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Indian & Russian Pharma Challenges

Indian & Russian Pharma Challenges. C.K.Kamalakkannan Country Head – Russia Sun Pharmaceutical Industries Ltd. Global Pharma Market Highlights 2010. Pharma Market Value US$ 856 billion with Growth 4.1% Generic Drug Market – US$ 234 billion US Pharma Market – US$ 310.6 billion

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Indian & Russian Pharma Challenges

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  1. Indian & Russian Pharma Challenges C.K.Kamalakkannan Country Head – Russia Sun Pharmaceutical Industries Ltd.

  2. Global Pharma Market Highlights 2010 Pharma Market Value US$ 856 billion with Growth 4.1% Generic Drug Market – US$ 234 billion US Pharma Market – US$ 310.6 billion European Markets – US$ 147.4 billion (Germany, France, Italy, Spain and UK ) 17 Pharmerging Countries US$ 150.5 billion ( China, India, Russia, Poland, Argentina, Mexico, Vietnam, South Africa, Thailand, Indonesia, Romania, Egypt, Pakistan & Ukraine )

  3. Global Pharma Market Outlook 2011 – expected to grow by 5 – 7 % ; reach US$ 880 billion 2015 -- expected to reach – US$ 1,1 trillion 2015 -- US pharma market will reach between – US$ 320 to 350 billion 2015 -- Pharmering Markets – Expected between US$ 285 to 315 Billion. 2015 -- European Market will reach – US$ 160 billion

  4. SUMMARY – GLOBAL PHARMA in 2015 Pharmerging Markets & Generics are the key drivers for Growth 17 Pharmerging countries expected to contribute 28% of Global market and expected to double their spending on Medicines $ 285 - $ 315 by 2015 ( $ 151 billion in 2010 ) Global Pharma market share for Generics expected to grow from 27% to 39% Global Pharma market share for Patented medicines is expected to decline from 64% in 2010 to 53% in 2015

  5. INDIA PHARMA MARKET HIGHLIGHTS 2010 • Indian Pharma market ranks 10th in terms of Value and 3rd in terms of Volume • Indian Pharma market – US$ 12.3 billion in 2010 • Branded Generics 70-80% & a small % of unbranded generics • Indian Pharma to grow at a CAGR of 12-14% between 2009 – 2015 to Reach US$ 20-24 billion by 2015 • Indian Pharma market to Reach US$ 55 billion by 2020

  6. INDIA PHARMA MARKET HIGHLIGHTS • Exports : US$ 13.9 Bn Formulation export : US$ 5.8 Bn & API export : US$ 8.1 Bn • Exports branded generics CAGR 21- 23% during 2009 – 2014 • India contributes around 10% of world’s production by volume and 1.5% by value • Over 10,500 manufacturing units in India • 3000+ pharma companies • Over 60,000 formulations, covering almost every therapeutic segment

  7. INDIA PHARMA MARKET HIGHLIGHTS • R&D investment by the Global Pharma industry, estimated at US$ 40-50 billion in India over the next 10 years Clinical trials : 65% & New drug discovery : 35% • Innovative drug discovery with about 235 Clinical Trials is underway on about 13,000 patients in the areas of CVD, Cancer, Diabetes, Psychiatry, Infections • Number of Clinical trials is anticipated to cross 2000 by 2013 • Skilled Labour costs are 50 to 55% more economical than in the West

  8. INDIA PHARMA MARKET HIGHLIGHTS Approved Manufacturing Facilities • The largest number of US FDA approved facilities outside US are in India • 153 EDQM (European Directorate of Quality Medicine) bulk drug facilities have been approved • The country has 153 EDQM approved facilities for 195 molecules out of the total 693 molecules approved by EDQM • India also has over 1,200 WHO GMP Certified Plants Formulations • Manufactured for therapeutics – Largest share from Anti-diabetics, Neuro/CNS , Cardiovascular, Respiratory, Anti-infective & Pain killers • India exports formulations in large volumes to Semi Regulated Markets – Africa, Asia, CIS & Latin America

  9. Opportunities – Indian Pharma for Collaboration

  10. Opportunities – Indian Pharma Summary • Wide range to offer APIs, Branded Generics and Generics in Top segments which, as per Global pharma market is expected to generate huge volumes in 2015 • Offers contract Mfg. facilities & Supplies of semi finished formulations • Offers R & D – Drug discoveries and Development – Clinical trials organizations • Contract & Co-marketing alliances • Offers cost effectiveness in most of the pharma industries activities than West

  11. Sun Pharma – Highlights 2010 - 11 • Annual sales grew 50% • Indian branded generics grew 37% Product basket includes 537 formulations Market leader in chronic segments Specialize in technically complex products & complete therapy basket – Remain competitive in the market Launched 38 new products in 2010 -11 • Emerging Market - branded generic business grew 32% • International operations grew across 41 markets

  12. Sun Pharma – Highlights 2010 - 11 • Presence in International Branded Generics in 41 countries • 14 key Deals & acquisitions – From 1996 to 2011 • Successful acquisition of Taro pharma – Sun Pharma holds an economic stake of 66% and enjoys voting rights of 77% in Taro • Sun Pharma and MSD (India) entered a Strategic Partnership to co-market MSD's diabetes drugs, sitagliptin and sitagliptin plus metformin • Sun Pharma and Merck establish a Joint Venture for Emerging Markets excluding India • Opportunity to use SPARC Proprietary Delivery Technologies • Equal representation in JV for Sun Pharma & Merck • JV to use partners infrastructure for development, manufacturing, regulatory and commercialization

  13. Finished Dosage Manufacturing 15 Manufacturing sites worldwide • India : 6, US : 3, Canada : 1 • Capacities available for a variety of finished dosage Creating Lasting Value - Investor Presentation

  14. API Manufacturing APIKey Plants 8 World class locations with all sites ISO 14001, ISO 9002 approved • India : 5, Israel : 1, US : 1, Hungary : 1 Over 25 API processes scaled up annually Hungary & Tennessee (US) Panoli & Ahmednagar (both India)‏ • International regulatory approvals: USFDA, European • Stand alone units for peptides, anti-cancer, steroids, sex hormones • Controlled substances manufacture Creating Lasting Value - Investor Presentation

  15. Research and Development Immediate termANDA, DMF, Products for India Medium termDrug delivery systems Balancing the risk • Generic R&D spend around 6% of net sales • Strong research teams in generics, finished dosage development, biological support, chemistry • 4 R&D centers with about 800 scientists Mumbai Baroda Creating Lasting Value - Investor Presentation

  16. Sun Pharma – Opportunities • To offer Branded Generics and Generics in Top segments in which Global pharma market is expected to grow faster • Offer APIs in Globally growing top segments • Ability to bring new combinations and formulations of incrementally innovative, branded generics to market • Opportunity to use SPARC Proprietary Delivery Technologies • JV to use partners infrastructure for development, manufacturing, regulatory and commercialization • Open for the Opportunity to Co-marketing alliances

  17. Russia Pharma Market • 2010 - Russia-10th Largest Pharma Mkt. $ 14 bn., Gr. 11% • 80% import & 20% local • In Pharma business - Brand loyalty is high • Govt. plan investment on healthcare - $ 6 bln. By 2015 to develop healthcare facilities & local capabilities • Reduce Import from 80% to 50% by 2020

  18. Russia Pharma - Opportunities • Russian Pharma Market – forecasted over all growth 12% to 15% per annum for the next few years • Requirement of Branded Generic & Generic – to support Govt. programs • OTC & Rxtion segment is growing faster • Govt. 2020 programs provides opportunity for Investment in Russian Pharma sector

  19. Challenges - Russian Pharma Market Product Registrations • Product under registration & New registration – BE /CT to be submitted along with the documents as per recent information – demand of Local BE further delays the process of registration Suggestion for BE : 1. Accepting the BE from Russian govt. approved centers in India 2. MOH delegation to visit companies’ in-house BE center for approval Suggestion for Clinical Trial : 1. Accepting CT conducted in other countries and accept other countries’ registration 2. Post-registration clinical trial

  20. Challenges Russian Pharma Market Product Registration Impurity Limits – Compared with analogue products NDs registered in Russia Suggestion Possibility of  consideration and accepting  of Normative documentation data according to  USP or BP pharmacopeias and Limits approved in Europe instead of   comparing   with  analogical  products  NDs registered  in Russia First Generic product Registration In the absence of innovator difficult to register Generic product in Russia - it is required to submit all the documents like for Original product Suggestion Consideration given to generic products on submission of documents like BE from approved centers or BE from EU…Post registration clinical trial.. etc.

  21. Challenges Russian Pharma Market Operational 1. Registration of prices for life-saving products considers only customs charges to be included in the cost of the product. Other incidental expenses like transport, certification charges, demurrage and storage charges not considering as a factual expense to be included in the cost of the product. Since, in the local margin there is a cap (limited margin).. and these expenses not considered to include in the cost of the product.. Overall companies incurring loss. Suggestion : All actual cost spent officially to clear the product to be considered ( with documents ) to include in the cost of the product. 2. For Life-saving drugs Cap on Local margin: Companies get less than 5 % which is very low to meet the overall cost of operation. There are issues with Tax Dept. to justify the low margin and high cost operation (Over all profitability) Suggestion : 1. Fixing margins at each level / re-consider the margin % 2. For Life-saving drugs, supply with low margin. Tax. Dept. to give consideration on the justification provided by the company with documents.

  22. Support – From Russian Govt. MOH • Price Registration or Price caping – Consideration given on Molecule not on Company or Country Specific • Fast Track Registration on Green Field Projects • Clarity on policies, Benefits & Tax holidays for 5 years – FDI on Mfg. facility projects • In Regulatory : Training, Cooperation & Dialogue between both countries’ regulatory bodies – for better understanding to use both countries’ strength to overcome Regulatory challenges

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