Obama’s wins to spell windfall for India’s generics cos

In my editorial dated June 29, I had asked, ‘Obamacare passed, but will Obama?’ (bit.ly/UmOwq7). Barack Obama’s decisive win on November 7 clears the deck for the roll out of Obamacare, the Patient Protection and Affordable Care Act (PPACA). Obamacare will give the argument for affordable generics a major fillip as generics are the only way US health authorities will succeed in expanding healthcare coverage to an additional 30 million US citizens.

Making medicines more affordable was also the rationale for the revocation of the patent on Roche’s hepatitis C drug Pegasys, but the move was seen as yet another sign that India’s IP laws do not reward and protect innovation. With the compulsory license on Bayer’s Nexavar still a fresh memory, and the Novartis/ Glivec case awaiting a final decision from the Supreme Court, MNC pharma companies are probably bracing themselves for the worst.

But the uncertainty on the legal front is a business risk that MNC pharma will have to live with because the economical case for India continues to grow. A recent GBI Research report cites that the overall cost of drug manufacturing is up to 50 per cent cheaper in India than in Western countries, thanks to vast differences in production and labour costs in developed and developing countries. Contract manufacturing organisations (CMO) in countries like India, Korea and China have started to adopt global CMO business models by integrating service portfolios so that they can position themselves as complete solutions providers to pharma manufacturers.

Thus, increasing levels of pharma outsourcing and generic manufacturing are fuelling the growth of the global CMO market which grew at around 10.8 per cent, from $21.2 billion in 2008 to $28.8 billion in 2011, and is forecast to reach an approximate value of $59.9 billion by 2018 following growth at a CAGR of 11 per cent.

These trends are set to be showcased at the forthcoming CPhI India and its sister events, which has become an annual adda for the global pharma fraternity. This issue of Express Pharma presents key facets of the various industry segments exhibiting at the event and we hope the event sets an upbeat tone for 2013.

But the point to ponder is this: as the country builds a reputation as a reliable source of affordable quality generics and as a CMO destination, big pharma will remain edgy on the IP front. Should we settle for the generics/ CMO opportunity at the cost of being written off the innovation map? Hopefully big Indian pharma will lead the way and devise our own strategy to manage a balancing act.

Viveka Roychowdhury
Editor

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