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The Indian active pharmaceutical ingredients (API) as well as excipient markets are anticipated to expand significantly in the near future thanks to India’s consistent economic growth, reforms, and regulations pertaining to patents, which is attracting the attention of the pharma majors the world over to start their operations here.
The key factor driving the API market growth is the evolving API manufacturing scenario in developing countries. Considering the presence of developed infrastructure and growing economic development, India and China have started producing high-quality APIs and drug intermediates for regulated markets.
With a cascade of initiatives taken by the government which include the Production Linked Incentive (PLI) scheme for the promotion of domestic manufacturing of critical key starting materials (KSMs) and Drug Intermediates and APIs, along with the liberalized foreign direct investment (FDI) with 74 per cent FDI under automatic route in brownfield pharmaceutical projects, the Active Pharmaceutical Ingredients (API) industry is sanguine about the long-term growth prospects.
India also saw its reputation for API manufacturing improve by seven per cent year-on-year. Underpinning this shift in optics, in 2021 there has been a five-fold increase in private equity investments totaling $1.5 billion into API companies across the country. India’s API sector is also increasingly drawing global bulge-bracket investors and private equity managers, with Covid reshaping fortunes and boosting valuations.
The API sector has seen a three-fold increase in investments in 2021 compared with a year ago. Though nearly 70 per cent of the APIs are imported from China and the dependence rises to 90 per cent for certain life-saving antibiotics like cephalosporins azithromycin and penicillin, the recent government initiatives augur well for the steady growth of the industry since it has enabled a positive eco-system and a conducive policy frame, the industry insiders aver.
In the recently concluded CPHI Frankfurt, the released CPHI Annual Survey findings show for the first time that Indian API manufacturing has surpassed the quality scores of even Europe’s leading API hub – Italy. Indian companies also reported surging interest from the EU and in particular USA. Companies in both the US and Europe are reportedly deepening ties with India’s pharma industry as a response to recent macro-sourcing changes.
In fact, India has seen record rises in many categories and has overtaken Japan, Switzerland, Italy and France in the overall rankings, finishing only behind the UK, Germany and the USA. The country was also identified by nearly 50% of pharma industry executives as the biggest beneficiary of ‘geo-sourcing strategies’ in next three years. India recorded its largest ever improvements in scores for the quality of its ‘finished dose manufacturing’ and ‘API manufacturing’ with a massive 15 per cent gain in the latter category.
API companies in India need growth strategies, product innovations, new product launches, investments to garner the growth prospects. The API market size is expected to grow by US$ 64.53 billion from 2020 to 2025, progressing at a CAGR of 6.1 per cent, according to the latest market research report by Technavio.
At least 66 per cent of the market growth will originate from APAC (Asia Pacific) region during the forecast period. China, India, and Japan are the key markets for active pharmaceutical ingredients in APAC. Market growth in this region will be faster than the growth of the market in other regions.
However, one of the foremost challenges faced by the pharma sector in India is the dependence on China for APIs. In the absence of any reasonably prized alternative, China continues to be the top choice for pharma manufacturers however the need for diversifying supply chains could attract API manufacturers in the country to prepare raw materials themselves.
China accounts for the largest share in the active pharmaceutical ingredients market in APAC. The Chinese pharmaceutical industry mainly produces basic
chemicals and APIs.
The major reason for China’s ability to capture the global active pharmaceutical ingredients market is the cheap and cost-effective production of APIs, resulting from its large-scale manufacturing which will facilitate the active pharmaceutical ingredients market growth in APAC over the forecast period.
The country’s pharmaceutical regulatory environment is seen to be further improved with the accelerated implementation of the Marketing Authorization Holder (MAH) system, the pharmaceutical product whole-process traceability system and the priority review and approval system etc. However, the transformation and upgradation of Chinese pharmaceutical industry will have an impact on the world market.
In such a scenario, the Union government is working towards finalizing the levy of anti-dumping duty on ciprofloxacin which is an antibiotic for a broad range of infections. The industry considers this as a right move owing to its capability in manufacturing this product along with paracetamol among others.
Certainly, in terms of protecting essential medicine there will be a huge benefit over the next few years with these initiatives. And potentially we will see benefit as globally pharma industry is expanding their manufacturing capabilities. This is because there is certainly a market for API manufacturing. There is plenty for room for manufacturers from India, China or the USA and what we will likely see is the creation of strategic supply lines over the next few years and India will certainly benefit from that.
Currently, India’s contribution to the global API market is around eight per cent. China’s share is around 60 per cent and the balance comes in from Italy, Germany and Malaysia. Over 30 per cent of the APIs manufactured in India are exported to the US, UK, Japan etc.
Motilal Oswal Financial Services research report indicates Indian API industry is expected to outperform other countries with an estimated Compound Annual Growth Rate (CAGR) of 9.6 per cent over the calendar year 2021-26, while complex APIs would see a faster growth owing to the focus on complex formulations by innovators and generic companies.
“The cost of manufacturing in India is approximately 33 per cent lower than that of the US. Therefore, the industry can benefit from these attributes and accordingly scale-up production, productivity and efficiency. But the realization of this potential necessitates harnessing economies-of-scale to move to a newer and higher orbit, according to Infomerics Valuation and Rating Agency.
In-house API manufacturing with focus on efficiently creating high-quality APIs in key therapeutic categories is the focus of many companies. The industry noted that with regards to the API policy and dedicated parks; the government is yet to go forward with the same. However, there are efforts initiated in Gujarat, Andhra Pradesh and Telangana, which is the hub for bulk drug production, said Anjan K Roy, chairman Ray Group.
Excipients market
Even though Europe holds the largest market share in the global pharmaceutical excipients market, the Asia-Pacific is expected to be the fastest growing market.
Europe dominated the pharmaceutical excipient market share in the year 2020, the growing government initiatives for reducing the prices of the drugs along with the rising investments for the development of biologics as well as advanced dosage forms, is increasing the demand for new excipients and thereby contributing in the growth of the pharmaceutical excipients market in Europe.
However, Asia-Pacific is predicted to grow at the high growth rate during the forecast period, owing to low cost of raw materials and availability of cost-effective workforce in this region. Moreover, the proliferation of pharmaceutical industry in countries like China, India and others is likely to offer immense opportunities for the growth of the market during the forecast period in terms of value sales.
According to Precedence Research, the pharmaceutical excipients market size is estimated to hit around US$ 14.2 billion by 2030 and expanding growth at a CAGR of 5.39 per cent from 2022 to 2030.
The global pharmaceutical excipients market size was accounted at US$ 8.85 billion in 2021. The demand for the oral formulations drugs has been witnessing a rapid increase from the past few years. This is attributable to the ease of consumption of this oral drug by the patient, especially children. Oral dosage formats usually require more amounts of excipients over other available drugs forms during the manufacturing process and is being promoted owing to the rising adoption of patient-centricity approaches by drug manufacturers globally.
Need for novel excipients and APIs
Pharma industry needs novel excipients and APIs plays a central role in drug development process.
According to Dr Allen Guy, Technical Director, Pharmaceutical Group, IMCD, novel excipients are rationally obvious and now expected to be robust, consistent and science-based. For instance, MCC, Lactose, Mannitol to name a few, will probably adequately succeed in 70-80% of most formulation challenges. It is the other 20% where we make compromises in quality expectations. This is where we need to ensure innovation brings something better than a compromise on our health. We should support FDA and the pilot program on Novel Excipients. He suggested to de-couple CP (co-processing) excipients from the novel excipient definition and restrictions. This should incentivize USP and other pharmacopeia especially European Pharmacopeia to act quickly and support new ingredients more efficiently, said Dr Guy at a recently concluded event organized by IPEC India in collaboration with IMCD India.
“We need Pharmacopeia and Finished Dose Formulation manufacturers to engage more with the excipient innovation and delivery process. This is because the industry has 20+ years of evidence available and excipient manufacturers are working to bring great excipients to meet the needs of modern drug delivery,” said Dr Goy.
Working with just the existing or pragmatic excipients alone will not solve all the problems. CP and genuinely novel excipients should be explored. Since 2000, lots of co-processing has taken place and one notable new excipient was derived known as ‘Soluplus’. In addition, IPEC too has produced many guides, including Composition guide and the Co processing guide.
The acceptance of novel excipients has challenges encountered during approval of new chemical entities (NCEs). Then there is the issue of two or more compendia /non-compendia excipients, where ratios of components may vary and physically modified properties are not achieved by physical mixing. In excipient mixture blends and single monographed excipients, he stated.
In order to tackle excipient composition, Dr Guy said that expectations by companies are well laid out by the regulators. In fact, the IPEC guidance which is the Co-Processed Excipient Guide of 3.6.2. suggests independent review in the event as the bridging studies could not exclude new chemistry. This might involve an in vivo safety evaluation. Therefore, first a review by toxicology experts helps to assess the likelihood of acceptance by regulatory authorities. Second, toxicology data must be sought wherever it may come from and viewed rationally. Animal studies too are useful to understand IID (inactive ingredient database) of the individual components and recommendations to plan the studies appropriately.
Among the new chemical excipients, Soluplus is literally the only one in this category. The barriers to entry for truly new chemical excipients are very high. Benefits to use must have a clear NPV (Net Present Value) when considering the cost to bring to market. Therefore, there are headwinds for new chemical entity excipients, Dr Guy concluded.
Excipient monographs
In the meanwhile, the Indian Pharmacopoeia Commission (IPC) is set to harmonize 31 general chapters and as many excipient monographs of Indian Pharmacopoeia (IP) with Pharmacopoeial Discussion Group (PDG) in three phases. The first phase will start from December 2024 and the last phase from December 2028.
IPC has been selected by PDG for its year-long pilot for global expansion. The year-long pilot will facilitate harmonization of IP’s general chapters on Tablet Friability and Optical Microscop with European Pharmacopoeia (EP), the Japanese Pharmacopoeia (JP) and the United States Pharmacopoeia (USP) which are members of PDG. The pilot will start from December 1, 2022.
The decision to launch a pilot for expansion of membership was taken at PDG annual meeting last year. This was a critical first step in the PDG’s commitment to expanding the recognition of harmonized pharmacopoeia standards with a view to achieving global convergence.
The commission will harmonize IP’s general chapters on Particulate Contamination, Analytical Sieving, Laser Diffraction Measurement of Particle Size, X-Ray Powder Diffraction and Chromatography Peptide Mapping with PDG in first phase starting from December 2024.
It will harmonize IP’s general chapters on Dissolution, Disintegration, Uniformity of Content/Mass, Color (Instrumental method), Residue on Ignition, Bulk Density and Tapped Density, Conductivity, Powder Fineness, Water-solid Interaction, Amino Acid determination, Capillary Electrophoresis with international pharmacopoeias in second phase commencing from December 2026.
IPC will further harmonize IP’s general chapters on Tests for Specified Microorganism, Microbial Enumeration, Limits for Non-sterile Products, Bacterial Endotoxins, Extractable Volume, Sterility Test, Gas Pycnometric Density of Solids, Powder Flow, Specific Surface Area, Thermal Analysis, Isoelectric Focusing, Polyacrylamide Gel Electrophoresis with PDG in third phase starting from December 2028.
Besides this, the commission will also harmonize 31 excipient monographs of IP with PDG in three phases.
The first phase will begin from December 2024 wherein monographs of Alcohol, Dehydrated Alcohol, Benzyl Alcohol, Croscarmellose Sodium, Lactose, Anhydrous, Ethyl Paraben, Propyl Paraben excipients of IP will be harmonized with PDG.
The monographs of excipients of IP covering Calcium Disodium Edetate, Calcium Phosphate Dibasic, Calcium Phosphate Dibasic Anhydrous, Carmellose Calcium, Cellulose, Microcrystalline, Crospovidone, Ethylcellulose, Hydroxyethylcellulose, Hydroxypropylcellulose Hydroxypropylcellulose, Low Substituted, Lactose, Monohydrate, Magnesium Stearate, Butyl Parabe will be harmonized with global pharmacopoeias in second phase commencing from December 2026.
The IPC will harmonise monographs of excipients of IP like Cellulose Powdered, Cellulose Acetate Phthalate, Citric Acid, Anhydrous, Citric Acid, Monohydrate, Hypromellose, Hypromellose Phthalate, Methylcellulose, Methyl Paraben, Petrolatum, White Petrolatum, Polysorbate 80, Povidone with PDG in third phase starting from December 2028.
The IPC has taken the decision to harmonize selected general chapters and excipient monographs of IP with PDG based on consultation with the pharmaceutical industry. There are more than 200 general chapters and more than 40 excipient monographs in the 9th edition of Indian Pharmacopoeia, launched on July 1, 2022. Several monographs and general chapters have also been revised to update them as per current global requirements and to harmonize with other pharmacopoeias like USP, BP, EP, etc., said Dr Gaurav Singh, senior scientific officer, IPC.
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