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Keep Pace with Pharma’s Even Nuanced Technology Driven Changes – For Success

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Since 2020, unprecedented global disruptions affecting lives, livelihoods, and business, have impacted India in equal measure, if not more – across various areas, including the pharma industry. If there is one change that is creating a snowballing effect, is the rate of progress and use of technology in its operations.

Consequently, finding properly trained people, to drive the new avatar of technology driven today’s business – right from R&D, supply chain, manufacturing, sales and marketing, customer behavior, market dynamics – poses a facet of ongoing challenges.

This is primarily because, some key business-success requirements have now significantly changed, but many are still nuanced that one may tend to possibly ignore. Thus, early identification of these and placing properly skilled – right people in the right job, who can floor the gas pedal in search of excellence, assume two key priorities for the pharma players, more than ever before.

Most companies, as I understand, are finding this task quite time consuming, if not arduous. The options are basically two. The first one – spot, search and hire the best talent from outside the organization. And the second – spot the internal talents, hone their skills, handhold them for some time on the job, before they take charge and assume accountability for achieving the set goals. In this article, I shall focus on the relevance, criticality, and associated intricacies that pharma leadership may encounter in this process.

Intense focus on the drug industry in last two years – blessings and burden:

A recent research study on Talent Trends For Life Sciences Organizations, published by Randstad Sourceright on July 22, 2022, came out with some interesting findings in this area. The key ones are as below:

  • In the past couple of years, the intense global focus on Life Sciences Industries brings both blessings and burden on the industry.
  • Key drug manufacturers received unprecedented levels of financial and regulatory support for the development of therapies and vaccines for the treatment and prevention of Covid-19 onslaught on the people across the world.
  • In tandem, the drug industry had to withstand tremendous pressures and intense scrutiny to achieve this task by re-prioritizing their R&D focus, which no drug manufacturer had experienced ever before.

Alongside, pharma customer characteristics and behavior also started changing fast in many areas, and consequently the market dynamics. Many of these changes are still nuanced and are driven by contemporary technology. Amid lesser concern for Covid-pandemic, the ongoing metamorphosis in the world of work – impacting almost all functional areas of a customer-driven organization, poses a fresh pharma leadership challenge.

Thus, for future business success, pharma companies now need to capture relevant real-time data, and analyze them to gain in-depth insight of these changes. Consequently, it is important to figure out how much the quality of talent requirement has changed for an organization, to continue to remain as patient centric. However, before doing that, it’s worth figuring out what kept the wheels of pharma businesses moving during the years of the recent pandemic.

What kept the wheels of business moving during the pandemic:

Several important studies have made dip-stick assessment in this space. One such recent study findings of Randstad Sourceright highlighted the following three, among others, as the key success factors for employee motivation in trying times, which kept the wheels of business moving:

  • Empathy of the leadership,
  • Flexibility in work life
  • Ingenuity of employees to quickly adapt to the new normal

Some of these, or all, may linger in the minds of many employees. They may still long for empathy at work and flexibility in the workplace, to unleash their full potential for organizational success. Otherwise, they may look outside, especially to those companies who can meet their expectations, in the new normal.

In this situation, fostering EQ within the organization to encourage employees committing to the corporate shared goal, is a key requirement for pharma’s performance excellence. The bottom-line is,how well an organization continues to nurture and retain or attract new talents, besides honing their skills in line with the changing customer value delivery process, would be critical.

Need to identify even nuanced changes in workplaces:

Thus, before making a dip-stick assessment to ascertain the changes in organizational talent requirements, it is worth getting a sense from the available studies what’s going on today in the industry.

Like many other countries, the pandemic is no longer an unsettling unease for most pharma organizations in India. At the same time, studies reiterate that it’s for sure that the pandemic related disruptions have ushered-in visible or nuanced transformations, especially in the operational areas of the life sciences business.

Some recent studies, such as, one done by McKinsey & Company on – Creating the workforce of the future, made a notable observation. It emphasized, “Pharma companies struggle to predict where they will see the talent gaps, these disruptions create, though a majority monitor key trends and track talent needs. Only a minority of companies (40 percent) believe that they really know which skills are needed now, let alone in ten years (less than 25 percent).”

Which is why, I reckon, it is now critical for the Indian pharma leadership to identify, analyze and address, both perceptible and nuanced transformation within their customers, employees, and other stakeholders. And then zero-in on changing talent requirements of employees in key operational areas, including sales and marketing – to gain a competitive edge in the marketplace.

However, it is worth remembering that the supply of quality talent remains limited, although it is essential to catapult the business in a higher growth trajectory. Besides, gradually changing employee expectations in the workplace culture – work-flexibility could emerge as another sought after factor to attract new talents from the millennials. 

The ways to move forward in this area:

Many companies may decide to hire new talents from outside the company, whereas some may look for developing people internally, through well-structured internal human development initiatives. However, the research study of Randstad Sourceright finds: ‘67% of life science and pharma leaders believe reskilling and upskilling employees for different roles is an effective way to address talent scarcity. Additionally, 63% say they already invest in internal mobility platforms to augment their recruiting efforts, while 53% plan to increase their investments in this area.’

Further McKinsey & Company in their above-mentioned article also suggested: ‘Reskilling employees to address talent gaps can help a company retain the bulk of its operations workers and empower them to take advantage of a new world.’ So did another article on building pharma talent of tomorrow, published in the Pharma Executive on October 05, 2022. It emphasized that training current employees who already know the business, and are familiar with the inner workings, would expectedly take much less time to deliver that is expected of them.

I also understand, a few large Indian pharma majors are also focusing on internal talent development as one of the key organizational development initiatives. They are identifying internal talents in an organized manner, up-skill them to shoulder new responsibilities – following a well-charted career path for each one of them. It’s important for the leadership to demonstrate and make these employees also feel that they are of great value to the organization.

From the above perspective, I reckon, in today’s environment when many employees are eager to search for a greener pasture that suits them better, the above approach also provides an opportunity for pharma employers. This opportunity is primarily to retain talents, by incentivizing them with learning, and development process, besides a chance for career progress in the company.

Conclusion:

One thing for sure is critical to ensure that right talents are always placed in the right job. This is crucial to keep pace with not just significant transformations. But even for emerging and nuanced technology driven changes in customer characteristics, behavior, and market dynamics. Thereafter, each organization will need to identify available in-house talents for upskilling, honing and development. Whereas some fresh new talents may necessarily be required to hire from outside or outsourced.

Several recent studies have also indicated that the best strategy in this regard, is the optimal combination of hiring from outside or outsourcing the new requirements, alongside internal talent development initiatives, and charting a career path for them. To chart on this emerging frontier calls for a mindset change. Thus, it is important for us to remember that only permanent factor in the pharma business is – change. Can one ignore it? Of course, but at one’s own peril, because in the long run “What You Do is Who You Are” in the future pharma business.

By: Tapan J. 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.

 

Creating ‘Shared Value’ in Pharma – The Way Forward

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Many Pharmaceutical companies, both global and local, are struggling with a plethora of critical challenges. With the industry reputation diving south successful navigation through this headwind has become an onerous task, more than ever before.

Under this backdrop, the article, titled “Creating Shared Value” of Michael Porter and Mark Kramer, published in the Harvard Business Review (HBR) in its January – February 2011 issue, becomes very relevant to analyze the situation.

The paper says: “Companies are widely thought to be prospering at the expense of their communities. Trust in business has fallen to new lows, leading government officials to set policies that undermine competitiveness and sap economic growth. Business is caught in a vicious circle. A big part of the problem lies with companies themselves, which remain trapped in an outdated, narrow approach to value creation.”

The authors also articulated that pharma players, generally focus on optimizing short-term financial performance, overlooking the greatest unmet needs in the market as well as broader influences on their long-term success. They questioned: “Why else would companies ignore the well-being of their customers and the economic distress of the communities in which they produce and sell?”

Porter and Kramer advised the companies to bring business and society back together – redefining their purpose as creating “shared values”. It means generating economic value in a way that also produces value for society by addressing its challenges.In this article, I shall explore in this area.

Not CSR or Philanthropy, its engaging business as business, for social progress:

Creation of “Shared values” for a business is quite different from “Philanthropy” or “Corporate Social Responsivity (CSR)”. Philanthropy usually involves ‘donations to worthy social causes’ and CSR is primarily directed at compliance with community standards and good corporate citizenship. Whereas the creation of “shared value” means integrating societal improvement into economic value creation, making social improvement as an integral part of with a business model.

To create “shared values”, it is imperative for business organizations to create “social value” through active participation in addressing the social issues and needs related to the business. Or in other words, the creation of “shared values” would entail striking a right balance between “social value” and the “business value.”

An article titled “What Is the Social Value of Pharmaceuticals?”, published by FSG on February 13, 2014 dwells on the business relevance of creation of “social value” in the pharma industry. It writes,creation of “social value” corresponds to effecting positive change along the major societal challenges, such as affordable health care, by working more in collaboration with other stakeholders to address the needs of the underserved through commensurate value creation. This entails engagement of a business as a business, not as a charitable donor, nor through public relations, for social progress.

A resolution to create “shared value” in the pharma industry:

An interesting article, featured in SFGATE of the San Francisco Chronicle on July 11, 2018, elucidated that the reputations of drug makers have taken a hit over the past few years as the public and politicians have called out the companies for high prescription drug prices that even Americans are facing. Recently, President Donald Trump, reportedly, singled out the top pharma companies of the world  for raising the list prices on some of its prescriptions.

Possibly it’s a sheer coincidence, but on the same day, an intent of creating “shared values” with the society got reflected in the statement of the president of the Novartis Institutes for Biomedical Research. The officialexplained, why his company has a ‘contract with society’. He admitted that: The cost of health care, which has been rising has left many on the hook for a larger amount of their prescription drug cost that can place a big burden on patients in many countries, including the United States.

Consequently, the pressure from the people who need medications is now on the pharmaceutical companies for doing right, he added. Thus, Novartis feels:”We have a contract with society, and society is our shareholder. A company like ours exists to have a definitive impact on life threatening diseases, to keep people alive and healthy for a long, long time, full stop” – the official concluded.

A laudable intent, but is it credible?

The concept of pharma having a contract with the society ‘to keep people alive and healthy for a long, long time,’ is laudable, but is it credible? This question arises because, just before public articulation of this intent, the same company, reportedly, entered into USD 1.2-million contract with President Trump’s lawyer, Michael Cohen, allegedly, to provide access to the US President.

The exact reason for the same is being investigated by competent authorities, including the US Senators. However, another report highlighted, “Novartis is among the drug companies that has put through significant price increases for its products since Trump took office in 2017 – in some cases more than 20 percent.”

Another  repot of July 09, 2018, quoting a tweet of the US President, poured more cold water on the warm intent of pharma’s ‘contract with the society.’ According to this article President Trump tweeted: “Pfizer & others should be ashamed that they have raised drug prices for no reason. They are merely taking advantage of the poor & others unable to defend themselves, while at the same time giving bargain basement prices to other countries in Europe & elsewhere. We will respond!”

Consistently declining pharma’s image and public trust:

Many believe that due to such hyperbolic statements and conflicting actions of pharma, over a long period time, are driving down the public image and trust on the industry, in general, from deep to deeper level, which has not found its bottom, just yet.

The reality gets reflected in various well-recognized polls, conducted even in the top pharma market of the world, which is also one of the richest nations, globally. August 2017 Gallup Poll on ‘Business and Industry Sector Ratings,’ features pharma industry at the very bottom of the ranking, just above the Federal government.

The concern gets reverberated in the February 03, 2017 article titled, ‘How Pharma Can Fix Its Reputation and Its Business at the Same Time,’ published in the Harvard Business Review (HBR). The paper observes that the worrisome mix of little growth potential and low reputation prompts the pharma players, among other actions, developing new treatments for neglected populations, and pricing existing products at affordable levels – avoiding corruption and price collusion.

How will “shared value” creation help pharma?

The process of creating “shared values” will involve creating “social value” with all sincerity and a clearly defined purpose. Its outcome should be measurable, and the impact felt by the society. In tandem, striking a right balance between “social value” and the “business value” would call for a metamorphosis in the concept of doing business.

There aren’t too many examples of creation ‘shared values’ by pharma companies, yet. However, to illustrate this point, let me quote one such that was originated from India, which I had the privilege to observe closely. This initiative is ‘Arogya Parivar (healthy family) of Novartis in India.

‘Arogya Parivar’ is a ‘for-profit’ social initiative developed by Novartis to reach the under-served millions living at the bottom of the pyramid in rural India. As Novartis claims, since its launch in 2007, ‘Arogya Parivar’ is proving to be both a force for improving health in rural communities and a sustainable business. ‘Arogya Parivar’ is a commercially-viable program and began returning a profit after 30 months with sales increasing 25-fold, since launch. After successful implementation of this initiative in India, the company has created similar programs in Kenya, Indonesia and Vietnam, according to Novartis.

Conclusion:

The concept of ‘shared values’ emphasizes that business success of a company is closely related to the progress, development and wellbeing of the society where it transacts the business. This can be achieved by striking a right balance between the social need and the business need. In the pharma space too, the value creation in the business value chain may need to be redesigned to meet the ‘social value’. This happened as in the case of ‘Arogya Parivar’ initiative of Novartis in India.

Creating robust business models based on ‘shared values’, in sync with the business-specific needs of the society can help make more profit in areas where there is none, at present. It will also facilitate achieving additional growth of the organization and improve long-term competitiveness.

Consequently, pharma can earn recognition of the society as a powerful contributor for containing suffering and even death of many ailing patients, by increasing access to affordable medicines for those who need these most. This, in turn, would help pharma companies to improve their public image and reputation. Let me hasten to add that provided, of course, no countermeasures are taken by them, surreptitiously, as I have discussed above.

The good news is, some pharma players have already initiated action in this direction. Thus, I reckon, many of them would soon realize that creating ‘shared value – based’ business models are the way forward for sustainable business excellence.

By: Tapan J. 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.

Should India follow the US way to regulate all types of lobbying in the country?

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Currently, India is one of the fastest-growing economies of the world along with China. Even during the recent global financial meltdown process both India and China could register a very impressive average GDP growth of around 7% consistently during the last so many years. This growth is over three times more than that of the developed countries like the US, which has been growing just around 2% in the recent years.

India growth story, I reckon, is now attracting a large number of companies across the industries from all over the world including India to lobby hard and participate in the process of spectacular growth across many industry sectors. Such lobbying activities in India are expected to increase by manifold in the years ahead.

As per newspaper reports the large corporations involved with these activities, besides pharmaceuticals, include the world’s largest retailers, the coffee shop giants, financial services, insurance companies and technology majors in addition to chemicals, telecom, defense and aerospace giants.

Currently, many US-based companies, as reported in the lobbying disclosure reports filed by them with the US Senate, are lobbying for various issues ranging from facilitating the market access to easing of foreign direct investment caps in retail, insurance and other financial services sectors in India to facilitate their business expansion in the country.

Indian Pharmaceutical sector is becoming more and more attractive to many:

Keeping pace with other high growth industries of the country, Indian Pharmaceutical Market (IPM) with the current domestic turnover of around US$ 12.1 Billion has been registering a scorching pace of CAGR growth of around 15%, since over a decade. The domestic pharmaceutical industry now caters to about 20% of global requirements of high quality and affordable generic medicines of all types.

IPM is, therefore, a global success story and India has already established itself as a major force to reckon with, especially in the development and manufacturing of high quality generic pharmaceuticals, as well as in Contract Research and Manufacturing Services (CRAMS), in the pharmaceutical industry of the world.

IPM is creating newer jobs:

As per reports, in roughly around 20,000 pharmaceutical organizations and its ancillary units over one million people are currently employed by the Industry. As mentioned above, though India has globally established itself as a producer of high-quality medicines available at reasonable prices, predominantly due to a very high of around 80% ‘Out of Pocket’ expenses towards healthcare in India, ‘common man’ still finds it extremely difficult to bear the cost of illness. Such critical public health interests India can ill afford to ignore.

Spectacular progress of the Indian Pharmaceutical Industry:

India, during its independence on August 15, 1947 inherited the patent system of its British colonial masters. Drugs and Pharmaceuticals used to be largely imported from the developed world in that period with local production being absolute minimal.

This abysmal trend and pattern of the IPM of pre-independent India took another 20 years to make any significant change worth mentioning. It will be quite difficult even for the staunchest skeptics to brush aside the fact that the Indian pharmaceutical industry started blossoming since 1970, mainly due to abolition of product patent act and government encouragement with various fiscal and tax incentives paving the way for the emergence of a vibrant high quality drug manufacturing sector in the country. However, that was the need of the 70’s and certainly not for now.

It is good to know that so far as national self-sufficiency in pharmaceuticals is concerned, as per Indian Drug Manufacturers Association (IDMA), it is far above 70% despite many tough challenges.

Patent regime of many ‘developed economies’ had a stormy beginning:

While deliberating on product patents, it should be noted that in many industrial nations of the world, the protection of inventions through patents started taking place in around the last 40 years.

For example, pharmaceuticals product patents in Switzerland came into effect only since 1978. History tells us that at the fag end of the 19th century the pharmaceutical industry in Switzerland fought vehemently against the enactment of a patent law to be able to imitate foreign drugs, such as Aspirin of Bayer. Mainly because of this reason, at that time, Germany used to consider Switzerland a ‘state of robber barons’. Similarly, France used to be known as a ‘country of counterfeiters’.

Some historians have written that exactly in the same way like India, as mentioned above, the economies of Korea, Taiwan and the ‘land of the rising sun’ – Japan were able to thrive in their formative years due to absence of patent protection in those countries.

Young India is possibly crossing, if not has already crossed that stage much sooner than many others.

Innovation is the ‘Wheel of Progress’ of any nation:

However, it is an undeniable fact that ‘innovation’ is the wheel of progress of any nation. Without innovation, it is virtually impossible for any country to make significant economic progress. The Prime Minister of India has thus termed the current decade of 2010 as the ‘decade of innovation’ for India.

It has been well established by now that ‘Technology Transfer’ from the developed nations not only brings profit to those countries from patent protection and shields them from low-cost competition, but also helps the developing nations to add requisite speed to their growing economy.

However, most developing nations want access to such technological innovations at an affordable and lesser cost without any possible future risk of oligopoly and ‘technological recolonisation’.

New Product Patent regime in India came much after China and Brazil:

India signed the WTO agreement to become its member in January 1, 1995 and following a 10-year transition period, on January 1, 2005 the country amended its national patent legislation to usher in the product patent regime. The lose knots, if any, in the amended Patents Act of India are widely expected to get strengthened as the domestic innovators will feel the need for the same and possibly not due to any extraneous pressure.

Compared to India, product patent came much earlier in China and Brazil. China enacted its first patent law on March 12, 1984. However, it provided little protection to pharmaceutical and chemical inventions.  In 1992, China amended the 1984 patent law in compliance with an agreement between China and the United States, as well as to join the WTO. Similarly, the new patent law came into force in Brazil way back on October 6,1999, which also has the provision of issuing Compulsory Licenses (CL).

International independent domain experts feel that it will take some more time for India to gauge the real benefits of product patents for the country.

Public interest for ‘Health and Nutrition’:

The philosophy of India since decades has been to ‘promote the principle of relying on one’s own strength’, especially in the critical and a very sensitive areas of public interest for ‘Health and Nutrition’. Many independent experts in this field both from India and abroad have opined that India seems to be following this path without compromising on its TRIPS compliance status. However, there are some dissenting voices in this area, who feel that a more rigorous and robust patent regime in India is in the best interest of the country.

Should the government regulate lobbying activities?

Considering the fast emerging environment, as mentioned above and arising out of some recent very sensational lobbying related financial/policy scams in India, the moot question, as is being raised by many across the country is: “Should the government regulate the lobbying activities in India?”.

Even in the Pharmaceutical Industry, some instances of lobbying activities carried out both within and outside India, had led to raging debates and controversies.

To cite an example, not so very long ago, some consumer activists from the civil society vehemently protested against the ‘Intellectual Property Conferences’ held in India, which were allegedly sponsored by some interested groups in a guise to influence the policy makers and the judiciary of India.

It was widely reported that the consumer activists viewed these IP summits, organized by the George Washington University Law School of USA as ‘attempts to influence sitting judges on patent law enforcement issues that are pending in Indian courts.’

In a letter dated February 26, 2010 addressed to Shri Anand Sharma, Minister of Commerce and Industry of India, over 20 NGOs demanded transparency and more information on such meetings and wanted the government of India ‘to put a stop to such industry sponsored lobbying with Indian judges and policymakers to promote their own requirements for intellectual property and to lobby for either law amendments or even to plead their cases currently pending before, various courts and the Indian Patent Office,”

In raising their concerns, the civil society groups argued that the posture adopted by the lobbyists and their supporters is to “force India to adopt greater standards” of IP protection “beyond the mandatory levels” required by the WTO, which may go against public health interest in India.

Lobbying activities are expected to gain further momentum:

It is quite logical to expect that lobbying activities in such and many other areas both ‘for’ and ‘against’ are expected to gain momentum in the times to come. However, it is widely believed that long-term interest of India is expected to ultimately prevail in this closely watched ball game.

Lobbying is legal in many countries like the US with the government ground rules firmly in place:

We all know that in many countries like the US, lobbying is a legal activity. Many Indian companies, including the government of India have been lobbying in the US since so many years to present their cases and argument with the American law and policy makers.

When President Obama came to power in the US, it was reported: ‘one of the first acts of the Obama administration in office was to have an executive order which prohibited the Obama Administration either from hiring lobbyists – those who had lobbied within two years of joining the administration or allowing people who had left the Obama administration to service lobbyists for two years. The idea is that you want to break the chains where there is undue influence of special interest groups upon the government’.

However, there are no government ground rules still in place for lobbying in India either for the local or the global companies and their lobbyists, across the industry sectors.

Surrogate lobbying:

It was discussed somewhere about ‘surrogate lobbying’ in many industries from various parts of the world. I have really no idea about what these are and the legality of such activities without appropriate well-drafted government specified disclosures in place, for public interest.

Conclusion:

Be that as it may, in the US such activities are required to be intimated to the US senate by the companies concerned and their lobbyists highlighting their activities in form of a quarterly disclosure reports detailing not only the issues, but also the concerned government departments and institutions and the related expenses.

Let me hasten to add that despite a long history with regulated and legalized lobbying in the US, still there has been severe criticism in that country of the way lobbying has worked there in the past so many years. India has plenty to learn from such experiences.

Thus, as a part of following the global ‘public interest best practices’, a large section of the civil society in India has been voicing in so many ways, mainly after the recent financial and policy related mega scams, that it may be a good idea, if the government also puts system driven adequate checks and balances in place for lobbying activities in India, sooner.

It is believed by many that such regulations will ensure perfectly legal lobbying initiatives in India always maintain complete transparency and follow appropriate processes/procedures of disclosures to maintain a right balance between long-term public interest and the growing requirements of a healthy business ecosystem to accelerate the inclusive economic growth of the nation.

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.

Abbott – Piramal deal: the way future is expected to shape up

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In my view, these are still very early days for such acquisitions of large domestic Indian pharmaceutical companies by the Global Pharma majors to gain momentum in the country. However, there is no doubt that in the near future, we shall rather witness more strategic collaborations between Indian and Global pharmaceutical companies, especially in the generic space.

Squeezing margin due to cut-throat domestic and international competition may affect future valuation of the domestic companies:

I reckon, the number of such high profile mergers and acquisitions will significantly increase, as and when the valuation of domestic Indian companies appears quite attractive to the global pharma majors. This could happen, as the domestic players face more cut-throat competition both in Indian and international markets, squeezing their profit margin.
Abbott possibly has a well-structured game plan for seemingly high valuation of the deal:
Having said that let me point out, during Ranbaxy-Daiichi Sankyo deal, analysts felt that the valuation of the deal was quite high. US $ 3.7 billion Abbott – Piramal deal has far exceeded even that valuation. Does this deal not make any business sense? I do not think so. Abbott is a financially savvy seasoned player in the M&A space. It is very unlikely that they will enter into any deal, which will not have any strategic and financial business sense.

Big ticket Indian Pharma deals:

So far India has seen four such major deals starting from Ranbaxy – Daiichi Sankyo, Dabur Pharma – Fresenius, Matrix – Myalan and Orchid – Hospira, besides some global collaborative arrangements, such as, Pfizer with Aurobindo/Claris/Strides GSK with DRL, AsraZeneca with Torrent and again Abbott with Zydus Cadila.

Key drivers for these deals:

Such acquisitions and collaborations will be driven by following eight key factors:

1. R&D pipelines of the global innovative companies are drying up
2. Many blockbuster drugs will go off-patent in the near future
3. Cost containment pressure in the western world exerting pressure on the bottom lines
of the global pharma majors
4. Increasing demand of generics in high growth emerging and developing markets
5. The new Healthcare Reform in the US will promote increased usage of generic drugs.
6. The fact that India already produces 20% of the global requirement for generic drugs
increases the attractiveness.
7. The fact of domestic Indian companies account for 35% of ANDAs highlights the future
potential of the respective companies.
8. Highest number of US-FDA approved plants, next to the US, is located in India.

A strategic move by Abbott:

As announced by Abbott from its headquarter in Chicago that Abbott in India will increase its sales four times to around Rs. 11,000 Crores by 2020 with the acquisition of 350 brands of ‘Piramal Healthcare’ business.

Facing the stark reality of a ‘patent Cliff’, cost containment pressures especially in the US and EU, low single digit growth rate of the developed markets and high growth of branded generic dominated emerging markets, Abbott has taken a new global initiative aimed at the emerging markets with the creation of its global ‘Established Products’ Business’. This initiative started with worth US $ 6.2 billion acquisition of branded generic business of Solvay Pharma, which has a sizeable presence in the EU markets.
Recently announced licensing agreement of Abbott with Zydus Cadila to market 24 products initially in 15 emerging markets of the world is another step towards this direction.

Advantage Abbott India:

The asset based acquisition of ‘Piramal Healthcare’ by Abbott will help its Indian arm to increase its domestic market penetration, significantly, both for branded generic and patented products in urban, semi-urban and rural markets spearheaded by around 7000 strong sales force. This strategy perhaps will also help Abbott in India distancing itself from the number 2, in the Indian Pharma league table, probably with a handsome margin.

Global players want a risk-cover with the generic business and minimize tough competition:

Like Abbott, it is quite likely that other major global players are also planning to reduce their business risks by expanding the business from mainly high risk and expensive R&D intensive patented products to a more predictable and rapidly expanding branded generic business.

Will such move have any significant effect on competition?

Such M&A initiatives may seemingly minimize the cut throat competition from large generic players from India. However, I do not envisage any significant impact on over all competition between the generic players for such moves, as their will be mounting competition from more number of new entrants and emerging players, entry barrier in Indian generic pharmaceutical market being quite low.

Conclusion:

In the globalized economy where the ‘world is flat’ such types of business consolidation initiatives are inevitable. The domestic Indian companies across the industry are also in the prowl for suitable global targets, which are at times of world class ‘Crown Jewels’ like Arcelor, Chorus or Jaguar/Land Rover. Pharmaceutical industry is, therefore, no exception.

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.

Innovative Public Private Partnership (PPP) in Healthcare Financing is the way forward to improve ‘Affordability’ and ‘Access’ to Healthcare’ in India

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Despite various measures taken by the Government of India (GoI), around 65% of the population do not have access to modern medicines in the country. Such medicines do not include treatment just for ‘Tropical Diseases’ like, Malaria, Tuberculosis, Filariasis or Leishmaniasis or even anaemia in women. These medicines, in fact, cover much wider spectrum of the primary healthcare needs of the country and include antibiotics, anti-hypertensive, anti-diabetics, anti-arthritic, anti-ulcerants, cardiovascular, oncology. anti-retroviral etc. Many stakeholders in the country, including the policy makers feel that the reason for poor access to medicines to a vast majority of Indian population is intimately linked to the affordability of medicines.

A bold public measure to achieve the dual objectives:                           To make medicines affordable to the common man and at the same time to create a robust domestic pharmaceutical industry in the country, the Government took a bold step in early 1970 by passing a law to abolish product patent in India.

The changed paradigm, encouraged domestic pharmaceutical companies to manufacture and market even those latest drugs, which were protected by patents in many countries of the world, at that time. This policy decision of the GoI enabled the domestic players to specialize in ‘reverse engineering’ and launch the generic versions of most of the New Chemical Entities (NCEs) at a fraction of the innovators price, in India.
Simultaneously other low cost ‘essential medicines’ continued to be produced and marketed in the country.

‘Reverse Engineering’ – a huge commercial success in India:
From 1972 to 2005 domestic Indian pharmaceutical companies were replicating most, if not all the blockbuster drugs of the world, to their low price generic substitutes, just within a year or two from the date of their first launch in the developed markets of the world. These innovative drugs include quinolones. H2 Receptor anatagonists, proton pump inhibitors, calcium channel blockers, ace inhibitors, Cox2 inhibitors, statins, anti-coagulants, anti-asthmatic, anti-cancer, anti-HIV and many more.

In 1970, the Market share of the Indian domestic companies, as a percentage of turnover of the total pharmaceutical industry of India, was around 20%. During the era of ‘reverse engineering’, coupled with many top class manufacturing and marketing strategies, domestic Indian pharmaceutical companies wheezed past their multinational (MNCs) counterparts in the race of market share, exactly reversing the situation in 2010.

‘Reverse engineering’ was indeed one of the key growth drivers of domestic pharmaceutical industry. In its absence, during this period, the growth rate of branded generic industry may not be as spectacular.

India – now the ‘Eldorado’ of the pharmaceutical world:
This shift in the Paradigm in 1970, catapulted the Indian domestic pharmaceutical industry to a newer height of success. India in that process, over a period of time, could establish itself as a major force to reckon with in the generic pharmaceutical market of the world. Currently, the domestic pharmaceutical industry in India caters to around one third of the global requirement of generic pharmaceuticals and is a net foreign exchange earner for the country.

Currently, within top ten pharmaceutical companies of India, eight are domestic companies. All those global pharmaceutical companies who had left the shores of India and many more, have returned to the country after India signed the WTO agreement in January 1995 with great expectations.

Government feels quite confident and exudes a sense of accomplishment with its pharmaceutical policies:
The government therefore believes that a combination of these policy measures resulting in the stellar success of the domestic pharmaceutical companies since last four decades has helped the country earning the global recognition as one of the most attractive emerging pharmaceutical markets of the world, with commensurate and sustainable ascending growth trend.

Has stringent Price Control/Monitoring of Medicines worked in India?
Be that as it may, from 1970 to 2005, India could produce and offer even the latest NCEs at a fraction of their international price, to the Indian population. There are as many as 40 to over 60 Indian branded generic versions for each successful blockbuster drug of the world. Competition has been intense and cut-throat, which keeps the average price well within the reach of common man. Average price of medicines in India is even lower than that of Pakistan, Bangladesh and Sri Lanka. Thus the combination of price control, price monitoring, fear of price control and cut throat competition within branded generics have been able to drive down the prices of medicines in India.

Has the focus mostly on ‘Price’ been able to resolve the issue of poor access to modern medicines by the common man?                       Although the GoI should be complemented for the above measures and putting in place the Product Patents Act in India effective January 1, 2005, the issue of access to modern medicines to the common man has still remained unanswered in the country. Why then access to medicines in India is confined to just to 35% of the population even after 62 years of Independence of the country? Comparable figures of access for Africa and China are 53% and 85%, respectively. This is indeed an abysmal failure on the part of the government to achieve the core healthcare objective of the nation.

Strategy adopted to address the core issue of ‘affordability’ and ‘access’ to healthcare and medicines are grossly inadequate:
Despite the stellar success of the pharmaceutical industry in India thus far, there is a pressing need for the government to address this vexing problem without further delay. The situation demands from the policy makers to put in place a robust healthcare financing model in tandem with significant ‘capacity building’ exercise, initially in our primary and then in the secondary and tertiary healthcare value chain.

Towards this direction, the Federation of Indian Chambers of Commerce and Industry (FICCI) has suggested to the Government for an investment of around US$ 80 billion to create over 2 million hospital beds.

Government changing its role from ‘Healthcare Provider’ to ‘Healthcare Facilitator’:
Frugal budget allocation (0.9%) by the GoI towards healthcare as % of GDP of the country and its other healthcare related policy statements suggest that government is changing its role in this area from a healthcare provider to a healthcare facilitator for the private sectors to develop the healthcare space of the country adequately.

In such a scenario, it is indeed imperative for the government to realize that the lack of even basic healthcare financing model and primary healthcare infrastructure in many places across the country, leave aside other fiscal incentives, will impede the penetration of private sectors into semi-urban and rural areas. Innovative PPP model should be worked out to address such issues, effectively.

Laudable projects like NRHM and ‘Jan Aushadhi’ must deliver:
Over 70% of Indian population are located in rural India. A relatively recent study indicates that despite some major projects undertaken by the Governments, like National Rural Health Mission (NRHM), about 80% of doctors, 75% dispensaries and 60% of hospitals are located in urban India.

Another recent initiative taken by the Department of Pharmaceuticals (DoP) called ‘Jan Aushadhi’ is also orientated towards urban and semi-urban India. Unfortunately even in those areas the scheme has failed to deliver against the objectives set by the department of pharmaceuticals (DoP) themselves.
The net result of such a lack of firm intent to deliver by all concerned denies 65% of Indian population from having access to modern medicines and other basic healthcare services within the country.

Address the issue of ‘Affordability’ and ‘Access’ to medicines and healthcare with a robust ‘Health Insurance’ model for all:
While trying to find out a solution to these critical issues, by restricting the focus only on the ‘prices of medicines’ for several decades from now, the Government is doing a great disservice to the common man.
Let me hasten to add that I am in no way suggesting that the prices of medicines have no bearing on their ‘Affordability’. All I am suggesting here is that the issue of ‘Affordability’ and ‘Access’ to modern medicines could be better and more effectively addressed with a robust ‘Health Insurance’ model for all, in the country.

Sporadic initiatives towards this direction:

We find some sporadic initiatives in this direction for population below the poverty line (BPL) with Rashtriya Swasthya Bima Yojana (RSBY) and other health insurance schemes through micro health insurance units, especially in rural India. It has been reported that currently around 40 such schemes are active in the country. Most of the existing micro health insurance units run their own independent insurance schemes.

Some initiatives by the State Governments:

Following initiatives, though quite limited, are being taken by the state governments:

1. The Government of Andhra Pradesh has planned to offer health insurance cover under ‘Arogya Sri Health Insurance Scheme’ to 18 million families who are below the poverty line (BPL).

2. The Government of Karnataka has partnered with the private sector to provide low cost health insurance coverage to the farmers who previously had no access to insurance, under “Yeshaswini Insurance scheme”. This scheme covers insurance cover towards major surgery, including pre-existing conditions.

3. Some other state governments have also started offering public health insurance facilities to the rural poor, but not in a very organized manner. In fact, some private health insurers like Reliance General Insurance and ICICI Lombard General Insurance have been reported to have won some projects on health insurance from various state governments.
Covering domiciliary treatment through health insurance is important:

Currently health insurance schemes mostly cover expenses towards hospitalization. However, medical insurance schemes should also cover domiciliary treatment costs and loss of income, along with hospitalization costs.

Government policy reforms towards health insurance are essential:
Currently Indian health insurance segment is growing over 50% and according to PHD Chamber of Commerce and Industries the segment is estimated to grow to US$ 5.75 billion by 2010. Even this number appears to be much less than adequate for a country like India.

It is high time that the Government creates a conducive environment for increased penetration of health insurance within the country through innovative policy measures. One such measure could be by making health insurance cover mandatory for all employers, who provide provident fund facilities to their employees.

Conclusion:
It is a pity that the concept of health insurance has not properly taken off in our country, as yet, though shows immense growth potential in the years to come. Innovative policies of the government towards this direction along with increasing the cap on Foreign Direct Investment (FDI) for health insurance will encourage many competent and successful global players to enter into this market.

With the entry of efficient and successful global players in health insurance segment, one can expect to see many innovative insurance products to satisfy the needs of a large section of Indian population. Such an environment will also help increasing the retail distribution network of health insurance with a wider geographic reach, significantly improving the affordability and access to healthcare in general and medicines in particular, of a large number of population of the country.

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.

The need for urgent healthcare reform in India: The way forward.

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If we look at the history of development of the developed countries of the world, we shall see that all of them had invested and even now are investing to improve the social framework of the country where education and health get the top priority. Continuous reform measures in these two key areas of any nation, have proved to be the key drivers of their economic growth.Very recently we have witnessed some major reform measures in the area of ‘primary education’ in India. The right to primary education has now been made a fundamental right of every citizen of the country, through a constitutional amendment.As focus on education is very important to realize the economic potential of any nation, so is the healthcare space of the country. India will not be able to realize its dream to be one of the economic superpowers of the world without sharp focus and significant resource allocation in these two areas.

Healthcare in India:

There are various hurdles though to address the healthcare issues of the country effectively, but these are not definitely insurmountable. National Rural health Mission is indeed an admirable scheme announced by the Government. However, many feel that poor governance will not be able make this scheme to become as effective as it should be. Implementation of such schemes warrants effective leadership at all levels of implementation. Similar apprehensions can be extended to many other healthcare initiatives including the health insurance program for below the poverty line (BPL) population of the country.

A quick snapshot on the overall healthcare system of India:

In terms of concept, India has a universal healthcare system where health is primarily a state subject.

Primary Health Centres (PHCs) located in the cities, districts or rural areas provide medical treatment free of cost to the citizens of the country. The focus areas of these PHCs, as articulated by the government, are the treatment of common illnesses, immunization, malnutrition, pregnancy and child birth. For secondary or tertiary care, patients are referred to the state or district level hospitals.

The public healthcare delivery system is grossly inadequate and does not function with a very high degree of efficiency, though some of the government hospitals like, All India Institute of Medical Science (AIIMS) are among the best hospitals in India.

Most essential drugs, if available, are dispensed free of charge from the public hospitals/clinics.
Outpatient treatment facilities available in the government hospitals are either free or available at a nominal cost. In AIIMS an outpatient card is available at a nominal onetime fee and thereafter outpatient medical advice is free to the patient.

However, the cost of inpatient treatment in the public hospitals though significantly less than the private hospitals, depends on the economic condition of the patient and the type of facilities that the individual will require. The patients who are from below the poverty line (BPL) families are usually not required to pay the cost of treatment. Such costs are subsidized by the government.

However, in India only 35 percent of the population have access to affordable modern medicines. The healthcare facilities in the public sector are not only grossly inadequate, but also understaffed and underfinanced. As a result, whatever services are available in most of the public healthcare facilities, are of substandard quality to say the least, which compel patients to go for expensive private healthcare providers. Majority of the population of India cannot afford such high cost of private healthcare providers though of much better quality.

A recent report on healthcare in India:

A recent report published by McKinsey Quarterly , titled ‘A Healthier Future for India’, recommends, subsidising health care and insurance for the country’s poor people would be necessary to improve the healthcare system. To make the healthcare system of India work satisfactorily, the report also recommends, public-private partnership for better insurance coverage, widespread health education and better disease prevention.

The way forward:

In my view, the country should adopt a ten pronged approach towards a new healthcare reform process:

1. The government should assume the role of provider of preventive and primary healthcare across the nation.

2. At the same time, the government should play the role of enabler to create public-private partnership (PPP) projects for secondary and tertiary healthcare services at the state and district levels.

3. Through PPP a robust health insurance infrastructure needs to be put in place, very urgently.

4. These insurance companies will be empowered to negotiate all fees payable by the patients for getting their ailments treated including doctors/hospital fees and the cost of medicines, with the concerned persons/companies, with a key objective to ensure access to affordable high quality healthcare to all.

5. Create an independent regulatory body for healthcare services to regulate and monitor the operations of both public and private healthcare providers/institutions, including the health insurance sector.

6. Levy a ‘healthcare cess’ to all, for effective implementation of this new healthcare reform process.

7. Effectively manage the corpus thus generated to achieve the healthcare objectives of the nation through the healthcare services regulatory authority.

8. Make this regulatory authority accountable for ensuring access to affordable high quality healthcare services to the entire population of the country.

9. Make operations of such public healthcare services transparent to the civil society and cost-neutral to the government, through innovative pricing model based on economic status of an individual.

10. Allow independent private healthcare providers to make reasonable profit out of the investments made by them

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.

Increasing penetration of Health Insurance: an important way to improve affordability and access to healthcare

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While India is making rapid strides in its economic growth, the country is increasingly facing constraints in providing healthcare benefits to a vast majority of its population. This is mainly because of the following reasons:1. Inadequate healthcare infrastructure and delivery system2. Lack of proper healthcare financing/insurance system for all strata of society

3. Difficulty in managing costs of healthcare even when the country is producing drugs for the world market

In this article I shall touch upon only on the healthcare financing/insurance part of the problem.

Sporadic initiatives:

We find some sporadic initiatives for population below the poverty line (BPL) with Rashtriya Swasthya Bima Yojana (RSBY) and other health insurance schemes through micro health insurance units, especially in rural India. It has been reported that currently around 40 such schemes are active in the country. Most of the existing micro health insurance units run their own independent insurance schemes.

Some initiatives by the State Governments:

Following initiatives are being taken by the state governments:

1. The Government of Andhra Pradesh is planning to offer health insurance cover under ‘Arogya Sri Health Insurance Scheme’ to 18 million families who are below the poverty line (BPL).

2. The Government of Karnataka has partnered with the private sector to provide low cost health insurance coverage to the farmers who previously had no access to insurance under “Yeshaswini Insurance scheme”. This scheme covers insurance cover towards major surgery, including pre-existing conditions.

3. Some other state governments have also started offering public health insurance facilities to the rural poor. In fact, some private health insurers like Reliance General Insurance and ICICI Lombard General Insurance were reported to have won some projects on health insurance from various state governments.

Cost of healthcare is rising but the penetration of health insurance is still very poor:

All over India costs of all types of healthcare be it primary, secondary or tertiary, are going beyond the reach of common man. Even in rural India penetration of such schemes is almost as poor as the organized health insurance schemes available in urban India. In a situation like this one will need to ponder why the penetration of health insurance and micro health insurance is so low in our country covering just around 35 to 40 million of the population.

Government spend on health is too low:

Even today the Government spends just 1.2% of GDP on health. When both public and private sectors expenditures are put together this number works out to not more than 5%.

It has been reported that in 2005-06 the total private expenditure towards healthcare was around Rs 1, 35,000 crore. This number is expected to grow at a 5-year CAGR of around 16%.

High ‘out of pocket’ expenditure towards healthcare:

Currently around 78% of healthcare expenditure is ‘out of pocket’ and without any health insurance cover. A recent survey of the National Survey Organization has reported that around 40% of the people who get admitted to hospitals for treatment go through extreme financial hardship and many a times are compelled to abandon the treatment or need to sell of their property to meet such unavoidable expenditure towards health.

Disease pattern undergoing a shift increasing healthcare expenditure:

As the disease pattern is undergoing a shift from acute to non-infectious chronic illness, the cost of treatment is becoming even more. In a situation like this there is an urgent need to have a robust healthcare financing system within the country.

Covering domiciliary treatment through health insurance is important:

Currently heath insurance schemes only cover expenses towards hospitalization. However, medical insurance schemes should also cover domiciliary treatment costs and loss of income along with hospitalization costs.

Government policy reforms towards health insurance are essential:

Currently Indian health insurance segment is growing at 50% and according to PHD Chamber of Commerce and Industry the segment is estimated to grow to US$ 5.75 billion by 2010. Even this number appears to be much less than adequate for a country like India.

It is high time that the Government creates a conducive environment for increased penetration of health insurance within the country through some innovative policy measures. One such measure could be to make it mandatory for all employers, who are required to provide provident fund facilities to their employees to also offer health insurance facilities to all of them.

It is a pity that the concept of health insurance has not taken off in our country, as yet, though has immense growth potential in the years to come. Innovative policy measures of the government towards this direction along with increasing the cap on Foreign Direct Investment (FDI) for health insurance will encourage many competent and successful global players to enter into this market. With the entry of efficient successful global players in health insurance segment, one can expect to see many innovative insurance products to satisfy the need of a large number of Indian population in the healthcare space. Such measures will also help increasing their retail distribution network with a wide geographic reach, significantly improving the affordability and access to healthcare of a large number of population of the country.

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.