan); Tricor
(Fenofibrate); Tarka (Verapamil)
 Revenue
The revenue of Abbott Pharmaceuticals increased from $2,324
million in 2012 to $2,358 million in 2013 in key emerging markets
including India.
5. ACTAVIS PHARMACEUTICALS
 Headquarters
Dublin, Ireland & Parsippany- Troy Hills, New Jersey
 Specialization
Aesthetics/ Dermatology/ Plastic Surgery; Neurosciences/ CNS; Eye
care; Women’s Health & Urology; Gastrointestinal and cystic fibrosis;
Cardiovascular Disease and Infectious disease.

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 Products
Lidocaine patch; Propranolol HCl; Telmisartan Tablets; Metoprolol
succinate; Duloxetine DR; Butox; Memantine; Risedronate Sodium,
etc.
 Revenue
The revenue of Actavis Pharmaceuticals touched the figure of $1.70
billion in the last quarter of 2013.
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INDIAN GENERIC MARKET:
Branded drugs play an important role in medications, but generics are their cost
effective alternatives. Generics are similar to branded drugs in terms of purity,
efficacy and are perceived to be safer as compared to new drug molecules, as
they tend to be older and time tested. Indian pharmaceutical market of generic
drugs is increasing day by day. The present communication describes various
aspects and prospects of generic drugs in Indian Pharmaceutical Sector.
Introduction-:
The drug which is protected by patent is a branded drug and the drug which is a
copy of branded drug and is equivalent in terms of safety, efficacy, dosage and
use is called a generic drug.
Indian pharmaceutical industry has become an important hub in production of
generic drugs from last some decades. Total global generic drugs market
constituted USD 155bn.(1) Total Indian generic drug market is around USD19bn&
it is expected to grow to USD26.1bnby 2016.(2) India holding 22% of the world
market of generic drugs.(3) Today 95% of the country’s medical needs are served
by Indian Pharmaceutical industry. Indian pharma sector exports 32%, of which
90% is generic and marketing growth is about 20% per annum. More than
1/3rd
volume of total market is covered by top 10 companies. There are several
multinational pharmaceutical companies like Pfizer, Aventis, and GlaxoSmithKline
etc. which have set up operations in India and are expanding their existing
business.(4)
rank Company Revenue (Rs.
In cr.)
Market share
(%)
Growth (%)

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According to express pharma magazine these are the major pharma companies in
Indian pharmaceutical industry.in this Abbott India tops in revenue generation it
covers highest market share in Indian pharmaceutical industry. Sun pharma an
Indian origin company got 1second rank in terms of revenue as well as market
share. Out of this all pharma giants, mankind is a company has notched up a
steady growth in this over the past five year. (5)
Sun Pharma leveraging its generic market capabilities:
1 Abbott India 5,199 6.19 7.4
2 Sun 4,574 5.44 14.7
3 Cipla 4,187 4.98 12.2
4 Zydus 3,625 4.32 8.4
5 Ranbaxy 3.124 3.72 12.6
6 Mankind 3,020 3.59 13.0
7 Alkem 3,005 3.58 13.2
8 Lupin 2,778 3.31 11.3

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FY9 FY10 FY 12 FY13 FY14
932 847
1,672 2,087
2,800
Sun pharma sales in USD Millions
1.043
1.588
1.909
2,383
3,000
2009-10 2010-11 2011-12 2012-13 2013-14
Mankind pharma-growth in the revenue (Rs cr)
over the last five years.
Scope of Generic in Indian pharmaceutical market :-
In today’s era, the scope of generic drugs is increasing day by day specially in
several ill health conditions such as diabetes, cardiovascular and in microbial

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diseases etc. When any patent expires, new generics are introduced into the
market. The scope is also increased due to Para IV filings and Bolar provisions.
Recently, Para IV filing strategy has been adopted by leading Indian
pharmaceutical companies to introduce generic drug of its own taking advantage
of shortcoming in patent application of patent holders. According to this, a
generic manufacturer challenges the original patented drug and claims that the
generic version proposed to be launched by the manufacturer does not infringe
the patent holder’s version. In case a patent challenge is won, it entitles the first
to file Para IV generic manufacturer a 180 days exclusivity, if company come up
with an equivalent of the innovator’s branded formulation.
‘Bolar provision’ allows generic manufacturers to prepare and develop regulatory
procedures before patent expires, so that, products are ready for market as soon
as the patent ends. With these provisions, in India, the scope of generic drug
manufacturing has also increased. (5)
 EMR-: EMR stand for exclusive market right, according to Hatch Waxman
act a company has filled first ANDA application that company would get the
exclusive market right for manufacturing of generic version of patented
product. the tenure of emr is 180 days that means within this period of 180
days only this company can produce the generic version of patented
product.(7)
 ANDA-: ANDA stand for abbreviated new drug application. If a company
wants to manufacture the generic version of patented drug that company
has to fill an ANDA application. ANDA application includes following
inspections (8).
 Chemical inspection
 Bioequivalence
 GMP (Good manufacturing practice)
 Labeling

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Some important case of Para IV fillings:-
1. In May -2014 patent on nexium had expired, nexium is the product of
AstraZeneca. At that time no of companies has filled para IV to get an ANDA
approval for manufacturing of generic version of nexium. Including Ranbaxy,
Drl & lupin and finally Ranbaxy got an ANDA approval for manufacturing of
generic version of nexium.
According hatch Waxman act a company has got an ANDA approval that
company has to launch the generic version of the patented product within 75
days of EMR. But Ranbaxy had not launch generic version of nexium within this
time limit of 75 days And Ranbaxy lost the EMR on nexium and TEVA Pharma
got an EMR for nexium
Teva has given a contract to Cipla Pharma for manufacturing of generic version
of nexium in India. (9)
ParaIV filled by Against Brand name Mollecules Result
Ranbaxy Pfizer Accupil Quinapril hydrochloride Loss
Dr Reddy’s Pfizer Norvac Amlodipin Bysulfate Loss
Ranbaxy Gsk Ceftin Cefuroxime Axetil Won
Dr Reddy’s Eli Lilly Zyprexa Olanzapin Loss
Ranbaxy Pfizer Lupitor Atrovastatin calcium Loss
Social aspects
In our India a large number of people are living below poverty line. They are not
able to afford branded drugs because these drugs are too much expensive.
Therefore, generic drugs become the preferred alternatives. Generic drugs are as
effective and safe as branded drugs, so physicians may also prefer generic drugs.
Due to an increase in competition between domestic companies and
multinational companies, the cost of generic drug gets reduced. Indian
pharmaceutical companies are primarily generic based; they spend time and
money on generic research. Generic market has now also increased due to expiry
and shortcoming of patents. During period 2015-18 patents of many drug
molecules have been expired and many more are going to be expired (10)

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Branded Generics Dominate the Indian Pharmaceutical Market
India is primarily a branded generics (molecular copy of an off-patent drug with a
trade name) market. However, it is important to note that generic versions of
molecules which still had patent protection in the rest of the world were
produced (by reverse engineering) and marketed in India by domestic market
participants until 2005, since India did not follow any patent protection laws up to
2005. Hence, the Indian generic market size includes the sales value of generic
drugs sold by both big pharma companies (generic copies of the innovator's
molecule sold under a different trade name) as well as Indian generic companies
like Ranbaxy, Lupin, and Sun Pharma and so on. The Indian pharmaceutical
industry, which is the third largest globally in terms of volume, had a total
production output of $23.24 billion in 2014, and was the thirteenth largest, in
terms of value. The domestic Indian pharmaceutical market was worth $12.24
billion in 2014, and grew at a significant rate of 17.0 percent per year.
India, a global market leader in the export of generic drugs to countries such as
the United States and Japan, as well as to countries in Africa and Europe, had a
market share of $11.00 billion in 2014, registering a growth rate of 22 percent. In
2014, the Indian pharmaceutical companies produced 20-22 percent of the
world's generic drugs in terms of volume and offered 600 finished medicines and
nearly 400 bulk drugs in formulations. Indian firms manufactured products for
nearly 60,000 generic brands, covering 60 key therapeutic areas. Approximately
80 percent of this domestic production consisted of formulations, while the
remaining 20 percent comprised bulk drugs. The Indian pharmaceutical market is
a highly-fragmented one, with more than 20,000 registered units (11).

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Generic Pharmaceuticals Market: Breakdown by Domestic Sales and Export
Values, India 2014
What Drives the Growth of Generics in India?
Inherent Competencies and Low-cost Manufacturing Capabilities
India's strength lies in its excellent reverse engineering skills, price
competitiveness, and its profusion of inexpensive but well-qualified English-
speaking scientists and engineers. Indian pharmaceutical companies function on a
much lower profit margin than their Western counterparts. Labour costs incurred
between 50.0 per cent- 55.0 per cent, which are cheaper than the West. The cost
of bulk drug production in India is 60.0 per cent lower, while the cost of setting up
a production plant in India is 40.0 per cent lower than in the West.
Increasing Consolidation through Co-operative Alliances
Mergers and acquisitions are common, and have helped Indian companies gain
global market presence. Overall, generic companies with Indian headquarters
have spent over $2.70 billion on mergers and acquisitions, since 2000. Sun
Pharmaceuticals acquired Ranbaxy for $4.0 bn in 2014 and gained a major stake
in Taro, while Dr. Reddy's acquired Betapharm Arzneimittal GmbH for $571.0
million, in 2006. Likewise, Indian generic companies have always held the special
interest of innovator companies as is evident from several acquisitions, which

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include Abbot acquiring Solvay and Piramal Healthcare in 2010; Daiichi Sankyo
acquiring Ranbaxy in 2009; and Pfizer entering into collaborative agreements with
Aurobindo Pharmaceuticals and Strides Arcolab.
Conducive Regulatory Environment
India currently has 75 United States FDA approved plants, enabling contract
research and manufacturing services, and drug production as per the compliance
requirements of developed countries. In the beginning of 2009, India had close to
1,000 WHO clinical good manufacturing practices (cGMPs) approved plants and
153 European Directorate of Quality Medicine (EDQM) approved manufacturing
facilities, of which 32 sites have Certificate of Suitability (CEP) approval. According
to the WHO, more than 90.0 per cent of active pharmaceutical ingredient (API)
approvals for anti-retro virus (ARVs), antituberculosis treatments and
antimalarials were granted to India. As of January 2009, of the total 4,942
prequalified approvals granted by WHO, to 12 countries, India has 621 approvals
for six companies. (12)
Key Industry Challenges
Highly Fragmented Market
The Indian pharmaceutical market is a highly fragmented market, with more than
20,000 registered companies competing on price. Of these, the organised sector
accounts for only 5.0 per cent of the market with 95.0 per cent comprising the
unorganised sector. Stiff competition among the domestic participants in the
Indian market has led to margin pressures in most therapeutic areas and product
categories. Leading participants in the Indian market are continuing to expand on
a large scale, thereby fuelling the competition in the market, which in turn
restricts the profit margins of small participants.
Corruption and Red-Tapism
The Indian pharmaceutical market is fraught with malpractice and unethical
activities resorted to by pharmaceutical companies in order to survive the intense
competition. It is likely that, in a market like India, consumers are not the
decision-makers; doctors and medical representatives play a major role in the

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decision making process. Therefore, patients are forced to buy expensive or
inferior quality medicines owing to doctors' commitments to pharmaceutical
companies. This has resulted in India being branded as a highly corrupt market by
the developed nations, raising quality and safety concerns.
Drug Price Control Measures
Under the DPCO act 2013 intends to bring 410 drugs under price control, besides
the already notified 74 bulk drugs. This new policy is expected to cap margins on
generic drugs at 15.0 per cent for wholesalers and 35 per cent for retailers. It is
also likely to bring 50 to 60 per cent of the drugs on the domestic market under
price control. This policy is set to affect the industry margins significantly,
especially for companies that have restricted their trade to local operations.The
National Pharmaceutical Pricing Authority (NPPA) is mandated with the task of
implementing the Drugs (Prices Control) Order (DPCO) 2013, which aims at
making available all essential and lifesaving medicines to all at affordable prices
through the instrumentality of price control. Drug price control is not something
peculiar to India, but one that is prevalent in most countries, including many
developed countries, though the methodology of price control may differ from
one country to another. (13)
Future Directions and Trends
With the re-introduction of the Patents Act, 2005 and given the current
fiercely competitive scenario, the Indian pharmaceutical industry is
expected to gradually shift from vanilla generic drugs to become a regional
hub for research and development (R&D), drug discovery, contract research
and manufacturing services (CRAMS), and technology licensing.
 Multinationals are expected to expand extensively into the Indian markets -
by as high as 60.0 per cent by 2017- through acquisitions, which will
gradually neutralise the cost advantages enjoyed by the Indian
pharmaceutical majors.

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 The foreign acquisitions of Indian companies will enable the Indian
companies to gain a foothold in the Western regulated markets, diversify
their portfolios, acquire recognised brands, and gain R&D capabilities.
 The United States appears to be the major hub for the export of generics.
However, severe price erosion due to the intense competition from other
low-cost generic manufacturers and the domestic generic manufacturers in
the United States make it crucial for India to look out for alternative export
destinations like Western Europe and the Middle East.
 It is equally important for the Indian-based generic companies to branch
out into the speciality and difficult-to-produce therapeutic segments, from
just commodity generics, in order to sustain themselves in the market.(14)
Why are American companies moving their manufacturing to India?
 The Indian companies are facing increasing pressure at home as their
country opens up and welcomes American drug makers onto its soil –
companies that are keen to take advantage of the same low costs that have
helped propel the Indian generics companies forward.
 With the low cost of manufacturing and the high level of expertise, India is
an attractive destination. This is unlikely to affect the Indian companies,
they’re already well established.
 It may restrict growth a little because there will be more pressure on prices,
but part of the problem for the U.S. companies will be the vast difference in
culture which can make business very complicated.(15)
Are There Downsides to Generic Drugs?
Knowing how much money we can save when we pay for our own drugs, and how
much money we can save for the entire healthcare system if we accept generics
through our health, we have to wonder why we wouldn't always prefer to take
generics.
The answer is more about how generic drug manufacturers operate, the lack of
oversight by the FDA, and less about the real question of whether generics will
"work."

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The vast majority of generic drugs are manufactured in other countries; not in the
US. The FDA has enough trouble regulating drugs manufactured in its own
country; it cannot and does not do a good job of regulating manufacturers
overseas. One example of this problem is the Ranbaxy debacle in 2013 when
ultimately the FDA levied a $500 million fine because Ranbaxy was intentionally
adulterating its drugs. There can be no question that other manufacturers are
legally selling counterfeit versions of the drugs they have been approved to
manufacture, too.
The best way to be sure you are getting exactly the drug you need, branded or
generic, is to consult with your doctor. When your doctor prescribes a drug for
you, ask if there is a generic equivalent. If there is, then ask which form of the
drug makes the most sense for you.
If you are curious about the availability of generic versions of the drugs you
currently take, the FDA maintains a reference called the Orange Book.
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Regulatory Environment:
With the key drugs going off-patents in the coming future, which also include
blockbusters, there is an immense opportunity for generics manufacturers to
strengthen their market share in different countries.
So, Regulatory environment plays a significant role for the growth of generics
industry. Let’s have a look on regulatory environments of three key generics
pharmaceutical markets, as U.S., Europe and India.
A. Regulatory Environment in the U.S Generic
Pharmaceutical Market-
1. Hatch-Waxman Act:
Generic pharmaceutical companies allow the public to purchase low cost
medications in the form of generic drugs after the brand medications’ patents
have expired. This system is created through the Hatch Waxman Act, which
makes an important balance between brand and generic drug manufacturers. On
the one hand, it provides developmental brand drug manufacturers and
opportunity to recoup their research and development costs through a patent
monopoly and on the other side, it allows generic alternatives to be developed
and FDA approved as a low cost alternative against the high cost brand drug. This
balance creates an innovative approach that powers both economic improvement
and public health.
Key facts about Hatch-Waxman Act:
 Also known as “The Drug Price Competition and Patent Term Restoration
Act”
 Enacted in 1984
 Generic companies could obtain market authorization by proving
bioequivalence of generics to brands

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 Safe Harbour Provision: experimental use of patented drugs permitted by
generic companies
 180-day market exclusivity for first-to-file generic applicant
 30-month stay for patents listed in Orange Book
 Objective of the act -Reducing the cost associated with the approval of
a generic drug Motivating the generic drug manufacturers
What is the necessity of Hatch-Waxman Act?
There was no provision for patent term extension prior to enactment of the Hatch
Waxman Act, to make up for the time lost out of the total patent term during the
marketing approval process. Generic companies required to submit their own
comprehensive NDA, which was costly and time consuming. If drug was covered
by patent, testing could not begin until patent expired, therefore, to overcome all
these problems an act was needed to promote generic companies.
Provisions of the act:
Creation of section 505(j)-
Section 505(j) established the ANDA approval process. The timing of an ANDA
approval depends in part on patent protections for the innovator drug. NDA must
include any patent that claims the "drug" or a "method of using [the] drug" for
which a claim of patent infringement could reasonably be asserted.
On approval of NDA, FDA publishes patent information for drug in Orange Book
(“Approved Drug Products with Therapeutic Equivalence Evaluations”)
 When an applicant submits an ANDA to the FDA, the applicant must certify
one of four things under section 505(j)(2)(A)(vii):
 that the required patent information relating to such patent has not been
filed (Para I)
 that such patent has expired (Para II)
 that the patent will expire on a particular date (Para III)
 that such patent is invalid or will not be infringed by the drug, for which
approval is being sought (Para IV – Patent Challenge)

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Incentives and protection:
 First applicant to submit a substantially complete ANDA (first-to-file)
 May be shared by multiple applicants
 Subject to forfeiture
 If patent owner or NDA holder sues the ANDA applicant for patent
infringement within 45 days of receiving notice of the Paragraph IV
certification
 Runs from date of notification or expiration of NCE exclusivity
 May be lengthened or shortened by the court
Para IV deadlines:
 Upon ANDA acceptance for filing, the applicant must notify the NDA holder
and patent owner of the ANDA within 20 days. The notice must include a
detailed statement of the factual and legal basis of the opinion of the applicant
that the patent is invalid or will not be infringed
 Upon notification, the NDA holder and patent owners have 45 days in which to
initiate an action for patent infringement. If such an action is brought within 45
days, the ANDA is subject to a 30-month stay of FDA approval beginning on the
date the notification letter was received

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Exempt Acts of Patent Infringement for FDA Approval:
 The manufacture, use, or sale of a patented drug is not an act of infringement,
to the extent it is necessary for the preparation and submission of an ANDA
 The Hatch-Waxman Act provides under 35 U.S.C.- 271(e)(1), generally that:
“It shall not be an act of infringement to make, use, or sell a patented
invention solely for uses reasonably related to the development and
submission of information under a Federal law which regulates the
manufacture, use, or sale of drugs”
Benefits for generic manufacturers:
 180-day market exclusivity for first successful challenger to Orange Book
patent
 Allows generics to challenge Orange Book patents without risk of damages
 “Safe Harbour” rule allows generics to perform bioequivalence and other
testing relating to regulatory approval without risk of patent infringement
 “Dr. Reddy’s was the first Indian company to get the 180-day exclusivity for
marketing Fluoxetine (Eli Lilly’s Prozac) 40 mg capsule in August 2001”
Generic Drug Exclusivity:
 Hatch-Waxman Act, 1984
 Granted: to first ANDA applicant who submits a “substantially complete”
ANDA containing a paragraph IV certification
 Substantially complete = sufficient to permit review
 Blocks: approval of subsequently-filed ANDA containing a paragraph IV
certification
 Length: 180 days, from commercial marketing
2. Gregg-Schumar Act:
Gregg schumar act evolved with the change in US generic legislation. There are
two revisions to Hatch-Waxman act in U.S.A. as McCain-Schumar legislation in
2002 and Gregg schumar act 2003, which are sought to improve the balance

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between the needs of branded companies and those of generic companies. The
objectives of these two revisions are as following:
1. The new revisions set up a new mechanism to prevent the inclusion of
frivolous patents or those filed at the last moment as a blocking mechanism.
2. The new legislation addressed the use of 180 day exclusivity period by generic
companies for special arrangements with originators as a means to prevent
market entry of other generics.
3. The Gregg-Schumar act revisions included ‘forfeiture’ provisions, which put the
generic company under risk of losing the exclusivity if found to have made
such an arrangement.
Key facts about Gregg-Schumar act:
 “Single 30-month stay” granted to branded company for patent infringement
suit
 Stay to run concurrently with FDA’s consideration of application
 No significant delay in generic entry
 Allows generic companies to file counterclaims against innovators
3. Pricing & Reimbursement:
 Generic drug price ranges from 90% of brand equivalent with just one
competitor and 5% with 16-20 competitors
 Medicare Prescription Drug, Improvement and Modernization Act (MMA) 2003
 180-Day Exclusivity Forfeiture
 Medicare Modernization Act, 2003 (“MMA”)
 Six ways to forfeit:
1. Failure to market
2. Withdrawal of application
3. Amendment of certification
4. Failure to obtain tentative approval within 30 mos.
5. Improper agreement with another applicant, the listed drug application
holder, or a patent owner
6. Expiration of all patents

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 Medicare reimburses drugs based on weighted average prices
 Competitive bidding is practiced
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Regulatory Environment in the European Generic
1. Data Exclusivity:
Also known as ‘Test data exclusivity’. It refers to protection of clinical test
data required to be submitted to a regulatory agency to prove safety and efficacy
of a new drug, and prevention of generic drug manufacturers from relying on this
data in their own applications.
Key facts about data exclusivity:
 Uniform level of data protection of originator products for 10 years
 Permits to access data of a generic application but the generic version cannot
be launched until the completion of the ten-year period
Mysteries about data exclusivity?
1. Pharmaceutical companies has an argument that the test data production
costs are higher for a pharmaceutical company, but it can be an advantage for
other companies, if these firms rely on that data without incurring cost. Critics
charge that it can act as a restriction to producing a generic copy; that
although it would not raise prices of drugs, it would prevent prices from falling
due to generic competition, and make it more costly for the poor to gain
access to life-saving drugs (e.g. anti-HIV & anti-malarial medications.)
Developed countries with innovative pharmaceutical industries (including the
United States) have sought data exclusivity provisions in Free Trade
Agreements with their trading partners, e.g. DR-CAFTA which includes such a
provision.
2. One critical issue in this regard is the issue of data exclusivity for
pharmaceutical R&D organizations. From the economics point of view,
industries where the R&D process is costly and risky, need longer exclusivity

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periods to realize innovation benefits, compared to those industries where
innovation is easier and less costly.
3. Some academics allege that pharmaceutical data exclusivity protection unfairly
restricts the rapid public dispersal of knowledge that is supposed to be the
trade-off for a grant of a patent or intellectual monopoly privilege. They allege
that data exclusivity is really a form of ever-greening pharmaceutical patent
protection that may even restrict the capacity of governments to benefit from
the granting of a compulsory license on the patents on a medicine, since the
data monopoly will still prevent the marketing of generic products, even
though the patent licenses have been granted by the government or a court.
4. A separate criticism of data exclusivity concerns medical and research ethics.
Specifically, it is considered unethical under the Declaration of Helsinki to
undertake duplicative clinical trials on human subjects. Similar concerns have
been raised in the context of test data protection for certain agricultural or
cosmetic products, leading in some countries to proposals for cost sharing
rather than exclusive rights as the form of test data protection.
Data Exclusivity Period for human use drugs:
United States: 5 Years for new pharmaceutical chemical entities, 3 years for new
indications for pharmaceutical drugs, and 12 years for biologic products.
European Union: 8 Years (+ 2 Years market exclusivity + 1 year for new indication)
Japan: 6 Years
China: The government promised a protection period of 6 years for
pharmaceutical drugs, when applying for membership to the World Trade
Organization (WTO).
Why is data exclusivity granted?
The rationale for granting data and market exclusivity is to compensate the
innovator company for the investment it has put in to developing the new
medicinal product and to generating the data required to obtain a marketing
authorization.
Regulatory approval for medicinal products requires applicants to provide
information about the efficacy and safety of their product to regulatory

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authorities. The first applicant for approval of a new medicinal product must
provide a substantial body of data relating to the product (including the results of
pre-clinical tests and clinical trials).
The regulatory regime permits generic companies, who subsequently wish to gain
their own approval for the same drug substance, to rely on information filed by
the innovator company that made the first application. In order to be able to
benefit from the data provided by the innovator in their regulatory filings for that
medicinal product - the "reference medicinal product" - a generic company must
show that their product has the same qualitative and quantitative composition as
that product and that it is bioequivalent.
So what is the impact of a product enjoying "data exclusivity"?
An innovator company enjoys a period of "data exclusivity" during which their
pre-clinical and clinical trials data may not be referenced in the regulatory filings
of another company (typically a generic company) for the same drug substance.
For marketing authorization applications made from November 2005 onwards,
the period of data exclusivity in Europe has been harmonized as 8 years from the
date of first authorization in Europe. For marketing authorization applications
made before November 2005, the period of data exclusivity varies from EU
member state to EU member state, and is either 6 years or 10 years.
For marketing authorization applications made from November 2005 onwards,
there is an additional period of 2 years of "market exclusivity". This is the period
of time during which a generic company may not market an equivalent generic
version of the originator's pharmaceutical product (although their application for
authorization may be processed during this period, such that they are in a
position to market their product on the expiry of this additional 2 year period).
2. 8+2+1 Formula:
a) Originator companies are granted 8-year data exclusivity and 2 years
market exclusivity
b) Additional one year exclusivity awarded for new product indications and
those shifting from “prescription only” to OTC
c) Generics can enter the market only after the 10th or 11th year

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3. European Bolar Clause:
Review of Europe's pharmaceutical regime:
During its review of the pharmaceutical regime, the European Commission
therefore focused on balancing the interests of the research-based
pharmaceutical industry with those of the generics manufacturers. In his opening
speech at the European Parliament Plenary Session on 16 December 2003, Mr.
Erkki Liikanen, the Member of the European Commission responsible for
Enterprise and Information Society, stated that an objective of the review was to:
"increase the availability of innovative medicinal products while at the same time
encouraging competition with generic products". At the end of the review
process, the Commission concluded that generics manufacturers should be
permitted to conduct trials required for marketing authorization during the
patent term of the original product.
The Bolar clause:
This conclusion was transposed in the Bolar clause (set out in revised Article 10(6)
of Directive 2004/27/EC in the EU Package), which provides that: "conducting the
necessary studies and trials and the consequential practical requirements shall
not be regarded as contrary to patent rights or to supplementary protection
certificates for medicinal products". The introduction of the Bolar clause in the EU
is undoubtedly a positive step. But it is unlikely to be trouble free. The use of
ambiguous terminology will inevitably result in protracted and costly disputes
over the exemption's scope, and implementation of the Bolar clause into national
law is likely to be complicated by a diverging application from member state to
member state (as national legislators variously interpret the objective of bringing
the rights of European generics manufacturers into line with the US).
Key facts about Bolar clause:
 Permits initiation of generic R&D activity prior to patent expiry of brands

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 Withdrawal of brands before generic entry cannot stop generic companies
from using them as reference products
Sunset Clause:
In public policy, a sunset provision or clause is a measure within
a statute, regulation or other law that provides that the law shall cease to have
effect after a specific date, unless further legislative action is taken to extend the
law.
Key facts about Sunset clause:
 Allows cancellation of marketing authorization for products not in market
for 3 years
 Legal challenges by patent owners can prevent generic companies from
applying registrations more than 3 – 4 years in advance of patent expiry
-------------------------------------------------------------------------------------------------------------
Regulatory Environment in the Indian Generic
Regulatory Impact Analysis – India:
Pharmaceutical Policy Drug Policy
1996 Pharmaceutical Policy 2002
National Pharmaceutical Policy 2006
Quality Control
GMP/cGMP
Price Control
On Prices On Margin
IPR Protection
Amended Patents

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Pricing & Reimbursement:
 The revised policy of the National Pharmaceutical Policy Authority, has
capped margins on generic drugs at 15% for wholesalers and 35% for
retailers
 Price controlled drugs Category I: Essential drugs Category II: All drugs not
in Category I
 Drugs exempted from price control required to meet specific criteria
Patent Protection/ IP Rights:
 Patents Amendment Act 2005 (TRIPS Agreement) strictly prohibited reverse
engineering of drugs
 Covers two types of generic drugs – off patent generics and generics of
drugs patented before 1995
 Introduced compulsory licensing for exports
 Mainly encourages foreign companies to trade in India
Quality Control:
 The Drug and Cosmetics Act (D&C) 1940 regulates import, manufacture,
distribution and sales
 Schedule M – requirements for factory premises, plant, materials, plant and
equipment
 Schedule Y – legislative requirements for clinical trials
 Increasing regulatory compliance in India boosts confidence of MNCs
-------------------------------------------------------------------------------------------------------------
Drug and Cosmetic Act 1940
Schedule M
Schedule Y Essential Commodities Act 1955
Drug (Price Control) Order 1995
Bulk Drugs Formulations
Patents Amendment
Act 2005

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SWOT ANALYSIS OF INDIAN GENERIC DRUG
INDUSTRY:
STRENGTHS:
1. Low Price of the product:
Low Price products are preferred by the patient pool belonging to Middle class
population. In Developing countries like India High class people buy branded
medicines & middle class people or low class people prefer generic medicines
over branded medicines.
COST OF THE DRUGS IS IN THIS ORDER:
Biologics > Biosimilars > Branded drugs > Branded Generics > Generics
2. Therapeutically equivalent:
Generic medicines are therapeutically equivalent to branded drugs. Drug products
are considered to be therapeutic equivalents only if they are
pharmaceutical equivalents and if they can be expected to have the same clinical
effect and safety profile when administered to patients under the conditions
specified in the labeling.
3. Lower expenditure on Advertising:
There is less spending on Advertising of these products & it is Cost- saving as well
as time-saving.
4. Lower expenditure on R&D:
The investment needs are very much less & very less cost is incurred for
manufacturing generics but in case of generic version of biologics the investment
needs are comparatively high .The key areas of Union Budget 2015- To encourage
innovation, in-house R&D exemption limit was expected to be raised from 200

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percent to 250 percent. Excise duty rationalization was expected on Formulations
(5 percent) & API (10 percent).A reduction of MAT (20 percent) was expected on
SEZ. Less expenditure is required in case of generics when compared to
expenditure of a New Chemical entity.
5. Economical production:
Comparison Bio equivalence studies are conducted for generic products with the
branded product. For generics cost about less than or equal to 5 million USD in
incurred whereas for NCE it is 800 million USD to 900 million USD.
WEAKNESS:
Lack of awareness among users with regard to the therapeutic efficacy &
prescribing nature of physicians
Patients are naïve about the differences between a Generic medicine & Branded
medicine. They buy medicinal products as prescribed by the Physician .Moreover;
Physicians are given incentives by the company to prescribe their branded
products to the patients. Due to this physicians are prescribing branded products
over generics.
OPPORTUNITIES:
1. A change in prescribing habit of the physicians:
The prescribing habit of physician must change because if he prescribes the
branded medicine patient will only use those medicines. Physician must ask the
patient whether the drugs prescribed are affordable by the patient are not or else
the patient must tell the doctor about his financial situation. By keeping the
financial situation of the patient in mind he must prescribe either branded or
generic medicines.
2. Incremental innovation in generics:
Due to the declining innovativeness of the classic R & D model in the original
pharmaceutical industry, the generic pharmaceutical industry is aiming to become

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an innovation generator itself. Those generic pharmaceutical firms that
implement new competitive strategies have integrated re-innovation design into
their product portfolio to provide more personalized, cost-effective products to
meet the healthcare systems’, policymakers’ and patients’ demand for high
quality accessible treatments. This re-orientation hopes to better face the
changing competition challenges in both mature and developing markets.
Increasing focus on higher value biological therapies, biosimilars, controlled
release products, sterile formulations & niche therapeutic segments. There is an
urgent need to boost R&D in the Pharma sector. India is the hub of generic
medicines. It contributes significantly to the country’s total exports. Annually,
India exports pharmaceutical products worth USD 10 billion. The Pharma sector is
a capital intensive sector. Besides R&D expenditure, regulatory requirements
require large funds. All quality investments should be treated on par with R&D to
provide incentives to the industry
3. Strong export Element :
India has become a prime destination for manufacture of branded, generic and
branded generic medicines with a strong export element. It is estimated that
around 40 per cent of the generic drugs in the US come from India and with
Obamacare being introduced this figure is set to rise further. The spending
pattern of an erstwhile manufacturing-oriented industry has also changed with
the industry spending around 18 per cent of revenue on R&D activities.
4. Off –patent of Biological medicines by 2020 :
Block buster drugs like Biologics are going to go off patent from 2015 to 2020.This
will provide a huge opportunity to all the global generic players to manufacture &
bring the generic version of these products into market & make those products
affordable to the patient pool.
5. FDI Inflow in Pharmaceuticals:
India has a large population with a limited access to affordable healthcare. In this
regard, some of the primary concerns in allowing foreign investment in the Indian
Pharma industry included ensuring (i) continuous availability and supply of drugs,

48 | P a g e
(ii) non-discontinuance of essential medicines, and (iii) an increased supply of
drugs over a period of time. Therefore, the policy allowing foreign investment into
the Indian Pharma sector has to play a balancing act between meeting the needs
of the people and the capital needs of the industry.
Presently, FDI up to 100 per cent is permitted in Brownfield investments, with
prior approval of the Foreign Investment Promotion Board (FIPB) and for
Greenfield investments, FDI up to 100 per cent is permitted with no requirement
of prior FIPB approval.
The drugs and Pharma sector has attracted one of the highest FDI inflows in India.
It has been a matter of debate whether such investments have indeed benefitted
the Indian Pharma industry or not. Recently, there have been demands from
certain quarters of the government for banning Brownfield foreign investments
altogether. While increased access to capital is necessary for growth of any
industry, in the Pharma context such increased investments should be
accompanied with technology sharing, increased production and increased
employment generation. FDI coupled with such accompaniments can achieve
long-term sustained growth and could ensure world class facilities in India.
It is necessary that FDI fuelled growth should not be artificial in nature and should
act as a catalyst in developing a world class Pharma industry which takes care of
the needs of the vast populace of the country
THREATS:
1. Sufficient advertising related all the information about generic drugs is needed
otherwise there may not be inclination towards generic drugs
2. The fact that generic drugs are bioequivalent to brand drugs is required to be
highlighted.
FUTURE CHALLENGES:
1. Large generic Companies are likely to increase their investment in R&D
activities.

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2. Generic Consumption is likely to be favored in a big way by the government,
payers, policy makers & physicians.
3. Increasing focus on higher value biological therapies, biosimilars, controlled
release products, sterile formulations & niche therapeutic segments.
4. Companies need to come up strategic alliances & have long term perspective
to provide medicines for patients via integrated healthcare system.
STRATEGIC RECOMMENDATIONS FOR SUCCESS:
1. Big Multi-National Companies require focus on
i) Products with technologically challenged formulations.
ii) Products with limited availability of APIs.
2. Medium sized generic firms require to focus on
i) Products with relatively higher profit margin.
ii) Appropriate time of entry into the right market.
3. Strengthen distribution network.
4. Strategic alliances between Multinational Generic firms & domestic firms
with locally restricted operations.
5. Higher investments in R&D:
The prime reasons why R&D in India is viewed as beneficial are:
 Cost effectiveness: The cost of setting up world class R&D facilities in
India cost a fraction of what they do in the west. The overall R&D costs
are about one-eighth and clinical trial expenses around one-tenth of
western levels;17
 Skill: A large pool of English speaking technical skill power is available at
a low cost with highly developed R&D oriented skill sets;
 Established R&D centers: Pre-established state of the art R&D centers
offer logistic convenience and cost effectiveness;
 Growing biotechnology industry: Indian biotechnology industry has
grown by leaps and bounds and has some world class players;

50 | P a g e
 Market access: India is one of the fastest growing markets in the world.
R&D in India allows companies to gain a foothold in this new and
growing market;
 Rising household incomes: The growing middle class in India is an
attractive market for drugs. With increasing disposable incomes, the
market for non-essential drugs, is set to grow rapidly;
 Governmental incentives: Post the liberalization era, the Indian
government has offered numerous incentives to R&D in India; and
 Biodiversity: Some drugs aimed at the Indian market require certain
gene specific R&D and clinical trials. India’s rich genetic bio diversity
offers a perfect destination for such R&D and clinical trials.
 The key areas of Union Budget 2015- To encourage innovation, in-house
R&D exemption limit was expected to be raised from 200 percent to 250
percent. Pharma R&D in India is expected to witness exponential growth
in the near future, and with the growth of the economy and Pharma
industry in India, innovation assumes new economic importance in the
Indian Pharma industry.
6. Improve the product-line.
7. Pioneer new & better technologies:
Enter into Incremental Innovation in generics.
8. Research customer needs preferences & expectations
-------------------------------------------------------------------------------------------------------------
References:
(1), (2), (3), (4): IBEF report on Indian pharmaceutical industry
(5), (6): www.financialexpress.com/pharma
(7), (8), (9): Business line article
(10), (11), (12): frost & Sullivan
(13): http://www.nppaindia.nic.in/englishcompendium2015.pdfrences
www.financialexpress.com/news/Indian-pharma-exports-may-grow-by-
20pct/8397241
www.scribd.com
www.wikipedia.org

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www.Timesof india.com/business

Global Generics : Pharmaceutical Industry Report 2015

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Global Generics : Pharmaceutical Industry Report 2015