Friday, April 15, 2011

Active Pharmaceutical Ingredient - API Industry in India - Growth Drivers

  1. Pressure on Global Pharma is forcing them to Outsource production. Pure play API companies are the best choice, as branded formulation companies in India have a conflict of Interest.
    • AstraZeneca has decided to entirely outsource its API needs over the next 5-10 years – They have identified India and China as sourcing centers
    • Merck has recently announced shut down of six manufacturing plants in Italy, Portugal, Mexico, Brazil and Singapore. Besides it has recently closed down another 8 manufacturing facilities
    • BMY has already cut its manufacturing site to half
    • With patent expiry pressures mounting on other global pharma companies too, they are expected to follow suit. As per our intelligence, Sanofi-Aventis has aggressively started looking out for API manufacturers in India, to whom they can outsource.
  2. With Growing Credibility of Indian manufacturers, Innovators are shifting production from EU companies (Italy) to India
  3. Upcoming patent cliff provides opportunities for R&D focused pure play API companies
  4. Increasing penetration of generics in the regulated markets (especially EU and Japan) will drive API demand from cheaper destinations
  5. Recent announcement of free trade pact with Japan will open doors for Indian pharmaceutical exports to Japan. Currently China is the major pharmaceutical exporter to Japan
  6. Increasing focus of Indian Generic companies on New Drug Delivery System (NDDS) based drugs, should force them to outsource API production to pure play API companies
  7. Underlying Strong Volume Growth in pharmaceuticals and Growing domestic demand