Amid stifling competition in its biggest market, the US, Indian drug makers are scouting for partners in China, the world’s second largest drug market. A report by Bank of America Merrill Lynch, released on Monday, estimates more Indian companies will enter the pharma industry in China through joint ventures.
Major pharmaceutical companies in India like Dr Reddy’s Laboratories, Aurobindo Pharma Ltd, Cipla Ltd and Sun Pharmaceuticals Industries Ltd are looking at China as a big opportunity, making the market one of the focus areas for future growth.
“Indian companies are seeking partners that can make tangible business contributions, safeguard IP, ensure operational control and manage talent," said the report. Five joint ventures are already in place in China.
Dr Reddy’s has identified 70 products from its US portfolio that meet requirements and can obtain approval from Chinese authorities in coming years. The company is building a new plant, upgrading teams and building a pipeline for China.
Aurobindo Pharma is next in line to construct a facility in China. The company expects commercialisation of its products in the next 2-2.5 years. There is also a joint venture for inhaler products which will start operating soon.
Early in July, Cipla said it was setting up a joint venture with a Chinese pharmaceutical company to manufacture and sell drugs. They are in the process of setting up a facility in China. “The company is looking at both routes--manufacturing in India and exporting to China as well as looking at potential facilities in China--for oncology," the report further says.
In May, Sun Pharmaceutical said it had entered into licensing agreements with China Medical System Holdings to develop and commercialise drugs to treat psoriasis and dry eye in Greater China. According to the company, there is a strong interest in China for products which it has global rights. Alembic Pharmaceutical has also announced its interest in China.
According to the report by analyst Girish Bakhru, the recent renewed interest in China has stemmed from healthcare reforms in the country that aim to reduce drug prices and increase competition and the quality of generics.
“Given high fragmentation, complex distribution, high hospital channel share, language and cultural barriers, most Indian firms are opting for joint ventures in China. Efforts are visible across the board as companies put China as one of the focus areas for future growth," added the report by Bakhru.
In an announcement on Monday Strides Pharma Science Limited (Strides) said that its step down subsidiary Strides Pharma Global Pte, Singapore (SPG) has entered into a joint venture (JV) with Sun Moral International (HK) Limited, a wholly-owned subsidiary of Sihuan Pharmaceutical Holdings Group Ltd (Sihuan), one of China’s leading pharmaceutical companies.
According to the statement, the JV will fast track Strides’ entry into China. “The recent regulatory developments in China has enabled fast track approvals of differentiated high-quality generics approved in key regulated markets. Strides’ specialized basket of 140+ products qualifies for the program, and this JV will be able to leverage it in China," said the company.
The spending on medicines in China is expected to reach $140 billion to $170 billion by 2023, reckons research firm IQVIA.