Corporate
On the drug trail

Ravi Ananthnarayan
655 words
27 August 2004
The Economic Times
English
(c) 2004 The Times of India Group. All rights reserved.

For long, global pharmaceutical majors have derided Indian pharmaceutical companies as copycat companies, who reverse engineer blockbuster drugs and live off innovator companies' R&D efforts.

While such accusations still fly, Big Pharma has accepted that making India an ally in their struggle to stay globally competitive is a more pressing need. Now, that is a big statement about the quality of Indian manufacturing in this field.

Standing testimony to India's manufacturing prowess are an estimated 70 pharmaceutical plants in the country that are FDA approved, which is believed to be the largest collection outside America.

Indian pharmaceutical manufacturing has proved its mettle in what is probably one of the world's toughest regulated markets.

Companies like Dr Reddy's Laboratories and Ranbaxy Laboratories have successfully made and marketed drugs in America and by all accounts, those consumers seem satisfied.

Now that Made in India is no longer an issue with Americans, the value for money that they are getting, backed by FDA's approval for these drugs are enough reasons for them to consume these drugs.

That marks a critical turning point for Indian companies and indeed for foreign innovators too.

They have now started to look more vigorously at India as a manufacturing base for their products, the obvious reason being lower costs and the not-so-obvious one being that their consumers will not feel nervous about consuming drugs produced here.

Less than a decade ago, when Indian pharmaceutical markets thought exports, typical countries that came to their mind were CIS including Russia, Brazil and some African countries, apart from SAARC.

These are less regulated markets where entry is easy, but now when you look at the flow of exports, the accent on regulated markets is marked. Even if generic exports to America have suffered some setbacks of late, Western Europe is being developed as a viable alternative.

Since April 1, 2003, about 20% of all drug master filings with the US FDA are from Indian companies.

And we are not talking about just Dr Reddy's or Ranbaxy but a host of other companies who feel confident of their facilities meeting US FDA standards. DMFs are not approvals but disclosures to the FDA about facilities, processes etc in making a drug that can be used to support an ANDA or an export application.

Dr Reddy's Laboratories is a key player in the bulk drugs market or APIs (short form for active pharmaceutical ingredients).

It has six API plants in AP, all of which are USFDA approved. In '04, it filed 16 DMFs with the USFDA taking its total to 56 and plans to file for 20 more in '05.

These are key to its performance, as DRL sold Rs 123 crore worth of Ramipril API in Europe. Cadila Healthcare's API exports doubled to Rs 140 crore in '04 on the back of alliances with European manufacturers. Cadila filed 12 DMFs during '04.

Nicholas Piramal India too is also eyeing this market. The company signed a custom manufacturing contract with Advanced Medical Optics, Inc, USA for making eye care products for global markets including US, Japan and Europe.

It acquired an API facility for Rs 116 crore to enhance its capacity to meet this and future plans, and also set up a subsidiary in US to develop business for this activity. At present, the API business sells mainly to European regulated markets apart from unregulated markets. It has filed for five DMFs in '04.

Shasun Chemicals and Drugs which started out supplying APIs has shifted to value added products like intermediates, value-added APIs and formulations, including contract research and manufacturing services.

Nearly three-fourth of its exports is to regulated markets. The company lays claim to being the largest producer of ibuprofen in the world with a share of 25% and supplies nearly 15% of US' requirement of the drug.