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GETTING TO KNOW INDIAN PHARMA Conference and trade fair reveal opportunities and limitations for India's pharmaceutical sector JEAN-FRANÇOIS TREMBLAY, C&EN H

FURTHER EVIDENCE OF THE AS-

cendance of India as a supplier of materials and services to the glob­al pharmaceutical industry was provided at a conference in Hy­

derabad, India, last month. But several in­dustry insiders are cautioning that growth in the Indian industry has its limits.

Reflecting the rising interest in India, attendance at the two-day conference, or­ganized for the seventh time by the Mum-bai-based publication ChemicalWeekly, was much better than it had been in previous years. The conference usually provides a general overview of India's chemical in­dustry, but there was increased focus this year on the pharmaceutical fine chemi­cals segment. Attendees numbered about 300, 50% more than at the last confer­ence, held two years ago in Mumbai. About 2 0 % of attendees were from abroad, compared with a negligible num­ber previously

Immediately following the conference, ChemSpec India was held for the first time at Hyderabad's Hitex trade show complex. ChemSpec is aimed at manufacturers of specialty chemicals and pharmaceutical in­gredients and takes place several times a year around the world. Attendance in In-

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I dia exceeded expectations. There were 5,000 attendees on the first day, whereas organizers were hoping for 3,000 to 5,000 over two days.

At the conference, the most enthusias­tic speaker was probably Dinesh Dua, pres-ident of Wockhardt 's biotechnology business. A human encyclopedia of facts and figures about India's pharmaceutical industry Dua has more than 20 years of experience at Wockhardt and other Indi­an drug companies. In his presentation, he argued that India is in an ideal position to take advantage of numerous pharmaceu­tical business opportunities.

THE MOST EXCITING sector, Dua said, is generic pharmaceuticals. The world gener­ic drug market was worth $43 billion in 2003 and is growing 10% annually. The biggest opportunity today is Japan, a gener­ics market worth at least $ 6 billion. Phar­maceuticals sold in Japan will no longer have to be made in Japan after April 1, he said. Opportunities in France and Spain are almost as good because, as in Japan, the market share held by generic drugs is low, he said.

Drugs with combined worldwide annual I sales of $80 billion will lose patent pro-

STANDING BY With more U n ­approved facilities than its closest competitor, Italy, India stands ready to export pharmaceutical ingredients and formulations. Pictured here, a Nicholas Piramal plant that produces the cardiovascular drug diltiazem.

tection before 2012, Dua added. If histo­ry is a guide, competition from generics will cause the prices of these drugs to col­lapse. But even if prices fall by 90%, these generics are a "staggering" opportunity worth at least $8 billion. India will excel in this environment, Dua predicted. "India provides value for money, not cheap prod­ucts. We provide quality and bring down costs by various means."

Over time, Dua said, Indian generics manufacturers will become full-fledged pharmaceutical companies marketing drugs invented in their own labs. But he warned that a new generics company could require 25 years of steady success to be­come a major international player such as Israel's Teva Pharmaceutical Industries. And it takes even longer to develop the ca­pabilities to introduce new drugs in the global marketplace.

Over the past fewyears, the importance of India and China in the global pharma­ceutical ingredients industry has grown so much that competitors in other countries feel threatened. Enrico Τ Polastro, a vice president of management consultants Arthur D. Little in Belgium, addressed these concerns head on with a presenta­tion titled "The Fine Chemicals Industry: West O u t - India and China In?"

Polastro believes that India's pharma­ceutical industry will remain prosperous in coming years. This perspective is only partly the result of the new patent protec­tion regime that India inaugurated on Jan. 1 and that upholds foreign patents on phar­maceuticals. The main factors in favor of India, he said, are its abundant scientific workforce and its citizens' eagerness to work hard and for long hours.

"India graduates more engineers in a year than the total number of engineers working in a country like Switzerland," he said. Other factors in India's favor are that it is relatively free of the "not-in-my-backyard" syndrome and that its envi­ronmental regulations are not unrealis­tic, he noted.

The global fine chemicals industry is in the doldrums as a result of overinvestment, Polastro noted. In this context, India, with its lower costs and abundant human re­sources, finds itself in a strong position. But over the long term, he expects that

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Western producers of pharmaceutical fine chemicals will remain competitive through innovation and their ability to provide bet­ter service.

Echoing Polastro's comments, Goutam Das, chief operating officer of Syngene, one of India's most successful pharmaceutical contract research firms, said that his com­petitors in Western countries will contin­ue to remain relevant. ' W h e n major phar­maceutical companies want something fast, they don't come to India," he said.

According to Das, U.S.-based contract research companies routinely charge five times more than Indian ones for identical work. But they can deliver more quickly, primarily because it is easier to source lab chemicals in Western countries. Even though lab chemicals distributor Sigma-Aldrich recently opened a branch in India, it is still difficult to obtain delivery in a timely manner.

Das also warned that Indian euphoria over the rapid pace at which multination-

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al companies are increasing their out­sourcing is misplaced, because the market is not that big. Excluding Phase II and III clinical trials, which focus on human test­ing, drug companies worldwide spend a to­tal of $20 billion per year on pharmaceu­tical research. But only 25% of that $20 billion is outsourced, he said, and of that, only 25%—or $1.25 billion—is outsourced to developing countries.

India already enjoys a 30% share of that number, but this is worth no more than $400 million. Market leaders like Syngene are doing relatively well, Das noted, but there may not be enough business for everyone. At least 22 Indian contract re­search companies exist, he said.

Earlier this year, Yusuf K. Hamied, chair­man of Cipla, one of India's largest drug companies, warned in an interview on In-

Over time, Indian generics manufacturers will become full-fledged pharmaceutical companies marketing drugs invented in their own labs.

dian television that the outlook for the In­dian pharmaceutical industry is dark. As a result of India's adoption of the new patent regime, only the large Indian drug compa­nies will do well, because they rely on ex­ports of generics to rich countries for most of their sales. Small Indian drug compa­nies will be decimated by foreign compe­tition entering the country, he predicted.

Hamied doubts that Indian firms will be able to launch new drugs on the inter­national market. Pfizer's annual R&D budget amounts to about $7 billion, he pointed out, whereas India spends a grand total of $3 billion a year in all its R&D ac­tivities, including pharmaceutical and non-pharmaceutical research in both govern­ment and private labs. Cipla's R&D budget is about $50 million. "How can I com­pete?" he asked rhetorically.

Undaunted, most of India's largest phar­maceutical companies are hoping to launch patented drugs on international markets. Although it is too early to tell whether any will be successful, it is clear that India's pharmaceutical industry is undergoing a profound transformation as it opens to the world. •

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