Dealing in New Delhi

Contract manufacturing in India up 20 percent with expected CAGR of 17 to 18 percent

Register for free to listen to this article
Listen with Speechify
NEW DELHI—While India is best known for being the home of the Taj Mahal, it might soon be known for being a leading center of contract manufacturing as well as the trend of pharmaceutical outsourcing continues.
Contract manufacturing is an area of increased growth in the pharmaceutical, biotech and life-sciences industries, and a good portion of that growth is taking place in India, according to a recent release by the India Brand Equity Foundation (IBEF). The IBEF, a trust established by the Department of Commerce, Ministry of Commerce and Industry of the Indian government, is focused on promoting international awareness of Indian products and services. S. V. Veerramani, president of the Indian Drug Manufacturers’ Association, recently noted that the pharma contract manufacturing industry is growing at 20 percent, with the current market value estimated at 50 percent of the domestic production (which translates to roughly $5.3 billion).
One of the leading reasons for this increased interest in India’s contract manufacturing services is that the country features a roughly 40-percent lower cost of operation and production when it comes to the basic manufacture of medical products and drugs. With the cost of taking a drug from discovery to approval currently in the range of $2.5 billion—and still rising—lower-cost options unsurprisingly are a huge draw for pharma companies. Additionally, India, according to the report, has the highest number of U.S. Food and Drug Administration (FDA)-approved manufacturing plants outside of the United States.
The interest in looking to the global stage for outsourcing manufacturing options is being driven by several factors, according to IBEF. In addition to increased development costs, some manufacturing plants in Europe are reaching the end of their life cycles, leaving companies to consider whether to build new units or to relocate or outsource the work to cost-effective locales such as India. As the age of blockbuster drugs is largely over and generics continue to add market pressure, some multinational companies continue to market their branded products even after patent protection is lost by dramatically reducing the price to that of generics. Finding more cost-efficient manufacturing centers to outsource production to, such as India, can make this approach feasible.
India’s government is supporting the trend by exploring the idea of incentivizing the upgrade of Schedule M facilities to WHO-GMP-compliant units with the help of soft loans, which could result in another 1,000 units being certified as WHO-GMP-compliant, IBEF’s report stated. As another incentive, the Drug Technical Advisory Board has agreed to grant a waiver to Phase 3 studies of certain drugs in India that are from the regulated markets of the United States and European Union, a move that could offer significant cost savings.
The country’s efforts to attract more interest globally include extending an offer to Japan’s pharma organizations to base units in India that are wholly owned or in joint partnership with India with Indian companies. Dr. P. V. Appaji, director general of the Pharmaceutical Export Promotion Council of India (Pharmexcil), has said that, “Our idea is to promote Indian generics in the international markets. Around 20 Japanese companies have already evinced interest in leveraging the contract manufacturing benefits from the U.S. FDA-approved facilities in India.”
And more growth is on the way: The contract manufacturing market in India is expected to grow by a compound annual growth rate of 17 to 18 percent as manufacturing efficiency and business model maturity continue to help contain manufacturing costs.
In an August presentation, IBEF noted that the Indian pharmaceutical sector accounts for roughly 2.4 percent of the global pharmaceutical industry. Generic drugs form the largest segment of its footprint, at 71 percent of the market share, and India is expected to be the third-largest global generic active pharmaceutical ingredient merchant market by next year. In addition, generic drugs account for 20 percent of India’s global exports in terms of volume, with Indian drugs exported to more than 200 countries worldwide.

Subscribe to Newsletter
Subscribe to our eNewsletters

Stay connected with all of the latest from Drug Discovery News.

DDN Magazine May 2024

Latest Issue  

• Volume 20 • Issue 3 • May 2024

May 2024

May 2024 Issue