PHARMACEUTICAL INDUSTRY

The pharmaceutical industry discovers, develops, produces, and markets drugs or

pharmaceutical drugs for use as medications to be administered (or self-administered)
to patients to cure them, vaccinate them, or alleviate a symptom. Pharmaceutical companies
may deal in generic or brand medications and medical devices. They are subject to a variety
of laws and regulations that govern the patenting, testing, safety, efficacy and marketing of
drugs.

History

Mid-1800s – 1945: From botanicals to the first synthetic drugs

The modern pharmaceutical industry traces its roots to two sources. The first of these were
local apothecaries that expanded from their traditional role distributing botanical drugs such
as morphine and quinine to wholesale manufacture in the mid 1800s. Rational drug
discovery from plants started particularly with the isolation of morphine, analgesic and sleep-
inducing agent from opium, by the German apothecary assistant Friedrich Sertürner who
named the compound after the Greek god of dreams, Morpheus. By the late 1880s, German
dye manufacturers had perfected the purification of individual organic compounds from tar
and other mineral sources and had also established rudimentary methods in organic chemical
synthesis. The development of synthetic chemical methods allowed scientists to
systematically vary the structure of chemical substances, and growth in the emerging science
of pharmacology expanded their ability to evaluate the biological effects of these structural
changes.

Epinephrine, norepinephrine, and amphetamine

By the 1890s, the profound effect of adrenal extracts on many different tissue types had been
discovered, setting off a search both for the mechanism of chemical signalling and efforts to
exploit these observations for the development of new drugs. The blood pressure raising and
vasoconstrictive effects of adrenal extracts were of particular interest to surgeons
as hemostatic agents and as treatment for shock, and a number of companies developed
products based on adrenal extracts containing varying purities of the active substance. In
1897, John Abel of Johns Hopkins University identified the active principle as epinephrine,
which he isolated in an impure state as the sulfate salt. Industrial chemist Jokichi
Takamine later developed a method for obtaining epinephrine in a pure state, and licensed the
technology to Parke-Davis. Parke-Davis marketed epinephrine under the trade
name Adrenalin. Injected epinephrine proved to be especially efficacious for the acute
treatment of asthma attacks, and an inhaled version was sold in the United States until 2011
(Primatene Mist). By 1929 epinephrine had been formulated into an inhaler for use in the
treatment of nasal congestion.

While highly effective, the requirement for injection limited the use of epinephrine and orally
active derivatives were sought. A structurally similar compound, ephedrine, (actually more
similar to norepinephrine,) was identified by Japanese chemists in the Ma Huang plant and
marketed by Eli Lilly as an oral treatment for asthma. Following the work of Henry Dale and
George Barger at Burroughs-Wellcome, academic chemist Gordon Alles synthesized
amphetamine and tested it in asthma patients in 1929. The drug proved to have only modest
anti-asthma effects, but produced sensations of exhilaration and palpitations. Amphetamine
was developed by Smith, Kline and French as a nasal decongestant under the trade
name Benzedrine Inhaler. Amphetamine was eventually developed for the treatment
of narcolepsy, post-encephalitic parkinsonism, and mood elevation in depression and other
psychiatric indications. It received approval as a New and Nonofficial Remedy from the
American Medical Association for these uses in 1937 and remained in common use for
depression until the development of tricyclic antidepressants in the 1960s.
 RESEARCH AND DEVELOPMENT

Drug discovery is the process by which potential drugs are discovered or designed. In the
past most drugs have been discovered either by isolating the active ingredient from traditional
remedies or by serendipitous discovery. Modern biotechnology often focuses on
understanding the metabolic pathways related to adisease state or pathogen, and manipulating
these pathways using molecular biology or biochemistry. A great deal of early-stage drug
discovery has traditionally been carried out by universities and research institutions.

Drug development refers to activities undertaken after a compound is identified as a

potential drug in order to establish its suitability as a medication. Objectives of drug
development are to determine appropriate formulation and dosing, as well as to
establish safety. Research in these areas generally includes a combination of in
vitro studies, in vivo studies, and clinical trials. The cost of late stage development has meant
it is usually done by the larger pharmaceutical companies.

Often, large multinational corporations exhibit vertical integration, participating in a broad

range of drug discovery and development, manufacturing and quality control, marketing,
sales, and distribution. Smaller organizations, on the other hand, often focus on a specific
aspect such as discovering drug candidates or developing formulations. Often, collaborative
agreements between research organizations and large pharmaceutical companies are formed
to explore the potential of new drug substances. More recently, multi-nationals are
increasingly relying on contract research organizations to manage drug development.
 GROWTH OF PHARMACEUTICAL INDUSTRY IN INDIA

The growth of drugs and pharmaceutical industry in India is primarily a post-Independence

phenomenon. Before Independence, bulk of drugs was imported and only processing and
formulations were done in the country. This industry has made tremendous progress during
the last 40 years.

The growth rate of this industry has been about ten per cent per annum, consistently for the
last more than two decades.

Today, India is in a position to meet 95 per cent of her requirements of bulk drugs and almost
all the requirement of formulations.

The present production covers a wide range of bulk drugs including antibiotics, vitamins,
steroids and hormones, semi-synthetic penicillins, synthetic phytochemicals and biological
products besides, practically the entire range of formulations required by the medical
profession.

The industry is likely to grow rapidly in times to come. For example, its turnover is estimated
at Rs. 25,000 crore and with annual growth rate of about 10 per cent is expected to reach Rs.
1,25,000 crore in 2010. Exports in 2002-03 were around 50 per cent of the domestic market
making industry a net exporter.

Drug prices in India are some of the lowest in the world and India has one of the largest
inventories of highly skilled pharmaceutical professionals. Modem drugs reach only 40 per
cent of Indian population mainly in urban and semi-urban areas. Obviously the potential for
growth in the domestic market is enormous.

There are about 250 units in the organised sector, five of these in the public sector (IDPL,
HAL, SSPL, BCPL and BIL) and six in the joint sector. There are 21 MRTP companies and
six FERA ones. About 5,000 units in the small scale sector are also engaged in the production
of drugs. Of these, over 100 units are engaged in the production of bulk drugs.

Indian Drugs and Pharmaceuticals Limited (IDPL) a premier undertaking was incorporated
on 5 April 1961. It has five plants located at Rishikesh for the manufacture of synthetic drugs,
at Chennai for surgical instruments, at Gurgaon for formulations and at Muzaffarpur for drugs
and chemical intermediates.

Besides, IDPL has three subsidiary companies set up in association with the state
governments. These are Rajasthan Drugs and Pharamaceuticals (RDPL), Jaipur, Uttar
Pradesh Drugs and Pharmaceuticals Ltd. (UPDPL), Lucknow and Orissa Drugs and
Chemicals Ltd. (ODCL), Bhubaneswar.

Hindustan Antibiotics Limited (HAL) was incorporated on 1 March 1954. It is engaged in

manufacturing Penicillin, Streptomycin, Amcillin, Hamycin, Gentamycin and Aureofungen,
besides formulations. It has three subsidiary companies set up in collaboration with the state
governments.

They are (i) Maharashtra Antibiotics and Pharamceutical Limited (MAPL), Nagpur, (ii)
Karnataka Antibiotics and Pharmaceuticals Limited (KAPL). Bangalore and (iii) Manipur
State Drugs and Pharmaceuticals Limited (MSDPL) Imphal.

The Government has also nationalised three sick units at Kolkata. These units have been
converted into public sector companies. They are (i) Bengal Immunity Limited (BIL), (ii)
Bengal Chemicals and Pharmaceuticals Limited (BCPL) and (iii) Smith Stanistreet
Pharmaceuticals Ltd. (SSPL)

The leading companies in the private sector are Ciba, Sarabhai, Hoechst, Alembic, Glaxo,
Unichem, Pfizer, Chemo Pharma and Warner Hindustan. These companies produce almost all
types of drugs and formualtions.

Although small sector units are scattered all over the country, their heavier concentration is
found at Mumbai, Chennai, Kolkata, Delhi, Vadodara, Kanpur and Hyderabad.
 THE FUTURE OF THE PHARMACEUTICAL INDUSTRY IS IN
EMERGING MARKETS

Stagnation suffocates a company’s growth, so when profits start to level out after years of
growth, smart companies immediately begin to scour the globe for new sources of revenue to
move their organizations back into a more profitable position. For the pharmaceutical
industry, expanding into emerging markets is inevitable and will prove to be a critical step in
the industry’s evolution, despite initial growing pains.
Let’s take a step back and look at the commonly accepted business model for pharmaceutical
companies in a mature economy, such as the U.S. market. A pharmaceutical company
establishes a fully integrated system including the research and development processes all the
way to the finished goods facilities owned by the same company. The up- front investment is
large, but controlling all assets in the process has traditionally served as a reliable model in
the long run.
Fast-forward to the 2012 patent cliff with the overwhelming volume of patent expirations and
what seemed to often be insurmountable regulatory roadblocks that put a hard stop on the
promise of growth in the US market. From 2002 – 2012, the value lost by products going off
patent far exceeded the value created by new products entering the market creating a
disconcerting financial situation for many.
In light of that, pharmaceutical companies began looking to the promise of growth abroad in
the BRICs (Brazil, Russia, India, China). These countries comprise the top tier of emerging
markets in the world because they are projected to be the most economically stable and with
the likelihood of becoming similar to the US market, in time. As their economies matured, the
most prevalent health conditions in the BRICs began to mirror those in the developed
countries, such as the US. Issues such as chronic disease, diabetes, and obesity are becoming
more prevalent as the middle class grows and life expectancies increase. This changed need
opens a whole new host of consumers for pharmaceutical treatments that have traditionally
been marketed to Western patients.
From purely a financial perspective, the strategic decision to move to the BRICs was well
substantiated, with over 70 percent of the world living in developing or emerging markets,
many of these nations of which required products to treat the influx of new medical disorders
they now confronted. It’s daunting to imagine the potential new customer base and endless
opportunities for growth.
Proceed With Caution
There have been growing pains, which should be expected. Despite the enticing financial
incentives in these countries, many top pharmaceutical companies have already lost
substantial revenue from seeking to operate in these emerging markets without proper risk
assessments and planning prior to implementation. This could be due to the fact that the
supply chain operations, manufacturing processes, and regulatory requirements are vastly
different from that of the Western world.
With a primarily out-of-pocket payment system for healthcare services due to the
underdeveloped nature of emerging market health infrastructure, pharmaceutical companies
stand to both improve the standard of living of patients in the BRICs while also expanding
their company’s global reach and customer base. Providing the expanding middle class with
high-margin generics from Western brands is the hallmark of this sort of expansion. While it
seems to be a simple solution, the key to success involves significant strategy rather than a
“one size fits all” approach.
Several companies have successfully implemented programs in the BRIC markets, but those
case studies all involved substantial groundwork with the populations and rigorous training of
staff.
The key to facilitating a successful pharmaceutical expansion to BRIC countries is for the
organization to accept that every emerging market is different and that the landscape of the
government, regulatory, and policy structure of the country and more specifically, the region,
where the company seeks to expand must be audited. There is no standard recipe for market
expansion, as each requires unique knowledge of the current infrastructure and technologies
available. Like always, the devil is in the details.

Do Your Homework
The BRICs have been implementing the necessary strategies to further develop their
healthcare sectors, but their work is still far from over. Government-influenced growth
coupled with the growing middle class, creates a need for increased public engagement and
focused efforts on the specific needs of the population group. Pharmaceutical companies must
develop, manufacture, and distribute drugs that fit the target audience and are affordable to
consumers in that particular market.
Prior to creating an operation in an emerging market, companies must conduct detailed
research to identify market segments within the country with proper adaptation to buying
patterns, education needs, training, and threshold for purchase. Often, healthcare
infrastructure is not well established, creating a disparity between cost of the drug and ability
to pay. Understanding the needs and education required to implement change are a critical
foundation for ensuring that demand for a product will exist in these volatile environments.
Companies must choose their population, select their focus areas, and then provide the
absolute best product for an affordable price. Simply importing Western medicine that is
unaffordable to the general community will not prove an effective or economically sound
solution.
Above all, education is key. In developing countries, access to inexpensive, generic drugs is
critical to many patients. Pharmaceutical companies have the opportunity to improve quality
of life for patients while also growing their bottom line. If a company plans to enter the
market, a disease management program must be implemented to help ensure the both
physicians and patients understand their condition and why a particular medication is
necessary to treat it.
For example, submarkets within a country can be identified as a customer cluster with a
specific health need. If the customer cluster does not understand the need for medication or
treatment, the pharmaceutical company should then focus on the needs of these consumers by
providing educational materials and training to teach both physicians and patients how to use
the medication, this practice promotes disease prevention while increasing healthcare
consumption within the sub market.

High Risk High Reward

With pharmaceutical exports from India totaling $15 billion in the 2014 fiscal year, the
opportunity for success in emerging markets is real, as long as companies understand that
growth in these countries have proven to be more complicated than originally expected and
take the appropriate measures to ensure success. The combined effect of the 2012 patent cliff
in the US, limited healthcare systems in the BRIC, growing middle class in the BRIC, and
chronic disease becoming a growing problem in developing countries led to an increased
need for drugs in these expanding markets at the same time US Big Pharma needed another
avenue for expansion.
Not all expansion attempts have been immediately successful, but the consistent theme seems
to be that through singular, strategic approaches based on a thorough population analysis,
patient and physician education, and therapeutic niche, emerging market offer the best long-
term growth opportunity for companies willing to put the work in.
 EXAMPLE OF PHARMACEUTICAL COMPANIES

Sun Pharmaceutical

Sun Pharma, officially known as Sun Pharmaceutical Industries Limited, was founded in
1983 by Dilip Shanghvi. The company is headquartered in India's financial capital Mumbai,
Maharashtra. Active Pharmaceuticals Ingredients (APIs) and formulations are known to be
Sun Pharma's specialised areas. It targets a wide spectrum of chronic and acute treatments. Its
therapeutic segments of over 3000 high quality molecules include psychiatry, anti-infectives,
neurology, cardiology, orthopaedic, diabetology, gastroenterology, ophthalmology,
nephrology, urology, dermatology, gynaecology, respiratory, oncology, dental and
nutritionals. On 15 June 2015, Sun Pharma was India's largest pharmaceutical company with
the market capitalisation valued at Rs. 2,01,706.41 crore. Its products and services may be
categorised as below:
 Formulations
 Active Pharmaceutical Ingredients (APIs)
 Over-The-Counter (OTC)
 Antiretrovirals (ARVs)

Lupin

Headquartered in Mumbai, Lupin Limited is a multinational pharmaceutical company. An

associate professor at BITS-Pilani in Rajasthan, Dr. Desh Bandhu Gupta established Lupin in
1968, which is today one of India's leading pharmaceutical companies. In Pune, Maharashtra,
Lupin has a state-of the-art research and development unit. It is one of the fastest growing
companies as far as oncology, cardiology, gastroenterology, central nervous system, anti-
infective, anti-asthma and diabetology therapies are concerned. Lupin's market capitalisation
amounted to Rs. 77,115.19 crore on 15 June 2015. Its products and services may be
categorised as below:
 Branded Formulations
 Advanced Drug Delivery Systems
 Generics
 Novel Drug Discovery
 APIs
 Biotechnology
Dr. Reddy's Labs

Based in Hyderabad, Telangana, Dr. Reddy's Laboratories is a multinational pharmaceutical

entity. It was founded in 1984 as a manufacturer of APIs. A vast range of pharmaceutical
products are offered by Dr. Reddy's Labs. It has 60 APIs and 190 medications to treat various
kinds of ailments. It is now India's third largest pharmaceutical company in terms of market
capitalisation, which was valued at Rs. 56,638.13 crore on 15 June 2015. Its products and
services may be categorised as below:
 Generic Formulations
 Active Ingredients
 Pharmaceutical Services
 Biosimilars
 Propriety Products

Cipla
Dr. K. A. Hamied set up Cipla Limited in 1935, which is one of the biggest biotechnology
and pharmaceutical multinational companies of India today. APIs and formulations are
produced at 34 state-of the-art Cipla plants spread across the country. Primarily, medicines for
treatments of ailments like depression, obesity, cardiovascular diseases, arthritis and diabetes
are developed by Cipla. It is India's fourth largest pharmaceutical company accounting for a
market capitalisation worth Rs. 47,025.38 crore on 15 June 2015. Its products and services
may be categorised as below:
 APIs
 Formulations
 Veterinary

Aurobindo Pharma
Aurobindo Pharma was founded by K. Nityananda Reddy and P.V. Ramaprasad Reddy with
others in 1986. Headquartered in Hyderabad, Telangana, Aurobindo Pharma Limited
manufactures APIs and generic pharmaceuticals. Six prime therapeutic areas of medication
addressed by the company are anti-allergic, gastroenterology, antiretrovirals, antibiotics,
central nervous system and cardiology. With the market capitalisation valued at Rs. 37,281.76
crore on 15 June 2015, Aurobindo Pharma Limited is India's fifth largest pharmaceutical
company. Its products and services may be categorised as below:

 Formulations
 APIs

Cadila Healthcare
The city of Ahmedabad in the western Indian state of Gujarat is home to the head office of
Cadila Healthcare that was founded in 1952. The company has around 20 different
manufacturing locations across the country. Cadila Healthcare is India's sixth largest
pharmaceutical company in terms of market capitalisation that amounted to Rs. 36,159.61
crore on 15 June 2015. Its products and services may be categorised as below:

 APIs
 Formulations

GlaxoSmithKline
One of the oldest and most experienced players in the pharmaceutical industry of India,
GlaxoSmithKline Pharmaceuticals Limited was established in 1924. GlaxoSmithKline
Pharmaceuticals is one of the world's top research-based health management and
pharmaceutical companies. Major therapeutic areas of medication addressed by the company
are anti-infectives, dermatology, oncology, gynaecology, diabetes, cardiology and respiratory
products. In addition to that, it provides vaccines for cervical cancer, hepatitis B, hepatitis A,
rota-virus, influenza, tetanus, chickenpox, pertussis and diphtheria amongst many. The
market capitalisation of GlaxoSmithKline Pharmaceuticals Limited stood at Rs. 27,522.55
crore on 15 June 2015.

Glenmark Pharmaceuticals
Glenmark Pharmaceuticals is an Indian pharmaceutical company founded in 1977 and
headquartered in Mumbai, Maharashtra. It specialises in developing and marketing APIs and
 formulations and covers segments such as diabetology, dermatology, ENT, internal medicine,
gynaecology and paediatrics. Glenmark Pharmaceuticals is India's eighth largest
pharmaceutical entity by market capitalisation, which was valued at Rs. 25,045.36 crore on
15 June 2015. Its products and services may be categorised as below:
 Formulations
 Active Pharmaceutical Ingredients

Divi's Laboratories
Divi's Laboratories was set up in 1990 with the sole purpose of research and development in
the life-sciences segment. The company mainly focuses on the development of modern
innovative methods of manufacturing pharmaceutical intermediaries and other APIs. It is
India's ninth largest pharmaceutical company by market capitalisation, which amounted to
Rs. 23,493.97 crore on 15 June 2015. Its products and services may be categorised as below:

 Generics
 Intermediates
 Protected Amino Acids
 Chiral Synthesis
 Carotenoids (Synthetic) and Nutraceuticals

Torrent Pharmaceuticals
Based in Ahmedabad, Gujarat, Torrent Group's flagship unit is Torrent Pharmaceuticals,
founded in 1959. It is a major in therapeutic realms such as central nervous system and
cardiovascular, spanning over segments like diabetology, gastroenterology and anti-infectives
to name some. Torrent Pharmaceuticals is operational in over 50 countries and has a
significant presence in India where it is rated as one of the top 10 pharmaceutical companies
operating in the country. On 15 June 2015, the market capitalisation of Torrent
Pharmaceuticals was Rs. 21,555.59 crore
 ROLE OF GOVERNMENT IN THE GROWTH OF
PHARMACEUTICAL COMPANY

The Indian government established the Department of Biotechnology in 1986 under the
Ministry of Science and Technology. Since then, there have been a number of dispensations
offered by both the central government and various states to encourage the growth of the
industry. India’s science minister launched a program that provides tax incentives and grants
for biotech start-ups and firms seeking to expand and establishes the Biotechnology Parks
Society of India to support ten biotech parks by 2010. Previously limited to rodents, animal
testing was expanded to include large animals as part of the minister’s initiative. States have
started to vie with one another for biotech business, and they are offering such goodies as
exemption from VAT and other fees, financial assistance with patents and subsidies on
everything ranging from investment to land to utilities.

The biotechnology sector faces some major challenges in its quest for growth. Chief among
them is a lack of funding, particularly for firms that are just starting out. The most likely
sources of funds are government grants and venture capital, which is a relatively young
industry in India. Government grants are difficult to secure, and due to the expensive and
uncertain nature of biotech research, venture capitalists are reluctant to invest in firms that
have not yet developed a commercially viable product.

The government has addressed the problem of educated but unqualified candidates in its
Draft National Biotech Development Strategy. This plan included a proposal to create a
National Task Force that will work with the biotech industry to revise the curriculum for
undergraduate and graduate study in life sciences and biotechnology. The government’s
strategy also stated intentions to increase the number of PhD Fellowships awarded by the
Department of Biotechnology to 200 per year. These human resources will be further
leveraged with a "Bio-Edu-Grid" that will knit together the resources of the academic and
scientific industrial communities, much as they are in the US.
In 2019 the Department of Pharmaceuticals announced that as part of the Made in India
initiative, drugs for local use must have 75% of local content, and drugs for export 10%. A
bill of material must be produced for checking

CAUGHT IN THE MIDDLE

Kamal K. Sharma, Advisor and former vice chairman of India's second-largest drug company,
Lupin Ltd., uses the transformation of India's two-wheeler market to explain the ongoing
global disruption that is giving the country's pharmaceutical companies a hard time.
"When our roads were bad, the Bajaj Chetak scooter became a hit. Over the years,
motorcycles gained popularity, and when roads became better and more motorable, electric
scooters became popular and obliterated many popular scooter/motorcycle brands and
models. Value migration happens in every industry at some point or the other. The generic
industry is going through such a transition," he says.
That is why the pharmaceutical and healthcare sector - considered to be broadly insulated
from market swings and regarded as a safe investment for stock investors - is the only sector
that destroyed investor wealth (it fell 2.6 per cent) in October 2017-September 2018 over the
year-ago period. Its average market capitalisation fell from Rs 7,17,453 crore in the October
2016 to September 2017 period to Rs 6,98,896 crore during the October 2017 to September
2018 period. Half the top ten companies in the sector registered growth in market
capitalisation. The fall in the average market cap was primarily led by heavyweights Sun
Pharmaceutical and Lupin Ltd. Sun's market value, for instance, fell 11.25 per cent from Rs
1,48,534 crore to Rs 1,31,816 crore. Lupin fared worse; its market capitalisation fell 34.22
per cent from Rs 59,049 crore to Rs 38,842 crore. Similarly, Dr. Reddy's Laboratories' market
cap fell 17.72 per cent. The other losers in the top ten were Zydus Cadila (-7.47 per cent) and
Aurobindo (-6.67 per cent). The gainers were Biocon (66.49 per cent), Cipla (6.14 per cent),
Divis Laboratories (34.07 per cent), Emami (5.25 per cent) and Alkem Laboratories (11.44
per cent).
Analysts credit Biocon's performance to its long pipeline of next generation products,
progress of approvals to biosimilars (identical copies of original biotech drugs) and the
company's confidence about earning $200 million from biologics in 2018/19. Similarly,
analysts are bullish on Divis and expect the company to report sales and profit compounded
annual growth rate of 23 per cent and 32 per cent, respectively, between 2017/18 and
2020/21. The reasons for the bullishness include capacity expansion, pollution-related issues
leading to constraints in supply from China which will open up opportunities for Divis and
weakness in rupee against the US dollar that will make exports competitive.
But experts say Biocon and Divis are exceptions considering the trends in the sector over the
past few years.
Losing Steam
When India allowed process patents in 1972 that legalised manufacture of copycat versions
of patented drugs, numerous generic companies stepped in to cash in on the opportunity. The
industry developed great chemistry skills and companies such as Ranbaxy, Sun Pharma, Dr.
Reddy's and Lupin became multinationals supplying generic drugs to almost all parts of the
world. Naturally, all of them targeted the US, the world's largest drug market.
The US became the biggest and the most profitable market for most of these companies and
source of 30-40 per cent of their revenues. That huge growth of the past two decades is now
in limbo as changing industry dynamics and regulatory issues suffocate Indian companies in
the US. In the past three years, the largest US channel partners - CVS-Caremark, Medco-
Express Scripts and Walgreen-Alliance Boots - have merged and are now dictating terms to
suppliers. This has caused steep price erosion and squeezed margins of companies that sell
drugs in the US. "When we started (in 2005), five-six channel partners controlled 80-85 per
cent of the market. Now, three players control 90 per cent," says Vinita Gupta, CEO, Lupin.
Dilip Shanghvi, Managing Director, Sun Pharmaceutical Industries
That is not the only issue. Earlier, there were only five to ten players claiming to have made
generic version of a drug at patent expiry. Now, as many as 30 companies compete for one
drug, causing a big erosion in margins and market share.
Also, the US drug regulator, the Food and Drug Administration, is raising the bar for
approval to drugs, and as a result most leading Indian drug companies are facing the heat.
Apart from the troubled facilities of the now-acquired Ranbaxy, Sun Pharma is still struggling
to fix its unit at Halol that accounts for 15 per cent of its production. Lupin's two out of eight
units supplying to the US are in trouble.
The companies are also facing challenges in the domestic market, the first or the second
largest market for most companies, with more drugs coming under price control. They are
also struggling with the goods and services tax regime.
The Transformation
Anticipating the changes, most companies are now shifting to high-value generics, branded
products, biologics and complex generics where limited competition ensures that returns are
higher, but so are chances of failure. These also require different chemistry and biological
skill sets, apart from huge investments, in comparison to simple generics. The companies
now realise that selling plain vanilla generics is no more a profitable proposition. "Value
migration happens in all industries. As the generic industry matures, it is transforming to
specialty and complex generics. We are not alone and are geared up for the changes," says
Lupin's Kamal K. Sharma.
"We expect the US generics market to remain competitive. Given the changed business
dynamics, many of our generic R&D projects have become unviable and so we are
rationalising generic R&D spends," Dilip Shanghvi, Managing Director, Sun Pharma, told
analysts while discussing the company's performance for 2017/18 during which revenues fell
14 per cent to Rs 26,066 crore. Historically, Sun Pharma has been focusing on complex,
limited competition, niche products with five-year payback period and 20 per cent-plus
margins.
Vinita Gupta, CEO, Lupin, Photograph by Danesh Jassawala
"The speed of changes in the market place was much faster than anticipated and our evolution
in some of the new areas where we have invested should be able to offset the decline in
existing business. Those have taken a bit longer to play out," says Lupin's Vinita Gupta. "Pain
will continue for the next three-four quarters and then the big growth story will be back," says
Nilesh Gupta, Managing Director, Lupin.
The industry is also trying to reinvent with partnerships and joint ventures for the launch of
next generation products. The companies are also trying to tap the potential of markets like
Japan and other emerging markets. Experts feel a wave of consolidation can happen soon as
only companies with deep pockets will be able to survive the current turmoil.
 CONCLUSION
The government’s strategy also stated intentions to increase the number of PhD Fellowships
awarded by the Department of Biotechnology to 200 per year. These human resources will be
further leveraged with a "Bio-Edu-Grid" that will knit together the resources of the academic
and scientific industrial communities, much as they are in the US.

In 2019 the Department of Pharmaceuticals announced that as part of the Made in India
initiative, drugs for local use must have 75% of local content, and drugs for export 10%. A
bill of material must be produced for checking
 REFERENCES
 http://www.yourarticlelibrary.com/industries/growth-of-drugs-and-pharmaceutical-
industry-in-india/19659
 https://www.pwc.in/press-releases/india-pharmaceutical-industry-is-on-a-good-
growth-path.html
 http://www.pharmacompliancemonitor.com/the-future-of-the-pharmaceutical-
industry-is-in-emerging-markets/8719/
 https://business.mapsofindia.com/india-company/pharmaceutical.html
SNAP SHOTS
 CONTENTS

 Pharmaceutical industry

 History

 Research and development

 Growth of pharmaceutical industry in india

 The future of the pharmaceutical industry is in emerging markets

 Example of pharmaceutical companies

 Role of government in the growth of pharmaceutical company

 Caught in the middle

 Conclusion

 References

 Snap shots