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Industry & Economy - Pharmaceuticals


Mid-sized pharma cos dream big

P.T. Jyothi Datta

Mumbai , March 7

Move over pharma big-daddies, Dr Reddy's and Ranbaxy. It's time for the next generation of domestic drug companies to get more active in the overseas markets. Without much ado, mid-segment pharma companies, including JB Chemicals, Aarti Drugs, Ind-Swift, Unichem and Suven Pharma, are taking big strides into regulated pharma markets such as the US, Europe and Japan.

And the product-patent regime knocking at our doors, come 2005, is part of the reason, says Mr Satish Nachane, Managing Director, Aarti Drugs Ltd.

"Mid-sized pharma companies are investing in getting their production facilities GMP-compliant (Good Manufacturing Practices). The time is right to go in for regulatory approvals for manufacturing facilities and products. The reason for that is, as more new molecules come into the market, large innovator pharma companies are looking to align with smaller drug companies for production. For the large drug company, outsourcing manufacturing is cost-effective and the small companies are able to get a marketing route into regulated markets."

Equally optimistic about the opportunity ahead for mid-segment drug companies is Mr D.G. Shah, Secretary General, Indian Pharmaceutical Alliance: "Mid-sized pharma companies have reported a 100 per cent growth in exports. Globally, there is a demand for supply to the regulated markets, and big pharma and generic drug manufacturers are looking to align with smaller companies for production. And with more medium-sized companies going in for global approvals for their production facilities and products, they are increasingly seen to fit the bill for a partner."

According to him, Indian exports that are currently at about $2.5 billion would go up to about $14 billion in 2007, on account of such activity in the market.

Analysts observe that multinational pharma companies are "less intimidated by the smaller companies and find them easier to work with. The large Indian pharma companies, who are aggressive in the global market — filing patent challenges, besides getting into research for new products — have the strength to make it in regulated markets on their own steam. Small pharma companies benefit in tying up with large companies abroad to facilitate their own marketing."

The progression is evident, they observe: "In the past, it was only the DRLs, Ranbaxys, Wockhardts, Lupins and Sun Pharmas. Then came Cadila, Shasun, Matrix, Suven. And now, there are companies such as Aurbindo which are poised to take that leap into the regulated market. Meanwhile, companies like Ranbaxy and Lupin are elevating themselves to launching their branded generics in global markets."

Points out Mr Shirish B. Mody, Director, JB Chemicals and Pharmaceuticals Ltd: "There's been a change in the industry over the last couple of years with regard to regulated markets. The success stories of DRL and Ranbaxy have spurred other companies to think big. And with mid-segment companies like us getting active in the regulated markets, smaller companies will be encouraged to make ambitious plans."

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