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CHAPTER-IV

PROFILE OF PHARMACEUTICAL INDUSTRY 106 INDIAN PHARMACEUTICAL INDUSTRY

- AN OVERVIEW 108

HISTORICAL PREVIEW OF INDIAN PHARMACEUTICAL INDUSTRY 109 GROWTH AND PERFORMANCE OF INDIAN PHARMACEUTICAL INDUSTRY 114

PHARMACEUTICAL COMPANIES UNDER STUDY 117

i) Glaxo India Ltd. 117

ii) Novartis Ltd. 120

iii) Ranbaxy Labs Ltd. 123

iv) Nicholas Piramals Ltd. 126 NOTES 131

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Chapter-IV

PROFILE OF PHARMACEUTICAL INDUSTRY

Pharma Industry is one of the prominent industry in the world with the current

world drug sales turnover of approximately 500 billion $. US market alone stand for

50 % of the total world market and is continuously growing. Top 20 Pharma

companies in the world approximately equals 50 % of the world sales and new

emerging segments include Biotech Industry which equals turnover of approximately

50 billion $ that contributes approximately 10 % of total pharma market.

Indian pharmaceuticals market currently stands around 6 billion $ and

growing at a steady rate of 10-15 % every year. The total turnover of Indian

pharmaceutical market constitutes 60 % from exports to about 65 countries. This

market is expected to touch the turnover of around 25 billion $ by the year

2010.Average spend on research and development in India is just 5-6 % of the sales.

There are around 3000 API units; 5000 formulations units and 2000 other units or

intermediates.( Source – Web Sites)

The pharmaceutical industry is an important constituent of growing Indian

economy. Its position as a global player is widely acknowledged and it can boast of

adequate capabilities to cater to the global requirements. In terms of value, the Indian

pharma industry is the 14th largest producer of drugs in the world. However in terms

of volume it remains fourth largest producer of drugs. The industry is well developed

and capable of fulfilling all the healthcare needs in the country. According to available

information it produces more than 400 prominent bulk drugs that go into the making

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of more than 60,000 packs of formulations with over 600 companies in the field of

drug production.

The Indian companies supply a large number of generic bulk drugs and their

formulations internationally. According to a study conducted by MSF, 67 percent of

the medicines produced in India are exported to developing countries. Also,nearly 50

percent of the drugs procured through the U.N. Children Fund in developing countries

originates from India. In Zimbabwe, 75 percent of the tenders for medicines for all

public sector health facilities come from India. The National Drug Supply

Organisation and the state procurement agency of Lesotho buys most of important

segmental drugs from India.The leading companies in India have acquired over 20

companies across globe and the Indian Pharmaceutical industry is now becoming

global in certain end use segments. A few of the largest Indian companies have sales

turnovers of $ 50 million to $ 1.2 billion. Although this size of sales turnover is

relatively small as compared to annual sales of the leading MNCs of US, Europe and

Japan which are in the range of $ 5 billion to $ 50 billion. ( Source Web-Site)

This chapter is divided into the two parts. The first part deals with all general

and specific information on Indian pharmaceutical industry and the second part

contributes to discussions of all the four units selected under study.

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PART – 1

INDIAN PHARMACEUTICAL INDUSTRY- AN OVERVIEW

The Pharmaceutical industry of India is set to observe tremendous

growth, with western manufacturers outsourcing jobs in this country to reduce

cost and tap the pool of skilled professionals available here. The European and

US pharmaceutical industries are heading toward generics, and this move is

expected to offer enormous benefits to India. The overall Indian

Pharmaceutical market is poised to grow by 10% by the year 2010. The

country stands to gain, as it's already a generics market, and is benefiting

further by famous Indian drug makers, such as Ranbaxy, Reddy`s

Laboratories, Nicholas and Cipla to name a few. Further with the high priced

drugs in western world, manufacturers are pressurized from their government

to control cost, and this implies that they'll have to move their manufacturing

base to India. Growth in the country is mainly attributed to government's

efforts of enforcing intellectual property rights, strict patent regime, growing

pool of skilled professionals and opportunities for both up and down stream

businesses.

INDIAN PHARMA INDUSTRY - SWOT

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Historical preview of the Indian Pharmaceutical Industry

The Indian patent act of 1970 amended on March 22, 2005 marks the end of a

protected era and signals a new phase in the integration of India into the global

pharmaceutical market. The new amendment seeks to make copying of post-1995

patented drugs illegal. These product patent regimes largely affect the Indian

pharmaceutical industry (IPI), health care industry, legal machinery enforcing the

regulations and most importantly patients in India and the developing world. Indian

Pharmaceutical Industry currently with a regulatory system, focused only on process

patents and helped to establish the foundation of a strong and highly competitive

industry. This Industry is in the grip of a rigid price control framework . Still it has

transformed as a world supplier of bulk drugs and medicines at affordable prices to

common man in India and the developing world. Introduction of product patents will,

however, mark the end of a golden age for Indian pharmaceutical industry (IPI).

The new regulations will reshape the landscape of IPI forcing significant

changes and divide within the industry. A look into Organisation of pharmaceutical

producers of India (OPPI) directory shows only 300 units out of 10,000 registered

companies are in the organized sector. While process patent helped to flourish IPI

into a world-class generics industry, product patent regime will filter the best from the

pack and would be favorable to players with built-in scientific and technical

resources. The impact of the new regulations will not deter the Indian pharma majors

as they are already doing roaring business in the very countries where these patent

laws are strictly in force.

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Export markets increasingly drive IPI: in a turnover of US$5 billion, exports

constitute $3.2 billion and the industry is poised to grow to $25 billion by 2010

(McKinsey). The share of IPI in world pharmaceutical market is 1.0% (ranks 13th)

in value and 8% (ranks 4th) in volume terms. The global market for generic drugs

is estimated at $27 billion (2001) and the expiry of patents on drugs will be worth

$80 billion (2005) offers a huge opportunity to IPI. India today has the largest

number of US Food and Drug Administration (FDA) approved drug

manufacturing facilities outside the US. In addition, Drug Master Files (DMFs)

filed by Indian companies with the FDA is 126 higher than Spain, Italy, China and

Israel put together. DMF has to be approved by FDA for a drug to enter the US

market.

Research and Development (R andD) is a key to the strength of

pharmaceutical industry especially in the product patent period. The global

pharmaceutical industry spent $30.4 billion (2001) on R andD. The R andD

expenditure (as a percentage of turnover) by the IPI is low (1.9%) when compared

global giants (1016%). With transition into the new regime many Indian

companies are mobilizing their resources war chest with an increase in their R

andD budget. Government of India (GOI) encouraged the R andD in

pharmaceutical companies by extending 10 year tax holiday to this sector. Besides,

planning commission has earmarked $34 million towards drug industry R andD

promotion fund for the tenth plan.

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Globally, pharmaceutical industry grew at a compounded annual growth rate

of 9.1 per cent in the last 23 years to $491 billion propelled by a string of

innovative blockbusters. Multinationals were reshaped by mergers and acquisitions

as a way of fattening their research pipelines. This at best represents a short-term

solution. With a slew of brand name drugs losing patent protection in the next few

years and the pressure building for pharmaceuticals to cut price, these giants find

themselves under immense strain to find new drugs and reduce price. Bringing a

new drug into the market costs a company an average of about $800 to $900

million. Some estimates show that patient recruitment and medical personnel

account for nearly 70 per cent of the clinical costs that are required to bring a drug

to market. The less expensive means to raise research productivity is outsourcing

research to low cost havens such as India and China.

The global pharmaceutical outsourcing market stands at $10 billion(2004).

Pharma multinationals have maintained a low-key presence in Indian market due

to absence of product patents and rigid price controls. Pharmaceutical industry did

not receive significant foreign direct investment (FDI). From August 1991 to

December 1998 this industry accounted for a meager 0.44% of the total FDI.

Introduction of product patents will see multinationals strengthening their presence

in the country. The second largest population in the world, a growing economy and

rising income levels makes Indian market difficult to ignore. In the domestic

market, the share of Indian companies has steadily increased from around 20 per

cent in 1970 to 70 percent now. Ranbaxy Laboratories is the market leader in terms

of revenues followed by Cipla and Dr Reddys Laboratories. Glaxo is the only

multinational to figure among the top ten pharma companies in India.

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In India, Still 97 per cent of drugs are off patent and are manufactured by a vast

number of companies. The key therapeutic segments include anti-infectives, cardio

vascular and central nervous system drugs. Anti-infectives comprise the largest

therapeutic segment in India, accounting for about 26 per cent of the market.

Gleevac (an anti-blood cancer drug), sold by Novartis for $2750 per month when the

prohibited generics used to cost less than one-tenth of the price. In India 24,000 new

cases of this disease are reported each year with about 18,000 patients succumbing to

it. The country does not have a strong health insurance sector as in the US to cushion

the rising healthcare cost. In addition most patients pay for medicines through their

own funding and is not backed by medical insurance schemes. Private sector provides

80% of the country’s health care and the government role is limited with a budget of

only $215 million as per the 2005-06 budget estimates.

Since 1986 when the first case of AIDS was reported in India the affected

population has grown to 4.5 million in the late 2002. The impact of the recent

amendments will be felt in developing world as well as half the AIDS patients in the

third world rely on India's generic drug industry. Cipla, Ranbaxy Laboratories, Matrix

Laboratories, and Hetero Drugs recently announced an agreement with the Clinton

foundation to provide drugs to four African and nine Caribbean countries at a per

capita cost of about $0.37 per day. India's ministry of health is negotiating a final price

with the generic drug manufacturers in an effort to obtain drugs for India at a price

even lower than that. The 12 ARVs (anti retro-viral drugs) used for AIDS and

manufactured in India are pre-1995 period inventions. As AIDS patients develop

resistance to old drugs, new treatments will become less affordable.

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If a drug is desperately needed, the new law allows the government, like the rest of the

world, to declare an emergency and cancel its patent. India had never declared such an

emergency, and for years resisted admitting that it had an AIDS problem.

India is also home to 2.5 million Dementia/Alzheimers disease patients. As most of

the anti- holinesterse drugs are recent the price of these medicines would automatically

go up.

The government-run patent office will come under pressure for the first time in

several years to streamline the entire process. As with any new administrative or legal

system, transition to a new regime will not be smooth. Can the enormously strained

Indian legal system bear the additional pressures as we enter the product patent world?

The decades of incubation and shielding of IPI by favorable government policies and

absence of foreign competition is over. IPI is in the cross roads now and staring at a

new world full of opportunities and threats.

Other significant development are the recently regulatory and much awaited

patent law changes that have lead the Indian Pharmaceutical Industry towards

exploring newer avenues of drug development, thus, promising higher capital

investment in the pharmaceutical industry in the near future. The Indian

Pharmaceutical Research is backed by strong Government support and availability of

surplus skilled technical workers at lower costs. At a growth rate of 9 per cent per

year, the pharmaceutical industry in India is well set for rapid expansion. As a result of

the expansion, the Indian pharmaceutical and healthcare market is undergoing a spurt

of growth in its coverage, services, and spending in the public and private sectors. The

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healthcare market has opened a window of opportunities in the medical device field

and has boosted clinical trials in India.

Many multinational companies have penetrated into India with an aim to market

drugs and conduct clinical trails. Thus, Indian pharmaceutical research,

manufacturing, and outsourcing have received an impetus, thereby, creating an image

of a potential healthcare market and a land of opportunities in pharmaceuticals. The

economic liberalization policies coming to force in the 1990s and the strong

emergence of private sector in the Indian economy has heightened the pace of

development of the pharmaceutical industry and will continue to do so.

"Indian Pharmaceutical and Healthcare Market-Annual Review (2005)" presents

the latest information on the Indian pharmaceutical research. It highlights the

important factors that draw the foreign investors towards the Indian pharmaceutical

market to establish themselves. This report is indispensable for the manufacturers,

investors and all those involved in the pharmaceutical industry and healthcare market

to have an in-depth analysis of the business prospects. It interprets the key issues that

influence the success of a pharmaceutical company involved in research and

development ofdrugs.

Growth and Performance of Indian Pharmaceutical Industries:

Assessing the market potential and opportunities with pharmaceuticals and drug

discovery includes some of important factors as follows:

� Study of the key economic factors that form the source of revenue growth and

opportunities.

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� Recent and Future trends in Pharmaceutical Investments, by sector and business for

F.Y.2002-2008

� Advantages of conducting clinical trials in India and factors that propel multinational

companies to form new business ties with India

� Advantages of outsourcing as a new business maneuver in Pharmaceutical and

healthcareIndustry

� Continued shifting of business model towards the development of high- value new

chemical entities responsible at Indian R andD facilities

� Assessing the Imports and Export of Bulk Drugs, intermediaries and formularies for

theF.Y.2002-2008

� New Pathways in the Indian pharmaceutical research and development.

� Future Outlook and Key Drivers to Market growth

� Analytical Snapshot on the Performance indicator by Key.

This report provides a review of the pharmaceutical industry as a whole. It provides

an insight into the current market size, developments in pharmaceutical research,

challenges faced by the pharmaceutical industry as well as the future outlook, the

global coverage of the heath care market, growth status across the country, challenges

and potential areas along with the total production and consumption of life-saving and

generic drugs. It also deals with the regulatory matters including the Indian Patent

Law, the issue of bio-informatics, e- commerce, and research and development. It

highlights about information on the key players of this industry as follws:

� GlaxoIndiaLtd.

� Novartis India Ltd.

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� Ranbaxy Laboratories Ltd.

� Nicholas Piramal India Ltd.- Dr Reddy's Laboratories Ltd.

� Apollo Hospitals Company

� Cadila Healthcare Ltd.

� Cipla Ltd.

� Sun Pharmaceutical Industries Ltd.

� Wockhardt Ltd.

� Abbott Laboratories India Ltd.

� Burroughs Wellcome India Ltd.

� E-Merck (India) Ltd.

� Hoechst Marion Roussel Ltd.

� Pfizer Ltd.

� Smithkline Beecham Pharmaceuticals (India) Ltd.

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PHARMACEUTICAL COMPANIES UNDER STUDY

The four companies under study are as follows:

1. Glaxo India Ltd ( Source Annual Report 2006 and Web Sites)

It is one of the largest and most promising multinationals in the industry

which got Smithkline Beecham and Burrouws Wellcome merged in it, with presently

having 140 projects in clinical development. Of these , 43 new molecular entities

have moved into Phase II trials, including compounds to treat HIV, diabetes, blood

disorders and multiple sclerosis.The Company is well known for some of the

pioneering initiatives in the Country, including being the first ever pharmaceutical

company to commence manufacturing activities in India in the early part of the 20th

century.

Today, India's strengths in the global knowledge-based economy is widely

recognized and contribution of Glaxo there as a major source for a variety of

knowledge-based high value-added activities such as chemistry development, clinical

research and IT enabled activities relating to Research and Development (Rand D) is

really felt. While most of the Clinical Research activities today are concentrated

around US, Western Europe and Japan, Glaxo is continuely investing in R andD

procurement in emerging markets in Asia, Eastern Europe and Latin America. India

has been identified as a major center for clinical research across a number of disease

areas such as breast cancer, central nervous system related disorders and infectious

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diseases. The Company has made excellent progress in the last 2 years in India as

and has proved itself for its quality, speed and cost effectiveness.

Glaxo India Ltd is having business operations in the form of Pharmaceuticals,

Agrivet farm care and Qualigens ,the brief descriptions of the are as follows:

The Pharmaceuticals Business

The Company commands a 5.6% market share for the combined

GlaxoSmithKline Group Companies retaining its No. 1 position in the Indian

Pharmaceuticals market (Source : ORG MAT December 2003). Sales of the

Pharmaceuticals business segment was Rs. 971 crores constituting 81% of the

Company.s total sales. The Indian Pharmaceuticals market grew by 5.1% this year

(Source : ORG MAT December 2003), one of the lowest growth rates in recent times.

This low growth can be attributed mainly to the slowdown in retail purchases on

account of the confusion over the introduction of VAT coupled with an industry-wide

volume and price decline. Industry growth continues to be driven by chronic segments

such as Anti-Diabetes, Cardiovascular, Central Nervous System and Anti-Ulcerants.

Against this backdrop, the Company registered a growth of 5.8% in

Pharmaceuticals sales. The growth was totally driven by the priority brands, which are

at the core of the Company?s strategy and which registered a double-digit growth.

These include brands such as Augmentin, which continues to grow from strength to

strength gaining market share and which was twice rated by IMS as the No.1 brand,

and the Vaccines range, which continues to gain market share.

This year, the Vaccines team rolled out a novel concept of .Famili Vaccines.

which is an immunization awareness initiative launched by the Company. GSKI

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continues to enjoy its leadership position in the Dermatological, Corticosteroids and

Thyroid preparation segments in which its products are represented. In addition, the

Company has successfully in-licenced three products, viz. CCM (Calcium Citrate

Maleate), Zimig (Terbenafine) and Vozet (Levocetirizine).

Initiatives were also taken to effectively manage the life cycle of some key

products with the launch of three line extensions.

Efforts to improve sales and marketing capabilities continued through the

year. The continued focus on field force productivity has yielded encouraging results.

There has been a substantial improvement in field force productivity in the last two

years. The Company?s field force productivity continues to be a bench-mark for the

industry.

The advent of product patent protection in 2005 will present an opportunity

for Company to introduce newer chemical entities of the GSK group, which will

considerably strengthen its product portfolio. The Company is positioning itself as a

.partner of choice to exploit the commercial opportunities of a product patent regime.

The Agrivet Farm Care (AFC) Business

The AFC business continues to maintain its No.1 position in the Animal

Health sector. The business has a presence in the cattle, poultry, acquaculture, canine,

equine and sheep segments with a well-established reputation for quality. With a Sales

growth of 4% in 2003, the business achieved a sizeable improvement in Trading Profit

due to an improved contribution from the key promoted products, savings in

procurement costs and reduction of expenses. Five new products were launched in the

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cattle, poultry and canine segments which helped to reduce the dependence on low

margin products. The business migrated to the JDEdwards ERP platform, which will

mainly help to improve debtors management and inventory controls.

The Qualigens Fine Chemicals (QFC) Business

The QFC business holds the No.1 position in a very fragmented Laboratory

Chemicals market with an estimated market share of 29%. Net Sales grew by 16%

over the previous year with a significant improvement in Trading Profit due to an

improved product mix and supply chain initiatives. The business commands a strong

presence in Laboratory Chemicals, Diagnostics, Glassware, Liquid Handling

Instruments and Filtration products. The Diagnostics activity, which covers the

complete range of Serodiagnosis and Biochemical Tests, successfully launched HIV

and HCV Elisa Kits. Sales of Laboratory Glassware, launched last year, have

registered significant growth. The launch of the Filtration products range of Pall

Corporation, US, has been well accepted in the market. The business migrated to a

new ERP platform, which will help to provide greater visibility on key performance

indicators, and improved controls over operations.

2. Novartis India Ltd. ( Source Annual Report 2006 and Web Sites)

In 1996 Sandoz and Ciba joined to form Novartis in one of the largest

corporate mergers in history. Since then, Novartis has been marked by many

interesting events and success stories.

In recent past, Novartis led the way with its breakthrough cancer drug

‘Glivec’ and equally the Glivec international patient assistance program that became

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the most generous and far reaching access program which has benefited thousands of

people globally ,suffering from chronic myeloid leukaemia and gastro intestinal

stromal tumours. In India also, Glivec has provided hope to more than 5600 people

and their families to continue living their lives productively.

Novartis’s Sandoz generic is a leading global supplier of generic

pharmaceuticals that develops, produces and markets these drugs along with

pharmaceutical and biotechnological active substances.Novartis Consumer Health

focuses on creating, developing and manufacturing a wide range of competitively

differentiated products that restore, maintain or improve the health and well-being of

customers.Novartis Vaccines and Diagnostics, created in 2006 following the

acquisition of Chiron, comprises two businesses: Novartis Vaccines and a diagnostics

business that retains the Chiron name.

Further the financial success of Novartis in last 10 years has supported several

corporate citizenship initiatives on a sustainable basis. They have received several

awards such as Golden Peacock Award for innovative services to support elimination

of Leprosy, Bombay Chamber of Commerce and industry award for the work done

against tuberculosis and Ranked by IMS Health as one of the fastest-growing global

pharmaceutical companies worldwide in recent years, Novartis is seeking to further

expand its market share by introducing new products and maximizing sales.

Business Model of Novartis comprises following areas:

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a. Pharmaceuticals

Novartis Pharmaceuticals develops over 40 general and specialty prescription

medicines in 7 different therapeutic areas.

b. Vaccines and Diagnostics

Novartis Vaccines provides innovative vaccines and a wide range of

conventional products to combat viral and bacterial diseases across the globe.

c. Sandoz

Sandoz pharmaceuticals are generic bioequivalents of innovative, brand name

products and include retail generics, biopharmaceuticals and anti-infectives.

d. Animal Health

Novartis offers a number of products for pets and farm animals, so that they

can enjoy healthy lives.

e. Over the Counter

Novartis OTC has leading self-medication products for the in-home treatment

and prevention of medical conditions and ailments.

f. CIBA Vision

CIBA Vision is continuously working to improve, protect and preserve

eyesight with their state-of-the-art contact lenses and lens care products.

Novartis is committed towards active human resource development of its

employees and conducts regularly inhouse cutomised Management

development programmes (MDP’s) and Personality Development

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Programmes(PDP’s) . Further Novartis initiated a unique step that is setting

up of Novartis University where alll existing employees can upgrade their

skills as per their need and interest areas.

3. Ranbaxy Labs Ltd. ( Source Annual Report 2006 and Web Sites)

The Indian pharmaceutical industry is at the center stage in the global

healthcare arena and Ranbaxy endeavors to be at the forefront in delivering

the India centric advantages to the advanced and developing countries of the

world.

From a small domestic company at inception, Ranbaxy has grown formidably

to be a Billion dollar institution that was envisioned by Late Dr Parvinder

Singh, Chairman and Managing Director, Ranbaxy in early 90's.

Ranbaxy aims to provide quality generics at affordable prices to the patients

worldwide with a view to help bring down the healthcare costs and also intent

to be a leading player in the global generic space in the years to come with

strong focus on becoming Research based International Pharmaceutical

Company. Ranbaxy have invested heavily in R andD about $100 million

which is one-fifth or one seventh the cost advantage to the rest of the world .

Ranbaxy has already experienced commercial success penetrating the US

health care market, and looks forward to enhanced growth and future business

opportunities through collaboration and strategic alliances. Its General

Business Model comprises of following heads :

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a. API Development and Production

For those who want to manufacture their own product or brand, without the time and

costs associated with developing the API (Active Pharmaceutical Ingredient),

Ranbaxy can provide the API, eliminating this step from process. The key

advantages of using Ranbaxy's backwardly integrated system are:

• Ensuring continuity of supply

• Ensuring consistent quality of product

• Competitive costs

• Resources to respond in a timely fashion to meet demand

b. Dosage Form Development and Manufacturing

Ranbaxy's experience as a global manufacturer makes us aptly suited to take on the

complex process of solid or liquid dosage form development. At Ranbaxy, we

continually reverse engineer to improve upon our development process, enhancing

the yield, with a focus on cost efficiencies.

c. Contract Manufacturing

To expand product line with minimum investment, Ranbaxy provides "turnkey"

manufacturing services including API and dosage form development, to allow focus

on marketing and selling the product. This is an efficient way to increase product line

and profit margins, while taking advantage of Ranbaxy's manufacturing experience

and expertise.

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d. Sales and Marketing

Ranbaxy has set itself apart in the marketplace by the rapid growth of its product line,

its willingness to emulate complex drug formulations, and its core competencies in

anti-infectives, gastrointestinal, cardiovascular and analgesics arenas. Ranbaxy has a

commercial advantage as many of the high-profit branded drugs with expiring patents

over the next few years are in the categories where Ranbaxy has proven its expertise.

Ranbaxy has a self-contained marketing group that works to co-market products (the

same chemical under different brands), and co-promote products (the same brand

name carried by two different companies). The company has marketed their services

out to other companies, as they perform all of the steps in the pharmaceutical process

- from development and manufacturing to distribution and sales.

Ranbaxy’s commitment to quickly expanding the breadth and depth of their product

line has been key to their success in the marketplace.

e. Marketing Strategies

Marketing Strategies as emphasized by the name is the department which is focused

primarily on developing and establishing different strategies for the

promotion/distribution of Branded/Generic as well as the OTC products for Ranbaxy.

One of the key tasks for the department is to identify/look out for various

opportunities in different markets or channels of distribution and to pursue those

opportunities developing and establishing new relationships in the market. Managed

Care / Internet marketing are few of the key areas that the department is looking to

introduce into their ever expanding products portfolio.

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f. Licensing

Ranbaxy prides itself on taking a creative, mutually beneficial approach to licensing

arrangements. By being open to both outward and inward licensing opportunities,

Ranbaxy fulfills unmet needs in the marketplace

Ranbaxy’s treasure hunt is all set to strike gold with new drugs in the pipeline. The

Company is planning to gain ground presently. Currently it is having over 40 products

with USFDA and a number of them have come through.

4. Nicholas Piramal India Limited ( Source Annual Report 2006 and Web Sites)

Nicholas Piramal India Limited( NPIL) is the flagship company of the Rs. 2500 crore

(US $ 500 million) Piramal Enterprises (PEL), one of India's largest diversified

business houses. The Group is headed by Mr. Ajay Piramal, who is also the Chairman

of NPIL, and among the most respected names in Indian industry.The company was

formed when the Piramal Group acquired Nicholas Laboratories, a small formulations

company in 1988 from Sara Lee. It has followed a multi-pronged strategy to integrate

and maximize synergies with the planned acquisitions and develop and consolidate its

major strength in marketing to therapeutic niches.

Managed by a team of highly proficient industry professionals, Nicholas key strengths

come from its strong brand building, selling and distribution, manufacturing and

alliance/partnership management skills. The alliance management skills, especially,

are quite unique in the Indian context as only few Indian Pharmaceutical have

exhibited such a strong and consistent record in successfully and ethically managing

joint ventures and alliances as Nicholas has. Further Nicholas has one of the widest

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product portfolios in India, spanning nine key therapeutic areas, including the Cardio-

vascular, Neuro-psychiatry, Oncology, Diabetes Management, Respiratory, Anti-

infectives,Gastro-intestinals, Dermatology and NSAIDS.

Nicholas Tree constitutes presently 15divisions . These Divisions offers wide variety

of product range that Nicholas possesses. The name of these divisions are as follows:

1. Actis 9. Extra care

2. Akshaya 10. Cardex

3. Cadence 11. Aakar

4. Annant 12. MS

5. Glotek 13. Zeeta

6. Biotek 14. Zivon

7. Cognex 15. Vistaar

8. Critical Care

Nicholas’s policy of respecting IPR and managing partnerships, in keeping with both

the letter and the spirit of written agreements, has been widely respected and

commended by its partners. The company is also making forays into Biotechnology in

key therapeutic areas for which it has formed several global alliances.

For 2005-06, Nicholas recorded a turnover of Rs 14.1 billion and profits after tax were

Rs 1.7 billion. Its biggest brands that maintained lead in the pharma business includes

Phensedyl, Ismo, Supradyn, Gardenal, Stemetil, Haemaccel and Rejoint -these bring in

67 per cent of the business, while its secondary brands which include Paraxin, Flagyl

and Omnatax contribute around 24 percent of its revenues.

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An aggressive player in the pharma industry, Nicholas in the last 15 years has grown

to its leadership position through a series of well managed acquisitions, mergers and

alliances. Some of its major acquisitions include the Indian operations of Roche

Products Ltd., Boehringer Mannheim India Ltd., Hoechst Marrion Roussel Ltd,'s

Research Centre, Rhone Poulenc India Ltd., ICI India Ltd.'s Pharma Division and

Aventis' Reseach facilities.

Nicholas has joint ventures and alliances with some of the finest global names in the

industry which include F. Hoffmann-LaRoche Ltd., Switzerland; Allergan Inc., USA;

UK; Gilead Sciences, USA; Cheissi, Italy; and IVAX Corp; UK.

Nicholas's core strengths are its 2700-strong field force that offers it the depth and

width in the Indian market with successful brand building. Today together with its

joint ventures, it has 16 brands among the top 300 in the Indian Pharma Industry.

Nicholas have state-of-the-art manufacturing plants. Its Hyderabad plant is the only

one in India to have USFDA approval for the entire facility, it is also accredited and

approved by MCA of UK, TGA of Australia and the European and Canadian Drug

Authorities, and its Pithampur plant in Central India is accredited by reputed

organisations like Allergan, Novartis, Solvay and IVAX, among others, which use it

for toll manufacturing.

With the acquisition of Pfizer's Morepeth's manufacturing wite in UK, Nicholas

Piramal through its wholly owned subsidiary NPIL Pharmaceuticals Limited, has

emerged as one of the leading custom manufacturing organisations across the world.

Today, Nicholas, is well poised to take advantage of the opportunities that will

emerge in the bulk actives and intermediates market for contract manufacturing at

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attractive price points of both on patent and off patent drugs for the regulated markets

of Europe, US and Japan. The company's track record and credibility in respecting IPR

is extremely good and is respected globally. Nicholas also has major investments in R

andD which focus on formulations development, new chemical entity research,

clinical research from laboratories in India and abroad.

The research strategy of Nicholas is unique and different from the other Indian

companies who are also targeting original drugs. It is leveraging the power of

networks and itsr motto is to “build partnerships that prosper”. The partnerships with

academia and global innovators are helping nicholas build unique strengths and

expertise. In addition, it has build up a natural product library of over 50,000 microbial

strains and 6000 plants from the bio-diverse regions of India. We believe this is a

unique treasure house of potential new medicines. Company has research

collaborations with academic institutions like Anna University, Indian Institute of

Science, These collaborations helped the company in its progress towards a new drug

molecule. Their recent research collaboration with Eli Lilly has created a new

paradigm in the pharma industry. This unique drug discovery collaboration is

analogous to a “relay race” where Lilly will discover a new drug, file patents and

“pass the baton” to Nicholas for taking it through to Phase II clinical trials.

Nicholas goal is to make Indian drug discovery reach the global market for a price

between US$ 50-100 million. The decided pathway for that is by leveraging the power

of networks, effectively using information technology, and using the large patient base

for clinical trials and betting on the creation of intellectual property and fostering

global partnerships.

140

To sum up Pharmaceutical industry is the most important growing segment of Indian

industry. Glaxo, Novartis, Ranbaxy and Nicholas are the most prominent organisations

of this segment as per the various reports and available statistics. These organisations

are contributing a lot in the development of pharmaceutical sector in India, thus

studying these organisations is really a meaningful task.

141

NOTES

www.indiaoppi.com visited in August, October 2006 and Feb 2007.

www.pharmaceutical-drug-manufacturer.com/pharmaceutical-industry visited in

August, October 2006 and March 2007.

www.gsk-india.com visited in June ,August 2005, October 2006,March 2007.

www.ranbaxy.com visited in June ,August 2005 and August, October 2006.

www.en.wikipedia.org/wiki/Ranbaxy_Laboratories visited in August, October

2006,Feb 2007.

www.novartis.com visited in June ,August 2005 ,August, October 2006 and Feb

2007.

www.pharmaceutical-business-review.com/company profile.asp visited in August,

October 2006, March 2007.

www.nicholaspiramal.com visited in June ,August 2005 and August, October

2006, April 2007.

www.expressindia.com visited in August, October 2006, April 2007.

www.expresspharmaonline.com visited in August, October 2006, July 2007.

www.rncos.com/Reports/IMO 85.htm-31k visited in July 2007.

www.en.wikipedia.org/wiki/Pharmaceutical visited in July 2007.

Annual Report “ Glaxo India Ltd.” 2006.

Annual Report “ Ranbaxy Labs Ltd.” 2006.

Annual Report “ Novartis ” 2006.

Annual Report “ Nicholas Piramals” 2006.

Indian Pharmaceutical and Healthcare Market-Annual Review (2005)