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Regulatory Environment
Indian Pharma: News Updates
and Policies
November 1st – November 15th, 2009

Investment Updates Section I: Regulatory Environment and Policies

Issues
Ministry may reviewsale of 12 risky drugs
Developments
The Drugs Technical Advisory Board (DTAB) is likely to deliberate on 12 drugs which are banned in
several parts of the world but are still allowed in India.

DCGI to move courts on WHO export certificate stay orders

The Drug Controller General of India has decided to move courts on the multiple stay orders that
have put a brake in its efforts towards centralizing issuance of the WHO pharma export certificate.

Section II: Investment Updates

Diagnostic major Quiagen plans expansion in India

Quiagen, the German molecular diagnostic major, is planning to expand its Indian operations in a big
way. The company is considering a manufacturing facility in the country by 2010 to cater to the
growth opportunity in the cervical cancer detection segment.

Aurobindo to offer contract manufacturing services

Hyderabad-based drug manufacturer Aurobindo Pharma Ltd (APL) has set up a separate division,
„Aur O Source‟, which will exclusively offer contract research and manufacturing services (Crams) for
new chemical entities (NCEs).

Torrent Pharma to invest Rs 475 cr in Sikkim, Dahej

Torrent Pharmaceuticals is looking at regulated drug markets, like the US, for selling products from
its upcoming formulations facility in the Dahej special economic zone (SEZ), while its other
formulations manufacturing facility in Sikkim is expected to come on stream by October 2010.

Section III: Issues

Pharma slows down, grows at 9.6%

Growth in the domestic pharma market dipped in September over the previous month, but was still
nearly double digit at 9.6%. The industry had posted a robust growth of 16.5% in August this year.
Ironically, a meagre growth of 7% in anti-infectives — seems to have pulled down the industry‟s
growth during the month.
EU seizes another generic package
In yet another instance of attacks on Indian generics in the European Union, a consignment of 1.74
million tablets of anti-platelet drug clopidogrel from Mumbai-based Macleods Pharma to Venezuela
is learnt to have been seized at the Paris airport in October on grounds of patent violation.

India takes drug seizure issue to WTO

The seizure of another consignment of Indian generic drugs, in transit, has pushed India to drag the
issue to the TRIPS Council, a high-level body of the World Trade Organization (WTO) dealing with
intellectual property issues.

Generic drug cos see a bitter pill in 'counterfeit' label

The fear of generic drugs coming under the definition of 'counterfeit drugs' is haunting the Indian
pharma industry yet again. The domestic pharma industry has urged the government to play a
more proactive role in the issue by raising objection to the repeated use of the word 'counterfeit
drugs' in the World Health Organisation working papers.

AstraZeneca sues Lupin for 'infringing on' drug patent

Anglo-Swedish drug giant AstraZeneca has sued the Mumbai-based pharma company Lupin Ltd in
the US District Court of New Jersey charging it of infringing the innovator's patent coverage by
attempting to manufacture and market anti-ulcer drug Nexium (esomeprazole magnesium), one of
the top five blockbuster drugs globally.

Pharma Mncs Campaigning Against Domestic Sector: Sharma

India complained to the World Intellectual Property Organisation (WIPO) has stated that some
multinational firms have launched a campaign against the country‟s pharmaceutical industry.

Novartis puts R&D activities in India on hold

Frustrated with patent challenges, Swiss-pharma giant Novartis has put its research and
development (R&D) activities in India on the back burner, its CEO Daniel Vasella said. Mr Vasella,
who was in town to attend the Pepsico board meet, said the intellectual property (IP) protection was
not up to the mark in India.

Section IV: Developments

Pharma club seeks protection from foreign predators

The Indian Pharmaceutical Alliance (IPA), the association of the country's leading domestic drug
producers, has sounded the alarm bells against foreign companies acquiring homegrown players. In
fact, it has sought financial assistance from the government to make business more sustainable for
domestic entrepreneurs.

Caraco may shift production to India

Sun Pharmaceutical Industries‟ US-based subsidiary Caraco, which is facing a Food and Drug
Administration (FDA) ban on manufacturing, is looking at shifting production of some of the drugs to
India.
India is growth tonic for mid-tier global pharma
Global drug makers such as Teva Pharmaceuticals, Watson Pharma, Lonza, Eisai Pharmaceuticals,
Ethypharm and Astellas are now making India a major manufacturing and research and development
centre for their global operations. Their strategy is to either set up greenfield facilities or acquire small
companies or plants in which they will invest further. There are many mid-tier firms which have plans
for India although they may lack the "sex appeal" of Big Pharma.

Chemists Gang Up To Form Offbeat Firm

As many as 550,000 pharmaceutical retailers and 60,000 stockists from across the country have
come together to form an offbeat company. The firm AIOCD Ltd, will help government planners,
pharma companies and non-governmental organisations working on community health by
gathering statistics and creating it into a database.

Sikkim turns into a pharma hub

At present, Sikkim is home to as many as 14 major pharma companies, which have significant
investments in the state. These include the who's who of Indian pharma sector - Cipla, Sun Pharma,
Zydus Cadila, Alembic, IPCA, Alkem Lab, Intas Pharma, Torrent Pharma and of course, Unichem.
Industry grapevine suggests even the likes of Lupin is also evaluating the state.

US health bill to benefit local generic firms

The US healthcare bill, which has been passed by the US House of Representatives and is awaiting
nod from the Senate, holds a lot of promise for generic drug manufacturers from India. With
emphasis on increasing the coverage and reducing healthcare costs, the bill is going to provide a big
fillip to the usage of low-cost generic drugs.

Watch out for US recovery, new products

Robust growth in profits despite modest rise in revenues characterised the performance of the Indian
pharma sector for the latest quarter ended September 2009. The analysis of aggregate results of
leading 18 pharma companies reveals an 83% Y-o-Y rise in net profit, while net sales grew at a
modest rate of 10%. Savings on raw materials, cost management, and absence of forex losses have
primarily resulted in doubling of profits over the previous year.

Novo Nordisk looks to make India hub for South Asia

Denmark-based Novo Nordisk, a world leader in diabetes care, is looking at India as a hub for
manufacturing insulin for the entire sub-continent. The company today inaugurated a dedicated
facility with a capacity of 26 million vials per annum in partnership with Ahmedabad-based Torrent
Pharmaceuticals Ltd.

Section I: Regulatory Environment & Policies

Ministry may review the sale of 12 risky drugs

rd
3 November, 2009. DNA.
The Drugs Technical Advisory Board (DTAB) is likely to deliberate on 12 drugs which are banned in
several parts of the world but are still allowed in India.

The DTAB, which is the highest body on technical matters regarding the pharmaceuticals segment,
under the Union ministry of health, is planning to discuss the matter in its meeting this month, said a
person closely associated with the body.

Drugs including those like nimesulide (pain/fever, side-effect — liver damage), droperidol (anti-
depressant, side-effect-irregular heart beat), furazolidone (anti-diarrhoeal, side-effect-cancer),
nitrofurazone (anti-bacterial, side-effect — cancer) are some which have been banned in several
parts of the world, including the US and the UK.

Industry experts say the market potential for these drugs in India's Rs 34,000 crore domestic drug
market ranges between Rs 2 crore and Rs 150 crore annually.

Says a senior research analyst with a securities firm in Mumbai: "Though there are no exact figures,
we can say that the annual market for nimesulide is about Rs 150 crore at present. India is one of the
very few countries to allow this drug to be marketed."

However, C M Gulhati, editor of Monthly Index for Medical Specialties (MIMS), a reference journal for
medical practitioners, says the likelihood of these drugs actually getting banned appears negligible.
"If at all they decide to ban, the casualties are most likely to be droperidol, oxyphenbutazone
(painkiller, can cause blood disorders), as they have miniscule sales compared with the rest."

The media relations officer of the ministry of health said he was unaware of what all the DTAB meet
will deliberate on.

The Drugs Controller General of India (DCGI) Surinder Singh, who holds authority over granting
approvals or banning drugs, could not reached for comment.

According to a consultant, internal medicine, at a leading corporate hospital based in Bangalore,

drugs which are banned globally should also be banned in India. "A drug is banned when its risks
outweigh its benefits and it is considered to be dangerous. So, if a drug appears dangerous for
populations elsewhere, it would be risky for Indians also."

Says a senior consultant, internal medicine from a north-based hospitals chain: "There are several
options available for any indication like fever or pain. So these risky medicines should be best
avoided and safer alternatives should be taken."

These drugs can do more damage in a country like India where several people self-medicate and
where drugs are sold without prescriptions, says a former administrator of the Maharashtra Medical
Council.

Also, the system of reporting adverse drug reactions is nearly non-existent in India, said Gulhati.
"Doctors do not maintain proper patient records and also at times fail to seek patient information
about use of certain medications, etc. Without proper patient data, it is difficult to report any akdverse
drug reaction. So it's tough to say that a drug should be banned in India only if the adverse reaction is
reported here."

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DCGI to move courts on WHO export certificate stay orders

th
13 November, 2009. The Financial Express.
The Drug Controller General of India has decided to move courts on the multiple stay orders that
have put a brake in its efforts towards centralising issuance of the WHO pharma export certificate.
"The DCGI office could file a counter-affidavit in the Madras High Court as soon as Wednesday
evening while it would appeal to vacate the stay before the Karnataka High Court on Friday in most
likelihood," a DCGI official told FE.

The Madras High Court had stayed the DCGI's order three times while the Bangalore High Court
stayed it once within a span of ten days on the plea of drug inspectors and manufacturers. The latest
stay order was granted on October 23, on Confederation of Indian Pharmaceutical Industries' plea,
which has stayed the DCGI move for eight weeks. The DCGI would appeal for an early vacation of
the order.

The industry experts told FE that DCGI's appeal rests on strong ground. "Firstly, the exporters had
challenged the DCGI's power to implement such a move, which according to them is not the national
regulatory authority under the Drug and Cosmetics Act (DCA). But the DCA doesn't directly regulate
exports, it regulates only manufacturing, sale and imports and DCGI is the closest approximation to a
national regulatory authority that we have in the country by any stretch of imagination," said a legal
counsel. He pointed out that in its rules WHO refers to a competent authority, it doesn't say
"authority(ies)", which indirectly warns against creating multiplicity of agencies to issue the certificate.

DCGI officials say that the court would take cognizance of the fact that the action of DCGI to
centralise the issuance of CoPP was triggered by WHO's repeated requests and the certificate
issued is a WHO stamp at the end of the day.

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Section II: Investment Updates

Diagnostic major Quiagen plans expansion in India

th
9 November, 2009. Business Standard.
Quiagen, the German molecular diagnostic major, is planning to expand its Indian operations in a big
way. The company is considering a manufacturing facility in the country by 2010 to cater to the
growth opportunity in the cervical cancer detection segment.

In an interview with Business Standard on the sidelines of Indian Economic Summit here on Sunday,
Thomas Schweins, the company‟s vice-president for marketing and strategy, said it was open to
acquisitions to ensure a space in the fast-growing Indian diagnostic market.

“Over 70,000 people die of cervical cancer in India each year. The ones who are diagnosed every
year will come to about 150,000. We want to offer diagnostic solutions to the young women of the
country to see that they are screened well in advance, to eliminate the disease,” he said.

Quiagen has an ongoing partnership programme with PATH, an international health NGO being
funded by the Bill and Melinda Gates Foundation, to undertake demonstrative screening in select
Indian towns.

Schweins said the partnership can be expanded to other public programmes, once the new cost-
effective sceening method being tried by Quiagen is proved successful. “In the special cervical
cancer screening solutions developed by us for PATH, there is no need for specialised lab
technicians. The tests can be conducted even without electricity or pure water. This is tailormade to
suit developing country situtations and we are expecting a huge business opportunity in this segment
in the coming years.”

Quiagen‟s plan for a manufacturing facility in India is also linked to the growing need for diagnostic
services within the country. “Given the import duties, it is economical to manufacture the product
within the country than import them. We are also planning to have an inhouse research and
development facility here,” he added.

Quiagen has also recently tied up with Merc, the global drug maker, to increase access to HPV
(cervical cancer) testing in some of the most resource-poor areas of the world.

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Aurobindo to offer contract manufacturing services
th
13 November, 2009. Business Standard.
Hyderabad-based drug manufacturer Aurobindo Pharma Ltd (APL) has set up a separate division,
„Aur O Source‟, which will exclusively offer contract research and manufacturing services (Crams) for
new chemical entities (NCEs).

“With regard to NCEs, we are getting many enquiries for Crams. There are lots of enquires from
Pfizer alone. Hence, we decided to set up a separate division,” APL Chairman P V Ramprasad
Reddy told Business Standard.

Though APL has been long engaged in the Crams‟ generics business, this is the first time it will be
offering Crams for NCEs.

Reddy said the company had invested Rs 25 crore in the new division, for which 200 persons had
been recruited. It would go on stream on April 1, 2010.

APL, which acquired Trident Life Sciences in August to enter the area of high-growth injectables, is
also setting up a separate company, Auro Next Pvt Ltd, in collaboration with a local manufacturer at
its existing facility in Noida.

“We are investing around Rs 30 crore in the new facility, which will be dedicated to the production of
carbopenam (advanced antibiotics) injectables. It will be operational from the third quarter of the next
financial year,” Reddy said, adding that the local partner would have a 25 per cent stake in the
company.

He said injectables will be a significant contributor to APL‟s revenues from 2011 onwards. This
segment is expected to contribute $50 million in 2011 and up to $400 million by 2013.

Recently, APL expanded its partnership with Pfizer, the global pharma major, with licensing and
supply agreements for solid dosage and sterile products for Europe, Australia and Canada.

Under the pact, Pfizer has acquired the marketing rights for 42 APL products each for Europe and
Australia and 21 products for Canada. This is in addition to the 60 APL products for which Pfizer
acquired rights in May this year, for marketing in several countries through Asia, Latin America and
West Asia.

In this context, Reddy dismissed reports that Pfizer was likely to take over APL. “Pfizer is not
interested in taking part or full equity of APL. They are only interested in licensing our products,” he
said.

Meanwhile, APL is set to inaugurate its formulation unit at the pharmaceutical special economic zone
near Jadcherla, 80 km from here.

The Rs 170-crore unit, spread over 30 hectares, has an output capacity of 13.2 billion tablets and 1.3
million capsules yearly.

APL reported a net profit of Rs 103.2 crore for the quarter ended September 30, as compared with a
net loss of Rs 38.4 crore during the corresponding period last year. Its revenues during the quarter
registered a 24.4 per cent increase to Rs 882.6 crore as compared with Rs 709.4 crore last year.

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Torrent Pharma to invest Rs 475 cr in Sikkim, Dahej

th
15 November, 2009. Business Standard.
Torrent Pharmaceuticals is looking at regulated drug markets, like the US, for selling products from
its upcoming formulations facility in the Dahej special economic zone (SEZ), while its other
formulations manufacturing facility in Sikkim is expected to come on stream by October 2010.
The Dahej SEZ is a 50:50 joint venture between the Gujarat Industrial Development Corporation
(GIDC) and ONGC. Already, 28 companies have finalised their plans for setting up manufacturing
units in the area. “We will invest around Rs 350 crore in the Dahej SEZ and have started work on
land development there. The acquisition process is complete. The facility will take around three to
three-and-a-half years to become operational,” Chief Operating Officer Sanjay Dalal said.

Meanwhile, the company‟s Sikkim project is on track and will start commercial production with an
annual capacity of 3.50 billion tablets from the middle of the next financial year. The company has
invested around Rs 125 crore in the six-acre facility. Torrent also has seven discovery projects in the
pipeline. It has filed 336 patents for NCEs (new chemical entities) in all major markets worldwide, of
which 144 patents have been granted so far.

Torrent‟s manufacturing plant at Chhatral has a capacity to manufacture approximately 3 billion

tablets, capsules and vials and 15,000 kg of Bulk Drugs/API (active pharmaceutical ingredients).

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Section III: Issues

Pharma slows down, grows at 9.6%

nd
2 November, 2009. The Times of India.
Growth in the domestic pharma market dipped in September over the previous month, but was still
nearly double digit at 9.6%. The industry had posted a robust growth of 16.5% in August this year.
Ironically, a meagre growth of 7% in anti-infectives — seems to have pulled down the industry‟s
growth during the month.

This was also reflected in performance of top anti-infective brands, with the exception of Augmentin
and Ceftum (Glaxo) which grew by 16.7% and 43.4% respectively over the corresponding period
previous year. Others reported a modest show — Taxim (Alkem, -5.3%), Zifi (FDC, 6.5%), Mox
(Ranbaxy, 7.9%), Monocef (Aristo, 1.7%), Sporidex (Ranbaxy, -12.9%) and Novamox (Cipla, -0.9%).

The largest therapeutic segment with an industry share of 25%, gastro-intestinal and metabolic
diseases grew by a healthy 14%, according to market consultancy ORG-IMS.

Zydus Cadila executive director Ganesh Nayak said the performance of pharma industry during
September is on expected lines. With low monsoons this year, the off take in anti-infectives has been
impacted which has brought down the overall industry growth rate while the other segments, that are
non-seasonal in nature, have continued to grow and have been able to balance the downtrend in
anti-infective segment. Hence this dip in growth rate is a monthly aberration which will get corrected
on its own in the coming months.

Most top-ranking companies including Sun Pharma, Glaxo, Zydus Cadila and Piramal Healthcare
posted a healthy growth during the month, in some cases even exceeding industry growth, industry
sources said. Sun Pharma led the pack with 18.4% growth, followed by Ahmedabad-based Zydus
Cadila which grew by 16.7%. Glaxo, the third largest company (in terms of market share) also
recorded a healthy growth of 16%, while Piramal Healthcare posted a growth of 14.3% followed by
Mankind which recorded a growth of 13.4%.
Among the top 10 companies, Cipla (5.1%) and Aristo (4.8%) underperformed as against the
industry.

There were no changes observed in the ranking of top 10 companies during the month with Cipla at
the top spot, followed by Ranbaxy and GSK. The remaining slots were occupied by Piramal
Healthcare which was ranked fourth, followed by Zydus Cadila at the fifth position.

Among the top 20 companies, top gainers in September (as against August „09) were Sanofi Aventis,
Emcure and Intas Pharma, who have gained one rank each and moved up to rank 15, 16 and 18
respectively.

Amongst drugs, cough syrup Phensedyl Cough occupied the topmost position leaping eight ranks to
move to first slot, while another cough syrup Corex and pain killer drug Voveran were ranked at the
second and third slot. Other top gainers included Augmentin, Cifran and Omez who have gained
three ranks each and moved up to rank 5th, 16th and 21st slots respectively.

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EU seizes another generic package

rd
3 November, 2009. DNA.
In yet another instance of attacks on Indian generics in the European Union, a consignment of 1.74
million tablets of anti-platelet drug clopidogrel from Mumbai-based Macleods Pharma to Venezuela is
learnt to have been seized at the Paris airport in October on grounds of patent violation.

Clopidogrel is used for inhibiting blood clots and is marketed as Plavix by US-based Bristol-Myers
Squibb and French major Sanofi Aventis. It was the second-largest selling drug in 2008, with global
sales of about $8.63 billion as per IMS Health estimates.

Officials from Macleods Pharma could not be reached for a comment. This is the latest in a series of
seizures of India made generics in the EU.

In May this year, a consignment of 3.04 million tablets of generic amoxicillin (for bacterial infections)
worth €28,000, from Hyderabad-based Dr Reddy's Labs, was seized at Frankfurt airport in Germany.
The consignment was meant for the Republic of Vanuatu, a small country in the South Pacific Ocean.

Between October 2008 and early 2009, about 16 consignments of legitimate Indian generics worth
crores of rupees, bound for markets in Columbia, Peru, Brazil and Nigeria, etc, were seized by the
customs at the Amsterdam airport on charges of infringing the patent held by innovator companies in
the Netherlands. The seized drugs, which included those for treating AIDS, alzheimer's, blood
pressure, etc, were from drugmakers such as Cipla, Aurobindo Pharma and Ind-Swift Laboratories.

The seizures have dented India's generic exports tally — drug exports from the country between
April, 2008 and January, 2009 totalled Rs 31,608 crore, according to the commerce ministry —- and
also denied patients in the South American and African countries access to cheaper medicines.

"In spite of repeated assurances the EU has given, the practice has not stopped, and they continue
to harass Indian generics which are destined to developing countries in South America and
elsewhere," D G Shah, secretary general of Indian Pharmaceutical Alliance said.

A New Delhi-based patent expert said the seizures, rather than the drugs seized, were illegal. "The
said drugs neither enjoy patent protection in India nor in the countries where they were to be
imported. They are patented products in the EU markets, but are not meant for the EU population.
Hence, it's not right to detain them in the EU. They were just getting exported from India to the other
developing countries via the EU," the expert said.

"Generics are not substandard or illegal. Often, the customs actions are instigated by complaints
from EU companies alleging that the medicines may be counterfeit and violate their intellectual
property. It's a dismay that some members of the EU are linking safe and efficacious but low-cost
generics with counterfeit medicines, which is an intellectual property issue," the expert said.

An official of a domestic pharma company, whose consignments have been seized in recent past,
pointed out that many developing countries do not have the capacity to manufacture medicines and
hence rely on generics, which are 40-80% cheaper than innovators products, from countries like
India. "As such, trade in legitimate medicines between countries is fundamental to ensuring access to
medicines for millions," the official said.
A member of the international humanitarian organisation Medecins Sans Frontieres (MSF) said
barriers to legitimate trade of generics will seriously impair the efforts of humanitarian organisations
in providing medicines to the least developed parts of the world. MSF works in over 70 countries and
sources 80% of its requirement of AIDS drugs and 25% of its malaria and TB drugs, as also
antibiotics, from India.

On its part, the government has assured the industry that it would take up the matter with the World
Trade Organisation. Industry experts, though, aren't ready to bet on when or how effective the talks
with the world body would be, just yet.

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India takes drug seizure issue to WTO

th
4 November, 2009. Business Standard.
The seizure of another consignment of Indian generic drugs, in transit, has pushed India to drag the
issue to the TRIPS Council, a high-level body of the World Trade Organization (WTO) dealing with
intellectual property issues.

Last month, French customs authorities seized 740,000 tablets of heart attack prevention medicine
Clopidogrel, that were shipped by Mumbai-based Macleods Pharma to Venezuela, on complaints of
alleged patent violation.

Sanofi Aventis, the European drug maker that enjoys the patent rights over the drug, complained that
the consignment violated its patent rights.

India informed the TRIPS council meeting in Geneva last week that widespread and repeated
seizures would have an adverse impact on legitimate trade of generic medicines, universal access to
medicines in the Third World countries and national public health budgets.

This was the 18th instance of seizure, and second during the year, when generic drugs meant for
developing countries were confiscated during transit within the European Union, though the
manufacture of the drug in India and sale in the destination country were legal.

According to the Permanent Mission of India to WTO in Geneva, the seizure happened in spite of
India‟s persistent efforts to convince the European Commission on the need to review its rule that
allows confiscation of such consignments even if they are not meant to be used in the country.

The government is also planning to take up the matter with WTO‟s dispute settlement forum soon,
said a senior government official.

The same drug was seized on similar grounds in October last year in Amsterdam and was released
seven months later.

The regulation in question — EC Regulation 1383 — allow protection of patents and other intellectual
property rights (IPRs) and extends to goods in transit.

Industry sources said the situation was likely to remain grim unless there was a change in the EU
regulation.

Further, the transit issue has also been mixed up with sub-standard and spurious medicines, which,
the domestic industry feels, needs a separate treatment as compared to allegations over IPR
violations.

The Indian Pharmaceutical Alliance (IPA), the select club of leading domestic drug firms, has
identified seizure in transit and IPR enforcement and protection as serious challenges being faced by
the industry in the international arena. IPA had even asked for financial assistance from the
government to fight the enormous challenges faced by the domestic industry at a global level.

“We have not sought any protection from the central government to save the industry. The intention
is to seek appropriate funding mechanism for litigations involving issues such as seizures (happened
in Paris),” IPA secretary general D G Shah said.

IPA members — Cadila Healthcare, Cadila Pharmaceuticals, Dr Reddy‟s, Glenmark, Intas, Lupin,
Sun, Micro Labs, Torrent, Unichem, USV and Wockhardt — account for a third of India‟s drug exports
and a third of the domestic market.

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Generic drug cos see a bitter pill in 'counterfeit' label

th
7 November, 2009. The Financial Express.
The fear of generic drugs coming under the definition of 'counterfeit drugs' is haunting the Indian
pharma industry yet again. The domestic pharma industry has urged the government to play a more
proactive role in the issue by raising objection to the repeated use of the word 'counterfeit drugs' in
the World Health Organisation working papers. In one of its latest working papers, released in
October, the 44th expert committee on specifications for pharmaceutical preparations of WHO invites
suggestions on measures that should be adopted globally against penetration of counterfeit (drugs)
into legitimate supply chain while working on proposal for revision of WHO good distribution practices
for pharma products.

The pharma industry representatives met the health ministry officials last week and urged them to
register the government's protest to the definition of 'counterfeit' used in the paper and the very use
of the word 'counterfeit' for drugs. First, they want the word counterfeit to be replaced with either
'spurious' or 'sub-standard', which captures the essence of fake drug in most appropriate terms. The
industry has been opposing the term on the pretext that the generic use of 'counterfeit' has an in built
intellectual property right connotation in it, when applied to any area other than medicines.

The working paper defines "counterfeit pharma product" as 'a pharmaceutical product which is
deliberately and fraudulently mislabeled with respect to identity and/or source. Counterfeiting can
apply to both branded and generic products and counterfeit pharmaceutical products and may
include products with the correct ingredients or with the wrong ingredients, without active ingredients,
with insufficient active ingredients or with fake packaging'.

While the pharma industry has commended the fact that WHO has not used the ambiguous term
'history' which figured along with 'identity' and 'source' initially in the working definition of 'counterfeit
product' by International Medical Products Anti-Counterfeiting Taskforce (IMPACT), an initiative
under the WHO, the pharma industry still has other objections.

The domestic industry leaders point out that the definition should clearly specify 'source' of 'what', the
finished formulation or the API (Active Pharma Ingredients), the active chemicals used in
manufacturing the drugs. "There should be no scope for loose ends in the definition. It should be
precise, clear and crisp. Terms that leave the arena open for interpretations can spread misuse by
groups with vested interest. The global generic industry cannot afford open ends in the definition at a
time when perfectly genuine Indian generics have faced 18 seizures in the EU in last one and half
years," said a stakeholder actively involved in pursuing Indian generic industry's interest in the global
fora.

The domestic industry representatives feel when the definition uses correct ingredients and fake
packaging, it makes generic drugs susceptible to seizures, which cause delays, monetary losses,
and defamation of the Indian pharma industry, even if the industry is proven right at the end.

"For instance, many generic drugs have similar sounding names to their generic counterparts, which
could create suspicions on part of the countries which are neither source or destination but fall en
route. Also, fake packaging involves misbranding issues, which implies generic drugs would be
always under threat," said the source.

The industry feels that, earlier, this definition worked as generic producers didn't pose formidable
business threat to Big Pharmas, but times have changed and the definition needs to evolve with time.
"Office bearers within IMPACT and WHO have publicly acknowledged the need to stop using
'counterfeit' for drugs in their medium-term goals in meetings last year and this year. The WHO South
East Asia Regional Office passed a resolution emphasising the need to separate issues related to
intellectual property enforcement from the safety, quality and efficacy of medicines."

Even IMPACT agreed on the following in its third general meeting in December 2008, "Violations or
disputes concerning patents must not be confused with counterfeiting of medical products. Medical
products (whether generic or branded) that are not authorised for marketing in a given country but
authorised elsewhere are not considered counterfeit. Sub-standard batches of, or quality defects or
non-compliance with Good Manufacturing Practices/Good Distribution Practices (GMP/GDP) in
legitimate medical products must not be confused with counterfeiting".

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AstraZeneca sues Lupin for 'infringing on' drug patent

th
11 November, 2009. The Financial Express.
Anglo-Swedish drug giant AstraZeneca has sued the Mumbai-based pharma company Lupin Ltd in
the US District Court of New Jersey charging it of infringing the innovator's patent coverage by
attempting to manufacture and market anti-ulcer drug Nexium (esomeprazole magnesium), one of
the top five blockbuster drugs globally. The drug is indicated in case of gastroesophageal reflux
disease. The innovator has objected to all the five filings that Lupin has made in its Abbreviated New
Drug Application (ANDA) to the US Food and Drug Administration (US FDA) to market the generic
version of Nexium with strength 20 and 40 mg.

The drug is projected to clock over $5.5 billion globally this financial year. Of this, the company has
already garnered $3.6 billion in the first nine months of the current financial year with a revenue of
$2.1 billion from the US market only. The drug clocked sales worth $5.22 billion in 2007, and
commands over more than 40% of market share in the anti-ulcer category in 2009. Nexium is one of
the most important drugs used for the treatment of gastroesophageal reflux disease (GERD), which
affects 20% of the population in the United States around 6% of the global population making the
marketsize of the drug very lucrative for the generic companies. A Lupin spokesperson Fe spoke to
refused to comment on the litigation aspects of the specific case but said that litigations related to
patent busting form necessary part of any generic player's portfolio.

AstraZeneca had settled a patent litigation on Nexium with the Daiichi Sankyo owned second largest
domestic drug maker Ranbaxy Laboratories last year in April. According to the settlement, Ranbaxy
could market the generic version of Nexium starting middle of 2014. However, the Gurgaon-based
pharma firm would start supplying the key raw material of the drug to AstraZeneca starting next year.
AstraZeneca has patent protection for Nexium till May, 2014, the year when first of the product's
patents is set to expire. Other patents related to Nexium would expire between 2014 to 2019.

Lupin has a steady record of patent settlements and has managed to settle four such cases in the
last two years. These include patent settlements with Wyeth for antidepressant Effexor XR and
Hatch-Waxman litigation relating to Desloratadine, a generic version of Schering-Plough's Clarinex
tablets in the recent past.

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Pharma Mncs Campaigning Against Domestic Sector: Sharma

th
12 November, 2009. The Hindu Business Line.
India complained to the World Intellectual Property Organisation (WIPO) on Wednesday that some
multinational firms have launched a campaign against the country‟s pharmaceutical industry.
Mr Anand Sharma, Minister of Commerce and Industry, told Mr Francis Gurry, Director General of
WIPO, “We know how the campaign was there. Some multinational firms continue to misinform,
mislead and confuse when it comes to the Indian generics, which have brought a major change in the
world.

“There was a time when there was suffocating stranglehold of multinational drug cartels in anti-
retrovial drugs for HIV AIDS.”

Several consignments of off-patent generic drugs by Indian firms have been seized in the recent past
in Europe while being taken to Brazil and some African nations. It was Indian pharmaceutical firms
that brought down the annual treatment cost of HIV AIDS to $400 from $11,000, said the Minister at a
meeting organised by the WIPO and FICCI.

Africa and Latin America are major markets for India‟s low-cost drugs used for treatment of HIV-
AIDS, tuberculosis and malaria. The two continents account for around 15 per cent of India‟s
pharmaceutical exports of about Rs 40,000 crore.

Another long-standing issue discussed on Wednesday with the WIPO was the right to read for the
visually challenged people.

The treaty for visually challenged people, which has been tabled before the WIPO, was discussed in
a meeting organised by the National Institute for the Visually Impaired, Daisy Forum of India and
Centre for Internet and Society. The visually challenged community of India made a brief
presentation and submission before Mr Gurry on India‟s position with regard to availability of books in
accessible formats for the visually challenged.

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Novartis puts R&D activities in India on hold

th
12 November, 2009. The Economic Times.
Frustrated with patent challenges, Swiss-pharma giant Novartis has put its research and
development (R&D) activities in India on the back burner, its CEO Daniel Vasella said. Mr Vasella,
who was in town to attend the Pepsico board meet, said the intellectual property (IP) protection was
not up to the mark in India. “In principle you can discover in India, you can do research. There has
been some progress on the protection of intellectual property but its not up to the standard that I
would expect to make an investment into discovery led research, Mr Vasella said.

The leader of one of the largest innovator companies said its recent decision to invest $1 billion in
China and not India was not driven by its bad experience with Glivec in India but investment friendly
environment in China. ovartis has been fighting a legal tussle for the past four years over its cancer
drug, Glivec.

Novartis was denied patent of its blockbuster cancer medicine Glivec by Bombay and Madras High
Courts which prompted the company to move to the Supreme Court. According to Mr Vasella, the
Supreme Court verdict on the Glivec case might be the turning point for Indian R&D.

“There is a significant differences between India and China - in the political system, in the decision
making processes, in the complexities of the processes and in the continuity. I think India has
potential but things take longer to get done, he said.

It may come as a surprise but China has made tremendous progress in IP and is enforcing IP in
pharmaceuticals, he said.

“The SC verdict on Glivec will be a very important signal and I hope that we would then see an
implementation and encouragement for investment in research. It is important to see how the
judgement, will impact the other practices of the patent offices. At some point, however, if the
decision favours innovation then I definitely see investment into R&D coming to the country.
“There is a significant differences between India and China - in the political system, in the decision
making processes, in the complexities of the processes and in the continuity. I think India has
potential but things take longer to get done. It may come as a surprise but China has made
tremendous progress in IP and is enforcing IP in pharmaceuticals, he said.

Mr Vasella said IP protection is the crux of any investment for pharma companies. “IP is very
fundamental to our business and any investment we make without it is a no go. Now Indian
companies are also investing in research and I believe they would create something more of an
intellectual basis.

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Section IV: Developments

Pharma club seeks protection from foreign predators

st
1 November, 2009. Business Standard.
The Indian Pharmaceutical Alliance (IPA), the association of the country's leading domestic drug
producers, has sounded the alarm bells against foreign companies acquiring homegrown players. In
fact, it has sought financial assistance from the government to make business more sustainable for
domestic entrepreneurs.
There have been six such instances (see table) in a little over a year. It all started when Daiichi
Sankyo of Japan acquired Ranbaxy Laboratories, India‟s largest pharmaceutical company, from the
Singh family.
In a letter to the department of pharmaceuticals, IPA has said the paucity of funds and the enormous
challenges faced by the domestic industry abroad have driven promoters to sell their companies.
The IPA complaint turns significant in the backdrop of increasing talk about foreign companies buying
into Dr Reddy‟s, Piramal Healthcare and Aurobindo.
According to IPA, all the acquired companies were engaged in intensive research and were
attempting international expansion. It has cited the example of Dabur Pharma, Ranbaxy and Shantha
Biotech.
The association has pointed out that the financial trouble at Wockhardt was triggered by the need for
more funds. “In a bid to develop a global infrastructure and accelerate entry of its value-added
products in the regulated markets, it relied on funds from elsewhere and had to suffer as there is no
funding mechanism in the country to meet the needs of the larger companies,” it said.
These sell-outs have highlighted the needs for appropriate funding mechanism to meet the
challenges faced by big and successful Indian companies and have exposed the limitations of the
current policy framework providing weighted deduction for R&D and meagre amounts under the
Market Development Assistance programme, the association said.

FAMILY SILVER LOST

Year Acquirer company Target company
Jun’08 Daiichi Sankyo Co Ltd Ranbaxy Laboratories
Aug’08 Fresenius Kabi AG Dabur Pharma
Pfizer
Vetnex Animal Health Ltd
Jun’09 (Animal Health
(earlier ICICI Venture acquired from Ranbaxy)
Business)
Jun’09 Vetoquinol SA Wockhardt (Animal Care Subsidiary)
Jun’09 Abbott Laboratories Wockhardt (Nutrition Business)
Through Merieux Alliance Shantha
Jun’09 Sanofi Aventis
Biotech (hiked stake from 60% to 80%)
It is easy to classify these stake sales as the greed of promoters, but unless the basic issues of the
domestic industry are addressed with foresight and understanding of the market dynamics, more
promoters may sell-out on account of frustration in keeping the business growing,” IPA Secretary
General DG Shah said. “This would ultimately hit not only exports of pharmaceuticals from India but
also the availability of quality medicines at affordable prices in the domestic market.”

IPA members (Cadila Healthcare, Cadila Pharmaceuticals, Dr Reddys, Glenmark, Intas, Lupin, Sun,
Micro Labs, Torrent, Unichem, USV and Wockhardt) are known to collectively account for Rs 2,100
crore of annual R&D expenditure. This is 90 per cent of the total private sector investment in
pharmaceutical research. The member companies also account for one-third of the country‟s drug
exports and a third of the sale in the domestic market.

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Caraco may shift production to India

nd
2 November, 2009. The Economic Times.
Sun Pharmaceutical Industries‟ US-based subsidiary Caraco, which is facing a Food and Drug
Administration (FDA) ban on manufacturing, is looking at shifting production of some of the drugs to
India.

The company will, however, remain focused on addressing the issues related to manufacturing and
compliance raised by the FDA, Caraco CEO Jitendra N Doshi said in its annual report.

Doshi said, Caraco is also considering selling some of its products, made by third party
manufacturers, through some other facility, including its parent company Sun Pharma. “We may also
transfer certain manufactured products to an alternate manufacturing site that could allow the
company to gain revenue from those products in less than six months,” Doshi said.

He added, "we currently have products that are manufactured by third parties, including sun pharma."
Sun pharma chairman dilip shanghvi said the firm has not yet taken any decision on shifting
production of drugs from the us subsidiary to its indian facilities.

"The decision to shift manufacturing from caraco to sun would be taken on product-to-product basis
and till now we have not taken any decision in this regard," shanghvi said in a conference call with
analyst last week. On the request of the fda us marshals seized products manufactured at caraco's
michigan facilities, including raw materials, alleging violation of good manufacturing practice (gmp)
norms.

Later, caraco announced it has entered into a consent decree with the fda under which it would take
a series of corrective measures that would enable the company to resume manufacturing and
distributing of products made in detroit.

"Though near term sales of manufactured products will surely be impacted we believe we are
effectuating the changes required to manufacture products in a plant that meets regulatory
requirements," dish said.

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India is growth tonic for mid-tier global pharma

nd
2 November, 2009. Business Standard.
Two months ago, Michigan-based Perrigo Company, one of the world's largest over-the-counter
(OTC) pharmaceutical producers with over $2 billion sales, acquired 85 per cent in Mumbai-based
Vedants Drugs and Fine Chemicals for nearly Rs 60 crore.

The OTC major plans to pump in millions of dollars into Vedants‟ manufacturing facility coming up by
2011 at Ambernath near Mumbai.
Perrigo will then move production of active pharmaceutical ingredients (APIs or the key therapeutic
substance in a drug) from its sites in Germany and Israel to India.

There are many mid-tier firms like Perrigo with similar plans for India. They may lack the "sex appeal"
of Big Pharma, but global drug makers such as Teva Pharmaceuticals, Watson Pharma, Lonza, Eisai
Pharmaceuticals, Ethypharm and Astellas are now quietly making India a major manufacturing and
research and development centre for their global operations. Their strategy is to either set up
greenfield facilities or acquire small companies or plants in which they will invest further.

“It is a conscious strategy of these companies as they are new entrants into India and will prefer to
learn and test the market for a few years with small investments. Once they get established, they
may look at large acquisitions or big investments in greenfield facilities,” said V K Singh, chief
executive of Ethypharm India.

The parent company, Ethypharm of France, is the largest new drug delivery system (NDDS or
cutting-edge chemistry innovations like one tablet instead of three) developer in the world and is
among the first such European companies to enter India with a manufacturing and research and
development centre in Mumbai.

Now, Ethypharm is making its Indian subsidiary the most important centre outside France for NDDS
activities, mainly complicated chemistry NDDS products required for big pharma. Already, the Indian
subsidiary contributes 10 per cent to its global turnover. The company will soon expand the capacity
of its existing facility and will lease more facilities, with a view to double turnover and triple profits
within three years, said V K Singh, a former Ranbaxy executive and a veteran industry professional.

Astellas Pharma, Japan's second-largest drug company with a turnover of $10.5 billion, is planning to
enter India with a similar strategy.

Astellas is now recruiting sales executives to launch its first product in India, its $2 billion flagship
brand Prograf, used to prevent rejection in organ transplant patients. The product will reach the
market in a few months.

“We aim to become market leaders in India within the next five years in various specialities in which
we will launch our products. Our focus is to establish our own sales and marketing strength for the
time being and we are not looking at local production for the next few years,” said Himanshu Dave,
Astellas' director, sales and marketing.

Astellas has every reason to initially tap the local market with its own imported products. India's
pharmaceutical market will expand by more than 12 per cent a year to reach $20 billion by 2015,
according to a McKinsey & Co analysis.

Meanwhile, Eisai Co, another leading Japanese company with annual sales of $8 billion, is making
India a major manufacturing hub. Eisai, which entered India in a small way in 2004, is now setting up
a huge API and drug and formulation research facility at Jawaharlal Nehru Pharma City SEZ in
Visakhapatnam, Andhra Pradesh.

The facility, at an investment of $300 million to $400 million (Rs 1,400 crore to Rs 1,900 crore), will
be operational by 2011. Eisai hoped to supply drugs to markets throughout Asia, Russia and Africa
from this facility, said sources.

Expertise in process chemistry-related drug development and the ability to make drugs at one-fourth
the cost incurred in US and Europe have made India one of the most preferred destinations for drug
manufacturing in the changing global pharmaceutical landscape, industry analysts said.

The Indian API manufacturing industry is the world‟s third largest and is expected to record exports of
$2.8 billion by 2010, with an average yearly growth rate of 19.3 per cent, according to estimates
PricewaterhouseCoopers (PwC).
Take the case of Watson Pharma, the second largest US-based generic drug maker. It acquired a
manufacturing plant of Dr Reddy‟s Laboratories in Goa in 2005, and bought Mumbai-based API
maker Sekhsaria Chemicals within a year.

After this, Watson sold its manufacturing units in Miami and divested an injectable drug making unit
in Arizona. Soon the company will close another unit in New York and will move most of the
production to India.

Plans are to make India the manufacturing hub for one-third of its global drug requirements. Watson
now employs close to 1,000 people in India at Goa and Mumbai. The company also has a decades-
old supply agreement with domestic major Cipla for many of its products sold in the US market.

“The Goa facility will produce over one billion tablets and capsules annually for the US market”, said
a Watson India executive. Israel‟s Teva Pharmaceutical Industries, the world‟s largest manufacturer
of generics drugs with over $11 billion sales, is also making India as a major manufacturing base.
Teva, which opened an API research and development centre near Delhi a couple of years ago,
bought over 100 acres of land near Gwalior in Madhya Pradesh last year. Plans are to set up API
manufacturing facilities at this site that will match the production capacity of leading Indian
companies.

Teva‟s plans are to invest close to $1 billion in India, including $300-400 million in greenfield
manufacturing facilities.

Regent Drugs, a small company that it acquired from JK Industries in 2003 with its API business, now
acts as a supplier to Teva‟s global drug requirements. Further, the company sources a good
percentage of its global drug requirements from four or five suppliers in India, industry sources said.

In the last five years, the company was attempting a major acquisition in India, but could not succeed
due to valuation issues, said investment banking sources. “Teva considers India an interesting
geographical region and is looking to broaden its activities in the country,” Shir Altay, company
spokesperson for Teva had said earlier on their India plans in an e-mail to Business Standard.

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Chemists Gang Up To Form Offbeat Firm

rd
3 November, 2009. Hindustan Times.
As many as 550,000 pharmaceutical retailers and 60,000 stockists from across the country have
come together to form an offbeat company.

The firm AIOCD Ltd, will help government planners, pharma companies and non-governmental
organisations working on community health by gathering statistics and creating it into a database.

The data to be collated from monthly sales figures from wholesalers would be disseminated to
various stakeholders for appropriate action as well as to keep a tab on demand levels in various parts
of the country.

The company, in a joint venture with Trikar Medi Infotech, has introduced PharmaTrac, an online
database of region wise pharma consumption figures, which the Indian pharma industry and policy
makers were looking for. So far they have been getting data from various sources available in the
market but now they would get accurate data much faster and accessible anytime anywhere.

"This initiative is going to change the market dynamics of the pharma industry," said J.S. Shinde,
chairman, AIOCD Ltd. "Our authentic data would be vital for business planning and to face
international competition."

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Sikkim turns into a pharma hub
th
4 November, 2009. The Economic Times.
Early this year, when Mumbai-based pharma major Unichem Laboratories was planning to expand its
capacity, it was in a fix. The company's existing plants at Goa, Ghaziabad and Baddi were already
running at full capacity and acquiring additional land in these places would have meant a pretty high
investment. At that point of time, the company started to evaluate Sikkim as another potential
destination.

Bingo! It took very little effort and time for Unichem to decide on its next manufacturing hub. It was
Sikkim. The tax incentives which this hilly state offered on the table was quite attractive and easily
comparable to the so-called pharma-hub, Baddi, at Himachal Pradesh. Unichem at one shot decided
to invest Rs 30 crore to set up an ultra-modern formulation plant. The plant is now expected to be
operational in a couple of months.

Today, Sikkim is home to as many as 14 major pharma companies, which have significant
investments in the state. These include the who's who of Indian pharma sector - Cipla, Sun Pharma,
Zydus Cadila, Alembic, IPCA, Alkem Lab, Intas Pharma, Torrent Pharma and of course, Unichem.
Industry grapevine suggests even the likes of Lupin is also evaluating the state.

Believe it or not, Sikkim - which is the least populous state in the country and the second-smallest
after Goa - has already attracted pharma investment upwards of Rs 2,500 crore. After Gujarat, Goa
and Baddi, Sikkim is now attracting the most attention. This could have big implications, considering
the fact that the country is the world's fourth largest producer of pharmaceuticals by volume.

"Sikkim is a peaceful state and has huge potential for the manufacturing sector. There is minimal
interference by the state government. It's true the state took some time to develop and attract the
pharma companies. But now it is surely at a tipping point," says Ramesh Kumar, who heads the Cipla
plant at Sikkim. The Cipla unit is spread over 12 acres and has gone on stream since April 2008.

Mumbai-based drug major Sun Pharma completely buys the view. The company has plans to convert
its Rs 50-crore Sikkim plant, which became operational since April this year, into a major
manufacturing base. Sun Pharma manufactures solid oral finished dosages (read tablets and
capsules) of its popular brands like Glucored, Gemer and Cardivas.

"Since the Sikkim plant is expected to be an important supply point for our Indian finished dosage
business, going forward, it will be manufacturing a part of our top products too," exclaims a Sun
Pharma spokesperson.

The company is also finding labour, power and overall cost of manufacturing to be lower in Sikkim as
compared to states like Gujarat and Maharashtra.

Sikkim's attractiveness lies in the multitude of tax benefits it has on offer. The inclusion of Sikkim
under the Centre's 'North East Industrial and Investment Promotion Policy, 2007' in April 2007 did the
trick. As part of this, all new units as well as existing units which go in for substantial expansion in
Sikkim will be eligible for incentives for a period of ten years from the date of commencement of
commercial production. Check out some of the incentives.

There's 100% excise duty exemption on finished products manufactured there, 100% exemption on
income tax, capital investment subsidy of 30% on the investment in plant and machinery, interest
subsidy at 3% on working capital loan and even reimbursement of 100% insurance premium. On the
top of it all, Sikkim also offers attractive freight subsidy.

"The benefits which we get in Sikkim are truly attractive and in some cases even better than that in
Baddi. However, the freight benefit may not have a huge impact on the pharma industry as freight
cost in the domestic market accounts for just 1-2%," says Unichem Laboratories vice president
(finance) Rakesh Parikh.
The scale of benefits at Baddi, such as excise, had eventually come down. In fact, the pharma sector
made a beeline for Baddi around 2004-05 to cash in on the tax incentives. As many as 180 pharma
units had since then set up base in Baddi. Can, then, Sikkim match up to Baddi?

While the likes of Sun Pharma feel it is still early days to truly compare Sikkim and Baddi, no one is
willing to completely write off the state's potential. "Even if we forget the excise benefits at Sikkim as
such benefits are now also available in several states, the biggest draw for the state is its ten-year
income tax holiday. This could mean a lot for profitable companies like us," claims Parikh.

However, a section of the industry feels the state needs to work on certain grey areas to emerge as a
major pharma cluster. "Infrastructure is still the biggest concern in Sikkim. However, the good news is
that the government is now emphasising on this. The state is also addressing the power situation.
The recent announcement of constructing the rail link in Sikkim will provide a further fillip," says
Cipla's Kumar.

Agrees Daara B Patel, the secretary-general at Indian Drug Manufacturers' Association (IDMA) - the
apex body of Indian pharma companies. "Certain vital factors are still missing in Sikkim. The state
government needs to come up with a dedicated policy to support the pharma industry. Plus, there are
issues with availability of skilled workers which again the state government can address by setting up
training institutes," Patel says.

Be that as it may, analysts feel the Indian pharma companies always prefer to flock together. It had
happened in Goa, Baddi and now Sikkim should not be an exception. More so, since the big guns
have already tested the waters. The state has another latent edge - the Silk Route of India or the
Nathu La Pass. The industry believes this could act as a shortcut for the Indian industry to tap the
highly potential Chinese and CIS countries.

The pitch seems to be perfect for the next-phase expansion. "Poor marketing is a handicap which the
East has perennially been suffering from and Sikkim is no exception. And it is here that Baddi had
scored trumps. If Sikkim can effectively market itself and the benefits it offers, there can be no reason
why it cannot emerge as the next Baddi," adds a senior executive of a Gujarat-based pharma
company, which has invested in the state.

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US health bill to benefit local generic firms

th
10 November, 2009. The Economic Times.
The US healthcare bill, which has been passed by the US House of Representatives and is awaiting
nod from the Senate, holds a lot of promise for generic drug manufacturers from India. With
emphasis on increasing the coverage and reducing healthcare costs, the bill is going to provide a big
fillip to the usage of low-cost generic drugs.

The bill seeks to bring an additional 40 million US citizens under medical insurance coverage. This
will open up a big market for generic drug makers. Besides, even for the existing population under
insurance coverage, there is likely to be a shift in the usage from patented to generic drugs.

Indian pharma companies - most of them being exporters of generic drugs and intermediates to the
US, the world's largest drug market - are going to gain by passing of this bill. While the impact is long
term in the form of increase in procurement of generic drugs by the US, it is nevertheless a positive
sign. One other major aspect of the bill, which is likely to be important for Indian pharma companies,
is the provision in the bill on bio-similars.

The bill has provided for a data exclusivity protection period of 12 years for biologics innovator
companies. This is much longer than the period of five years, provided by the US government in case
of chemical drugs. This provision, while throwing some light on the pathway to launch bio-similars in
the US, will slow down the long-term growth of bio-similars in the US.
However, the good news is that this would not impact the immediate pipeline of Indian biotech
players. Most biologic drugs were developed between 2000 and 2004 in the US. Indian companies,
which are developing bio-similars for these biologics, will just be ready with their products by 2016 -
the time when the 12-year protection period ends for the biologics in the US. However, Indian
companies will have to go slow on future product development in bio-similars.

The bill also has provisions that impose restrictions on the Para IV settlements done between the
innovator and generic companies. While the settlements have not been banned altogether, the
restrictions may bring some deterrence to go for settlement.

The bill, however, is facing a lot of resistance and protests in its current form. It will be too naive to
think that large insurance companies and big pharma firms in the US would take these sweeping
changes lying down. This may lead to several compromises before it sees the light of the day as a
piece of legislation.

Even in a truncated and compromised form, it is likely to benefit generic players. And Indian
companies (aggressive that they are on the generic front) are likely to be natural beneficiaries.

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Watch out for US recovery, new products

th
13 November, 2009. The Economic Times.
Robust growth in profits despite modest rise in revenues characterised the performance of the Indian
pharma sector for the latest quarter ended September 2009. The analysis of aggregate results of
leading 18 pharma companies reveals an 83% Y-o-Y rise in net profit, while net sales grew at a
modest rate of 10%. Savings on raw materials, cost management, and absence of forex losses have
primarily resulted in doubling of profits over the previous year.

This has also led to expansion of operating and net profit margins. The growth in revenues has been
lowest ever, as some leading companies like Ranbaxy and Sun Pharma reported flat growth, as their
revenues from the US business have been affected due to the regulatory actions by US FDA. The
sector has managed to log a robust Y-o-Y performance in terms of profits for the quarter ended
September 2009 when compared to the performance in the preceding quarters.

However, a disappointing sign is that the aggregate revenue growth of pharma companies has been
on a steady decline since past four preceding quarters.

Among leading companies, Dr Reddy's Labs (DRL) and Cipla posted robust jump in earnings. DRL,
Sun Pharma and Ranbaxy pleased the Street posting betterthan-expected results. DRL and Ranbaxy
have started showing signs of stability.

However, in case of Ranbaxy, pending issues with US FDA still keep its future performance
uncertain. Among mid-sized companies, Lupin and Cadila Healthcare reported good numbers -
continuing the momentum in their earnings growth.

Among players in the contract research and manufacturing services business (CRAMS), almost all
players reported disappointed results. Jubilant Organsys, the largest CRAMS player, reported flat
sales on account of poor performance of its chemical business. Dishman Pharma, Divi's Laboratories
and Piramal Healthcare have witnessed a hit on their revenues on account of poor performance in
their CRAMS business.

For many companies, subdued growth in revenues from the US has been compensated, to an extent,
by growth registered in emerging markets of Eastern Europe , LatAm and CIS countries. Companies
like Ranbaxy, Piramal Healthcare and Cipla have also gained from good growth shown by the over-
the-counter branded consumer healthcare products in the domestic market.

Savings on raw material costs due to high base year effect will vanish from the current quarter
onwards. This will remove the extra growth in profits commanded by companies during last few
quarters. Going forward, recovery in the business conditions in the US, stance of the US FDA
towards compliance related issues and company's product pipeline are the factors to watch out for.

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Novo Nordisk looks to make India hub for South Asia

th
15 November, 2009. Business Standard.
Denmark-based Novo Nordisk, a world leader in diabetes care, is looking at India as a hub for
manufacturing insulin for the entire sub-continent. The company today inaugurated a dedicated
facility with a capacity of 26 million vials per annum in partnership with Ahmedabad-based Torrent
Pharmaceuticals Ltd.

The Rs 1,600-crore Torrent Pharma is the flagship company of the Rs 6,400-crore Torrent Group and
has been manufacturing insulin for Novo Nordisk since the early nineties.

Novo Nordisk's Senior Vice-President (International Operations) Jesper Hoiland said that the
company already had a manufacturing facility in China and was also looking for opportunities in
countries like Bangladesh. When asked whether India could be developed as a hub for
manufacturing insulin for neighbouring countries in the sub-continent, Hoiland said: "That is indeed a
possibility. We are looking into it." With over 50 million cases, India is one of the world's biggest
markets for diabetes, and the numbers are expected to reach 80 million by 2025. While the adult
prevalence rate in the country is at around 6.2 per cent, only a small percentage is actually treated.

Novo Nordisk enjoys a 70 per cent market share in the country, reaching out to almost 1.2 million
people of the total two million patients who are currently getting treated with insulin. "India's share in
Novo Nordisk's global turnover is negligible — around 1-1.5 per cent.

But it is steadily growing at a rate of 20-30 per cent," Hoiland said.

Novo Nordisk enjoys a 50 per cent share in the world insulin market.

Hoiland added, with the growing market in the country, India is fast becoming a strategic market for
the company. Novo Nordisk has brought in 150 people from its Denmark operations and is currently
holding 8-10 per cent of its clinical trials in India on over 10,000 people. Torrent Pharmaceuticals
Chief Operating Officer Sanjay Dalal said his company had invested around $11 million on the
dedicated insulin manufacturing facility for Novo Nordisk and this could be expanded. The Kadi
facility could also be used to export insulin from India later on.

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