Indian generic companies are gaining ground in the U.S. What does that mean and why are they having such success?
It’s cheaper to produce drugs in India, and companies there have been doing it for a long time, so they’re good at it. India’s inhabitants also rely heavily on generic drugs.
India also has the upper hand because outside the U.S., it has the largest number of FDA-approved sites, so the safety of its facilities is almost guaranteed.
And there are many available skilled young workers, who are educated and English-speaking. In fact, it is the third largest English speaking scientific and technological manpower in the world.
How’s India’s reputation?
The drug companies in India are well-respected. A survey by Bank of America Securities showed that 100 percent of U.S. pharmacy benefit managers indicated that they thought the leading Indian generic companies had the same quality as the leading U.S.-based companies.
What’s India’s drug-producing volume?
India leads the world for non-branded drugs, and produces close to 20 percent of the world’s generic volume. It’s traditionally been easier to launch a generic in India, because prior to 2005, there were no product patents on Indian drugs, just process patents. However, this changed with alterations to the TRIPS agreement, and on April 1, 2006, the first product patent was issued.
What does the future hold?
Indian companies will likely be major players for several more years, and they may start to factor more into the biotech drug market because that’s where the money is.
Who are the big players?
The top five Indian companies are Ranbaxy, Dr. Reddy’s, SunPharma, Cipla, and Nicholas Piramal. If a big pharmaceutical company wanted a strong generics arm, they should purchase an Indian company or at least do business with them.
Why are American companies moving their manufacturing to India?
The Indian companies are facing increasing pressure at home as their country opens up and welcomes American drug makers onto its soil – companies that are keen to take advantage of the same low costs that have helped propel the Indian generics companies forward.
With the low cost of manufacturing and the high level of expertise, India is an attractive destination. This is unlikely to affect the Indian companies, they’re already well established.
It may restrict growth a little because there will be more pressure on prices, but part of the problem for the U.S. companies will be the vast difference in culture which can make business very complicated.