Infrastructure is another sensitive issue. The number of hospitals with the infrastructure to undertake clinical trials is
still limited, and patients need to be followed closely so they do not drift away. Some firms have also had problems with
Indian contract research organizations that caused some of their drugs temporarily to be taken off the World Health Organization's
Dr. Reddy facility
But with experience, quality is definitely improving, as confirmed by Dr. Dua: "Our infrastructure investments might have
come later than they should, but we are investing heavily on that. In ten years time, you will see an amazing development
of infrastructure of this country. Around $40 billion will be invested in roads, and another $40 billion will be invested
in other engineering programs," he claims. Dilip Shah is equally enthusiastic about infrastructure in India: "The key to accessibility
is not giving free medicines, but there is a need to create an infrastructure which will guarantee both access to medicines
and provide medical support for the poor."
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The Resilience of API Companies
"The strategy for any API player today should consist in two elements," says Mehul Parekh, Executive Director of Unimark.
"Firstly, it is very important to maximize the number of molecules that we can create for the regulated markets. The second
element is backward integration, manufacturing the product from the basic stage. Integration is of great importance because
chemistry skills are more or less equal for most API players, so one way to differentiate oneself is by achieving backward
Matrix API manufacturing facility in Pashamylaram
This strategy is particularly relevant to most Indian API companies, which currently stand among the top five global manufacturers
of active pharmaceutical ingredients. The production of APIs continues to swell with an increasing number of international
companies making a beeline to India to meet their supply needs. Bulk drugs produced in India belong to all major therapeutic
groups. India ranks 17th in terms of export value of bulk activities and dosage forms. By 2010, the sector is estimated to
achieve $22.5 billion in formulation, with bulk drug production expected to touch 5.6 billion. The Indian API manufacturing
industry is currently the third largest in the world and is expected to generate sales of $4.8 billion by 2010 (up from $2
billion in 2005), at an average yearly growth rate of 19.3 per cent. Today, most of them who intend to stay in the race are
looking towards America.
Unimark is the perfect example of an API manufacturer wishing to venture into distribution. Parekh is fully aware that the
service sector is growing in India: "We have realized that there is a strong potential for this business because right now
the trend is to outsource this activity. Particularly when it comes to MNCs, these companies are looking for efficient logistics
partners that can handle their entire distribution. Instead of setting up their own distribution departments, they prefer
to have someone else doing this job for them so that they can get straight away into business."
Penetration, reach, and inventory management are, for Parekh, the major challenges a company needs to overcome in order to
become an efficient partner. "As long as you are able to penetrate the market, to reach the chemist shop, and to manage the
inventory, you will add value to your partner. The main reason why Unimark is one of the most competitive companies in the
market is because we manufacture all our major products from earth, fire, and water. This way the entire value addition chain
is captured in the product and remains in the company. This allows you to become more competitive by sharing this value with