Armed with certain strengths, Indian generic companies are on a Tear

April 14, 2008

The growth of Indian generic companies.

India's generic manufacturers file more successful abbreviated new drug applications with the Food & Drug Administration than does any other foreign country. In the second half of last year, Indian companies received 72 ANDA approvals, second only to the 95 approved ANDAs filed by U.S. companies. Israel was a distant third with 22 approved ANDAs in that period.

"As more and more generic companies enter the market, especially from countries such as India, existing players fight to retain market share, lowering price per pill through competition and squeezing margins," according to a recent report by Thomson Scientific.

In addition to India and Israel, more than a dozen other nations received a total of 66 ANDA approvals between July and December 2007. That means that two out of three approved ANDAs are from foreign-based companies.

It was in 2003 that the number of Indian companies competing here began increasing dramatically. "That year, only five companies received FDA ANDA approval," she said. "By last year that had increased to 16 companies."

The Indian companies are a "major presence now in the U.S.," agrees Edward Thwaite of E.W. Thwaite Associates, a generic industry consulting firm in Totowa, N.J. "And they are doing very well. It's impressive, seeing as they had much less presence just five years ago. Low labor costs are an obvious advantage."

Indian companies are highly aggressive and the companies find the United States "to be an attractive market," said Kuhrt, "because demand here is so high and continually growing." As more and more blockbusters come off market and as payers such as Medicare continue to encourage utilization of generics, Indian companies are increasingly competitive. "But it is very important to note that there is a downside to the American market that (multinational) companies also recognize. Because competition is intense, there is a great deal of downward pressure on prices and profits."

Safety is a concern

While generics from India have a cost advantage, how safe are they? Ranbaxy, a leading Indian generic manufacturer, initiated a voluntary recall of 73 million tablets of the anticonvulsant generic drug gabapentin in late 2007 because the allowed level of impurities in the tablets exceeded specified limits, according to the FDA.

"The expansion of international generics manufacturing highlights the importance of the challenge facing the FDA in monitoring drug safety," said Cynthia Reilly, director of clinical standards and quality for ASHP. "We strongly believe in the need to increase funding for the FDA so it has the resources necessary to ensure the safety of drugs produced both within and outside our borders."

According to recent Congressional testimony by drug safety experts, foreign drug and drug ingredient manufacturers are inspected only once every eight to 12 years by the FDA, compared to every two years for domestic manufacturers.

Dynamic generic market

The influx of Indian companies occurred as they began to appreciate the advantage of manufacturing both APIs and doses, said Kuhrt. "That move up the value chain had obvious advantages as not all companies had this joint capability, and many still do not," she said. "This has made them much more competitive and has lowered pricing."

Another advantage to the Indian companies is that until 2005, only process patent restrictions-not product patents-existed in India. "That meant that the large number of very talented chemists there could reverse-engineer products and create copies using an entirely different process. This is what gave them a competitive edge and gave them a leg up as they moved into the European and U.S. markets," explained Kuhrt.

The Indian companies vary widely in size, from powerhouses like Dr. Reddy's and Ranbaxy, strong specialty players like Sun Pharmaceutical, and up-and-coming player Aurobindo, which launched its first dose product in this country in February 2005.

In addition to Aurobindo, a number of other companies are playing increasingly important roles in the U.S. market, according to Thomson Scientific. These include Cipla, Glenmark, Jubilant, Lupin, Matrix, Orchid, Wockhardt, and Zydus Cadila. Many of these companies partner with other multinationals to create marketing and distribution deals in the United States and European Union to minimize their risks.

"The foreign market will just keep growing," said Jim Schiffer, R.Ph., a New York pharmacist and attorney. "We are going to have to make sure our system for safety [protection] keeps up."

THE AUTHOR is a writer based in Gettysburg, Pa.