Main Story

Multidirectional Growth

The growth in the biologics and oncology segments, penetration of health insurance, Government support and the need for more efficacious products will set the wheels turning for the injectables and parenterals market, says Arshiya Khan

While the concept of injectables was revolutionary when discovered, the innovation in this segment has been evolutionary. Drug delivery systems with various biotechnology drugs have brought new innovations in the industry. Also, the kinds of deals witnessed in this segment are indicators of the prospects that lie in this area. Indian players have made themselves regulatory compliant to attract the world markets. According to IndiaVenture Advisors, the total Indian market for injectables has been estimated at about Rs 6,500 crore for FY09. The total domestic injectables market is estimated at about $450 million and was estimated to have grown at more than 20 percent in the last three years.

Deals Galore

The Hospira-Orchid and Pfizer-Strides or Pfizer-Claris deals indicate that the injectables and parenterals market is in tumult. MNCs are closely monitoring the market changes in this segment. Likewise, a number of Indian pharma companies have successfully gained FDA approval for a growing portfolio of injectables generics, to gain foothold in the US generics market.

Vikram Gupta, Chief Operating Officer, IndiaVenture Advisors remarks, international markets where generics injectables have a huge market share include the US, Germany and the UK. These countries have seen maximum penetration of generic injectables in the oncology area. However, there are European markets such as Spain and Italy, where generic penetration is still low. In the case of the US, the generic penetration is about 65 per cent by volume and 45 per cent by value and continues to grow.

"This relatively exclusive segment of the generics market appears to be gaining traction, which has become evident with Hospira and Pfizer increasing their market shares by doing deals with Indian manufacturers," agrees Sujay Shetty, Associate Director, Pharma Practice, PricewaterhouseCoopers.

He cites another example: last year Hospira acquired Orchid's generic injectable finished-dosage form pharma business for approximately $400 million. The acquisition included Orchid's beta-lactam antibiotics manufacturing complex and R&D facility at Chennai, as well as its generic injectable product portfolio and pipeline. In addition, the companies signed a long-term agreement for Orchid to supply APIs for the acquired generic injectable pharma business.

In another such deal, Pfizer and Strides Arcolab entered into a collaboration whereby Pfizer agreed to commercialise Stride's off-patent sterile injectables and oral products in the US through its Established Products Business Unit. This is a highly complementary collaboration, expected to deliver 40 off-patent products, many of which are oncology therapeutics, to healthcare providers and patients in the US, by joining Pfizer's solid commercial infrastructure with Strides' high-quality manufacturing capabilities.

These deals are signs that, "MNC players like Pfizer are keen to work with Indian manufacturers to provide a boost to the injectable generics market," as Shetty underlines. Besides this, last May Pfizer also signed a commercialisation agreement with Claris Lifesciences, under which the firm acquired the rights to 15 injectable products that have lost patent protection in major markets, covering a wide range of therapeutic areas including anti-infectives and pain management. The products will be marketed under the Pfizer brand in the US, where the deal is exclusive; Claris will continue to market the products elsewhere.

Citing these deals, Gupta says, "Deals in the injectables space have been mostly driven by objectives of capacity expansion, cost optimisation and technology acquisition, and the growing interest of international companies to acquire or collaborate with Indian companies."

Bibhuti Bhusan Kar, Programme Manager, South Asia & Middle East, Healthcare, Pharmaceuticals & Biotechnology, Frost & Sullivan, echoes, "Low cost of production, and availability of low-cost scientific manpower are the core strengths of the Indian market which force MNCs to look for production partners to supply their injectable drugs in India and other parts of the world."

Adds Bhavesh Patel, Managing Director, Marck Biosciences, the injectables business is highly capital intensive with a long gestation period. Therefore, players look for collaboration in this area. He quips, "Even we are not averse to alliances. In fact in the pharma industry nowadays, it is very common to collaborate with competitors, suppliers and customers. We also have alliances with various companies within and outside India. We have filed our first ANDA with our partners in the US."

The Scene in India

"The rural market has growth potential for injectables in anti-infectives, GI segments and pain management drugs" - Bibhuti Bhusan Kar Program Manager South Asia & Middle East, Healthcare, Frost & Sullivan

"The relatively exclusive segment of the generics market appears to be gaining traction" - Sujay Shetty Associate Director Pharma Practice PricewaterhouseCoopers

Kar enumerates, "The Indian market is at an early stage of growth because of the low penetration of all healthcare needs, as compared to other parts of the world. Vaccination, patients receiving oncology treatment, usage of biologics are at nascent stages in India because of poor reimbursement policies, lack of government support, lack of awareness, and lower patient affordability, and thus there is a lot of opportunity for growth." He elaborates that the majority of the injectable drugs are sold on huge bonus offers and at discounted price. Moreover, a large portion of the market is hospital-based.

While changing lifestyle patterns have forced companies to tap cardiovascular diseases and diabetes segments more aggressively, Kar says that major markets for injectables / parenterals include vaccines, anti-infectives, oncology, biological, and nutritionals. Apart from these, several other drug classes such as insulins, drugs for pain management, CNS (Central Nervous System) drugs, and GI (Gastro Intestinal) drugs also contribute considerably to the injectable drugs market.

These things have jointly propelled the growth in this segment to be at or close to 15 percent over the last five years. However, "the booming vaccine market, growing at more than 20 percent in the last five years and with ample opportunities for further growth, is expected to favour the growth of the injectables market," says Kar.

And biotech drugs, which comprise two-thirds of the market, represent the biggest segment and are the fastest to grow at 15 percent, according to Gupta. Giving details, he says injectables using small molecules represent 25 percent of the market and are estimated to be at $35 billion, growing at 11 percent. But what is interesting is that most generic injectables use small molecules and are focused on oncology and cardiovasculars.

Though the market is highly fragmented there are small players as well as MNCs operating in this segment. But lacking capital, smaller domestic players are confined to market segments such as anti-infectives, GI and pain management drugs. Marck, however, focuses on a different league of products. Patel avers, "So far we have restricted our activities to respiratory solutions, ophthalmics and injectables in terms of therapeutics. Now we have augmented our capacities in large volume parenterals (LVP) as well as Small Volume Parenterals (SVP). Apart from fluid therapy and formulations, we have added ophthalmic, respiratory care and irrigation products by developing manufacturing capabilities. Today, we have the ability to offer six different therapeutic segments."

He continues, "So far we have grown in a very organic manner. We have never chased top line centric growth. We have been quite an inward looking organisation. We had Blow/Fill/Seal (BFS) technology only but now we are looking for anything which has synergy with BFS. We also have overseas companies approaching us for marketing tie-ups to launch in India. Marck's distribution network and hospital coverage attracts them. We have developed significant capabilities in terms of F&D, filings and our presence in various markets; as an extension to that now we are open to explore the opportunities available in the marketplace. Differently put, we would like to be a sterile dosage company and now we are looking at sterile drug systems other than BFS."

On the manufacturers' side, players would include Tablets India, Grandix, Lincoln Pharma, Noel Pharma, Molekule India, Martin Harris, Bombay Tablet, Synokem and others. However, in the formulations for vaccines, biologicals, and oncology drugs, large domestic companies and MNCs have a major share since the market is quality conscious and the products need technical expertise to manufacture and stock. Key players in this market segment are big size pharma companies and MNCs such as GSK, Pfizer, Sanofi Pasteur, MSD, Serum Institute, Panacea Biotech, Shantha Biotechnics and so on.

"This market segment is growing healthily in terms of value because of the product differentiation and product benefit it offers to the patients," explains Kar.

Surging Rural Market

"Pens are becoming more popular among diabetics in the US and could find a niche market in India" - Vikram Gupta Chief Operating Officer IndiaVenture Advisors

"The injectables business is highly capital intensive with a long gestation period" - Bhavesh Patel Managing Director Marck Biosciences

Though the urban setup is attractive and lucrative enough for major deals to make it through, the rural market is also up for a surge. As Kar rightly claims, "The rural market has tremendous growth potential for injectables in anti- infectives, GI segments and pain management drugs for several reasons-patients come at a late stage to the physicians and want to see instant results from a drug; higher margins are provided to the physicians for the injectable drugs; absence of adequately qualified physicians in the rural areas has led them to use injectables frequently to avoid any further complications of the disease. These reasons have attracted many smaller companies to enter the rural market to tap its potential."

Growth Areas

Oncology drugs form one of the largest and fastest-growing sectors of the global generic injectables market, informs Shetty, highlighting the numbers. Annual sales of the global generic injectables sector were $10-12 billion in 2008, according to IMS Health, with injectable oncology medicines accounting for about 30 percent. Additionally, injectable oncology medicines worth $9 billion in annual sales are expected to lose patent protection by 2015. The other area that he feels will drive growth in the Indian market is the antibiotics segment, as the injectable antibiotics market in India has shown robust growth in the last four to five years. This, Shetty says, is due to the introduction of high-end antibiotic brands at higher prices and the subsequent proliferation of their generic versions. The domestic injectable antibiotics market is worth $425 million and has been growing at a Compounded Annual Growth Rate (CAGR) of 21 percent in the last three years. And so is Troikaa's focus on pain management, cardiology and nutraceuticals, to leverage the high potential that lies herein.

Gupta points to another growth area. He says, "It is also expected that there will be higher growth in the pre-filled and lyophilised products due to increasing demand for simplified processes at the point of care. The main challenge for pharma companies is to make these drugs easier to administer, safer, more reliable, and economical." Patel agrees that keeping in sync with the demand for certain products, "Marck is also looking at other products like lipids, and total parenterals nutrition, which will strengthen our IV parenterals formulation basket. Besides this, we are working on new drug delivery systems to facilitate treatment. This will be a first time offering to the medical fraternity."

The market for injectables in the antibiotics segment and particularly for cephalosporin has been growing significantly and there is a huge opportunity in the Indian market itself. The other market with huge potential is multivitamin injectables, as per Gupta. The size of the non-biological injectables market is estimated to reach about $80 to $100 billion in 2015, out of which generics could account for about $35 billion. It is estimated that from 2006 to 2009 patents expired on non-biological injectables worth $15 billion.

Collaborate to Grow

The adage that adversity makes strange bedfellows is true of many industries and pharma is no exception. To cope with rising demand and increase their profit margins, Indian players have adopted the acquisition route to tap the world markets. The synergies that India has been boasting about for so long have once again taken the lead to bring in business. Due to a few factors like low cost of production and availability of adequately qualified manpower, Indian companies are able to manufacture and supply high volumes of parenteral drugs to the world market through JVs with MNCs / NGOs / international health organisations such as WHO, UNICEF and so on. More such JVs are expected in future, which will shape the injectables/parenterals market, opines Kar.

Coming soon

In recent past there has been double digit growth in market segments where injectables and parenterals are largely used such as vaccines, anti-infectives, oncology, biologic therapy, nutrition, pain management and so on. Most of these markets are growing at a rate close to or more than 20 percent, except for injectables in the antibiotic and pain management segment, which are growing at a rate close to 15 percent.

These market segments are expected to grow at a similar rate in the coming three to five years, which will drive the usage of parenterals, feels Kar. However, Patel thinks that the injectables market is driven largely by private investment, the number of hospital beds, physicians, health insurance, corporate hospitals and patent infrastructure. According to a KPMG report, it is expected that 2 million hospital beds and 4,00,000 physicians will be added by 2015, which will set the market to grow. With this there will be an emergence of newer and more sophisticated devices, which are cost-effective, and safe for use, opines Gupta. He cites an example: "Pens are finding increasing popularity to self-administer insulin in Europe. These devices are becoming more popular among diabetics in the US and this could find a niche market in India as well."

Also, while healthcare service providers and insurance companies abroad continue to drive prices down, injectable products, because of their higher regulatory standards and the complexity of development or manufacturing process, tend to command higher margins and price stability as compared to oral products. It is therefore expected that this market will continue to attract pharma and biotech companies who will focus on new product innovation as well as cost-cutting to improve their overall profit margins, Gupta predicts. Ketan Patel, Managing Director, Troikaa Pharmaceuticals, concludes, "With modernisation and new hospitals, the number of quality conscious customers who prefer to buy dependable parenteral products for their modern healthcare setup is steadily rising and will continue to rise for the next few years. Accordingly, the parenteral segment will enjoy excellent growth in the coming years. The key challenge, to emerge successful in this segment, is to provide consistent quality." Another challenge that will be an opportunity for biological injectables developers, Gupta remarks, is the fragile nature of the biological drugs themselves, which requires they be transported and stored at low temperature-which adds to the cost of distribution. To avoid the problem of temperature-dependent stability, these drugs are often processed and packaged in dry or powder form. These trends indicate that over a period of time more players will emerge in this segment either as independent entities or collaboration that will bring new high-end products.

sonal.shukla@expressindia.com