Peter has been in the pharmaceutical industry for 30 years of which the second half has been mainly in the areas of generics. He has worked for the former Evans Medical and then Norton Pharmaceuticals (now part of IVAX) where he was responsible for European Sales & Marketing. After leaving Norton Peter set up his own consultancy in 1993 and operated independently until 1996 when he joined the Indian company Ranbaxy to set up the infrastructure of their new UK subsidiary and spent two years with them.For the last 7 years he has been back doing consultancy and specialising in the field of generics. You can contact Peter by email or see his website www.interpharm-consultancy.co.uk
A passage to India? Almost everyone who is involved in generics will have noticed an ever-growing presence of Indian generic producers in their domestic market place. Those companies who confine their activities to their own domestic market place are though possibly not aware of how widespread this phenomenon has become or indeed the reason why Indian generics companies have become so successful.India, in pharmaceutical terms and even more in generic pharmaceutical terms has enjoyed some major advantages over its Western competitors. A combination of a large pool of skilled personnel and low labour costs has meant that India can manufacture many things cheaper than the West.Add to this the non-existence of protection for product patents and all the key ingredients are present for providing Western generic companies with low cost generic APIs (Active Pharmaceutical Ingredients) for their formulations.Within the EU, chemical manufacturers based in countries such as Italy, Portugal and Spain had filled this role for a long time. These countries too had benefited from similar advantages to India – skilled personnel and relatively low (by EU standards) labour costs but also the crucial factor of the absence of product patents, which disappeared in 1992.It was the loss of this advantage and the growing confidence and sophistication of Indian companies throughout the 1990’s that led to this gradual transfer of the API supply business away from Europe and over to South East Asia.India was not alone in this, as API manufacture has also grown in other Asian countries and in China in particular. India, though, continues to enjoy an advantage over China in terms of the huge number of English speakers, which greatly facilitates their international trade.The Indian role grew as Western firms, particularly those in the UK which has a special tie to India, realised that Indian companies could develop future new generics for them even during the period when the original was still protected by patents in Europe. This allowed the British companies to have the generic developed, registered and manufactured ready to launch immediately on Day-1 after the expiry of the patent. The other reason for the particularly strong UK-India ties on product development was the fact that most other European countries, with the exceptions of Germany and the Netherlands, had no generic industry of any size. The reasons for this will form the subject of another article in a future edition.This possibility of developing future generics in India was also not so attractive to US generic companies because the “Roche-Bolar” clause of the Hatch-Waxman legislation of 1984 allowed them to develop generics in the US even while the original was still under patent protection.The next step in this evolutionary process was transfer of some generic contract manufacturing from manufacturers to Indian companies who had carried out product development for the western client.As part of this process, some of the Indian companies acquired the skill of generating not just raw regulatory data on behalf of their Western clients but also of creating the full registration file needed to satisfy Western Authorities in both Europe and the USA.This in turn has led to some of the Indian generic producers deciding to create a presence for themselves in the West and so companies such as Ranbaxy, Dr. Reddys and Wockhardt to name just three have either set up US and European subsidiaries or bought into specific markets. In the UK market in particular, this has increased what was already very vigorous price competition. In cases where price competition becomes very intense, they and other Indian producers enjoy a great advantage in manufacturing both the finished formulation and the API that goes into it. In price sensitive markets where every penny or cent can make a difference, having a lower raw material cost than competitors who buy their API on the open market can have a critical influence on sales success.Whether Western companies should see this increased level of Indian competition as a threat or an opportunity depends on their own philosophy and growth strategy. For those who concentrate on manufacture of low margin commodities, India is a threat.For those who want to move to higher added value products or brands, India offers an opportunity to contract out manufacture of low margin commodities and concentrate on higher margin preparations.An interesting footnote, though, is the observation that Indian companies will probably find themselves in a similar position, perhaps 10 years in the future, of having lower cost competitors trying to take away their generic business. The reference here is to the large body of Chinese pharmaceutical manufacturers who already compete vigorously with India on API supply. They are likely to do the same with finished formulations as their expertise, professionalism and readiness to comply with GMP standards grows. Peter WittnerFebruary 2005 BACK TO TOP To register for GenericsWeb's free monthly newsletter 'INNsight', click here
Almost everyone who is involved in generics will have noticed an ever-growing presence of Indian generic producers in their domestic market place. Those companies who confine their activities to their own domestic market place are though possibly not aware of how widespread this phenomenon has become or indeed the reason why Indian generics companies have become so successful.India, in pharmaceutical terms and even more in generic pharmaceutical terms has enjoyed some major advantages over its Western competitors. A combination of a large pool of skilled personnel and low labour costs has meant that India can manufacture many things cheaper than the West.Add to this the non-existence of protection for product patents and all the key ingredients are present for providing Western generic companies with low cost generic APIs (Active Pharmaceutical Ingredients) for their formulations.Within the EU, chemical manufacturers based in countries such as Italy, Portugal and Spain had filled this role for a long time. These countries too had benefited from similar advantages to India – skilled personnel and relatively low (by EU standards) labour costs but also the crucial factor of the absence of product patents, which disappeared in 1992.It was the loss of this advantage and the growing confidence and sophistication of Indian companies throughout the 1990’s that led to this gradual transfer of the API supply business away from Europe and over to South East Asia.India was not alone in this, as API manufacture has also grown in other Asian countries and in China in particular. India, though, continues to enjoy an advantage over China in terms of the huge number of English speakers, which greatly facilitates their international trade.The Indian role grew as Western firms, particularly those in the UK which has a special tie to India, realised that Indian companies could develop future new generics for them even during the period when the original was still protected by patents in Europe. This allowed the British companies to have the generic developed, registered and manufactured ready to launch immediately on Day-1 after the expiry of the patent. The other reason for the particularly strong UK-India ties on product development was the fact that most other European countries, with the exceptions of Germany and the Netherlands, had no generic industry of any size. The reasons for this will form the subject of another article in a future edition.This possibility of developing future generics in India was also not so attractive to US generic companies because the “Roche-Bolar” clause of the Hatch-Waxman legislation of 1984 allowed them to develop generics in the US even while the original was still under patent protection.The next step in this evolutionary process was transfer of some generic contract manufacturing from manufacturers to Indian companies who had carried out product development for the western client.As part of this process, some of the Indian companies acquired the skill of generating not just raw regulatory data on behalf of their Western clients but also of creating the full registration file needed to satisfy Western Authorities in both Europe and the USA.This in turn has led to some of the Indian generic producers deciding to create a presence for themselves in the West and so companies such as Ranbaxy, Dr. Reddys and Wockhardt to name just three have either set up US and European subsidiaries or bought into specific markets. In the UK market in particular, this has increased what was already very vigorous price competition. In cases where price competition becomes very intense, they and other Indian producers enjoy a great advantage in manufacturing both the finished formulation and the API that goes into it. In price sensitive markets where every penny or cent can make a difference, having a lower raw material cost than competitors who buy their API on the open market can have a critical influence on sales success.Whether Western companies should see this increased level of Indian competition as a threat or an opportunity depends on their own philosophy and growth strategy. For those who concentrate on manufacture of low margin commodities, India is a threat.For those who want to move to higher added value products or brands, India offers an opportunity to contract out manufacture of low margin commodities and concentrate on higher margin preparations.An interesting footnote, though, is the observation that Indian companies will probably find themselves in a similar position, perhaps 10 years in the future, of having lower cost competitors trying to take away their generic business. The reference here is to the large body of Chinese pharmaceutical manufacturers who already compete vigorously with India on API supply. They are likely to do the same with finished formulations as their expertise, professionalism and readiness to comply with GMP standards grows.
Peter WittnerFebruary 2005
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