pharma2007:tp4 whitepaper a4.qxd - kpmg 2007.pdfforward looking step as compared to price...

Pharma�Summit�2007India�Pharma�Inc.�–�A�Continuing�Success�StoryNovember�2007

Pharma2007:TP4_WhitePaper_A4.QXD 30-10-07 11:29 AM

Executive Summary & Acknowledgements 01

Domestic Pharmaceutical Market 03

Global Generics Industry 15

Contract Research and Manufacturing Services

(CRAMS) 29

Research and Development 39

Growth Through Collaborations 47

Annexures 51

Table�of�Contents


The�Indian�pharmaceutical�industry�has�achieved�significant�momentum�in�the

last�few�years,�making�its�presence�felt�in�the�global�market�primarily�through�its

focus�on�global�generics�markets.

It�is�now�well�positioned�for�sustainable�growth�and�expansion�and�companies�in

India�are�identifying�diverse�business�models�as�a�means�to�participate�in�the

global�growth�potential.�The�domestic�market�also�has�strong�underlying�growth

drivers�such�as�increasing�spend�on�healthcare,�increasing�penetration�of�health

insurance�and�changing�disease�profile�which�should�sustain�the�double�digit

growth�witnessed�over�the�last�year.�

On�the�international�front,�Indian�generic�manufacturers�are�playing�an�important

role�in�the�global�consolidation�process.�They�are�also�increasing�their�market

presence�across�regulated�as�well�as�semi-regulated�markets,�through�organic�as

well�as�inorganic�means.�In�spite�of�increasing�competitive�intensity�on�account

of�continued�pricing�pressure,�several�significant�opportunities�are�being

leveraged�by�Indian�generic�players.�

Contract�Research�and�Manufacturing�Services�(CRAMS),�is�becoming�one�of�the

most�promising�opportunities�for�the�Indian�pharma�industry.�Global�pharma

companies�are�finding�pioneering�ways�to�attain�cost�efficiencies�across�the�value

chain.�India,�with�its�intrinsic�competitive�advantages,�remains�one�of�the�most

preferred�outsourcing�destinations�and�is�now�playing�a�vital�role�in�manufacturing

as�well�as�drug�development�value�chain�of�various�innovator�pharma�companies.

Enactment�of�patent�product�regime�offers�multiple�growth�opportunities�for

MNC�pharma�companies�in�the�medium�to�long�term.�India�has�not�only�become

an�important�market�for�launching�their�global�blockbusters,�but�also�a�strategic

destination�for�conducting�global�clinical�trials�and�making�it�a�significant

component�of�their�global�drug�development�value�chain.

Following�the�patent�product�regime,�many�Indian�pharma�companies�have

embarked�on�Research�and�Development�(R&D)�to�achieve�sustainable�long�term

advantage.�These�companies�are�now�adopting�innovative�funding�models�to

advance�their�R&D�activities.�

Strategic�alliances�have�been�one�of�the�preferred�routes�adopted�by�Indian�as

well�as�MNC�pharma�companies�while�foraying�into�new�markets�and

geographies,�as�well�as�in�the�development�and�sourcing�of�new�products�and

molecules.�Such�partnerships�enable�companies�to�capitalize�on�the�associates’

knowledge�and�understanding�of�the�local�market,�technical�know-how�as�well�as

provide�them�with�ready�access�to�a�strong�distribution�and�supply�infrastructure.�

Executive�Summary�andAcknowledgements

01


However,�there�are�a�few�structural�impediments�and�constraints�that�may�affect

the�future�growth�potential.�

Ambiguity�in�regulations�vis’�a�vis�patents�and�regulatory�threat�of�extending�the

span�of�price�control�may�hinder�growth�in�the�domestic�market�and�government

actions�in�different�markets�will�be�key�considerations�for�generics�players.

Strengthening�the�IPR�infrastructure�and�culture�will�benefit�the�CRAMS�industry

and�new�drug�development�and�investment�in�research�and�development�can�be

further�driven�by�access�to�funds.

The�Indian�pharmaceutical�industry�is�at�a�critical�juncture�given�its�inherent

strengths�and�its�ability�to�be�a�dominant�player�in�the�global�pharmaceutical

industry.�If�the�government,�industry�and�corporates�can�act�together�to�drive

reforms�that�strengthen�knowledge�and�compliance�enabling�companies�to�follow

differentiated�business�models,�India�will�be�positioned�to�emerge�as�one�of�the

leading�pharmaceutical�markets�of�the�world.

This�knowledge�paper�prepared�by�KPMG�in�partnership�with�CII,�presents�the

latest�trends�and�insights�on�the�Indian�pharmaceutical�industry.�We�hope�this

report�will�be�immensely�helpful�to�key�stakeholders�of�the�pharmaceutical�and

healthcare�market�and�provide�them�with�an�in-depth�analysis�of�the�business

prospects.

A�number�of�eminent�industry�stalwarts�made�time�to�provide�valuable�insights

for�this�report.�We�would�like�to�acknowledge�and�thank�the�following�people�for

their�contribution�(in�alphabetical�order):

Dr.�Brian�Tempest,�Chief�Mentor�and�Executive�Vice�Chairman�of�the�Board,Ranbaxy�Laboratories�Ltd.�

Dr.�Hasit�Joshipura,�Vice�President,�South�Asia�and�Managing�Director,�IndiaGlaxoSmithKline�Pharmaceuticals�Ltd.

Dr.�J�M�Khanna,�Executive�Director�&�President,�Life�Sciences,Jubilant�Organosys�Ltd.

Mr.�Kewal�Handa,�Managing�Director,�Pfizer�Ltd.

Mr.�Pankaj�Patel,�Chairman�and�Managing�Director,�Cadila�Healthcare�Ltd.

Mr.�Ranga�Iyer,�Managing�Director,�Wyeth�Ltd.

Mr.�Ranjit�Shahani,�Country�President,�Novartis�India�Ltd.

Dr.�Swati�Piramal,�Director,�Strategic�Alliances�&�Communications,�Nicholas�Piramal�India�Ltd.

02


Introduction

The�Domestic�pharmaceutical�market�is�going�through�a�transformation,�led�by

strong�underlying�growth�drivers�and�has�witnessed�robust�growth�over�the�last

couple�of�years.�While�this�growth�was�driven�mainly�by�an�increasing�spend�on

healthcare,�on�account�of�rising�disposable�income,�increasing�penetration�of

health�insurance�and�changing�disease�profile,�regulatory�reforms�also�provided�a

significant�boost.�The�industry�has�grown�at�a�CAGR�of�13�percent�from�

2002-2007�and�is�expected�to�grow�at�a�CAGR�of�16�percent�over�2007-2011.

“I think by and large, the market will grow in double digits given

that the penetration level of modern medicine in the country is low

and the fact that the health insurance sector is growing rapidly.

Everywhere else in the world, economic growth is linked to

increased longevity. So that being the case, I would say that there

will be growth. Healthcare in general will grow and therefore the

pharmaceuticals market will grow. And this growth would be led by

prescription and volume and not price,” says Dr. Hasit Joshipura.

Domestic�Pharmaceutical�Market

Source: Crisil Research

03


Growth Drivers

Strong Economic Growth

The�prospects�of�the�Healthcare�and�Pharmaceuticals�industry�are�strongly�linked

to�economic�growth.�Over�the�last�couple�of�years,�the�pharmaceuticals�industry

has�grown�at�approximately�1.5-1.6�times�the�growth�of�economy.�The�rise�in

disposable�income�has�a�positive�impact�on�healthcare�spend.�In�2005,�6.2

percent�of�disposable�income�was�spent�on�healthcare�as�compared�to�2.8

percent�in�1995.

“There is a view that if the GDP of a country grows by 1 percent the

pharma industry grows by approximately 2 percent. So if you are

going to have 8-10 percent growth in the GDP, the pharma industry

will grow in double digits. This growth would primarily be led by

expansion of healthcare services”, says Dr. Brian Tempest.

This�augurs�well�for�the�pharma�industry,�as�the�strong�economic�momentum�is

expected�to�continue�and�the�Indian�economy�is�expected�to�grow�by�8–9

percent�in�the�next�few�years.

Improving Healthcare Infrastructure

Both�healthcare�delivery�and�infrastructure�segments�are�going�through�a

structural�change�with�the�entry�of�corporates.�Significant�investments�have�been

lined�up�in�the�domains�of�organized�pharmacy�chains�and�private�hospitals.��In

addition�to�Metros�even�B�and�C�category�towns�are�witnessing�sizeable

investments.�Many�pharma�companies�have�expanded�their�sales�force�in�order

to�cater�to�these�untapped�markets.

04

Source: CSO, IMS


“Following factors will drive the growth of the domestic market:

Increase in disposable income, newer therapeutic segments, newer

markets, and semi-urban and rural areas. Last but not the least is

health insurance. Also, the growth in the domestic market would be

based on volumes rather than price,” says Mr. Ranga Iyer.

At present, organized players account for a meager 2 percent share of the

pharma retail market. It is expected that with the advent of modern retailing

in India, increasing investments in this space will multiply the availability

and accessibility of pharma products. The organized pharmacy chains will

not only capture an increasing percentage of the total market but will also

expand the market with value added services and enhanced offerings. The

culmination of all these factors is expected to further drive the growth of the

domestic pharma market.

Increasing penetration of health insurance

At�present,�only�4�percent�of�the�healthcare�costs�are�borne�by�the�insurers�in

India�as�against�80�percent�in�developed�economies.�With�increasing�health

insurance�penetration�in�India,�this�is�set�to�change�and�going�forward,�a�larger

proportion�of�expenses�will�be�paid�by�insurers�and�consumption�of�sophisticated

drugs�is�likely�to�become�more�affordable.

Expansion Plans of prominent pharmacy chains

Company Expansion Plans

Apollo 1000�stores�by�2008

Subhiksha 1000�stores�by�Dec.�2007

Medicine�Shop 500�outlets�by�2009;�700�by�2010

Dabur�HealthWorld 1,000�HealthWorld�stores�in�400�cities�in�next�five�years

Guardian�Lifecare 250�stores�by�Mar�2008�and�3,500�by�March�2015

Frank�Ross�Limited 100�stores�by�2010

Morepen�Laboratories 8�stores�in�2007�and�80�by�2011

Source: Credit Suisse Investment Report, April 2007; Press Articles

05


At�present,�the�health�insurance�penetration�is�estimated�at�approximately�10

percent�in�India�and�is�expected�to�double�in�the�next�five�to�seven�years.�This

increasing�penetration�will�help�expand�the�pharmaceuticals�market�in�two�ways.

One,�it�will�increase�the�access�to�more�sophisticated�and�expensive�drugs;�and

two;�it�will�also�make�basic�drugs�more�accessible�through�wider�coverage.�This

augurs�well�not�only�for�domestic�pharma�companies�but�for�MNC�pharma

companies�as�well;�as�increasing�health�insurance�will�also�help�expand�the

markets�for�patented�products.

“The growth in the domestic market will be driven by volume. The

small to medium size players are growing their presence in

untapped tertiary markets while MNC’s are expected to grow

through introduction of high value products. As Insurance gets more

liberalized as in the west and further growth in health infrastructure

in this country will be key factors to drive growth”, says Mr. Ranjit

Shahani.

06

Source: Industry


Changing Therapeutic Mix

The�existing�therapy�mix�is�tilted�towards�acute�diseases.�However,�in�the

medium�to�long�run�the�domestic�pharmaceutical�market�will�be�largely�driven�by

the�increasing�prevalence�of�the�chronic�segment.��Increasing�urbanization,

changing�lifestyles�and�ageing�population�will�drive�the�growth�of�this�segment.

In�most�cases,�ailments�in�the�chronic�segment�are�recurring�in�nature,�which

ensures�regular�consumption�of�medicines�for�the�lifetime�of�the�patient.�Going

forward,�therapies�for�treating�cardiovascular�diseases�and�diabetes�are�expected

to�have�one�of�the�highest�growth�rates.�

“50 percent of the industry is still anti Infective plus metabolism and

respiratory products. Standards of sanitation and hygiene in this

country are low. As long as this issue is not tackled, you cannot

expect acute disease to come down. CNS, CVS and other chronic

disease are also growing along with this,” says Mr. Ranga Iyer.


07

Source: IMS


Dr. Hasit Joshipura also feels that, “both segments, anti infectives

and respiratory will continue to grow. At the same time due to

change in Indian life styles in cities, which are getting more akin to

those in western countries, the disease profile will also change. So

you will have chronic and life style disease such as CVS, CNS and

diabetes also growing”.

In�terms�of�the�geographical�distribution�of�the�Pharma�market,�23�Metro�cities

account�for�approximately�a�quarter�of�the�market.�Class�I�towns—�comprising

300�towns�altogether—�account�for�about�one-third�of�the�market.�Rural�markets

which�account�for�21�percent�of�the�total�market�have�been�increasingly

becoming�an�important�market�for�big�pharma�companies.��Though�rural�markets

are�dominated�by�acute�segments,�chronic�segments�have�slowly�started�making

inroads.�

“The domestic Indian pharmaceutical market is expected to grow at

11-12 percent and will primarily be driven by the launch of new

products and market expansion strategies. Domestic companies will

also continue to grow through acquisitions, joint ventures,

leveraging low operational costs and outsourcing. However, price

control mechanisms and ambiguity in the policy environment may

constrain market growth”, says Mr. Kewal Handa.

Source: Merck Presentation

08


Mr. Kewal Handa also feels that, “Though patented products will be

introduced in India, the domestic market will predominantly remain

a branded generics market. By 2015, it is estimated that the share of

patented product will be about 10 percent.”

Government Initiatives

The�Government�has�introduced�several�development�programmes�to�improve

the�access�to�and�quality�of�the�healthcare�services�in�the�country.�The�National

Rural�Health�Mission�(NRHM),�introduced�by�the�government�to�provide�basic

healthcare�amenities�in�the�rural�areas,�is�expected�to�increase�the�access�to

drugs�in�the�rural�areas.�In�Budget�2007-08,�the�budgetary�allocation�to�health

was�increased�by�22�percent�to�INR�1,52,910�million.

Launch of Patented Drugs

After�the�product�patent�regime�was�introduced�in�India�in�2005,�the�domestic

pharma�industry�has�witnessed�the�launch�of�around�11�patented�products�by

multinational�companies.

This�number�is�expected�to�grow,�as�MNC�pharma�companies�are�already

planning�significant�patented�launches�over�the�next�few�years.�Various�industry

estimates�suggest�that�by�2015,�patented�drugs�will�account�for�10-15�percent�of

the�domestic�pharma�market.��

Key Patented Molecules launched in India (till March 2007)

Product Company Therapeutic Category Launch date Current Status

Vfend Pfizer Anti-Infective Feb-05 On�Patent

Avandia GSK Anti-Diabetic May-05 On�Patent

Viagra Pfizer Erectile�Dysfunction Dec-05 On�Patent

Lyrica Pfizer Neuropathic Feb-06 On�Patent

Caduet Pfizer Cardiovascular Feb-06 On�Patent

Carvedilol GSK Cardiovascular Mar-06 Off�Patent

Genotropin Pfizer Endocrine�Disorders Mar-06 On�Patent

Tamiflu Roche Influenza Apr-06 On�Patent

Pegasys Roche Hepatitis�C May-06 On�Patent

Avalide Sanofi�Aventis Cardiovascular Jul-06 On�Patent

Ambien Sanofi�Aventis Insomnia Jan-07 Off�Patent

Source: CRISIL Research

09


However,�ambiguities�in�the�patent�laws�remain�with�respect�to�issues�such�as

data�protection,�pre-grant�and�post-grant�opposition�and�patenting�of�derivatives.

“When GSK introduced patented products in 2005, there were lots of

sceptics. But we still launched the products. The interest of the

government is to globalize the country and all the signs are there,

and therefore I do expect that the steps will be such that they will

not take India back but they will continue this path of integrating

India into global economy. And I think the one indicator that the

global pharma players are sitting up and taking notice is the number

of new entrants. Companies that were not present in India are now

establishing businesses in India. So these are all indicators that the

people are hopeful that these changes would continue in a direction

that would facilitate innovative companies to operate in this country

with protection of their intellectual properties,” says Dr. Hasit

Joshipura.

“The domestic market will continue to be attractive. The patent law

today is not the best we have. But I think it will get better. I think it

will become more positive,” says Mr. Ranga Iyer.

“The full impact of the patent laws will be felt only after 2010, says

Mr. Ranga Iyer, because anything patented after 1995 only is eligible

to be patented in this country and if it takes the normal cycle of 12

years to get a molecule out, then it will come out only in 2007- 08 in

the western countries. It will take another 1-2 years for it to come to

India. I think all companies during the last 3 to 4 years have

launched one or two products per year. This is a lot for MNC pharma

vis a vis history”.

Key Considerations

Need for Public–Private Partnership (PPP)

At�present,�a�principal�share�(almost�75-80�percent)�of�the�total�healthcare

expenditure�by�the�country�is�incurred�by�the�private�sector,�while�the�public

sector�finances�the�balance.�On�the�other�hand,�affordability�and�accessibility�of

the�latest�and�quality�drugs�continues�to�be�one�of�the�major�issues�for�a�large

section�of�the�population�and�for�the�country�as�a�whole.�Both�the�public�as�well

as�private�sectors�have�recognized�this�as�a�serious�concern�and�are�looking�at

PPPs�as�a�sustainable�model�to�cater�to�the�growing�demand�of�medicines

across�all�sections�of�society.��

10


“70 percent people in this country do not have access to modern

medicine. 700 million people in a population of 1 billion. That is a

problem that the government needs to solve. There has to be a

public private partnership to reach medicines to these 700 people,”

says Mr. Ranga Iyer.

Mr. Ranjit Shahani also has similar opinion, according to him,

“Approximately 65 percent of the population does not have access to

medicines. The government should focus on improving access to

improve healthcare.”

Spurious / Sub-standard drugs

At�a�time�when�India�is�moving�towards�becoming�a�preferred�manufacturing

base�for�global�pharma�companies,�the�menace�of�spurious�and�substandard

drugs�could�give�a�negative�image�to�the�country.�According�to�the�Mashelkar

committee�report,�the�industry�faces�a�loss�of�around�INR�40�billion�due�to

substandard�drugs�and�a�WHO�report�suggests�that�35�percent�of�spurious�drugs

of�the�world�are�being�produced�in�India.�Spurious�and�counterfeit�drugs�are�a

major�public�health�hazard.�

Government�needs�to�accelerate�the�legislative�reforms�to�curb�the�menace�of

counterfeit�drugs.�“This is one of those issues that needs to be tackled

as the industry comes of age. It is not just spurious drugs; it is

pharmacovigilance per se.” says Dr. Hasit Joshipura.

11

Source: Edelweiss Investment Report, April 2007


Price Controls

Uncertainties�regarding�the�Draft�Pharmaceutical�Policy�2006,�which�proposes�to

bring�354�essential�drugs�under�the�purview�of�Drug�Price�Control�Order�(DPCO)

continues�to�be�an�area�of�acute�concern�for�the�industry.�The�pharma�industry

feels�that�regulation�should�try�to�simulate�the�"effects�of�competition"�and�price

control�should�not�be�imposed�on�drugs�where�the�"effects�of�competition"

already�exist.�The�proposed�policy�would�significantly�increase�DPCO’s�span�of

control�from�the�existing�25�percent�to�approximately�50-60�percent�of�all

medicines�produced.�

Some�of�the�notable�views�from�the�industry�as�follow.

“Artificially imposed constraints of any kind will hamper the growth.

Industry is responsible enough to make sure that pricing will not

spiral out of control. And again in this country where you have 50

brands for each molecule, there is an inbuilt mechanism to control

prices.” says Dr. Hasit Joshipura.

Dr. Hasit Joshipura also feels that, “it is the concern of governments

world over that the medical costs should be affordable. And if prices

go out of hand then it is not desirable. Certainly some monitoring

should be there.”

“By subsidizing and controlling prices, the government is actually

subsidizing these for the rich also. Because they are the people

buying it. Access is the problem in this country and not the price.

You improve the access of medicines to the poor and lots of these

problems could be solved,” says Mr. Ranga Iyer.

“The market is growing and it will continue to do well except for one

thing and that could be public policy. If the government does not

have a progressive policy then that perhaps could hamper the

growth. Fundamentals are strong and if the policy is progressive

then it will augur well for the industry. The industry needs good

legislations and price monitoring by the government would be a

forward looking step as compared to price control,” feels Dr. Swati

Piramal.

12


Mr. Kewal Handa feels that, “India needs a locally relevant

healthcare policy. It is imperative that the government broadens the

focus from controlling the price of medicine, which is just one

element of the healthcare expense cycle, to investing in other critical

elements such as improving primary healthcare infrastructure and

availability of doctors. Investments in preventative measures will

reduce the overall diseases incidences thus resulting in lower

healthcare costs.”

“Price controls would constraint the growth of the market. However,

price monitoring may be an effective way to manage prices”, feels

Mr. Ranjit Shahani.

High fragmentation

The�domestic�formulations�market�is�predominantly�a�branded�generics�market

and�intensely�competitive,�with�the�presence�of�several�players,�including�small

scale�companies.�The�top�10�companies�account�for�only�37�percent�of�the

market.��This�shows�the�level�of�fragmentation�in�the�industry.��Given�this

industry�structure,�brands�franchise,�field�force�strength�and�product�innovation

become�critical�success�factors�to�operate�in�this�market�place.

“In a market that is only selling copied products, the importance of

strong brands is very crucial and vital and the only way to grow in

the future. Otherwise how do you differentiate between 18 different

molecules? All you can look at is the brands,” says Dr. Swati Piramal.

A�report�by�the�Institute�for�Studies�in�Industrial�Development�(ISID),�a�national-

level�policy�research�organization�in�the�public�domain,�mentions�that�in�2000-01

there�were�approximately�2872�pharma�units�in�India�and�out�of�these�91�percent

were�small�manufacturing�enterprises.�

13


However,�the�amendments�made�by�the�government�to�the�Schedule�M�which

deals�with�standard�manufacturing�practices,�will�help�in�establishing�quality

standards�and�uniformity�across�manufacturing�practices.

“I don’t see consolidation happening in a massive way in the near

future. Many of them are family run businesses and they are doing

well. They have no reason to give up their business. It’s a

fragmented industry all over the world and why should it be

different here,” says Dr. Swati Piramal.

Mr. Ranjit Shahani feels that “consolidation will happen in the longer

term – by 2010. However, current high valuation expectations and

emotional attachments due to them being largely family run

organizations, are the key reasons why you do not see consolidation

in the short term”.

Conclusion

India’s�domestic�pharmaceutical�market�is�at�an�inflection�point.�The�strong

underlying�growth�drivers�offer�enormous�opportunities�for�domestic�as�well�as

MNC�pharma�companies.�However,�an�inclusive�and�growth�oriented�public�policy

regime�will�ensure�that�this�growth�is�sustainable.�

14


Global�Generics�Industry

Introduction

Over�the�last�few�years,�Indian�pharma�companies�have�been�scaling�up�their

presence�in�the�non-traditional�business�segments�such�as�drug�discovery�and

development,�contract�research�and�manufacturing,�etc.,�and�are�focusing�on

building�their�competencies�in�every�area�of�the�pharma�value�chain.�However

generics�continue�to�remain�the�mainstay�of�the�industry.�Indian�companies�are

increasingly�advancing�beyond�domestic�boundaries�and�are�aggressively

focusing�on�making�their�mark�in�the�global�generics�space.�In�order�to�reduce

their�dependence�on�the�U.S.�market,�Indian�pharma�companies�are�now�entering

new�and�under-served�generics�markets�across�different�geographies�such�as

Japan,�South�Africa,�European�and�Commonwealth�of�Independent�States�(CIS)

countries�and�Latin�America.�While�the�global�generics�industry�continues�to

remain�under�severe�pricing�pressure,�the�Indian�generic�drug�makers�continue�to

spread�their�wings�across�different�international�markets.

Growth Drivers

Trend towards an increased use of generics

Globally,�the�trend�towards�an�increased�use�of�generics�is�on�the�rise�and�is

expected�to�open�up�tremendous�opportunities�for�generics�players�as

governments�in�many�countries�encourage�the�shift�to�generics�on�the�back�of

rising�pressure�on�healthcare�budgets.�Globally,�the�generics�industry�is�expected

to�grow�at�a�Compound�Annual�Growth�Rate�(CAGR)�of�11�percent�between�2006

and�20101 and�touch�USD�94�billion�by�2010.��At�present,�India�has�only�10

percent�market�share�in�this�industry.

Regulated Markets

U.S.�-�The�world’s�largest�generics�marketThe�U.S.�market�is�still�by�far�the�largest�pharma�market�in�the�world�and

accounts�for�over�28�percent�of�the�world’s�generics�market.2

In�spite�of�severe�pricing�pressure�and�declining�profitability,�the�U.S.�market�will

continue�to�be�attractive.�Drugs�worth�USD�65-70�billion�are�expected�to�go�off

patent�in�the�next�four-five�years.

1 Crisil Research

2 SSKI Investment Report, March 2007

15


Given�the�opportunity�and�challenges�in�this�market,�it�is�evident�that�the�success

of�Indian�players�in�the�U.S.�market�will�largely�depend�on�their�ability�to�offer

value-added�generics�products�and�their�specialization�in�business�development

through�partnerships,�strategic�alliances�and�joint�ventures�(JV).

European�Union�(EU)�–�regulatory�reforms�to�drive�growthMost�European�markets�such�as�France,�Italy,�Belgium,�Spain�and�Germany�are

highly�regulated�and�have�low�levels�of�generics�penetration.�Rising�healthcare

expenditures�in�these�countries�is�becoming�a�key�concern�for�most�European

regulators.�Several�reforms�and�regulatory�changes�have�been�introduced�in�the

last�couple�of�years�to�encourage�an�increased�use�of�generics.�These�markets

are�largely�branded�generics;�hence�pricing�pressure�is�limited�as�compared�to

the�U.S.�market.

These�regulatory�changes�coupled�with�a�significant�number�of�drugs�going�off

patent�over�the�next�few�years,�has�opened�up�a�big�opportunity�for�Indian

generics�makers.�Many�Indian�companies�have�already�made�their�mark�in�these

markets�while�others�are�pursuing�aggressive�strategies�to�foray�into�these

markets,�primarily�through�their�inorganic�initiatives.�

16

Source: Motilal Oswal Investment Report, April 2007

Source: Motilal Oswal Investment Report, April 2007 Source: Motilal Oswal Investment Report, April 2007


Japan�–�Low�generics�penetration�and�Government�legislation�to�drivegrowthJapan,�the�world’s�second�largest�pharmaceutical�market,�has�lured�many�Indian

companies,�in�spite�of�its�low�generics�penetration�rate.�The�Japanese�pharma

market�was�valued�at�USD�65.2�billion�in�2006.3 At�present,�generics�account�for

approximately�17�percent�of�the�market�by�volume�and�5�percent�by�value.�It�is

expected�to�grow�to�USD�14�billion�by�2010.4 The�government�is�actively

introducing�reforms�and�measures�to�encourage�low�cost-high�quality�generics

drugs,�with�the�objective�to�cut�the�increasing�healthcare�spending.

Indian�companies�are�looking�at�significant�opportunities�in�the�Japanese�market.

The�growth�of�the�generics�industry�in�Japan�is�expected�to�be�driven�by�a�rapidly

ageing�population,�increasing�healthcare�expenditure�and�government�reforms.

Since�2002,�the�Japanese�government�has�introduced�several�legislations�to

promote�the�use�of�generics�drugs.�The�generic�substitution�law—�which�was

introduced�in�April�2006—�is�one�of�them.�It�is�expected�to�be�a�key�engine�to

expand�Japan’s�generics�drug�market�and�enable�medical�institutions�to�dispense

generic�drugs.

Emerging Markets- gaining traction

Emerging�markets�such�as�Russia�and�the�CIS�nations,�Eastern�Europe;�Brazil�and

other�Latin�American�countries�and�South�Africa�are�increasingly�being�viewed�as

highly�remunerative�markets.�

Presence of Indian companies in Japan

Indian Company Remarks

Ranbaxy Entered�into�a�JV�with�Nippon�Chemiphar,�a�medium�sized�pharma�companyfocused�on�generics,�to�strengthen�its�presence�in�Japan’s�generics�market

Lupin Acquired�Kyowa,�a�Japanese�generics�company�ranked�amongst�the�top�10generics�companies�

Strides�Arcolab Entered�into�a�JV�with�SORM�Co.�for�long-term�supply�of�generic�drugs,�Over-the-Counter�(OTC)�and�nutraceutical�products

Zydus�Cadila Acquired�Nippon�Universal�to�gain�access�to�a�manufacturing�base�anddistribution�network

Source: Motilal Oswal Investmenr Report, April 2007; Company websites and Press articles

3 Datamonitor Report, December 2006

4 Motilal Oswal Investment Report, April 2007

17


Many�of�these�markets�are�primarily�branded�generics�markets�and�have�high

entry�barriers,�and�are�thus�subject�to�lesser�competition.�As�a�result,�these

markets�offer�better�price�realizations�and�stable�margins.�The�demand�in�these

markets�is�further�driven�by�favorable�demographics,�increased�healthcare

spending�and�improving�healthcare�infrastructure.�

“Regulated Markets are the largest markets and their role will

always remain important. But, as and when there are opportunities

in other markets, people that have entered the regulated markets

will also look at these markets. Some of the emerging nations and

semi regulated markets offer better opportunities in terms of

profitability than the regulated markets,” says Mr. Pankaj Patel.

South�AfricaSouth�Africa�is�perceived�as�a�very�promising�market�for�several�Indian�generics

makers.�The�South�African�pharma�market�was�valued�at�USD�1.3�billion�in�2006.

This�market�is�expected�to�grow�at�a�CAGR�of�5.5�percent�over�the�next�five

years�and�touch�USD�1,698�million�by�2011.5 It�is�predominantly�dependent�on

imports�and�the�generics�market�accounts�for�around�40-45�percent�of�the�total

market.�

Hence�South�Africa’s�pharma�market�has�become�one�of�the�prime�emerging

markets�for�Indian�generics�players.�Several�players�have�established�their

presence�in�this�market�through�subsidiaries,�JVs,�acquisitions,�or�marketing�and

distribution�agreements.�Some�of�the�leading�Indian�companies�which�have

already�capitalized�on�the�opportunities�in�this�market�include�Cipla,�Dr.�Reddy’s,

Ranbaxy�and�Wockhardt.

5 Espicom Business Intelligence World Pharma Market, January 2007

18

Source: Citigroup Investmenr Report, May 2007


Russia�and�other�CIS�nationsThe�Russian�pharmaceuticals�market�was�valued�at�USD�7�billion�in�2006.6 It�is

one�of�the�fastest�growing��pharmaceuticals�markets�in�the�world.�Russia’s

generics�market�is�around�30�percent�of�the�total�market.7 It�is�a�semi-regulated

market,�offering�high�and�stable�returns.�Other�attractive�CIS�markets�include

Ukraine,�Kazakhstan,�Belorussia,�Uzbekistan�and�Azerbaijan.

The�reforms�in�healthcare�systems�and�the�shift�to�generics,�clubbed�with

favorable�demographics�such�as�a�large�population�base,�high�per�capita�income,

as�well�as�low�entry�barriers�compared�to�the�U.S.�is�expected�to�augur�well�for

companies�focused�on�this�region.�

JB�Chemicals,�Ranbaxy,�Lupin,�Lyka�Labs,�IPCA�Labs,�Plethico�have�established

their�presence�in�Russia.�Investments�are�in�the�form�of�JVs�and�manufacturing

facilities�in�Russia,�Ukraine�and�Uzbekistan.�Competition�for�Indian�companies�in

these�regions�is�from�the�neighboring�European�generics�players.

Brazil�and�other�Latin�American�marketsThe�Brazilian�market�has�caught�the�fancy�of�many�Indian�companies�in�the

recent�years.�In�fact,�approximately�50�percent�of�the�JVs�and�partnerships

between�India�and�Brazil�are�formed�in�the�pharma�sector.�

6 Economist Intelligence Unit

7 Espicom Business Intelligence World Pharma Market Fact Book

Source: Express Pharma

19


Generics�accounted�for�14.2�percent�of�the�estimated�USD�11�billion�market�in

2006.�Although�India’s�pharma�exports�to�this�market�stood�at�only�3�percent�of

the�total�pharma�exports�in�FY07,�this�market�is�expected�to�generate�significant

opportunities�in�the�near�future,�driven�by�the�recent�de-recognition�of�the�patent

for�antiretroviral�drugs�and�promotion�of�generics.�

Other�markets�of�Latin�America�which�have�attracted�many�Indian�companies�are

Argentina,�Mexico�and�Chile.�These�semi-regulated�markets�offer�stable�returns

and�higher�margins�as�compared�to�regulated�markets.

India’s competitive position

Indian�companies�have�already�proved�their�mettle�in�the�fiercely�competitive

global�generics�space.�India�has�a�share�of�around�23�percent�in�the�total

Abbreviated�New�Drug�Application�(ANDA)�approvals�and�48�percent�of�the�total

Drug�Master�Files�(DMF)�filings.8 India’s�cost�advantage�is�highly�compelling.�This

fact,�coupled�with�strong�chemistry�and�regulatory�skills�and�the�largest�no.�of

USFDA-approved�plants�outside�the�U.S.,�makes�India�one�of�the�most�dominant

players�in�the�global�generics�space.

Indian Company Presence in Brazil

Ranbaxy Formed�a�JV�Ranbaxy�S.P.Medicamentos�(with�local�partners)

Dr.�Reddy’s Established�a�subsidiary�Dr.�Reddy's�Farmaceutica�Do�Brazil�Ltda

Glenmark Established��wholly-owned�Brazilian�subsidiary�Glenmark�Farmaceutica�Ltd.Acquired�Laboratorios�Klinger

Zydus�Cadila Established�Zydus�Healthcare�Brasil�Limitada�to�market�formulations�in�BrazilAcquired�Quimica�e�Farmaceutica�Nikkho�do�Brasil�Ltda�(Nikkho)

Wockhardt Established�a�sales�and�marketing�subsidiary�Wockhardt�Farmaceutica�do�BrasilLtda

Strides Has�set-up�two�manufacturing�units�(Cellofarm�Ltda)

Source: Company websites, Indo-Brazilian Commercial Relations Report, December 2006 and Press articles

8 Crisil Research

20


In�order�to�remain�competitive�and�maintain�their�dominance,�Indian�players�have

realigned�and�restructured�their�operating�paradigms�reflected�in�lean�cost

structures,�vertically�integrated�models,�geographically�diversified�presence,�vast

product�baskets�and�increasing�presence�in�niche�segments.

“Yes, the competition is rising; it took Ranbaxy 4-5 years to get

established, so it will take 4-5 years for the Chinese to get

established. China is incredibly strong in terms of intermediates and

API but in formulations, India’s share is increasing. One out of every

four ANDAs is from India. But competition from China will begin by

2008. And it will be very important to be competitive on costs. There

are pricing pressures, but there are good profits to be made. The

good thing not to forget is the branded generics, which is a growth

oriented sector,” says Dr. Brian Tempest.

Enhanced focus on niche specialties

Indian�players�are�now�focusing�on�capturing�emerging�opportunities�in�certain

niche�specialties.�These�segments�offer�higher�and�more�sustainable�margins

which�can�compensate�for�the�intense�pricing�pressure�in�the�generics�segment.

Source: Merrill Lynch Investment Report, November 2006

21


The�table�below�shows�some�of�the�high�growth-high�profit�niche�segments

identified�by�Indian�companies.

Building Para IV pipelines

Aggressive�Para�IV�filings�and�teaming�up�with�innovator�pharma�companies�for

launching�authorized�generics�is�also�gaining�momentum.�Indian�generics�giants

such�as�Ranbaxy�and�Dr�Reddy’s�have�already�tasted�the�success�of�these

strategies�and�have�reported�significant�gains�by�winning�the�180-day

exclusivities.�To�give�an�example,�Ranbaxy�won�the�180-day�exclusivity�for

Simvastatin�80�mg,�an�anti-cholesterol�drug�in�the�U.S.�This�exclusivity�period

gave�the�company�a�share�of�approximately�56�percent�of�that�market.�Sun

Pharma�and�Glenmark�are�the�latest�entrants�in�the�high�risk-high�reward�Para�IV

filings�space.

Developing Niche portfolio

Ranbaxy�Laboratories� NDDS�products,�Branded��Generics

Sun�Pharmaceuticals� Controlled�Substances

Dr.�Reddy's�Laboratories Biologics,�Dermatology

Nicholas�Piramal� Controlled�Substances,�Bio-fermentation-based�products

Wockhardt� EPO,�Insulin

Biocon� Immunosuppressant,�Oral�Insulin,�Monoclonal�Antibodies

Glenmark� Dermatology,�Controlled�substances

Zydus�Cadila�� Anti-Cancers

Lupin� Cepharlosporins�(Steriles�and�Oral)

Aurobindo�Pharma Lifestyle�drug�formulations

Source: Merrill Lynch Investment Report, November 2006

Ranbaxy Dr. Reddy's Sun Pharma Glenmark

No.�of�filings�with�FTF�position 20 18 6 3

Innovator�sales�for�FTF�(USD�bn) 26 10 6�to�8 3

Source: Analyst Reports

22


Global Consolidation

The�consolidation�drive�that�has�accelerated�over�the�last�two�years�continued

unabated�this�year�as�well�–��a�prominent�one�being�Mylan’s�acquisition�of

Merck’s�generics�business.�Most�of�these�companies�have�made�it�to�the�top

league�by�aggressively�pursuing�the�inorganic�route.�Today,�the�top�10�global

generics�companies�collectively�have�a�market�share�of�over�50�percent�of�the

global�generics�market.�This�is�likely�to�have�a�positive�effect�and�reduce�pricing

pressure�in�the�global�generics�market,�to�some�extent.

The�enthusiasm�for�acquisition�has�been�driven�by�a�series�of�factors�such�as

attaining�scale,�geographic�diversification�by�venturing�into�new�markets,

expanding�product�portfolios,�building�new�therapeutic�specializations�and

strengthening�supply�chain�capabilities.�

Acquisitions by Indian Companies

The�augmented�risk�appetite�of�the�Indian�players�is�reflected�in�their�aggressive

acquisition�strategy�and�increased�leveraged�funding�activity,�over�the�last�few

years.�

In�continuation�of�their�strategy�of�growth�through�the�inorganic�route,�this�year

also,�the�pharma�industry�was�buzzing�with�heightened�Merger�and�Acquisition

(M&A)�activities.�This�is�driven�by�the�growing�ambitions�of�Indian�companies�to

strengthen�their�competitive�position�and�consolidate�their�presence�in�the

generics�space.�The�primary�drivers�that�would�sustain�profits�for�generics

companies�given�the�pricing�pressure�are�market�penetration�and�access�to

diverse�markets.�Hence,�growth�through�the�inorganic�route�has�been�the�most

sought�after�strategy�for�not�just�the�large�players�but�also�the�medium�and�small

companies.�

While�most�of�the�acquisitions�were�focused�on�the�European�markets,

companies�have�concluded�deals�in�the�emerging�markets�of�South�Africa,�Brazil

and�Thailand.�One�of�the�notable�trends,�is�Indian�companies�are�now�increasingly

targeting�front-end�marketing�and�distribution�companies,�in�order�to�strengthen

their�position�in�the�entire�value�chain.

23


The�table�below�explains�the�strategic�rationale�of�some�of�the�prominent�acquisitions�concluded�by�Indian�companies�in

the�last�one�year.

Cross-border acquisitions by Indian companies

Date Target Name Target Country Acquirer NameDeal Value

USD mnRationale

Oct-06 PinewoodLaboratories Ireland Wockhardt�Ltd. 150

Entry�into�Ireland�and�to�consolidate�its�positionin�U.K.�and�Germany.

Leverage�on�Pinewood’s�marketing�network�andoffer�a�wider�basket�of�products

Oct-06 CantabriaPharma�SL Spain Wanbury�Ltd. 62.6 Entry�into�the�European�generics�market

Dec-06Be-TabsPharmaceuticals

South�Africa RanbaxyLaboratories�Ltd. 70

Strengthened�Ranbaxy’s�South�Africanoperations.

Be-Tabs�is�South�Africa’s�largest�penicillinmanufacturers�and�the�fifth�largest�genericsplayer

Dec-06 Genemedix�(74percent�stake) U.K. Reliance�Life

Sciences 63.2Access��to��GeneMedix’s�manufacturing�andclinical�research�facilities�to�launch�bio-similarsportfolio�in�European�markets

Dec-06 PharmacinInternational� Netherlands Aurobindo

Pharma�Ltd. NA Access�to�several�key�European�markets�andwiden�product�portfolio

Jan-07 BiosciencesCo�Ltd. Thailand Dabur�Pharma

Ltd. NAAccess�to�the�marketing�and�distributionnetwork�for�Thailand’s�rapidly�growing�oncologymarket

Mar-07 MedicamentaAs

Czech�Republic(and�Slovakia

GlenmarkPharmaceuticalsLtd.

NA Entry�into�the�Czech�Republic�and�Slovakiamarkets

Apr-07NipponUniversalPharmaceutical

Japan Cadila�HealthcareLtd. NA

Leverage�on�Nippon’s�manufacturing�base�andstrong�distribution�network�to�gain�access�to4,000�hospitals�and�clinics

Apr-07 Negma�LeradsSas France Wockhardt

Limited 265Entry�into�the�French�market�and�access�toNegma’s�portfolio�of�172�patents�anddistribution�network

May-07Disapa�S.p.Afermentationfacility

Italy Strides�Arcolab NA Access�to�a�U.S.�FDA�and�EU�approved�facilitywith�strong�technology�and�fermentation�skills

May-07

Quimica�eFarmaceuticaNikkho�doBrasil�Ltd

Brazil Cadila�HealthcareLtd NA Entry�into�Brazil’s�branded�generics�space

Aug-07Biomeda�Group(51�percentstake)

Bulgaria Elder�Pharma 5Entry�into�the�Bulgarian�market�and��expansionof�the�product�portfolio�to�other�Europeanmarkets

Note: In May 2007, Sun Pharma announced the acquisition of Taro for USD 454 million. The deal is pending closure. The Acquisition will expand Sun’s U.S.portfolio and strengthened its Research and Development (R&D) activity and add 170 scientists to Sun’s existing team. Taro has a strong focus on the U.S. andCanadian markets.

Source: Analyst Reports, Press articles, Company websites

24


Acquisitions of Indian assets by international pharma

companies

It�has�become�a�strategic�imperative�for�global�pharma�companies�to�make�India

an�integral�part�of�their�manufacturing�value�chain�to�maintain�lean�cost�structures

and�combat�intense�competition�in�the�global�generics�industry.�Global�generics

players�such�as�Mylan�and�Actavis�have�acquired�Indian�assets�to�create�a�strong

back-end�for�their�global�supply�chain.�

“Generics industry will continue to be very attractive. India's

position is very strong. There are lots of products coming in, lots of

governments worried about rising health costs. Pricing pressure is

increasing and there is focus on the issue. If you don't have a

business in India, I can not see the company surviving in the future. I

really think that you need an Indian part of the business. So, you

may be Indian or you are based outside of India but you require an

Indian operational base or you will loose. So there is optimism

about the generic business which is still going to be there,” says Dr.

Brian Tempest.

Global�pharma�companies�have�been�sourcing�Active�Pharmaceutical�Ingredients

(API)�and�formulations�from�India�through�tie-ups�with�Indian�manufacturers.

However,�acquisitions�provide�them�with�greater�control�and�flexibility�and�access

to�the�same�resources�available�to�Indian�drug�manufacturers.�

Foreign companies are

acquiring Indian assetsRationale

Actavis�acquired�themanufacturing�facilities�ofGrandix�and�Sanmar

• Grandix�provided�Actavis�access�to�low�cost�manufacturing�facilities,�to�develop�andmanufacture�products�for�U.S.�and�Europe�as�well�as�re-launch�older�products�atcompetitive�prices�from�the�facilities

• The�Sanmar�acquisition�provided�Actavis�a�U.S.�FDA�approved�facility�and�the�ability�todevelop�and�manufacture�its�own�APIs

Mylan�acquired�a�majoritystake�in�MatrixLaboratories

• Matrix’s�acquisition�is�expected�to�significantly�enhance�the�backward�integrationcapabilities�of�Mylan�and�strengthen��its�supply�chain�capabilities

• Provided�Mylan�an�access�to�the�emerging�markets�of�India,�China,�Africa�and�also�Europe(through�the�distribution�network�of�Matrix’s�Docpharma�subsidiary)

Teva�acquired�RegentDrugs • Regent�Drugs�provided�Teva�access�to�API�manufacturing�facility�for�its�global�needs

Watson�Pharmaceuticalsacquired�Mumbai-basedSekhsaria�Chemicals

• The�acquisition�was�part�of�Watson’s�strategy�to�expand�its�presence�in�India.�It�providedWatson�access�to�facilities�such�as�process�R&D,�contract�manufacturing�and�development;and�manufacture�of�API�and�intermediates

Watson�acquired�DrReddy’s�Goa�formulationfacility

• Watson�produces�solid�dosage�generic�products�for�the�U.S.�market�from�this�plant

Source: Press articles, Analyst Reports

25


Key Considerations

Pricing Pressure and Increasing Competitive Intensity

The�global�generics�industry�continues�to�reel�under�pressure�with�intense�

price-led�competition,�and�the�entry�of�smaller�players�has�further�intensified�the

competitive�intensity.�Though�the�generics�segment�continues�to�grow�at�a�rate

higher�than�the�global�pharmaceutical�market,�the�operating�environment�is

becoming�increasingly�competitive.�U.S.,�the�leading�generics�market,�is

witnessing�intense�competitive�pressure�with�several�new�players�entering�this

space�leading�to�price�erosion�to�the�tune�of�95-98�percent�in�some�instances

“Given the fact that there are newer players entering the fray, in

addition to the existing players, we can expect the generics space to

become a more competitive one,” feels Mr. Pankaj Patel.

While�the�long�term�business�drivers�are�intact,�the�near�term�prospects�seem

challenging.�However, Mr. Pankaj Patel feels that the generics market

will expand. It is a growing market and opportunities still exist. The

severe pricing pressure will continue and eventually it will become a

volume game. The key factors that will become very important to

succeed in the generics business will be the ability to differentiate

oneself in terms of technological development and cost optimization.

Taking care of these two aspects would have a positive impact for

companies.

Managing Growth in multiple markets

One�of�the�key�issues�to�be�dealt�with�while�achieving�geographical

diversification�is�to�manage�growth�in�multiple�markets.�Not�only�big�players�but

even�mid�and�small�sized�Indian�pharma�companies�have�started�foraying�into

regulated�as�well�as�non-regulated�markets.�Each�of�these�markets�has�unique

characteristics.��It�is�a�challenging�task�to�develop�a�strong�presence�and�acquire

scale�in�each�of�these�markets.�The�success�of�companies�in�these�markets�will

depend�on�factors�such�as:

– Entry�strategy

– Ability�to�comply�with�regulatory�complexities

– Building�product�portfolio�based�on�disease�profile�of�each�country.

“It’s not just managing multiple markets, but the complexities in

terms of supply chain and regulatory requirements that make the

task of managing growth a challenging one,” says Mr. Pankaj Patel.

26


Competition from China

It�is�becoming�increasingly�difficult�for�India�to�ignore�China.�China�is�emerging�as

a�strong�competitor�on�the�back�of�its�cost�competitiveness,�strong�government

support�(in�the�form�of�incentives),�implementation�of�GMP�norms,�aggressive

focus�on�exports�and�the�soaring�consolidation�drive�to�build�large�Chinese

pharma�giants.�In�fact,�China�is�thought�to�be�the�preferred�contract�research

destination�over�India.

In�some�aspects,�however,�China�lacks�the�required�specialization�in�some�areas

such�as�finished�formulations,�regulatory�compliances�for�regulated�markets�and

Intellectual�Property�Rights�(IPR)�development.�In�terms�of�U.S.�FDA�approved

plants,�China�is�still�far�behind�India.�India�is�also�leading�in�terms�of�the�number

of�DMF�filings.�While�India�has�filed�1,155�DMFs�between�January�2000-June

2007,�China�has�filed�only�329�in�the�same�period.�In�2007�itself,�India�has�filed

110�DMFs,�which�is�nearly�thrice�that�of�China’s�38�filings.9

“China has always tried to compete on price, so they could pose a

threat to India in the Generics Market. However, they are still six

years away from doing anything significant as far as generics are

concerned. Apart from China there is no other country that could

pose a serious threat to India,” says Mr. Pankaj Patel.

9 Crisil Research

27



Integration Issues

Finding�a�target�and�acquiring�it�is�just�one�aspect�of�a�deal,�what�is�equally

important�is�the�ability�to�successfully�integrate�the�target�with�itself.�Some�of

the�key�concerns�of�the�integration�process�involve�people�management,

managing�cultural�differences�and�aligning�the�goals�and�ambitions�of�the�staff

members�with�the�vision�of�the�merged�company.�Going�forward,�the�successful

implementation�of�planned�growth�strategies�will�also�depend�on�how�well

companies�manage�the�integration�process.

Conclusion

These�are�very�exciting�times�for�Indian�generics�players.�On�one�hand,�the

mainstay�of�the�Indian�players,�the�U.S.�market,�is�experiencing�intensely

competitive�business�environment,�and�on�the�other�hand,�semi-regulated�and

emerging�markets�are�expected�to�become�new�growth�markets.�While,

operational�restructuring�and�realignment�of�business�models�will�help�Indian

players�survive�the�competitive�environment�in�the�U.S.�and�European�markets,

their�increasing�presence�in�other�promising�markets�will�further�enhance�their

market�share�in�the�global�generics�industry.�

28


Introduction

Pharmaceutical�companies�are�increasingly�realizing�the�benefits�of�outsourcing.

Until�the�late�1990s,�companies�developed�their�products�in-house�and�only

shared�select�information�with�third�parties.�However,�in�recent�times,�increased

competition,�weaker�product�development�pipelines,�fewer�approvals,�the�need�to

accelerate�the�time-to-market�of�new�products,�and�pricing�pressures�have

compelled�pharmaceutical�companies�to�re-examine�their�priorities�and

increasingly�include�outsourcing�as�part�of�their�model�structure�for�business

operations.

CRAMS,�considered�as�one�of�the�most�promising�medium�to�long�term

opportunities�for�the�Indian�pharma�industry,�is�gaining�momentum.�In�recent

times,�the�CRAMS�segment�has�witnessed�heightened�activities�on�the�back�of

increasing�deal�flows,�presence�of�global�Contract�Manufacturing�Organizations

(CMOs)�and�Contract�Research�Organizations�(CROs)�and�emergence�of�new

players.�Global�pharma�companies�are�finding�innovative�ways�to�capture�cost

efficiencies�across�the�value�chain�and�are�resorting�to�outsourcing�of�core�as

well�as�non-core�processes.�India,�with�its�inherent�competitive�advantages,

stands�as�one�of�the�most�preferred�outsourcing�destinations�for�a�range�of

activities�and�is�now�becoming�a�critical�component�in�manufacturing�as�well�as

the�drug�development�value�chain�of�various�innovator�pharma�companies.��

Contract�Research�andManufacturing�Services�(CRAMS)

29


Growth Drivers

MNC�pharma�companies�are�increasingly�focusing�on�realigning�their

manufacturing�activities�in�order�to�concentrate�on�core�activities�such�as�R&D

and�brand�building�-�thereby�reinforcing�the�potential�for�cost�savings�through

contract�manufacturing.�At�the�same�time,�existing�global�CRAMS�players�are

facing�adverse�business�conditions,�on�account�of�increasing�regulatory

compliances�on�environmental�issues�and�competition�from�low�cost�countries.�

MNCs - leveraging on their Indian subsidiaries for global

support

The�introduction�of�the�product�patent�regime�has�opened�up�dual�opportunities

for�global�pharma�companies�in�India.�While�on�one�hand�the�regime�has�made

India�one�of�the�most�promising�pharma�markets�(on�account�of�the�favorable

demographics�and�increasing�income�levels),�on�the�other,�it�has�boosted�India’s

capabilities�as�an�emerging�off-shoring�destination�for�providing�end�to�end

pharma�outsourcing�services.�

“India is already an attractive destination and to sustain this,

building capacity is going to be a key factor. It is not just about cost

arbitrage, because beyond cost arbitrage, it would be the ability to

offer large intellectual capital in numbers which no other country can

do. We have to be competitive in terms of regulations and the speed

at which we turn things around,” says Dr. Hasit Joshipura.

Company Remarks

MerckReduction�of�the�workforce�by�5,100�people�(47�percent�frommanufacturing)

Eli�Lilly Comprehensive�restructuring�package:�greater�reliance�oncontract�manufacturing

Sanofi�Aventis Sells�manufacturing�plants�in�Puerto�Rico�and�France

Pfizer� USD�4�bn�cost-savings�plan:�25�percent�reduction�inmanufacturing�plants�by�2008

Source: Citigroup investment Research, May 2007

30


“India is an attractive choice for outsourcing. The attractiveness of

demographics and cost advantage are key. However the ambiguity

in patent law and bureaucracy can be inhibitors of growth. Key areas

for outsourcing in India are bio informatics, lead optimization and

clinical trials. Currently India is getting the lower end of these

activities, however companies will slowly move to outsourcing

higher end of their activities here once we demonstrate value

through lower cost and also reduce the time to market”, feels Mr.

Ranjit Shahani.

Global�pharma�MNCs�are�increasingly�enhancing�the�scope�for�outsourcing�of

their�operations,�related�to�research�and�manufacturing�to�their�Indian

subsidiaries.�Accordingly,�they�are�increasingly�leveraging�on�their�facilities�in

India.�

Some�of�the�key�operations�for�which�India�is�evolving�as�an�important

outsourcing�base�include:

Support for global R&D functions

In�order�to�improve�R&D�productivity�and�curb�escalating�costs,�MNC�pharmacompanies�are�capitalizing�on�their�existing�low�cost�facilities�in�India.�ManyIndian�subsidiaries�are�already�playing�a�vital�role�in�the�global�R&D�programmesof�the�parent�company.�

Outsourcing of manufacturing operations to the Indian subsidiaries

Pharma�MNCs�that�have�renewed�their�interest�in�the�Indian�markets�have�set�uplow�cost�manufacturing�facilities�in�India�that�meet�international�standards.�Whilethey�continue�to�expand�their�presence�in�the�domestic�markets,�many�of�themare�simultaneously�using�these�facilities�as�off-shoring�hubs.

Using India as a export base for other countries

Pharma�MNCs�are�also�increasingly�using�India�as�a�base�for�exports�not�only�tothe�immediate�neighboring�markets,�but�also�to�other�markets�around�the�worldsuch�as�Japan,�South�Africa,�Latin�America�and�Europe.

Clinical Data Management for global drug discovery and research functions

Pharma�MNCs�are�also�exploiting�India’s�competencies�in�the�field�of�InformationTechnology�and�its�strong�and�low�cost�IT�skill�sets;�by�setting�up�centers�for�theirglobal�clinical�data�management�functions�in�India.

The�India�pharma�industry�is�positioning�itself�as�the�provider�of�value�addedservices�such�as�support�for�early�phase�discovery,�research,�clinical�tests,�andsynthesis�of�custom-made�intermediates�or�even�finished�APIs,�elaboration�ofgenerics�dossiers�bundled�with�the�supply�of�the�formulated�drug�product,�etc.�ataffordable�prices.�Accordingly,�many�MNC�pharma�companies�have�alreadystarted�taking�advantage�of�this.

31


The�table�below�illustrates�the�various�activities�outsourced�by�MNC�pharma�companies

Company Remarks

GlaxoSmithKline (GSK)

R&D

In�2006,�GSK�India�was�involved�in�16�global�clinical�studies.�Going�forward,�GSK�India�isplanning�to�play�an�important�role�in�the�parent’s�global�drug�discovery�programme.�India�hasbeen�recognized�as�one�of�the�prime�centers�for�clinical�research,�especially�for�therapeuticsegments�such�as�oncology,�psychiatric�disorders�and�infectious�diseases.�It�is�also�involved�inthe�custom�synthesis�for�drug�discovery�and�research�initiatives�of�GlaxoSmithKline�R&D�atU.K.,�Italy,�and�U.S.

Exports

India�is�being�used�as�a�base�for�the�export�of�bulk�drugs�to�key�markets�such�as�Japan,Mexico,�France,�Germany,�Holland,�U.K.,�South�Africa�and�Denmark.

Clinical Data Management Center

It�has�set�up�a�center�for�clinical�data�services�with�Data�Management,�Biostatistics�andScientific�Writing�functions�to�support�the�clinical�R&D�activities�of�GlaxoSmithKline�Biologicalsworldwide.

PfizerR&D

Conducts�clinical�research�on�behalf�of�Pfizer�Global�Research�and�Development�(PGRD)worldwide�development�teams.��Approximately�3/4th�of�the�clinical�research�portfolio�is�relatedto�Phase�II�and�Phase�III�studies,�while�the�balance�pertains�to�the�research�essential�for�thelocal�registration,�launch�and�marketing.

Export Base

India�is�also�used�as�a�base�for�exports�to�other�countries.

AventisOutsourcings�of�mainly�APIs�by�the�parent�company�as�well�as�sales�to�Russia�are�the�two�keycomponents�of�exports.

AstraZenecaHas�set�up�a�process�R&D�facility�focused�on�tuberculosis�in�Bangalore,�the�first�outsideSweden�and�U.K.

Novartis Novartis�is�increasingly�using�India�as�a�base�for�exports�to�other�countries.

Novo Nordisk It�is�planning�to�set�up�a�global�data�management�center.

Sanofi Aventis

Planning�to�make�India�one�of�its�largest�bases�for�clinical�research.�It�set�up�a�dedicated�IndianClinical�Research�Unit�(CRU)�in�April�2006.�It�has�been�assigned�17�studies�in�severaltherapeutic�areas�till�date.�Sanofi�is�planning�to�send�almost�100�percent�of�its�feasibilitystudies�for�Phases�II�and�III�trials�to�the�Indian�CRU.�

32

Source: Press articles, Company websites


Contract Manufacturing

Contract�Manufacturing�represents�the�largest�opportunity�within�the�CRAMS

space.�India,�with�its�efficient�labor�pool�and�large�number�of�USFDA�compliant

manufacturing�plants�outside�the�U.S.,�is�expected�to�garner�a�major�share�of�this

large�opportunity.�At�present,�the�global�manufacturing�outsourcing�opportunity�is

estimated�at�USD�20�billion�and�is�expected�to�reach�USD�31�billion�by�2010.

The�four�main�components�of�the�global�outsourcing�market�are�intermediates,

APIs,�custom�synthesis�and�formulations/dosage�forms.�It�is�estimated�that

approximately�40�percent�of�outsourcing�demand�is�for�the�manufacturing�of

APIs.

Source: Citigroup Investment Research, May 2007


33


Having�a�presence�across�various�segments�of�the�contract�manufacturing�space

is�important�and�helps�to�capitalize�on�opportunities�provided�by�this�space.

Though�Custom�Chemical�Synthesis�(CCS)�and�the�intermediates�space�offers

limited�scale�and�volume�but�strong�chemistry�skills�at�this�stage�is�a�significant

step�in�getting�increasingly�involved�with�the�overall�drug�development�process

and�developing�relationships�with�MNC�pharma�companies.

“Well integrated players certainly will have an advantage. The clients

will certainly prefer players who could be contracted for all the

disciplines and segments,” says Dr. J M Khanna.

For�Indian�contract�manufacturing�players,�opportunities�exist�on�two�

fronts

-�capture�a�larger�share�of�the�opportunities�created�because�of�the�shift�from�

in-house�manufacturing�to�outsourcing�by�innovator�pharma�companies�and

-�foray�into�western�countries�by�acquiring�existing�contract�manufacturing�players

in�the�western�countries.�

Acquisitions�are�not�new�to�Indian�pharma�companies.�The�success�of�the

generics�players�can�very�well�be�attributed�to�the�large�acquisitions�they�have

made�to�foray�into�western�countries�–�especially�in�the�European�region.�Indian

contract�manufacturing�players�have�also�opted�for�the�inorganic�route�to�growth

and�have�made�strategic�acquisitions�to�gain�scale�and�strengthen�customer

relationships.

“Acquisition is also a philosophy. Ambition of the management to

grow is an important factor. Acquisition is a quicker way of achieving

higher revenues. Organic growth may also result in higher revenue

growth however, it takes time and it can be slow. It depends on the

management, how they want to grow,” feels Dr. J M Khanna.

Acquirer Target Country Deal Value (USD mn)

Nicholas�PiramalAvecia

Pfizer’�Facilty

U.K.

Morpeth,�U.K.

18

38

Shasun�Chemicals Rhodia’s�CCS�business U.K. 5

Jubilant�OrganosysTarget�Research�Associates

Hollister�Steir�Laboratories

U.S.

U.S.

33.5

122.5

Dishman�Pharma Carboogen�Amcis Switzerland 74

Dr.�Reddy’sLaboratories Roche’s�Facility�in�Mexico Mexico 61

Source: Citigroup investment Research, May 2007

Notable acquisitions in the CRAMS segment

34


Considering�that�some�of�these�assets�were�not�doing�well�due�to�a�bloated�cost

structure�and�inadequate�focus,�Indian�companies�were�able�to�acquire�them�at

reasonable�valuations.�With�proper�operational�realignment�and�rapid�scale�up�in

contracts,�most�of�these�acquisitions�are�now�proving�to�be�earnings�accretive.�

Contract Research

Contract�Research�also�offers�significant�opportunity�to�the�Indian�pharma

industry�which�is�becoming�a�global�R&D�hot-spot�for�innovator�pharma

companies.�The�global�contract�research�opportunity�was�pegged�at�USD�14

billion�in�2006�and�is�expected�to�reach�USD�24�billion�by�2010.�Declining�R&D

productivity,�coupled�with�an�increasing�number�of�products�going�off�patent�is

expected�to�drive�the�growth�of�the�contract�research�segment.�

“Besides manufacturing, outsourcing of discovery services will also

start happening sooner rather than later. However, it would be a

function of the experience that some of the earlier innovators have

had and how competitive the country is as against other countries

such as China, Singapore, Brazil, etc.” says Dr. Hasit Joshipura.

Given�the�conducive�regulatory�environment,�strong�chemistry�innovation�skills,

large�and�diverse�patient�pool;�and�availability�of�players�providing�ancillary

services�such�as�bio-informatics,�clinical�data�management�and�bio-statistics;�the

contract�research�market�in�India�is�expected�to�grow�at�a�CAGR�of�30-35�percent

during�2006-2011.��At�present,�contract�research�for�new�drug�discovery�accounts

for�60�percent�of�the�total�market�while�the�balance�40�percent�is�for�generic

drugs.�

Source: BiotechFinances.com

35


Clinical Research

At�present,�a�majority�of�clinical�trials�conducted�in�India�are�for�Phase�II�and

Phase�III.�Further,�Phase�I�trials�are�not�permitted�in�India�for�new�drug

substances�discovered�in�other�countries�unless�Phase�I�data�from�other

countries�is�made�available�to�Indian�authorities.�However,�the�government�is�in

the�process�of�considering�the�recommendation�of�the�Drug�Technical�Advisory

Board�(DTAB)�to�allow�Phase�I�clinical�trials�for�the�drugs�discovered�abroad.�If

this�happens,�then�it�will�enable�the�Indian�CRAMS�industry�to�provide�a�wide

range�of�drug�discovery�services.

The�advent�of�the�product�patent�regime�in�2005�has�provided�the�much�needed

impetus�to�the�growth�of�the�clinical�research�and�clinical�trials�segment.�Many

MNC�pharma�companies�have�made�India�their�R&D�hub�-�especially�for�clinical

trials.�India�is�also�becoming�a�preferred�destination�for�clinical�trials�given�that�it

offers�a�huge�patient�base�afflicted�by�both�tropical�diseases�as�well�as�lifestyle

diseases.�Patient�recruitment�in�India�is�also�faster�than�other�semi-�regulated�and

regulated�markets.

Following�the�move�of�their�global�customers,�international�CROs�have�also

forayed�into�the�Indian�market.�Some�of�the�prominent�ones�include�Quintiles,

SBFC�International,�ICON�Clinical�Research�and�i�GATE�Clinical�Research

International.

Source: acrohealth.org

36


Government Support

On�the�regulatory�front,�the�government�is�also�trying�to�promote�the�growth�of

this�industry�by�providing�tax�exemption�on�all�services�carried�out�by�the

contract�research�and�clinical�trials�industry.��This�step�is�likely�to�further�boost

clinical�trial�outsourcing�to�India.

Key Considerations

Efficient execution of contracts

Given�that�the�Indian�CRAMS�industry�is�still�evolving,�the�industry�experiences�a

rather�long�gestation�period�due�to�a�longer�time�taken�for�awarding�contracts.

Further�time�spent�on�registration�and�other�regulatory�processes�can�extend

final�delivery�timelines�by�almost�two�additional�years�in�the�initial�phase.

The�Indian�CRAMS�industry�also�needs�to�focus�on�building�strong�and

sustainable�client�relationships�and�improving�the�quality�of�service�with�respect

to�meeting�delivery�timelines,�upholding�ethics,�and�the�ability�to�offer�

value-added�services.

“Execution of CRAM deals also depends on how we exploit the

technical capabilities and how we manage broader issues such as

people and ethics. These things are still not in full control. We are

holding back. The day we start it and demonstrate it, we will attract

more business,” feels Dr. J M Khanna.

Building a strong technology platform and long term

partnerships

Considering�the�large�opportunity�and�strong�growth�drivers,�several�Indian�mid

sized�companies�have�forayed�into�this�segment.�

“The CRAMS segment is becoming commoditized with more

number of players entering the segment and people constantly

driving down prices. Therefore, even in this segment technology and

research will play a part. Developing the best technology, focusing

on a few large deals and building long term partnerships, will help in

achieving success in this segment,” says Dr. Swati Piramal.

37


Training and Infrastructure

Education�pertaining�to�contract�research,�including�discovery�services�and

clinical�trials,�needs�to�be�given�high�priority.�An�adequate�physical�infrastructure

coupled�with�specialized�training�and�an�industry�wide�accreditation�system�will

help�balance�the�demand-supply�equation�in�this�rapidly�growing�industry.��

IPR Compliances

Issues�related�to�data�exclusivity�and�confidentiality�are�still�areas�of�concern�for

most�clinical�trials�sponsors.�Stronger�IPR�compliances�will�instill�greater

confidence�in�MNC�Pharma�companies�and�will�further�boost�the�CRAMS

segment.�

“We need to speed-up the patent process, infrastructure has to be

ramped up and more clarity on the data exclusivity factor needs to

be provided. If you were to bring more and more R&D into this

country, then these are the issues one has to consider,” says Dr.

Hasit Joshipura.

Conclusion

Today,�what�was�once�considered�a�potential�opportunity�is�now�being�translated

into�real�numbers.�In�recent�times,�the�pharma�industry�has�seen�has�seen�an

emergence�of�significant�opportunities�in�the�form�of�increase�in�outsourcing

contracts.�Indian�companies�are�now�witnessing�increasing�visibility�in�this

business�–�from�one-off�contracts�to�becoming�preferred�vendors�with�assured

revenue�streams.�

One�of�the�most�notable�trends�is�a�formation�of�a�proper�eco-system�that�will

support�the�growth�of�this�industry�on�a�sustained�basis.�Emergence�of�domestic

players,�increasing�presence�of�global�CROs,�well�developed�IT�infrastructure,

encouraging�regulatory�environment�and�well�established�Knowledge�Process

Outsourcing�(KPO)�industry.��A�combination�of�all�these�factors�will�take�this

nascent�industry�to�the�next�level.

38


Introduction

Research�on�New�Chemical�Entities�(NCEs)�and�New�Drug�Delivery�Systems

(NDDS)�is�steadily�becoming�an�integral�part�of�the�strategy�of�Indian�pharma

companies,�who�want�to�build�a�sustainable�long�term�advantage.�Over�the�last

couple�of�years,�the�discovery�R&D�segment�has�gained�significant�momentum

and�discovery�R&D�pipelines�of�several�players�have�expanded�substantially.�At

present,�as�many�as�10-12�companies�have�molecules�under�various�stages�of

development.�R&D�investments�by�Indian�companies�have�also�increased

significantly�and�now�account�for�as�much�as�7-9�percent�of�sales�for�leading

pharma�companies.�It�is�expected�that�investment�in�R&D�is�expected�to�rise�to

USD�500�million�in�2010�and�USD1.2�billion�by�2015.10

“I believe India will be recognized as a research hub, it may not

happen very soon. There are tremendous opportunities for people to

get into this innovative business, as the cost of conducting research

in India is significantly lower. But we still don’t have great respect

for innovation and this will take time to evolve. There has to be a

cultural change and societal change to make this happen. So India

would be the place for research, but perhaps in the long term,” feels

Mr. Pankaj Patel.

Growth Drivers and Trends

India’s�competitive�advantage�in�offering�strong�chemistry�innovation�skills�at

significantly�lower�costs�has�lured�many�multinational�innovator�pharma

companies�to�make�India�a�major�component�of�their�global�drug�discovery�value

chain.�

Key�aspects�of�R&D�initiatives�of�Indian�pharma�companies�are�the�various

collaborations�and�innovative�funding�models�that�are�being�adopted�by�each�one

of�them.�Research�on�NCEs�is�relatively�a�new�field�for�Indian�pharma�companies,

which�have�traditionally�relied�on�their�process�engineering�skills�and�is�fraught

with�uncertainties�and�demands�considerable�financial�resources.�Collaborative

research,�through�in-licensing�and�out-licensing�helps�in�accessing�the�vast�pool

of�resource�capabilities�of�MNC�Pharma�companies.��This�also�allows�Indian

pharma�companies�to�build�resources�for�expanding�their�research�pipeline.

In-licensing�and�out-licensing�transactions�are�gaining�strategic�importance�with

MNC�pharma�companies�making�it�an�integral�part�of�their�business�models.�This

not�only�helps�in�boosting�their�weak�short�to�mid-term�growth�prospects�by

swiftly�filling�gaps�in�their�pipelines�but�also�helps�in�saving�time�for�conducting

early�stage�R&D�process.

Research�and�Development

39

10 Press Articles


Prominent�deals�in�collaborative�research

Indian

CompanyMolecule Indication Nature of deal Global Partner Remark

Glenmark

GRC�3886 Asthma,COPD Out-licensing Forest�Labs

Out-licensed�to�Forest�Labsfor�USD�190�mn�for�NorthAmerican�markets

GRC�3886 Asthma,COPD Out-licensing Tejin�Pharma Out-licensed�to�Teijin�Pharma

for�Japanese�markets

GRC�8200 Type�IIDiabetes Out-licensing Merck�KGaA

Out-licensed�to�Merck�KGaA,Germany�for�the�NorthAmerican,�European�andJapanese�markets.

Dr�Reddy’s

DRF�1042� Cancer JointDevelopment ClinTec�International� Co-development�and

commercialization�agreement

DRF�2593 Type�IIdiabetes

JointDevelopment Rheoscience�A/S Co-development�and

commercialization�agreement

Ranbaxy RBX�11160 Anti-malarial JointDevelopment

Medicines�forMalaria�Venture(MMV)*

Co-development�andcommercialization�agreement

Nicholas Pre�clinical�drugcandidate NA In-licensing NA Global�clinical�development

Alembic NDDS�forKeppra®�XR

Anti-epilepticdrug Out-licensing UCB,�Belgium

Out-licensed�for�milestonepayments�of�USD�11�millionand�royalty�on�futureworldwide�net�sales

Suven Pre�clinical�drugcandidate CNS Joint

Development Eli�Lilly

Partnering�deal�with�Eli�Lillyfor�early�phase�research�forDiscovery�of�NCEs�in�the�CNSarena

*this joint venture has been discontinued

Source:�Company�websites,�Analyst�reports,�Press�articles

40


MNC Pharma’s quest for in-licensing

For�MNC�pharma�companies,�in-licensing�is�the�most�sought�after�strategy�to

arrest�declining�R&D�productivity.�Over�the�last�couple�of�years,�many�MNC

pharma�companies�have�stepped�up�their�in-licensing�activities.�Novartis�has

more�than�320�ongoing�collaborations�across�19�countries�while�Astra�Zeneca�has

in-licensing�partnerships�with�more�than�50�companies.�Globally,�leading�pharma

companies�are�witnessing�increasing�dependence�on�in-licensed�products�to

augment�sales.�In�2005,�revenues�from�licensed�products�accounted�for�24.4

percent�of�the�total�sales�of�the�top�55�pharma�companies�as�against�20.7

percent�in�2002.�Datamonitor�estimates�that�by�2010,�these�companies�will

derive�as�much�as�29�percent�of�their�total�sales�from�in-licensed�products.�

Source: Datamonitor, April 2006

41


Collaborative Research

Indian�CROs�with�advanced�research�capabilities�and�value�added�service

offerings�are�going�beyond�their�pure�service�led�models�to�an�incentive�based

structure.�Advinus�Therapeutics,�a�CRO�promoted�by�the�Tata�Group,�is�one�such

example.�It�has�entered�into�an�in-licensing�cum�joint�development�agreement

with�Merck�for�the�development�of�two�drugs�in�the�metabolic�disorder�segment.

In�addition�to�the�USD�75�million�milestone�payments,�upon�commercialization,

Advinus�will�also�receive�royalty�on�drug�sales.��In�another�example,�India’s

biotech�major,�Biocon,�has�entered�into�a�USD�300�million�deals�with�BMS�to

develop�a�new�research�center�employing�400�scientists�for�providing�discovery

and�pre�clinical�support�to�BMS.

De-mergers

De-merging�of�R&D�assets�into�a�separate�company�is�one�of�the�most�notable

trends�among�Indian�pharma�companies.�The�objective�being�–�to�enhance�the

focus�on�the�drug�discovery�business�and�generate�resources�by�roping�in

strategic�investors�to�take�molecules�to�advance�stages�of�development.

“You take the R&D assets of all the Indian companies together and

the market cap that the stock market is ascribing to them today. By

2015, these assets would have an approximate value of USD 65

billion. But, if you create a separate company specifically for

research then value could be as high as USD 100 billion by that time.

So the de-mergers would add significant value,” says Dr. Swati

Piramal.

Dr. Swati Piramal also feels that, “Generics Discovery and CRAMS

should be separate. You can't do both. In discovery, your scientist is

asked to be creative and find a new innovation. The mandate of the

scientist is broad and ensuring that it won't infringe on anyone's

patent. In CRAMS the mandate to your scientist is different. The

mandate is to make an existing patent or innovation better. So the

approach is different.”

42


Key Considerations

Need for partnering

New�drug�discovery�is�a�costly�and�lengthy�process.�It�takes�anywhere�between

(approximately)�10-12�years,�for�a�new�drug�to�reach�the�market�from�the

laboratory�and�costs�approximately�USD�800�million�to�1.2�billion.�Indian�players

have�been�funding�their�research�pipelines�through�resources�generated�from�the

generics�business�which�is�facing�intense�price�competition.�This�makes�it

particularly�difficult�for�Indian�pharma�companies�to�drive�the�entire�process�of

drug�discovery�all�the�way�to�the�stage�of�marketing.�Indian�pharma�companies

are�well�placed�to�do�early�stage�research�but�lack�the�financial�strength�to�take�a

promising�new�molecule�to�advanced�stages�of�development.�

Globally,�the�R&D�business�is�becoming�tougher�with�declining�productivity�and

spiraling�costs.�On�the�regulatory�front,�product�approval�norms�are�becoming

stricter.�Both�Indian�pharma�companies�and�global�innovator�pharma�companies

realize�the�benefits�of�partnering.

Strategic R&D Demergers

Company Strategic�Rationale

Sun

• To�provide�scope�for�independent�collaboration�and�expansion

• To�offer�investors�an�option�to�separately�hold�investments�in

businesses�with�different�investment�and�return�characteristics,

depending�on�what�matches�their�risk�and�return�expectations.

Dr Reddy’s

• To�rapidly�advance�the��existing�as�well�as�future�NCE�assets�through

Phase�II�trials�and�seek�out-licensing,�co-development�or�joint

commercialization�opportunities

• To�aggressively�accelerate�new�discoveries�to�clinical�development�in

the�areas�of�Metabolic�Disorders�and�Cardiovascular.

Nicholas Piramal

• To�enhance�the�focus�on�the�NCE�Business

• Improve�profitability�of�core�business�such�as�CRAMS�and�domestic

formulations

• Funding�flexibility�–�to�explore�innovative�financing�mechanism

including�strategic�investors.

Ranbaxy

• To�create�an�independent�pathway�for�Drug�Discovery�Research

• Operational�freedom�and�flexibility�for�new�growth�opportunities

• Provide�a�platform�for�increased�collaboration.

Source: Company websites, Analyst reports, Press articles

43


“Companies are investing, trying to partner with various companies to dotesting of compounds and take it to a pre- clinical level. This will developand will be more like an investment for the future. There are fewcompanies that are already doing that. As an industry we can learn thistesting of new compounds. This is a weak area and which we need andshould build. When that is done, I think India will be benefit,” says Dr. JM Khanna.

Partnering�with�a�MNC�Pharma�company�helps�in�taking�new�compounds

through�all�the�phases�of�clinical�trials�right�till�the�launch�of�the�molecule.�This

strategy�considerably�reduces�payback�period�and�helps�Indian�companies

develop�specialization�to�consistently�generate�new�innovative�compounds

through�in-house�R&D.

“Research and Development offers a lot of advantage to India and this iswhere India can create a priority structure and reorient the business.There is plenty of scope for R&D Collaboration. We could undertakeresearch in full-scale therapeutic areas or collaborate in specific or partialresearch and development projects. Another area for collaboration couldbe for products that are not so important for large pharma companies,but still relevant for others. The MNC Pharma companies would not beinterested in these products because of their limited market size but thiscould be an area of interest for Indian companies,” feels Mr. Pankaj Patel.

Need for Regulatory Impetus

The�government�and�other�regulatory�bodies�can�play�a�significant�role�in

determining�the�success�of�drug�discovery�research�in�India.�One�form�of

government�support,�would�be�the�PPP�models�that�can�give�the�much�needed

impetus�to�this�segment.�The�PPP�model�can�help�companies�finance�the

molecules�across�different�stages�of�development,�provide�support�for

conducting�clinical�trials�and�get�faster�regulatory�approvals.�The�public�sector�will

also�stand�to�benefit�by�getting�access�to�drugs�of�high�therapeutic�use�meant�for

mass�distribution,�at�significantly�low�costs.

44


“There are lots of government laboratories, like Central Drugs, NCL

and Hyderabad Labs that do drug discovery. The government fund

and grants that go for these labs should be aligned with the

industry, especially for drug discovery. The generics industry was

supported by the government when the industry started in the 60s

and 70s and 80s. This is the time when the government should

support the industry for drug discovery, wholeheartedly. I think there

is lot of knowledge and experience available. And the government

should help in a similar way they did it for the generics industry 20

years ago. They should come forward and see how they can help in

new drug discovery,” says Dr. J M Khanna.

From�the�MNC�Pharma’s�perspective,�some�of�the�regulatory�aspects�regarding

the�IPR�regime�still�remain�an�area�of�concern�and�there�is�need�to�bring�India’s

IPR�regime�in�conformance�to�the�world�class�IPR�standards.

“‘Pharmaceuticals’ is a knowledge based industry and India offers a

unique skill advantage to the global research community. Taking a

cue from China, which has received $117 billion in foreign

investments (in comparison to $17 billion received by us), the Indian

government has to create an investor friendly environment with

clear and transparent policies. Fostering a culture of innovation by

providing incentives to companies to invest in R&D will enable us to

capitalize on the significant opportunities present in the field of

clinical research and manufacturing,” says Mr. Kewal Handa.

Funding Constraints

Most�of�the�Indian�pharma�companies�that�are�involved�in�new�drug�discovery�are

also�focused�on�the�generics�business�as�well�as�the�domestic�formulations

market.�Globally,�the�generics�business�is�witnessing�relentless�pricing�pressure

on�the�back�of�intense�competition�and�fewer�product�launches.�At�the�same

time,�the�competitive�intensity�in�the�domestic�market�is�also�high�due�to�severe

price-based�competition�and�a�high�level�of�fragmentation.�Considering�these

factors,�resource�generation�for�investment�in�R&D�activities�is�becoming

increasingly�challenging.

45


“Funding is the biggest constraint. It takes lot of money to develop a

new drug and chances of failure are also high. If the prices of the

drugs in the domestic market are controlled then there is very little

money left for research. We are the only country in the world where

this is happening. China, Korea, Israel, Taiwan, they all encourage

research. If we don’t do it, then the money doesn’t go to research.

But if it does go to research, then with much less cost we can do

much more because of our inherent advantages,” says Dr. Swati

Piramal.

Conclusion

India�is�expected�to�play�a�vital�role�in�the�global�R&D�space�and�collaborative

research�is�expected�to�be�the�future�of�the�new�drug�discovery�process�in�India.

This�is�reinforced�by�the�increasing�collaborations�between�Indian�and�MNC

pharma�companies.�Going�forward,�this�trend�will�continue�to�gather�momentum.

However,�success�would�largely�depend�on�proper�partner�selection�and�well

structured�alliances.

46


The�pharma�industry�is�regarded�as�one�of�the�most�globalized�industries.�The

Indian�pharmaceutical�industry�has�the�ability�to�exploit�the�opportunity�inherent

in�the�global�industry�at�various�points�in�the�value�chain�from�raw�materials,

intermediates�and�active�pharmaceutical�ingredients�at�one�end,�to�generic�and

outsourced�formulations�and�drug�discovery�and�development�at�the�other�end.�In

order�to�rapidly�integrate�with�the�global�pharma�industry,�Indian�pharma�players

have�entered�into�various�collaborations�in�almost�every�area�of�the�pharma�value

chain,�be�it�drug�discovery�and�development;�manufacturing,�sales�or�distribution.�

Post�the�introduction�of�product�patents�in�Indian�legislation,�the�domestic�market

has�become�even�more�attractive�to�pharma�MNCs�that�have�now�started

collaborating�with�domestic�players�through�in�licensing�deals�and�marketing

alliances.�

For�MNCs�pharma�companies�that�are�augmenting�their�market�presence�(after

the�new�product�patent�system),�by�utilizing�domestic�industry's�skills�and

infrastructures�to�boost�their�research�and�manufacturing�activities,�partnerships

will�be�crucial�to�penetrate�the�tertiary�and�rural�markets.�

This�enables�the�MNC’s�to�utilize�the�vast�marketing�and�distribution�networks�on

the�Indian�players�while�these�alliances�enable�Indian�companies�to�access�a

wider�knowledge�base�and�a�diverse�product�range.�

Growth�Through�Collaborations

47


Generic�players�are�using�collaborations�as�a�market�expansion�tool.�Various�JVs

have�been�formed�between�Indian�and�international�pharma�players�to�strengthen

their�manufacturing�capabilities�and�technology,�and�leverage�on�the�partner’s

experience�in�product�filings,�regulatory�compliance�and�local�market�knowledge

and�penetration.�Recently,�many�Indian�pharma�companies�have�formed�JVs�for

expanding�in�semi-regulated�markets.

“Collaboration as a trend will continue to grow. It is a market

expansion tool,” says Dr. Hasit Joshipura.

Collaborations�and�partnerships�are�critical�drivers�for�CRAM’s�players.�It�is

important�for�companies�to�demonstrate�the�ability�to�respect�the�values�and

ethics�of�the�partner�as�this�will�encourage�MNC’s�to�begin�outsourcing�the

processes�that�reside�at�the�higher�end�of�the�value�chain.�For�companies�to

successfully�exploit�the�benefits�of�these�alliances�it�is�also�critical�to�have�a

substantial�involvement�of�senior�management�as�well�as�allocation�of�necessary

resources�to�achieve�success.�

“Cross border alliances especially after the (amended) Patents Act

have and will continue to increase. Whether it is research alliances,

in-licensing or out-licensing it will sky rocket. This is happening

world wide. It is with partnerships we can learn. Cultures of both

sides have to be looked at seriously whether the company whom

you are signing with is akin to your values. You have to be very

careful about ethics,” says Dr. Swati Piramal.

In-licensing�and�out-licensing�agreements;�and�joint�drug�discovery�and

development�are�the�most�prominent�R&D�collaboration�models�adopted�by

Indian�as�well�as�MNC�Pharma�companies�to�advance�their�R&D�initiatives.�This

not�only�enables�companies�to�strengthen�the�resource�pool�but�also�reduces�the

risks�associated�with�failures.�

“Collaborations are going to explode because of synergies. There are

lots of mid sized companies in Europe, Japan and U.S. that are keen

on collaborating with Indian companies to explore various

opportunities,” says Dr. Brian Tempest.

48


Conclusion

Collaborations�have�played�a�very�important�role�in�the�growth�of�the�Indian

pharma�companies.�Be�it�the�domestic�market�or�international,�the�co-existence

of�collaboration�and�competition�has�now�become�an�inherent�characteristic�of

the�Indian�pharma�industry.�Companies�have�identified�collaborations�as�a�faster

growth�tool�than�building�their�own�infrastructure.

Today,�pharmaceutical�companies�operate�in�multiple�markets�spanning�multiple

segments�and�with�varied�business�models.�Collaborations�will�be�critical�to

success�in�such�a�dynamic�business�environment.

49


Annexures - Profiles


Educational Background

Dr.�Brian�Tempest�has�acquired�his�CSci,�CChem,�MRSC,�BSc�and�PhD.

Professional Experience

Dr.�Tempest�has�worked�in�the�pharma�industry�for�the�last�36�years.�During�this

time,�he�has�worked�for�several�pharma�majors,�including�Glaxo�&�Searle,�around

the�world�and�joined�Ranbaxy�12�years�ago.�During�this�period,�Ranbaxy�has

transformed�from�a�small�company�focused�on�the�India�domestic�market,�to�a

top�10�global�generic�company.�Dr.�Tempest�lives�in�New�Delhi,�India�and�has

been�President,�Managing�Director�&�Chief�Executive�Officer�and�is�presently�the

Chief�Mentor�&�Executive�Vice�Chairman�of�the�Board.�Dr.�Tempest�is�one�of�a

few�westerners�to�hold�a�leadership�position�in�an�Indian�blue�chip�MNC,�and�has

an�unusual�insight�into�India.

Dr.�Tempest�is�also�a�Honorary�Professor�of�the�Management�School�at�Lancaster

University,�U.K.,�and�he�sits�on�the�Editorial�Board�of�the�Journal�of�Generic

Medicines.

Dr.�Brian�W.�TempestChief�Mentor�&�Executive�Vice�Chairman�of�the�BoardRanbaxy�Laboratories�Ltd.

Brian Tempest

52



Dr.�Joshipura�is�a�graduate�in�Electrical�Engineering�from�VJTI�-�Bombay

University�and�a�Post�Graduate�from�Indian�Institute�of�Management�-

Ahmedabad.�He�has�completed�his�Doctorate�programme�at�the�School�of

Management�at�IIT�Mumbai.�


After�having�spent�about�three�years�with�the�Tata�Administrative�Services,�Dr.

Joshipura�has�spent�about�16�years�with�the�Unilever�Group�of�companies�in

India�and�held�positions�of�increasing�responsibility�in�commercial,�sales,

marketing�and�business�management�functions.�He�joined�the�pharmaceutical

business�of�Johnson�&�Johnson�Ltd.,�as�President�&�Executive�Director�in

October�2001,�a�position�he�held�until�August�2006.��Dr.�Joshipura�was�also�the

Chairperson�for�the�Corporate�Contributions�Programme,�as�well�as�the�lead�for

Government�Affairs�for�the�Johnson�&�Johnson�group�of�businesses�in�India.��

Other Achievements

Dr.�Joshipura�brings�considerable�management�experience�in�both�consumer

healthcare�and�pharmaceuticals�and�is�ideally�placed�to�lead�GSK�India�in�the

patent�era.��He�is�also�an�Executive�Committee�Member�of�the�Organisation�of

Pharmaceutical�Producers�of�India�(OPPI)�and�has�been�recently�nominated�by

the�Board�of�Governors�VJTI�to�their�Senate.

Dr.�Hasit�JoshipuraVice�President,�South�Asia�and�Managing�Director,�IndiaGlaxoSmithKline�Pharmaceuticals�Ltd.

Hasit Joshipura

53



Dr.�Khanna�completed�his�M.Sc�in�Organic�Chemistry�from�the�Agra�University

and�obtained�the�first�rank�for�the�same.�He�went�on�do�his�Ph.D�in�Drug

Discovery�research�at�the�Central�Drug�Research�Institute�in�Lucknow.


Dr.�Khanna�was�an�Executive�Director�in�Ranbaxy�in�(Guanzhou�China)�Ltd.�China.

He�was�also�the�Chairman�of�Ranbaxy�Pharmaceuticals�Inc.�in�Princeton,�U.S.�In

addition,�he�was�with�Ranbaxy�Labs�Ltd.,�New�Delhi�for�23�years,�where�at�the

time�of�his�retirement,�Dr.�Khanna�was�its�President.

Other Achievements

Dr.�Khanna�created�a�world�class�R&D�Infrastructure�at�Ranbaxy�Labs�Ltd.��He

was�also�responsible�for�the�development�of�several�complex,�non-infringing�and

cost�effective�technologies�and�products�including�Agro-chemicals,�dosage�forms

etc.�He�was�also�actively�involved�in�drug�discovery�research�and�the�publication

of�research�publications�and�patents.

Dr.�J.M.�KhannaExecutive�Director�&�President,�Life�Sciences�Jubilant�Organosys�Ltd.

J M Khanna

54



A�qualified�Management�Accountant�and�Company�Secretary,�and�with�a

Masters�Degree�in�Commerce�from�Sydenham�College,�Mumbai,�Mr.�Handa has

completed�the�Pfizer�Leadership�Development�Program�from�Harvard�University

and�the�Senior�Management�Development�Program�from�IIM,�Ahmedabad.�He

has�also�done�a�course�on�Marketing�Strategy�from�Columbia�Business�School.


Mr.�Handa�is�Managing�Director,�Pfizer�Limited,�a�pharmaceutical�company�that

discovers�and�develops�drugs,�provides�information�on�prevention,�wellness,�and

treatment.�Under�his�leadership,�the�company�is�now�aggressive�in�its�growth

plans�and�has�launched�several�new�products.�Mr.�Handa�is�aiding�the�closer

alignment�of�Pfizer�India�with�its�parent�company.�Today,�Pfizer�has�adopted�a

focused�method�of�targeting�doctor�customers�and�building�therapeutic

specialization.�

Mr.�Handa�joined�Pfizer�16�years�ago.�Prior�to�becoming�the�Managing�Director,

he�was�Pfizer’s�Executive�Director,�Finance�and�was�responsible�for�strategically

guiding�the�company�through�two�mergers�with�Parke�Davis�-�Warner�Lambert

and�Pharmacia�respectively.

Other Achievements

Mr.�Handa�is�a�reputed�industry�expert�who�takes�the�lead�on�key�issues�that

concern�the�pharmaceutical�sector.�As�Vice�President�of�the�Organisation�of

Pharmaceutical�Producers�of�India�(OPPI),�he�has�been�at�the�forefront�of�the

industry’s�efforts�to�resolve�issues�pertaining�to�the�pharmaceutical�sector.�He

has�recently�been�appointed�as�the�President�of�All�India�Management

Association.�He�is�a�Committee�Member�of�the�Confederation�of�Indian�Industry

(CII),�the�Bombay�Chambers�of�Commerce�and�Industry�(BCCI),�and�the�past

President�of�Bombay�Management�Association�(BMA).�Mr.�Handa�was�awarded

the�‘India�CFO�2004�–�Excellence�in�Finance�in�an�MNC’�by�International�Market

–�Assessment�Group�and�has�recently�won�the�Bharat�Shiromani�Award.

Mr.�Kewal�HandaManaging�DirectorPfizer�Limited

Kewal Handa

55



Mr.�Pankaj�Patel�holds�a�Masters�Degree�in�Pharmaceutics�and�Pharmaceutical

Technology.�


Mr.�Pankaj�Patel�is�the�Chairman�&�Managing�Director�of�Zydus�Cadila,�a�global

healthcare�provider�and�one�of�India’s�leading�healthcare�companies.�With�over�30

years�of�experience�in�the�Indian�pharmaceutical�industry,�Mr.�Patel�combines

both�research�and�techno-commercial�expertise.�He�has�published�35�research

papers.�Mr.�Patel�has�been�the�guiding�force�behind�the�group’s�fast�tracked

growth.�From�a�turnover�of�INR�250�crores�in�1995,�the�group’s�turnover�today

stands�at�over�INR�1800�crores.�For�his�innovative�business�practices�that�have

accelerated�Zydus�Cadila’s�growth,�Mr.�Pankaj�Patel�was�declared�the�‘Pharma

Man�of�the�Year’�by�the�Federation�of�Indian�Industry�and�Economists�(FIIE)�in

2004.

Other Achievements

Mr.�Pankaj�Patel�is�associated�with�industry�associations�such�as�Indian

Pharmaceutical�Alliance,�Indian�Drug�Manufacturers�Association,�Federation�of

Indian�Chamber�of�Commerce�&�Industry�(FICCI),�Basic�Chemicals,

Pharmaceuticals�and�Cosmetics�Export�Promotion�Council�(CHEMEXCIL)�etc.�He

also�officiated�as�the�President�of�Gujarat�Chamber�of�Commerce�and�Industry

for�the�year�2006�–�07.

Mr.�Pankaj�Patel�is�also�actively�involved�in�various�educational�institutions�and�is

on�the�advisory�committees�and�academic�councils�of�leading�pharmaceutical

colleges�and�management�institutes.

Mr.�Pankaj�R.�PatelChairman�&�Managing�DirectorCadila�Healthcare�Ltd.

Pankaj R. Patel

56



Mr.�Iyer�holds�a�Post�Graduate�degree�in�Commerce�and�MBA�in�Finance�from

Bombay�University.


Mr.�Iyer�is�the�Managing�Director�of�Wyeth�Limited,�a�subsidiary�of�Wyeth�U.S.

He�joined�Wyeth�in�1980�and�rose�to�become�its�Managing�Director�in�the�year

2000.�Before�becoming�Managing�Director,�he�has�held�various�positions�of

increasing�responsibilities�in�Finance�and�Commercial�functions.

Other Achievements

Mr.�Iyer�is�the�President�of�Organisation�of�Pharmaceutical�Producers�of�India

(OPPI)�and�is�also�the�Managing�Committee�Member�of�Bombay�Chamber�of

Commerce.

Mr.�Ranga�IyerManaging�DirectorWyeth�Ltd.

Ranga Iyer

57



Mr.�Shahani�did�his�Mechanical�Engineering�from�IIT�Kanpur�and�then�went�on�to

complete�his�MBA�from�JBIMS,�Bombay.


Mr.�Shahani�started�his�career�with�ICI�in�India�in�their�businesses�of�Fibres�&

Speciality�chemicals.�Later,�he�rose�to�the�position�of�General�Manager�with�ICI�/

ZENECA�U.K.,�overseeing�their�Asia�Pacific�and�LatAm�operations�for�their

Petrochemicals�and�Plastics�division.�This�was�followed�by�a�period�as�CEO�at

Roche�Products�Limited,�after�which�he�moved�to�Novartis�in�India�in�1997,

following�the�merger�of�Sandoz-Ciba.�At�present�he�is�Country�President

responsible�for�the�overall�operations�of�the�Novartis�Group�of�Companies�in

India.

Other Achievements

Mr.�Shahani�was�President,�Organisation�of�Pharmaceuticals�Producers�of�India

(OPPI)�from�2001-2007,�and�is�currently�President�of�the�Bombay�Chamber�of

Commerce�and�Industry,�President,�Swiss�Business�Forum,�and�was�on�the

Council�of�the�International�Federation�of�Pharmaceuticals�Manufacturers

Associations�(IFPMA,�Geneva).��He�is�a�thought�leader�in�the�Pharmaceutical

Industry�and�has�been�actively�involved�in�lobbying�for�a�strong�Product�Patent

law�in�the�country;�and�Data�Protection�and�liberalization�of�the�price�control

mechanism�for�Pharmaceuticals.��He�has�also�strongly�canvassed�for�deterrent

legislation�against�counterfeit�drugs.

Mr.�Ranjit�ShahaniCountry�PresidentNovartis�India�Ltd.

Ranjit Shahani

58



Dr.�Swati�Piramal�received�her�medical�degree�from�the�University�of�Bombay.

She�went�on�to�complete�her�Doctorate�in�Industrial�Medicine�in�Mumbai.�Dr.

Piramal�then�got�her�Masters�in�Public�Health�from�the�Harvard�University,�U.S.


As�Director�of�Nicholas�Piramal,�Dr.�Piramal�looks�into�R&D,�Strategic�Alliances,

Communication,�Knowledge�Management,�Public�Policy�amongst�other�things.

She�is�also�responsible�for�starting�and�leading�the�team�for�Strategic�Research

Planning,�Discovery�Research�and�Chemical�Process�Development.�

Dr.�Piramal�headed�the�task�force�to�rapidly�implement�ERP�solutions�for�meeting

MRP�II,�world�class�manufacturing�standards.

Dr.�Piramal�was�a�Member�of�the�Committee�set�up�by�Shri�Yashwant�Sinha�to

transform�India�into�a�Knowledge�Power.�She�has�written�papers�on�Drugs�Price

Control,�Biotechnology�Regulation�on�Biosimilars,�and�a�paper�on�Data�Protection

Laws�in�2000�to�help�influence�India’s�positions.��Another�position�paper�on

Patentability�has�been�published�in�2007.

Acquired�and�set�up�new�pathology�laboratories�across�India,�to�be�part�of�a

chain�offering�PCR/Histopathology/Immunological�specialized�tests.��

Other Achievements

Dr.�Piramal�founded�the�Gopikrishna�Piramal�Memorial�Hospital�in�1983,�a

charitable�Hospital�with�services�for�the�under-privileged.��She�also�started�the

new�sports�sciences�wing�at�the�hospital,�with�a�high�tech�human�performance

laboratory.�The�Prime�Minister�has�nominated�Dr.�Piramal�as�a�member�on�the

Board�of�the�Council�of�Scientific�and�Industrial�Research�(CSIR).�She�is�also�an

expert�member�of�the�Planning�Commission,�Govt.�of�India�and�Vice�President�of

ASSOCHAM.�Dr.�Piramal�is�also�on�the�board�of�companies�such�as�LIC,�ICICI

Bank,�SBI�Capital�Markets�and�others.

Dr.�Swati�A.�PiramalDirector,�Strategic�Alliances�&�CommunicationsNicholas�Piramal�India�Ltd.

Swati Piramal

59


The�Confederation�of�Indian�Industry�(CII)�works�to�create�and�sustain�an

environment�conducive�to�the�growth�of�industry�in�India,�partnering�industry�and

government�alike�through�advisory�and�consultative�processes.�

CII�is�a�non-government,�not-for-profit,�industry�led�and�industry�managed

organisation,�playing�a�proactive�role�in�India's�development�process.�Founded

over�112�years�ago,�it�is�India's�premier�business�association,�with�a�direct

membership�of�over�6500�organisations�from�the�private�as�well�as�public

sectors,�including�SMEs�and�MNCs,�and�an�indirect�membership�of�over�90,000

companies�from�around�350��national�and�regional�sectoral�associations.

A�facilitator,�CII�catalyses�change�by�working�closely�with�government�on�policy

issues,�enhancing�efficiency,�competitiveness�and�expanding�business

opportunities�for�industry�through�a�range�of�specialised�services�and�global

linkages.�It�also�provides�a�platform�for�sectoral�consensus�building�and

networking.�Major�emphasis�is�laid�on�projecting�a�positive�image�of�business,

assisting�industry�to�identify�and�execute�corporate�citizenship�programmes.

Partnerships�with�over�120�NGOs�across�the�country�carry�forward�our�initiatives

in�integrated�and�inclusive�development,�which�include�health,�education,

livelihood,�diversity�management,�skill�development�and�water,�to�name�a�few.�

CII's�theme�of�"Building�People,�Building�India"�puts�the�spotlight�on�Human

Resource�Development:�making�people�more��efficient,�entrepreneurial�and

innovative,�to�make��India�and�Indian�industry�even�more�competitive,�across�all

sectors�of�the�economy�and�all�sections�of�society,�at�all�levels��Global,�National,

Regional,�State�and�Zonal.�

With�57�offices�in�India,�8�overseas�in�Australia,�Austria,�China,�France,�Japan,

Singapore,�UK,�USA�and�institutional�partnerships�with�240�counterpart

organisations�in�101�countries,�CII�serves�as�a�reference�point�for�Indian�industry

and�the�international�business�community.

Summit Websites:

http://www.pharmasummit.biz

About�Confederation�of�IndianIndustry�(CII)

60


KPMG�is�the�global�network�of�professional�services�firms�of�KPMG�International.

Our�member�firms�provide�audit,�tax�and�advisory�services�through�industry

focused,�talented�professionals�who�deliver�value�for�the�benefit�of�their�clients

and�communities.�With�nearly�113,000�people�worldwide,�KPMG�member�firms

provide�services�in�148�countries.

The�member�firms�of�KPMG�International�in�India�were�established�in�September

1993.�As�members�of�a�cohesive�business�unit,�they�respond�to�a�client�service

environment�by�leveraging�the�resources�of�a�global�network�of�firms,�providing

detailed�knowledge�of�local�laws,�regulations,�markets�and�competition.�We

provide�services�to�over�2,000�international�and�national�clients,�in�India.�KPMG

has�offices�in�India�in�Mumbai,�Delhi,�Bangalore,�Chennai,�Hyderabad,�Kolkata�and

Pune.�The�firms�in�India�have�access�to�more�than�2000�Indian�and�expatriate

professionals,�many�of�whom�are�internationally�trained.�We�strive�to�provide

rapid,�performance-based,�industry-focused�and�technology-enabled�services,

which�reflect�a�shared�knowledge�of�global�and�local�industries�and�our

experience�of�the�Indian�business�environment.

About�KPMG�in�India

61


in.kpmg.com

KPMG�in�India

MumbaiKPMG House, Kamala Mills Compound448, Senapati Bapat MargLower ParelMumbai 400 013Tel: +91 22 3989 6000Fax: +91 22 3983 6000

Delhi4B, DLF Corporate ParkDLF City, Phase IIIGurgaon 122 002Tel: +91 124 307 4000Fax: +91 124 254 9101

BangaloreMaruthi Info-Tech Centre11-12/1, Inner Ring RoadKoramangalaBangalore 560 071Tel: +91 80 3980 6000Fax: +91 80 3980 6999

ChennaiNo.10 Mahatma Gandhi RoadNungambakkamChennai 600 034Tel: +91 44 3914 5000Fax: +91 44 3914 5999

HyderabadII Floor, Merchant TowersRoad No. 4, Banjara HillsHyderabad 500 034Tel: +91 40 2335 0060Fax: +91 40 2335 0070

KolkataPark Plaza, Block F, Floor 671 Park StreetKolkata 700 016Tel: +91 33 2217 2858Fax: +91 33 2217 2868

Pune703, Godrej CastlemaineBund GardenPune 411 001Tel: +91 20 305 85764/65Fax: +91 20 305 85775

KPMG�Contacts

Pradeep UdhasHead - MarketsTel: +91 22 3983 6205e-Mail: [email protected]

Hitesh GajariaHead - PharmaTel: +91 22 3983 5702e-Mail: [email protected]

CII�Contact

Darryl DasilvaDirector - Western Region105 Kakad Chambers132 Dr A B RoadWorliMumbai - 400 018Tel: +91 22 2493 1790e-Mail : [email protected] :www.cii.in

©�2007�KPMG,�an�Indian�Partnership�and�a�member�firmof�the�KPMG�network�of�independent�member�firmsaffiliated�with�KPMG�International,�a�Swiss�cooperative.All�rights�reserved.KPMG�and�the�KPMG�logo�are�registered�trademarks�ofKPMG�International,�a�Swiss�cooperative.�Printed�in�India.

The�information�contained�herein�is�of�a�general�nature�and�is�not�intended�to�address�the�circumstances�of�any�particular�individualor�entity.�Although�we�endeavor�to�provide�accurate�and�timely�information,�there�can�be�no�guarantee�that�such�information�isaccurate�as�of�the�date�it�is�received�or�that�it�will�continue�to�be�accurate�in�the�future.�No�one�should�act�on�such�informationwithout�appropriate�professional�advice�after�a�thorough�examination�of�the�particular�situation.


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