Pharma Sector

December 6, 2019 India INC

Pharma Sector

If Information Technology has given India a global identity, it’s the pharmaceutical sector, which has added a dash of credibility to that enterprising image. In fact, Indian pharma firms have not only been playing a global role but have become an extension of global business alliances. With no cap on FDI in pharmaceutical and drug industries, this sector has witnessed phenomenal international investment. To cite an example, it was not too long back when the World Bank’s private investment arm, International Finance Corporation picked up a stake in the Chennai-based Orchid Chemicals. Not lagging behind in promoting pharma firms, the Central Government recently announced exemptions from import licenses to foreign units setting up manufacturing units in Special Economic Zones. The cost of bulk drug production in India too is 60-70 % less than the global costing. Another major incentive for the foreign drug giants is that in compliance with WTO regulations, India now grants product patent recognition to all new chemical units from this year onwards. A large number of research-driven foreign companies such as Japan’s EiFai Pharma, the Canada-based Apotex Corporation, Germany’s Haxal AG and Ritopharma and Israel’s Teva are setting up centers in the country. Hungary’s Gedeon Richter Ltd has formed a joint venture with the Delhi-based Themis Pharmaceuticals, to manufacture active pharmaceutical ingredients and intermediates at an investment of around $20million. The French company Galderma, which recently received approvals for a 100 per cent subsidiary, is another company which plans to make India a manufacturing base for products sold in South-East Asian countries. A lot of factors such as strong R&D skills and low operational costs are attracting MNC pharma firms to India. With the amendment in the patent regime, foreign companies are keen on India, as their drugs will now enjoy product patent protection. On the other side, Indian companies too have gradually come to terms with the shocks created by entry of the global pharma giants into India. Entry of foreign giants has also been a boon in disguise for their Indian counterparts as Indian companies have learnt precious lessons from their global counterparts. Dr Reddy’s Laboratories in 1997 and 1998 signed agreements with global pharmaceutical giant Novo Nordisk to license molecules for further development. DRL’s move egged many other Indian pharmaceutical houses on to tie up with foreign companies. India’s largest pharmaceutical company, Ranbaxy, also licensed its technology for an innovative drug delivery system for ciprofloxacin to Germany’s Bayer. Zydus Cadila acquired a stake in German Remedies along with the rights of over a few of its brands. Ranbaxy has proved its global presence by deriving about 70 per cent of its one billion dollar revenue from overseas operations and 40 percent from USA. Ranbaxy’s drugs are being sent to 70 countries and it has ground operations in 25 markets and manufacturing in seven countries including China. Recently it has bought a French Pharma Company RPG Aventis for $80 million. It has earlier acquired companies in UK and Germany. The Ahmedabad-based major, Torrent Pharmaceuticals recently signed a research collaboration agreement with AstraZeneca, one of the world’s leading pharma companies. Under the agreement, the Torrent Pharma and AstraZeneca will fund the research project jointly in equal proportion. There are numerous such examples of global tie-ups, where MNCs and Indian firms have come closer for mutual growth and expansions. No doubt, with the innate enterprising abilities of Indians and innovative skills of MNCs, the pharma sector is poised to leap to glorious future.