Bibhuti Bhusan: Healthcare Forum

HIV Drugs and accessibility

2011-04-21T22:18:00.006+05:30

HELP IN THE HOUR OF NEED

The Indian Government needs to extend its help to support HIV patients in minimising therapy costs, which in turn will provide an opportunity for domestic drug manufacturers. Usha Sharmaanalyses the current demand and availability of HIV drugs in India.

Before we begin to discuss the HIV drug market in India, it is important that we should know the population pool infected with HIV across the globe. HIV anti-retroviral (ARV) sales across the seven major markets of the world (ie. US, Japan, France, Germany, Spain, Italy and the UK) accounted for around $11.8 billion. However, it is possible that in the coming year, emerging markets will also have some foothold in this segment. The governments of India, Brazil and other countries are under pressure due to the alarming rates at which the disease is spreading and the resistance of the disease to first line of treatment.

This may provide a business opportunity to big pharma companies to foray into these markets through voluntary licenses and agreements with domestic manufacturers. This is present in both regulated and semi-regulated markets. Globally, HIV has become a major cause for concern. Each year there has been a large number of HIV-related deaths across regions where the percentage of low- to middle income groups is higher. However as per UNAIDS statistics, the number of people newly infected people with HIV decreased from 3.1 million in 2001 to 2.6 million in 2009.

"If these decisions are correct, then it’s good for India’s patent law, which will be seen as preventing routine extensions/ improvements from being patented and aims to work in favour of public health by only granting patents to drugs that are genuinely innovative"
Hitesh Gajaria
Executive Director
KPMG

In India, there are around 30 to 35 companies operating in the HIV market. This includes both domestic as well as multinational companies (MNCs). The country had around 2.4 million people HIV-infected people in 2009, as per a report published by National AIDS Control Organisation (NACO), with a 15 to 49 years prevalence rate of 0.31 per cent contributing to 83 per cent of the total HIV population.

The current market size of HIV drugs in India is around ` 151 crore, and growing at around 11 per cent over the previous year. Four states, namely Andhra Pradesh, Maharashtra, Karnataka and Tamil Nadu contribute 0.5 million, 0.42 million, 0.25 million and 0.15 million respectively and account for nearly 55 per cent of those infected with HIV in the country.

Hitesh Gajaria, Executive Director, KPMG summarises India's market value in this segment. He says, “It is estimated that the ARV segment which is the most common/effective HIV treatment, is likely to grow at a CAGR of 22 per cent between FY 2010-12 and reach a value of ` 750 crore. The market has been growing steadily at a rate of 12-15 per cent from FY 2007–2010.”

Region	Adults and children living with HIV (in million)	Adults and Children newly infected with HIV (in million)	AIDS related deaths among adults and children (in million)	Percentage Adult prevalence (15-49 years)
Sub Saharan Africa	22.50	1.8	1.3	5.0
South Asia and South East Asia	4.10	0.27	0.26	0.3
North America	1.50	0.07	0.02	0.5
Eastern Europe and Central Asia	1.40	0.13	0.07	0.8
Central and South America	1.40	0.09	0.05	0.5
Western and Central Europe	0.82	0.03	0.008	0.2
East Asia	0.77	0.08	0.03	0.1
Middle East and North Africa	0.46	0.07	0.02	0.2
Caribbean	0.24	0.01	0.01	1.0
Oceania	0.05	0.004	0.001	0.3
Total	33.3	2.6	1.8	0.8
Source: UNAIDS Regional HIV and AIDS statistics, 2009

India is the largest supplier of generic ARVs to low- and middle-income countries. Thailand and South Africa also produce a significant amount of generic drugs. Many African nations — such as Zambia, Ghana, Tanzania, Uganda and Zimbabwe have also developed local anti-AIDS drug manufacturing facilities. Domestic companies that manufacture the HIV drug include Cipla, FDC, Torrent, Hetero, Sun Pharma, Lupin, Ranbaxy, Zydus Cadila, Natco, Alkem and GSK, Ranbaxy, Emcure and Aurobindo.

MNCs operating out of India include Roche and Mylan (previously Matrix Lab). Recently, ViiV Healthcare (a 85:15 Joint Venture (JV)between GSK and Pfizer, specialised in HIV medicine) has been in the news seeking a partner to launch its patented HIV drugs in the Indian market. Indian generic drug manufacturing companies such as Aurobindo Pharma, Ranbaxy, Hetero, Cipla and Mylan are likely to leverage the opportunity that will arise when most of these drugs lose their patent exclusivity.

Cipla, especially, is establishing a strong presence in the segment with the company's total ARV formulation sales totalling ` 550 crore and has reported a growth of over 40 per cent for the nine-month period ended December 2010. Multinationals that have a foothold in the segment include GlaxoSmithKline, Pfizer, Merck BMS, Gilead and Abbott.

In 2001, Cipla, announced that it would sell a generic version of the triple-therapy ARV (stavudine+ lamivudine + nevirapine) drug. Generic ARVs are available under many integrated programmes such as PEPFAR - the President's Emergency Plan for AIDS Relief.

It is, however, difficult to put a concrete number to the brands/generics available in the segment. At present in the Indian market there are about 30 ARV drugs available. But Roche’s Fuzeon (enfuvirtide), Boehringer Ingelheim’s Aptivus (tipranavir) and GlaxoSmithKline’s Lexiva are not available in India from 2010. In terms of the number of ARV products, Cipla, Emcure and Hetero have a larger number of products in the market.

The Indian HIV market is dominated by generic products. In 2009, Cipla’s Viraday tenofovir/ emtricitabine/ efavirenz (a generic formulation of Gilead’s/Bristol-Myers Squibb’s Atripla) was the highest selling product with sales of $6.8 million (MIDAS sales data, IMS Health, April 2010). As per the data, Cipla’s Triomune (stavudine/ lamivudine/ nevirapine) was the best selling product in terms of volume and its Duovir-N (lamivudine /zidovudine/ nevirapine) was next. This is in line with the NACO treatment guidelines, which recommend using both these regimens (as fixed dose combinations) in first-line.

In January 2011, India rejected the patent application for the drug Atazanavir Bisulphate, filed by Bristol-Myers Squibb (BMS), and a combination drug Lopinavir/Ritonavir filed by Abbott. Both these drugs are recommended as second-line treatment for HIV patients after the failure or resistance to first line drugs. In September 2009 also India had rejected patent applications for Tenofovir and Darunavir filed by US drug companies, Gilead Sciences and Tibotec Pharmaceuticals. Darunavir is a second line drug for HIV patients, while Tenofovir can be used for both first and second line treatments. With many patients showing resistance to first line drugs, and second line drugs being much more expensive, it limits access to a small section of the population.

"Besides keeping HIV drugs affordable at present, these patent rejections will also encourage more generic suppliers to enter in this segment, further dropping the price of treatment, and thus, help increase its accessibility to patients"
Bibhuti Bhusan Kar
Programme Manager
South Asia and Middle East Healthcare
Frost & Sullivan

Bibhuti Bhusan Kar, Programme Manager, South Asia and Middle East, Healthcare — Pharmaceuticals and Biotechnology, Frost and Sullivan predicts, “These moves by the Indian Government is definitely positive as far as Indian pharma companies are concerned given the fact that affordable HIV treatment across the globe is dependent on Indian pharma companies.”

There is also increased effort on the part of voluntary organisations such as Clinton Foundation, Bill and Melinda Gates Foundation, Médecins Sans Frontières (MSF), UNITAID, PEPFAR etc to increase the accessibility to HIV drugs in countries with a higher percentage of low- and mid-income groups. This can only be done with generic medicines.

"Though this is a patent law-related issue, unfortunately it has been hyped up as a ‘major victory for public health and access to affordable treatment" Tapan Ray
Director General
Organisation of Pharmaceutical Producers of India

Tapan Ray, Director General, Organisation of Pharmaceutical Producers of India (OPPI) emphasised, “Recently two key HIV/AIDS medicines namely, lopinavir/ritonavir and atazanavir bisulphate were not granted patents by the Indian Patent Office with the reason cited that they 'lacked inventive ingenuity'. Though, this is a patent law-related issue, unfortunately it has been hyped up as a ‘major victory for public health and access to affordable treatment’.”

Gajaria agrees with his industry colleague and explains that, “The patent for the drug atazanavir bisulphate filed by Bristol-Myers Squibb was rejected because it 'lacked inventive ingenuity', while Abbott's patent application for lopinavir/ritonavir (Kaletra) was turned down as it did not involve an 'inventive step'.

Before 2006, there was no generic production of lopinavir/ritonavir, and Abbott was able to charge close to $6,000 per person per year in some developing countries. Today, generic companies like Hetero and Ranbaxy have brought the prices down substantially to $440 per patient per year. Generic companies including Cipla and Hetero are major suppliers of these drugs to developing countries like South Africa. The rejection of these patents indicates that there could be undisrupted supply from India for AIDS programmes in developing countries, some of which have even issued compulsory licenses (Ecuador, Thailand) that waive their local patent barriers to obtain generic drugs from here.”

He adds, “This decision also provides motivation for producers to enter the market and lower the price further. If these decisions are correct then it’s good for India’s patent law, which will be seen as preventing routine extensions/ improvements from being patented and aims to work in favour of public health by only granting patents for drugs that are genuinely innovative.”

The move by the Indian government to reject the patent application is an encouraging step to protect the public health given the fact. Indian manufacturers not only supply drugs in India, which is home to around 2.4 million HIV patients, but is also a major supplier to the Sub Saharan Africa region - home to 22.5 million HIV patients struggling with an accessibility problem of slightly more than 35 per cent for HIV medicines.

"The decision provides access to these second-line treatment drugs at a low cost for NGO’s and other public health organisations (NACO, etc), which in turn provides another opportunity to the pharma companies focusing on ARVs to supply these drugs to AIDS programmes in developing countries" Ramaraju Nallaparaju
Senior Consultant
Datamonitor Healthcare Consulting

Ramaraju Nallaparaju, Senior Consultant, Datamonitor Healthcare Consulting simplifies this view and explains the stand of the Indian Patent Office saying, “The rejection of the patents for these drugs has to be taken from the perspective that the Indian Patent Law does not encourage or allow granting of patents for minor improvements in products and grants it only to those which are highly innovative. The decision provides access to these second line treatment drugs at a low cost to NGO’s and other public health organisations (NACO, etc), which in turn provides another opportunity to pharma companies focusing on ARVs to supply these drugs to AIDS programmes in developing countries.”

Name of the states / UT	Population living with HIV infection (In million)	Percent of total HIV population in India
Andhra Pradesh, Maharashtra, Karnataka and Tamil Nadu	0.13	55
West Bengal, Gujarat, Bihar, Uttar Pradesh and MP	0.62	26
Rajasthan, Orissa, Punjab, Kerala and Chhatisgarh	0.28	12
Other states and UT	0.18	7
Total	2.4	100
Source: NACO, 2009

Kar highlights, “Besides keeping HIV drugs affordable at present, these patent rejections will also encourage more generic suppliers to enter in this segment, further dropping the price of treatment, and thus help increase its accessibility to patients. This will encourage more number of patients to be put on the second line treatment after the failure of first line drugs, especially through the government run AIDS control programmes, which at present have a large number of patients on second line and 0.3 million patients on first line drugs.

The patent applications that were rejected on grounds that they did not meet the criteria in section 3(d) of the Indian Patent Act that prohibits patenting a product that follows the process popularly called 'evergreening' of known medicines. 'Evergreening is a process of making minor modifications in the existing drug without a significant improvement in its therapeutic effects. This tactic is practised by pharma companies to extend the patent life of a branded drug, and thus acts as an entry barrier for generic manufactures to market the drug.

The need of the hour is that ARVs are accessible to even the poor at affordable prices. India is one of the countries which has capabilities to provide the second line of treatment to developing countries at reasonable rates.

Kar shares his concern, “To avoid these situations, which may result in complications in the future, the Indian Government. should support/ encourage the Indian pharma industry to enhance its R&D capabilities for ARV developments and immediate attention should be given to providing tax relief, grants for R&D, incentives and so on. Favourable Government policies to encourage building world-class R&D infrastructure would help the Indian pharma industry to be competitive in the long run.

Gajaria suggests, “The Government can also facilitate an open dialogue between pharma companies and NGOs who help the suffering, poor and needy persons with a view to ensuring the availability of pharma therapies against AIDS at affordable rates.”

- Source: Express Pharma, April 2011

- Link: http://www.expresspharmaonline.com/20110415/market01.shtml

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India Scenario: Basic Healthcare

2010-11-05T02:04:00.002+05:30

India spends 4.6% of its GDP on healthcare i.e. US$ 23 per capita (INR 1,021), 2010 (world average is 10% and per capita world average is US$ 964)

Public Expenditure: 22.6% (World average is 58.5%)

Number of hospitals

Public Hospitals: 31,500 (PHC & CHC: 95%, Tertiary care: 1%)
Private Hospitals: 15,000 (Nursing homes: 86%, Tertiary care: 3%)

Hospital beds: 816,200
Hospital beds per ‘000 population: 0.7 (world average 2.6)
Inpatient admissions, 2005-06: 130,700 (2005-06)
Inpatient admissions per ‘000 population, 2005-06: 115.7 (World average 67.0)
Number of surgical procedures: ~ 22,000,000
Physicians: 700,000
Physicians per ‘000 population, 2009: 0.6 (World average: 1.6)
Dentists: 72,500
Dentists per ‘000 population, 2006: 0.1 (world average: 0.3)
Nurses: 1,509,195
Nurses per ‘000 population, 2007: 1.3 (World average: 2.8)
Pharmacists: 578,200
Pharmacists per ‘000 population, 2006: 0.5 (world average: 0.4)

The above infrastructure clearly indicates there is lack of even the basic infrastructure needed for healthcare in India. In almost all, India has to travel a long journey to match with the world average.

Later on we shall discuss on the topic for the other infrastructures related to healthcare!

India Scenario: General

2010-11-02T01:27:00.003+05:30

Population: 1,180 Million
Population Growth: 1.6%
Births per ‘000 population: 23.5 (2006)
Death per ‘000 population: 7.5 (2006)
Live births: 25,740,700 (2006)
Infant mortality/ ‘000 live births: 57 (2006)
Life expectancy at birth, Male: 65.8 (2006)
Life expectancy at birth, Female: 68.1 (2006)

Income statistics (Source: TIG, ADB 2010)

Rich (> INR 10,354 per person per month): 1 million
Upper middle class ( INR 5,177 – 10,354): 5 million
Middle Class (INR 2,070 – 5,177): 45 million
Lower middle class (INR 1,035 – 2,070): 224 million
Poor (< INR 1,035 per person per month): 825 million

Income statistics 2009-10 (by households – Source: NCEAR)

Total Indian Households/families: 228.4 million (2009-10)

High income households (Earning per annum: > INR 1.80 lakhs per annum, at 2001-02 prices): 46.7 million (20.4%)
Middle Income households (Earnings per annum: INR 45,000 to 1.80 Lakhs, at 2001-02 prices): 140.7 million (61.6%)
Low income households (Earning per annum: < INR 40,000 per annum, at 2001-02 prices): 41 million (18%)

GDP: US$ 1.235 trillion (Nominal, 2009)

GDP growth: 8.8% (2010)

GDP per capita, 2009: US$ 962

India spends 4.6% of its GDP on healthcare i.e. US$ 23 per capita (INR 1,021), 2010 (world average is 10% and per capita world average is US$ 964)

Indian APIs flying high in global market

2010-08-07T00:51:00.020+05:30

Thursday, July 08, 2010 08:00 IST

Bibhuti Bhusan Kar

Active Pharma Ingredient (API), the main ingredient in a pharmaceutical product is responsible for the potency and efficacy of a drug and at the same time for the major portion of overall costs of a drug. Therefore, companies need to look for high quality and cost-effective APIs. Qualitative API will produce drugs with superior quality enabling the company to pass through the Food and Drug Administration (FDA) approval process with relative ease, while reducing the cost of manufacturing and increasing margins.

The API market is largely dependent on the pharmaceutical formulation market and vice versa. However, the growth of the API market in terms of value is dependent on several other factors, which will be covered in this article. Presently, close to 90 per cent of the domestic API requirements are being fulfilled by domestic API manufacturers. Indian API manufacturers also supply APIs for the global pharma market apart from fulfilling domestic demand.Thus, the global pharma industry acts as a growth driver for Indian API manufacturers.

India is characterized by its low cost manufacturing and hence low priced APIs with international quality. Over the years Indian companies have manufactured more and more complex APIs with high quality and lower costs, thus earning them high repute in the highly regulated international markets

The API market

The FDA scrutinizes the source of API very strictly since it is the main ingredient of any pharmaceutical product. Price has been the most important criteria for selecting the source of API for pharmaceutical companies. However, with the increased focus of the FDA on the quality of API, pharma companies have also shifted focus to several other parameters to identify a sourcing partner for API.

A preferable API manufacturer should have:

■ Chemistry and manufacturing expertise

■ Meet regulatory requirements during manufacture, storage and other processes

■ Predictable lead time and timely delivery assurance

■ Intellectual property security

■ Quality compliance of the API as per the required regulatory framework

China, India and Italy are top three countries, respectively, in terms of supplying APIs to the global pharma market. China produces close to 70 per cent of world’s generic APIs followed by India with about 19 per cent and Italy close to 9 percent. Globally, 41 per cent of the API market consists of demand from the merchant market and the remaining 59 per cent is captive. Out of the 41 per cent merchant market demand, generics is 46 per cent , branded drugs 54 per cent.

India has world’s second largest API manufacturing industry after China. India’s drug industry produces more than 400 different APIs and is among the world’s top five API producers accounting for approximately nine percent of the world’s API production. According to Assocham, the leading APIs are for anti-infectives, gastrointestinals, cardiovascular and respiratory drugs. In terms of volume, the gastrointestinal and cardiac segments saw the highest rates of growth and accounted for the largest number of new drug launches in 2009.

Key facts about Indian API industry

■ Indian bulk drug market is fragmented with top 10 companies contributing 44 per cent of the market and about 1,325 companies accounting for the balance 56 percent

■ The Indian API industry is self-sufficient in terms of meeting the need of all the 300 essential drugs for the domestic Pharma industry. It caters to around 10,000 formulations and thus close to 90 percent of the total API requirement for the domestic industry

■ 15 to 20 percent of Indian Pharmaceutical Industry is contributed by APIs

■ Besides the highest number of USFDA approved plants for manufacturing drugs outside the US, India has 19 facilities recognized by TGA (Therapeutic Goods Administration), Australia; 45 plants by MCC (Medicines Control Council), South Africa and 3 certified by EDQM (European Directorate for the Quality of Medicines and Healthcare). At present, India has more than 175 USFDA approved plants

■ Major companies operating in this segment are Aurobindo Pharma, Dr Reddy’s, Orchid Chemicals and Pharmaceuticals, Divi’s Lab, Hetero Drugs, Shasun Chemicals and Drugs, Jubilant, Ranbaxy, Dishman and others

Drivers of API industry

The four main components of the global outsourcing market are intermediates, APIs, custom synthesis and formulations/dosage forms. It is estimated that approximately 38 percent of outsourcing demand is for manufacturing of APIs.

■ Between FY 2008-09 and FY 2010-11 molecules worth US$ 29 billion went or are going off patent, opening opportunities for API manufacturers

■ 2008-09: Value of off-patented drugs was US$ 8 billion. Major molecules: Lamotrigine, Venlafexaine, Mycophenolate, Tacrolimus and Desloratidine

■ 2009-10: Value of off patented drugs was US$ 10 billion. Major molecules: Valacyclovir, Lansoprazole, Escitalopram, Peridopril, Gatifloxacin and Sirolimus

■ 2010-11: Value of off patented drugs are US$ 11 billion. Major molecules: Levofloxacin, Olanzapine and Pantoprazole

■ Biotech API is an area of high growth within the Asia Pacific region with a Compound Annual Growth Rate (CAGR) of 27 percent from 2005 through 2010; major demand in Asia is within India and China

■ New drug development pipelines in different therapy areas open new opportunity areas for API manufacturers

■ Increasing US Drug Master File (DMF) filings by Indian companies, as shown below: (Source: www.fda.gov)

■ 2003: Indian companies filed 122 US DMF out of total of 426 by all other countries across the world (29 per cent of total filing)

■ 2004: Indian companies filed 194 US DMF out of total of 541 by all other countries across the world (36 percent of total filing)

■ 2005: Indian companies filed 269 US DMF out of total of 688 by all other countries across the world (39 percent of total filing)

■ 2006: Indian companies filed 319 US DMF out of total of 689 by all other countries across the world (46 per cent of total filing)

■ Increasing generic penetration in developed markets will open new doors of opportunity for API manufacturers

■ Big western companies are taking advantage of the cost and skilled manpower in India, with producers such as Roche, Bayer, Chiron and Aventis already having made India a regional hub for APIs and bulk pharma supplies in Asia

■ According to a report on APIs, demand for Chiral chemicals from the pharma industry, which amounts for the majority of the market, is set to grow at an annual rate of 8-10 percent; worldwide revenues were estimated at US$15 billion in 2008. The increasing complexity of the chemistry required to make Chiral APIs provides a potential differentiating factor for manufacturers to separate themselves from their competitors in a fragmented market

Strengths of Indian API industry

■ Indian API manufacturers are highly preferred and accepted by big pharmaceutical companies, as they are the sourcing partners for their APIs. The key success factors of the Indian API manufacturers are as follows:

■ Low labour cost: Average wage index for India is 10 per cent of a typical Western API company. Even the higher productivity (turnover/employee) of a Western company (due to the higher average automation level of the manufacturing processes) can not nullify the labor cost difference

■ Highest number of USFDA approved plants outside US. India currently has more than 175 USFDA approved plants, the highest in the world in a country outside US

■ Strong process / chemistry skills

■ Ability to synthesize complex synthetic APIs, whereas China manufactures large volume APIs only

■ Capital efficiency

■ Availability of skilled workforce

■ Strict adherence to global regulatory compliances

■ Enforcement of product patent increases the confidence of global pharma companies

■ Large domestic market helps to achieve economies of scale to penetrate global markets

■ Desire and readiness of the Indian API manufacturers to operate at lower margins than their western counterparts

■ Growing experience with GMP compliance

■ Strategic alliances with the MNCs to supply APIs to them. A few examples are given below:

Challenges for Indian API industry

The following are the key issues and challenges the Indian API industry is facing:

■ Increasing competitive intensity within India and from other countries

■ Price erosion for products because of increasing number of filings for each product

■ Increasing costs and procedures for regulatory management such as regulatory filing costs, regulatory inspections / audits, legal costs, difficult labor laws

■ Shortage of legal talent for the pharma domain, which is a costly affair in the other parts of world

■ No product differentiation and only price differentiation approach by Indian players is rapidly commoditizing a once highly profitable market. Thus, a rapid price erosion pulls the market downward in terms of value

■ Capabilities of API manufacturers, which are not differentiated from each other results in competition on the cost front only

■ Overcapacity in manufacturing and large number of Drug Master File (DMF) filings forces API manufacturers to sell even at lower prices

■ Low cost of development and manufacturing but high logistics cost

■ Increasing difficulty in finding novel processes in APIs

■ Depreciating US dollar puts pressure on realization

■ Competition and threat from China

■ Lack of government support for the indigenous API industry

Prospects bright

Though the API market was led only by price competitiveness, due to lack of product differentiation, rapidly growing business areas like oncology, rheumatoid arthritis, biopharma and others may be considered as a potential business avenue to invest in emerging high-potency APIs. Since Indian companies have a high record of DMF filings and many approved APIs, Indian companies are competitively strong to be the preferred API sourcing partner by the big pharmaceutical companies in the highly regulated markets. Also, because of the cost pressure on the big pharmaceutical companies, the amount of outsourcing is increasing, which will add certain fresh opportunities for API manufacturers. Besides, a strategic tie up with big pharmaceutical companies to be an exclusive supplier for certain products can make Indian manufacturers think beyond the cost differentiation.

The author is Program Manager, Healthcare – Pharmaceuticals and Biotechnology, South Asia and Middle East, Frost & Sullivan

- Source: Chronicle Pharma Biz, July 2010

- Link: http://www.pharmabiz.com/article/detnews.asp?articleid=56312&sectionid=50

The Rheumatoid Arthritis Scenario in India

2010-07-14T01:14:00.005+05:30

Introduction

Rheumatoid Arthritis (RA) is a systemic disease—an autoimmune disorder in which the body's defense system attacks the joints through the thin layer of cells called the synovium that lines and lubricates the joints. The most visible symptoms of RA are swollen joints and crippling stiffness, particularly of the hands and feet. It can cause fatigue, fever, loss of appetite, and also impedes mobility and quality of life.

RA is a common autoimmune disease, which affects about 20 million persons worldwide. The disease commonly develops between the ages of 25 and 50 and given its progressive nature, patients often live for 30 years or more with the disease.

Incidence and Prevalence

In India there are about 11 million people with RA, of whom about 75.0 percent are women. While India would require about 70,000 specialists to treat them all, it has only between 100 and 150 rheumatologists at present, putting pressure on them in terms of patient load and the time they are able to spend with each patient.

Prevalence of RA was about 0.75 percent in 2004, and has risen to 1.0 percent in 2007. The number of diagnosed patients is likely to increase due to the increasing awareness of the disease. As for treatment, DMARDs are the treatment of choice and for moderate to severe cases, biologics may be added. Unlike other countries, Remicade was the first biologic to be available in the market, although Enbrel captured a larger market share after it was introduced.

Diagnostic Tests

The diagnosis of RA is based on clinical examination of symptoms, patient history, as well as blood tests. There is no absolute test that can confirm or exclude RA. Some of the common tests include erythrocyte sedimentation rate (ESR), C-reactive protein (CRP), rheumatoid factor (RF), and X-ray.

Rheumatologists use a suite of parameters in confirming an RA diagnosis and monitoring disease progression.

The vital parameters in confirming diagnosis and determining disease progression are:

• Number of swollen joints

• Presence of morning stiffness

• Number of tender joints

• Functional status

Key Treaters and Patient Flow

GPs treat patients for joint-ache with steroids and NSAIDs, and refer RA patients to orthopedic surgeons and rheumatologists for further treatment. Orthopedic surgeons, also, are often the first point of contact. They would diagnose and prescribe DMARDs. Patients with severe RA or those who require treatment beyond DMARDs are directed to a rheumatologist. Rheumatologists are the key treaters of RA.

The main treatment goals include:

• Reduction in pain, swelling and thus the inflammation

• Reducing joint deformity

• Improving quality of life

Treatment Options

Most of the patients are initially treated with only drugs. Patients on drugs and physiotherapy would be those with concomitant diseases. Patients also practice yoga, exercises that are designed to cure the inflicted joints by slow movements and gentle pressure in conjunction with deep breathing. There are a very small proportion of patients who are not on any treatment because of their refusal to be treated.

Most commonly used drugs for the treatment and management of Rheumatoid arthritis are:

Steroids / NSAIDs (Non Steroidal Anti Inflammatory Drugs) / Cox-2 inhibitors
DMARDS (Disease Modifying Anti-Rheumatic Drugs) in monotherapy or combination therapy
Biologics

Though Biologics are the most effective treatment options available till date for the RA treatment, high cost of therapy acts as a barrier for its frequent usage. Available biologics in India are Enbrel (Etanercept), Remicade (Infliximab), Orencia (Abatacept), Rituxan/Mabthera (Rituximab) and Actemra (Tocilizumab).

Treatment Filter

-- Total RA patients: 100%

-- Patients diagnosed: 3.37%

-- RA patients available for treatment: 2.5%

-- RA patients eligible to be treated with biologics: Less than 1%

-- Patients actually treated with biologics: !!!

Government and Non-government Initiatives

Mission Arthritis India (MAI) is a voluntary support group for patients of arthritis and rheumatism, established in 2000. It was formed by a group of people who are suffering from chronic arthritis and wish to help the community fight these ailments. The main goal of MAI is to provide proper and scientific information and guidance about all aspects of arthritis and related problems. MAI publishes quarterly newsletters containing health-related articles and organizes public awareness meetings during the week 12 - 20 October every year, in which the annual health magazine is inaugurated. Various health talks by well-known doctors from the field of orthopedics, rheumatology and other specialties are also arranged in this program.

Bone and Joint Decade India : National Action Networks (BJD – India: NAN), under the umbrella of the WHO-endorsed Bone and Joint Decade 2000 – 2010, is engaged in disseminating general awareness about rheumatic musculoskeletal disorders both for the medical community and the Indian public. It has established corporate partnerships with some Indian pharmaceutical companies that are interested in building awareness. The organization has also set up multiple studies to collect population-based prevalence data.

Market Challenges

High cost of treatment with biologics
Lack of awareness among the patients
Low Rheumatologists to patient ratio
Low reimbursement scenario
Patients drop out because of low compliance results

Around 30% of patients are non-compliant with treatment with DMARDs either due to side effects, Patients’ attitude that the treatment is not working or inclination to use alternative therapies.

More than 90% of patients do not continue treatment with biologics till one year either due to high cost of biologics or side effects. In many cases where patient pay out of pocket for biologics, it is given to relieve the patient from painful symptoms and then treatment is continued with DMARDs.

Future Outlook

Though there are biologics available for treating RA, specialists in India will continue to use DMARDs as their first line therapy, because of high cost of treatment and fear of side effects associated with long term usage with biologics. However, improving reimbursement scenario, increasing disposal income, increasing awareness among the Indian population about RA and continuous effort by the companies for increasing usage of biologics are few of the factors which will drive the growth of RA market.

Author Information:
- Bibhuti Bhusan Kar, Program Manager - Pharmaceuticals and Biotechnology, Frost & Sullivan, India.

- Source: Pharma Bio World, April 2010

-Link: http://www.pharmabioworld.com/archives.html

The perishables business injects profits for carriers

2010-07-07T00:27:00.004+05:30

With growing globalisation the perishables business has taken off, but the highly sensitive cargo — be it flowers, fruit, meat or pharmaceuticals — requires greater investment in specialised ULDs and expertise. Manfred Singh reports.

It is likely that not many of us have seen the new 10x10 cm handling label that has been developed for the transportation of temperaturecontrolled, time-sensitive goods. Affixed by the shipper, the labels are intended to signal to handlers the need to maintain such packages at between 15°C and 25°Cambient temperature.

Though the use of the label has not yet become mandatory, airlines and freight forwarders are becoming increasingly aware that transporting such goods is treading a thin line and constitutes a whole gamut of risk management. If there is one cargo that is solely dependent on ULDs, it is the perishable trade and obviously the fast-moving — read pharma — variety. As a perishable expert puts it, the difference between a perishable-loaded ULD arriving on time, or arriving late could mean life or death for the products within. Getting it right means a business segment with huge growth potential. Ram Menen, Emirates’ divisional senior VP, Cargo, points out that perishables handling has grown “by leaps and bounds in the last five years”.

Pharma is big business

In short, perishables are important for the air cargo business. Forecasts by IMS Health Incorporated, a provider of market intelligence to the pharmaceutical and healthcare industries covering more than 100 countries, pointed out that the global market value of pharma products could exceed US$975 billion by 2013. The importance, therefore, of the ‘perishable’ goods industry to air cargo was more than evident at the recent 20th Annual IATA Cargo Network Services at Miami in the

. A session titled, ‘Time & Temperature Logistics for Healthcare Products’ outlined how the product has grown and the kind of work that the IATA’s Time & Temperature Task Force (TTTF), a body in its Live Animals and Perishables Board (LAPB), was undertaking.

According to a study by Frost & Sullivan’s programme manager, Pharmaceuticals and Biotechnology, South Asia & Middle East, Bibhuti Bhusan Kar, the global pharmaceutical logistics market recorded revenues of about $90.3 billion in 2008. That included services such as freight, warehousing, and express logistics. Freight forwarders estimate that logistics comprises 45-55 per cent of the costs in the pharmaceutical value chain.

From the air cargo point of view, a single perishable pharmaceutical unit could cost anywhere between $5,000 to $7,000 and a full ULD would contain more than $30 million of goods. A close look at how critical the business is, according to LifeConEx – the only industry-specific Lead Logistics Provider (LLP) of end-to-end temperature controlled transportation solutions for the life sciences industry worldwide – indicates that 20 per cent of the world’s best selling pharmaceuticals are temperature sensitive; $130 billion of the total pharmaceutical market is represented by temperature sensitive products; and nearly 100 per cent of all vaccines and 68 per cent of all products sold by biotech companies have to be stored and transported between +2ºC and +8ºC.

The transportation of healthcare and life-saving goods is governed by IATA’s Time and Temperature Task Force (TTTF). Mandated to develop and maintain standards for the procedures, documentation, cargo handling, packaging and acceptance of goods from the health care sector in order to facilitate, improve or maintain the logistics, the TTTF acts as the liaison with all stakeholders from the health care industry or their intermediaries. TTTF members include pharmaceutical industry companies, forwarders, airlines and temperature-controlled container manufacturers.

A growing focus by carriers

On their part, air carriers, forwarders and container manufacturers are keen to develop a wide variety of new products and services that would facilitate transportation. Said Emirates’ Menen: “Our perishable business has been quite steady even during the recessionary period and post recession is on the growth path. We carried good loads of fruit and vegetables and pharma throughout 2009.”

Emirates, for example, offers special cool chain solutions that are designed for the movement of temperature-sensitive goods. The airline also offers speciallydesigned temperature-controlled air cargo containers that maintain stable interior temperatures throughout the journey. These feature active temperature control systems that range from -20C to +20C. In addition, Emirates SkyCargo joined hands with a US research institute to develop a low-cost, light weight, breathable and reusable protective ‘White Cover’ designed to shield temperaturesensitive shipments from heat during airport-to-airport transportation.

Similarly, American Airlines has teamed up with Envirotainer to develop an active temperature-controlled air transportation solutions including the RKN e1 unit, which is the latest. The RKN e1 has been designed in collaboration with ThermoKing for requirements of the life sciences industry capable of maintaining temperatures in the +2 to 8 °C range, as well as in room temperature.

FedEx Custom Critical also uses the Envirotainer technologies. Continental Airlines also has an agreement with CSafe, a maker of active cooling units that recently received the licenses from the FAA for its technology. CSafe’s compressor-based units have both cooling and heating capabilities and can sustain consistent interior temperatures in ambient extremes from –30 to +50 degrees Celsius.

On the other side of the spectrum are other perishable items like flowers, fruits fish and meat products and vegetables. All require the same “cool’ treatment and are big business. Carriers like Emirates go through an intricate process that boosts the life of perishable commodities by ‘preserving the cool chain’ throughout the journey. Even so, most carriers maintained that respective governments could help by facilitating the necessary infrastructure at airports in the form of temperature-controlled facilities required to clear and store such cargo. To top it all, custom authorities could also assist in facilitating movement of such ULDs into and out of the bonded facility so that cool chain integrity could be maintained during the entire supply chain.

- Source: PayloadAsia.com, June 2010

- Link: http://www.payloadasia.com/article-5332-theperishablesbusinessinjectsprofitsforcarriers-PayloadAsia.html#

Cancer Therapy: Stasis no More

2010-06-20T10:42:00.000+05:30

With the Rs-10 billion Indian oncology market expected to grow at a rate of 21 per cent for the coming five years, a slew of standalone and dedicated oncology setups within hospitals are in the pipeline to cater for 2.5 million cancer patients, says Sonal Shukla

It was once the most dreaded disease. However, rising awareness and revolution in treatment has made cancer, which claims 5,50,000 Indian lives and afflicts 8,00,000 new cases every year, a treatable disease.

The growing number of patients seeking treatment for cancer has made hospitals realise that cancer treatment is an important area for growth. "Today there is more awareness about cancer and people are willing to go to recognised centres for cancer treatment. People, particularly in urban India are recognising the fact that cancer patients can lead a normal life, just like with any other chronic disease. Hence more and more people are willing to undergo therapy, which is a positive trend," opines Dr BS Ajai Kumar, Chairman, HealthCare Global Enterprises (HCG), South Asia's largest cancer care network.

Cashing in on this growth trend, multispecialty hospitals are investing in cancer care and even standalone cancer care hospitals are being set up. The Indian oncology treatment market is thus estimated to be in excess of Rs 10 billion and is expected to grow at a rate of 21 per cent for the coming five years.

Interesting Openings

"The future is going to be in tier II and III cities for viability, and they would be the preferred place of
treatment"

- Dr BS Ajai Kumar
Chairman
HealthCare Global Enterprises (HCG)

"In the past, Indian hospitals hesitated in making large investments because of a long gestation period"

- Pradeep Jaisingh
CEO
International Oncology Services

Ever-increasing unmet demand coupled with constantly rising cancer cases has incited many healthcare and pharmaceutical companies to make oncology their prime focus area. Despite increased awareness about the disease in the masses in general, delay in approaching doctors for treatment has not reduced yet. "More than 70 per cent of the cases reporting for diagnostic and treatment services are in the advanced stages of the disease, which has led to high mortality rates amongst patients in India," shares Pradip Kanakia, Executive Director, KPMG.

As a majority of the cases being treated in India are advanced cancer cases, there is still a significant market potential in the preventive and early detection space. On the other hand, lack of promising treatment in chemotherapy has opened up opportunities in radiotherapy and surgical therapy, which require a well-established hospital infrastructure. Being very capital-intensive prevents the entry of smaller players to the market and thus makes it a safer investment option for the large hospital players.

Dr Rajesh Mistry, Kokilaben Dhirubhai Ambani Hospital, Mumbai, opines, "Traditionally surgery and radiation have been the cornerstones of cancer treatment. However, now almost all patients (solid and haematolymphoid cancers) will at some point require chemotherapy - in addition to conventional surgery and radiation. All the three modalities will contribute to growth of the cancer treatment market in the Indian healthcare industry."

On the pharma front, lack of any significantly promising molecule in the pipeline for chemotherapy is also believed to be driving regimens such as radiotherapy and surgical therapy for cancer treatment. The technological revolution in cancer treatment and delivery too has given a major thrust to this segment in India. Dr HKV Narayan, Medical Superintendent, Tata Memorial Hospital, Mumbai, explains, "Today technology like CyberKnife and Novalis Tx offer non-invasive radiosurgery. PET-CT scan and other diagnostics have increased the speed and accuracy of diagnosis and improved identification of recurrence." The latest radiation therapy machines are capable of delivering precise radiation therapy (IMRT/IGRT) while sparing surrounding normal tissues so as to minimise the immediate and long term side-effects without compromising disease control. "We should be able to offer treatment with lesser debilitating side -effects with good chance of long term control or cure. Newer technological advancement in radiation oncology gives clinicians major treatment edge in terms of reducing treatment related morbidity and increasing cure rates," shares Dr A K Anand, Chief - Radiation Oncology, Max Cancer Centre. Similarly surgical techniques have also improved over the years with better results. Many leading hospitals catering to cancer care are installing these high-end technologies.

Radiation Oncology on Radar

The highest growth is expected in the radiation oncology space due to undersupply and a significant opportunity for reduction in the cost of treatment. However, establishing a radiation oncology unit in the hospital has been an expensive option, as it involves huge capital investments as well as recruitment of specialised physicians. "Oncology is a capital-intensive sector particularly while setting up a radiation centre. Most of the cancer centres are radiation oncology centric. The only way to overcome this is to create models where there is effective capacity utilisation. Centralisation of high-end equipment will be another feature," opines Dr Ajai Kumar.

A robust analysis of the patient demographics, planning of appropriate equipment based on the market and clinical teams, quantum of investment available, systems to manage the throughput and opportunities to maximise capacity utilisation are key determinants in planning a radiation oncology unit, believe experts.

While the Government gives grants for Government or trust hospitals for development of a radiation oncology department, private hospitals have to depend on debt for financing the high-end equipment. Reducing upfront capital investment via collaborative models with medical equipment manufacturers has been seen as a large opportunity area to address the investment constraint. Partnering with global players in the form of joint ventures could be another approach to deal with this challenge, one expert
suggests.

The Players

"The Government should ensure cancer hospitals are given tax or duty benefits"

- Dr MK Khanduja
Chairman and Managing Director
BSR Healthcare Group

"The fight against cancer cannot be won by a single healthcare provider or even a group"

- Preetha Reddy
Managing Director
Apollo Hospitals Group

The estimated growth of the oncology market at 30 per cent per annum indicates that the healthcare players have largely been able to leverage available market opportunities. The industry has been witnessing the increasing involvement of private players putting up cancer centres and prevalence of standalone cancer hospitals.

It is estimated that presently around 160 Government hospitals and more than 350 private hospitals in India are providing specialised oncology treatment. A very small percentage amongst these hospitals provides all three areas of oncology namely surgical, medical and radiation oncology.

Close to 25 regional cancer centres (RCC) have been established in the country for the ongoing care and early detection of the disease. More than 35 major players are operating in the Indian cancer treatment market and close to 15 MNCs are already present and more are planning to enter the market. Still, there are very few exclusive hospitals dedicated to cancer care. "Apart from the regional cancer centres, which are owned by the Government of India, the number of players in the private sector is small," opines Bibhuti Bhusan Kar, Programme Manager, South Asia and Middle East, Healthcare, Pharmaceuticals and Biotechnology Practice, Frost & Sullivan, Mumbai.

There are numerous private clinics operated by oncologists for chemotherapy, which is a very fragmented sector due to the size of the country and the preference for localised treatment because of cost considerations.

One of the major players in the Indian market, Fortis Healthcare, has entered into a partnership with International Oncology Services Pvt Ltd (IOSPL), a US-based company. IOSPL is also looking to set up independent hospitals in India, particularly at tourist destinations such as Jaipur and Delhi, to attract foreign visitors. Funded by a group of individual investors, IOSPL has planned an investment of around $15 million (about Rs 70 crore) for its immediate expansion projects, with eight new centres coming up by 2012. "Overall, we would be investing about Rs 200 crore in the next three years," discloses Pradeep Jaisingh, CEO, IOSPL. With Fortis Healthcare Group, the company is starting work on its centres at Fortis, Mohali and Fortis, Amritsar, and these centres will be operational in a years' time.

Mumbai-based Tata Memorial Hospital and PD Hinduja Hospital, All India Institute of Medical Sciences, Delhi and Indo American Cancer Center in Hyderabad are the other major players in this space. A few private players have opened dedicated hospitals or have set up a dedicated cancer unit in existing hospitals to tap the opportunity. These include Netaji Subhash Chandra Bose Cancer Research Institute, Thakurpukur Cancer Research Centre, Bangalore Institute of Oncology, MS Ramaiah Memorial Hospital, Apollo Hospital, Jaslok Hospital, and SL Raheja Hospital. New players Narayana Hrudayalaya have entered this space through a facility in Bengaluru, which is expected to treat patients at a much lower cost and thereby achieve growth through volumes.

Delhi-based Max Healthcare is expanding its oncology footprint in North India. "The group's first two hospitals in PPP with the Government of Punjab, opening in September 2011, shall have cancer as a superspecialty at Max Super Speciality Hospitals in Bathinda and Mohali," says Umesh Kandpal, Head, Business Development, Max Healthcare. There is a huge incidence of cancer in the Malwa belt due to indiscriminate use of pesticides and resultant groundwater contamination over the years. Setting up cancer services in these hospitals will help reduce the cancer burden in North India.

Oncology now has the attention of PE /VC players as well, and hence a few Indian companies are setting up chains of cancer hospitals. Likewise a few international chains are also expanding in India. HCG recently announced that it has raised Rs 500 million in equity from IDFC Private Equity Fund II, a fund managed by IDFC Private Equity. Milestone Religare Investment Advisors invested $10 million in HCG.

A number of private hospitals are investing in dedicated cancer care units in existing hospitals, instead of setting up separate hospitals for cancer treatment. Apollo Hospital already exists in Delhi and Hyderabad. In addition, they have recently started a dedicated unit in Delhi, Kolkata and Hyderabad for cancer treatment, providing all the modern healthcare facilities for cancer.

However, no information is available on the amount of investment being planned in these cases. The bulk of the investment is expected to be in the areas of radiodiagnosis, radiotherapy, surgical treatment and stem cell transplant, which are largely capital-intensive and thus provide less competition.

On High Alert

Cancer has taken India in its tight grip over the years. Though the cancer incidence rate in India is lower than in Western countries, the numbers of cases are higher in India due to its large population. Moreover, recent times have witnessed an increase in the incidence of cancer, possibly due to urbanisation, industrialisation, lifestyle changes, population growth and increased lifespan (in turn leading to an increase in the elderly population). It is estimated that the life expectancy of the Indian population will increase to 70 years by 2021-25. This has caused a paradigm shift in the disease pattern from communicable diseases to non-communicable diseases such as cancer, diabetes and hypertension. "Studies indicate that cancer prevalence in India is around 2.5 million, with over 8,00,000 new cases and 5,50,000 deaths occurring each year due to this disease," shares Preetha Reddy, Managing Director, Apollo Hospitals Group. According to a WHO forecast, Asia will be visited by degenerative disorders in the next decade, and this includes cancer as a disorder. The common sites for cancer in India are oral cavity, lungs, oesophagus and stomach in males and the cervix, breast and oral cavity in females. "With an estimated incidence rate of eight lakh new cases every year and prevalence of 2.4 million cases, the cancer treatment market needs attention from India Inc," warns Bibhuti Bhusan Kar, Programme Manager, South Asia and Middle East, Healthcare, Pharmaceuticals and Biotechnology Practice, Frost & Sullivan, Mumbai.

Choosing the Right Regimen

HealthCare Global

Tata Memorial Hospital

Multiple business models exist worldwide for delivering cancer care-ranging from quaternary care cancer hospitals, a hub-and-spoke model and even standalone centres that house high-end equipment. There are newer business models emerging in the oncology treatment space in India too; for example, dedicated day care chemotherapy centres where the patient undergoes chemotherapy sessions and gets discharged the same day. Since upfront capital investments are a big barrier for providing oncology services, there are new business models evolving in which large equipment manufacturers install and operate the equipment in the hospital, whereby the hospital gains by providing comprehensive oncology treatment and the equipment manufacturers gain access to new and scalable business opportunities.

Outsourcing is 'In': Outsourcing of the services to another is increasingly seen, as the costs need to be contained. The two parties can share the cost of the setup. One partner may look after the infrastructure and the other supply the equipment. "To put my money where my mouth is, we have tied up with IOSPL to set up the therapeutic end of the cancer centre, whereas we will set up the infrastructure. This also includes a state-of-the-art bone marrow transplant unit. Such models will work and many more will be seen in healthcare in the future," predicts Dr Sujit Chatterjee, CEO, LH Hiranandani Hospital, Mumbai. LH Hiranandani Hospital tied up with IOSPL in 2009. Its cancer centre at Hiranandani Hospital, which is currently under construction, will be operational by the end of this year.

All in One: According to Kanakia, Indian healthcare players specialising in oncology can emulate successful new models from countries such as the US. He gives the example of Goshen Health System in Indiana, which has been providing consolidated oncology services in a single centre focusing on cancer care. The most attractive feature of this 30,000 sq ft facility, opened in 1998, is a total patient-centric approach whereby patients can come to one site to complete all their physician appointments, review their treatment plan and have their lab and diagnostic tests in one place, something really difficult to do in multiple settings. "This cancer centre has become a regional cancer treatment facility, a destination hospital that has grown by 17-22 per cent annually since opening, in a relatively mature market like the US," reveals Kanakia.

Going Hub and Spoke: The hub-and-spoke model has also been well received on Indian ground lately. Shares Jaisingh, "India needs hub-and-spoke models of cancer care where each hub has state-of-the-art equipment which is gradually phased out to the satellite centres." Such centres keep providing patient inflow from the peripheries and at the same time prevent the technology from becoming obsolete. One of the major players in the cancer space, HCG has been following this model extensively to expand its reach within the interiors of India. The spokes utilise services from the hub, thereby reducing travel for patients. "We take centres to their hometown. In coming years we plan to have several centres in tier II and III cities. We would also like to be ahead in technology and bring in true backward integration through R&D. We plan to expand our reach through investment; of course we have funding from private equity and in future we are looking to go public," shares Dr Ajai Kumar. With the funds raised from the public, the group intends to expand to different areas of the country, as well as in Africa.

Dr MK Khanduja, Chairman and Managing Director, BSR Healthcare Group, which runs BSR Cancer Hospital, sees comprehensive cancer care and need-based treatment as the models for the present and future. He points out that palliative care and pain management will also increase, and focus must also be on cancer prevention and early detection. "We plan to set up one more comprehensive cancer treatment hub in Chhattisgarh in the next two to three years," Dr Khanduja reveals.

Cancer Hospitals in India

Major well-known cancer care centres across the country are:

In the northern region: Rajiv Gandhi Cancer Institute and Research Center, Dharamshila Cancer Research Institute, Indraprastha Apollo Hospitals, All India Institute of Medical Sciences.
In the western region: Tata Memorial Hospital, Jaslok Hospital, Lilavati Hospital, SL Raheja Hospital and Breach Candy Hospital.
In the southern region: Kidwai Memorial Institute of Oncology, Karnataka Cancer Therapy and Research Institute, Bangalore Institute of Oncology, Nizam's Institute of Medical Sciences, Sri Ramachandra Medical College, MS Ramaiah Memorial Hospital, MNJ Institute of Oncology, Christian Medical College.
In the eastern region: Thakurpukur Cancer Research Institute, Netaji Subhash Chandra Bose Cancer Research Institute, Chittaranjan Cancer Research Institute, Calcutta Medical College, Nehru Cancer Centre for Research & Care.

Source: Frost & Sullivan

Barriers to Progress

Rapid Arc

CyberKnife

Capital Intensive Nature: Blame it on the capital-intensive nature of this segment which kept hospitals away for a long time. "In the past, Indian hospitals hesitated in making large investments because of a long gestation period," Jaisingh explains.

Most of the equipment like the linear accelerator, brachytherapy, and high-end onco-surgery setup are pretty expensive and give a relatively low ROI. "The Government should ensure cancer hospitals are given tax or duty benefits which would bring down the capital as well as operating cost," shares Dr Khanduja. Dr Jayaprakash Madhavan, Senior Consultant, Oncology, KIMS Pinnacle Comprehensive Cancer Care, Kerala Institute of Medical Sciences, Trivandrum, concurs, "The Government should come up with special subsidies for import of equipment. Financing should be liberalised."

Accessibility and Affordability Woes: Lack of proper and affordable diagnosis, and of awareness and easy accessibility to treatment in India, has further made the market sluggish. Presently most of the hospitals such as Apollo, Max Healthcare and other private players have come up with specialised and dedicated cancer care units in their hospital setups to cater to this hugely needy therapeutic area. However, these hospitals are located mostly in the metros and tier I cities. Since the segment is capital-intensive, smaller private players are not able to afford to set up such facilities. In cities with less development and in rural areas, the lack of proper diagnostic facilities further limits the treatment to a great extent. Hospitals have only partially been able to utilise the market opportunity, mainly because the paying capacity of the patient is still low in India. Health insurance in India has also not picked up to the desired levels to take care of the affordability factor. The delay in diagnosis resulting in poor survival and high mortality rates prevents some of the patients from coming forward for treatment. Besides, cancer treatment continues for a longer period while the patients and their relative travel to a metro or other city. This leads to inconvenience as well as loss of wages / revenue. Says Dr Avinash Deo, Haematologist & Medical Oncologist at Dr L H Hiranandani Hospital Powai, "Cancer is likely to become more common, more treatable but more expensive to treat. Managing costs without compromising the interest of all stakeholders (patients, doctors, paramedical staff, hospital managers and investors) will be a major challenge for cancer care."

Manpower Crisis: Health manpower is another major challenge that the Indian healthcare industry faces and it does slow down the sector's potential for growth. "There is a shortage of the oncologists treating specific type of cancers. Each physician treats almost all types of cancer and most of the time each oncologist practises in many hospitals," shares Bibhuti Bhusan Kar. Starting academic courses for generating a pool of trained and skilled manpower can address these issues.

Attention R&D: Lack of R&D is another area in cancer treatment in India which requires attention. A combination of financial incentives announced in the recent Union Budget for R&D in the form of weighted deductions coupled with more FDI by global healthcare chains can accelerate the pace of R&D activity in this segment, believes Kanakia.

Prognosis

Despite all the growth seen in this segment, the Indian healthcare industry has still barely touched the tip of the iceberg when it comes to cancer care treatment. "The fight against cancer cannot be won by a single healthcare provider or even a group. The demand for cancer care far outweighs the existing supply," avers Preetha Reddy, Managing Director, Apollo Hospitals Group.

This scenario is set to change very soon. It is believed that more and more hospitals will enter this segment. In tier I cities like Delhi, Mumbai and Bengaluru we may be reaching the saturation point. Now, this segment may not be viable for the multispecialty hospitals particularly. "The future is going to be in tier II and III cities for viability, and they would be the preferred place of treatment," opines Dr Ajai Kumar. The major issue of affordability has seen some hope with the Government setting up various schemes like Arogyasree in the country. Such Government-led initiatives will surely bring in tremendous change with people below the poverty line being able to access high-end care. This will create a great demand, which in turn will force hospitals to get into the market of tier II and III cities as they will see great advantage to sustain their business model there.

sonal.shukla@expressindia.com

- Source: Express Healthcare, June 2010

- Link: http://www.expresshealthcare.in/201006/market01.shtml

Multi Directional Growth

2010-06-13T10:22:00.001+05:30

The growth in the biologics and oncology segments, penetration of health insurance, government support and the need for more efficacious products will set the wheels turning for the injectables and parenterals market. Arshiya Khan considers a few deals that may encourage MNCs to collaborate with Indian companies

While the concept of injectables was revolutionary when discovered, the innovation in this segment has been evolutionary. Drug delivery systems with various biotechnology drugs have brought new innovations in the industry. Also, the kinds of deals witnessed in this segment are indicators of the prospects that lie in this area. Indian players have made themselves regulatory compliant to attract the world markets. According to IndiaVenture Advisors, the total Indian market for injectables has been estimated at about Rs 6,500 crore for FY09. The total domestic injectables market is estimated at about $450 million and was estimated to have grown at more than 20 percent in the last three years.

Deals galore

The Hospira-Orchid and Pfizer-Strides or Pfizer-Claris deals indicate that the injectables and parenterals market is in tumult. MNCs are closely monitoring the market changes in this segment. Likewise, a number of Indian pharma companies have successfully gained FDA approval for a growing portfolio of injectables generics, to gain foothold in the US generics market.

Vikram Gupta, Chief Operating Officer, IndiaVenture Advisors remarks, international markets where generics injectables have a huge market share include US, Germany and UK. These countries have seen maximum penetration of generic injectables in the oncology area. However, there are European markets such as Spain and Italy, where generic penetration is still low. In case of US, the generic penetration is about 65 percent by volume and 45 percent by value and continues to grow.

"This relatively exclusive segment of the generics market appears to be gaining traction, which has become evident with Hospira and Pfizer increasing their market shares by doing deals with Indian manufacturers," agrees Sujay Shetty, Associate Director, Pharma Practice, PricewaterhouseCoopers.

He cites another example: last year Hospira acquired Orchid's generic injectable finished-dosage form pharma business for approximately $400 million. The acquisition included Orchid's beta-lactam antibiotics manufacturing complex and R&D facility at Chennai, as well as its generic injectable product portfolio and pipeline. In addition, the companies signed a long-term agreement for Orchid to supply APIs for the acquired generic injectable pharma business.

In another such deal, Pfizer and Strides Arcolab entered into a collaboration whereby Pfizer agreed to commercialise Stride's off-patent sterile injectables and oral products in the US through its Established Products Business Unit. This is a highly complementary collaboration, expected to deliver 40 off-patent products, many of which are oncology therapeutics, to healthcare providers and patients in the US, by joining Pfizer's solid commercial infrastructure with Strides' high-quality manufacturing capabilities.

These deals are signs that, "MNC players like Pfizer are keen to work with Indian manufacturers to provide a boost to the injectable generics market," as Shetty underlines. Besides this, last May Pfizer also signed a commercialisation agreement with Claris Lifesciences, under which the firm acquired the rights to 15 injectable products that have lost patent protection in major markets, covering a wide range of therapeutic areas including anti-infectives and pain management. The products will be marketed under the Pfizer brand in the US, where the deal is exclusive; Claris will continue to market the products elsewhere.

Citing these deals, Gupta says, "Deals in the injectables space have been mostly driven by objectives of capacity expansion, cost optimisation and technology acquisition, and the growing interest of international companies to acquire or collaborate with Indian companies."

Bibhuti Bhusan Kar, Program Manager, South Asia & Middle East, Healthcare, Pharmaceuticals & Biotechnology, Frost & Sullivan, sings the same tune. He says, in addition to the above, low cost of production, and availability of low-cost scientific manpower are the core strengths of the Indian market which force MNCs to look for production partners to supply their injectable drugs in India and other parts of the world.

Adds Bhavesh Patel, Managing Director, Marck Biosciences says, the injectables business is highly capital intensive with a long gestation period. Therefore players look for collaboration in this area. He quips, "Even we are not averse to alliances. In fact in the pharma industry nowadays, it is very common to collaborate with competitors, suppliers and customers. We also have alliances with various companies within and outside India. In fact, we have filed our first ANDA with our partners in the US."

The scene in India

"The relatively exclusive segment of the generics market appears to be gaining traction, which has become evident with Hospira and Pfizer increasing their market shares by doing deals with Indian manufacturers"

- Sujay Shetty,
Associate Director, Pharma Practice, PricewaterhouseCoopers

"The rural market has tremendous growth potential, for several reasons-patients come at a late stage to the physicians and want to see instant results from a drug; higher margins are provided to the physicians for the injectable drugs; absence of adequately qualified physicians in the rural areas has led them to use injectables frequently to avoid any further complications of the disease. These reasons have attracted many smaller companies to enter the rural market to tap its potential"

- Bibhuti Bhusan Kar,
Program Manager,
South Asia & Middle East, Healthcare, Pharmaceuticals & Biotechnology, Frost & Sullivan

Kar enumerates, "The Indian market is at an early stage of growth because of the low penetration of all healthcare needs, as compared to other parts of the world. Vaccination, patients receiving oncology treatment, usage of biologics are at nascent stages in India because of poor reimbursement policies, lack of government support, lack of awareness, and lower patient affordability, and thus there is a lot of opportunity for growth." He elaborates that the majority of the injectable drugs are sold on huge bonus offers and at discounted price. Moreover, a large portion of the market is hospital-based.

While changing lifestyle patterns have forced companies to tap cardiovascular diseases and diabetes segments more aggressively, Kar says that major markets for injectables/parenterals include vaccines, anti-infectives, oncology, biological, and nutritionals. Apart from these, several other drug classes such as insulins, drugs for pain management, CNS (Central Nervous System) drugs, and GI (Gastro Intestinal) drugs also contribute considerably to the injectable drugs market.

These things have jointly propelled the growth in this segment to be at or close to 15 percent over the last five years. However, "the booming vaccine market, growing at more than 20 percent in the last five years and with ample opportunities for further growth, is expected to favour the growth of the injectables market," says Kar.

And biotech drugs, which comprise two-thirds of the market, represent the biggest segment and are the fastest to grow at 15 percent, according to Gupta. Giving details, he says injectables using small molecules represent 25 percent of the market and are estimated to be at $35 billion, growing at 11 percent. But what is interesting is that most generic injectables use small molecules and are focused on oncology and cardiovasculars.

Though the market is highly fragmented there are small players as well as MNCs operating in this segment. But lacking capital, smaller domestic players are confined to market segments such as anti-infectives, GI and pain management drugs. Marck, however, focuses on a different league of products. Patel avers, "So far we have restricted our activities to respiratory solutions, ophthalmics and injectables in terms of therapeutics. Now we have augmented our capacities in large volume parenterals (LVP) as well as Small Volume Parenterals (SVP). Apart from fluid therapy and formulations, we have added ophthalmic, respiratory care and irrigation products by developing manufacturing capabilities. Today, we have the ability to offer six different therapeutic segments."

He continues, "So far we have grown in a very organic manner. We have never chased top line centric growth. We have been quite an inward looking organisation. We had Blow/Fill/Seal (BFS) technology only but now we are looking for anything which has synergy with BFS. We also have overseas companies approaching us for marketing tie-ups to launch in India. Marck's distribution network and hospital coverage attracts them. We have developed significant capabilities in terms of F&D, filings and our presence in various markets; as an extension to that now we are open to explore the opportunities available in the marketplace. Differently put, we would like to be a sterile dosage company and now we are looking at sterile drug systems other than BFS."

On the manufacturers' side, players would include Tablets India, Grandix, Lincoln Pharma, Noel Pharma, Molekule India, Martin Harris, Bombay Tablet, Synokem and others. However, in the formulations for vaccines, biologicals, and oncology drugs, large domestic companies and MNCs have a major share since the market is quality conscious and the products need technical expertise to manufacture and stock. Key players in this market segment are big size pharma companies and MNCs such as GSK, Pfizer, Sanofi Pasteur, MSD, Serum Institute, Panacea Biotech, Shantha Biotechnics and so on.

"This market segment is growing healthily in terms of value because of the product differentiation and product benefit it offers to the patients," explains Kar.

A few collaborations

Panacea Biotec is associated with WHO for supplying polio vaccine throughout the world
Panacea also has a JV with Chiron which will strengthen their position in terms of technology to produce and market paediatrics combination vaccines in India
Bangalore based Strides Arcolab has acquired a sterile injectable manufacturing facility in Brazil to cater to the injectable market for infectious diseases globally
Strides Arcolab also has signed an agreement with Pfizer (the world's largest pharmaceutical company by value) to supply Pfizer's off-patent sterile injectables and oral drugs for the US market
Serum Institute has an agreement with the Global Alliance for Vaccines and Immunization (GAVI) to develop, manufacture and sell meningitis vaccine
Shantha Biotechnics was taken over by Sanofi Pasteur (the vaccine division of Sanofi-Aventis) and was awarded a contract by the UN to supply pentavalent vaccine worth $340 million over the period 2010-12

Surging rural market

"Pens are finding increasing popularity to self-administer insulin in Europe. These devices are becoming more popular among diabetics in the US and this could find a niche market in India as well"

- Vikram Gupta,
Chief Operating Officer,
IndiaVenture Advisors

"With modernisation and new hospitals, the number of quality conscious customers who prefer to buy dependable parenteral products for their modern healthcare setup is steadily rising and will continue to rise for the next few years. Accordingly, the parenteral segment will enjoy excellent growth in the coming years. The key challenge, to emerge successful in this segment, is to provide consistent quality"

- Ketan Patel,
Managing Director,
Troikaa Pharmaceuticals

"The injectables business is highly capital intensive with a long gestation period. Therefore players look for collaboration in this area"

- Bhavesh Patel,
Managing Director,
Marck Biosciences

Though the urban setup is attractive and lucrative enough for major deals to make it through, the rural market is also up for a surge. As Kar rightly claims, "The rural market has tremendous growth potential for injectables in anti- infectives, GI segments and pain management drugs for several reasons-patients come at a late stage to the physicians and want to see instant results from a drug; higher margins are provided to the physicians for the injectable drugs; absence of adequately qualified physicians in the rural areas has led them to use injectables frequently to avoid any further complications of the disease. These reasons have attracted many smaller companies to enter the rural market to tap its potential."

Growth areas

Oncology drugs form one of the largest and fastest-growing sectors of the global generic injectables market, informs Shetty, highlighting the numbers. Annual sales of the global generic injectables sector were $10-12 billion in 2008, according to IMS Health, with injectable oncology medicines accounting for about 30 percent. Additionally, injectable oncology medicines worth $9 billion in annual sales are expected to lose patent protection by 2015. The other area that he feels will drive growth in the Indian market is the antibiotics segment, as the injectable antibiotics market in India has shown robust growth in the last four to five years. This, Shetty says, is due to the introduction of high-end antibiotic brands at higher prices and the subsequent proliferation of their generic versions. The domestic injectable antibiotics market is worth $425 million and has been growing at a Compounded Annual Growth Rate (CAGR) of 21 percent in the last three years. And so is Troikaa's focus on pain management, cardiology and nutraceuticals, to leverage the high potential that lies herein.

Gupta points to another growth area. He says, "It is also expected that there will be higher growth in the pre-filled and lyophilised products due to increasing demand for simplified processes at the point of care. The main challenge for pharma companies is to make these drugs easier to administer, safer, more reliable, and economical." Patel agrees that keeping in sync with the demand for certain products, "Marck is also looking at other products like lipids, and total parenterals nutrition, which will strengthen our IV parenterals formulation basket. Besides this, we are working on new drug delivery systems to facilitate treatment. This will be a first time offering to the medical fraternity."

The market for injectables in the antibiotics segment and particularly for cephalosporin has been growing significantly and there is a huge opportunity in the Indian market itself. The other market with huge potential is multivitamin injectables, as per Gupta. The size of the non-biological injectables market is estimated to reach about $80 to $100 billion in 2015, out of which generics could account for about $35 billion. It is estimated that from 2006 to 2009 patents expired on non-biological injectables worth $15 billion.

Collaborate to grow

The adage that adversity makes strange bedfellows is true of many industries and pharma is no exception. To cope with rising demand and increase their profit margins, Indian players have adopted the acquisition route to tap the world markets. The synergies that India has been boasting about for so long have once again taken the lead to bring in business. Due to a few factors like low cost of production and availability of adequately qualified manpower, Indian companies are able to manufacture and supply high volumes of parenteral drugs to the world market through JVs with MNCs/NGOs/international health organisations such as WHO, UNICEF and so on. More such JVs are expected in future, which will shape the injectables/parenterals market, opines Kar.

Coming soon

In recent past there has been double digit growth in market segments where injectables and parenterals are largely used such as vaccines, anti-infectives, oncology, biologic therapy, nutrition, pain management and so on. Most of these markets are growing at a rate close to or more than 20 percent, except for injectables in the antibiotic and pain management segment, which are growing at a rate close to 15 percent. These market segments are expected to grow at a similar rate in the coming three to five years, which will drive the usage of parenterals, feels Kar. However, Bhavesh Patel thinks that the injectables market is driven largely by private investment, the number of hospital beds, physicians, health insurance, corporate hospitals and patent infrastructure. According to a KPMG report, it is expected that two million hospital beds and 4,00,000 physicians will be added by 2015, which will set the market to grow. With this there will be an emergence of newer and more sophisticated devices, which are cost-effective, and safe for use, opines Gupta. He cites an example: "Pens are finding increasing popularity to self-administer insulin in Europe. These devices are becoming more popular among diabetics in the US and this could find a niche market in India as well."

Also, while healthcare service providers and insurance companies abroad continue to drive prices down, injectable products, because of their higher regulatory standards and the complexity of development or manufacturing process, tend to command higher margins and price stability as compared to oral products. It is therefore expected that this market will continue to attract pharma and biotech companies who will focus on new product innovation as well as cost-cutting to improve their overall profit margins, Gupta predicts. Ketan Patel, Managing Director, Troikaa Pharmaceuticals, concludes, "With modernisation and new hospitals, the number of quality conscious customers who prefer to buy dependable parenteral products for their modern healthcare setup is steadily rising and will continue to rise for the next few years. Accordingly, the parenteral segment will enjoy excellent growth in the coming years. The key challenge, to emerge successful in this segment, is to provide consistent quality." Another challenge that will be an opportunity for biological injectables developers, Gupta remarks, is the fragile nature of the biological drugs themselves, which requires they be transported and stored at low temperature-which adds to the cost of distribution. To avoid the problem of temperature-dependent stability, these drugs are often processed and packaged in dry or powder form. These trends indicate that over a period of time more players will emerge in this segment either as independent entities or collaboration that will bring new high-end products.

arshiya.khan@expressindia.com

- Source: Express Pharma, 1-15 May 2010; Express Healthcare, June 2010

- Link: http://www.expresspharmaonline.com/20100515/market01.shtml

http://www.expresshealthcare.in/201006/knowledge01.shtml

Indian oncology market likely to triple in 4 years

2010-04-01T01:13:00.001+05:30

fe Bureaus
Posted: Thursday, Apr 01, 2010 at 2232 hrs IST
Updated: Thursday, Apr 01, 2010 at 2232 hrs IST

Mumbai: The oncology market in India is expected to touch nearly Rs 3,309 crore by 2014. According to a recent Frost & Sullivan report, the cancer market is expected to grow at a compounded annual growth rate (CAGR) of 21% from 2008 to 2014. The growth will be driven by the introduction of new treatments, increasing number of patients on chemotherapy, and improved access to modern cancer therapies. The Indian oncology market stood at Rs 1,065 crore in 2008.

Deaths from lung cancer, breast cancer, ovarian cancer and pancreatic cancer are rising in India. Cancer accounts for 8% of the main causes of deaths in India.

Increased rates of incidence of various cancer types prevailing in India has created interest among various companies like BMS, Pfizer, Roche, Sanofi-Aventis, GSK, SP Corporation, Fresenius Kabi, Natco Pharma, Sun Pharma, Dr Reddy's and Biocon to focus in the oncology segment. More than 30 companies in India market drugs for cancer treatment.

According to Bibhuti Bhushan Kar, program manager, pharmaceuticals and biotechnology, Frost & Sullivan, the major factors driving the oncology market include increasing patient population, combination therapy as standard therapy and novel high-cost therapy.

In males, lung cancer has the highest mortality rate of 28 per 10,000 males, whereas cervical cancer is found to be the most common cancer in females with a mortality rate of nearly 15 per 10,000 females. Lung cancer is also the most commonly diagnosed cancer in the world. Over 60,000 new cases are diagnosed every year and 80 % of patients are at an advanced stage, mostly the middle-aged and elderly.

Bibhuti Bhushan added: "New therapies to arrive on the market are priced in a much higher bracket because of their proven survival benefits and reduced toxicity. These therapies are preferred over generic drugs, thereby generating more revenues."

Non-small cell lung cancer (NSCLC) accounts for approximately 90% of all lung cancer. The primary cause of lung cancer in up to 90% of patients is tobacco. Lung cancer represents one-fifth of all cancer-related deaths in India.

- Source: The Financial Express, April 01, 2010

- Link: http://www.financialexpress.com/news/indian-oncology-market-likely-to-triple-in-4-years/598336/

Analyst Briefing about Oncology Market

2010-03-29T01:09:00.001+05:30

Frost & Sullivan Announces Analyst Briefing on Indian Oncology Market

NewswireToday - /newswire/ - Mumbai, India, 03/29/2010 - The Healthcare practice at Frost & Sullivan, a Growth Partnership Company is pleased to host an Analyst Briefing on the Indian Oncology Market. The presentation will be held on Tuesday, March 30 at 3:00 pm Indian Standard Time.

The latest research of Frost & Sullivan on 'Overview of Indian oncology market' presents an all-encompassing research of Oncology markets for various cancers: Breast cancer, Lung Cancer, Ovarian cancer, Prostate cancer, Head and Neck cancer, Cervical cancer, Renal cell carcinoma and Pancreatic cancer. The research focuses on pharmaceutical industry spending in various segments of cancer treatment. Cancer is the leading cause of death in India, so the Oncology therapeutic market is growing at a very high speed. The research study of this market represents the competition and strategic analysis of various segments of cancer market.

Oncology market is the most attractive and growing healthy. Most of the MNCs present capture maximum market share, but hardly anybody knows about the market and its dynamics. Most of the players are not sure about where the market is moving and each one is trying to increase its sales as maximum as possible.

Through this briefing, we shall present active reforms and recommendations that could be followed to plan out the strategy in the cancer market. The briefing, besides covering an analysis of the drivers and key constraints that affects growth of Oncology market, shall also cover the diseases including its impact on local and global scenario.

The briefing will benefit the API manufacturers, finished formulation manufacturers, marketers, decision makers, by discussing the market trends and future drivers in Indian context.

According to Frost & Sullivan Program Manager Bibhuti Bhusan Kar "Lack of any authenticated and audited data on the market, absence of any standardized treatment protocol, and increasing demand for newer and newer molecules for treatment has made the marketers to plan very wisely. Knowing the market better would solve the purpose."

To participate in this briefing, or for an interview, please email Anish Charles at anishc[.]frost.com with the following information: your full name, company name, title, telephone number, office email id, address, city, state, and country. Upon receipt of the above information, a registration link will be emailed to you. You may also register to receive a recorded version of the briefing at anytime by submitting the aforementioned contact details.

If you are interested in a virtual brochure, which provides manufacturers, end users, and other industry participants with an overview of the Indian Oncology Market in India, then send an email to Anish Charles / Nimisha Iyer, Corporate Communications, at anishc[.]frost.com / niyer[.]frost.com, with your full name, company name, title, telephone number, company email address, company website, city, state and country. Upon receipt of the above information, an overview will be sent to you by email.

Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from 40 offices on six continents.

- Source: PR Newswire Today, 29 March 2010

- Link: http://www.newswiretoday.com/news/67488/

Pharma Logistics Supplement: Asian Potential

2010-03-01T00:49:00.008+05:30

Bibhuti Bhusan Kar, program manager, Frost & Sullivan

Logistics providers can ride on the growth of Asia's expanding markets by offering reliable and efficient services in the transport, monitoring and storage of pharmaceuticals.
Monday, March 01, 2010
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Program manager, pharmaceuticals and biotechnology, south asia & middle east, frost & sullivan the pharmaceutical industry is one of the few sectors that has been relatively resilient during the economic slowdown. Healthcare is typically one of the last areas where consumers cut spending. According to the world health organization, asia accounts for half of the world's population and has a significant market for novel drugs and improved healthcare systems.

In 2008, the global pharmaceutical market was worth us$773 billion, growing by about five percent over 2007, according to ims. The asia/africa/australia region has had the highest growth rate of 15.3 percent to us$90.8 over 2007, as compared to north america at 1.8 percent and japan at 2.1 percent.

pharmaceutical products need to be transported from the manufacturing site to the end user. However, unlike other types of products, pharmaceutical products need specialized transportation to maintain quality as many drugs are temperature, humidity and light sensitive. Any slight deviation in handling during transportation can cause degradation in the quality or potency of the drug.

Maintaining standards
drug manufacturers need to enforce the standards of good manufacturing practice (gmp) during manufacture to produce drugs in certain temperatures and humidity. This is the same for various other procedures such as quality control, packaging, storage, etc. Pharmaceutical companies have to follow stringent regulatory guidelines to obtain approval to market the drug.

The drugs manufactured are under scrutiny by the regulatory authorities to ensure quality. Any change in quality of the drug can be expensive to the manufacturer or the marketer of the product.

Certain medicine such as vaccines, biologics and certain ophthalmic preparations, require cold chain management from the site of manufacturing till it reaches and is used by the patient (end user). These drugs need special temperature controlled storage to maintain their quality and efficacy. They can become less effective or lose their potency if not stored properly throughout the distribution process. Generally, two temperature ranges are recommended for the cold chain products as per their labels - products requiring temperatures between 20c to 80c and those requiring a range of between -100c and -200c.

For example, sanofi-pasteur imports vaccines from a manufacturing site in france. The cold chain has to be maintained from that site to the end user in India, to ensure the potency of the drug - demonstrating the importance of logistics in the pharmaceutical distribution channel.

As drugs have a finite shelf-life, the time that is required for transportation is also an important consideration.

Competitive pressure
major markets in asia are driven by generic drugs and these drugs compete by price. The substitution of drugs is common where a particular product has become out of stock at the retail counter. It is important that the appropriate medicine and dosage is administered to the patient at the right place, time - and the right price.

pharmaceutical companies are increasingly under pressure for reasons such as lack of innovative molecules in the pipeline, increasing pressure from the government to reduce healthcare expenditure, and the rising cost of regulatory activities. Many companies have to slash operational costs and therefore reduce inventory levels at various stages of distribution. This is to reduce order cycle time and to increase efficiency. This further increases the requirements for an efficient and proper distribution system, to ensure just-in-time deliveries.

In some countries like India, there are a lack of regulatory standards and stringent norms for logistics. Many of the manufacturers transport the drugs through conventional methods such as trucks.

Also, certain drugs reach expiry in the market at the retail counter and are usually returned to the pharmaceutical companies for compensation with fresh products.

In countries such as India, the distribution channel is multilayered. At every level, there are associations comprising of stockists or retailers that decide on the products and usually demand higher profit margins. Pharmaceutical companies are not able to bypass the system and reach the customers directly.

In china however, the government has been able to implement reforms to flatten the distribution structure, reducing the overall cost of the supply chain.

In India, there are about 65,000 stockists and 550,000 retail outlets in the pharma industry, which has increased six- and fourfold respectively in the last 25-30 years. Similarly in china, there are close to 125,000 pharmaceutical retail outlets and more than 15,000 wholesale enterprises in the pharmaceutical distribution network. The accessibility of drugs to these entities is important, which means that logistics has to play a crucial role for just-intime deliveries and at the same time avoid stock outs.

The retail chains sector also looks promising. In India, retail chains such as religare wellness, reliance wellness, 98.4, the medicine shoppe, himalaya, guardian and others have been successful. From the logistics point of view this segment is likely to be lucrative as it requires efficient logistics solutions from third-party logistics service providers.

Regulatory challenges
stringent government regulations can create hurdles due to the documentation process. Especially pertaining to the import or export of the drugs, the documentation process can be time consuming. The time period also varies from country to country. Any issues in the documentation process will result in the materials being withheld for a longer period of time. However, well-trained logistics support from third-party vendors can be tapped on to take care of these issues.

The biotech industry in the region is in a nascent stage. However, in India and china, the growth of the industry is faster than those of other countries in the region. Biotech products require careful climate control throughout their transit period, which makes them vulnerable to spoilage during distribution. Therefore, the demand for well-trained and efficient logistics providers is high.

There are large untapped rural markets in countries like India and China. Most of the modern medicines today are not accessible by the rural population in India because the supply chain is unable to reach these areas. Close to 70 percent of India's population comprise the rural market which makes it a potentially lucrative market for pharma logistics players.

In addition, most multinational national corporations (mncs) are operating mainly in the metropolitan tier one and tier two cities in India. Because of the growing healthcare infrastructure in India and also across the region, there will be an increasing demand for drugs in previously untapped markets.

The clinical trials industry in asia and more specifically in china and India is growing rapidly. This is because of the cost competitiveness in the region, compared to western countries, and the presence of widely available disease profiles. In addition, the availability of treatment naive patients and skilled human resources are also contributing factors.

Medicines have to be transported to different patient centers or study sites across the country to be tested on various patients. As the transportation of medicines is subject to regulations, the existence of effective logistics is necessary.

In certain cases, batches of medicines may be required to be returned to the manufacturer from the market. In countries like India, a system is lacking for the recall of drugs, once the latter has entered the market. This is due to the fragmented nature of the distribution channel.

Technologies such as Radio Frequency Identification (RFID) can be used to keep track of the product along the entire distribution channel, and would prevent counterfeit drugs from entering the distribution system. However, the adoption of this technology in India is slow.

Potential for Expansion
in 2008, the global pharmaceutical logistics market recorded revenues of about us$90.3 billion, which included services such as freight, warehousing, and express logistics. According to Cygnus research, the market size of Indian pharmaceutical logistics was close to us$200 million in 2006 and the industry has been growing at a rate of four percent since 2002.

According to an estimate, logistics comprises of 45-55 percent of the costs in the pharmaceutical value chain. Based on a study in 2009, transportation is the biggest contributor to logistics costs, accounting for about 45.7 percent.

The next two biggest contributors to pharmaceutical logistics costs are warehousing and freight forwarding, which accounted for 33.2 percent and 15.0 percent respectively. Most of the industry participants also aim to further reduce their overall logistics costs by 1-5 percent in the next 1-2 years. Inbound or outbound transportation and freight forwarding are expected to be the most sought-after logistics services during this period.

Many pharmaceutical companies are constantly looking at enquiry code: 102s01 outsourcing their logistics operations to service providers that can offer them end-to-end supply chain solutions. There is an increasing trend in the usage of technologies in the logistics sector such as track and trace, fleet management, warehouse management and planning and forecasting tools.

Looking at the present scenario of the pharma industry and the increasing pressure to reduce the cost of operations, the following services are required from the logistics support suppliers by the pharmaceutical companies:

• cost effective cold chain distribution management;
• maintenance of humidity, temperature and light for drugs during distribution;
• strategies for an efficient distribution system for just-in-time deliveries and to avoid stock outs and drug substitution;
• value-added services during the documentation process to avoid any delay during the import and export processes;
• value-added services to match the needs of clinical trial distribution requirements;
• technology to prevent counterfeit drugs from entering into the supply chain;
• technology to track and trace the location of drugs in the distribution channel.

The use of technologies can further enhance the efficiency in daily operations for faster and more accurate delivery. Technologies like track and trace systems can also increase the visibility of logistics end users, allowing customers to track their shipment or package and to know when the delivery will be performed. Warehouse management systems are used by pharmaceutical manufacturers and distributors. There is also an increasing adoption of visibility tools like bar-coding/RFID systems.

- Source: PharmaAsia, singapore, March 01, 2010
- link: http://pharmaasia.com/article-8358-pharmalogisticssupplementpharmalogisticsasianpotential-asia.html

Drug discovery paradigm shift

2009-09-10T00:25:00.005+05:30

Nayantara Som

Thursday, September 10, 2009

A convergence between the pharma and biotech sector will gradually see both parties leveraging their strengths in drug development, commercialization, discovery and manufacturing capabilities thus delivering innovation and changing the whole landscape of M&A deals.

Global pharmaceutical companies have been swimming in troubled waters for quite some time but the good news is that they are now on the proactive mode.
Big pharma’s acquisition spree started making big news since 2008. In January 2009, Pfizer acquired biotech big-wig Wyeth for $68 billion, followed by Roche ending its long drawn hostile battle with Genentech by buying the remaining 44 percent stake, thus acquiring the latter for $46.8 billion. This was followed by Merck’s announcement in March to acquire Schering Plough for $41.1 billion. Other big deals include: El Lilly’s purchase of ImClone Systems last year, Japanese giant, Takeda Pharmaceutical’s acquisition of Millennium Pharmaceuticals and Cephalon’s takeover of Australia’s Arana Therapeutics.

Convergence is the trend
Analysts claim that convergence between pharma and biotech companies is not a new trend and will continue to do so. Sujay Shetty, associate director, Pharma Life Sciences Advisory, PricewaterhouseCoopers (PwC), says, “From a global perspective, these big acquisitions have been taking place for the obvious reasons like the R&D pipeline drying up, and at the same time, biotech companies are either discovering a new molecule or a drug platform which could help replenish that pipeline. Deals like the Takeda-Millennium, ImClone-El lilly, Roche-Genentech will continue as long as big pharma sees the need to augment its pipeline which is not created in-house.”
Patent expirations will open the way for a fierce generic competition. “A lot of drugs are going to be off patent in future and will face fierce competition from the generic companies, thus will marginally reduce the revenue of the pharma companies. Increasing issues on drug safety norms delaying entry of new drugs into the market due to the stringent regulations in the clinical trials are some of the other reasons for pharma and biotech companies coming together,” says Bibhuti Bhusan Kar, program manager, South Asia & Middle East, Healthcare –Pharmaceuticals & Biotechnology, Frost & Sullivan. Hence, industry experts claim that convergence between the two will drive the wheels of the much needed innovation for the industry. It is a healthy market which will be the apt solution for big pharma’s reeling woes.
A PwC report on ‘Lifting big pharmas prospects with biologics’ , mentions that it will primarily be the biologics sector which will drive the M&A activity with protein-based therapeutics, MAbs and vaccines being hailed as promising sectors for growth. The same report also goes on to mention that in 2008, the therapeutic monoclonal antibodies sub-sector drew increased investment of $640 million in 46 deals, up from $477 million with 41 deals in 2007. Four of the top 10 human biotech deals in 2008, were companies focusing on therapeutic MAbs. It is also estimated that the market for MAbs is estimated to grow at a CAGR of 16.9 percent between 2006-12. Vaccines also drew in a considerable amount of investment of $494 million from 31 deals in 2008.
“In many therapeutic areas like CNS, Alzheimer’s and diabetes, we have seen that further meaningful innovation is not happening. Companies have been shifting their focus now on the root cause of any disease and understand the corrective measures to be taken more at the genetic level. Hence, a convergence between biotech and pharma will result in newer ways of finding curative therapies than the traditional synthetic ways,” opines Nair.
Moreover, maintaining an almost perfect balance between innovation on one hand and cost-efficiency on the other, it becomes the center of attention for strategy teams. Shetty mentions, “Pharma is on the lookout for new pipeline drugs. They have typically addressed that and are going out and buying companies. Companies are now saying that by 2012, they are to lose revenues and their scientists are not coming up with anything innovative. Therefore, buying a biotech company is the best option to keep those revenues flowing in.”
“As far as cost-reduction is concerned, pharma has got a huge infrastructure for R&D. Now there is a hope for them to do it more efficiently, not just in R&D but also for the ground level and fast-end clinical works,” he adds. To keep their business up and running, companies are now drawing up biological strategies which also include tapping emerging markets. The nature of competition is such that one day a company’s revenue might be $10 billion and with patent expiry, it is zero. “This does not happen in any industry. So the challenge is always on the innovation part of it, and cost comes after that,” observes Shetty.
The recent trend of convergence has thus changed the rules and landscape for M&A deals in the life sciences industry.
Sudeep Krishna, co-lead, Healthcare and Life sciences, Deloitte India, says, “The recent convergence trend has changed the rules of M&A activities, in the sense that traditionally we’ve seen that a pharma company acquires a biotech company having one or two blockbuster drugs with the deal around Rs 100-200 crore. Now, we see them acquiring big biotech companies having a whole pipeline of promising targets because big pharma has the money. The interesting aspect we’ve to look out for is the manner in which they integrate the entities especially the talent pool from both the entities.”

Impact of convergence
Drug innovation: With the convergence, the industry will now see a gradual blurring of boundaries between the biotech and pharma sectors. Such a convergence will open up avenues in the drug innovation process, the most obvious reason being that biotech companies whose forte has been innovation will replenish the drying up pipeline of pharma companies. “I think that drug innovation will go through a positive transformation. Now the cure will be much more holistic,” says Nair. Genentech for example, has cutting-edge products in both biotechnology and cancer medicines – with blockbusters
Avastin, which churned a revenue of around $2 billion last year and Herceptin, an extensive portfolio of new drugs.
Over the past one year, the number of FDA approvals for biologics has seen a gradual rise. For example, in 2008, there were 20 new molecular entity (NME) and four new biologics as compared to 16 NMEs and two biologics in 2007. Says Sanjay Singh, associate director, corporate finance, KPMG, “Biotech will aid significantly in drug discovery research especially in target identification, and lead generation and optimization activities.”
Moreover, big pharma companies are cash-rich companies. Hence, investing in expensive assets such as biologics is a risk they’re willing to take, considering the returns they’ll reap at the end. “With biotech companies focusing on molecular biology and genetic engineering approaches, and with pharma companies being the lavish spender in R&D for drugs with basic chemistry one can expect a larger success rate in terms of output from the biotech drug development rather than pharma,” says Kar.
The whole process of drug innovation is an expensive one which does require a continuous inflow of monetary funds, and convergence will be a solution to the problem.
Licensing deals: Typically, a biotech company is always on the lookout for revenue churning options. So licensing deals are the answer to the question wherein a biotech company can expect an inflow of cash returns in the form of upfront payments, milestone payments and royalties. Opines Krishna, “Licensing deals between pharma and biotech companies have been happening for a long time and will continue to do so. In fact, I would say that it was these licensing deals which was a stepping stone for a convergence of such a kind.” “Biotech companies had to out-license their molecules because of their limited market access, and pharma companies in-licensed molecules from biotech companies which looked promising. Later pharma companies went a step further and thought why not go in for an acquisition of these entities,” he adds.
An important fact to bear in mind is that big pharma’s primary capability is commercialization while biotech strength lies in discovery and manufacturing. “Big pharma has much deeper pockets. In the present global economic environment, biotech, which has traditionally been a beneficiary of venture capital (VC) and government funding, will have challenge in keeping the fund flow. Hence, a natural consequence of this will be licensing deals which focuses on leveraging each others strength for the best outcome,” adds Nair.
Outsourcing: Outsourcing projects on the other hand will either see a status quo or a gradual increase but not drop. Opines Singh, “It’ll lead to outsourcing of high-end preclinical research to Indian companies, though it’ll be a slow and gradual process as Indian companies will need to demonstrate their skill and knowledge base in high-end preclinical research areas.” VCs will also have a pivotal role to play. The VC market has supported the growth of the outsourcing market due to the fact that there’s a significant risk involved in bringing a drug to the market.
Manufacturing: Manufacturing is another area which will see a positive transformation with biotech being a catalyst in the transformation. The dynamics of biotech manufacturing is different from pharma manufacturing, hence, the former will remain as a separate unit post-integration. “A convergence will lead to a need to invest in specialized, high-end fermentation and purification units,” says Singh.
At a closer look, a pharma company will reap more benefits than its biotech counterpart. “If you look at the top 10 pharma companies, they have all made biotech investments but their manufacturing capabilities are limited. Hence, a biotech manufacturing facility will be an additional and useful asset to a pharma company,” adds Krishna.
Biosimilars: With biosimilars being the buzz word, and some movement happening in the US Congress for a regulatory pathway, analysts and industry experts are hopeful that such a convergence might boost up the biosimilars space. Above all, an important fact to bear in mind is that all pharma companies have a generic strategy in hand, which will be a big boost for the biosimilar space.
According to Nair, “All the big pharma companies are talking about emerging markets and all of them have a generic strategy now. With generics being the focus for pharma companies, I see a collaboration here which will immensely benefit biosimilars. That’s because biosimilars have much better margins than other generics which will attract big pharma, even while big pharma’s commercialization capabilities will give the access and reach to biosimilars.”
Integrating the two entities: A major task in hand would be integrating assets of two entities which are in all aspects poles apart from each other. Experts have unanimously opined that companies will prefer to keep assets pertaining to R&D and manufacturing independently.
Ideally, when a pharma company takes over a biotech organization, they try and preserve the culture of the latter, which is more entrepreneur-driven and polished compared to a pharma organization which is more process driven. Integration will ideally be seen in the shared services, human resources and the financial services. The Roche-Genentech integration is an apt example. “Genentech is a fiercely independent company, and even after Roche taking over, its R&D unit has been kept independent,” says Krishna.
Singh opines that integration could happen at the sales force and manpower level. “I see integration will mainly happen at the manpower level and sales force to a certain extent. Manufacturing will be a separate unit because you’ll need a different technology. Also, there could be a synergy at the development and regulatory level,” he adds.

Company strategies
Pfizer, which has now set its foot in biologics has majorly revamped its business strategies. Following the Wyeth acquisition, it will establish a unique research model designed to advance the strong scientific capabilities of both Pfizer and Wyeth, and to support the new company’s nine diverse healthcare businesses. In order to maximize new opportunities in biopharmaceutical research, Pfizer will form two distinct research organizations —the PharmaTherapeutics Research Group and the BioTherapeutics Research Group. The PharmaTherapeutics Research Group will focus on the discovery of small molecules and related modalities and the BioTherapeutics Research Group will focus on large-molecule research, including vaccines. The new BioTherapeutics Research Group will capitalize on Wyeth’s industry-leading expertise in biologics and build on the momentum established by both Pfizer’s Biotherapeutics and Bioinnovation Center (BBC), and centers of large-molecule research and pharmaceutical science excellence in PGRD, which will be a part of the new and larger group. This new group’s mandate will be to create a broad and deep pipeline in vaccines, antibodies, proteins, peptides, nucleic acids and other novel modalities.
“Creating two distinct but complementary research organizations, led by the top scientist from each company, will provide sharper focus, less bureaucracy and clearer accountability in drug discovery,” says Jeff Kindler, CEO, Pfizer, in a press release. The new Pfizer will consist of nine diverse global healthcare businesses. The convergence between the two entities is aimed to capture key therapeutic areas such as cardiovascular, oncology, women’s health, CNS and infectious disease; vaccines, biologics and small molecules; and animal health with products for companion animals, consumer health, biologics and anti-infective. Going into emerging markets like China, Latin America and the Middle East is also on the cards.
In order to preserve the ‘biotech’ work culture of the company rather than diluting it, Genentech’s research and early development will operate as an independent center. At present, Genentech’s Avastin has been approved in the US and clinical trials are in progress to investigate the efficacy of Avastin in several other tumors. The synergy target increased to one billion Swiss francs annually, and a total one-time integration costs of approximately three billion Swiss francs has been alloted. The combined company has development portfolios with 10 new molecular entities in ongoing or planned late-stage clinical development.
Following the Eli Lilly-ImClone systems deal last year, their combined oncology portfolio will target a broader array of solid tumor types including lung, breast, ovarian, colorectal, head, neck, and pancreas, thus positioning Lilly to pursue treatments of multiple cancers. Partnering with ImClone will expand Eli Lilly’s biotechnology capabilities. “We think very highly of ImClone’s ground-breaking work in oncology, particularly its success with Erbitux(R), a blockbuster targeted cancer therapy, and its ability to advance promising biotech molecules in its pipeline,” says John C Lechleiter, president and CEO, Eli Lilly. This will also help them broaden their portfolio of marketed cancer therapies and boost Lilly’s oncology pipeline with upto three promising targeted therapies in phase III in 2009. By bringing together ImClone’s and Lilly’s oncology products, pipelines and biotech capabilities, the company is taking a step forward in addressing the challenges of patent expirations.
The combined entity of Merck and Schering-Plough will bring in a combined portfolio of products in key therapeutic areas which include cardiovascular, respiratory, oncology, infectious diseases, neuroscience and women’s health. Moreover, Merck will now get a footing in the emerging markets and hence devise a strategy accordingly for these markets because of the fact that Schering-Plough generates more than 70 percent of its revenues outside the US with around $2 billion in revenues coming in from these markets.
The Indian vaccine sector is a growing market and post Shantha-Sanofi deal, analysts predict that there will more such deals in this space to follow suit.

Challenges
Integration of assets of both the entities could be a challenge. Biotech is a different ball game and intellectually they’re different from their pharma counterparts. While biotech, which is still in developing stage, is science-driven, pharma is mainly commercialization-driven.
Kar says, “The biotech market is also much more concentrated than the pharma. “The biologics are costly as compared to the pharmaceuticals. We have to really see how pharma companies are moving ahead with the higher prices of biologics to make it a drug of choice, as the convergence will find the pressure both from the government and the consumer to slow down the growth of the healthcare costs,” Kar adds.

Looking ahead
With such a convergence, in the near future, one would see fewer pure biotech companies. “Pharma has the money, it has the need to reinvent itself and their solution being biotech and biotech has it own challenges. So, a convergence will be natural. Currently pharma and biotech is fairly distinctive and I see that line getting blurred,” adds Nair.
Singh maintains that a major trend would be companies would have a dedicated focus on biogenerics. “Another trend would be that within the fold of a pharma company there would be a separate business units which would focus on chemical as well as biopharma. The marketing strategies might differ because normally biological compounds are driven by value and not volume and there is a different logistics chain which is used for biological compounds,” he concludes.
Mixed reactions have emerged within the industry as to whether we can expect to see similar deals this year. There was talks of Pfizer buying out Biogen but the deal did not take off because of valuations. There were talks of Amgen being acquired as well as Bristol-Myers Squibb. “Small deals will continue to happen. However, I do not expect to see any big biotechs being up for sale. This is primarily because, they have the funds and are public entities,” said a research analyst. “ There are some big deals bound to happen this year. We can look out for some,” opines another analyst from a well-renowned firm.

- Source: BioSpectrum, Sept. 10, 2009

- Link: http://biospectrumindia.ciol.com/content/BioSpecial/10909102.asp

Big pharmas distribute Indian generics

2009-08-18T00:09:00.002+05:30

Narayan Kulkarni

Aug 18, 2009: Pfizer, world’s No. 1 pharma company with revenues of $48.3 billion in 2008 as compared with 2007 full-year revenues of $48.4 billion announced that it has entered into licensing agreements with two Indian pharmaceutical companies namely Aurobindo Pharma and Claris Lifesciences strengthening its position in emerging markets and significantly expanding its portfolio of medicines in its Established Products Business Unit.

Similarly, GlaxoSmithKline, world’s No. 2 pharma company announced an agreement with Dr. Reddy’s Laboratories in June, to develop and market for selected products across an extensive number of emerging markets, excluding India.

Commenting on the deals with the Indian generic players, Jeff Kindler, Chairman and CEO of Pfizer said, “The announcement demonstrates Pfizer’s commitment to improving the global public health landscape by making needed quality medicines—in a range of disease areas—accessible to underserved populations worldwide. The off-patent marketplace worldwide too often suffers from quality and supply reliability issues. With our broad established medicines portfolio and our world-class manufacturing capabilities, Pfizer is in an ideal position to supply high-quality medicines at affordable prices to people around the world.”

Pfizer has been active in generic business through its subsidiary, Greenstone LLC, (the seventh-largest generic pharmaceutical company in the world by volume of prescriptions dispensed).

With the above deals, Pfizer has enhanced its offerings in the emerging markets that are experiencing growth of 12-13 percent to reach $85-90 billion by 2012. The growth is driven by greater access to generic and innovative new medicines. Pfizer hopes to expand its product offerings and pick up enough sales to help cushion the blow when Lipitor goes off patent in 2011.

“It is the era of alliances and partnerships and with the big shifts happening in the global pharmaceutical industry, this relationship will keep Claris at the forefront of change. Through Pfizer, we will get access to extremely competent sales and marketing partner for our regulated markets strategy in order to enhance our existing presence in these markets,” said Arjun Handa, Managing Director and CEO, Claris Lifesciences.

Commenting on the deal with Dr Reddy’s Labs, Mr Abbas Hussain, President Emerging Markets, GlaxoSmithKline said, “This is significant step forward in our strategy to grow and diversify GSK’s business in emerging markets. Growth in both population and economic prosperity is leading to increased demand for branded pharmaceuticals. This new alliance will combine Dr Reddy’s portfolio of quality branded pharmaceuticals together with GSK’s extensive sales and marketing capabilities. Together we’ll be able to deliver more medicines of value to more patients in these countries.” However, Mr GV Prasad, Vice-Chairman & CEO, Dr Reddy’s Labs said, “We combine forces with GSK to fully realise the potential of our strengths in technology, product development and manufacturing across a range of high growth emerging markets. We hope to take our purpose of providing affordable and innovative medicines to a much wider population through this partnership.”

Mr Sujay Shetty, Associate Director, Pharma Life Sciences, PwC, India said “It is a time for collaboration and partnership. In that direction the latest developments are positive developments for both Indian companies and MNCs. For generic companies, the tie ups will open up to offer their affordable and innovative medicines to a much wider population. Without reinventing the wheel, the MNCs can offer quality products by working with partners at affordable price in the emerging markets that are growing faster than the developed pharma markets.”

However, Mr Bibhuti Bhusan Kar, Program Manager, South Asia and Middle East, Healthcare-Pharmaceuticals & Biotechnology, Frost & Sullivan, India, said, “Drying pipeline of new drugs, increased R&D expenditure required to bring a drug to the market, increased pressure in the developed nations to bring down the health care costs are some of the factors that are responsible for the big MNCs to fine tune their business models to enter/increase their portfolio into the branded generics market.”

The other factor that is driving the big pharmas to look at branded generics is strategic shift in the healthcare reform in the US (world’s no 1 pharma market). The pharma majors joined hands recently to reduce the healthcare cost increases by $2 trillion over a decade. These companies can achieve this only by introducing branded generics in the US.

Mr Bhusan further said, “India being a low cost manufacture destination and the fact that India has highest number of US FDA approved plants outside the US and is more experienced meeting the regulatory requirements of the US and EU, Indian manufacturers are the preferred choice as a partner for sourcing the products.”

Reacting to the developments, Hitesh Sharma, Partner & National Leader, Health Sciences Practice, Ernst & Young India, said, “The Indian companies are into similar activities i.e, distributing the products of MNCs in India. Now, MNCs will distribute Indian generics. The companies are always scouting for opportunities for growth and mutual benefits. The deals will happen if it will be win–win for both the parties. However, it is difficult to say how many such deals one can expect in near future.”

“Looking at the present scenario, one can expect more such deals in future as well by these MNCs with generic players especially with the Indian manufacturers, because of their strengths in technology, diversified product portfolio and rich experience in the developed markets,” points out Mr Bibhuti Bhusan.

Entering the new markets, these kinds of deals will be an exciting opportunity for Indian generic companies like Cipla, Wockhardt, Lupin, Glenmark, Sun Pharma, Cadila as they provide stability towards their earnings and accelerate their growth plans.

India well positioned to leverage partnering options
Big Pharma has been under strain to sustain its existing revenue levels due to the challenges faced in terms of slowdown in new product launches and thinning of new product discovery pipelines clubbed with a large number of blockbuster drug patent expiries and increasing penetration of generics, particularly in the current market scenario. All this has led Big Pharma to aggressively look at building sustainable diverse business models by foraying into and strengthening new high-growth business.

Foraying into related sectors such as biotechnology, counted among the most promising sectors worldwide. Building generic product portfolios either through acquisitions (such as the Daiichi–Ranbaxy deal) or through strategic alliances (such as the recent GSK–Dr Reddy’s, Pfizer-Aurobindo and Pfizer-Claris deal).

Given the increasing use of generics globally, as governments worldwide as well as private healthcare payers look at controlling rising healthcare costs, the growth of this market outperforms the growth of the overall pharma market, making it an attractive investment opportunity. Further, strategic alliances are a less risky option than pursuing outright buy-outs and are hence emerging as a preferred route.

It may be observed that traditionally there have been similar examples where Big Pharma has built its presence in the generics market through focused business units. However, given the current unprecedented pressures that the Big Pharma is reeling under, this strategy has gained all the more importance and we can expect more such strategic alliances between the Big Pharma and generics players in the time to come.

With India already having made its mark in the global generics market as a supplier of high quality – low cost drugs and its strengths in terms of product development and manufacturing portfolios, niche therapeutic focus and well-balanced geographic mix focusing on both regulated and semi-regulated markets, it is well positioned to leverage the opportunity and further explore such partnering options. Additionally, these companies can strongly benefit in terms of financial support, brand name and well established marketing and distribution channels of the Big Pharma player.

- Source: BioSpectrum Asia Edition, Aug 18, 2009

- Link: http://www.biospectrumasia.com/content/060809IND10235.asp

The French connection

2009-08-03T21:08:00.008+05:30

BV Mahalakshmi, Sudhir Chowdhary

Posted: Monday, Aug 03, 2009 at 2346 hrs IST
Updated: Monday, Aug 03, 2009 at 2346 hrs IST

Indian vaccine makers seem to have entered good times. As France’s largest drug maker, Sanofi-Aventis, agrees to buy a majority stake in Hyderabad-based Shantha Biotechnics, a sense of excitement combined with renewed confidence has rejuvenated the domestic vaccine makers.
Investor interest has shifted back to the vaccine sector and there is widespread excitement in industry circles that the product portfolios of Indian vaccine companies are niche and less susceptible to competition and are hence attracting global recognition. The Sanofi-Shantha deal has highlighted the increasing potential of Indian vaccine companies in the realm of drug research. Excitement is also on account of the fact that intellectual property and manufacturing facilities of Indian companies will attract strategic investors in the times to come.
The deal has again brought into focus the strong value proposition that Indian vaccine makers such as Serum Institute of India, Panacea Biotec, Indian Immunologicals, Shantha Biotechnics, Bharat Biotech bring with them in terms of strong discovery research, combined with good manufacturing capabilities. They have made their mark as reputed vaccine producers in the world, exporting to a number of countries. The fact that Shantha Biotech was able to attract Sanofi with its intellectual property and good manufacturing facilities is a sign of the maturity of the Indian vaccine industry.
No sooner was the deal announced that the stock prices of domestic vaccine makers skyrocketed, riding on investor interest. A rich product pipeline along with several vaccines under advanced stages of development at domestic companies add to the glitter. Indian vaccine makers have a long history of supporting WHO and UNICEF in developing and supplying affordable vaccines such as, oral polio, measles, combination vaccines etc. Products in the pipeline include vaccines for rotavirus, swine flu, typhoid, various forms of cancer and other adult vaccines.
Perceived as low growth and uneconomical earlier, vaccines have been in focus for global drug companies during the last few years; the sector is currently estimated at $20.6 billion and is said to be growing at 10% compared to the 3-4% growth for the overall global pharmaceutical industry. Hence global drug majors facing patent expiry and shrinking product pipelines are increasingly looking at this segment to maintain their topline and profitability. The vaccine segment continues to enjoy good profitability—thanks largely to the high entry barriers—and hence has been drawing renewed attention of the drug majors.
The US and European vaccine majors have targeted emerging markets as sales in the mature markets of America and Europe slow. For instance, Shantha’s buyout is part of Sanofi-Aventis CEO Chris Viehbacher’s strategy to aggressively grow the company’s vaccine business. As on date, he has inked four vaccine deals—three in emerging markets—since he became the company’s CEO last year. These include a deal for Mexico’s generic maker Laboratorios Kendrick, Brazilian generic drug company Medley, and California-based cancer specialist BioPar Sciences. Sanofi is trying to refill a development pipeline seen as lacking new drugs to replace blockbusters such as Plavix, which is used to prevent blood clots that will soon come off patent and face competition from generic drugs. Moreover, vaccines are considered to be increasingly important as they are typically ordered by governments in bulk and can be administered to large populations.
No wonder, the Shantha Biotechnics buyout did not surprise many. But what left many astounded was the size of the deal. At a buyout price of Rs 3,778 crore, the transaction even exceeded the combined Indian vaccines industry’s revenues of Rs 3,587 crore for the fiscal 2008-09. Equally shocking was the valuation more than eight times of its projected sales of Rs 440 crore for the current year. Analysts reckon the deal has catapulted Shantha Biotechnics into the big league. It is now one of the top 15 drug companies by market valuation, ahead of even the Indian subsidiaries of global vaccine majors in terms of market value.
“The deal sends a strong signal that Indian pharmaceutical and biotech companies are well respected. The high valuation is due to our quality conscious products at low prices. We have been focusing mainly on good quality and developing new products for affordable healthcare,” says KI Varaprasad Reddy, managing director, Shantha Biotechnics. “The valuation comes at a historical cost which created and then distributed wealth in the form of employee stock options. Even the lowest employee got about Rs 4-5 lakh on an average,” he adds.

According to Nitin Deshmukh, head of private equity at Kotak Mahindra Bank, the valuation is justified and the Sanofi-Shantha Biotech deal is not a one-off deal. “Finally, there is recognition for intellectual property being generated by an Indian vaccine company. There are a number of biotech companies which are not in the public domain and yet, they are doing some significant work. As they approach the market with their product, I am sure we could expect similar valuations for them too,” he adds.

Without any doubt, the deal is seen as a strategic fit for both Sanofi-Aventis and Shantha. While the French firm would benefit by acquiring a slew of new vaccines under development at Shantha facilities, the Indian company would gain access to new technologies and the global market. “Shantha would provide Sanofi Pasteur with a portfolio of new vaccines in development which complement Sanofi Pasteur’s current vaccines, positioning the company to accelerate its growth in strategically important emerging markets,” says Viehbacher. “Shantha’s manufacturing facilities allow Sanofi Pasteur to gain high quality capacity in order to enable us to provide important vaccines at affordable prices to many people around the world,” he reiterates. Clearly, it is the lure of the rich product pipeline of Shantha Biotech which attracted Sanofi-Aventis to go for the acquisition. The Indian company is developing generic biologicals, therapeutic antibodies, proteins and vaccines in the fields of oncology, infectious diseases and platform technologies. The new products being developed at the Hyderabad facility include rotavirus vaccine for infant diarrhoea, conjugated typhoid vaccine and human papillomavirus vaccine for cervical cancer.

In addition, most of the existing vaccines in the Indian company’s pipeline are ready for use. Besides, Sanofi will also be able to take advantage of Shantha’s manufacturing facilities in Hyderabad. Nevertheless, this deal will definitely have a positive outlook for the Indian vaccine sector. There are other companies such as Biocon, Panacea Biotec, Serum Institute, Bharat Biotech to name a few among the major ones, which boast of a rich product pipeline.

Post Sanofi’s buyout of Shantha Biotech with such a good deal, other companies may not mind looking for such a deal if they get such a valuation, opines Bibhuti Bhusan Kar, programme manager, South Asia & Middle East, healthcare—pharmaceuticals and biotechnology, Frost & Sullivan.

Krishna Ella, chairman, Bharat Biotech says, “There is a good recognition for Indian vaccine manufacturers. Companies manufacturing vaccines from the country are being approached world over as there is a huge demand.”

The key drivers for global vaccines market has been mass immunisation programmes in emerging markets like Brazil, Cuba, India and Russia and various developed countries agencies stocking up in anticipation of diseases. Besides this, developments occurring in pediatric vaccines have been astounding.

The sector has also been boosted by funding from various governments and private agencies as well as better and more innovative combination products/delivery systems being developed, informs Navroz Mahudawala, associate director with Ernst & Young’s health sciences practice.

There are two important strategic reasons because of which the interest in India and Indian markets would continue. India is slowly emerging as a global manufacturing base for low cost vaccines. “From a demand angle, while the emerging markets currently represent around 75% of volumes; they actually contribute less than 25% in value. This dichotomy will get corrected over a period of time; with increasing purchasing power and increased spending from organisations like UNICEF,” says Mahudawala.
Besides most Indian manufacturers have a robust product pipeline with several products in advanced stages of development. This is expected to be well received in various developed markets.

The other factor is India’s domestic market potential itself. According to industry sources, the Indian vaccines market is currently Rs 3,587 crore in size and is expected to grow at a CAGR of 20-25% over the next few years. Although the size of the market is relatively low, it is expected to grow owing to factors like government immunisation programmes and increased disease awareness. India offers huge potential to offer products from their global portfolio. Given the above factors, it is expected that global vaccine majors will look to increasingly expand their presence in India either organically or through strategic alliances or even acquisitions. The action seems to have just begun.

- Source: The Financial Express, Aug 03, 2009

http://www.financialexpress.com/news/the-french-connection/497143/3

Pharma firms shy away from cardio molecule research

2008-12-13T19:55:00.005+05:30

Priyanka Golikeri Thursday, December 4, 2008 4:04 IST

MUMBAI: A recent issue of British medical journal The Lancet found that heart diseases kill 3 million people in India annually, accounting for a third of the total deaths in the country. The World Health Organisation (WHO) estimates that by 2010, India will have 60% of the world's heart patients.

Recently, US pharma giant Pfizer, which focused on cardiovascular diseases (CVD) research, decided to stop the development of new drugs for this segment and shift focus to areas such as cancer, diabetes, pain management, Alzheimer's disease and inflammation. Pfizer is the innovator of blockbuster CVD drugs like Lipitor and Norvasc.Hard-hitting facts, these. What's more alarming is that not much research is being done in India for developing new molecules in the area of cardiology.

Tapan Ghose, consultant (cardiology) at Fortis Hospital, said Pfizer's decision may be due to its failure to bring CVD drug torcetrapib into the market.

Several leading domestic players are actively engaged in research to develop new chemical entities (NCE) or new biological entities (NBE). An NCE is a chemical molecule discovered and developed by a pharma company, which can become a drug after undergoing clinical trials. On the other hand, an NBE is derived from plants or animals and could become a drug on completion of clinical trials.

Though Indian pharma companies have NCEs and NBEs in the pipeline, the focus seems to be more on segments such as cancer (oncology), diabetes, pain management, chronic obstructive pulmonary disease (COPD) than on heart ailments, which affect over 20 million Indians.

Players such as Wockhardt and Dr Reddy's Laboratories have 2 and 4 NCEs in the pipeline, respectively, but none in cardiology. Likewise, Piramal Life Sciences and Sun Pharmaceuticals Advanced Research Centre (SPARC) have 14 and 4 NCEs, respectively, but again none for heart ailments.

CK Ponde, consultant cardiologist at PD Hinduja Hospital, said, "Research in cardiology has plateaued. There are hardly any molecules in cardiology at present."

Manjeet Juneja, consultant cardiologist at Wockhardt Hospitals, added that Indian firms are more inclined towards conducting clinical trials and not developing new molecules.

However, Glenmark Pharma has one NBE for CVD, of the 8 NCEs and 5 NBEs it is working on. This molecule is currently in the preclinical stage.

On the other hand, Lupin has some NCEs in the pipeline, and spends 10% of its R&D budget on the cardiovascular space, a spokesperson said.

Bibhuti Bhusan Kar, programme manager (South Asia & Middle East Healthcare) at research and consulting firm Frost & Sullivan, said, "Indian players are less focused on cardiology even though India is becoming a major hub for heart-related ailments.

Though domestic companies have presence in the cardiovascular market, it is more in the area of process development and analytical research."

He added that where innovations are concerned, cardiology is a neglected area. Though there seem to be no clear reasons behind the trend, cost and fear of failure could be a couple of causes, say experts. Ghose said, "About 70-80% of heart diseases are preventable with existing medicines. The failure rate of molecules in cardiology is very high and so, for players, it is a major risk."

He added that the patient pool required for conducting human trials before launching a cardiology drug is quite large compared with other disease segments. "Over 5,000-7,000 patients are needed for phase III trials of a cardiology drug as against 2,000-3,000 for other drugs," Ghose said.

- Source: DNA India, Dec 04, 2008

http://www.dnaindia.com/money/report_pharma-firms-shy-away-from-cardio-molecule-research_1211525