India. India is a major hot spot for API manufacturing but the large number of Indian Import Registrations (IIRs) for APIs (more
than 1200 have been filed since 2003) confirms that India also imports a significant amount of APIs. Chinese companies hold
one-third of IIRs, which is not surprising given India's market focus on cost (see Figure 4). Nevertheless, a significant
number of registrations are held by companies based in regulated markets such as Germany, the US, Italy, and France. Among
the top US and EU players in terms of the number of IIRs are major manufacturers such as DSM (Heerlen, The Netherlands), BASF
(Ludwigshafen, Germany), and Schering-Plough (Kenilworth, NJ).
Figure 4: Share of Indian Import Registrations for active pharmaceutical ingredients filed between February 2003 and November
2007, broken down by the country of headquarters.
The products that Indian companies import from Western Europe and the US tend to fall into two groups. The first group consists
of products that require facilities or technology not widely available in India. Clavulanate potassium, a fermentation- based
product, would fall into that category. The second group consists of products such as lactulose and beta carotene, for which
a limited number of producers have developed efficiencies and market dominance sufficient to make successful competition unlikely.
We also see opportunities for Western companies in India with steroids, peptides, and difficult-to-manufacture products such
as prostaglandins. In addition, there are opportunities to sell APIs to export-focused Indian finished-dose companies, whether
they are toll-manufacturing for overseas marketers or want to increase their chances of getting speedy approvals for their
own marketing applications.
Of course, there are a number of challenges that foreign API manufacturers face while competing with Indians in their backyard.
Despite rising costs in India, local companies still frequently enjoy a cost advantage over their Western counterparts. And
in cases where the API is locally not available, Indian finished-dose companies have been importinge the API from low-cost
countries such as China, rather than from the West. Recently, however, the prices from China have been skyrocketing as a result
of factory closures due to the Olympic games and enforcement of tougher environmental standards. This may provide additional
openings for European API manufacturers in the Indian market. An additional barrier facing foreign API manufacturers in India
is high import duties on active ingredients. It is worth noting that these duties can be waived if the importer can prove
that the finished dose will be exported.
Because of India's lower cost base, several API manufacturers from Europe and the US have set up manufacturing facilities
in the country, among them Albany Molecular (Rensselear, NY) and Trifarma/Alchymars (Milan). According to Albany Molecular,
the company's short-term goal is to use Indian facilities to make intermediates for products manufactured in their New York
facility; in the longterm, the company plans to manufacture APIs in India.
In addition to accessing a lower cost base and a large talent pool, setting up facilities in India helps European companies
compete more aggressively with Indian companies for the chance to supply APIs to the US generics market, especially to those
companies participating in patent challenges. Bolar-type provisions permit the development and small-scale manufacturing of
a pharmaceutical product ahead of the patent expiry. These provisions have been implemented in most of Europe during the past
few years and have helped to level the playing field somewhat, although it is our understanding that commercial quantities
of APIs still cannot be made ahead of patent expiry in Italy. This means that it would not be possible for a generic finished-dose
company to launch commercial quantities of a generic product on the day after patent expiry with an API that comes from Italy.