|
South India—An attractive emerging pharmaceutical hub
A report from Interlink Business Consultancy and Confederation
of Indian Industries (CII)
South India is emerging as a strong pharma hub with a vibrant IT industry and
strong infrastructure of research facilities and scientists.
South India—A snapshot
Several MNCs are starting research operations in South India, turning the region
into a pharmaceutical services hotspot. Drug trials expenditure in India is
expected to reach $1.5 billion by 2010, with South garnering a significant portion
of this business. Hyderabad, Chennai and Bangalore are being viewed as important
in sourcing centres.
South India is an attractive destination since it offers availability of scientific
and technical expertise, academic research facilities, environment conducive
to innovation and credibility, English language and competitive compensation.
South India's expertise in IT skills combined with strong knowledge in pharma
domain is ideal for drug development and clinical research activities.
Business potential of South India
Bangalore is being recognised as a bio-cluster. The creation of economic clusters
of biotech units is attributable to increasing returns under monopolistic competition
and generation of strategic alliances. Leading companies in Karnataka include
Accelrys, Advinus Therapeutics, Agilent Technologies, Animal Biotech, Automed
Systems, Avesthagen, Bharat Biotech, Bigtec, Biocon, ClinTec (India) International,
CytoGenomics, Delta Biologicals etc. The State's biotech ventures are sustained
by the presence of notable research institutes like Indian Institute of Science
(IISc), National Centre for Biological Sciences (NCBS) and Jawaharlal Nehru
Centre for Advanced Research (JNCAR). There is also a large presence of pharmacy-biotech
graduates.
Karnataka has emerged as a centre for generics, medical devices, biotech and
drug discovery. The total pharma market in the State in 2006 was Rs 1,317 crore
with 251 companies in the fray. The industry is growing at 17.82 percent. The
State is active in pharma services such as bioinformatics research support services.
It accounted for 55 percent of biotech companies in the country in 2006-07.
Out of a total 320 enterprises in India, Karnataka has 175 units and 158 of
these are located in Bangalore.
In 2005-06, out of the 28 new biotech ventures, 27 were set-up in Karnataka.
In 2005-06, the State biotech business registered a turnover of Rs 1,400 crore.
Exports generated revenues to the tune of Rs 850 crore. The total scientific
head count was 6,800 personnel. The presence of sophisticated corporate hospital
chains in Bangalore is turning Karnataka into an important healthcare hub. Companies
like GP, Wipro, Biocon, AstraZeneca, Nova Nordisk, Lumbeck, AFD and Manipal
hospitals are playing a major role here.
Andhra Pradesh is active in bulk drugs production and biotech. The State also
specialises in offering CRM solutions since it is an IT hub. It has several
important institutions such as Pharmexcil, Shapoorji Biotech Park and a knowledge
park promoted by ICICI.
Andhra Pradesh alone contributes 9.5 percent to total Indian pharma market.
The pharma market in the State is estimated to be Rs 2,900 crore growing at
the rate of 14 percent. The total market size of therapeutic segments like anti-diabetes
is Rs 130 crore, cardiology is Rs 331 crore, PPI is Rs 130 crore, antihistamines
is Rs 51 crore, gynaecology (nutraceuticals like calcium and iron preparations)
is Rs 94 crore, and antibiotics groups like Macrolide is Rs 44 crore.
Key players in the State include Dr Reddy's Laboratories, Aurobindo Pharma,
Natco Pharma, Suven Pharmaceuticals, Biological E, Divi's Labs, Matrix Laboratories,
Hetero Drugs, Neuland Laboratories, Global Bulk Drugs and Fine Chemicals and
Glochem Industries.
Andhra Pradesh accounts for more than one-third of India's total bulk drug production.
A major share of the bulk drugs produced by State based companies find their
way to foreign markets, resulting in high export turnover from the segment.
The State has emerged as a key player not only in the export of bulk drugs but
also finished formulations. It has set a production target of $8 billion by
2010 and between $10-15 billion by 2020 from the pharma sector.
Good infrastructure facilities, availability of trained manpower
combined with the presence of leading research and development centres like
CCMB, IICT, CDFD, NIN etc make the State a fertile land for the industry to
take deep roots and flourish.
The pharma industry in Tamil Nadu is undergoing a critical
phase in its evolution. It is facing closure of several units owing to inability
to comply with Schedule M norms besides the issue of migration of units to excise
free zones (EFZ). The industry in the State is banking on the proposed setting
up of EFZs and SEZs to boost industrial growth. The small scale industry (SSI)
is pinning hopes on the cluster development programme to promote infrastructure
development and boost growth. The industry also expects support from the Central
Government for technological upgradation of the pharma cluster at Alathur with
new facilities for R&D and industrial development.
Several retail pharmacy chains have opened up in Tamil Nadu. The mushrooming
of organised retail medical shops in the State has led to efforts by traditional
medical shops and their associations to improve quality of service to take on
the new trend. These include Macare, a company floated by the Kerala based Manappuram
group and LifeKen, promoted by Lifetime Healthcare.
Several contract research organisations are in the process or intending to set
up facilities in South India. These include Quintiles, Parexel, Actavis and
Indian companies such as Aurigene, Clinigene and Asian Clinical Trials.
Tamil Nadu is active in both ayurveda and healthcare. The State was the fourth
largest producer of medicines in the country in 2006 after Maharashtra, Gujarat
and Andhra Pradesh. It has several organised retail pharmacy chains. The setting
up of export free zones such as the proposed 250 acre Nanguneri Pharma Park
can impart a boost to the pharma industry in the State.
Kerala has been globally recognised for its ayurvedic treatments,
ayurvedic research and herbal spas with names like Kaya Kalp. The intensity
of ayurvedic medicines has been deep rooted throughout Kerala. As a result,
State organisations such as Kottakal Pharma have Rs 7,100 crore turnover in
only one state.
The marketing methodologies in Kerala also explore media, newspapers and other
digital media to promote ayurvedic and herbal products throughout Kerala.
Besides being prominent in ayurveda, ayurvedic research and necessary distribution
channels have been fully well established so that citizens from Kerala can access
the products with affordability. Similarly research centre in ayurveda as well
as destination spas have encompassed and invigorated human life at different
destinations in Kerala.
Nagarguna Herbals, Kottakal and other clusters of ayurvedic
companies are key players in Kerala.
South India: SWOT analysis
Strengths
- Support from quality infrastructure and scientific
institutions.
- Emergence of South India as an IT hub.
- Availability of skilled scientific manpower.
- Economic and regulatory climate conducive to innovation.
- Strong capabilities in manufacture of bulk drugs
and formulations.
Weaknesses
- Effective sales force for marketing.
- Demand supply gap for biotech and CRO professionals
Opportunities
- Opportunities for export of bulk drugs in emerging
markets.
- Emergence of biotechnology sector in the region.
- Opportunities in CRAMS, CROs and clinical trials.
- Opportunities for foray into global market through
strategic acquisitions, joint ventures and expansion and upgradation.
Threats
- Migration of units to EFZs.
- Challenges posed by globalisation such as closure
of units owing to inability to comply with Schedule M norms.
- Challenges posed for Indian system of medicine due
to compliance with Schedule T.
Interlink's perspective—Bridging gaps to maximise
potential
Growth of pharma industry in South India is hampered by absence of linkages
between industry value chain parameters. This paradox exists despite abundance
of skilled scientific manpower for scientific research and a vibrant IT industry
which supplements and adds value to the efficiency of the pharma industry. The
presence of a strong and vibrant ayurvedic industry suffuses and hampers the
penetration of allopathy in the region.
SMEs (small and medium enterprise)
Lack of entrepreneurship, ambition, drive and initiative hamper the growth of
industry despite presence of requisite resources and infrastructure. Industry
faces a critical funding constraint despite presence of several foreign banks
and financial institutions because of lack of initiative and drive to avail
these facilities. Lack of skilled manpower for marketing also hampers efforts
aimed at market penetration in the region.
Conclusion
The pharma value chain of South India in Figure 2 describes the strategic options
available for achieving long term sustainable growth and unlocking the huge
potential provided they are linked together to create value.
Southern region of India has grown steadily in the recent years and is emerging
as one of the most developed regions of the pharmaceutical industry. The benefits
afforded by the significant cost-savings opportunities and highly skilled work
force, however, are tempered by the challenges this region faces.
(The report is authored by Dr Raja B Smarta, Founder and
Managing Director, Interlink Business Consulting Firm, with inputs from CII
and Express Pharma)
|
