Pharmaceutical Industry - India

Overview Pharmaceuticals account for 1 % of Indias GDP. Indian Pharma industry holds more than 1 % of the global industry and its size is currently increasing at 10% a year. Last year growth rate was more than 17 % while globally pharmaceutical industry registered a growth of around 7%. The robust performance of the pharmaceutical companies in domestic markets and overseas markets has resulted in sales upsurge. The reasons attributed to this upsurge include strong financial performance, dividend announcements, healthy product pipeline, significant growth in raising money from Foreign Converted Currency Bonds (FCCBs) for M&A and aggressive marketing efforts. Globally, the Indian market ranks fourth in terms of volume and 13th in terms of value. By the end of 200708, Indian pharma will face stiff pricing pressures and tough competition from the Chinese and the US companies. Rupee appreciation will show negative impact on exports in 200708 as well. Growth Drivers The major growth drivers for the industry are penetration in geographical markets to capture generics and increasing contract research and manufacturing (CRAMS) projects. Acquisition of generic brands and launching new products brought more revenues to the industry. Indian firms made their subsidiaries to pour in more revenues from geographical markets. Industry profits rose in AMJ07 on the back of decreasing expenditure and increasing segmental performance. Formulation companies such as Cipla, Ranbaxy, Sun Pharma, DRL, Lupin, Wockhardt performed well in terms of turnover and profits. Bulk drug companies, such as, Divis Labs, Aurobindo and Matrix showed good performance in the industry. Ranbaxy is the industry leader with high volume of sales and profits for the quarter AMJ07. Industry trends and overview During AMJ07, Indian pharmaceutical market showed interest to capture generics market across the world. Majority of the drugs that got USFDA nod were generics. Acquisition of offshore companies happened in the direction to occupy major generics market.

Since India became TRIPS (Trade Related Intellectual Property Rights) compliant and formally recognized products patent in 2005, several international pharma giants have collaborated with the Indian companies on drug development and R&D projects. These include Dyax, Merck KGA, Eli Lily and Glaxo SmithKline. Example, Ranbaxy and GlaxoSmithKline (GSK) made joint drug discovery collaboration to develop a drug in the respiratory segment. Indian patent law needs proper definition After becoming TRIPs compliant India became obliged to grant patents for pharmaceutical products since January 1, 2005. While amending its law, India limited the patentability of pharmaceutical substances to new chemical entities. The described section lists various derivatives that cannot be treated as an `invention'. This added requirement of the `inventive step' for pharmaceutical substances is intended to prevent ever-greening. Acquisitions As compared to the January-February-March 2007 (JFM07) quarter, AMJ07 recorded more number of acquisitions. Sun Pharma, Jubilant Organosys, Ranbaxy and Zydus Cadila are the major firms that came out with high valued acquisitions. Regulations

DCGI (Controller General of India) to curb export of fake drugs. Pharma (National Pharma Price Authority) body may fix price for 10 formulations drugs outside of the GOI controlled prices. Panel report submitted on data exclusivity, this will allow successful applicants a protection of five years, similar to what is done in the US.