From the Land of the Rising Sun come rays of hope for India?s Pharma Inc. Following the India-Japan free trade agreement signed in February, which put India?s generic firms on par with Japanese drugmakers, a host of large and mid-sized generic firms from India are looking east, outlining plans to enter the country?s $80-billion drug market. As of now, the share of generics in this market is only $8 billion, the lowest among key developed countries.
Companies like Dr Reddy?s Labs, Alkem, Ind-Swift Labs and Elder Pharma are planning to enter the strictly-regulated Japanese market, while those already present there like Lupin and Zydus Cadila plan to expand their footprints. Diet, Japan?s parliament is expected to ratify the trade agreement with India soon.
For Indian pharma firms, the timing has been just right: They go in with a first-mover advantage, at a time when Japan intends to raise the share of generic drugs from 18% to 30%. The need of affordable drugs is expected to rise at a time when the country is reeling from the after-effects of natural and nuclear disasters. Besides, several drugs are going off-patent in Japan until 2013, opening new vistas for the Indian companies. Consequently, the market is being pegged as the next frontier for generics.
Says Ind-Swift managing director NR Munjal, also president of Indian Drug Manufacturers? Association: ?We have lined up around seven drugs for the Japanese market in therapeutic areas of high blood cholesterol, diabetes and Alzheimers? disease among others, which would be launched starting November 2011. For now, we have tied up with local partners for manufacturing there and are supplying active pharma ingredients, but going forward, we would like to explore options for exporting formulations as well. The agreement is very recent and though it has created a buzz, it would take at least six to eight months for us to see the impact.?
Adds an Alkem official: ?Japan is a market of interest to us. We are chalking out a roadmap to enter the market, though that will require a lot of preparatory work.? Interestingly, Alkem?s current CFO and chief of strategy Ravindra Shenoy was a vice-president (finance) with Lupin in 2007-08 when the firm acquired 90% stake in Kyowa, one of the top ten generic firms in Japan. Sources say he was part of the core team instrumental in orchestrating the deal in Japan. Dr Reddy?s too is actively hunting for local partners to finalise its Japan strategy. ?We are in early stages of evaluating partnership options as part of our Japan entry strategy,? a company spokesperson said.
Lupin ? Japan?s seventh-largest generic player after its Kyowa acquisition ? targets to become one of the top five generic drug makers there in the next three years. Its sales in Japan rose from R442 crore in FY2009 to R534 crore in FY2010, accounting for 11% of its total sales. Lupin currently markets around 200 products in Japan and is a significant player in the neurology segment that caters to Japan?s ageing population.
Says Lupin president (business development) Vinod Dhawan: ?Around a dozen new product launches have been planned in the year ahead, which would address a target market size of close to $3 billion.? He adds that Lupin is also exploring strategic arrangements with European and American pharma majors to enter new segments in Japan and may go in for a second acquisition. Sources say Zydus Cadila, which acquired Nippon Universal Pharmaceuticals in 2007, is also ramping up its operations in Japan. The company?s Japanese operations registered sales of R32 crore in 2009-10, up 44% since 2008-09. Daiichi Sankyo, which has a majority stake in Ranbaxy Laboratories, also set up a new firm, Daiichi Sankyo Espha Company (DSECL), in May last year for marketing generic drugs.