India: An Emerging Knowledge Superpower - Pharmaceutical Executive

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India: An Emerging Knowledge Superpower


Pharmaceutical Executive


Even though formulations account for a significant portion of Unichem's revenues, the company also manufactures APIs. The company has prudently addressed relevant and growing therapeutic areas like gastrointestinal, cardiovasculars, diabetes, psychiatry, neurology, anti-bacterials, anti-infectives, and pain management, among others.

Currently 30 percent of the company's turnover comes from international business operations. Just as its competitors, Unichem is eyeing to penetrate the regulated markets. "When talking about regulated markets, we cannot afford to ignore the USA, as it represents 40 to 45 percent of the world market. Our second focus will be Europe," claims Dr. Prakash Amrut Mody. As far as the United States is concerned, Unichem will be filling its own ANDAs through its wholly owned subsidiary, and intends to exploit this market with its own marketing model. Unichem's ambition is to partner with other companies. "This strategy is not rocket science," Dr. Mody says. "But we can be among the first to spot opportunities, find the right partners and produce our own APIs." By doing this, Unichem expects to be able to obtain better margins than the ones it has in India. "We look for a suitable US acquisition or setting up our own marketing team only when we have a reasonable portfolio of ANDAs marketed in the United States."

In terms of innovation, Unichem is not looking at new chemical entities but has projects being developed in the biotechnology area. "Hopefully in the future, we will be able to provide a lot of innovation in this area," says Dr. Mody." Unichem would rather take its expertise to foreign markets and partner with other companies in order to expand the reach of the company's products in rest of the world. Its aspiration is to become a $500 million company by 2010— growth it hopes to achieve through the interest in Indian companies and on some acquisitions in the domestic and international stages.

"Unichem believes its growth will be quite substantial," says Dr. Mody. "Organically it would not be possible to secure this kind of growth. We are not involved in contract manufacturing but in the contract research business where the company is concentrated in building some intermediaries for multinationals. Unichem is also looking for generic partners and providers of APIs and finished formulations."

From Copycats to Innovators


Dr. Anji Reddy
"Among the sectors that have experienced the greatest transformation in India, the pharmaceutical industry is perhaps the most significant. India's WTO involvement during the last decade has encouraged our pharmaceutical companies to adopt a strategy of R&D based innovative growth."

Kamal Nath, the Indian Minister of Commerce & Industry, is very clear about a change in the sector, from a constellation of generic companies to an R&D hub. To Dr. R A Mashelkar, the Director General of the Council of Scientific and Industrial research (CSIR), the Indian pharmaceutical sector has indeed responded very well to the challenges of the new product patent regime. "Major pharmaceutical companies had already shifted their focus from imitative to innovative research, including new drug discovery. Ranbaxy, Dr Reddy's Laboratories, Workhardt, Nicholas Piramal, Cipla, and Lupin have created state-of-the-art R&D facilities so as to take the global challenges."

If we look at the Indian scenario, it has 6,000 pharmaceutical companies, but many of these are small and medium sized and can therefore not afford to spend any money on R&D. Thus, while Indian companies spent not even a fraction of a percent on R&D ten years ago, today the largest Indian companies are spending in the region of six to eight percent of their turnover on R&D. (The norm for major MNCs is 12 percent.) They already spend significant amounts in this key area, recognizing that growth will come primarily from their ability to innovate and bring new drugs to market. In 1995, the total R&D spent by the Indian pharmaceutical industry was about $30 million. By 2005, this number had gone up to $333 million.


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