Indian pharmaceuticals - a growth story
The prominent position that India holds in the field of IT Services is quite well known. I recently came across some very interesting articles highlighting the growing dominance of the Indian bio and drug generics that intrigued me quite a bit. I read up further, and found the following facts very interesting:
-Indian drug and bio industry mainly thrives on generic drugs. Generic drugs are those that are sold under the actual "chemical" composition name of the drug, and not the brand name. It is legal to produce generic drugs in US if a particular patent on a brand-name drug has expired, or it has never been patented. When the patent expires, the patent-holder no longer has the monopoly on sales of that drug. Biogenerics are drugs that are produced from living cells.
-According to Frost and Sullivan, the global biogenerics market is expected to hit $8 billion by 2010. India currently supplies 22% of the world's generic drugs, according to KPMG.
-Indian biotech industry grew by more than 35% for a fourth consecutive year. Indian biotech market crossed revenues of over $2 billion for the fiscal year ending March 31, 2007. "The Indian biotech industry will attain its target of $5 billion in revenue by 2010", said Dr. Kiran Mazumdar Shaw, chairwoman and managing director of Biocon, India's larget biotech company. The Indian pharmaceutical industry is ranked the fastest growing market in the world by IMS health for 2006.
-Indian pharmaceutical companies are able to provide these generic drugs at half or less than half the price as compared to the American pharmaceutical companies.
-These recent decisions have worked in the favor of Indian generics:
*US Supreme Court's ruling on April 30, which makes it easier to invalidate patents and obtain new ones works out in the benefit of the Indian generics industry.
*The recent announcement by the Clinton foundation that it has negotiated cheaper rates for costly AIDS drugs by agreeing to buy these generics from Indian pharmaceutical companies like Cipla and Matrix
*Recent decisions of countries like Brazil and Thailand to opt for Indian generic drugs for AIDS overriding the American pharmaceutical companies like Merck, Sanofi-Aventis and Abbott.
-Indian companies have been positioning themselves to get a bigger and bigger piece of the biogenerics pie by building up infrastructure and foraying into new markets.
-Indian pharmaceutical companies made $7.5 billions in sales and were involved in merger and acquisition deals of about $1.7 billion, of which 43% were acquisitions of foreign companies. These deals serve the primary purpose of entry into the much more regulated European and US markets. Some of the most recent mergers and acquisitions include
*Mumbai based Sun pharmaceuticals agreed to buy Israeli generic manufactured Taro Pharmaceutical for $454 million in an all-cash deal.
*Mumbai based Wockhardt acquired Paris based Negma Laboratories
*Mumbai based Reliance Life Sciences bought over UK based GeneMedix, a biotech company
*Hyderabad based Dishman Pharma acquired Swiss based Cabbogen Amcis
-Dr. Reddy's[NYSE: RDY], India's largest drug company, has filed 33 patent challenges in US Court. Other Indian companies like Ranbaxy, Sun, Cipla, Glenmark, Cadila Healthcare, Aurobindo Pharma and others have also filed several challenges. US FDA figures report approval of 23% of generics in favor of these companies since December 2006.
Unfortunately for us in the US, there is only one Indian pharmaceutical company that trades as ADR in the US: Dr. Reddy's[NYSE: RDY], but that doesnt mean you cannot invest in an India fund like Matthews India fund[MINDX], which constitutes among its top 10 holdings pharma companies like Glenmark and Cipla. For my previous post on other India funds, please click here.
-Indian drug and bio industry mainly thrives on generic drugs. Generic drugs are those that are sold under the actual "chemical" composition name of the drug, and not the brand name. It is legal to produce generic drugs in US if a particular patent on a brand-name drug has expired, or it has never been patented. When the patent expires, the patent-holder no longer has the monopoly on sales of that drug. Biogenerics are drugs that are produced from living cells.
-According to Frost and Sullivan, the global biogenerics market is expected to hit $8 billion by 2010. India currently supplies 22% of the world's generic drugs, according to KPMG.
-Indian biotech industry grew by more than 35% for a fourth consecutive year. Indian biotech market crossed revenues of over $2 billion for the fiscal year ending March 31, 2007. "The Indian biotech industry will attain its target of $5 billion in revenue by 2010", said Dr. Kiran Mazumdar Shaw, chairwoman and managing director of Biocon, India's larget biotech company. The Indian pharmaceutical industry is ranked the fastest growing market in the world by IMS health for 2006.
-Indian pharmaceutical companies are able to provide these generic drugs at half or less than half the price as compared to the American pharmaceutical companies.
-These recent decisions have worked in the favor of Indian generics:
*US Supreme Court's ruling on April 30, which makes it easier to invalidate patents and obtain new ones works out in the benefit of the Indian generics industry.
*The recent announcement by the Clinton foundation that it has negotiated cheaper rates for costly AIDS drugs by agreeing to buy these generics from Indian pharmaceutical companies like Cipla and Matrix
*Recent decisions of countries like Brazil and Thailand to opt for Indian generic drugs for AIDS overriding the American pharmaceutical companies like Merck, Sanofi-Aventis and Abbott.
-Indian companies have been positioning themselves to get a bigger and bigger piece of the biogenerics pie by building up infrastructure and foraying into new markets.
-Indian pharmaceutical companies made $7.5 billions in sales and were involved in merger and acquisition deals of about $1.7 billion, of which 43% were acquisitions of foreign companies. These deals serve the primary purpose of entry into the much more regulated European and US markets. Some of the most recent mergers and acquisitions include
*Mumbai based Sun pharmaceuticals agreed to buy Israeli generic manufactured Taro Pharmaceutical for $454 million in an all-cash deal.
*Mumbai based Wockhardt acquired Paris based Negma Laboratories
*Mumbai based Reliance Life Sciences bought over UK based GeneMedix, a biotech company
*Hyderabad based Dishman Pharma acquired Swiss based Cabbogen Amcis
-Dr. Reddy's[NYSE: RDY], India's largest drug company, has filed 33 patent challenges in US Court. Other Indian companies like Ranbaxy, Sun, Cipla, Glenmark, Cadila Healthcare, Aurobindo Pharma and others have also filed several challenges. US FDA figures report approval of 23% of generics in favor of these companies since December 2006.
Unfortunately for us in the US, there is only one Indian pharmaceutical company that trades as ADR in the US: Dr. Reddy's[NYSE: RDY], but that doesnt mean you cannot invest in an India fund like Matthews India fund[MINDX], which constitutes among its top 10 holdings pharma companies like Glenmark and Cipla. For my previous post on other India funds, please click here.
**Facts collated from various sources like Redherring, New York Times and others.
**I do not own Dr.Reddy's[NYSE: RDY] or Matthews India Fund[MINDX] at this time
posted by Bini at
10:34 AM
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