Mersummer addressed the China International Medicine 2016 Summit
Our chairman-Mersummer addressed the China International Medicine 2016 Summit. Below is the content of the presentation.
The Characteristic of Indian APIs and the Application Of Indian DMF
1.Overview of Indian Pharmaceutical Industry
There are more than 10,000 pharmaceutical companies in India, among which 90% are small-and-medium-sized, the top 200 pharmaceutical companies based on company scale occupy about 70% market share. There are about 650 pharmaceutical companies only manufacturing APIs. Most large-scale companies mainly produce formulations, some of whom has reached the sales volume of over $100 million,such as Sun, Cipla, Dr. Reddy’s, Zydus and Lupin etc.
Indian pharmaceutical industry produces over 1000 kinds of API and 57,000 kinds of formulation. The formulation includes the Indian ethnic medicines.
Indian pharmaceutical industry has begun its internationalization since 1970s, after the year of 2000, it obtained a rapid and swift development and began to turn its view from Russia and CIS countries to European and American countries. Meanwhile the export of its formulations had also increased quickly, the export volume has ballooned from $0. 663 billion in 2000 to $2.013 billion in 2005.
Indian pharmaceutical industry has formed a complete and full production chain of bulk drugs – Specialty APIs – Generic drugs – Non-patent drugs – Patent drugs. Now 40% needs of API in global market come from India.
2.Historical status of Ranbaxy Company
2.1Current status of Ranbaxy
On June 2008 Daiichi Sankyo Co., Ltd had the transaction with Ranbaxy Company to spend $4.6 billion to acquire 54.8% shareholding of Ranbaxy Company (among the total transaction amount $2.4 billion was paid to the promoters-the Signh family for its 34.8% shareholding). In 2013 Ranbaxy company was accused by US FDA for seven charges, finally it paid $0.5 billion to reach the reconciliation with US FDA. Subsequently FDA received the impeach that Ranbaxy falsified its drug test reports & datum and cheated by qualified drugs to deal with FDA’s inspection, later FDA instituted the Import Alert barring the complete entry of drugs from two Ranbaxy’s working plants into America. Afterwards Daiichi Sankyo Co., Ltd submitted the bill of indictment to International Court of Arbitration to sue the former controller of Ranbaxy Signh Brothers, after receiving a compensation of $0.4 billion from Signh Brothers, Daiichi Sankyo made the deal with Sun Pharma in all stock trading to sell its shareholdings of Ranbaxy to Sun Pharma on April 2014, including $3.2 billion of stock and 0.8 billion of debt.
2.2 The history of Ranbaxy
In 1937 as the distributor of drugs from Japanese Shionogi Company Signh Brothers –Ranjit Singh and Gurbax Singh established the Ranbaxy private company after their names in the capital Amritsar of Punjab state.
In 1952 due to the debt Ranbaxy company has been acquired by businessman Bhai Mohan Signh in Dehli who was born and grown in Pakistan. As other Indian pharmaceutical companies, Ranbaxy had been engaged in importing drugs from abroad, split packing and selling in domestic. In 1961 Ranbaxy changed its name to Ranbaxy Laboratories Limted.
In 1967 the son Parvider Singh who received PhD in chemistry from University of Michigan joined Ranbaxy Company. Parvider Signh, young with chemical background and inherited the commercial talent from his father, had brought a true reform and innovation to Ranbaxy company.
In 1969 Ranbaxy started to import API of diazepam from Hungary to produce the tablet, promoted it to the market as Calmpose brand and received over $1 million sales volume in the first year, since then Ranbaxy had become a true independent manufacturing pharmaceutical company.
In 1973 Ranbaxy listed in Mumbai stock exchange.
In 1977 Ranbaxy set up the first joint venture in Nigeria.
In 1988 the manufacturing plant of API from Ranbaxy had been certified by US FDA for the first time, since when Ranbaxy had created a path step by step to become the biggest multinational pharmaceutical company in India.
On July 4th 1999, only at the age of 57 Parvinder Singh died of cancer in Apollo, his assistant D.S.Brar took the control, and then Brian succeeded.
On January 18th 2006, after the fierce struggle, Malvinder Mohan Singh the eldest son of Parvinder who entered the company since 1998 became the chairman of the Board. The Singh family has been the largest shareholder of Ranbaxy from 1966 to 2008.
Ranbaxy is the first manufacturing pharmaceutical company using machine to produce drugs; is the first company to sell drugs based on self-owned brand who broke through the colonial consumption mentality of “only imported drugs are good” at the time. Parvider Signh had introduced the GMP concept into Ranbaxy, created and leaded the Indian pharmaceutical modernization, which made Ranbaxy as the benchmark and example for many Indian enterprises such as Sun, Cipla and Dr. Reddy’s etc. At the time all the senior quality executive of the first batch GMP enterprises were from Ranbaxy. Whether Ranbaxy was the first Indian pharmaceutical company entered into American market, or set up R&D center in 1985, or acquisition of American Ohm Laboratories Inc in 1995, had more or less influenced every Indian pharmaceutical company with certain scale.
2.3 Enlightenment from Ranbaxy
Within 53 years from 1961 to 2014, Ranbaxy experienced the establishment, changing of owner, revolution of profit pattern, became a public enterprises, focusing on R&D, internationalization, professional management, then the gradual disappearing of its own enterprise culture, from rapid self-development switched to rely on merger & acquisition to sustain its development, the vanish of its name and official website, the Ranbaxy’s rise and decline history has a great enlightenment to Chinese pharmaceutical company.
3. The characteristic of Indian API
3.1 Sales globally
Indian pharmaceutical companies always aim at global market during the stage of new project proposal and launch, so from R&D period they will consider all the factors which will affect the synthesis technology such as the protection of environment, cost, the origin of raw material etc. Also they will actively submit the application of USDMF and COS. They produce the APIs for real sales.
Some Indian pharmaceutical companies don’t have the ability to prepare DMF, thus they don’t have USDMF or COS, they can only sell the products in domestic, Middle East and South America etc, but they are real manufacturer of APIs. Distinguishing from Indian pharmaceutical companies, most Chinese pharmaceutical companies submit the APIs for approval aiming to support the matched formulation’s review, actually they have no intention to implement the industrial production of APIs.
3.2 The lack of intermediate
There are over 60% of the intermediate from China for APIs in India. The lack of intermediate in India is as following reasons:
3.3 Weak production of fermentation products
There are five Indian states near China where the temperature is very low in winter, but these states are mainly mountainous regions, the basic infrastructure are very poor and the modern industry are very undeveloped which is not suitable for the establishment of plants. India mainly has the tropical monsoon climate, hosts rainy season from June to October, dry season from March to May and cool season from November to next February. The temperature all the year in India is very high, which is not suitable for the production of fermentation products.
There are some Indian companies manufacturing fermentation products with certain scale such as Biocon Ltd, Concord Biotech Ltd.
3.4 Bulk drugs
3.4.1 For bulk drugs which are synthesized by pure chemical process with huge market consumption, due to the same technology, the cost for both Chinese and Indian enterprises is very close.
In Chinese market, there is no possibility for Indian pharmaceutical enterprises to compete with Chinese pharmaceutical enterprises because the Chinese custom duties and value-added taxes based on zero point are insurmountable mountains.
In international market, both Chinese and Indian pharmaceutical enterprises can be only in close combat with similar quality and close price. In regulated markets, the Indian pharmaceutical enterprises have the innate and natural advantages because they have cGMP certification and they enter the markets much earlier.
Take the bulk drugs for example, one kind is that both Chinese and Indian enterprises manufactured from the initial raw material, such as Ibuprofen, Acetaminophen, Aspirin, Aminopyrine, Caffeine, Metformin and Amantadine etc.
Another kind is that Indian enterprises manufactured from the imported intermediates from China, which makes Chinese enterprises have the cost advantage, such as Amoxicillin of penicillin series, Cefalexin of cephalosporin series, Azithromycin of macrolide series, Vancomycin of glycopeptide series, Ciprofloxacin of quinolone series, Aciclovir and Zidovudine of nucleoside series, Cortisone and Finasteride of hormone series.
3.4.2 Few products on which Chinese pharmaceutical enterprises have technology advantage, such as Trimethoprim.
3.4.3 Few products on which Indian pharmaceutical enterprises have technology advantage, such as Sulfamethoxazole and Ethambutol.
3.4.4 Some products due to the special plant raw materials that make Indian pharmaceutical enterprises have advantage, such as menthol, peppermint oil and colchicine.
3.4.5 For some special reasons that both Chinese and Indian pharmaceutical enterprises don’t have advantage, for example that the initial raw material is controlled by government, such as morphine series, fentanyl series, oxycodone series, pholcodine series and naltrexone series.
3.5 Non-bulk drugs
On some APIs Chinese pharmaceutical enterprises are better due to historical reason like China started to produce many years earlier, on some APIs Chinese and Indian pharmaceutical enterprises are well-matched, but there are still nearly 200 APIs on which Indian pharmaceutical enterprises are better.
3.6 India pharmaceutical enterprise is good at solving the complicated synthetic technique issues through cost-effectiveness at a short time, which makes the competition of some high-end APIs with high profits or special APIs in India is stronger than that in China, for example Dr. Reddy’s researched and developed dextromethorphan with seven sets of pilot plant at the same time.
4. Competition and cooperation of Chinese and Indian APIs
4.1 One nation desires to industrialize the production of APIs, it needs a proper environment protection policy, vast territory, many inland rivers for discharging sewage ; meanwhile it also needs sufficient related engineers, skilled workers and basic supporting industrial chain, so it is destined for China and India to became the leading suppliers of APIs in the world.
4.2 There is indeed a competition existing between Chinese and Indian APIs, as above-mentioned in big, medium and small varieties.
4.3 The complementarity and cooperation of Chinese and Indian APIs
Chinese and Indian APIs have each characteristic, which makes them complementary. What’s more, both China and India are largest source of APIs in the world, which leads a stronger complementarity with each other and makes much more cooperation with each other.
The largest exporting product from India to China is menthol about 5000 MT annually, the second one is sulfamethoxazole and the third one is ethambutol hydrochloride. Except for these products, other products exported to China are in small market consumption.
China exports huge quantity of intermediates to India for the production of APIs, which takes no less than 60% market share in India. Meanwhile China also exports a large quantity of APIs to India for the production of formulations, such as penicillin, 6-APA, 7-ACA, 7-ADCA, vitamin, amino acid and antipyretic analgesics.
There should be more and more Indian APIs applying the registration of IDL from CFDA in order to acquire a reasonable market share in Chinese market. Please refer to below two tables.