What’’s in the cards for 2014?

Most pharma leaders want to bid adieu to annus horribilis 2013 and ring in the new year with renewed focus and vigour. What’s on their road map for 2014? Which global trends and events will impact Indian pharma the most? Express Pharma gets industry leaders and sector analysts to share their predictions for 2014 and beyond

Adieu annus horribilis 2013

Kiran Mazumdar Shaw

The year 2013 was probably one of the worst years for the Indian economy, with inflation running unbridled and economic growth grinding down to a level below five per cent.

Unfortunately, the pharmaceutical sector also witnessed an unprecedented slowdown growing at barely 5.2 per cent in 2013 against an average growth of 12 per cent the previous year. The negative impact was further compounded with adverse policy decisions w.r.t pricing, FDI, clinical trials and compulsory licensing in India. An overactive US FDA issuing notices to some of the leading Indian pharma companies tarnishing the image of the sector. Collectively all this made 2013 an ‘Annus Horribilis’ for the Indian pharma sector.

The silver lining

However, on the brighter side, India took the lead of developing and adopting biosimilar guidelines which enabled the approval of world’s first biosimilar of Herceptin for breast cancer, developed in India by Biocon and Mylan.

The introduction of biosimilar Trastuzumab in India in 2014 will offer an affordable option for millions of cancer patients in India and in the other world markets subsequently.

2014: A promising year of positive change

2014, as the year of general elections, is expected to lead to a stable majority government at the Centre. Hopefully, that will be a starting point for some of the challenges to be addressed through bold policy reforms.

We hope that the new government will be able to manoeuvre the winds of change and create real jobs, provide good infrastructure for industrial growth, ensure safety and security for women and promote better governance.

We will need innovative solutions to address these numerous challenges and emerge as a robust economy.

Healthcare for all is a critical need which can only be addressed through access to affordable medicines. The government needs to enable affordable innovation by defining a smarter regulatory pathway that cuts the cost of drug development. Regulatory reforms that address issues related to Intellectual Property and clinical development coupled with use of technology for procurement will enable better access to drugs.

The Indian pharma sector also needs to take corrective action to address non-compliance issues to regain the reputation of a provider of good quality affordable generics for the patients and healthcare systems across the globe.

India has successfully leveraged its strengths of ‘low cost manufacturing’ and ‘quality of talent pool’ to gain global recognition, however, it now needs to ensure that it has rigorous processes for self -audit to ensure zero tolerance to non-compliance.

For Biocon, 2014 holds good promise as we bring the world’s first biosimilar Trastuzumab to cancer patients in India, our novel biologic Alzumab makes a positive impact on the lives of several patients, our Malaysia plant nears completion and all our business verticals continue to report a robust growth.

Year 2014 can be a year of positive change if every Indian citizen commits itself to engage with the political process, plays the role of an active citizen and demands good governance. Citizen participation is critical for creating an economically strong India that can gain global recognition.

– Kiran Mazumdar Shaw, Chairperson & Managing Director, Biocon

Biopharma sector to continue on growth path

KV Subramaniam

The biotechnology industry in India continued to see strong growth in 2013 on the strength of biosimilars; in terms of domestic market growth, exports, product/ clinical development, new product launches and product-based partnerships. This trend is expected to strengthen further in 2014. At the same time, the industry has had to face several challenges in 2013, particularly with price erosion, greater competition, constraints in capital markets, currency depreciation and more stringent regulations for biotherapeutics. The industry would continue to face these challenges in 2014.

Biotechnology is changing India in several ways:

1. Making India largely self-sufficient in the critical medical product category of vaccines, plasma proteins and biosimilars
2. Bringing biopharmaceutical (biosimilar) products and vaccines at affordable prices, thereby helping affordability and preventing use of sub-optimal dosages
3. Bringing novel proteins and vaccines to address unmet medical needs
4. Developing stem cell therapies to not only address unmet needs, but also to bring about a new era in regenerative medicine
5. Enabling high-end molecular diagnostics and molecular genetics to enable superior health care at competitive prices and obviate the need for patient samples to be sent to developed countries for testing
6. Creating new export opportunities for India
7. Enabling a contemporary innovation node in India
8. Above all, helping improve the quality of health care in the country

India has been able to make a mark in the world of biotechnology as a large producer of public-health vaccines and biosimilars at very competitive costs for global supplies.

Reliance Life Sciences and biotech

Reliance Life Sciences has created a strong foundation in medical biotech with a range of products and services across plasma proteins, biosimilars, specialty pharmaceuticals, regenerative medicine, molecular medicine and novel proteins. It is now scaling up its product-market play. There are several products in clinical development, some novel proteins in pre-clinical stage and a host of product registrations in overseas countries that are currently underway. Concurrent with this, Reliance Life Sciences is expanding manufacturing capacities consistent with the need for higher scales of production.

In case of biosmilar products, Reliance Life Sciences has the distinction of launching three of the world’s first biosimilars – interferon beta, human chorionic gonadotropin and reteplase. It currently markets eight biosimilars and has 20 more under development.

Some of the innovative work that Reliance Life Sciences has been doing is in developing therapies that meet unmet needs relevant to India – cord blood stem cell transplant for beta thalassemia and other blood disorders, siRNA molecules for anti-cancer and anti-viral (dengue fever), melanocyte stem cell therapy for pigmentation disorders, novel fusion proteins for head and neck cancer and biomarkers for oral cancer.

Future roadmap

The biotech industry in India has the potential to grow at 20 to 25 per cent per annum. Within the biotech sector, the prospects are undoubtedly bright for vaccines and biosimilars, given the strong position that India has created, its competitiveness and the fact that a large majority of people in the world have limited or no access to biotech products.

In order to achieve full potential of biotech sector, there is a need for partnership between industry and government, which recognises opportunities for the Indian biotech industry to be a global leader, particularly in vaccines, biosimilars and regenerative medicine, and institutionalises policies that enable faster market entry at lower costs, without compromising product quality, safety and efficacy.

2014 outlook

Reliance Life Sciences looks forward to 2014 with expectations of higher growth and profitability, on the basis of the depth of its product pipeline and diversity of its market participation.

– KV Subramaniam, President and Chief Executive Officer, Reliance Life Sciences

Rely on innovation, growth follows

Dr Krishna Ella

Our focus is to expand and further our vision to develop new vaccines to combat infectious diseases that affect emerging markets. For Bharat Biotech the biggest aspiration for year 2014 is Rotavac roll out. We had a successful 2013 when we added two more important socially relevant public health driven vaccines Typbar TCV Typhoid Conjugate Vaccine and Jenvac (inactivated Japanese encephalitis vaccine) in our product portfolio. We also announced successful completion of Rotavac phase III clinical trials.

The future seven billion populace of the emerging markets continue to offer the biggest growth opportunities with rising incidence of infectious diseases and growing public health problems that seek preventive public healthcare solutions. Going forward, we would also like to expand our collaborations with academic research groups and global health agencies to bolster early drug discovery efforts, speed up basic science and translational research. Essentially we like to excel in all: innovation, product development, regulatory submissions, regulatory approvals, commercial launches.

Immunisation against childhood diseases is one of the most cost-effective public health interventions for prevention of child illness and death. We hope the Government expands the list of vaccines under the national immunisation programme in 2014 and help reduce the nation’s disease burden. Vaccines are an integral part of development of nations, since their ROI is similar to that of investments made into primary education. As a new vaccine development and manufacturing company our goal is to support the government national immunisation initiatives in a manner that can lead to a healthy country and a healthy industry.

Bharat Biotech is also enhancing and consistently upgrading its quality management systems in compliance with global health agencies and international markets, to ensure a consistent supply of affordable quality vaccines. Our investments in R&D and in manufacturing facilities will also remain consistent with our growth plans.

We believe vaccines produced in the region have the potential for global use because of their affordable cost (and assured quality). This potential will provide for regional vaccine security. With this perspective in view, there are challenges that must be overcome for the region to realise its full potential in achieving self-reliance in the production of affordable vaccines of assured quality which can happen with wider public private partnerships.

A classic example of PPP has been for the rotavirus and Jenvac Vaccine Development programmes where Bharat Biotech and governmental agencies collaborated right from identification of strain, the early research programmes, clinical trials, eventually leading to successful clinical trial successes.

Our R&D pipeline continues to be strong with seven vaccine and three therapeutics product development programmes that are under various stages of development. We are presently carrying out research on bio-antibiotics, combination probiotics, lysostaphin, THR-100 (Recombinant staphylokinase Injection), chikungunya vaccine, oral rotavirus vaccine, malaria vaccine, and Staphylococcus aureus vaccine.

In order to foster academic excellence, Bharat Biotech is supporting a M.Tech and PhD. programme for its employees. Several employees have benefited from the academic tie-up with Jawaharlal Nehru Technological University, Hyderabad for their M.Tech and PhD. degrees. Similar tie-ups are being worked out with other universities. Our effort is to maintain and enhance the momentum of progress achieved over the previous decade to make lifesaving vaccines available to the world’s children, in partnership with Global Alliance for Vaccines and Immunization (GAVI Alliance) and realising our pledge of a $1 vaccine for the world.

– Dr Krishna Ella, CMD, Bharat Biotech

Will look to redesign product portfolio

Sujay Shetty

The year 2013 was a mixed one for Indian pharmaceutical industry. Driven by regulatory reform and the desire to rein in healthcare expenditure, many developed countries have increased the use of generic products. These efforts have led to increased opportunities for Indian companies where pharma exports have shown robust growth. Many Indian companies have launched new products in the US and other advanced markets. Depreciation of the Indian rupee vis-a-vis major world currencies have also aided the export growth.

The growth in the domestic market, however, has slowed down considerably to 9.8 per cent in 2013 from 16.6 per cent in 2012. Drug Price Control Order 2013 has had an impact on the topline growth of pharma companies.

Challenges with product offtake by stockists and introduction of free medicine schemes in some states have also impacted growth in the domestic market. Delays in approvals for clinical trials as well regulatory issues like restriction on FDI in pharma, uniform code for sales and marketing, compulsory licensing have also had an adverse impact on the pharma sector in India.

2014: Renew and redesign

Looking ahead to 2014, Indian companies will look to redesign their product portfolio keeping in mind the price control requirements. They will look to take advantage of the opportunities offered by biosimilars. To be able to capitalise on these opportunities, Indian pharma companies would need to renew their focus on manufacturing quality to ensure that they are adherent to the norms of the regulatory agencies.

They would also need to focus on enhancing the productivity of their sales forces, improving the manufacturing and supply chain efficiency and improving compliance. Information technology will play a major role in achievement of these objectives.

India has a large pharma industry which has been providing low priced medicines not just for the Indian market but for global customers too. Pharma industry thus has a major role to play in ensuring health security for all.

– Sujay Shetty, Leader – Pharma and Life sciences, PwC India

Making healthcare affordable,accessible

Dr K Anand Kumar

Sales performance of Indian Immunologicals Ltd (IIL) till December 2013 has been satisfactory. The sales performance represents double digit growth compared to the previous year. IIL through its quality products is currently catering to some of the key disease control programmes in the country such as Foot and Mouth disease (FMD), Brucella and Pest Petits Ruminants (PPR). IIL is playing a crucial role in control of FMD by supplying close to 80 per cent of the vaccine requirement for the FMD Control Progarmme (FMDCP).

Retail sales of Animal Health (AH) division continues to show good growth. AH Division obtained manufacturing license for Bruvax Plus, a modified vaccine Brucella abortus S19 strain for control of brucellosis. Another product Bruvax Delta, containing Brucella abortus RB 51 strain has been licensed. Both the products are being made available to the farmers for the first time. These new vaccines are going to play an important role in providing protection to female calves and adult animals.

In the formulations market, IIL’s star formulation product, Nimovet has exceeded sales of Rs one crore per month. Sales in the Companion Animal Health (CAH) segment have been strong with about 38 per cent growth. Raksharab a rabies vaccine for companion animals continues to keep its leadership position.

In the Human Health (HH), IIL has been identified as one of the most preferred supplier of paediatric vaccines to the Universal Immunization Programme (UIP) of Ministry of Health and Family Welfare. IIL has supplied more than a 100 million doses of DPT vaccine and has orders to supply more. The supply of life saving rabies vaccine, Abhayrab to various state governments is consistent during present financial year. On the export front, IIL continues to do well and has bagged key orders for supply of its human Rabies vaccine to Turkey.

IIL commissioned its new veterinary formulation facility at Biotech Park Phase III in Karakapatla, Hyderabad. It has started commercial production in June 2013. The human vaccine facility in Karakapatla is expected to start commercial production during first quarter of next financial year.

Continuing with the legacy of introducing new vaccines through in-house R&D, IIL is in an advanced stage of introducing new vaccines for animal health as well as human health. Animal health vaccines include blue tongue vaccine, multivalent companion animal vaccine, classical swine fever vaccine, goat pox vaccine, infectious bovine rhinotracheitis vaccine etc. Some of the human health vaccines are undergoing pre-clinical and clinical studies such as tetravalent vaccine, pentavalent vaccine, JE vaccine, chikungunya vaccine, HPV vaccine.

IIL as an organisation is committed to its mission of making healthcare affordable and accessible.

– Dr K Anand Kumar, Deputy Managing Director, Indian Immunologicals

EMs to show higher growth

Amit Backliwal

The developed markets of North America, Europe, and Japan will see very modest single-digit spending growth, due to a combination of economic and healthcare austerity measures and the savings realised from the growing availability of lower cost generic versions of brands following their patent expiry. In contrast, many (but not all) leading pharmerging markets, show much higher double-digit growth rates due to a combination of economic growth, demographic and epidemiologic changes, increased access to medicines as infrastructure and health systems evolve and improved state and private insurance funding for healthcare and medicines.

– Amit Backliwal, Managing Director, IMS Health – South Asia

EMs gain global attention

Neha Ambardar

With rapid economic growth and an ambition to improve the standard of living, emerging markets are gaining global attention. It is estimated that the emerging markets will represent 30 per cent of the global pharma market in the next five years. Due to increased focus on maximising profits and bringing down costs to provide affordable healthcare, the coming years will register a major acceleration in the generics supply, with a total market expected to be around $400 billion, constituting 35 per cent of the total pharma market, as compared to 25 per cent in 2011.

– Neha Ambardar, Solution Consultant, Life Sciences (India) Thomson Reuters

Outlook quite positive for 2014

Vrinda Mathur	Mahadevan Narayanamoni

We expect to see several more transactions led by both financial as well as strategic investors, a greater focus on regulatory compliance by Indian companies and continued challenging of patented drugs in therapeutic areas such as oncology. A number of regulatory matters such as FDI, new product launches, clinical research approvals do need to be addressed at the soonest, to ensure the sector realises its full potential in the medium term.

Consolidation in smaller pharma companies will be imminent once the Uniform Code of Pharmaceutical Marketing Practices (UCPMP), which is currently voluntary, is finalised and made mandatory by the Department of Pharmaceuticals (DoP) for all players (domestic and international) operating in India.

– Vrinda Mathur, Director, Healthcare and Lifesciences Advisory, Grant Thornton in India
– Mahadevan Narayanamoni, Partner – Advisory Services, Grant Thornton in India

India to lag nearest EM compatriots

Gustav Ando

Looking purely at the pharmaceutical segment of the wider healthcare industry, the historical reputation of this market as ‘recession-proof’ is foundering. The reputation was built over strong incremental growth over the decades between the 1960s and 1990s, as the pharma industry was seen as a safe haven amid periodic outbreaks of economic uncertainty.

After all, the fundamentals of the market are inarguably favourable: demographics in both developed and emerging markets point towards increased consumption of pharma amid rising rates of diabetes, oncology, and various lifestyle-related illnesses. And who stops taking their insulin even if there is a recession? And which government would dare to say no to the latest life-saving cancer treatments?

Not a pretty picture anymore

Until recently, the answer to those questions were a resounding ‘no’ – but over the last few years, coinciding with the wider global economic downturn, it is proving to be a far more complex issue, and one which looks to continue to be an issue in the near-term future.

Certainly, the picture of the pharma industry is not a particularly pretty one: there is widespread cost containment, restrictive reimbursement conditions, a tough R&D climate, major patent expirations and intellectual property challenges, as well as increasing difficulties in obtaining investment from an increasingly risk-averse financial community.

The traditional Big Pharma companies are shedding staff all over the place, struggling to adapt their business models amid the loss of exclusivity of key pharma agents that drove their growth over the years. Others are almost in a perpetual motion of re-organisation, seeking to find the precise organisational structure that will strike the right balance between innovation and risk management, and devolution versus integration.

It’s hard to find the bright spots, but they do exist, and strikingly, one primarily finds it in companies which are devoting themselves to only one or very few therapeutic areas. They have generally been able to entrench themselves in that particular therapeutic area, drive the innovation story and benefit from their strong relationships in that particular community of healthcare delivery.

Roadblocks in developed markets …

However, a key roadblock is the same for everyone: market access. Market access has evolved dramatically over the last few years amid a sea change in pricing and reimbursement (P&R) mechanisms around the world, as governments have sought to reign in or rationalise healthcare expenditure by targeting the pharma segment.

In 2012-2013, this was particularly true, as the industry adapted to the end of true free pharma pricing in the key market of Germany, and a series of price cuts in other major markets.

The continuing economic turmoil in Southern Europe also translated into negative growth in the pharma markets in this region, and drug shortages continue to rage in hard hit countries such as Greece and Romania. Indeed, these markets are banning the parallel exporting of select drugs out of the country in order to preserve the supply in the domestic market. And indeed the Greek government has asked foreign governments to stop referencing pharma prices in Greece due to the temporary, exceptional hardship in the country which is resulting in unusually low prices from a series of price cuts.

But the turmoil is by no means confined to Southern Europe, and there has been a dramatic drop in pharmaceutical expenditure in several Nordic markets in 2013 – once considered another regional safe haven for pharma companies.

Even the US, the key growth engine for the global pharma industry, has experienced a year-on-year drop in drug expenditure, the first in living memory, as the market absorbs several years’ of major patent expirations as well as increased pushback from payers seeking to limit uptake of expensive, innovative medications.

Indeed, although healthcare reform in the US has not been accompanied by any formal pricing rules, there has been increasing pressure from grassroots public campaigns as well as from critical healthcare institutions for pharma companies to lower their prices – famously this resulted in a 50 per cent price cut for a major new oncology medication.

… and turmoil in emerging markets

And looking away from the key developed market, there is also major turmoil in emerging markets, Russia is in the midst of major healthcare reform but is explicitly seeking to develop its domestic pharma industry, hence is adopting pro-domestic legislation at the expense of major pharma multinationals. China is rapidly expanding its healthcare insurance to near-universal coverage, but is at the same time looking at tightening its pharma pricing rules in 2014. China also launched an unprecedented clampdown on the marketing practices of pharma companies in 2013, resulting in a major shift in the strategic thinking for global drug firms operating in the market.

So where does India fit Amid all this upheaval, where does India fit in?

India experienced a tumultuous 2013, and this looks set to continue well into 2014. For global drug operators, India is generally speaking among the lowest-priority markets among the top tier emerging markets. This is down to a confluence of factors: a comparatively poor healthcare infrastructure; a highly complex, regionalised market dynamic; a lack of proper healthcare insurance; and one of the most uncertain intellectual property environments in the world. At the macro-level, inflation continues to be a major dampener on the overall economic outlook, and political instability continues to affect healthcare policy.

The Indian government has sought to grapple with its healthcare system, and put the reform of its pricing and reimbursement system at the top of its priorities in 2013. Ultimately, the reforms went through a series of iterations and counter-reforms as priorities changed, and it looks like further reform continues to be on the agenda. The new internal referencing system ended up having a more significant impact than initially anticipated, and continues to scare away global operators seeking to launch important, innovative medicines onto the Indian market. The situation is compounded by a series of watershed court cases on the country’s intellectual property environment: and suffice to say, the courts tended to side with the country’s domestic generic operators.

All this means that India will continue to lag behind its nearest emerging market compatriots in the pharmaceutical arena, although there is significant investment in the surrounding healthcare infrastructure which bodes well for the longer-term.

Globally, as we look ahead into 2014, we see a modest but important recovery for the pharma industry as we see the back of the worst of the patent cliff, and an incremental improvement in macro-economic trends. The innovative drug sector has been comparatively successful in avoiding the worst excesses of the global P&R clampdown in key markets, as governments have often targeted the generic industry for the most severe price cuts. However, for all the political talk of investment in hi-tech sectors, there are few openly pro-innovation governments which drug firms can currently point to, although Japan may be an important exception here in 2014 as it looks to potentially reward innovative medicines with relaxed pricing rules and fewer price cuts for these products. The worst may be over, but undoubtedly there continue to be troubled times ahead.

– Gustav Ando, Director & Head, Life Sciences Business, Healthcare IHS