Big opportunity for Indian pharma companies

Latest figures reveal that generic companies are looking at a bigger opportunity than ever - $73 billion in current annual sales - as patents on 103 blockbuster drugs in the US are slated to lapse over five years.

As many as seven abbreviated new drug applications - one of the early steps towards launching a generic version - from India are expected to chase each one of these drugs.

However, the expectations, given the experience, are more realistic than before. There is a consensus of sorts that Indian companies can hope to capture no more than $1.1-2 billion of it. Even that will be a sizeable 28 per cent of the current size of the domestic market.

Analysts warn that Indian companies should be ready to face a price erosion of 90-95 per cent once the drugs, blockbusters when protected by patents, become generic.

"I would be disappointed if Indian companies cornered anything less than a $1 billion of this incremental opportunity despite having the largest number of US Food & Drug Administration-approved sites outside the US and accounting for 35-40 per cent of drug master filings and abbreviated new drug applications", said Sanjiv Kaul, managing director, ChrysCapital.

Companies such as Ranbaxy Labs and Dr Reddy's Labs have begun positioning themselves to capture this market.

"We'll continue to focus on expanding the product flow and therapeutic width," said a spokesperson for Ranbaxy, which currently has 56 pending ANDA approvals, with 17-18 First-To-Files and last year derived 28 per cent of its revenues from the US.

This opportunity will not come on a platter. Pricing pressures would continue to intensify with a large number of generics players in the fray, authorised generics are here to say and innovator pharma are finding newer ways to retain market share post expiry, all of which put together could poop the generics party.

Merck's tie up with UnitedHealth Group Inc. and WellPoint to sell its branded version of simvastatin, Zocor - at prices lower than those of the generics, thereby, making them bleed - could serve as a precedent for others.

"There would a dozen ANDAs filed for every drug and to top it, the innovator pharma are going to make life miserable for generics", said Amar Lulla, joint managing director, Cipla.Collaboration would be the key.

"Become authorised generics and research partners, tie up for bulk and Active Pharmaceutical Ingredient supplies in others and marketing partners to launch their products in India in return. Why competing and fragment the market so finely for all?" said Sanjay Aggarwal, pharma sector leader, KPMG.