Indian pharma industry a continuing success story

A new breed of companies from the emerging markets is catching their Western counterparts off guard. At the Pharma Summit 2007, Dr Swati Piramal, Director-Strategic Alliances and Communications, Nicholas Piramal India, remarked that Asian history is the history of globalisation. With six out of ten people living in Asia, it is the continent marked by a number of emerging markets. Further, it is expected that with 10,000 manufacturing units by the year 2050, India will among the top ten nations in drug manufacturing. Piramal added that Indian drug prices are among the lowest in the world. The Indian pharma industry is an example of global success. With five percent decline annually, real prices have declined year on year. Also, there has been a drop in the number of HIV patients-a result of the pharma industry having acted responsibly on drug prices. Piramal added that the industry has trailed the sensex, hence, challenges are many. Medicines contribute to only 15 percent to total healthcare spend for the average patient. However, rural availability is less and the real issue is accessibility. For this the industry and the government need to come together. Piramal said that by 2050 the value of R&D would stand at over $120 billion.

The CII-KPMG report on 'India Pharma Inc-A continuing success story' was released by Renuka Ramnath, Managing Director and CEO, ICICI Venture Funds Management. The report showcased the past, present and the future of the Pharma Industry. In her keynote address, Ramnath said that the pharma industry is undergoing a significant change. While R&D is a high risk and high gain sector, innovations are needed. She added that the Indian mindset is moving from copying to making, which in turn will bring about fragmentation. Ramnath called for creation of financial instruments and allocation of capital to institutions that can manage it. Good legal practices, creation of attractive financial instruments and new patents are required. This would lead to availability of more capital for creation. According to John Morris, Global Chair-Chemicals and Pharmaceuticals, KPMG, United Kingdom, the global challenge of regulation should not be ignored. Pricing control is another threat poised at the expansion of the industry. Hitesh Gajaria, Executive Director, KPMG India said that all segments of the industry have shown growth further adding that the inorganic growth strategy of the Indian pharma is driven by a number of factors. Also, medium sized companies are trying to get in. R&D is the way for long-term sustainable growth. Gajaria said that the market is now differentiating between the 'winners of today' and the 'winners of yesterday.' The pharma industry is growing due to the various co-operative and collaborative actions. Of the key challenges that the industry faces, he said that the pricing pressure is felt more acutely at the time when a particular patent becomes non-existent. Also, managing growth in multiple markets can be challenging, since working out strategies in different geographies is difficult.

Pankaj R Patel, Chairman and Managing Director, Cadila Healthcare stated that the pharma industry is unfolding multiple opportunities. With R&D outsourcing of $600 million expected to take place by 2010, the pharma in all probability will triple by 2015. A new era of growth through collaborations is emerging today. Not only this, the domestic and the international businesses as well as the R&D will play an important role important role in leveraging India's potential. Patel further added that strategic alliances reduce investments and restructure operations among other benefits.

In his welcome address Shrinivas Dempo, Chairman-CII Western Region and Chairman and Managing Director , said that the present growth rate depends on improvements be it in lowering the production costs or liberalising government policies. He also stated low entry barriers and low R&D expenditure still pose a major challenge for the industry. Along with the Pharma Summit 2007, an exhibition was also organised that had participation from over 200 Indian and international exhibitors who showcased, the latest products and services for the Indian Chemical and Pharmaceutical Manufacturing Industry. The Chinese pavilion was one of the major overseas participants.