Indian Pharmaceutical Export Market - Top Export Destinations for Indian Pharma Companies

Indian Pharmaceutical Export Market Perspective on key export destinationsJuly 2015

1

Report by Mr. Irish PereiraPharma Market Analyst

2

Table of Contents

Indian Pharmaceutical Industry – Snapshot

Indian Pharmaceutical Industry – Overview

Indian Pharmaceuticals Export Market

Key players in Indian pharma industry

Pharma players and their export destinations

Emerging trends in Indian Pharma Market

Bibliography

3

India

Indian Pharmaceutical Industry - Snapshot

The Indian pharma market is expected to grow at a CAGR of 23.9% to USD 55 bn by 2020 from USD 12 bn in 2013

Domestic Market size

Indian pharmaceutical industry accounts for about 1.4 % of the global

pharmaceutical industry Ranks third in terms of

volume of production 14th largest by value

Global Contribution There are around 3,000

pharma companies About 10,500

manufacturing units in India

Industry structure

1,400 WHO GMP approved manufacturing units

584 sites USFDA approved (Highest number of approved plants outside US)

1,105 CEPs, 950 TGA approvals

Regulatory Status

India exports to more than 200 countries of the World

Indian Pharmaceutical Exports amounted to USD 15.2 bn in 2014-15

US alone accounted for around 27% of total pharma exports followed by European Union and Africa

Exports

Domestic growth driven by higher penetration in tier-II & III cities and the largely-untapped rural market

Increased health Insurance penetration

Rising healthcare spending's Growth in the number of

lifestyle diseases Government’s Pharma

Vision 2020 to make India a major hub for end-to-end drug discovery

Growth Drivers

* 1 USD = 63 INR

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Table of Contents







Bibliography

Expected to grows to USD 55 billion by 2020, Indian pharma market…

5

6 12

24

55

2005 2013 2015F 2020F

Indian Pharmaceutical Sector Market Size (USD bn) The Indian pharmaceutical sector which started in 1930 with

Bengal Chemical and Pharmaceutical Works, was virtually non

existent till 1970

The Indian pharmaceuticals market which was valued at USD 6

billion in 2005, increased at a CAGR of 9.4 per cent to USD 12

billion in 2013 and is expected to expand at a CAGR of 24 per cent

to USD 55 billion by 2020

By 2020, India is likely to be among the top three pharmaceutical

markets by incremental growth and sixth largest market globally

in absolute size

Anti-infective drugs command the largest share (16 %) in the

Indian pharma market

The cardiovascular segment represents 13 per cent of the market

share; its contribution is likely to rise due to the growing number

of cardiac cases in India

Top five segments contribute nearly 57 per cent to the total drugs

consumption

Source: PWC, Mckinsey, Aranca Research, Extracted from IBEF Report dated August 2014, * 1 USD = 63 INRAll Indian Origin Chemists & Distributors, Department of Pharmaceuticals, Planning Commission Report, Aranca Research

Indian pharmaceutical market segments by value (Feb 2014)

16%

13%

11%

9%8%7%

7%

29%

Anti- infectives

Cardiovascular (CVS)

Gastro-intestinal

Respiratory

Vitamins, Minerals

Pain/analgesic

Anti diabetic

Others

Source: Mckinsey, IBEF India

Source: IBEF India

* 1 USD = 63 INR

6

Branded Generics which are identical, or bioequivalent to

innovator drugs continue to dominate the Indian pharma market

While the patent law will encourage the launch of new and more

patent protected products, the effort on innovation is still led by

the foreign players rather than indigenous companies

As per Mckinsey India “Patent share model”, Patented products

are expected to capture 10% share of total Indian pharma market

in 2015 and the growth is attributed to an improvement in the

implementation of patent laws and spread of health insurance

By 2015, Mckinsey expects the top five therapeutic areas namely

neuropsychiatry, oncology, anti-infective, gastro-intestinal, CVS to

contribute 60-70 % of total patented product launched

Source: * Mckinsey Reports titled “India Pharma Inc. Capitalising on India’s Growth Potential” Dated 2010 &Report “ India Pharma 2015 Unlocking the Potential of the Indian, Pharmaprojects

Patented (Innovator) Vs Generics Scenario*

…will be continued to be dominated by Branded Generics

10%

90%

2015E

Patented

Generic

2%

98%

2010

Share of Global Patent Pipeline (By therapeutic area)

27%

17%

10%10%

7%

29%

Anti- Cancer

Central Nervous System

Anti -lnfective

Gastro- Intestinal

Cardiovascular

Others

Any non patented molecule with brand name, which is other than the innovator’s name, is termed as a branded generic

What are ‘Branded Generics’ ?

Substitution (when an innovator product goes off-patent) is the key driver

Drivers of ‘Branded Generics’

Indian Context

Global Context

Difference in Brand Equity of a product (which is created by adopting superior communications strategies with physicians) is the key driver

Source: Mckinsey India

Source: Mckinsey India

7

Active Pharmaceutical

Ingredients (APIs)

• India is expected to be the third largest global generic API merchant market by 2016, with a 7.2 per cent market share

• In 2012, drug companies from India filed 49 per cent of the overall Drug Master Filings (DMFs) in the US

Indian Pharmaceutical

Industry

Contract Research & Manufacturing

Services (CRAMS)

• Fragmented market with more than 1,000 players• CRAMS industry is estimated to have reached USD8.0

bn in 2015, up from USD4.0–4.5 bn in 2012

Formulations

• Largest exporter of formulations in terms of volume, with 14 per cent market share and 12th in terms of export value

• Domestic market size currently valued at USD11.2 bn• Double-digit growth expected over the next five years

Biosimiliars

• Biosimilar’s sector is expected to touch USD 1.4 bn by 2016 from USD 482 mn in 2011

• The government plans to allocate USD 70 mn for local players to develop biosimiliars

Source: BMI, Datamonitor, Kemwell Biopharma, Chemical Pharmaceutical Generic Association, ICRA Report Estimates, Aranca Research, pharmanewsprwire.com. Extracted form IBEF report dated August 2014

API is the largest segment of the Indian Pharmaceutical Market

* 1 USD = 63 INR

8

• Reduction in approval time for new facilities

• Focus on specialised pharma education

• Improved accessibility for BPL (Below Poverty Line) people

• Pharma Vision 2020 by the Indian government’s Dept. of Pharmaceuticals aims to make India a major hub for end-to-end drug discovery

• MoUs with USFDA, WHO, Health Canada, etc. is expected to boost growth in the Indian Pharma sector

• India a major manufacturing hub for generics • Cost advantage - India’s cost of production is nearly 60

% lower than that of the US and almost half of that of Europe; Expected to create opportunities for Indian companies in emerging markets and Africa

• 546 sites registered at USFDA• Patent drugs worth USD 171 bn are estimated to go

off patent Between 2010 and 2015 providing great opportunity to Indian companies

• Increasing penetration of health insurance • Accessibility of drugs to greatly improve • Growing number of stress related diseases due to

change in lifestyle • Better diagnostic facilities• Per capita sales of pharmaceuticals is expected to

expand at a CAGR of 16.3% to USD 27 by 2016 from USD 16 in 2011

Indian Pharmaceutical Sector

Supply side drivers

Growth Drivers

Indian Pharmaceutical sector is driven by confluence of demand, capabilities and policy

Source: Pharmaceutical Export Promotion Council. Extracted from IBEF Report Dated August 2014

Demand side drivers

Policy Support

* 1 USD = 63 INR

9

Qualified English-speaking manpower Fair protection of intellectual property rights. India has skilled scientists / technicians / management

personnel at affordable cost leading to low cost of innovation/ manufacturing / capex costs / expenditure to run cGMPcompliance facilities and high quality documentation andprocess understanding

Low investments in innovative R & D Majority of companies lack the ability to compete with

MNCs for New Drug Discovery, Research andCommercialization of molecules on a worldwide basis due tolack of resources.

STRENGHTS

SWOT

WEAKNESS

Indian Pharmaceutical sector – SWOT Analysis

Source: Extracted from Report “Can India be the Leader in Global Generics “

India has significant exportopportunities. US$40 billionworth of drugs in the USA andUS$25 billion worth of drugs inEurope are going off patent .

Product patent regime poses seriouschallenge to domestic industry unlessit invests in research anddevelopment.

OPPURTUNITIES THREATS

Data management functions for clinical trials Strength in Chemistry which are essential for

drug discovery.

Rapidly increasing costs of skilled manpower suchas scientists / regulatory compliance personnel /pharmaceutical lawyers / International businessdevelopment

Improper systems and issues complicates conducting clinicaltrials scope in India

MNCs play different strategies to pull down Indiancompanies

Drug Price Control Order puts unrealistic on product pricesand profitability

This translates to an opportunity of additional export ofUSD 19.5bn

Cost advantage in contract manufacturing & Researchmulti-national companies find it compelling to shift theirproduction bases to countries offering such cost advantage.

India has a very high potential for developing as a centrefor international clinical trials due to rich diversity.

10

PHARMEXCIL – Facilitating agency for Indian Pharma Exports

Facilitation of exports of Drugs, Pharmaceuticals, Biotechnologyproducts, Herbal medicines and Diagnostics etc.

Authorized to issue Registration-cum-Membership Certificate (RCMC)which is one of the requirements for the importers and exporters ofcommodities

Concerned with giving export thrust to the various products throughvisits of delegations to various markets abroad, organizing of seminars,workshops and exhibitions

Pharmexcil also holds Buyers/ Sellers meets and compiles detailed database on pharma exports and problems in exporting pharma products

The Pharmaceutical Export Promotion Council of India (PHARMEXCIL) has been set up in 12.5.2004. by Government of India to promote the Indian pharmaceuticals industry around the world

Key functions of PHARMEXIL

Source: Department of Pharmaceuticals – Government of India – Annual Report 2014-15

Indian PharmaExports

11

Table of Contents







Bibliography

12

8.67

8.96

10.43

13.20

14.59

14.84

15.20

17.20

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16E

Export of Drugs, Pharmaceuticals & Fine chemicals

Indian Pharmaceutical Exports (USD bn) US accounted for ~ 27% of India's pharmaceutical exports in FY'14

as against 25.5 per cent in FY'13, making it the single largest

export destination

Major share (~55%) of Indian Pharmaceuticals is exported to

regulated western markets, highlights not only about excellent

quality of Indian pharmaceuticals but also about reasonableness

of the prices

As per India Ratings & Research, India's pharma exports are

expected to grow at 10-12 per cent and reach ~ USD 17.2 bn by

2015-16 from USD 15.2 bn last fiscal

Exports growth are likely to be driven by fully operational USFDA

facilities, led by restored regulatory approvals and thereby

increased exports to US and regulated markets

Source: Pharmaceutical Export Promotion Council of India (Pharmexcil), Department of Pharmaceuticals, India Ratings & Research

Formulations share in Total Pharma Exports (2014-15)

71%

29%Formulations

API & Others

India continues to be a hub for low cost pharma research and production in turn aiding manufacturing for exports

Top Pharmaceuticals Export Destinations (Value wise USD mn)

Source: Pharmexil

Source: Pharmexil

Source: Ind – Ra Research, CMIE

* 1 USD = 63 INR

* 1 USD = 63 INR

13

India’s Pharma Industry is aptly known “Global pharmacy of the world”, with exports to more than 220 countries around the globe

Top 25 destination countries of India’s pharmaceutical exports during 2013-14 (INR mn)

“India is the pharmacy of the world…We hope to achieve 10-15 per cent growth in export of pharmaceutical products during 2015-16,"

PV Appaji, Director General, Pharmexcil

Source: Pharmexcil Annual Report 2013-14, Department of Pharmaceuticals, Economic Times article

14

Table of Contents







Bibliography

Key players in Indian Pharma Industry

15

457

517

664

773

900

921

1120

1,283

1664

1760

2091

2571

PIRAMAL

IPCA

TORRENT

WOCKHARDT

GLENMARK

JUBILANT …

CADILA

AUROBINDO

CIPLA

LUPIN

DR REDDY'S

SUN PHARMA

FY 2014

Major Indian Pharma Companies (By Revenue-USD mn)

Multinational Pharma Companies (By Revenues-USD mn)

137176

305372

419

NOVARTIS

PFIZER INDIA

SANOFI INDIA

ABBOTT* INDIA

GSK INDIA

FY 2014

Source: Company Annual Report 2013-14, Research Report By Centrum Broking, Pharmabiz.com article titled” Current scenario and future challenges in pharma segment” dated Jan 2013

The Indian pharmaceutical industry is highly fragmented with about 24,000

players (330 in the organised sector). The top 10 companies make up for

more than a third of the market.

Sun pharma and Abbott represent top Indian and Multinationals pharma

companies respectively

Sun pharma acquired Ranbaxy in 2014-15 to be largest Indian pharma

company

Till 2014 MNC’s had 74 brands (25% of total) among the top 300 brands in

the domestic market.

Indian Pharma Market – Market share

73%

27%

2014

Indian Pharma Companies

Multinational Pharma companies 56%

2.7%

2.9%

3.0%

3.4%

3.6%

3.6%

4.2%

5.0%

6.2%

8.9%

Others

Emcure+Zuvetus

Macleods

Pfizer

Lupin

Mankind

Alkem+ Subsidiaries

Zydus Cadila

Cipla

Abbott + Subsidiaries

Sun Pharma + Ranbaxy

Branded Generic Sales March 2015

Source: AIOCD AWACS MAT March 2015

* 1 USD = 63 INR

* Excluding subsidiaries revenues

* 1 USD = 63 INR

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Table of Contents







Bibliography

Sun Pharma

17

Key Company Facts

Market leader in India & Strongpositioning in Emerging Markets

Highly leveraged in US with 64% oftotal revenues

Sun Pharma is the 5th largest GlobalSpecialty Generic Pharma Company

Differentiating Strategy of the company

Geographical Revenue Mix (% of Net Formulation Sales)

Name SUN PHARMA

Headquarters Mumbai India

Employees 30,000

Revenues (USD mn)FY 15 4,376

FY 14 2,571

Global Presence 150 Countries

Website http://www.sunpharma.com/

24

25

52

64

14

7

9

6

FY 14

FY 15

India US Emerging Markets ROW Markets

Geography Focus Therapeutic Areas

India CNS, CVS, Diabetology

US Dermatology, oncology, controlled substances, ophthalmology

Europe: Complex generics and differentiated products

Emerging Markets: Mexico, Brazil, Russia & CIS, South Africa

Chronic therapies like the metabolic syndrome, diabetes, neurology and cardiology

Source: SPIL Financials Q4 FY15,SUN’S Investor Presentation June 2015, Annual Report 2013-14

597 ANDAs filed & 438 approved ANDAs across multiple therapies in US 159 ANDAs pending FDA approval, including complex generics, FTF and pure generics

Company’s Strategic plans

US Business: Enhance share of specialty/branded business Continue to focus on complex generics and high entry

barrier segments Gain critical mass in key therapeutic segments

ROW Business: Gain critical mass in key emerging markets Enhance product basket in emerging markets Improve profitability in developed European markets

Future markets for particular focus will include LatinAmerica, Russia & CIS, South Africa and a few Asianmarkets with focus on specialty products

Source: Company Annual Report

Dr. Reddy’s Lab

18

Key Company Facts

Dr. Reddy’s Laboratories' revenue model isbased on global markets rather than Indianpharma market and its prime focus is onbuilding a sustainable Biosimilar business

US and Europe markets alone accounts for ~56% of the company revenues as against 12 %from India


Geographical Revenue Mix (% of Net Sales)

Name DR. REDDY’S LABORATORIES LIMITED (DRL)

Headquarters Hyderabad, India

Employees 20,000


FY14 2,091


Website http://www.drreddys.com/

41.8

43.7

15

12

11.9

12.1

5.3

4.9

5.6

8.8

FY 14

FY 15

North America Generics Russia & CIS

India Europe



India Oncology, Nephrology, Urology, Hepatology and Rheumatology

Russia Gastro – intestinal, Anti-infective, Oncology, Pain & Dermatology

North America: US Differentiated Formulations and discovery & development of 'New Chemical Entity' or 'NCEs'. In the following therapeutic areas: • Neurology • Dermatology • Pain management• Anti-Infectives • Gastro- Intestinal

Europe

CIS: Ukraine, Kazakhstan, Uzbekistan and Belarus

ROW: Venezuela, South Africa, Australia, New Zealand and markets in Southeast Asia

Source: Company Annual Report 2013-14, DRL’s Investor Presentation, Financial Analyst report by Prabhudas Lilladher dated May 2015,

Complex Generics leverage to Russia, CIS, Venezuela Complex Generics enabled entry in Brazil, Colombia, East. Africa Expand 2025 China potential through First Generics to launch Leverage innovator Oncology, Gastro-intestinal to Emerging Mkts.

68 pending ANDAs & 2 pending NDAs of which 43 para-IV and 14 are first to file products


Lupin

19

Key Company Facts

US & Europe markets remain theprincipal growth engines for the Companyand are the major contributors to Lupin’sglobal revenues and overall profitability

Lupin is targeting total complex genericsfilings in US market worth USD 51.2bn


Name LUPIN LIMITED

Headquarters Mumbai India

Employees 14,000


FY 14 1,760


Website http://www.lupin.com/



Lupin has made Acquisitions a vital route to their growth strategyand are targeting geographies, complementary product portfoliosand therapies absent in their current portfolio

Primary Focus US / EU / potentially Japan Therapy Focus on Pediatrics, Dermatology, GI, Ophthalmics Future Expansion areas: EU, Russia) & LatAm Lupin enetered into starategic partnership with Merck Serono to

leverage their distribution in major markets such as Brazil,Mexico, Indonesia, Phillipines, Africa,and Central Eastern Europeand Emerging markets

Lupin entered into a distribution agreement with SalixPharmaceuticals Inc, USA to gastroenterology products for Canada


India Cardiology, CNS, Diabetology, anti-asthma, Gynaecology, anti-infective, Gastro-intestinal and Oncology

US & Canada Anti-asthama and COPD, Dermatology, Ophthalmology, Pediatrics, CNS

Europe CNS

Japan CNS, Cardiovascular, Gastroenterology and injectable segments

South Africa Cardiovascular, CNS & OTC segments

Philippines Oncology

Mexico & LATAM Ophthalmic


25

26

49

50

3

3

13

12

4

4

6

6

FY 14

FY 15

India USA Europe Japan South Africa ROW

Total of 210 ANDA filings till date, of which 111 have been approved (18 approvals in FY15)

CIPLA

20

Key Company Facts

More 200 formulation developmentprojects underway

Increased R&D spending ~6.2% ofrevenue for FY 2014-15

Received ATMP classification from EMAand granted process patent in China andNorth America

Formulation filings: North America (12),Europe (78), International (>1800)

36 DMFs filed in Europe, North Americaand International


Name CIPLA LIMITED

Headquarters Mumbai, India

Employees 20,000


FY14 1,664


Website http://www.cipla.com/



North America Respiratory, oncology and anti-infectives

Europe Respiratory, HIV, pain management, OTC

South Africa ARV, Respiratory, Mental Health, Cardiovascular,Women’s Health

Source: Company Annual Report 2013-14, Cipla Investor Presentation 2015

Business de-risked via front end build in 17 select markets eg.Yemen, Iran, Sri Lanka, Myanmar, Morocco and Algeria;Integration of operations on track

Tender wins in South Africa- Respiratory, ARV and newer areassuch as mental health and cardiovascular

Launch of Salmeterol Fluticasone in select European markets:Croatia, Germany, Sweden, Slovakia, Czech; added Belgium andHungary in recent month


44.0

44.0

15

9

8.0

14

33

36

FY 13

FY 14

India USA South Africa ROW Markets

Total ANDA’s filed: 147

Approved: 79 Tentative

approval/ awaiting approval:68


Aurobindo

21

Key Company Facts

A global companywith more than 85%of operating incomecoming frominternationaloperations


Name Aurobindo Pharma Limited

Headquarters Hyderabad, India

Employees 9500


FY14 1,283

Global Presence 125 countries

Website http://www.aurobindo.com/



US Oncology, Hormones, Peptides, Non-betalactam, CNS, CVS, ARV, Anti –Infective, OTC (Anti –Allergy, laxatives, oral antiseptics and rinses, first aid care, sunscreen & ophthalmic)

Europe (Post Actavis Acquisition)

Hormone, Oncological Penem, OralContraceptive, Dermatological, Ophthalmic


Aurobindo plans to strengthen business presence in potentiallylarge markets such as Japan, Brazil, South Africa, Canada,Australia, North & West Africa and Middle East

Other focus markets being developed are Mexico, ColumbiaUkraine, Russia Kenya, Tanzania, Ethiopia, Nigeria Vietnam,Malaysia, Philippines

Total ANDAs (USA) – 376 - Approved –193 - Under review - 183 Formulations Dossiers in key advanced markets (incl. Multiple registration into EU. SA and Canada) - 2184


63

51

12

33

9

6

16

10

FY 14

FY 15

USA Europe ROW Anti -Retrovirals


Cadila Healthcare

22

Key Company Facts

Cadila Healthcare(Zydus) is one of theoldest players in the Indian formulationsmarket with strong positions in keysegments of Cardiovasculars,Gastrointestinals, Women’s Healthcare.

Globally, Cadila has a strong presence inthe regulated markets of the US, Europe,Latin America and South Africa


Name Cadila Healthcare

Headquarters Ahmedabad, India

Employees 16,000

Revenues (USD mn)FY 15 1144

FY14 998

Global Presence US, Europe (France & Spain) LatAm, South Africa. +25 Emerging markets

Website http://zyduscadila.com/



India CVS, Female healthcare Respiratory, GastroIntestinal and Dermatology

Brazil Branded Products in Female healthcare, Hepatology, Diabetes, CNS, CVS and Nutraceuticals

Mexico Cardiology and Central Nervous System

Cadila Healthcare aims to be a leading global healthcare providerwith a robust product pipeline; achieve sales of over USD 1600mn by 2015 and to be research-based pharmaceutical companyby 2020

According to Industry sources Cadila Healthcare, is in late-stagetalks to acquire smaller rival Claris Lifesciences which hasspeciality generic drugs including blood products and anti-infectives, as well as the delivery systems for such products, suchas vials, ampoules and intravenous bags.

The deal if successful is expected to fortify Cadila’s Globalexpansion as half of the Claris’s sales come from 70 emergingmarkets, including Brazil and Russia.

US formulation: 235+ ANDA fillings of which 85+ approvals Brazil - 100+ filings- 40 approvals


44

40

28

35

7

6

6

6

5

4

FY 13

FY 14

India USA Europe Emerging Markets Brazil



Torrent

23

Key Company Facts

Torrent Pharma hasstrong presence indomestic market withfocus and leadership inCVS and CNS segments

Torrents US revenuesgrew by 44% in 2014-15


Name Torrent Pharma

Headquarters Ahmedabad, India

Employees 8600


FY14 664


Website http://www.torrentpharma.com/



Torrent pharma plans to acquire dermatology business ofMumbai-headquartered Encore group to tap both domestic aswell as the developed markets like US and Europe

The company is increasingly focusing on Chronic segments likecardiac, CNS, anti-diabetic which has registered huge growthpotential in domestic market

US: 48 ANDA approvals (including 5 tentative approvals) Pipeline consists of 22 pending approvals and 47 products under development Brazil : Approvals - 31 products whereas 25 products under approval


31

37

20

19

25

21

14

14

10

9

FY 14

FY 15

India USA Europe Brazil ROW


US Metabolic disorders and Vascular Diseases

India Cardiology, Diabetology, Oncology Gastroenterology, Derma,, Gynaecology and Pain

Asia(Excluding India)

CVS, Neuropsychiatry & Diabetalogy, Gastro Intestinal and Anti-Bacterial

Europe CNS, CVS, and Gastro Intestinal

Russia & CIS cardiovascular , Central Nervous System and Gastrointestinal

Brazil CVS, CNS, Oral Anti Diabetic/obesity (OAD)

Thailand Cardiovascular, Neuro-Psychiatry and Anti-Diabetic segment


Wockhardt

24

Key Company Facts

Wockhardt is a leading IndianPharma company with most of itsrevenues leveraged on majorinternational markets

Post Import alerts by US FDA in2013-14,company has realigned itsglobal business model


Name Wockhardt Limited

Headquarters Mumbai, India

Employees 8600


FY14 767


Website http://www.wockhardt.com/



India Pain Management, Anti -Diabetes, Respiratory and CNS

UK OTC & Dental

France Osteoarthritis, Rheumatology, Arterial hypertension & chronic heart failure and Phlebotonic Vasculoprotector.

Ireland OTC & Nephrology


Wockhardt aims to capitalise the generic and biotechopportunities in the Regulated and Emerging Countries

The company has focussed on LATAM as major global expansiondestination

Company has boosted its R&D focus with 14% y-o-y growth inresearch expenditure

US Business: Total 14 ANDA’s during FY15 and a total of 69 ANDA’s pending approval till date UK(Europe): 11 new filings in FY14-15


27

36

45

25

29

39

FY 14

FY 15

India & Emerging Markets USA Europe


25

Table of Contents







Bibliography

Key market trends

26

1 Chronic segments poised dominate the Indian pharma market in future

2 Consolidation in US Markets has forced Indian Pharma Multinationals to diversify to Non US Markets

3 Indian pharma companies eye US complex generics market; boosting its R&Dspend

4 Indian pharma majors line to tap the Japanese Generic Opportunity

27

Chronic segments poised dominate the Indian pharma market in future

Source: Economic Times article titled “Chronic illness sees a spurt in business opportunity for pharma market“ dated 19 November 2014

The chronic segment has witnessed significant growth in last five

years as compared to acute segment which continue to dominate

the of Indian pharma market

According to data from industry body AIOCD, the last five years

have seen the highest volume/value growth in chronic therapies

like anti-diabetic medicines followed by urology and dermatology

and have grown at more than double the industry growth rate

The trend is likely to sustain, given the increased incidence of

chronic lifestyle disorders in a steadily prospering economy

Moreover value wise growth of chronic segment was partly due to

the government's drug price control policy (DPCO) which capped

the prices of many of the drugs in the acute therapies portfolio

Gearing up for the growth of chronic illnesses in the country,

Indian pharma companies have been gradually changing their

portfolio from being predominantly acute therapies focussed to

include more of the higher-margin chronic therapies

Target companies to tap Indian Chronic opportunity

The Great Indian Chronic Opportunity

7.18.7

10.511.311.512.212.913.3

16.116.3

19.120.5

11.3

ANTI -INFECTIVES

PAIN & ANALGESICS

RESPIRATORY

GASTRO INTESTINAL

STOMATOLOGICALS

NUEROLOGY/CNS

CARDIAC

VITAMINS/NUTRIENTS/MINERALS

DERMATOLOGY

UROLOGY

ANTI - NEOPLASTICS

ANTI- DIABETIC

INDIAN PHARMA MARKET

% Value growth terms - 5 Year CAGR

• Sun Pharma

• Lupin

• Torrent Pharma

• Dr. Reddy’s

Key segment sin Chronic segment

Cardiovascular

Neurology

Anti – Diabetes

Gastro Intestinal

Oncology

Increased incidence of chronic lifestyle disorders such as Diabetes, cardiac disorders

Chronic growth ?

Source: AIOCD AWACS

28

Consolidation in US Markets and rise in USFDA alerts has forced Indian Pharma to diversify to Non US Markets

Indian Pharma companies have begun to diversify to Non US Markets to outset

slowdown in product approvals and channel consolidation in US market

In recent years here has been extensive consolidation between pharmacy

managers (Drug distributors) and retail chains with around 16 mergers and

acquisitions in 2012 and 10 in 2013

It has started to hurt revenues of Indian generics players, whose sales come

mainly from the US market, as with falling number of players in the wholesale

and retail space their bargaining power has risen

Moreover drug exports to US which accounts for 25 per cent of the country’s

cumulative drug exports, are struggling with decreased product approvals,

increased audit inspections and resultant import alerts From USFDA

Hence major Indian pharma companies which are witnessing muted revenue

growth rate than previous year, are diversifying to new geographies

Few pharma companies are focussing on European countries with aim to

counterbalance the heavy reliance currently on the US market for export of API’s

and niche formulations from the country

7 9 21

32

2011 2012 2013 MAR-14

USFDA Import Alerts to Indian Pharma Companies

Indian Pharma Firms affected by Consolidation in US Mkt

• Dr. Reddy’s,

• Sun Pharma,

• Glenmark

Indian Pharma Firms affected by USFDA Import AlertsSun PharmaRanbaxy LabsWockhardtLupinAurobindo

New Target Geographies for Indian Pharma Firms

Brazil, Mexico, Venezuela Japan

Russia, Kazakhstan

Spain, Greece, Germany, France Italy

Source: Indian Express article titled “Consolidation in US hurts Indian generic firms Dr Reddy’s Lab, Sun Pharma“ dated 24 Nov 2012, Financial Express article titled “Indian drug firms may lose out as US pharma supply chain consolidates” dated 3 March 2014

Dr. Reddy’sCadila GlenmarkIpca

Reduce overall dependence on US Market due to:• Retail CONSOLIDATION

affecting margins• Slow rate of FDA APPROVALS &

increased FDA IMPORT ALERTS

Why Diversify

to Non US Markets ?

Source:USFDA

29

207253 235

162203 209

2013

171

2013 2014 2015 2016 2017 2018 2019 2020

US Patent Expiry Forecast

Source: Indian Express article titled “Consolidation in US hurts Indian generic firms Dr Reddy’s Lab, Sun Pharma“ dated 24 Nov 2012, Financial Express article titled “Indian drug firms may lose out as US pharma supply chain consolidates” dated 3 March 2014

Source: USFDA Orange Book, Oct 2011)

As the US complex generics segment growing at twice the pace ofthe commoditised generics, Indian drug makers are investing inR&D to develop complex products

The complex generics market accounts for ~ 50% of the US genericsmarket and is valued at USD 25 bn with the potential to outperformthe growth rate of the overall market by at least two times

Pharmaceutical companies to enjoy higher pricing power ascompetitive intensity in the complex generics segment is relativelylow with four to seven sellers per product

Evidently, Indian Pharma companies to tap the potential in theopportunity have reinvested their cash flow in establishingdedicated facilities and raised their R&D expenses towardsdevelopment of niche complex products such as injectables, oralcontraceptives, and transdermals

For example, Lupin has invested in a dedicated facility forophthalmic and oral contraceptives in Indore, (Madhya Pradeshstate),

Dr Reddy’s Laboratories has set up an injectables facility in Vizag(Andhra Pradesh State)

Wockhardt aims to continue supplies from the Shendra facility(Maharashtra state) once it is inspected and approved

Between 2009 and 2014 Indian pharmaceutical companies havemonetised opportunities from US market arising from risinghealthcare costs and due to blockbuster drugs going off patentregistering a healthy growth in sales to reach USD 5 bn in FY14from USD 1.4 bn in FY 09

Low Competitive intensity in the complex generics segment allows pharmaceutical companies to enjoy higher pricing power

Complex Generic

Interest ?

With growing complex generic opportunity in US, Indian drug makers are investing in R&D of complex products

Indian Pharma Firms targeting Complex Generic Opportunity• Lupin• Dr. Reddy’s • Sun Pharma (dermatology, oncology,

controlled substances, ophthalmology)• Wockhardt

India has the second highest number of US FDA approved plants after the US and accounts for 22% of overall US FDA approved facilities

Complex generics are large and complex in comparison to unbranded, branded, and company-branded generics—formulations or active ingredients used to treat chronic and life threatening diseases like cancer, Hepatitis C, and HIV

What are ‘Complex

Generics’ ?

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The Japanese pharmaceutical market is the second largest

pharma market in the world and is valued at over USD 115 bn

However according to industry sources, India’s exposure to

Japan is a mere one per cent

With its healthcare reforms aimed to reduce healthcare

budgets and generic friendly policies adopted by the Japanese

government, the market is gradually opening up to generics

The Japanese Govt. aims to increase generic penetration to ~

34 % by 2017

Among Indian drug makers, Lupin has a significant presence in

the Japanese pharmaceutical market

Indian government through Pharmexcil is incentivising Japanese

entry for Indian firms for API’s and formulations

73%

27%

Japan Pharma Market -2013

Patented Generic

Target companies interested to tap Japanese generic market

Source: Economic Times article titled “The Japanese Are a Brand Conscious People, Says Lupin MD“ dated 10 May 2012, Business Standard article titled “How Lupin cracked the Japanese pharma market” dated 19 Jan 2012, Lupin Website , Pharmexcil stands for ‘Pharmaceuticals Export Promotion Council of India’

Indian pharma majors line to tap the Japanese Generic Opportunity

LupinDr Reddy’sCadila IntasSun Pharma

GlenmarkShasun PharmaSami Labs Aurobindo Pharma

• Low generic penetration offering huge potential• Japanese market offers PREMIUM for generics

Japanese Interest ?

Source: Lupin Estimates

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Bibliography

Databases/Reports

Mckinsey Reports titled “India Pharma Inc. Capitalising on India’s Growth Potential”

Dated 2010

Mckinsey Report “ India Pharma 2015 Unlocking the Potential of the Indian of the

Indian pharmaceuticals market”

All Indian Origin Chemists & Distributors

Department of Pharmaceuticals, Government Of India

Websites

www.pharmexcil.com/

www.idma-assn.org ((Indian Drug Manufacturers' Association)

www.pharmabiz.com/

Company Annual reports, Investor presentations

Press articles from Economic Times, Indian Express

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Bibliography

http://www.pharmexcil.com/

http://www.idma-assn.org/

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Contact DetailsMr. Irish PereiraPharma Market AnalystEmail: [email protected]: +91-8087068343

Feedback & suggestionsare welcome

mailto:[email protected]

Documents

Indian Pharmaceutical Export Market - Top Export Destinations for Indian Pharma Companies