Entry strategy of Indian Pharmaceutical companies in Africa, CIS & Middle-east

A synopsis
By Roshni Majumdar

PGDM_IB; Roll no:35

RESEARCH TOPIC: Entry Strategy of Indian Pharmaceutical companies in Africa, CIS & Middle East: PATENTS, LICENSING, GENERIC & Research & Development

The Factor Analysis: Health is defined both as cause and effect of economic development. Therefore, the pharmaceutical industry is specifically recognized in the UN Millennium Development Goals as an actor that can contribute to economic development. The Indian pharmaceutical sector has come a long way, being almost non-existent before 1970 to a prominent provider of healthcare products, meeting almost 95 per cent of the country's pharmaceuticals needs. The Industry today is in the front rank of Indias science-based industries with wide ranging capabilities in the complex field of drug manufacture and technology. It ranks very high in the third world, in terms of technology, quality and range of medicines manufactured. Playing a key role in promoting and sustaining development in the vital field of medicines, Indian Pharma Industry boasts of quality producers and many units approved by regulatory authorities in USA and UK. International accompanies associated with this sector have stimulated, assisted and spearheaded this dynamic development in the past 53 years and helped to put India on the pharmaceutical map of the world. India's US$ 9.4 billion pharmaceutical industry is growing at the rate of 14 percent per year. Over the years, Indian pharmaceutical firms have been successful in exporting pharmaceutical products to traditional as also new destinations. China, Brazil, South Africa and Canada are some of the countries that have been targeted by Indian pharmaceutical firms in recent years. For many countries in Africa (Lesotho, Namibia, Guinea, Angola, Burundi, Eritrea, Malawi, Zambia, and Swaziland) and South Asia (Nepal, Maldives, Bhutan and Sri Lanka), India is one of the principal source countries for pharmaceutical imports. The low priced generic exports from India is playing a critical role in the fight against AIDS in sub-Saharan Africa, South America and Southern and Southeast Asia REGIONAL DISTRIBUTION OF GLOBAL PHARMACEUTICAL SALES (2001-2006)

The other major exporters are Wockhardt Limited, Sun Pharmaceutical Industries Ltd. and Lupin Laboratories. The formulations and exports are largely to developing nations in CIS, South East Asia, Africa and Latin America. In the last 3 years generic exports to developed countries have picked up. In the coming years, opening up of US generics market and anti AIDS market in Africa will boost exports.

THE ENTRY STRATEGIES OF INDIAN PHARMA COMPANIES IN AFRICA, CIS & the MIDDLEEAST PATENTS- Patents are a vital aspect of the global pharmaceutical industry. Patent protection is essential to spur basic R&D and make it commercially viable. But, only the developed nations endorse product patents. Most third world countries have patent laws but enforcement is totally lax. New Drug Approval (NDA) Prior to launching its products in any country, a pharmaceutical company undertakes patent registration to protect its own interests. To protect the interests of the consumers, it is necessary that the product be approved by the drug authorities in that country. Mostly the process for seeking approval is initiated alongside the patent registration process. RESEARCH & DEVELOPMENT (R&D) The pharmaceutical industry is characterized by heavy R&D expenditure. It is only the large pharmaceutical companies who can allocate significant resources for R&D to introduce new products. As the products are an outcome of significant R&D expenditures incurred by these companies, they have their products patented. The patent allows the companies concerned to wield immense pricing power for their new products. GENERIC STRATEGIES The global pharmaceutical industry has been undergoing the consolidation mode driven by increasing competition, and pressure on pricing and margins, on the one hand, and desire for geographical diversification and growth in market share, on the other. Indian companies have also adopted the inorganic growth strategy since recent times and have undertaken several mergers and acquisitions (M&A) activities. THE INCREASING ACQUISITIONS OVER THE YEARS BY INDIAN PHARMA COMPANIES

Continent wise acquisitions

Many Indian pharmaceutical companies have also gone for establishing joint ventures and wholly owned subsidiaries in select markets. For instance, Aurobindo Pharma has established joint ventures in USA, and wholly owned subsidiaries in countries such as China, Brazil, South Africa, Thailand and Netherlands. Another company, Dr. Reddys, has joint venture in Russia, where it produces formulations from the bulk drugs supplied from India. Cadila Pharmaceuticals has entered into joint ventures in South Africa and Ethiopia in order to tap the expanding Pharmaceutical market in the African continent. Recently, many Chinese pharmaceutical companies have shown interest in entering into joint ventures, strategic alliances and research collaborations with Indian firms. The Chinese pharmaceutical industry, which till now focused mainly on consumer oriented business strategies, has realized the importance of synergies with Indian firms that have strengths in generics, formulations and research services. At least 50 odd Chinese companies are currently in talks with Indian companies, R&D organizations and allied industry players, for cooperation. For many countries in Africa and South Asia, India is one of the principal source countries for pharmaceutical imports. Nepal, Maldives, Bhutan and Sri Lanka in South Asia; Lesotho, Namibia, Guinea, Angola, Burundi, Eritrea, Malawi, Zambia, Swaziland in Africa, source large share of their pharmaceutical import requirements from India. Contract Research & Contract Manufacturing are the upcoming trends in entry strategies. REFERENCES Exim Bank: - A report on Indian Pharmaceutical Industry (2006-2012)
The pharmaceutical industry is one of the success stories of Indian manufacturing sector. Favorable Government policies along with industry / firm level initiatives have helped the industry to post high growth rates over the years. Many Indian pharma companies have not only shown good performance domestically but have also been able to establish their foothold in overseas markets. Despite challenges posed by the WTO regime, the growth momentum has continued in this sector. The strategies being adopted by the industry are however to be strengthened along with an appropriate policy framework for shaping the future of the Indian pharmaceutical industry in Foreign countries like Middle East & Africa.

Fundamental Vis a Vis market perception of The Indian Pharmaceutical Industry by Tamal Dutta Chaudhuri & Paritosh Kumar
When the Indian economy shifted from a process patent regime to a product patent regime (2005), there was a thought whether Indian pharma companies would be able to weather the change in the regime? However, they have indeed succeeded in this transition and have grown in size. The world pharma majors confidence in Indian manufacturers has increased & the growth of the domestic pharmaceutical industry has outperformed the growth of the global pharmaceutical industry. An exploration of the change in market perception about Indian pharma companies in the background of their fundamental performance and their growth prospect with focus on the PE multiples of Indian pharma companies and their determinants.

Study on Indian Pharmaceutical SME

Ways in which Indian pharmaceutical SMEs can integrate themselves into the global markets with special focus on the entry strategy of exporting and outward foreign direct investment (OFDI). The trans-nationalization behavior of pharmaceutical SMEs has been analyzed from the perspective of firm-specific factors such as technologies, scale of operation, learning, skills, export behavior etc., and the overall policy environment. Also, various lessons that Indian pharmaceutical SMEs are required to be aware of while trans-nationalizing is incorporated.

Pharmaceuticals: The Indian Pharmaceutical Industry, Feb 2005, ICRA.

A detailed analysis of the Indian Pharma Industry, with detailed knowledge of the past since 1950, then with India opening up through Liberalization & later Globalization. The concept of IPR, Patents, R & D, and the future marketing strategies so as to be at par with the other developed countries. A detailed knowledge about the different countries as Africa, CIS and the Middle East is provided which can serve as one the most flourishing markets for the industry.

International Marketing Strategies in India by Prathap and Micheal, Vikalpa(IIMA)

The current shift in the marketing strategy is work by multinational pharmaceutical Companies .The high-end (rather than adaptive) development that is being carried out by leading companies. And, increasingly, other companies are finding themselves

competing against, or working with, new innovation-based companies. The processes and outcomes of globally distributed pharmaceutical companies, the changing marketing strategies when a pharma company shifts from Acute base to Chronic therapy base, & an insight about shift in process and customer and end-customer perception which is the base of formulation of different marketing strategies.

Wiki
Basics of the Indian Pharmaceutical Industry

********************************************************************************************