Breaking Down Pharma Borders

The seismic changes in the global market place are making a big impact on the world of pharma and opening up exciting opportunities for the supply chain with emerging markets such as India, Mexico, and North Africa. For India, the potential for growth and development are numerous, far beyond the borders of the subcontinent itself. Working with tried and tested brands, many from Europe, Indian industry is making sure it competes on the world stage to meet rigorous standards but with the enviable ability to reduce costs. The country’s ambitious mission to grow its pharma manufacturing industry over the past decade has won the backing of political heavyweights, not least the President. In this article, the author looks at how Indian pharmaceutical companies are working together with European engineering businesses to provide safe, sustainable, and cost-efficient pharmaceutical manufacturing solutions and how both parties are learning from each other.

Best practice and cost control are the core areas where India benefits from such partnerships. The world’s “fastest growing economy” (1) is well documented as an attractive place for businesses looking to invest in due to its recent growth, strong democracy, and growing standards as well as its high numbers of skilled staff. What’s more, India is fast tracking its presence on the global pharmaceutical manufacturing scene and deploying smart strategies. In this way, Indian manufacturers are well placed to steal a march in the global race for a piece of the lucrative pharmaceutical production market.

With Europe’s role as pioneers and its longstanding experience and reputation in cleanroom manufacturing, Europe has a lot to offer emerging markets that wish to develop their presence on the global pharmaceutical manufacturing marketplace. Europe’s reputation for quality and precision finished products, and German engineering excellence in particular, is still the order of the day with emerging markets keen to learn from years of experience. In 2012, Europe’s pharmaceutical trade surplus was estimated at €80 billion (2). Importantly, accessing world-class technology places Indian manufacturers on a level playing field with competition elsewhere-with that all important lower cost base.

This winning formula is echoed by a recent report by PWC, Changing Landscape of the Indian Pharma Industry, which stated that “despite a high demand for pharma products, there exists pressure to deliver effective treatment at lower costs. Healthcare reform and regulatory requirements are changing the realities of the marketplace. This is affecting the entire value chain from product development to healthcare delivery and payer reimbursement.”

In other sectors, there has been an inherent suspicion of dealing with emerging markets, with a fear that technologies and ultimately market share will be exported. This myopic view does not hold true in the world of pharmaceutical manufacturing that has a long-term global distribution. According to figures cited by the Indian government, in 2014, globally, the Indian pharmaceutical industry was ranked third largest in volume terms and 10th largest in value terms. The sector is highly knowledge-based and its steady growth is positively affecting the Indian economy. In addition to the relatively low cost-base, the organized nature of the Indian pharmaceutical industry is attracting several companies that are finding it viable to increase their operations in the country. In terms of value, exports of Indian pharmaceutical products increased at a CAGR of 26.1% , hitting $ 10.1 billion during June 2013 (3).

The government of India has responded to concerns around clinical trials by bringing in additional oversight mechanisms for clinical trials and notifying new rules for clinical trials (4). The government has also stated that it will consult the states and all other stakeholders to create a legal and regulatory framework for clinical trials in India. According to PharmaVision 2020, however, there is still more that the government can do, such as raising healthcare spending and investing more in healthcare infrastructure.

The strength of the pharmaceutical market in India is good and growing with investments continuing to pour in, largely through mergers and acquisitions (M&A). Already major manufacturers based in the subcontinent have flexed their muscles with a flurry of M&A activity, with clearance to enter North America. The US market alone accounted for nearly 30% of India's medicine exports of $15 billion in the fiscal year through March 2014. With many Indian drug companies investing outside the sub-continent as well, confidence in the market is growing from both sides. The benefits for European engineering organizations to partner with Indian pharmaceutical manufacturers lies largely in the cost benefits. Due to availability of skilled labour, India has the ability to deliver cost efficient programmes. Pharmaceutical manufacturing projects can cost between 30% and 40% of manufacturing projects in the US, a significant reduction in costs leaving cash left over for investment or future projects. For organizations that are looking to build one facility in India as opposed to a modular solution fit for purpose to be built in multiple locations, this model, therefore, is ideal.

The need to import talent and skills from outside the industry is vital if India is to compete globally in the pharmaceutical manufacturing market. Traditionally, talent is harnessed from within. With key hires who have backgrounds in organizations with strong engineering backgrounds and years of experience, these individuals are able to pass on their knowledge to students who will eventually become the experts.

The export of knowledge, experience, and specialist products allows emerging markets to deliver to stringent standards and importantly compete globally. The advantage that India has over other emerging markets is a surplus of highly skilled engineers and technology graduates providing a ready-made low-cost labour market for the most sophisticated of manufacturing processes from R&D to world-leading production regimes. This is in sharp contrast with Europe where the skills gap for engineers has placed a premium on such a precious resource. Competition for work in India is cut-throat with a large number of colleges and a supportive industry encouraging young people to take up a career in engineering and infrastructure, from process through to construction management. It is the partnerships with European organizations that will help nurture these young professionals to allow India to continue to grow and contribute to the global pharmaceutical manufacturing market.

One of the key challenges India faces is the lack of readily available advanced technology products for facilities, which are needed in order for India to deliver its pharmaceutical manufacturing at global standards. European engineering and products have strong reputations of engineering excellence and pharmaceutical companies in India are cottoning on to the benefit of partnering with such organizations. There is an incredible amount of research and development already taking place in the US and across Europe. Rather than follow the same route and yet remain 50 to 100 years behind many organizations, businesses are realizing that a combined approach to building up the Indian pharmaceutical manufacturing industry is ideal. Furthermore, these partnerships help Indian pharmaceutical companies deliver global levels of safety and quality while adhering to the levels of FDA and GMP standards, which are essential for their products to be acceptable globally.

With the introduction of PharmaVision 2020, the Indian government is aiming at making India a global leader in end-to-end drug manufacture. To help achieve this goal, reduced approval time for new facilities to boost investments is needed.

Partnerships ensure global levels of safety. Rather than adhering to specific levels of safety and quality in multiple countries, organizations will, through partnerships, adhere to the highest levels globally where it is appropriate.

References

1. The Telegraph, India to overtake China as fastest growing large economy, says IMF, www.telegraph.co.uk/finance/globalbusiness/11474914/India-to-overtake-China-as-fastest-growing-large-economy-says-IMF.html, accessed Apr. 24, 2015.

2. EFPIA, Facts and Figures, www.efpia.eu/facts-figures, accessed Apr. 24, 2015.

3. India in Business, Pharmaceuticals, http://indiainbusiness.nic.in/newdesign/index.php?param=industryservices_landing/347/1, accessed Apr. 24, 2015.

4. Pharma Vision 2020, http://online.wsj.com/public/resources/documents/McKinseyPharma2020ExecutiveSummary.pdf, accessed Apr 24. 2015. 

Abhishek Bardhan is general manager business development at M+W Group’s India office in New Delhi.