Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Pharma: Is the 'Dragon' far behind? - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Oct 10, 2006

    Pharma: Is the 'Dragon' far behind?

    In the global economy, both India and China have staked claims as nations to watch out for in the future. Both these countries along with their counterparts Russia and Brazil (labeled as the BRIC nations) have been touted to emerge as the fastest growing economies by 2050. While much has been said about the impact of India and China on the dynamics of the global economy, here, we shall attempt to find out as to which country has the edge in the global pharmaceutical space.

    The Chinese edge...
    As mentioned earlier, China has proven its capabilities in the manufacturing space and the same advantage extends to the pharmaceutical segment as well. Being a cost-efficient country, it has emerged as the preferred destination for outsourcing intermediates (used in the manufacture of APIs) and APIs. Chinese companies have forged growing relationships with top global pharma companies (referred to as Big Pharma) in custom manufacturing and also for outsourcing older APIs. Besides this, China also has the edge over India in the biotech field due to the presence of high quality research institutions and the Chinese government's commitment.

    The number of DMF (Drug Master File) filings made by Chinese companies have also been witnessing a rise in recent times, highlighting the growing interest of multinationals in the country. In fact, India too, has been sourcing intermediated from China for the purpose of manufacturing low cost APIs.

    Where India scores...
    That said, while China is set to provide stiff competition to India in the API space, it still lags behind in the formulations segment. This can be gauged by the fact that in the global generics market, while India accounts for 25% of the ANDAs filed in the US market, China has yet to file a single ANDA. India's advantage vis--vis China lies in R&D, availability of scientific manpower, laws that have begun to recognise intellectual property and Indian companies having alliances with global pharma companies in research, generics and manufacturing. Even in the API space, while China has been growing at a fast pace, it still falls behind India in terms of overall filings made until now.

    India is making increasing strides in the global generics space, as can be evinced by the progress made by Tier-I companies such as Ranbaxy and Dr.Reddy's. Ranbaxy is already ranked amongst the top ten generic companies in the world. Both of them have emerged as major contenders in the consolidation activity gaining momentum in the generics market and have also been aggressive in challenging innovator patents (Para IV). In contrast, the Chinese Tier -I company, Zhejiang Hisun, has yet to make a significant mark in the global generics market.

    India VS China: Top company comparison
      Ranbaxy Hisun
    Formulations presence in US Yes No
    Formulations presence in EU Yes No
    API presence in the US Yes Yes
    API presence in the EU Yes Yes
    Local formulations presence Yes Yes
    Drug discovery research Yes No
    DMF filings Yes Yes
    ANDA filings including Para IV Yes No
    Source: Newport Strategies

    The equation: Present and future
    Given the fact that the 'low cost distinction' is no longer a trait unique to the Indian pharmaceutical sector with the resurgence of Chinese companies in this area, Indian companies will have to focus more than ever on moving up the value chain. This has to be by capitalising on the generics opportunity (in both plain vanilla and value added products), strengthening efforts on the NDDS and NCE research front and continuing relationships with global pharma in research and manufacturing. At present, on an overall basis, India does have the edge over China in terms of relevance to the global pharmaceutical industry. That said, Indian companies need to capitalise on the window of opportunity currently available before the competition from China begins to pose a significant threat.



    Equitymaster requests your view! Post a comment on "Pharma: Is the 'Dragon' far behind?". Click here!


    More Views on News

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    Jun 10, 2017

    Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.

    You've Heard of Timeless Books... Ever Heard of Timeless Stocks? (The 5 Minute Wrapup)

    Aug 19, 2017

    Ever heard of Lindy Effect? Find out how you can use it to pick timeless stocks.

    Why NOW Is the WORST Time for Index Investing (The 5 Minute Wrapup)

    Aug 18, 2017

    Buying the index now will hardly help make money in stocks even in ten years.

    Trump Takes a Beating (Vivek Kaul's Diary)

    Aug 18, 2017

    Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.

    How To Read Your Mutual Fund Account Statement Correctly (Outside View)

    Aug 17, 2017

    PersonalFN simplifies the mutual fund account statement for you.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 21, 2017 12:32 PM