Pharma Market Sweden Industry - PDF

Document Sample
Pharma Market Sweden Industry - PDF Powered By Docstoc
					Pharmaceuticals Industry –
Opportunities and Challenges
in current market

Nitin Parekh
Chief Financial Officer
Cadila Healthcare Ltd., Ahmedabad


15th September, 2009
                                  Global Pharma Industry – An Overview
•        Pharma industry broadly includes finished dosage formulations (tablets, capsules,
         injections, liquids, ointments etc.).

•        Other ancillary industries include active pharmaceutical ingredients (API), excipient
         chemicals, pharma packaging, pharma related capital goods, clinical research etc.

•        Chemical formulations account for over 80% of the market, though biotech products
         (pharma formulations based largely on a new recombinant DNA technique) have been
         strengthening their presence since last decade.
        Global Pharma Market Size ($ bn) and Trend                                     •   Global pharma industry is valued at ~ $ 773
900                                                                           14.00%       billion, currently growing at ~4.8%, which is
800       11.80%                                                       773                 lower compared to last 5 year (2003-2008)
                                                        715                   12.00%
700                                      648                                               CAGR of 6.6%. (Source : IMS Dec-08)
                           605                                                10.00%
600

500                                                                           8.00%
                                                                                       •   US dominates the global pharma market with
                   7.20%
           393                                                                             ~$ 291 billion, followed by Japan ($ 77 billion).
400                              6.80%                                        6.00%
                                                6.60%                                      Top 5 markets of Europe are valued at ~$ 150
300                                                            4.80%
                                                                              4.00%        billion. (Source : IMS Dec-08)
200
                                                                              2.00%
100
                                                                                       •   Growth in these regions, however, have been
    0                                                                         0.00%
                                                                                           lackluster (US – 1%, Japan – 2%, Top 5 EU –
           2001        2005              2006           2007           2008
                                                                                           4%). They are expected to grow at the same
                                 Mkt Size        Growth
                                                                                           pace for next couple of years. (Source : IMS Dec-08)
                   (Source : IMS Health Market Prognosis, Mar 09)
                  Global Pharma Industry – An Overview
•   Overall growth in ‘Pharmerging’ markets
    (China, India, Russia, Brazil, Mexico, Turkey
    and South Korea) was ~14% in 2008.

•   These markets are expected to lead the
    growth journey in future also with same pace.

•   Innovative, patented and branded drugs
    have been dominating the market with over
    90% value till last decade.

•   However, generic drugs (copy of the
    patented drugs, launched generally after
    patent expiry), have significantly increased in
    size mainly due to substantial cost
    differential, and account for over $ 100
    billion in value.                                                        (Source : IMS Dec-08)

•   In fact, in US, the largest pharma market, generic drugs account for over 60% of pharma
    prescription volumes, but 16% of total value.

•   Globally, generics account for over half of volume sales, but only 15% of value sales, clearly
    indicating the cost differential between patented and generic drugs. (Source : IMS Dec-08)
                          Global Pharma Industry – An Overview
•      The top three therapeutic categories globally are - Neuro-psychiatry drugs at $118 billion,
       Cardiovascular drugs at $ 105 billion and Anti-cancer drugs at $70 billion, which is growing
       at highest rate of 19%.

•      Overall, chronic segments (cardiovascular, anti-diabetic, anti-depressant, respiratory etc.)
       and specialty segments (anti-cancer, biologics etc.) are growing at higher rate than acute
       segments (anti-infective, pain-mgmt etc.)

                                                              Sales      •   The list of top 15 pharma companies in
    Rank           Company                   Base                            the terms of sales (2008) is dominated by
                                                             ($ mn)
       1     Pfizer                     US                      43,363       US and other developed countries.
       2     GlaxoSmithKline            UK                      36,506
       3     Novartis                   Switzerland             36,506   •   These cos., known as ‘Big Pharma’, are
       4     Sanofi-Aventis             France                  35,642       innovation driven, and spend 15-20% of
       5     AstraZeneca                UK/Sweden               32,516       their sales on R&D.
       6     Hoffmann–La Roche          Switzerland             30,336
       7     Johnson & Johnson          US                      29,425
                                                                         •   These companies enjoy profit margins
       8     Merck & Co.                US                      26,191
       9     Abbott                     US                      19,466
                                                                             between 15-25%, making Pharma
      10     Eli Lilly and Company      US                      19,140       industry one of the most profitable
      11     Amgen                      US                      15,794       industries in the world.
      12     Wyeth                      US                      15,682
      13     Teva                       Israel                  15,274   •   Teva is world’s largest generic co.
      14     Bayer                      Germany                 15,660       Sandoz (Germany based subsidiary of
      15     Takeda                     Japan                   13,819       Novartis), Mylan (US) and Watson (US)
    (Source : IMS Health 2008, Top 15 Global corporations)                   are other leading generic companies.
                    Indian Pharma Industry – A Snapshot
•   India’s total pharma industry, comprising of domestic formulations market and exports of
    formulations and APIs, is valued at $ 17 billion in 2008.

•   Domestic formulations market is valued at over $ 7 bn (>Rs. 35 K crores), currently growing
    at over 10%. It has been growing at CAGR of 14% over last 4 years, and is one of the
    fastest growing pharma markets in the world. (Source : ORG IMS MAT Mar-09)

•   In terms of size, domestic formulations market is 8% of global pharma volumes and ranks
    4th, but in terms of value, it is only 1% of value, and ranks 12th in global pharma markets.
                                                                                                 Rs. Crores
•   The Indian pharma industry has grown                          Exports                Domestic
    significantly as can be observed from the      Year           Form &        % Gr      Form &     % Gr
    export and domestic sales figures from                        Others                  Others
    2003-04 to 2008-09.                            2003-04          15,213       18.61      32,575    7.28
                                                   2004-05          17,857       17.38      34,128    4.77
                                                   2005-06          22,216       24.41      39,989   17.17
•   Indian pharma industry is self sufficient to
                                                   2006-07          26,895       21.06      45,367   13.45
    meet the demand of drugs in the domestic
                                                   2007-08          30,760       14.37      50,946   12.30
    market, and at present over 95% of             2008-09          38,433       24.94      55,454    8.85
    domestic requirement is met by domestic        (Source: Express Pharma, Equity Master)
    pharma manufacturers.

•   This has been made possible because of lack of patent protection to pharma products (after
    Patent Act of 1970), and formulations market today is accounted for almost entirely by low
    cost branded generic drugs, which still offer high margins and sustainable business.
                      Indian Pharma Industry – A Snapshot
•   Domestic formulations market in India is highly fragmented one, with over 20,000 registered
    drug manufacturers.
                                     Sales    % Mkt    • Top 5 companies hold less than 25%
    Rank         Company
                                   (Rs. mn) Share        of the total market.
           Total Pharma Market       368,471
       1   Cipla Ltd.                 19,917    5.41%
                                                      •    MNCs used to hold dominant position
       2   Ranbaxy Laboratories       18,138    4.92%
       3   Glaxo Smithkline Pharma    15,917    4.32%      in the domestic formulations market 40
       4   Piramal Healthcare         15,023    4.08%      years before, which gradually exited the
       5   Cadila Healthcare          13,399    3.64%      market or slowed down their operations
       6   Sun Pharmaaceuticals       13,054    3.54%      post Patent Act, 1970.
       7   Alkem Laboratories         11,608    3.15%
       8   Lupin Laboratories         10,085    2.74% •    List of top 10 companies is now
       9   Mankind Pharmaceuticals     9,719    2.64%
      10   Aristo Pharmaceuticals      8,962    2.43%
                                                           dominated by Indian companies, with
    (Source: ORG IMS MAT Jul-09)
                                                           GSK being only MNC.

•   Indian pharma manufacturers are also dominant players in API and generic formulations
    exports due to lower cost base.

•   In terms of overall revenues, considering domestic and exports sales, Ranbaxy ranks 1st
    among Indian pharma cos., followed by Dr. Reddy’s Lab, Cipla and Sun Pharma.

•   Indian healthcare market, contrary to developed markets, is still characterized by high ‘out of
    pocket’ spend by patients themselves, and government spending is very low. Over 90% of
    healthcare costs are borne by patients, which is highest in the world, which puts check on
    drug prices so as to ensure its affordability and availability to all.
Challenges for Big Pharma- Opportunities for Generics & India
•   Declining R&D Productivity of Big Pharma –                Number of projects terminated in Phase III

     •    Increasing failure rate in clinical trials                           36              35
                                                                                                             39

                                                                 31
     •    Increasing cost of developing a new drug –
          from $ 1.1 bn in 2004 to $ 1.3 bn in 2008
     •    Increase in time taken for trial completion
          and drug approval
•   Lack of replacement of blockbuster drugs that            2002-04         2003-05         2004-06       2005-07
    have gone off patent in past – very few drugs        (Source : 2008 CMR International)
    launched in recent past have blockbuster potential
                                                                      % of total prescriptions dispensed in US
•   Deceleration in growth of existing blockbusters
                                                          100%
         2004           2005      2006         2007
         24%            14%       10%           9%         80%         47%     47%       51%        57%      63%
    (Source : IMS Health)
                                                           60%
•   Increasing competition from generics, with govts.
                                                           40%
    in developed countries encouraging generic players
                                                                       53%     53%       49%
    to reduce heavy burden of healthcare costs             20%                                      43%      37%

•   Recent financial crisis and economic slowdown,          0%
    though having relatively less impact on pharma                    1999     2001     2003        2005     2007
    industry, have impacted consumer spend on
                                                                                    Brands     Generics
    healthcare (# of prescriptions in US down by 2%
                                                           (Source : IMS Health, National Prescription Audit Plus)
    in 2008-09 for the first time in decade)
         Challenges for Generics and Indian Pharma Industry
•   Price erosion and margin restrictions putting severe earnings pressures

     •   Stiff competition from Indian and Eastern European players – all fighting on price front.

     •   Market for blockbuster drugs gets crowded on very first day of patent expiry with over
         10 players competing for market share

     •   Over 90% erosion in the prices on branded products on ‘genericisation’ in US and other
         developed markets; in some products, it was higher than 97% (e.g. Simvastatin)

     •   Price and margin controls and regulations for generic drugs by Govts. in some markets
         to contain healthcare costs (e.g. France)

•   Non tariff barriers and product registrations

     •   Compulsory requirement of having local mfg. and QA / QC facilities (e.g. Brazil)

     •   Regulations for manufacture, import, packaging, marketing and distribution by govt.

     •   Could be used as measures by MNCs to place obstacles for generics

•   Big Pharma entering generics space with ‘deep pockets’ – could further intensify the
    competition in the generics space (Daichi Sankyo acquiring Ranbaxy, many others in race)

•   IP risk and EHS perception – major outsourcing customers i.e. big MNCs still perceive IP risk
    in India due to lack of laws for data protection. Also EHS compliance standards in India are
    considered to be below average. Both these factors could be growth deterrent for CRAMS
    players.
         Challenges for Generics and Indian Pharma Industry
•   Stringent Regulations and increasing regulatory costs
     •   Instances of manufacturing irregularities and deviations from quality standards
         surfacing (several generic companies having issues in USFDA approved plants),
     •   Regulatory authorities across the world have become more stringent on compliance
         and have started taking stiff actions against the defaulters.
     •   This has caused increase in cost of regulatory compliance
•   New patent regime in India (post 2005)
     •   Move from process patent to product patent
     •   Molecules patented post 1995 get protection and can’t be copied
     •   Availability of new off-patent molecules (or pre 1995 patented) drugs drying up slowly
     •   Drug discovery pipeline of Indian companies to take time to deliver results
•   Price controls - India only country in the world to have cost based drug price controls
     •   Drug Price Control Order (DPCO) 1995 – regulates prices of 74 essential drugs
     •   New pharma pricing policy proposing 354 other drugs to bring under price control, if
         implemented, would severely hurt pharma cos. and discourage investments in R&D
•   Regulatory environment within India (approval processes and timelines), though better than
    China and Eastern Europe, needs to be improved to match standards of western countries.
        Opportunities for Pharma Industry – Global Factors
Aging of the world population
                                                                               % of World Population :
                                                                                  60 years or older
•   World population aging is unprecedented (not seen before in
    the history of humanity), pervasive (a global phenomenon                                         21
    affecting everybody), profound (having major consequences
    and implications for all facets of human life) and enduring.
                                                                                        10
•   During the twentieth century the proportion of older                   8
    persons continued to rise, and this trend is expected to
    continue in the twenty-first century.
                                                                        1950         2000       2050 E
•   Healthcare needs are expected to rise with aging population
                                                                       (Source: UN Report on World
    across the globe, inducing greater demand for pharma drugs.        Population Aging 1950-2050)

New diseases and diagnosis of newer syndromes
•   More than 300 diseases have been discovered since 1940 - SARS (Severe Acute Respiratory
    Syndrome), Ebola, HIV, West Nile Virus, MRSA (Methicillin-resistant Staph), Swine Flu….

•   For most of the diseases emerged in last 25 years, no prevention or cure is still available.

•   India, China and sub-Saharan Africa regions are ‘hotspots’ for new emerging infectious
    diseases (EID).

•   This gives tremendous opportunity (and responsibility too) to the pharma industry to
    innovate remedies for these diseases and syndromes and create newer markets.
                  Opportunities for Pharma Industry – Global Factors
 Biologics – promising future                                                                                      Share of biologics in
                                                                                                                    top 100 molecules

 •        17% of total world pharma market, 42% of pre-clinical                                              11%
                                                                                                                          28%
          candidates and 26% of submissions in 2008                                                                                    50%


 •        Fastest growing therapies – oncology and diabetes are                                              89%
                                                                                                                          72%
                                                                                                                                       50%
          being driven by biologics

 •        Expected to grow to 23% of world pharma market by 2013                                             2000         2008          2014
                                                                                                                 Conventional    Biologics

 •        Complex technology, hence lower risk of early entry of                                         (Source: EvaluatePharma World
                                                                                                         Preview 2014)
          generics – a positive factor for ‘big pharma’
         Pharma Markets - Size ($ bn) and CAGR of 2003-08                                All roads lead to Emerging markets
900                                                                              16.0%   •   ‘Pharmerging’ markets are key engines of
800         773                                           13.7%                  14.0%       growth for pharma industry – comprising of
700
                                                                        12.7%
                                                                                 12.0%       82% of world population, which contribute
600
                                                                                 10.0%       to only 12% of world pharma sales
500

                                                                                         •
                                                                                 8.0%
400                                6.4%                                                      Growth would be driven by increasing per
                       312                                                       6.0%
300                                248                                                       capita spend on healthcare, lower
                       5.7%                 2.7%
200        4.8%
                                                                                 4.0%
                                                                                             penetration of modern medicines,
                                                           91
100                                           77                        47       2.0%        increasing insurance penetration and
     0                                                                           0.0%        improving lifestyles
         World Mkt   North Am    Europe     Japan   Asia / Africa /   Latin Am
                                                         Aus
                                Mkt size   CAGR 2003-08                                  •   Offer highest growth potential due to
(Source: IMS Health, 2009)                                                                   strong GDP growth expected there
                                Opportunities for Generic Pharma Industry
                           Healthcare Costs will continue to                               Spiraling healthcare costs
                            outpace GDP and Wage Levels
    350

    300                                                                                    •   Governments in developed economies
          Value Index




    250
                                                                                               bear healthcare costs of people, which
    200
                                                                                               has been rising very sharply.
    150
                                                                                           •   Governments are taking various steps to
    100
                                                                                               promote generics to reduce costs like-
    50
          2005          2010   2015   2020   2025    2030   2035    2040    2045    2050
                                                                                                 • centralized purchase (Germany),
(Source: OECD Health Data, 2006)
                                                                                                 • generic substitution (Japan),
                                Healthcare Costs as % to GDP
                         Switzer                                                                 • waiving co-payments for generics (US)
          US                          France        Germany        Canada      Japan
                           land
      15.3%               11.3%        11.1%         10.6%         10.0%           8.2%          • promoting and monitoring physician
     (Source: IMS Health, National Prescription Audit Plus)                                        prescription habits
Low generic penetration                                                                                Generic Penetration % in total market

                                                                                                     Italy       5
•     In some of the developed and emerging
      markets, generic penetration is still very low.                                               Spain            7


                                                                                                                         10
•
                                                                                                  France
      Governments in such countries are encouraging
      generic players to play vital role in reducing                                               Japan                          17

      healthcare costs.                                                                         Germany                                19


•     Outlook for growth of generics in these markets                                               Brazil                              20

      and eastern European markets is promising.                                               (Source: Sandoz presentation)
                   Opportunities for Generic Pharma Industry
Patent expiries                                                     Sales of Products having Patent Expiry ($ bn)

                                                                                    58
•    Products worth US $ 235 billion are going off                                           48
     patents from 2009 to 2014,                                                                      39       37

•    Includes many blockbusters like Lipitor (Pfizer -             26      27

     $ 12 bn), Plavix (Sanofi-Aventis & BMS - $ 8 bn),
     Diovan (Novartis - $ 6 bn), Zyprexa (Eli Lilly -
     $ 5 bn), and $ 40 bn worth of biologics
                                                                  2009    2010     2011     2012    2013     2014

•    This gives huge opportunities to generics        (Source: EvaluatePharma World Preview 2014)
     players, with low cost development and mfg. capabilities, to tap market for these products

•     Biologics, which are difficult to copy and hence have low price erosion post patent
      expiry, is an attractive market for players with biologics capabilities
    Generic industry growth estimates (2008-2013)   Generics industry – poised for growth
            US          5%                          •   With aging population and rising healthcare costs,
    Western EU     3%                                   acceptance of generics has been increasing.
    Eastern EU                             13%
                                                    •   Expected to grow at CAGR of 9% over next 5 years,
         Japan                       11%
                                                        emerging markets being key growth drivers.
     Rest of US                     10%

          ROW                           12%
                                                    •   Players with efficient development and mfg,
                                                        capabilities, and ability to develop and manufacture
         World                    9%
                                                        ‘difficult’ technology stand to gain. Indian players
(Source: Sandoz Presentation)                           should benefit the most.
     Opportunities for Pharma Industry – Domestic Factors
•   India is poised to be one of the most important pharma markets and formulations pharma
    market is likely to triple over next decade to ~ $ 20 bn by 2015 at CAGR of 12%
                                                                    Shift in Income Demographics
•   Real GDP growth – expected to grow at 7.3% pa

•   Rise in income levels and shift in income
    demographics

     • Per capita disposable income – expected to
       rise from $ 463 in 2005 to $ 765 in 2015.

     • 27 mn households currently in lower income
       category to move up.

     • Middle income category to rise steeply – 59
       mn more households to be added by 2015.

     • Rural and Tier-2 markets to contribute to
       almost half of total growth till 2015
                                                                         (Source: McKinsey Report on India Pharma 2015)

•   Increase in healthcare spends by people (from 4% of household consumption in 1995 to 9%
    in 2015 and 14% in 2025) with-
     • Increase in affordability of living costs, both in tier 1 and tier 2 markets, and
     • Increasing importance to health, fitness and wellness, due to changing lifestyles
•   Increased coverage of health insurance – expected to cover 200 mn people by 2015
       Opportunities for Pharma Industry – Domestic Factors
•    Increased spending by Govt. on rural development, healthcare access improvement thru
     National Rural Employment Guarantee Scheme and National Rural Health Mission
•    Improvement in medical infrastructure
      • Number of hospital beds and physicians expected to double, with 2 mn additional beds
        and 0.4 mn physicians.
      • Corporate hospital chains to play vital role in transforming quality of healthcare

•    Lifestyle related and chronic diseases         India projected to be 10th largest Pharma market by 2015
     are expected to rise rapidly with
     changing lifestyles
•    With over 50 mn cardiac and ~40 mn
     diabetic patients, India is already the
     cardiac and diabetic capital of the
     world.
•    New Patent regime post 2005 –
     Product patent and compulsory licensing
     provisions should encourage
     multinationals to launch products
•    All these factors provide huge potential
     for Pharma to grow in India.
(Source: McKinsey Report on India Pharma 2015)
               Opportunities for Pharma Industry – CRAMS
•   R&D and mfg. outsourcing market (Contract Research and Mfg. Services or CRAMS, as it is
    known in Pharma world)
                                                                Global Outsourcing Industry 2008
•   Representing 19% of global pharma
                                                                Research
    R&D and mfg. spend in 2008.                                  $ 6 bn
    (Source: Morgan Stanley Report on „Global                   (up 19%)
                                                           Drug                                     $ 51 bn
    Outsourcing – Best Ideas, 2007‟)                   Development                                 (up 14%)
                                                          $ 12 bn          APIs &
                                                         (up 16%)      Intermediates
“…The need for a continued evolution                                       $ 33 bn
of the innovative pharma business                                         (up 13%)
model, coupled with the war for
technical talent, has put India at the
heart of the global sourcing                    •   Increasingly becoming a strategic decision for big
initiatives. Strong cost competitive                pharma cos. to reduce costs and sustain margin
and well developed local industry base,             pressures felt due to
combined with the large pool of                      • Large block-busters going off patent
technical talent has necessitated the                • Declining R&D productivity, and
inclusion of India as a part of all global
sourcing initiatives across global                   • Increasing generic penetration
pharma businesses…”                        •        Expected to grow despite the financial crisis and
                                                    economic slowdown
Dr. Harit B. Joshipura
Chairman,                             •             India and China top two best CRAMS destinations
GlaxoSmithKline Pharmaceuticals Ltd.,               due to their huge market potential and tremendous
India                                               cost saving offered by them
     CRAMS – huge opportunity for Indian Pharma Industry
•   India has an edge over other countries in the CRAMS space with –
     •   Highest no. of US FDA approved plants (119) outside US, with largest share in DMF
         and ANDA filings (34% in DMFs with >1100 filings, 30% in ANDAs with >450 approvals)
     •   Significantly lower costs (65% lower than US plants and 50% lower than EU plants)
          • Lower facility installation costs (30% lower than US), and      (Source : E&Y Analysis, Indian
          • Significantly lower manpower costs (>1/10th the US cost)        Pharma CRAMS, 2008)

     •   Largest pool of qualified, skilled and English speaking manpower
     •Significant advantage for drug discovery and process        “…Out vision is to catapult India
     development outsourcing due to                               into top five pharma discovery
          •Process, analytical and chemistry skills,              and innovation hubs by 2020
                                                                  with a significant number of
          •Chemical synthesis and pre-clinical services, with
                                                                  drugs discovered worldwide by
          GLP-compliant facilities
                                                                  2020 coming from India. We
     •Global quality, IP and EHS standards                        want to position India as the
                                                                  destination of choice for global
•India has become a major player for sourcing of APIs and
                                                                  pharmaceutical R&D…”
formulations, with- 24% growth in exports over 2004-08.
•Big Pharma are focusing on India for R&D outsourcing.            Ashok Kumar
                                                                  Secretary, Govt. of India
•Despite its inherent advantage, India accounts for only ~3%      Ministry of Chemicals &
of global outsourcing market – a significant opportunity to tap   Fertilizers, Dept. of
larger share and grow rapidly.                                    Pharmaceuticals
                      Recent trends in Pharma Industry
•   Declining R&D productivity of ‘big pharma’ cos., no major ‘block-buster’ drug expected in
    near future and lackluster growth from existing block busters coupled with increasing
    generic penetration, has forced them to think of
    alternative strategies like :

     • Strengthening presence thru consolidation
       (Pfizer acquiring Wyeth, Merck acquiring Schering-Plough)

     • Entering generics space either from scratch or
       thru acquisition (Daichi Sankyo acquiring Ranbaxy)

     • Looking at newer avenues like biotech (Roche acquiring
       Genentech, Sanofi-Aventis acquiring Shantha Biotech)

     • Entering ‘Pharmerging’ markets either ‘greenfield’,
       thru in-licensing of products or other tie-ups (Pfizer
       in-licensing products from Aurobindo and Claris,
       GSK tying up with DRL)

     • Improving research productivity thru contract
       research from low cost Indian players (Merck’s tie up
       with Ranbaxy, Eli Lilly’s tie up with Cadila),

     • Rationalizing costs by outsourcing of manufacturing
       to low cost players of China and India, setting up own
       mfg plant there or acquiring cos. there with mfg. plant
                      Recent trends in Pharma Industry
•   Generics are getting increased support from govts.             Exports pf formulations and APIs
                                                                           from India ($ bn)
    of developed economies, due to economic slowdown
    coupled with burden of mounting healthcare costs
                                                                                            3.3
•   Indian pharma cos., with their product development
    skills and low cost mfg. capabilities have
                                                                        1.1                 4.1
     • Substantially increased their presence in rapidly
                                                                        1.6
       growing developed and emerging generic markets, and
                                                                        2004               2008
     • Emerged as preferred partners of choice for MNCs
                                                                          Formulations     APIs
       for getting their products developed and manufactured
                                                               (Source: E&Y analysis, Dec 08)
       at low cost on contract basis

•   With regulatory authorities across the globe becoming more and more stringent, generic
    cos. have started focusing on strengthening their regulatory compliance.

•   Generic companies are adopting differentiated strategies for growth – by building product
    pipeline which is difficult to develop and manufacture (aerosols, injectibles, bio-similars)

•   In India, the expansion of rural market due to rising income levels across the regions and
    increased government spending has prompted many Indian cos. to start initiatives for tapping
    opportunities in this high potential market, considered to be the next growth driver

•   With number of new off-patent (or pre 1995 patented) molecules reducing, Indian cos. have
    started looking for in-licensing of products from MNCs for Indian market
                        Lessons in Economic Slowdown
•   Conservative approach

     •   No litigation for ‘one-off’ opportunities, which might be big but quite risky

     •   No big ticket acquisition. Buy only if it is too strategic, that too at ‘reasonable price’.

     •   R&D charge off as revenue expenditure – risk of failure is very high, hence it is prudent
         not to capitalize any R&D spend and ‘build hopes’.

•   Continue thrust on innovation and new products – long term value lies in innovation and
    new products are not going to fade easily.

•   Cost consciousness as a way of life

     •   Competition and price pressures are the ‘fact of life’, so they are going to be there and
         can’t be controlled

     •   Only way to sustain margin pressures is thru tighter cost control, continuous cost
         improvement and rationalization. ‘Cash is the King’.

•   Strong periodic monitoring mechanism of business performance and costs, to establish
    ‘early warning system’ and prompt decision for future course of actions

•   Constant eye on D/E ratio – to use the leverage cautiously, otherwise could cost heavily
Thank You.

				
DOCUMENT INFO
Description: Pharma Market Sweden Industry document sample