Pharmaceutical Industry In Global Market: Issues To Be Handled For Better Growth

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Abstract:

In the global market, the position of the pharmaceutical industry is not parallel as compared to other information and technology based industries.
Among the Leading industries, the pharmaceutical industry lacks behind in the growth rate as far as innovative research, capital investment and
government regulations are concern. Most of the countries simply depends on bulk production of the generic drugs and not focused on core research. In
comparison with the growth rate of the electronic and IT industry stands first where as the pharmaceutical comes at the 9th position.

The new rule regarding the product patent had made a huge impact on growth of the pharmaceutical sector in developing country. Many of the small-scale
pharmaceutical company in developing countries are either closed down or stopped their business activities in the last few years. It is due to
un-favorable government policies, their inability to invest capital in research of new drugs which is essential to compete with large companies in the
changing business environment.

The world pharmaceuticals market is forecast to grow with 11% percent or more from uptill 2020 which can be increased if companies invest more in drug
research sector as well promotion, shortens the period of clinical trials and specially the government has to focus more on growth of small scale
sector in developing countries by liberalization of regulations and policies like exemptions in taxes and more research oriented funding to improve the
future of the pharmaceutical sector globally.

Keywords:
Pharma Market, Global Market, Capital investment, Time period, Patent, Government Policy

Introduction:

Pharma Market

Pharmaceutical industry serves human health. As there are many diseases prevalent in the community of the globe, drugs are essential to cure them. This
work is done by Pharma companies.

The pharmaceutical industry develops, produces, and markets drugs which can be used as medicines. There are major two categories one BRAND and another
GENERICS. They have different laws and regulations regarding the patenting, testing and marketing. At present, total pharmaceutical market comprises
most by prescription drugs both in terms of value as well as volume. Prescription products are of two types, synthetic one which have got a long
history and the vaccines which are obtained from the microbes or latest one developed from novel techniques like hybridoma technique. The remaining
market is of “over the counter” medicines (OTCs), which can be purchased without prescription. Both prescription and OTC medicines can branded or
“generic” depending on the company whether it is patented product of that company or out of patent one or given a exclusive right for marketing. (1,2,3)

Global Market (13)

With development in terms of technology, human resource, global peace - Industries are extending their business to the international level by coming
out of their national barriers. The companies in various sectors(industries) are taking into account all the demographic, social, technological and
political factor in to account before taking decisions, making marketing strategy and before any merger and acquisition outside the county.

There are various other industries which are as important as that of Pharmaceuticals like Electronics, FMCG, Travel and tourisms, Automobiles etc.
Major player which strengthen the global market are:

- Energy sector

- Consumer goods

-Transportation industry

- BPO and KPO

These industries suffered a lot during the recession and are soon going to recover from it as the research based success is more in providing several
ranges of products and services. Provide consumer with daily use products in wide ranges and also services which makes life easy.

Stand Of Pharma Industry In Global Market:

In the global market, the position of the pharmaceutical industry is not parallel as compared to other information and technology based industries.
Among the Leading industries, the pharmaceutical industry lacks behind in innovations as far as the research is concern. In comparison with the
innovation, electronic and IT industry which stands first where as the pharmaceutical comes in the 5th position and with growth rate it
comes at the 9th position. The total world pharmaceutical market is covered mainly by US, Japan, France, Germany, UK, Italy, China, Canada,
Spain, Brazil etc. (Source: IMS, Health)

Percent of rating category as“innovative”among currently available product:-

Table 1 and 2:

Industrial sectors(category)

% INNOVATIONS

Electronic equipment

54 %

Computer equipment

53 %

Cameras and video equipment

50 %

Household products

32 %


Pharmaceuticals


29 %

Food and Beverages

28 %

Daily use products

24 %

**sectors

Positive ratings

2007

Positive ratings

2008

Technology

71

73

Travel and tourism

54

55

Retail

52

50

Consumer products

51

47

Telecom

45

45

Automotive

37

38

Airlines

31

26

Insurance

28

24


Pharmaceutical


28


26

Energy

26

28

Tobacco industry

9

10

**The reputation of the pharma industry continues to lag behind other consumer-facing businesses, based on Harris Interactive's latest survey into
corporate reputations.

Issues To Be Handled:

(1) Capital investment:(4,5,6)

The pharmaceutical sector serves a lot for the global sector and its part is very important. Thus investment on the research work of pharmaceutical
field has to be increased to serve best to the global sector.

The entire pharmaceutical market lacks in the global investment so enough funds are not raised for the medium and small scaled industries to do the
research.

There are only countable companies which are involved in the research of innovative molecules, which has to be increased.

The current Scenario of R and D investment of Pharma companies in comparison to the other global industry is:(7,8)

Table 3:


RANK


2010


Company


Sector


Country


R-D


Expenditure(£m)


% R-D Growth


RANK 2009

1

Toyoto

Automobiles

Japan

6014

-6

1

2

Roche

Pharmaceuticals

Switzerland

5688

9

4

3

Microsoft

Software

USA

5396

-3

2

4

Volkswagen

Automobiles

Germany

5144

-2

3

5

pfizer

Pharmaceuticals

USA

4802

-2

6

6

Novartis

Pharmaceuticals

Switzerland

4581

2

10

7

Nokia

Technology Hardware

Finland

4440

-6

8

8

Johnson and johnson

Pharmaceuticals and other

USA

4326

-8

7

9

Samsung

Electrical equipment

South Korea

4007

8

12

10

Seimens

Electrical equipment

Germany

3805

2

18

Solution:

So the entire pharmaceutical market should do the global interaction to bring more and more investors in the sector so that the funds can be raised for
the Novel Research work.

Novel Drug delivery system are becoming part of emerging era of medicine. The market is growing and has lots of potential in it. In coming 10 years,
many new products are going to be launched which will account for raising global market of advanced targeted delivery products to approximately US$10
billion.

(2) Time period:(9,10,11,12,21)

The period from discovery, synthesis to release a drug molecule in the market is about 10 to 15 years. During this period, companies have to do large
investments and the returns are not confirmed as the molecule success is not predetermined.


Drug discovery


Pre-clinical


Clinical trials


FDA reviews


Phase 4

3-5 years

1.5-2 years

6-7 years

1.5-2 years

continued

Examples
: The returns in the critical antibiotic is not the same with the company invested in its research.

Thus the period has to be reduces, as no much changes can be done in clinical and preclinal trials as they are compulsory. Only if the entire work is
done by single domain then it can be done faster as compare to distributing it to different department.

Solution:

The period of process chemistry can be reduced by implementation of innovative techniques. Also the adoption of various electronic devices can help in
shortening the clinical trial period especially reducing the time spent on data accumulation.

Biomarker discovery is very promising for finding new relevant markers rapidly, without the details of mechanism of diseases thus saving time in the
discovery process. As the use of inulin, which is used as marker led to discovery of creatinine. It’s the major interest of pharmaceutical industry as
biomarkers can solve various challenges in predicting diseases during the clinical trials by acting as intermediate markers.

Biological system can be clearly understood by various computational system of cells, tissues and organisms. This systems are now being explored by
pharmaceutical companies to maximise their chances in converting targets into therapies. Various computational methods are ligand based drug design,
drug target docking, quantitative structure based design etcetera. Thus it would be son fully implemented with co-ordination of pharmaceutical
industry and regulatory bodies.

The future success of the entire pharmaceutical market depends on the success of PIPELINE drugs. examples: The companies like Pfizer has 252 drugs
under research in phase 3 clinical trials.

(3) Patent:(14,17,19)

The new rule regarding the “product patent” had made a huge impact on growth of the pharmaceutical sector in developing country

The number of the patent filing has been decreased in the developing countries. Though the Patent System is important for Industrial Growth but it
should be such that it should encourage the growth of the small scale industries.

The number of patent filing lacks in Pharmaceutical and biotechnological industry as compared to other industries. As shown by the survey done by
DOLCERA.

Graph 1:

Patent Application For Various Fields Of Invention

Entirely it is co-related that there should be enough funding so that small scale industries along with major player can involve in research work and
so more patents can be filed.

Solution:

The best way is by exploring the work done by various post graduate students at college level. Industries can collaborate with the universities
especially in developing country like India so that best potential can be explored and ideas can be commercialize.

Various universities have come up with University-Industry partnership cell so that company can explore best ideas of the young students. Example:
AICTE sponsored Partnership cell established at Manipal University, where student’s projects are shared with the company experts.

There should be special amendment in the patent law which can encourage small scale sector to participate in research. In developing countries like
India, government along with association with the regulatory body should allow easy access to patents documents, which can be easily downloaded and
their legal status can be accessed. (17)

Patents are the sign of development in research for a developing country. Hence every research work should be paid importance to convert it into
reality which would serve the humanity.

(4) Government Policy:(15,16,18)

The Drug price control order (DPCO) of the government is not benefiting the sector. Though it is in favor of the patients but the government should
also look for the development of the industry.

SSI units were introducing about 1,000 brands every year with licenses from the state drug controllers, this number has shrunk to less than 100. AS New
drug registrations are expensive for the SSIs. So government should give appropriate funding to boost up the healthcare sector as far as SSIs are
concerned.

Solutions:

The government should take following measures to give a boost to pharmaceutical sector in the developing countries:-

- To give adequate funds for research and development.

- Gives liberalization in the Drug price control order (DPCO).

- Special funding program for the small scale industry.

- Focus on the development of the infrastructure of marketing of the generic drugs.

Conclusion:

The global trend is set where innovations drive the industrial growth. Other consumer facing industries are growing more as compared to pharma
sector due to more rapid rate of innovation. Pharma sector is giving great competition to it but lacks behind due to various factor.

The world pharmaceuticals market is forecast to grow with 11% percent or more until 2020. (20) This growth rate can further be increased by:

- Increasing investment more drug research sector.

- Reducing the period of clinical trials.

- Focusing on growth of small scale sector in developing countries.

- Exempting taxes and funds provided in developing country.

References:

1) John L. McGuire, Horst Hasskarl, Gerd Bode, Ingrid Klingmann, Manuel Zahn "Pharmaceuticals, General Survey" Ullmann's Encyclopedia of Chemical
Technology" Wiley-VCH, Weinheim, 2007.DOI: 10.1002/14356007.a19_273.pub2

2)Kirsch M., “The pharmaceutical industry: angels or demons?”, Am J Gastroenterol. 2010, Dec;5(12):2530-36.

3) Sharma K, Zodpey S, “Need and opportunities for health management education in
India”, Public Health Foundation of India, New Delhi, India.

4) David C, “Marketing to the consumer: perspectives from the pharmaceutical industry”, Mark Health Serv. 2001 Spring;21(1):5-11.PMID: 11291513 [PubMed -
indexed for MEDLINE]

5)“Pharmaceuticals no longer good investment” articles published in forbes. Available on site: http://www.newmediaexplorer.org.

6) “Drugs Cost More, Return Less to Investors”,Study- Mon December 8, 2003 05:34 PM ET (www.forbes.com)

7)Tubbs. M. R, “The relationship between R&D and company performance” Research-Technology Management-. 2007-, Nov-Dec, pp. 23-30.

8)R&D Scoreboard
Key sectoral trends in R&D - a comparison of UK and global performance The scale of R&D expenditure by sector. Available at:- http://www.innovation.gov.uk

9)“Tooling Up for Clinical Trials”- Issue 5-by Next generation pharmaceuticals.

10)“Shortening the cycle of clinical Trial” Published by hp company. Available of site: www2.hp.com

11) Jeffrey M. Skolnik, Jeffrey S. Barrett, Bhuvana Jayaraman, Dimple Patel, Peter C, “Shortening the Timeline of Pediatric Phase I Trials: The Rolling
Six Design”. Adamson-Journal of Clinical Oncology, Vol 26, No 2 (January 10), 2008: pp. 190-195

12)“Understanding Clinical Trial” published by CLINICALTRIAL.gov- A service of US national institute of health.

13)“Electronic and petrochemical industry”India Business directory. Available at Business.mapsof india.com.

14)Pharmaceuticals patent filings” information available at http://www.patentstorm.us

15)Salvi S, “DPCO tool in the hands of government of India to provide cheaper medicines to people”; International Conference on AIDS. Int Conf
AIDS. 2002 Jul 7-12.

16) Jagdish singh, “Small scale Pharmaceutical Industry- Problems and Prospects” SPIC conference held by IBN7 for screening drugs in india

17) Bruce lehman, President, “The pharmaceutical industry and patent system” Intellectual property institute.

18)“Small pharma units fail to meet Schedule M norms” available at: http://www.business-standard.com/india/news

19) Anil, “Patenting Landscape in India- A view on patenting trends in India” DOLCERA Analysis- prepared based on the Annual report provided by the IPO

20) Ernst and Young, “Insights into the Pharmaceutical industry in emerging market” A perspective, Global Pharmaceutical center.

21) Neil Kumar, Bart S. Hendriks, Kevin A. Janes, David de Graaf and Douglas A. Lauffenburger, “Applying
computational modeling to drug discovery and development” Department of Chemical Engineering, Pfizer Research Technology Center and Department of
Biological Engineering MIT, Cambridge, MA 02139, USA.

About Author:

Ganesh Parihar

Ganesh Parihar

Manipal College of Pharmaceutical Sciences, ManipalUniversity, Manipal, Karnataka-576 104.

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Comments

sunilahuja's picture

good work and quite informative article
Ganesh Nirma's picture

Thanks alot....
Devang Patel's picture

Very Nice
Ganesh Nirma's picture

Thank you devang.... Next one is going to be from your side....promise me
Ankit's picture

very nice article. wish u all the best for your great future..
Ganesh Nirma's picture

Thanks.... I will try to give my best
Vaibhav Vaishnav's picture

It is a very well written article I must say. But, we can not compare pharmaceutical industry with other industiries like IT, consumer electronics and so on. All industries have their own market mechanism and it is necessary to follow that mechanism to survive in a perticular industry. Like we all know, how difficult it is to manufacture and sell medicine in any country of the world unlike TV and mobile phone. Pharma industry has many barriers like; Regulatory of concern country, pricing control, adverse reaction, environmental concern, difficulties with clinical trials and registration and so on. If a company want to sell a single medicine in different continents of the country, each continent has their ovn regulatory policies which add on lot of difficulties to manufacturer and marketer. That is the reason why many small companies are avoiding to expand as they don't have financial as well as technical and human resources to overcome these hurdles. These small companies rather choose to become a contract manufacturer of a big company or they restrict their footprints to local regional market. Recent cases of joint ventures and mergers & acquisition in global pharmaceutical industries is the reason of overcoming these hurdles. A company would rather prefer to go for a Licensing or a joint venture with another company to expand presence in global market. This is going to be the major strategic choice for all samll or big sized pharmaceutical companies to become international/global at minimum resource, cost and efforts. Talking about research, developing a drug from lab sclae to market is not a profitable task in recent scenario. A company gets considerable less time to recover the development cost due to less duration of patent protection and pricing control. Generic medicine is breed & butter of all local and multinational pharmaceutical companies. The generic business is the source of funds to invest in research & development of new molecules & new formulation. This cylcle of development functions in a way to become more profitable and market leader in targeted segments.

Vaibhav Vaishnav Management Trainee- Internationa Operations (EU) Torrent Pharmaceuticals Ltd.

M R L Narayana's picture

very nice article

mrlnarayana

Seraj Ashraf's picture

Very nice article!! informative

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