In the Field

Report from: India

The $6.3 billion Indian pharmaceutical industry is at a crossroad. Aiming to be the international home for quality drugs, which could in itself propel India's market to $20 billion by 2015 according to recent estimates, the generic hothouse is clearly moving beyond its earlier low-cost mindset.

Indian drug manufacturers are focusing on gaining leadership in their core, low-cost generic drug businesses by improving operating efficiencies and investing in innovation. The Indian government is also creating the right investment climate for both multinational corporations (MNCs) and Indian companies by addressing key concerns about intellectual property protection. In 2005, the government adopted the Patents Amendment Act to make the country compliant with the World Trade Organization's TRIPS regulations, which ultimately improve parallel trade and bring quick regulatory clearances.

Globally, India's drug industry ranks fourth in terms of volume (8% share of global sales) and 13th in value (1% share of global sales). The country produces 20–24% of the world's generic drugs (in terms of value) and is one of the top five active pharmaceutical ingredients producers (6.5% share), growing at 8–10% annually, according to a directive by India's Ministry of Commerce and Industry.

A study by McKinsey & Company confirms the fresh demand in India for drugs and pharmaceutical products in the forthcoming years. "Sheer size of the Indian market is one aspect. What is important is the incremental growth," said Palash Mitra, one of the study's authors. With the market set to add $14 billion in demand by 2015, competition and the need for innovation in drug processes and marketing strategies will balloon, he added.

The challenge will be different for large domestic companies, their smaller rivals, and MNCs, according to McKinsey. Large Indian companies will have to contend with aggressive attacks by smaller companies and the introduction of patented products by the major players, while the smaller companies will need to learn to manage size and complexity. In the past few years, larger drug companies have been growing at around 9% per year, an average growth rate as compared with other sectors, but smaller companies rose more rapidly, to the tune of 12%–14%. This growth has come at the cost of Big Pharma, which has been losing market share since 2000. The local industry has edged out MNCs whose 75% share of the market in 2000, fell to 35%.

Echoing these sentiments, a 2007 Goldman Sachs report predicts that India will be the fifth largest pharmaceutical market in the world by 2020, with global sales of $43 billion. Factors helping the surge include a growing middle class segment with disposable incomes, and increasing incidences of lifestyle diseases such as diabetes and hypertension. The gradual shift in disease profile and adoption of patented products is also boosting demand.

Consequently, a number of MNCs have entered the Indian market, and 16 of the 20 largest drug companies in the world already have a presence in India. In fact, drugs and pharmaceuticals make up the eighth largest foreign-direct-investment sector in India.

The country is already home to some of the world's most prominent makers of generic drugs, including Dr Reddy's Laboratories (Hyderabad), Ranbaxy Laboratories (New Delhi), and Sun Pharma (Mumbai ), all of which compete with US-based companies such as Merck and Pfizer. Indian companies are also using acquisitions to increase their market muscle and geographical reach.

"Indian generic companies have been particularly active in acquiring smaller foreign generic companies, especially in Europe and the US. They are potentially the most aggressive and are now able to get financial backing to contemplate the acquisition of significantly larger companies," says one industry analyst. Local players garnered a combined commitment of about $221 million from large private equity players in 2005, alone.

The market does have its negatives though. McKinsey's Gautam Kumra says the Indian government needs to expand its healthcare infrastructure to rural hospitals and clinics. "Around 90% of the Indian population is uninsured and must pay out-of-pocket for pharmaceuticals and healthcare services. Helping to accelerate the growth of private insurers in India would drive up drug sales," he explains.

Ashish Singh, managing director of Bain, a global business consulting firm, noted: "If Indian pharma is effective in shoring up its operating and cost structure, promoting innovation and gaining more regulatory credibility, the challenges both from mature markets and from developing countries like China should substantially lessen."

At the same time, a Bain report states that although India continues to rise, it pales in comparison to China as a destination of choice for low-cost drug manufacturing.

The overall facts, however, remain positive for India. Drug exports bring in more than $2 billion. There are 170 biotechnology companies in India involved in the development and manufacture of genomic drugs. Sequencing genes and delivering genomic information for Big Pharma is considered the next boom industry in India. And, Indian companies are getting more aggressive in expanding their global footprint. Mumbai-based firms Nicholas Piramal, Sun Pharma, Glenmark, Wockhardt, and Cipla have deals that span five continents—the surest signal of the growing global ambition of Indian pharma companies.

A. Nair is a freelance writer based in Mumbai, India.

Zone in on: Regulation

FDA Issues Rule to Clarify GMP Requirements for Aseptic Processing

by Patricia Van Arnum

The US Food and Drug Administration issued a rule on Dec. 4, that clarifies its requirements for current good manufacturing practices (CGMPs) for aseptic processing, water standards, and verifications standards. Notice of the rule was published in the Federal Register.

FDA issued the rule as part of a process for amending certain regulations in an incremental approach to modifying GMPs for finished pharmaceuticals. These changes are designed to modernize or clarify some of the CGMP regulations and harmonize some requirements with those of foreign regulators.

Among other changes, the rule deletes the current requirement for adherence to a specific US Environmental Protection Agency water standard and instead simply requires that the plumbing system contain water that is "safe for human consumption."

The rule also amends several aseptic-processing regulations to clarify requirements and reflect currently accepted practices. In some cases, the rule harmonizes the regulations with international regulatory standards. The revision to Sec. 211.113(b) applies specifically to the validation of aseptic processes. Other recommendations concern various types of processes and operations in addition to aseptic processes.

Comments are due 75 days after the publication of the rule, which will be effective 135 days after publication. If FDA does not receive any significant comments during the comment period, the agency will publish a notice in the Federal Register 105 days after Dec. 4 to confirm the effective date of the rule.

World Briefs

ASIA &PACIFIC

India's Dr. Reddy's Laboratories signed an exclusive 10-year agreement with pharmaceutical company Sygnis Pharma (Heidelberg, Germany) for the supply of the active ingredient in AX200, a biological molecule in development by Sygnis for treating stroke and other neurodegenerative disorders. • Santen Pharmaceutical (Osaka, Japan) is using Oakwood Laboratories' (Cleveland, OH) "Chroniject" sustained-release delivery technology for its DE-102, a drug to treat macular edema in Phase I–IIa clinical development. • Astral Pharmaceutical (Mumbai) formed an agreement with Sagent Pharmaceuticals (Schamburg, IL) under which Astral will develop, manufacture, and supply injectable products for which Sagent will obtain US regulatory approval and will market in the United States.

EUROPE &MIDDLE EAST

England's Hikma Pharmaceuticals acquired Jordan's Arab Pharmaceutical Manufacturing for $163.6 million. • Switzerland's Novartis expanded its collaboration with MorphoSys (Martinsried–Planegg, Germany). Under a new 10-year agreement, which may be extended, the companies will discover and optimize antibodies in a wide range of diseases. • England's Reckitt Benckiser agreed to acquire the specialty pharmaceutical company Adams Respiratory Therapeutics (Chester, NJ) for $2.3 billion. Adams is currently active in the US only and markets two brands: "Mucinex," an adult cough expectorant and "Delsym," a cough suppressant. • Switzerland's Roche may change the general language in its "Tamiflu" (oseltamivitor) drug label based on a FDA recommendation to specify the potential for neuropsychiatric adverse events. • France's Rhodia Organics will increase prices by 10–15% for its salicylic product range, effective this month.

Where is that?

• Osaka is located at the mouth of the Yodo River on Osaka Bay, in the Kansai region of the main island of Honsh, Japan. Japan's pharmaceutical hometown, Osaka is the second largest city in Japan, after Tokyo, and the world's ninth largest metropolitan area. Pharmaceutical company Tanabe Seiyaku (now merged with Mitsubishi Pharma) was founded in the city more than 300 years ago.

• Martinsried –Planegg is a suburb of Munich in the Bayern region of Germany. It is known as the "center of the biotech cluster" with some 100 biotech companies, and in near distance to Ludwig-Maximilian University, Munich Technical University, and the Max Planck Institutes for Biochemistry.

More Funds Needed Abroad

by Angie Drakulich

The US Food and Drug Administration's 2008 President's budget requests approximately $16 million* out of an overall drug inspection budget of nearly $56 million** for inspections conducted by the Office of Regulatory Affairs (ORA) of overseas drug facilities and related import activities. Despite the need for increased inspections abroad, the budget is actually $700,000 less than what the agency spent on foreign drug inspections and import activities six years ago, in 2002. According to the Government Accountability Office, 3,000 companies are registered to import drugs into the United States. But FDA was only able to conduct 310 preapproval or good manufacturing practice (GMP) inspections at these sites in FY2007. The remainder of the 494 inspections conducted abroad was primarily for bioresearch monitoring purposes (e.g., clinical investigators). The above pie chart shows where those inspections where conducted.

Total FDA Foreign Drug Inspections, FY 2007: 494 Source: FDA, December 2007.

*Foreign inspection budget includes laboratory analyses of imported drug products, import activities at the border, and foreign inspections. **Overall budget adds domestic inspections to the foreign inspection budget request. Neither budget figure includes funds expended by FDA's Center for Drug Evaluation and Research (CDER) in support of inspections conducted by ORA.

COMING DOWN THE PIKE...

by Michelle Hoffman

The most significant early-stage discovery to hit the journals in late 2007 (or at least the most highly publicized) were the dual announcements from two independent research groups that they had managed to turn adult human skin cells into cells with properties that are seemingly identical with human embryonic stem (hES) cells. The teams each inserted four genes (only two of which overlap) into the adult cells to make them revert to the embryonic-like state. Among other things, the achievement may allow US scientists to explore the properties of hES cells—and their potential uses in regenerative medicine—while circumventing the debate on the morality of destroying human embryos to get the cells. Of course, both teams and scientific commentators stress that it will take a while to determine how similar the so-called induced pluripotent cells are to true hES cells. For now, however, it may allow US scientists to catch up to foreign counterparts studying hES cells.

Facility Roundup

Sources:

1. J. Yu, M. A. Vodyanik, K. Smuga-Otto, J. Antosiewicz-Bourget, J. L. Frane, S. Tian, J. Nie, G. A. Jonsdottir, V. Ruotti, R. Stewart, I. I. Slukvin, J. Thomson, "Induced Pluripotent Stem Cell Lines Derived from Human Somatic Cells," SCIENCEXPRESS, www.sciencexpress.org, accessed Nov. 20, 2007.

2. K. Takahashi, K. Tanabe, M. Ohnuki, M Narita, T. Ichisaka, K. Tomoda, and S. Yamanaka, "Induction of Pluripotent Stem Cells from Adult Human Fibroblasts by Defined Factors," Cell (2007), doi: 10.1016/j.cell.2007.11.019.

Have you heard the eNews?

• China Signs Agreement to Improve Drug and Food Exports

• 2007 Ends with a Drought in New Molecular Entities

• Merck Issues Voluntary Recall of Two Vaccines

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