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at CPhI Shanghai by ORS Rao Cygnus India
at CPhI Shanghai by ORS Rao Cygnus India
Presentation at CPhI,Shanghai
by
ORS Rao CEO and Director Cygnus Business Consulting & Research (www.cygnusindia.com) INDIA 20th June 2007
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Agenda
Industry Segments Pharmaceuticals Biopharmaceuticals Bulk drugs and APIs Contract Research and Manufacturing Services (CRAMS)
Other related Segments Traditional Systems of Medicine Healthcare Industry Dental Industry
Major Players Mergers & Acquisitions Opportunities Issues and Challenges Future Outlook China and India - Competition or collaboration? About Cygnus
Industry Scenario
4.54
5.12
5.74
6.57
USD bn
The industry has grown at a compounded annual growth rate (CAGR) of 13% during the last five years.
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Production Bulk Drugs Market SizeUSD2.48 bn Growth 21% Formulations Market SizeUSD2.33 bn Growth 14% Bulk Drugs Growth 19% Formulations Growth 13%
CVS 11.10%
18.8
17.2
9.1
14.3
13.9
14.7
Alimentary/ Metabolism
Anti-infectives dominate the Indian pharmaceutical market whereas lifestyle disorders dominate in other major markets
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India has 6 Companies amongst top ten filers of ANDAs Over 80 US FDA approved facilities, largest outside of USA and 20 other certified plants Adopting Global sustainability Standards for growth and
Investment in R&D increased from 3% of gross revenue to 10% Increase in capacities with focus Integration on Vertical
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7 Indian Companies among top ten filers of DMFs in 2006 ( 30% by approvals and 58% by new applications ) and cumulative share in the global DMFs at over 14%
India has 4354 manufacturing units which produce a range of formulations (top 200 over 70% of market) 1333 bulk manufacturing units producing around 465 main bulk drugs. (top 100 over 70%)
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99 87 80 71 50
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Nicholas Piramal
Dr. Reddy's
Sun Pharmaceuticals
Ranbaxy*
GSK
Source: Company Annual Reports FY2006-07, * Annual Reports 2006 Dec ending
Wockhardt*
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Cipla
Cadila Healthcare
Lupin
Aurobindo
Market structure
Indian Pharmaceutical Market Structure
Raw materials/ Chemical intermediates manufacturers API manufacturers
Formulation manufacturers
Importers
C&F agents
Distributor/ Dealer
Retailers
Hospitals
Patients
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Bio-Pharmaceuticals
Bio Pharma market is valued USD 1.3 million in 2007. Vaccines is the largest segment of Biopharma accounting for 50% of the sectoral revenue. India is leader in global vaccine market (over 33% market as per E&Y 2007 report) . India is the largest producer of recombinant Hepatitis B vaccine in the world Vaccines market in India in 2007 was USD 0.65 million registering a 40.26% growth over the previous year. Diagnostics contributed 19% with USD 0.25 million market size in 2007 ,over 50% growth over previous year. Therapeutics, 3rd largest contributed 14% of the total biopharma sales USD 0.18 million in revenues, growth of 28% in 2007. In 2007 Biopharma contributed USD 0.65 million worth exports.
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Contract Research and Manufacturing Services (CRAMS) in India Contract Research (including clinical trials and CDM) during 2006 is estimated to be USD 366 million, a growth of 45 % over previous year and is expected to scale up to USD 2.5billion by 2011 Contract manufacturing in 2006 was USD 659 million and growing at 48% over pervious year and expected to be worth USD 2.5 billion in India by 2011.
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Contract Research:
Large Companies dedicated units/companies Medium sized CROs - Chembiotek (TCG Group), Reliance Research and Development Services
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9.5 57.2
0.5
333.3
Source: Cygnus Research
Siddha
ISM market for products in India in 2006 USD 400m, grew at 8% Over 82% of it - Ayurveda, 14% Homeopathy and balance by others.
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Market is growing at an annual rate of 18%. The private sector accounts for 86% of the market while public sector accounts for the balance. The health tourism industry in India, worth US$333 million, is expected to rise to US$2,200 million by 2011.
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2004
2005
2006
The services market is growing at 12% annually The Indian dental equipments and appliances market size was US$66m in 2005. India is a net importer of dental equipments and supplies. Indias major dental products for import are dental furniture (US$9.76m in 2006) followed by dental cements (US$6.71m) and radiation apparatuses (US$5.39m).
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Significant depth in engineering and science Lower cost of innovation and highly motivated scientists. Large pool of English speaking employees, a comfort for international customers and regulatory agencies Low cost scientific pool on shop floor leading to high quality documentation and process understanding Outsourcing services culture Global business management skills (including patents and legal aspects)
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Research & Development Indian companies are focusing on new product development by increasing the R&D spending on generics. In the next three years blockbuster drugs worth US$26.5billion are set to go off patent in US alone. Therapeutic coverage Indian companies are enhancing the coverage of as many therapeutic areas as possible. Marketing Large companies have been setting up sales operations / partnerships in developed markets M&A Large companies have been acquiring companies in US, Latin America and Europe ,with a focus on customer acquisitions. Focus on services Small/Medium sized companies focusing on niche services markets
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Regulatory bodies
National Pharmaceutical Pricing Authority (NPPA)
Organization of the Government of India Established in 1997 Revises the prices of controlled bulk drugs and formulations Enforces prices and availability of the medicines in the country Recovers amount overcharged by manufacturers for the controlled drugs from the consumers Monitors the prices of decontrolled drugs in order to keep them at reasonable levels
(CDSCO)
Functions under the Directorate General of Health Services Established in 1940 Laying down standards of drugs, cosmetics, diagnostics and devices Laying down regulatory measures, amendments to Acts and Rules Regulates clinical trials & market authorization of new drugs Approve licenses to manufacture certain categories of drugs Regulate the standards of imported drugs Testing of drugs by Central Drugs Labs Publication of Indian Pharmacopoeia
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Key regulations
Ministry of Health & Family Welfare Directorate General of Health Services The Drugs and Cosmetics Act, 1940 Regulates import, manufacture, distribution and sale of drugs and cosmetics whether imported or made in India
The Drugs Price Control DPCO, 1995 is an order issued by the GoI under Section 3 of the Order (DPCO), 1995 Essential Commodities Act, 1955 to regulate the prices of drugs Currently 74 bulk drugs and their corresponding formulations are under price control The Drugs and Magic Remedies (Objectionable Advertisement) Act, 1954 The Pharmacy Act, 1948 Patents (Amendment) Rules, 2005 Prohibits the advertising of remedies alleged to possess magic qualities Deals with levy and collection of taxes on medicinal and toilet preparations containing alcohol, opium, Indian hemp, or any other narcotic drug Regulates the profession of pharmacy and deals with various pharmacy issues such as professional education and requirements for registration Recognition of product patents for food, drug, and pharmaceuticals from January 1, 2005
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Recent Mergers and Acquisitions in Indian Pharma Industry Indian companies acquiring global firms to consolidate their overseas presence. Major giants like Ranbaxy, Dr.Reddys, Wockhardt top the list with major acquisitions Dishman and
Major contracts are also signed in the CRAMS segment Acquisition of CROs in Europe to leverage on existing client relationships of acquired companies These acquisitions help in bridging the gaps in the services offered to become full service industry players. Industry benefited by acquisitions in terms of gaining access to new technologies, platforms for improving custom synthesis, clinical research and working with new clients.
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Major Agreements Signed in CRAMS Segment Company Nicholas Piramal Innovator AMO Allergan Fortune 500 company Astra Zeneca Global hospital products company Pfizer AstraZeneca GSK Eli Lilly Boots Plc Abbott Solvay AstraZeneca GSK Merck Altana Mayne DSM GSK Eli Lilly Area Neutralizing tablets API Formulations for many products APIs & Intermediates for many products APIs for many products APIs/formulations for Veterinary products APIs & Intermediates for many products API for Ranitidine APIs for Nizatidine and Cyclosorine API for Ibuprofen NA API for Eposaratan Mesylate Intermediates for Esomeparzole Intermediates for 3 products Intermediates for 3 products Two intermediates for Pantaprazole Intermediates for 8 oncology products API for Cephalosporins API for Acyclovir CCS for 3 molecules
Shasun Chemicals
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Opportunities
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Pharmaceuticals Growing Generics A strong generic market in India is a favouable destination for many MNCs Low- Cost Manufacturing Skills Indian manufacturers offer low cost in producing complex synthesis within short frame of time. The sharp decline in generic prices raises the importance of low-cost manufacturing even further. World class practices Majority of the Indian firms comply with cGMP standards. India has the largest number of USFDA approved manufacturing sites (about 80) outside the US EMR in US - Indian companies have been able to win rights on blockbuster drugs. For instance Ranbaxy received 180 day exclusivity (80gm.) for Simvastatin and Dr.Reddy's became the authorized generic for Merck for Zocor.
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CRAMS & Clinical Trials India is fast becoming a leading destination for CRAMS with advantages like cGMP and FDA compliant facilities, manufacturing capabilities, R&D base, superior information technology capability, cost efficiency and pool of skilled personnel. There is an increasing visibility in the Contract Research and Manufacturing Services (CRAMS) space, which is being considered as the next emerging and scalable opportunity for the Indian pharma industry. India is fast becoming a hub of pharmaceutical outsourcing thanks to its cost and quality advantage. Not only manufacturing, but research contracts and clinical trials are coming into India.
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Pharmaceuticals Domestic market price controls on several drugs. The draft New Drug Policy intends to bring an additional 354 drugs under price control. Drug prices in India are already amongst the lowest in the world Sustainability of growth in exports: in the face of competitive pricing pressures , high cost of international marketing and increasing salaries of employees Logistics infrastructure : under pressure R&D Expenses: Continuous rise in R&D expenditure puts pressure on the industry to increase productivity. Dominating generic drugs: Indian companies are more focused on generics whereas branded drugs market is yet to be fully captured
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Bio Pharmaceuticals
Human Resources - Biopharma is an emerging knowledge-driven industry and requires specific skill sets for product development and marketing . Products - Identifying the right unmet need of products and alliances is challenge. Faster commercialization of the product is very important. Early stage funding Non availability of large VC/angel funding
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Threats 2005 IPR regime implies drying up of product pipeline for Indian companies China Non tariff barriers Internal fragmentation
Future Outlook
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20 USD bn 15 10 5 0 2007 2008 2009 2010 2011 8.47 9.77 11.26 12.94 14.70
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Exports to grow at 20% CAGR . Contract research to India to grow to US$2 -3 billion (2-3% of global R$D spend)
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Generics Segment Mergers of Pharmacies, wholesalers increasing bargaining power, Corporate mergers, Restructuring of product sourcing / supply chain . Value to drift towards cost efficient, low cost countries. Significant business in less regulated market or old generics with scale and technology superiority New Generic opportunities are becoming highly complex and the business shall migrate to strong India R&D players The diversity of product dosage forms, strengths, packaging and regulatory challenge across continents offers a competitive advantage for modern Indian companies.
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Biopharmaceuticals India's fledging biotech industry is expected to grow still further to reach a value of approximately USD5.37 billion in 2010 Revenues of Indian Biopharmaceuticals are expected to reach approximately US$3.90 billion by 2010 Monoclonal antibodies, human and animal biologics will be the limelight products in the future. The areas of clinical trials, contract research and government support will be the future growth drivers for the industry.
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CRAMS Contract Manufacturing and Contract Research are expected to scale up to USD2.5billion and USD1.5billion respectively by the same period Growth in Contract Research will be driven by the vast pool of abundant English-speaking manpower skilled in chemistry and biotechnology. A sharp increase in Clinical Trials activities due to large subject pools in all major therapeutic areas, improved healthcare infrastructure, increased awareness of the ICH Guidelines for Good Clinical Practice (GCP) and availability of specialized pool of research investigators.
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China and India competition or co-operation? China is an important source of chemical and APIs , whereas India is stronger on the finished product / formulation side.
India Focus on Late stage Intermediates Complex Synthetic APIs (Custom Synthesis) Dosage Form Manufacture R&D led generics industry Global Sales organisations M&A capability China Focus on Early Stage intermediates Large Volume API mfg Expertise in Fermentation Large scale production capacities Low cost production Better logistics infrastructure
India - second largest export destination for bulk drugs/APIs for China (after US) and exports to India grew at 42% in 2006 ,whereas exports to US grew at 9% China and India can collaborate - CHINDIA can lead the world pharma market !!!
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About us
Cygnus in Latin means SWAN - a symbol of purity and swiftness. As per Hindu mythology, it is the heavenly bird that separated milk from water. Cygnus stands for :
*Quality *Speed *Innovation * Satisfaction of its stakeholders (Employees and customers)
Market, People and Process driven 4 years old ,95 employees and 9 offices in India Over 600 customers across the globe Growing @ CAGR of over 50% (last 3 years)
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KNOWLEDGE PRODUCTS
Economy : Economy Insights India/12 Indian states Economy Monitors Monthly update (Global/India/12 Indian states) Country reports Industry : Global Industry Insights 10 Sectors Global Industry Monitors (GIM) Monthly update on 35 industries Indian Industry Insights 45 Industries / sectors / subsectors Quarterly Performance analysis of industries and Companies (25 industries- Industry /Company analysis /Inter Firm comparison/Performance projections ) Vertical Industry Portals (VIPs) Pharma, BioPharma,Technologies Indian Industry Intelligence portal (i3) Chinese Industry Monitors (7 industries) Company: Cygnus Progress Indian Company Intelligence on 2500 listed Indian companies Company profiles (Top 200 Pharma companies)
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