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Progress of the ‘Millennium Development Goals (MDGs)’ in India: a little to cheer, more to ponder

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The world has just five more years to achieve the ‘Millennium Development Goals (MDGs)’. To accelerate progress of this unique United Nation’s initiative the UN Secretary-General Ban Ki-moon has called on world leaders to attend a summit in New York on 20-22 September 2010. Under this back-drop let us deliberate on the progress made by India on this global project.

The ‘Millennium Development Goals (MDGs)’:

These are eight time-bound comprehensive developmental goals, both global and country-specific, adopted by the world leaders in the year 2000, with clearly defined benchmarks and targets to achieve by the year 2015, encompassing even the healthcare space. The key purpose of the MDGs is to address multi-dimensional issues and manifestations of extreme poverty prevailing in the world. The eight MDGs, which have been clearly divided into 18 quantifiable targets and evaluated by 48 indicators, are as follows.

1: Eradicate extreme poverty and hunger
2: Achieve universal primary education
3: Promote gender equality and empower women
4: Reduce child mortality
5: Improve maternal health
6: Combat HIV/AIDS, malaria and other diseases
7: Ensure environmental sustainability
8: Develop a Global Partnership for Development

What happens, if these goals are achieved?

MDGs provide a unique platform to the civil society across the nations to work in unison with common objectives to ensure equitable distribution of the outcome of human development in all countries of the world. If the MDGs are achieved by all the nations, it is believed, ‘world poverty will be cut by half, tens of millions of lives will be saved, and billions more people will have the opportunity to benefit from the global economy’.

UNDP score card and forecast:

The first India country-report on the MDGs for the year 2005 was released by the Government of India on February 13, 2006 in Delhi. Now with just five more years to go, let me take you through the following broad and major findings from an assessment report prepared by the United Nations Development Program (UNDP) in 2009 on the same:

1: Eradicate extreme poverty and hunger:

Set objective: India must reduce the number of people below the poverty line from around 37,5% in 1990 to around 18.75% in 2015.

Progress:

• Absolute number of poor has declined from 320 million (36% of population) in 1993-94 to 301 million (27.6% of total population) in 2004-05. At this rate, the country will still have 279 million people (22.1%) living below the poverty line in 2015.

• India is slow in eliminating the effects of malnutrition, going by the proportion of underweight children below three years of age. This proportion has declined only marginally from about 47 in 1998-99 to about 46 percent in 2005-06. At this rate, 40% of children will still remain underweight by 2015.

2: Achieve universal primary education:

Set objective: India should increase the primary school enrolment rate to 100% and wipe out the drop-outs by 2015 against 41.96% in 1991-92.

Progress: Going at the rate by which youth literacy increased between 1991 and 2001, from 61.9% to 76.4%, India is expected to have 100 percent youth literacy by the end of 2012.

3: Promote gender equality and empower women:

Set objective: India will promote female participation at all levels to reach a female: male proportion of equal levels by 2015.

Progress: Gender parity in primary and secondary education is likely to be achieved, though not in tertiary education. But the share of women in wage employment in the non-farm sector can at best be expected to reach a level of about 24% by 2015, far short of parity.

4: Reduce child mortality:

Set objective: India will reduce under- five mortality rate (U5MR) from 125 deaths per thousand live births in 1988-92 to 42 in 2015.

Progress: Prevalence of child mortality is down from 125 per thousand live births in 1990 to 74.6 per thousand live births in 2005-06. At this rate, the level is expected to reach 70 per thousand by 2015, short of the target of 42 per thousand live births by 2015.

5: Improve maternal health:

Set objective: India should reduce maternal mortality rate (MMR) from 437 deaths per 100,000 live births in 1991 to 109 by 2015.

Progress: The national MMR level has come down from 398 per 100,000 live births in 1997‐98 to 254 per 100,000 live births in 2004‐06, a 36% decline over a span of seven years as compared to a 25% decline in the preceding eight years from 1990‐1997. Given to achieve an MMR of 109 per 100,000 live births by 2015, India tends to fall short by about 26 points as it tends to reach MMR of about 135 per 100,000 live births in 2015.

6: Combat HIV/AIDS, malaria and other diseases:

Set objective: India has a low prevalence of HIV among pregnant women as compared to other developing countries, yet the prevalence rate has increased from 0.74 per thousand pregnant women in 2002 to 0.86 in 2003. The increasing trend needs to be reversed by 2015.

Progress:

• Spread of HIV/AIDS in the country shows a downward trend: from 2.73 million (0.45%) people living with HIV/AIDS in 2002, the number has declined to 2.31 million (0.34%) by 2007.

• With 1.9 million tuberculosis cases estimated in 2008, India has a fifth of the world’s total. But India made the most notable progress in providing treatment across the country. In 2008, over 1.5 million patients were enrolled for treatment.

7: Ensure environmental sustainability:

Set objectives:

• Integrate the principles of sustainable development into country policies and programs and reverse the loss of environmental resources.

• Halve, by 2015, the proportion of people without sustainable access to safe drinking water and basic sanitation

Progress:

• During the past decade, India’s forest cover has increased by 728 sq. km, access to water is up from 68.2% in 1992-93 to 84.4% in 2007-08 and in urban areas it is 95%.

• 2015 Target (83%) for proportion of households without access to safe drinking water sources has already been attained by 2007‐08 (84%).

• At the current rate of decline, India is likely to have the proportion of households without any sanitation reduced to about 46% by 2015 against the target of 38%.

8: Develop a Global Partnership for Development:

Set objective: Co-operation with the private sector and making available the benefits of new technologies.

Progress: Overall tele-density has remarkably increased from 0.67 per 100 population in 1991 to 36.98 per 100 population in March 2009.

Conclusion:

Though in some areas of MDGs like, achieving universal primary education, combating HIV, malaria and tuberculosis, ensuring environmental sustainability and developing a global partnership for development, India has something to cheer about. However, in other areas the progress made by the country, as on date, is far from satisfactory, as there are more key issues to ponder. The main reasons of inadequacy in these areas being low public spend of around 1.1% of GDP on health and 4.1% on education.

Moreover, the awareness, contribution and involvement of other stakeholders like Corporates, NGOs and the Civil Society at large in most of the states of India, if not all, in this commendable global initiative is dismal, to say the least.

If India wants to come out with flying colors by end 2015 in its efforts to effectively address multi-dimensional issues and manifestations of extreme poverty and hunger prevailing in the country, the Country assessment report prepared by the UNDP in 2009 on MDGs, should be taken as the ‘wake-up’ call to make good the lost time– as the saying goes ‘better late than never’.

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.

Challenges for the Pharmaceutical Industry in the new paradigm – there are more questions than answers

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To get insight into the future challenges of the pharmaceutical industry in general ‘Complete Medical Group’of U.K recently conducted a study with a sizeable number of senior participants from the pharmaceutical companies of various sizes and involving many countries. The survey covered participants from various functional areas like, marketing, product development, commercial, pricing and other important areas.
The study indicates that a paradigm shift has taken place in the global pharmaceutical industry, where continuation with the business strategies of the old paradigm will no longer be a pragmatic approach. Besides this finding, my experience also vindicates that today is not a mega yesterday, just as tomorrow will not be a mega today.
Learning from the results of the above study, which brought out several big challenges facing the pharmaceutical industry in the new paradigm, my submissions are as follows:

Gaining greater market access and increasing pressure of price containment:

The increasing power of payors in the developed world and the interventions of the Government in the developing countries are creating an all pervasive pricing pressure. This critical development together with the issues related to gaining greater market access remain a prime concern for the future.

Better understanding of the new and differential value offerings that the doctors and patients will increasingly look for beyond the physical pharmaceutical products, will indeed be the cutting edge for the winners, in this new ball game.

Questioning the relevance of the current business model:
Top managements of the pharmaceutical companies have already started evaluating the relevance of the current global pharmaceutical business model. They will now need to include in their strategy wider areas of healthcare value delivery system with a holistic disease management focus. Only treatment of diseases will not be considered just enough with an offering of various type medications. Added value with disease prevention initiatives and appropriately managing quality of life of the patients, especially in case of chronic ailments, will assume increasing importance in the pharmaceutical business process.

Greater innovation across the pharmaceutical value chain:
Greater and more frequent incremental innovation across the pharmaceutical Value Chain will be critical success factors. The ability to really harness new technologies, rather than just recognize their potential, and the flexibility to adapt to the fast changing and demanding regulatory environment together with patients’ newer value requirements, should be an important part of the business strategy of a pharmaceutical company in the new world order.

Well integrated decision making processes:
More complex, highly fragmented and cut throat competition, especially in the branded generic market, have created a need for better, more aligned and integrated decision making process across various functional areas of the pharmaceutical business. Avoiding silos and empire building have long been a significant issue, especially for big pharmaceutical companies. Part of better decision making will include more pragmatic and efficient investment decisions and jettisoning all those activities, which are duplications and will no longer deliver incremental intrinsic or extrinsic differential value to the stakeholders.

Customer engagement:
Growing complexity of the prevailing business environment, including most recent change in the MCI regulations for the doctors are making meaningful interactions with the customers and decision makers increasingly challenging. There is a greater need for better management of the pharmaceutical communications channels to strike a right balance between ‘pushing’ information to the doctors and patients and helping them ‘pull’ the relevant information whenever required.

Let me hasten to add, even in the new paradigm, the fundamental way the pharmaceutical industry has been attempting to address these critical issues over decades, has not changed much. To unleash the future growth potential the pharmaceutical companies are still moving around the same old issues like, innovative new product development, scientific sales and marketing, customer focus, application of information technology (IT) in all areas of strategy making process including supply chain, building mega product brands, continuing medical education, greater market penetration skills, to name just a few.

Such responses do ring an alarm bell to me. It is known to many that most of the pharmaceutical companies have been investing in all these areas since long and yet these are the very points being highlighted even in the new paradigm to meet the “Challenge of Change”. The moot question will therefore be, what have all investments in these areas achieved, so far? And why have we not been able to address the needs of the new world order focusing with these tools? More importantly, if we do not address these issues moving ‘outside the box’ and with ‘lateral thinking’ even now, one can well imagine what could the implications be in the times to come?

The future Business Model will need to different:
I believe, the underlying business model of large global organizations focused primarily on developing New Chemical/Molecular Entities (NCEs/NMEs) from initial product discovery through development and commercialization, is unlikely to continue to yield results in the new era. The issue of ‘Patent Cliff’ has already started haunting the research based companies and assuming larger dimensions day by day.
Global pharmaceutical businesses have started evolving beyond patented drugs and including generics to create more diversified and robust healthcare businesses. It is quite evident from the strategies of many larger global pharmaceutical companies that this process has already begun.

Will R&D be collaborative in nature in future?
Currently R&D cost to launch a new patented drug in the market is reported to be around US$ 1.8 – 2.0 billion with accompanying huge risk factors. Thus there is a need to re-evaluate the R&D model of the pharmaceutical companies to make it cost effective with lesser built-in risk factors.
Could there be a collaborative model for R&D, where multiple stakeholders will join hands to discover new patented molecules? In this model all involved parties would be in agreement on what will be considered as important innovations and share the risk and reward of R&D as the collaborative initiative progresses. The Translational Medicine Research Collaboration (TMRC) partnering with Pfizer and others, ‘Patent Pool’ initiative for tropical diseases of GSK and OSDD for Tuberculosis by CSIR in India are examples of steps taken towards this direction.
Surely such collaborative initiatives are not easy but they are not uncommon either, as we witness these, especially in areas like IT. So why cost effective collaborative R&D projects be not initiated to create a win-win situation for all stakeholders in the healthcare space?

Could building pharmaceutical mega brands go beyond just a product for better ROI?
Building brands involve creating equity around an entity that delivers value to the customer, over and above the key functional properties of product. Traditionally, the global pharmaceutical industry has been largely focusing on building mega product brands having specific product life cycle say about ten years, especially for patented products.

Could the core idea of building a mega pharmaceutical brand be substantially different, in future?
I reckon, yes. Instead of investing huge sums in building pharmaceutical product brands with very limited product life cycle (for patented products), a more dynamic, powerful and cost efficient brand building process could well entail focusing on the ‘Corporate franchise’ brands with a mix of both patented and generic products in different price bands for different customer segments within a specific therapy category or disease area.

So instead of consistently creating, building and watching the mega patented pharmaceutical brands grow, mature and die, pharmaceutical companies could well encash the real opportunity to build long term emotional equity into their brands, hopefully without the suffocating NPPA restrictions associated with the current product brands.

Who knows, tomorrow’s list of the world’s top mega brands will not be dominated by the likes of Lipitor, Nexium, Plavix or Advair, but perhaps by quite a different types of mega brands like for example, GSK Vaccines, Sanofi-aventis Endocrinology, Novo-Nordisk Diabetic Care, Abbott Nutrition or Pfizer Cardiac Care.

Serum Institute Vaccines could be considered as one such brand for vaccines as a category, created within the pharmaceutical arena in India, over a long period of time.

Conclusion:
It is indeed quite clear now that the pharmaceutical business models are undergoing a serious re-evaluation in the new paradigm. I get a sense that the change is inevitable due to a variety of trends that are squeezing both sales and margins, posing severe challenges towards R&D, product development, marketing and communications.

As I have deliberated, some kind of solutions are gradually emerging. However, the key questions of how profound will this change be and how well the pharmaceutical companies are prepared to counter these changes, still remain unanswered.

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.

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.

Ensuring ‘health outcomes’ based drugs prescriptions will be more beneficial for the patients in India than just ‘price control’ of drugs

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Currently the global pharmaceutical market is undergoing a metamorphosis. The concept of ‘evidence-based medicine’ is gaining ground in the developed markets of the world, making the pharmaceutical companies generate requisite ‘health outcomes’ data using similar or equivalent products. Cost of incremental value that a product will deliver is of key significance. Some independent organizations like, the National Institute for Health and Clinical Excellence (NICE)in the UK have taken a leading role in this matter.Global pharmaceutical companies using more ‘health outcomes’ data to set pricing strategies:In early 2009, reported agreements between Sanofi-Aventis, Procter & Gamble and Health Alliance as well as Merck and Cigna vindicate this point. These agreements signify a major shift in the global pharmaceutical industry’s approach to gathering and using ‘health outcomes’ data

In the Sanofi-Aventis/Procter & Gamble-Health Alliance agreement, the concerned companies agreed to reimburse health insurance companies expenses incurred for patients suffering from non-spinal bone fracture while undergoing treatment with their drug Actonel.

In the Merck/Cigna agreement, Cigna will have the flexibility to price two diabetes drugs based on ‘health outcomes’ data.

‘Outcomes-based’ pricing strategies are expected to become the order of the day, in not too distant future, all over the world.

The ground realities in India:

Medicines constitute a significant cost component of modern healthcare systems, across the world. In India, overall healthcare system is fundamentally different from many other countries, even China. In most of those countries around 80% of expenses towards healthcare including medicines are reimbursed either by the Governments or through health insurance or similar mechanisms. However, in India situation is just the reverse, about 80% of overall healthcare costs including medicines are private or out of pocket expenses incurred by the individuals/families.

Since 1970, the Government of India (GoI) has been adopting various regulatory measures like cost based price control and price monitoring to make medicines affordable to the common man. For those products, which are patented in India, it has now been reported that GoI is mulling the approach of price negotiation with the respective companies.

However, we should keep in mind that making drugs just affordable in India, where about 65% of population does not have access to modern medicines, is indeed not a core determinant of either healthcare value or proven health outcomes or both.

Cost-effective ‘health outcomes’ based doctors’ prescriptions are more important:

Spending on medicines can be considered as an investment made by the patients to improve their health. To maximize benefits from such spending will require avoidance of products, which will not be effective and the use of lowest cost option with comparable ‘health outcomes’.

For this reason many countries have started engaging the regulatory authorities to come out with head to head clinical comparison of similar or equivalent drugs keeping ultimate ‘health outcomes’ of patients in mind. A day may come in India when the regulatory authorities will also concentrate on ‘outcomes-based’ pricing. However, in Indian context these appear to be very early days.

Till then…

1. Get Standard Treatment Guidelines (STG) prepared for the diseases more prevalent in India, based on, among other data, ‘health outcomes’ studies.

2. Put the STG in place for all government establishments and private hospitals to start with.

3. Gradually extend STG in private medical practices.

4. Make implementation of STG a regulatory requirement.

Thus we need to discuss first what these STGs are.

Standard Treatment Guidelines (STG):

STG is usually defined as a systematically developed statement designed to assist practitioners and patients in making decisions about appropriate cost-effective treatment for specific disease areas.

For each disease area, the treatment should include “the name, dosage form, strength, average dose (paediatric and adult), number of doses per day, and number of days of treatment.” STG also includes specific referral criteria from a lower to a higher level of the diagnostic and treatment requirements.

For a developing country like India formulation of STGs will ensure cost-effective healthcare benefits to a vast majority of population.

In India STGs have already been developed for some diseases by the experts in those areas. These are based on review of current published scientific evidence towards acceptable way forward in diagnosis, management and prevention of various disease conditions

STGs, therefore will provide:

- Standardized guidance to practitioners.
- Cost-effective ‘health outcomes’ based services.

GoI should encourage the medical professionals/institutions to lay more emphasis and refer to such ‘heath-outcomes’ based evidences while prescribing medicines. This will ensure more cost effective ‘health outcomes’ for their patients.

Conclusions:

Such an approach for drug usage will help both the doctors and the patients, significantly, to contain the cost of treatment in general and the cost of medicines in particular. Encouraging and implementing ‘health outcomes’ based medicines prescription in India will require, above all, a change in the mindset of all concerned. The use of an expensive drug with no significant improvement in ‘health outcomes’ should be avoided by the prescribers, initially through self regulation and if required through an appropriate regulation.

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.

Are pharmaceuticals related more to chemicals than health?

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I received a call from Professor Sam Gupta yesterday.

(please refer to my article at: http://www.tapanray.in/profiles/blogs/the-professor-counterfeit)

He is returning to the US next week. Before that, he felt, it will be nice if he and I can manage some time to have a leisurely chat on various issues related to the pharmaceutical industry in India.

Sam had time, so did I on the following Sunday. We agreed to meet and discuss the subject while going for a long drive through the ‘Western Ghats’, leaving Mumbai early morning.

On the ‘D day’, I took the wheel. We fastened our seat belts and soon were on the highway. While leaving behind ‘aamchi Mumbai’ and taking the first ‘ghat road’, our Sam deviated from his usual humorous chat on America’s ‘Uncle Sam’ and fired his first salvo, “the Government of India (GoI) just created a new department called the ‘Department of Pharmaceuticals’, presumably to have greater focus on the pharmaceutical Industry. Why is that the department has still been kept under the Ministry of Chemicals & Fertilizers and not under the Ministry of Health?” Taking a short breather, professor quipped, ‘does GoI consider pharmaceuticals related more to chemicals rather than health?’

What a first salvo!…indeed thought-provoking, at least to me. I soon lost myself to the question, diving deep into my memory lane, at the same time keeping both my right and left brain active to ponder over this interesting subject. Professor’s inquisitive chat gradually faded away from my ears…

Creation of the Department of Pharmaceuticals (DoP):

I had a quick recap on this subject.

In mid 2008, GoI had set up a new department under the Ministry of Chemicals & Fertilisers (MC&F), called the ‘Department of Pharmaceuticals (DoP)’. The department was created primarily to have a greater focus on the pharmaceutical sector.

Historically, issues and policies related to pharmaceuticals used to be handled by the Department of Chemicals and Petrochemicals. A separate Department of Fertilisers still handles all issues related to fertilizers in India. Both the departments were within the MC&F.

The then Minister of MC&F probably felt that the pharmaceuticals sector has very complex issues, besides others, related to pricing, access and availability, IPR, and other international commitments that necessitate integration of work with other ministries. A separate department for pharmaceuticals was, therefore, necessary to do justice to the pharmaceuticals industry of India. The proposal, I reckon, was there for quite some time though.

Which Ministries the DoP will have to co-ordinate with…the most?

As stated above let us have a look at the key areas of focus of the DoP, one by one and try to ascertain which Ministry currently deals with each one of these issues, as follows:

1. Pricing:

Currently DoP looks after ‘drugs pricing’ under the MC&F. This activity will remain unchanged in the new scenario.

2. ‘Access’ and ‘Availability’:

Availability of pharmaceuticals is intimately linked to access to pharmaceuticals… and access to pharmaceuticals to a vast majority of population of India depends on availability of requisite healthcare infrastructure. ‘Jan Aushadhi’ scheme of the DoP will be more meaningful in terms of its purpose and objectives, when adequate health related infrastructural facilities will be made available, in tandem, to the common man as a part of integrated healthcare initiative. Ministry of Health is responsible to create such healthcare related infrastructure.

3. IPR:

To give some examples, for the researched-based pharmaceutical companies, there are some burning pharmaceuticals related Intellectual Property Rights (IPR) issues, pending since long, like ‘Patent Linkage’ and ‘Regulatory Data Protection’ along with pharmaceuticals related other regulatory issues. All these are again currently looked after by the Ministry of Health.

4. International commitments:

International debate on ‘Counterfeit drugs’, ‘clinical trials’ etc is now spearheaded by the Ministry of Health.

Thus the objective of GoI to have greater focus on pharmaceuticals will be better achieved, if the DoP becomes a part of the Ministry of Health.

What should be the key objectives of the DoP?

The key objective of the DoP should be to “ensure access to affordable modern medicines to all”. To achieve this objective the mindset of the ministers and especially beaurocrats, should change from ‘empire building’ to serving the ‘common man’ with right earnest. With this change in the mindset, I hope that the DoP would try to align itself more with health than just chemicals.

If this happens, the newly created DoP will be able to deliver far more to the ‘common man’ and justify its creation and existence by spending huge amount of taxpayers’ money.

Yes Professor… you have a point:

A steep climb ahead on the ‘ghat’, compelled me to focus on driving. Meanwhile, noticing a long pause at my end, probably professor Gupta thought initially that I was inattentive to his first question… and like a thorough gentleman that he is, remained quiet. Time passed by, in pregnant silence, till I replied, “Yes professor you have a point” and then continued driving through the meandering ‘ghat’ road, in the sweltering heat of summer…still pondering why on earth our politicians still relate pharmaceuticals more to chemicals rather than health?

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.

Global API manufacturers are poised to penetrate the Indian market in a bigger way – will the API ‘marketing warfare’ be even more intense, in future?

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India currently plays a relatively dominant role in the Global Active Pharmaceutical Ingredient (API) Market with China being ahead of India. While this is the current scenario, many experts in this field contemplates that important players from the regulated markets will soon start making significant inroads in India.Current API Market situation in India:In 2007 the API output value in India was around US $4.1 billion registering a 5 year CAGR of around 19% and ranking fourth in the world API output. According to the Tata Strategic Management Group, Indian API export value is expected to increase to US $12.75 billion in 2012.

Currently in India about 400 different types of APIs are manufactured in around 3000 plants, Ranbaxy Laboratories, Lupin, Shasun Chemicals, Orchid Chemicals, Aurobindo Pharma, Sun Pharmaceuticals Ipca Laboratories and USV being the top API manufacturers of the country. Indian domestic companies source almost 50 percent of their API requirements from China, because of lower cost in that country.

In terms of global ranking, India is now the third largest API producers of the world just after China and Italy and by 2011 is expected to be the second largest producer after China. However, in Drug Master File (DMF) filings India is currently ahead of China.

In addition, India scores over China in ‘documentation’ and ‘Environment, Health and Safety (EHS)’ compliance. All these have contributed to India having around 100 US FDA approved world class manufacturing facilities, which is considered the largest outside the USA.

Indian API manufacturers are facing a cut throat competition from their Chinese counterparts mainly because of lower costs in China. Considerably higher economies of scale and various types of support that the Chinese API manufacturers receive from their Government are the main reasons for such cost differential.

Growing competiton from the regulated markets:

We now observe a new trend within the API space in India. Many of the global innovators and generic companies are keen to enter into the API space of India.

It is known that API manufacturers from the regulated markets are already selling their products in India. However, at present, the numbers of Indian registrations for API applied by some of the large global companies, as reported by ‘Thomson Reuters Newport Horizon Premium’, are quite significant, which are as follows:

1. Novartis, Switzerland:20
2. Pfizer, USA:16
3. Sanofi-Aventis, France: 26
4. Teva, Israel: 45
5. Schering-Plough, USA:39
6. BASF: 37
7. DSM: 26
8. E.ON AG: 16
9. Kyowa Hakko: 23

All these companies who are entering into the API business space in India, I am sure, have worked out a grand design to compete not only with the the low cost domestic API manufacturers, but also with the cheaper imports, particularly from China.

What will then be the competitive edge of these companies in India?

It appears that each of these companies has weighed very carefully the existing strategic opportunities in the API sectors of India, both in terms up technology and also in terms of domestic demand.

Strategic gap in API manufacturing technology:

India, undeniably, is one of the key global hubs in the API space, with competitive edge mainly in ‘non-fermentation technology’ product areas. This leaves a wide and perceptible technological gap in the areas of products requiring ‘fermentation technology‘.

Significant demand from domestic formulations manufacturing :

India is much ahead of China in pharmaceutical formulations manufacturing, especially in the area of exports to the regulated markets like, the USA and EU. Over 25 domestic Indian companies are currently catering to exports demand of the U.S market. However, it is interesting to note that the global manufacturers like Sandoz, Eisai, Watson, Mylan have already set up their formulations manufacturing facilities in India and some more are expected to follow suit over a period of time. Hence, fast growing domestic demand for APIs, especially for exports, will drive the business plan of the global API players for India.

Is the cost advantage in India sustainable?

Indian API manufacturers although currently have a cost advantage compared to their counterparts in the regulated market, this advantage is not sustainable over a period of time because of various reasons. The key reason being sharp increase in cost related to more stringent environmental and regulatory compliance, besides spiralling manpower and other overhead costs.

Indian regulatory requirements for the global API players:

To sell their APIs into India, global companies are now required to obtain the following regulatory approvals from the Indian authorities:

1. Foreign manufacturing sites for the concerned products
2. APIs which will be imported in the country

The Drug Controller General of India (DCGI) has stipulated a fee of U.S$1,500 to register the manufacturing premises and U.S$1,000 to register each individual API. Since January 2003, around 1,200 registration certificates have been issued in India. Large number of Indian registrations is attributed by many to the strategic technology gap in India, as stated above, demand of high-quality API for finished formulations required by the regulated markets like the U.S and EU, and relatively cheaper product registration process.

As we see above Teva has gone for maximum number of Indian registrations, so far and most probably selling the APIs to their contract formulations manufacturers in India. Similarly, Schering-Plough and Sanofi-Aventis, if not Pfizer are perhaps catering to the API demand of their respective formulations manufacturing plants in the country.

Whatever may be the reasons, these global players are now exporting APIs at a much larger scale to India and in that process have started curving out a niche for themselves in the Indian API market. Impressive growth of the domestic pharmaceutical formulations manufacturing market fueled by increasing domestic consumption and exports to the regulated markets, coupled with gradual improvement in the regulatory environment of the country, is expected to drive the growth of API business of the global players.

However, the moot question is how significant will this competition be?

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.