Indian firms in the pharmaceuticals ingredients space are thronging the Japanese market — an outcome of the Japanese government’s decision to entertain the use of copycat drugs in the country. Active Pharmaceutical Ingredient (API) manufacturers such as Ind-Swift Labs, Suven Life Sciences and Dishman Pharma are set to join hands with Japanese generics producers to supply APIs and intermediates in the world’s second biggest pharmaceutical market after the US. The Japanese pharma market is estimated at around $75 billion.
Japan, which has a government-funded National Health Insurance scheme covering every citizen, wanted to shift from costly patented products to cheaper generic versions. The government introduced a series of reforms last year, with the intention of expanding generic drug penetration to 30 per cent of the pharma market by 2013, from the current 18 per cent. The free trade agreement signed with India earlier this year is also expected to boost the supply of ingredients to Japanese players.
Venkat Jasti, former president of the Bulk Drug Manufacturers Association (BDMA) and managing director of Suven Life Sciences, said, "Indian drug intermediates or APIs are made with high regulatory compliance, and are the cheapest as well. That is why Japanese players opt for joining hands with Indian makers for generic drugs. Also, the free trade agreement will have a good impact over the alliances."
Suven Life has already started selling intermediates to two Japanese generics manufacturers, and is expected to sign contracts with three others soon.
Although the Japanese government started promoting generic drugs in 2002, the result was not promising, due to a lack of proper incentives for doctors and pharmacists. However, in 2010, pharmacists and doctors were offered huge incentives to substitute prescription drugs with generic alternatives, which resulted in 20-25 per cent growth in generic sales volumes.
The Japanese drug market is characterised by very low generic drug penetration. Generics represent a mere five per cent of the total in value terms and 18 per cent in volume terms. In the United States, the world’s largest pharma market, generics fill 75 per cent of the prescriptions dispensed but consume just 22 per cent of total drug spending. According to the US-based Generic Pharmaceutical Association, generic medicines saved the US healthcare system $824 billion over the past decade, including a whopping $139 billion in 2009 alone.
Another API major, Ind-Swift Labs, has submitted seven drug master files (DMFs or applications for approval of ingredient sales) to the Japanese regulator, the Pharmaceuticals and Medical Devices Agency (PMDA). Of these, two have won approval and five have received a tentative nod. PMDA approval was secured for producing pioglitazone (an anti-diabetic) and risedronate sodium (a medication for osteoporosis).
N R Munjal, vice chairman and managing director of Ind-Swift Labs, said, "We are in talks with two generics makers for supply agreements for atrovastatin (anti-cholesterol) and two for pioglitazone. We expect revenues of $5-10 million from the Japanese API market by FY12." A delegation of the Indian Drug Manufacturers Association (IDMA) and Ficci will be sent for bi-lateral negotiations with the Japanese government on pharma issues in January 2012, added Munjal, who is also the president of IDMA.
Ahmedabad-based API maker Dishman Pharma is in discussions with 12 Japanese generics makers to supply APIs for gastroenterology and anti-hypertensive drugs, and is expected to clock revenues of $5 million in 2011-12 (current revenues from Japan are $1 million). Dishman received the PDMA’s nod for six APIs recently. "Currently, the API market in Japan is dominated by US and European players, which can be slowly replaced by Indian firms which supply regulatory-compliant and cheaper versions," said J R Vyas, Dishman’s managing director.
In January, Elder Pharma won accreditation from Japan’s ministry of health for its API plant at Patalganga in Maharashtra. "Elder is positioning itself to be a supplier of APIs and advanced intermediates to the Japanese market. The company has developed two products that are going off patent in the Japanese market in 2014. One product is from the CNS category and the second is from the GI segment," Elder Pharma Director Alok Saxena had said.