U.S. Pharma Is Quietly Expanding Ties to Indian Generic Manufacturers
U.S. pharmaceutical companies have been trekking to India for a while to carry out clinical trials. But the relationships with Indian drug manufacturers have been quietly growing and now encompass the entire industry, according to a leader in the Indian pharmaceutical industry.
“There is not one brand name company which is not tied up with an Indian company,” Dilip Shah, secretary general of the Indian Pharmaceutical Alliance, told attendees of the International Generic Pharmaceutical Alliance’s annual meeting. The event, held in Miami Beach Nov. 28-Dec. 1, was attended by people from 33 countries.
The collaborations between brand name and Indian companies range from Indian companies producing molecules for clinical trials to conducting Phase I trials and pursuing innovative research through Phase III trials before licensing a compound to a brand name company.
This is significant because the Indian industry … is essentially based on working with brand name companies in India,” Shah said.
Shah noted that many of the deals between Indian and U.S. brand name companies have remained under the radar. “The brand name companies do not want it to be known in the world outside for various reasons and one of them is the competitive edge” they gain through such agreements.
Among the deals that have been publicized is Wyeth’s October launch of a $10 million R&D facility in Hyderabad. Wyeth is collaborating with GVK Biosciences, an Indian contract research organization, on the facility.
Under other deals, Novartis is developing Torrent Pharmaceuticals’ AGE (advanced glycosylation endproducts) breaker molecule for use in heart disease and diabetes-related vascular events; Lilly and Nicholas Piramal are conducting joint research on Lilly’s pre-clinical drug candidates; and Pfizer has a clinical research deal with Suven Pharma and another agreement with SIRO Clinpharm for clinical data management and biometrics services.
Shah said Wyeth announced the new R&D plant two months after Novartis declared that it would no longer invest in India because the Indian Patent Office had denied Novartis a patent for its cancer drug Gleevec (imatinib). At the time, Shah noted, Novartis said five other brand name companies, including Wyeth, would also halt investment in India.
While the drug industry is flourishing in India, the country is taking steps to improve its regulatory system. “We’re working closely with the U.S. FDA to strengthen the Indian regulatory structure,” Shah said.
In an email exchange with PharmAsia News, he said the Indian regulatory system is being modeled after FDA. A bill to centralize the licensing of new drugs in the hands of the Drugs Controller General of India, the equivalent of FDA, has been tabled in Parliament.
Shah also noted that new clinical trial registrations are being set up for the protection of patients. And he said large distribution chains are being established in India “essentially to benefit industry by maintaining the integrity of the supply chain, which under the current system is very weak.”
Shah, who spoke on a panel about emerging markets and future trends, gave an overview of the Indian market. One of the indicators of the country’s economic boom, he said, is the growth in the telecommunication network: nearly seven million new cell phones are connected each month. Another indicator is the household expenditure on health care and medical services, which grew 11 percent between 1996 and 2006.
Pointing to pharmaceutical industry trends, he noted that in the last two-and-a-half years Indian companies have made more than $2 billion in acquisitions. The biggest deals are Dr. Reddy’s $580 million purchase of the German company Betapharm Arzneimittel GmbH and Sun Pharma’s $454 million purchase of the Israeli company Taro Pharmaceutical Industries.
Indian companies have also invested $1.3 billion in new manufacturing facilities between 1999 and 2004. By comparison, foreign investment has lagged far behind at $139 million over the same period.
Around The World At Way Less Than 80%
Other panelists gave a run down on the generic industries in Japan, Brazil and the European Union. Shakil Ohara, Hospira’s North Asia vice president, reported that Japan held 17 percent of the worldwide market share of generics in 2006 based on volume and Japanese generic sales totaled $3.5 billion last year.
Ohara said the government recently announced a program to promote generics with the goal of increasing market share to 30 percent by 2012. He suggested that the Generic Pharmaceutical Association could help speed up the process by opening a branch in Japan.
Brazil, meanwhile, is new to the generics arena. Jairo Yamamoto, president of Medley S/A Indústria Farmacêutica, noted that the first generics did not hit the market until 2000. As of October 2007, they comprised 15 percent of the Brazilian pharmaceutical market.
Generics Need To Get Big But Think Small Market
In a separate panel, analysts gave their projections for the global pharmaceutical market. IMS Health’s Graham Lewis, Europe vice president of pharma strategy, said generics are moving toward zero growth in the primary care markets where 80 percent of generic business lies.
“Generic companies will have to move into more specialist markets,” he said. “I wouldn’t have predicted this. There are 107 blockbusters in the world” and 49 percent are specialist-driven while 50 percent are in the primary care area.
Randall Stanicky, vice president of global investment research at Goldman Sachs, predicted that consolidation of the market would continue at the current pace and within five years there will be four or five global competitors with a big portion of market share.
Stanicky said there is a huge growth opportunity outside the United States. He pointed to Barr’s acquisition of the Croatian-based generic manufacturer Pliva last year and Mylan’s recent purchase of Merck KGaA’s generics business as primary examples of globalization. But, he said of the latter deal, “there are not a lot of attractive big assets like that.”
Another trend Stanicky predicted is a growth in at-risk launches by generic companies. He cited several factors for this trend: the U.S. Supreme Court’s KSR v. Teleflex decision which gives courts greater leeway in determining if an invention is obvious, the growth in company balance sheets that enable them to cover damages if they lose a challenge to their launch, and uncertainty about settlements with the brand name companies given opposition to them by the Federal Trade Commission.
In another presentation, Tommy Erdei, executive director of the global healthcare group at UBS Investment Bank, pointed to the growing competition in the generic sector. “ANDA filings have doubled in the last four to five years as more companies are filing for the same product,” he said. While there were eight to 12 competitors three to four years ago, now there are 20 for the same product.
Erdei said growth in the generic industry will come from emerging markets, vertical integration and niche products and biologics.
– Brenda Sandburg
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