Mark Britnell, chairman and partner, Global Health Practice, KPMG, talks to BW’s Joe C. Mathew about adoption of global healthcare technologies that can suit India’s needsOn universal healthcarePrime Minister Narendra Modi’s intention to provide healthcare to all is a great move. India spends 4 per cent of its GDP on healthcare, which is the lowest among BRICS nations. And of that 4 per cent, only 1 per cent comes from the government. So, India should double its commitment on public expenditure.Economics & good healthProductive lives have a positive impact on the economic performance. In a study for the South African government, KPMG demonstrated that an increase in life expectancy by one year could raise GDP by 4 per cent over a number of years. So, if you could create a virtuous circle of health, you could create a virtuous circle of wealth.India as FDI destinationIn terms of investment — domestic as well as inward foreign direct flow of funds — the opportunities are enormous. With the right leadership and governance, I believe India is set for an explosion in its healthcare capability. The Japanese are keen to partner with India to develop a healthcare system here. The British are willing to help. The Singaporians and the Malaysians have got some big hospital groups that are looking to invest here. The Americans, Australians and Brits will be interested in the field of medical education here.Strengths of Indian healthcareThere are three things India’s top-end healthcare companies do that the rest of the world can learn from. The first is the mastery over the clinical process. They have standardised the clinical process, made it transparent, and aligned IT systems with the systems on the ground. Second is the supply chain, both clinically as well as non-clinically — they have been assertive in adopting the best practices in supply chain and management. Third, because of the clarity they have in the pathways, technology and supply chain management, they have been able to be more imaginative in the way they deploy their staff.On smart healthcare solutionsThere are three ways in which healthcare can revolutionalise the concept of smart cities. First, via wearable technology. Two, the penetration of tele-health and tele-care services. Third, use of smartphone for consultations. But healthcare, in relation to smart cities, is still a concept. The good thing is that the three areas I talked about already exist.(This story was published in BW | Businessworld Issue Dated 10-08-2015)
Read More
As predicted by analysts and industry experts, Sun Pharma will cut production units, divest non-strategic businesses of Ranbaxy to increase cost savings from the merger deal , says C H UnnikrishnanDrug maker Sun Pharmaceutical Industries Ltd, which is in the process of operational integration of merged entity Ranbaxy into the combined business, says that its profits and revenue will continue to be impacted in the whole financial year of 2015-16 due to the integration costs. The company, as predicted by the industry analysts and experts, is now planning to rationalise manufacturing units and divest some of the non-strategic businesses of Ranbaxy to increase cost savings from the $4 billion merger deal that it signed in 2014. The industry analysts and consultants had predicted job cuts in production and sales soon after the deal as the company would initiate manufacturing rationalisation and also by optimising marketing and sales network, although Sun Pharma had strongly denied this earlier. "As a part of the integration process, the company expects to incur certain integration charges in order to generate long-term synergies from this merger. Also, as a part of the integration process, the company may decide to discontinue certain non-strategic businesses," Sun Pharma said on Monday. "Our target for the synergy benefits from the Ranbaxy acquisition has increased by 15-20 per cent as compared to our original target of $250 million by financial year 2018. This will be achieved by focusing on overall profitability improvement driven by revenue and procurement synergies, manufacturing rationalization and various additional cost-management measures," said the senior management of Sun Pharma in a Monday late evening conference call. Soon after Sun Pharma's acquisition, Ranbaxy witnessed an exodus of its US leadership team. It also saw the exit of several more senior executives in its India leadership leaving the company after the formal merger with Sun Pharma in 2015. Sun Pharma acquired the troubled Ranbaxy through an all stock merger deal in 2014. Ranabxy, the then largest drug maker in India by sales, had lost half of its $2 billion revenue contributed by the US market due to serious manufacturing compliance issues at four of its key export units in India. The industry analysts had recently said that the company might discontinue some of these manufacturing units instead of investing further in these units for making it compliant with the US quality norms. While the company says that it will continue the remedial measures at the affected units, it will focus and expedite the process for one of these units. "The remedial action at the Mohali, Dewas, Poanta Sahib and Toansa facilities (the US export units of Ranbaxy in India those were banned from imports by the US Food and Drug Administration (FDA) for violation good manufacturing practices) is on track. We are working towards the fulfilment of the requirements of the US consent decree and will try to expedite the resolution for at least one of these facilities," said Sun Pharma promoter and managing director Dilip Shangvi. Meanwhile, a couple of Sun Pharma's own manufacturing units in India which cater to the US market are also under US FDA scrutiny over the manufacturing norms violations. "A key priority for us is to ensure continued current good manufacturing practice compliance by continuously enhancing systems, processes and human capabilities to meet global regulatory standards at all our manufacturing facilities. As a part of this process and in order to address the deviations at its Halol facility, the company has undertaken various remedial measures. These remedial measures have resulted in supply constraints for some of the products. We expect this situation to continue for some more time till all the remedial steps at Halol are completed," Sun Pharma said. However, these measures are likely to adversely impact the overall revenues and profits of the company for financial year 2016. "Consolidated revenues will remain flat or show a decline over the previous year and the consolidated profits may also be adversely impacted due to certain expenses/charges arising out of integration as well as remedial actions, although the above initiatives will help the company revert to a more sustainable growth trajectory going forward," the company said.
Read More
Decrease in sales of price controlled drugs and growth in non-controlled drug launches are unfair in nature and should be prevented, writes CH UnnikrishnanDrug market researcher IMS Health’s recent study on the impact of drug price control on access to medicines in India shows 7 per cent decline in consumption of price controlled drugs in the rural markets. It also shows the sales of medicines outside price control have gone up by 5 per cent since the implementation of the latest drug price control order (DPCO) in July 2013. It is a fact that the price reduction can’t alone ensure increased access to medicines in India where shortage of healthcare infrastructure and limited market reach of drug makers remains unresolved. C H UnnikrishnanBut, the new study’s conclusion that price control measures are ineffective and unsustainable on the basis of these market data is unfounded and is directed to a malicious intention of discouraging the government from such market intervention. Both these trends, decrease in sales of price controlled drugs and growth in non-controlled drug launches, are unfair in nature and should be prevented. Government should come forward to reinsure the real purpose of drug price control. The IMS study indicates that the sales of price controlled drugs have fallen and others have gone up because the drug companies are moving out of the price controlled portfolio and focusing more on non-price controlled brands. According to the IMS report, the small and medium companies who largely supply to the rural markets have found their business unviable in the price controlled category and were “forced out” from this segment and the sales in the non-controlled group increased as new launches in this category were high during this time. As a matter of fact, the drug price control order of 2013, which brought all the 348 drugs included in the National List Of Essential Medicines (NLEM) and their formulations under the ambit of the price control order, had very specifically put the condition that the drug companies should not withdraw their products from the market for at least five years without adequate reasons approved by the government. Also, there aren’t many new molecules (not included in NLEM) which invented and introduced in the market recently for the generic companies to increase their non-price controlled launches, especially in a patent protected market. Therefore, two key questions; How did these price controlled drugs started vanishing from the market? And, where did these new launches in the non-controlled category came from? Strangely, IMS Institute India, which conducted the study, tries to establish that price control is neither an effective nor sustainable strategy for improving access to medicines for Indian patients. The study, 'Assessing the Impact of Price Control Measures on Access to Medicines in India’, claims that it was based on both extensive quantitative data analysis of growth and volume trends and in-depth qualitative interviews with industry stakeholders and policy makers. The numbers shown in the report (if true) proves the veracity of the claim. But, it somehow fails to explain the conclusion that drug price control order is not effective and sustainable in a market where the providers are not very transparent on their cost and profitability. Prior to DPCO 2013, the prices of many drug formulations of same molecules in India varied from 10 per cent to 300 per cent. Although the industry argues that the investment on quality standards also vary from manufacturer to manufacturer, the fact remains that it cannot vary so much considering the standard cost of the generally mandated Good Manufacturing Practices (GMP) laid out by India’s regulator (under Schedule M) or the World Health Organisation (WHO). Nevertheless, the argument of the study sponsor—Organisation of Pharmaceutical Producers of India (OPPI) that the government intervention in pricing is irrelevant as it should be left to the market mechanism (competitive pricing) also fails to differentiate the healthcare market where consumer (patient) is not the decision maker. Lastly, the IMS study also says that the primary beneficiaries of the DPCO 2013 price controls have been high income patient populations, rather than the low-income targets. This can be largely linked to the poor market reach of drug makers in India, which has been the case even earlier. India, where drug prices are the lowest in the world thanks to predominant generic presence and a persistent price control regime, still claims only 30 per cent of its population having access to modern medicines due to poor distribution and limited infrastructure. Therefore, the focus should be targeted at expanding market reach and not at shelving price control orders.
Read More
India has extended price caps to an additional 39 drugs ranging from commonly used diabetes treatments to antibiotics, in the government's latest effort to improve the affordability of medicines.Wide-ranging price cuts over the past year have hit several drugmakers in India and have been opposed by many in the industry, who say drug prices in the country are already among the lowest in the world. The new drugs join a price control list that covers more than 500 drugs.The latest move will include medicines made by foreign drugmakers such as Abbott Laboratories and GlaxoSmithKline Plc, as well as domestic firms such as Lupin Ltd, Cadila Healthcare Ltd and Ipca Ltd.The move comes after a parliamentary committee said in April that the scope of price control needed to be enlarged even further. In India, the majority of people live on less than $2 a day and health insurance is scarce.But a study conducted by healthcare research firm IMS and sponsored by the main business association of multinational drugmakers operating in India argues that price controls are not an effective strategy to improve healthcare access for Indian patients.Price caps benefit high-income patients rather than the low-income patients and put pressure on profit margins for small and mid-sized companies, said the study, which was released on Tuesday.(Reuters)
Read More
Pfizer had suspended the production at this plant since 2013 and the employees were offered a voluntary retirement scheme, writes C H UnnikrishnanPfizer Ltd, the India unit of US drug maker Pfizer Inc, said on Wednesday that it plans to shut down its manufacturing unit located at Thane near Mumbai in two months. The closure of this heritage production facility of Pfizer in India will be effective from 16, September.The unit has some 80 employees on its rolls at present. The company had suspended the production at this plant since 2013 and the employees were offered a voluntary retirement scheme. The Thane manufacturing plant of Pfizer was commissioned in the sixties and has been a part of Pfizer India’s heritage for over 50 years. During this time, it has been producing a number of medicines for both domestic and international markets."The decision to close the site is based on an assessment its long term viability and its ability to achieve the needed production and the closure will not impact the supply of any of our medicines to patients," Pfizer said in statement on Wednesday.The company had offered a generous voluntary retirement scheme (VRS) to the workmen at this site last year, upon their request. This was taken up by as many as 132 of the 212 workmen. The remaining 80 workmen have continued to receive full wages, despite plant inactivity, the company said.As a part of the closure process, Pfizer has ensured that it will honour its obligations towards requisite compensation mandated by law, for the remaining workmen.
Read More
The US Food and Drug Administration (FDA) and the World Health Organisation have intensified investigations into India's clinical research firms, industry officials said, after recent probes revealed two leading firms had violated standards.The scrutiny is likely to further hurt India's reputation as a global pharmaceutical hub, as it follows sanctions imposed by the FDA and other regulators on Indian generic drugmakers over manufacturing quality lapses.India's clinical research organisations (CROs) conduct drug trials for global drugmakers seeking to cut costs. Consultants Frost & Sullivan had forecast the sector's sales to more than double to $1 billion in 2016 from $485 million in 2012."In the last few months, there have been several and more frequent audits of CROs by regulators," said Apurva Shah, managing director of Veeda Clinical Research, which says on its website it provides services to the world's top 10 drugmakers."The time, intensity and the detail of the audits has increased," he said, specifically referring to FDA audits.The FDA declined to comment.Inspectors at the WHO, which last week issued a warning to Chennai-based Quest Life Sciences over defective trials work, are also looking into lapses at other Indian CROs, a person with knowledge of the matter told Reuters.Asked about its inspections, the WHO said it was not specifically targeting India. "These inspections are arranged based on risk management principles," it said in a statement.Quest has said the issue was isolated, and would be resolved in six months. But the WHO warning followed a probe last year involving one of India's largest CROs, GVK Biosciences, which resulted in the withdrawal of approvals for hundreds of generic drugs in Europe.In the case of both GVK and Quest, regulators found duplication of patients' electrocardiograms (ECGs), or heart records. Regulators are now taking a lot of time inspecting ECG data at all CROs, Shah said.D.A. Prasanna, head of the industry lobby group Association of Contract Research Organisations, said the probes cast a bad light on a sector already facing challenges at home. India's pharma regulator has yet to draft concrete guidelines to conduct trials three years after the Supreme Court halted 162 trials, citing unethical practices."If we see an unreasonable rise in the frequency of foreign inspections over small issues - like in the case of ECGs - then I think we need to be concerned as an industry," Prasanna said.
Read More
India's smaller generic drugmakers, struggling to cope with a bruised reputation and tougher regulation in the United States, are under pressure to consider branching out to new, less-profitable markets or sell out to larger rivals.Two years after its most high-profile regulatory setback to date in the United States - Ranbaxy's $500 million US fine for drug safety violations - India's $15 billion a year generic drug industry is still rebuilding its image in its biggest market.Many of its top firms are facing sanctions at some of their factories, as the US Food and Drug Administration (FDA) tightens checks and its approvals process.Combined with government-mandated price controls on drugs at home, that is piling pressure on smaller players."If they want to have a presence globally, they have to make investments. If they can't, then they'll have to focus on other markets or scale back their ambition outside of India, and that's probably what will happen," said Subhanu Saxena, CEO of Cipla, India's fourth-largest drugmaker by revenue.Ashok Anand, president of Hikal Ltd, a Mumbai-based drugmaker with a market value of $167 million, said some peers were putting themselves on the block."If they cannot deal with the stricter regulations, they might just prefer to sell out," he said.Pressure on US sales has been felt across the Indian industry, with all drugmakers hit by delays in FDA approvals as the US safety body overhauls its review process. Growth in US revenue for drugmakers slowed to 14 per cent in the year to March 2015, less than half what it was in the year to March 2012, according to brokerage Edelweiss.But for larger players who want to plug gaps or, for the likes of Glenmark and Aurobindo who aim to grow in theUnited States, this pressure has lowered prices and could pave the way for attractive deals, bankers said."Now that some of the smaller companies are reeling under intensive regulatory scrutiny and want to cash out on their investments, valuations would be much more realistic," said the head of India M&A at a large European bank in Mumbai.Spending SpreeIndian manufacturers say they have spent millions in high-end testing equipment, improved training and have hired larger teams in quality control since Ranbaxy was fined for manipulating clinical data.Some consultants estimate spending on compliance has more than doubled to reach about 6 to 7 per cent of sales for the larger companies.But while the number of US export bans issued to Indian companies fell to eight in 2014 from 21 in 2013, according to FDA data, the agency continues to find manufacturing violations at the plants of some of the biggest drugmakers in the country, an indication of the pervasiveness of the problem.Sun Pharmaceutical Industries, Wockhardt, Dr Reddy's Laboratories and Cadila Healthcare have all faced FDA rebukes over the past year.Smaller firms Ipca and Aarti Drugs faced FDA bans on their plants this year.These failures - which executives blame on India's "quick fix" culture and consultants blame on a failure to prioritise compliance - have clouded short-term growth prospects and added to pressure on smaller players, pushing some to look elsewhere."They can choose to be in lesser-regulated markets, such as Latin America, where there is a lot of demand. But they will have to live with much thinner margins," said the finance director of a small Indian drugmaker, who did not want to be named. "It's survival of the fittest."(Reuters)
Read More
Davinder Gill, CEO, Hilleman Laboratories, talks about the operating model, achievements and future of HL with Arshad Khan Hilleman Laboratories, a Merck-Wellcome Trust joint-venture, started its operation in India to develop and deliver affordable vaccines, primarily for cholera and rotavirus in developing and third world countries. A venture of seven years and an equal investment of GBP 90 million, HL operates in a high-tech R&D centre in the campus of Jamia Humdard, New Delhi. Currently working on developing thermostable vaccine, a heat resilient vaccine, HL aims at lowering vaccine wastages up to a significant level. Davinder Gill, CEO, Hilleman Laboratories talks about the venture, operating model, achievements and future of HL when the venture will complete its tenure. Excerpts What is this alliance all about? MSD-Wellcome Trust? Why did the two global entities decide to have their joint-venture in India?HL is an equal joint-venture of MSD-Wellcome Trust, with a combined investment of GBP 90 million. Both the global entities were thinking about setting a flagship institute purely focusing on vaccine R&D. We felt that there was a big gap when it comes to vaccine R&D. After a long discussion for suitable destination, we routed for India as it has a strong manufacturing base for vaccines. Five-six leading Indian firms produces millions of doses of vaccines for hundreds of countries. In addition, we have a very strong talent base of high quality professionals. Also there are lots of chances for collaborations with dynamic institutes. Is it open ended or is there a time frame within which the alliance has to achieve certain mile stones?Actually its open ended. Initial commitment was made for seven years. That does not that there was some kind of clock has started. The notion was that seven years will be long enough for HL to be established. We are well on the way t\on establishment. What is the focus of research?Our focus is to develop affordable vaccines for global health, mainly with the amalgamation of innovation and new technology. We are for income and not for profit firm. We are solely focused of affordable vaccine. What is HL’s operating model? How is it different from a private vaccine company?We operate on a non-profit principle. We aren’t interested in developing ‘me-too’ kind of vaccines. We put a big emphasis on affordability. We being an R&D centre, our operating model rely heavily on collaborations and partnerships. We do not have commercial manufacturing capacity. We have to partner with companies to help us in commercialisation of our products. What has been the achievement so far?Right now we have an established R&D facility with 40 scientists. We have initiated three major programmes in the field of Rotavirus vaccine, Cholera vaccine and Polysaccharide conjugate vaccine. We have formed partnership with institutes of Sweden and Bangladesh. We are also working with global stakeholder like WHO. We have a dialogue going on with DGCI for the clinical development of our products. In the last 3-4 years we have built a core presence in India. What should the government do to promote drug research? The government has certainly made vaccines and drug development a big priority. Schemes like Indradhanush, which targets to achieve full coverage with basic vaccine by 2020 are laudable. Prime Minister also has added four new vaccines. The government through the department of biotechnology provides sufficient grants and incentives for R&D. What is your take on the existing standard of vaccination in India?Vaccine industry surely has some issues but compared to pharma industry of the country, the concerns are on the lower side. Condition of cold chain storage in the country is bad. Cold storage system lacks manpower, maintenance and reliable supply of electricity. The decision of the government to increasing the coverage of immunisation will add more burden to the system. There should be more emphasis on improving the quality of production. Can India contribute to original drug discovery? What should be its focus?Yes, it very much can. We have had examples in conventional drug system and vaccines in the last 5-10 years. Collaboration of multinationals with domestics firms will accelerate drug discovery in India. I feel the notion of domestic vaccine companies should not only be vaccines made in India but also vaccines made for India. Complex product like vaccines requires extra resources for storage, distribution and so on. My message for private companies is to focus on the aspect of affordability, thermo stability and easy distribution of vaccine. Who are the major clients of Hillman Lab?The major clients of Hillman Lab include international Centre for Diarrhoeal Disease Research, Bangladesh, Sweden based biopharma firm Gotovax AB and Dhaka based pharmaceutical firm Incepta, we are also in talks with major Indian companies. How do you see Hilleman Laboratories, five years from now?We will use the foundational money in the first seven years to establish ourselves. Once we are established, our aim is to become financially independent sustainable through the sale of our technologies, products, applicants for grants, philanthropies and other mechanism. Our model will be for income, not for profit.
Read More
