Tag Archives: domestic

Europe: now emerging as a more preferred market for the domestic Indian Pharmaceutical Industry

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Since almost last 30 years the Pharmaceutical Industry of India has been a net foreign exchange earner. Deutche Bank Researchindicates that over the last ten years the export surplus has widened from EUR 370 million to EUR 2 billion.Around 80% of these pharmaceuticals manufactured in India are sold to the US and Europedriven by higher purchasing power of the people in those countries and also due to recent regulatory changes towards greater cost containment initiatives by the respective governments.
Europe – a preferred destination for Indian Pharmaceutical companies:

In the quagmire of global recession, prompted by increasing pricing pressure with consequent pressure on the bottom-line, many Indian pharmaceutical companies have started increasing their focus on Europe. The European generics market is now growing faster than overcrowded US generics market.

Top domestic Indian pharmaceutical Companies like Ranbaxy, Sun Pharma, Dr. Reddy’s Laboratories (DRL), Glenmark, Wockhardt and Aurobindo whose performance is highly dependent on their revenues from the US and Europe perhaps will need to have a sharper look at both western and eastern Europe.

It has been reported that because of higher volume penetration of over 55% of generics pharmaceuticals in Europe, which is significantly higher than US, Europe offers an attractive and better growth opportunities to the Indian pharmaceutical companies in the medium to longer term. Companies like Ranbaxy, Wockhardt and Aurobindo have already reported to have started showing higher revenue growth in Europe than USA.

Major merger and Acquisition (M&A) initiatives of the Indian pharmaceutical companies in Europe augur well towards this direction. Ranbaxy has already acquired companies in France, Belgium, Romania and Zydus Cadila in France. DRL purchased Betapharm in Germany.

Inorganic growth will demand a more cautious approach:

However, the path of M&A by Indian pharmaceutical companies should be treaded with more caution. The case in point is Wockhardt, which grew with a scorching pace of over 30% on an average for several years in the recent past driven by its inorganic growth strategy. In 2006-07 Wockhardt acquired two companies in Europe, one in Ireland and the other in France. Unfortunately, the company could not manage its rapid growth through such M&A as efficiently for long and got entangled in a debt trap of around Rs. 34,000 crore in that process.

Converting problems into opportunities:

Global financial meltdown throws open an opportunity for the Indian pharmaceutical companies to acquire the distressed specialty pharmaceutical companies at a very competitive price in Europe. Many small pharmaceutical companies in Europe are now looking to sell their facilities because of difficulty in maintaining their business arising out of higher operating costs.

In such a scenario after acquiring a company in those countries, the Indian acquirer will have an opportunity to transfer the manufacturing operations to India, where the costs are much lower, keeping just the marketing operations there.

A report from The Economic Times (ET) indicates that Pharmaceutical majors like Zydus Cadilla are looking for acquisition in Spain and Italy and Glenmark in the Eastern Europe. Kemwell of Bangalore has recently acquired the manufacturing plant of Pfizer located in Sweden and has expressed intention to shift their manufacturing operations to India to concentrate only on marketing with the acquired local infrastructure.

Just at the same time and for the same reasons many global pharmaceutical companies plan to outsource their manufacturing requirements from India and China retaining the R&D and marketing operations with them.

Increasing attention on Eastern Europe:

According to PMR, the Polish Market Research company, countries like Ukraine, Bulgaria, Turkey, Russia and Romania are quite attractive for pharmaceuticals business in the Eastern Europe.

In that part of the world, Russia, Romania and Ukraine have been dominating in terms of sustained high growth since last five years. Acquisition of a local company will provide the best option for quick entry into these markets, recommends PMR.

Conclusion:

Global financial meltdown has thrown open many doors of opportunities for rapid entry into both eastern and western European markets by the Indian pharmaceutical companies for better future growth potential. I am sure the domestic pharmaceutical companies will carefully evaluate these opportunities to take appropriate action to catapult themselves to a higher business growth trajectory in the years to come by.

Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Growing menace of counterfeit drugs in India: why is the domestic pharmaceutical industry still so apprehensive with the new Amendments of the ACT?

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The growing menace of Counterfeit drugs has remained a serious threat to the healthcare space of India.
Do we have any credible data to assess the magnitude of this menace in India?

No we do not have, as yet. At this stage, the magnitude of the problem is anybody’s guess. Earlier a study sponsored by the World Health Organization (WHO) and conducted by SEARPharm reported that only 0.3% drugs were spurious and 3% of drugs were counterfeits.

Government of India has initiated the largest study in the world to quantify the problem:

To scientifically assess the magnitude of the problem in terms of real size of counterfeit drugs market in India , the Drugs Controller General of India (DCGI) India’s, for the first time ever, has initiated one of the largest studies in the world, as reported by the Times of India May 14, 2008.

The study has already identified 61 popular drug brands from nine therapeutic categories for testing 24000 samples. These include drugs prescribed for tuberculosis, malaria, allergic disorders, diabetes cardiovascular conditions, vitamins etc. This study is expected to cost 50 million rupees or about U.S$1.0 million and is expected to be published, soon.

Making provisions for stricter penalties through amendment of the Drugs and Cosmetics Act, 1940:

To bring into effect stricter penalties for those involved in counterfeit drugs, the process of amendment of the Drugs and Cosmetics Act, 1940 was proposed by the Ministry of Health in October, 2007. These amendments are expected to make the drug-related offences, cognisable and non-bailable.

The latest amendment to the Drugs and Cosmetics Act, 1940 became a law in 2008. The punishment for selling or distributing spurious drugs, which are likely to cause death and grievous hurt to the patients, is now imprisonment for a term not less than 10 years and fine not less than Rs 10 lakh or three times the value of drugs confiscated, whichever is more.

The Minister of Health of India announced in November 2008, that with this amendment the Government of India will “go all out to do away with spurious drugs.”

India working closely with WHO Anti-counterfeiting Taskforce:

India being a part of ‘International Medical Products Anti-Counterfeiting Taskforce’ (IMPACT), established under WHO in 2006, decided to work together to combat the growing menace of counterfeit medicines.

The Drugs Controller General of India (DCGI) was reported to have several discussions with the convenor of the IMPACT to effectively address the issue of such serious threats to the patients at large. Many people believe that China and India are the main source of counterfeit drugs in the world.

Apprehensions of the Indian Pharmaceutical Industry with new Amendments in the Law:

Indian Pharmaceutical Industry although welcomed the stricter punitive provisions in the law, expressed its apprehensions due to lack of clear demarcation between the definitions of spurious drugs and those which can lose their original potency because of improper transportation and storage.

If the law-enforcing authorities pick up such medicines from retail outlets, those can easily get categorised as spurious medicines under Section 17A and 17B of the Drugs and Cosmetics Act, 1940. Consequently the concerned manufacturers could be put behind bars with, presumably, no fault at their end.

While stringent punishment is essential for those involved in such heinous crime, the Government should take enough measures to ensure that genuine drug manufacturers are not harassed by the law enforcing authorities, as the courts will have no judicial discretion to award less than minimum punishment, as prescribed under this Act.

Need for clear guidelines for implementation of the amended ACT:

To allay the major apprehension of the industry regarding possible misuse of some provisions of the Act, the Ministry of Health is expected to work out and quickly announce clear guidelines for implementation of the act by the law enforcement agencies in different parts of India.

Will this amendment help to win the fight against counterfeit drugs?

Only time will be able to give that answer. However, by amending the Act, the Government of India has demonstrated its resolve to address the threat of counterfeit drugs with iron hand. Through enunciation of above guidelines, all concerned are expected to be taken on board to effectively curb, if not totally eliminate this growing menace, for the sake of humanity.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.