1 Multitude of opportunities for Finnish pharmaceutical industry in India Dr. Esa Heinonen, MD, PhD Senior Advisor Business Development and Support Orion Pharma
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3 Challenges of pharmaceutical industry The R&D costs are increasing, but output of new NCEs is not Science is moving fast, but making a drug based on genomic information may take decades Regulatory requirements are continuously becoming more stringent, also post marketing commitments (pharmacovigilance) Pricing pressures for NCE are getting tougher (health economic evaluations) Patents are being challenged earlier, high costs of legal activities The price of older, generic products is getting lower than ever, cost of goods is becoming challenging
4 INDIA Population 1.1 billion Area 3.2 mkm 2 (7th in the world) Largest democracy in the world 23 languages, official languages English and Hindi Pharmaceutical market 9 b$ in 2006 (80 % generic), annual growth 11 % About 300 million people in growing middle class, GDP growth 6-8 % annually
5 Why to India? Large pool of well educated experts in pharmaceutical fields (especially in chemistry, galenics, process development, manufacturing, medicine) with good IT skills (>100 000 scientists annually, 12 000 PhDs in chemistry) Lower costs of man power for R&D and manufacturing, contract manufacturing (CMO) and research organisations (CRO) are well developed in India: manufacturing costs about 20 % research 10-30% clinical development 50 % of the costs in Western Europe or USA Adequate quality in GMP: India has the highest number of FDA approved manufacturing facilities (>60 ) outside USA, India produces more than 20 % of world s generic products!
6 Why to India? Communication easy in English Due to large population a significant pool of untreated patients available with vast genetic diversity, high level cliniques Rapidly improving skill sets in biotechnology and drug discovery, new research centers are being built (annual turnover of biotech products 700 m$ in 2004, 5 b $ in 2010?) India presents 20 % of the global drug markets by volume, but only 1 % by value, a significant increase of value is expected (over 20b$ in 2010?) Tax benefits available for foreign investments (SEZ etc.), especially for R&D work
7 Trends and challenges in Indian pharma sector (1) There are 23 000 pharma companies, 3000 involved in production, but 250 leading companies control 70 % of India s market, consolidation is expected to take place, opportunities for M&As emerge The strategy of Indian pharma companies seems to be to launch the products first in India and the neighbouring countries, then Latin America, Africa, CIS, the USA and finally the EU Indian companies are acquiring companies in the USA and Europe Competition with Chinese API manufacturers
8 Trends and challenges in Indian pharma sector (2) IPR: Patent Acts 2005 meets the requirements of TRIPS (Trade related Aspects of Intellectual Property), medicines invented after 1995 are protected, how will this work in practice? When the patent legislation will start to work, there will be less generic opportunities Are there sufficiently competencies to be able to develop NCEs, and willingness to take the risks? Spin off of discovery and development of NCEs to independent companies, generic companies do not want to take the risk (?), codevelopment joint ventures available The salaries of academically qualified persons are increasing fast
9 Trends and challenges in Indian pharma sector (3) Prices in the Indian market are generally very low, competition is fierce, how to bring European drugs into the Indian market? How will the reimbursement system work? Development of health insurance system? More than 300 million people living below the poverty line, only 5 % of GDP spent on health care, per capita spending of pharmaceuticals is 4$ (796 $ in USA, 322$ in the UK) The infrastructure of the society should be improved (traffic, power and water supply) Ethical issues in clinical studies (low literacy rate, consent) Some extra byrocracy exists (e.g. import licences)
Business Areas of Orion Corporation 10 Pharmaceuticals- Orion Pharma Proprietary Products (patented prescription products) Specialty Products (off-patent prescription products and Animal Health self-medication products) Pharmaceutical Ingredients (API s, Fermion) Diagnostic Tests Orion Diagnostica The turnover in 2007 was 684m, profit 196 m R&D 98 m (14 % of turnover), personnel 3176
11 Innovations to the market from Orion s R&D Over its long history, Orion has invented and been the first to introduce many new products to the pharmaceutical market. Since the 1980 s, e.g. the following proprietary products have been launched: Product Launch year Indication Stalevo 2003 Parkinson s Disease Simdax 2000 Acute Heart Failure Precedex 1999 Intensive care sedative Comtan/ Comtess Indivina, Divina, Diviseq, Divigel 1998 Parkinson s Disease 1980-1990 Menopause Fareston 1988 Breast cancer Antisedan, Domitor & Domosedan 1989 1987 1983 Animal sedatives
Clinical studies carried out by Orion in any country focus in Europe 12
Establishing the liaison office in India 13 The legal process took four months (9-12/07), opening a bank account required at least as much paper + stamps Recruitement took 3 months Not too many good options to rent an office space in Mumbai Finpro was a great help to us!
Finnish companies in India 14 Pöyry Andritz StoraEnso Incap Sandvik TietoEnator Metso Automation, Minerals & Paper Wärtsilä Finnair Huhtamäki / PPL Finarte Exomi Ecocat ORION Nethawk M-Real F-Secure Citec Tekla Elcoteq Nokia Production/R&D Sales/Rep.office Aspocomp Salcomp Perlos Vacon Kone
15 Orion in India Discovery cooperation (e.g. Aurigene) Sourcing of active pharmaceutical ingredients and intermediates In-licencing of selected generic products Development of selected older generic products Marketing diagnostic products through a partner Screening for new business opportunities with pharma companies and CROs, assuring timely delivery and quality of the products
16 Strategic partnerships/joint ventures Long term commitments between Orion and selected Indian companies Balanced business model providing win-win deals is the cornestone of the long-term relationship Orion can offer: a reliable partner in Europe knowledge of the regulatory requirements of generic and proprietary products in EU and how to get into the market drug discovery and development knowledge of proprietary molecules sharing of the risk development of drug candidates marketing rights of its proprietary or generic products for India
17 Our experiences with Indian companies Price levels are usually very competitive, but some companies offer services at a rate similar to European CROs Great variability in quality, but the FDA approved sites usually are excellent, strong USA focus in documentation Following time tables is sometimes too flexible, there are production planning needs Discovery cooperation has been excellent Getting import licences cause delays in R&D work Fast turnover of staff In family owned companies the desicion making is fast Some larger Indian companies may feel they do not need a partner in Europe as they already have daughter companies established there
18 Induction program in Espoo 14.1-24.1.2008 ( 2)
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