Indian pharmaceutical

1. SHANKAR R 14114 GEORGE JACOB 14095 DIVYA LIZ GEORGE 14093 DHARA B SHAH 14067 MARY MONISHA 14060 G5 INDIAN PHARMACEUTICAL INDUSTRY Committed to a healthier life

2. Indian Pharmaceuticals  World’s 3rd largest [volume]  6th largest market globally [size]  2.4% of the Global Pharma Industry  Domestic demand [2014-15] close to $36.8 billion  cCAGR 13%, to continue for the next 5 years  90% of drugs sold estimated to be generics 1

3. KEY STRENGTHS  Fair protection of intellectual property rights  Strong manufacturing base.  Drug prices 1/10th of international price and 40 % cheaper to set up plants.  60-70% cheaper for bulk drug production.  Highly trained pool of scientists and professionals.  Highest quality approvals from USFDA  Growing biotechnology industry.  Low labour cost 2

4. INDIAN PHARMA API / Bulk Drugs Formulations Branded Generics Chronic Acute • Cardiovascular • Anti-diabetics • Gastro-intestinal • Neurological • Anti-infectives • Respiratory • Pain • Gynaecology 12.3% 13-15% 2010-15 2015-20E Exports [CAGR] 2010-15 17.7% 2015-20 11-13%E 2010-15 2015-20E 15.2% 10-12% 3

5. Major Players – Top 10 8.90% 6.20% 5.00% 5.00% 3.60% 3.60% 3.50% 3.40% 3.00% 2.70% Sun Abbott Cipla Cadila ManKind Alkem Glaxo Lupin Pfizer Emcure 4

6. REGULATIONS PRICE BASIS QUALITY PATENTS Co- coordinating Activities Central Govt. State Govt. DCGI State DCO 5

7. NOTABLE TRENDS IN INDIAN PHARMA R&D Export Revenue JV’s Expansion by Indian Players Abroad Patent’s Act Product Patents Less time For approval 6

8. 10.40% 17.80% 15.50% 15.50% 12% 6% 12.9% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 20.00% 0 100 200 300 400 500 600 700 800 2009 2010 2011 2012 2013 2014 2015E Market Size [In bn] Growth Rate Domestic Pharma Market Size 7

9. Growth trend in formulation exports [in bn] 2010 2011 2012 2013 2014 2015E 2.7 3.6 4.3 5.2 5.7 6.2 3.6 4.4 4.9 5.4 6.2 6.7 Regulated markets Unregulated markets 8

10. Growth trend in bulk drug exports [in bn] 2010 2011 2012 2013 2014 2015E 2.7 3.6 4.3 5.2 5.7 6.2 3.6 4.4 4.9 5.4 6.2 6.7 Regulated markets Unregulated markets 9

11. 18.40% 16.80% 17.00% 18.80% 18.20% 18.5% 18.5% 2011 2012 2013 2014 2015E 2016P 2017P Profitability Trend of Large Formulation Companies

12. 18.40% 16.80% 17.00% 18.80% 18.20% 18.5% 18.5% 2011 2012 2013 2014 2015E 2016P 2017P Profitability trend of mid sized and small sized formulation companies

13. 18.40% 16.80% 17.00% 18.80% 18.20% 18.5% 18.5% 2011 2012 2013 2014 2015E 2016P 2017P Trend in Profitability for bulk drug manufacturers

14. Growth drivers Demand Side Drivers Policy Support Supply Side Drivers  Cost advantage  Manufacturing hub  546 sites registered  Penetration of chemists  Accessibility to improve  Health insurance  Stress related disease  Diagnostic facilities  Reduction in approval time  Pharma education  Accessibility for BPL  Exemptions 10

15. Key challenges  Drug Quality, not adhering to cGMP  Clinical trial quality  Low margin of profits due to Govt pricing policy – Drug price control order  Patent issues  Low input for R & D  USFDA checks 11

16. Opportunities  $44 billion lose due to patent expiry in US  Expansion of Biosimilars and Bio-pharmaceuticals.  Growth of CRAMS  NMITLI & DPRP schemes  Fiscal incentives to R &D units 12

17. India’s share in anda approvals 370 398 433 418 421 442 499 380 379 59 21% 28% 29% 30% 31% 35% 40% 43% 34% 41% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 0 100 200 300 400 500 600 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD 2015 Total Approvals India as a % of total approvals 13

18. BIOSIMILAR : THE next big thing Active Ingredients sourced from living organisms Sensitive to storage and handling Approval – Multi step process Complex nature – Not easily copied USD 1.4 billion by 2016 Overall market sales – 20% growth Cadila Biocon Dr Reddy’s Lupin WockhardtCadila’s Exemptia, biosilmilar of Humira 14

19. SOURCE : CRISIL RESEARCH

20. THANK YOU!!

Editor's Notes

3rd largest pharmaceuticals market by 2020. 20% of global exports in generics. USD 45 Billion in revenue by 2020. USD 26.1 Billion in generics by 2016. USD 200 Billion to be spent on infrastructure by 2024. 49% of all drug master filings registered in the USA
The Drugs and Cosmetics Act, 1940 (Drugs Act) and Drugs and Cosmetic Rules, 1945 (Drug rules) regulate the import, manufacture, distribution and sale of drugs in India. Under the provisions of these Acts, the Centre appoints the Drugs Technical Advisory Board (DTAB) to advise the central government and the state governments on technical matters. The responsibility to enforce the Drugs Act is entrusted with both the central government and the respective state governments. Under the Drugs and Cosmetics Act, state authorities are responsible for regulating the manufacturing, sale and distribution of drugs, whereas the central authorities are responsible for approving new drugs and clinical trials, laying down the standards for drugs, controlling the quality of imported drugs and coordinating the activities of state drug control organisations. The Drugs Controller General of India (DCGI) is the central body that coordinates the activities of state drug control organisations, formulates policies and ensures uniform implementation of the Drugs Act throughout India. It is also responsible for approval of licenses of specified categories of drugs, such as blood and blood products, IV Fluids, Vaccine and Sera. Indian pharmaceuticals industry is mainly regulated on the basis of patents, price and quality Source: CRISIL Patents Before 2005, the regulatory system in India focused only on process patents. Indian pharmaceutical companies thrived during the process patent regime. They would reengineer products of global innovator companies, which were unavailable in India, and launch them in the country as generics, as India did not recognise the product patents. In this manner, Indian companies gained process chemistry skills, but did not focus on R&D for new drug discovery. In January 2005, India complied with the World Trade Organisation (WTO) to follow the product patent regime [sale of reengineered products (for drugs patented after 1995) is restricted]. However, enterprises, which had made significant investments and were producing and marketing the concerned product prior to January 1, 2005 and which continue to manufacture the product covered by the patent on the date of grant of the patent, are protected, and the patentee cannot institute infringement suits against them, but would be entitled to reasonable royalty. For a detailed analysis on the product patent regime and its impact, please refer to the Thematic Coverage section. Drug prices The Drug Price Control Order (DPCO) fixes the ceiling price of some APIs and formulations. APIs and formulations falling under the purview of the legislation are called scheduled drugs and scheduled formulations. The National Pharmaceutical Pricing Authority (NPPA) collects data and studies the pricing structure of APIs and formulations and accordingly makes recommendations to the Ministry of Chemicals and Fertilisers. The new Pharmaceutical Policy, notified in 2012, intends to bring 348 essential drugs in the National List of Essential Medicines (NLEM), under the purview of the DPCO. With this policy, the market size of drugs under price control will increase from 1520 per cent of the domestic formulations market to 2030 per cent. The policy also introduces a radical change in the mechanism of control: shifting from the current costbased control to a marketbased price mechanism. Under the policy, the ceiling price for each drug under control would be fixed as the simple average price of brands having more than 1 per cent market share (by value) in the sales (MAT Moving Annual Turnover) of that particular molecule. Thus, prices of brands which are higher than this ceiling will need to be lowered. The ceiling prices will be allowed an annual increase as per the Wholesale Price Index (WPI). Prices will be recalculated using MAT only once in five years or when the NLEM is updated. Price of drugs that were part of the earlier policy, but do not come under the current policy, would be frozen for a year and, thereafter, allowed a maximum annual increase of 10 per cent. A 10 per cent increase would also be the limit for prices of drugs outside the government's price control. Quality No drug can be imported, manufactured, stocked, sold or distributed in India unless it meets the quality standards laid down in the Drugs Act. All companies have to comply with Schedule M of the Act, which outlines various requirements for manufacturing drugs and pharmaceuticals by applying cGMP (current Good Manufacturing Practice). cGMP has to be followed for control and management of manufacturing and quality control testing of drugs.

Indian pharmaceutical

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Indian pharmaceutical

Editor's Notes