It may sound like a contradiction in terms to know that there is an increasing interest shown by overseas firms to outsource API manufacturing to India, even at a time when the country’s import of this pharmaceutical raw material is peaking to an all time high in order to meet its ever-increasing demand.

Reports showed that India’s API industry registered a compound annual growth rate (CAGR) of 17% over the last three years. Notwithstanding this, the rate of its imports during the same period soared at least by one percent more than the speeding growth of the sector—notching the 18% mark.

The rising import of raw materials, especially, intermediates is attributed to falling indigenous production and heightened demand. Industry associations said several local API facilities stopped production after facing intense competition on the pricing front from Chinese manufacturers. 

At present, India shares around 10% of world’s $110 billion API market. With a large number of cGMP facilities around, API manufactures from India also claim a major chunk of Drug Master Files (DMFs) and European Directorate for the Quality of Medicines and Healthcare (EDQM) CEP applications.

Compelling Reasons
Cost-effective technology and the manufacturers’ prowess to make even tough-to-produce APIs have attracted many transnational players to Indian shores. In recent years, the trend has become more forceful as generic majors began holding Indian operation integral. Rather, leading generic players seem to regard an Indian angle indispensable to their business strategy.

Among the latest, Eisai came up with the plan to import major APIs meant for generics to Japan after manufacturing them at its Elmed Eisai facilities in India. The company intends to put the plan in operation within the next couple of years.

In the run-up, the Japanese firm merged  its Eisai Pharmaceuticals India R&D unit with its Eisai Pharmatechnology and Manufacturing unit in India in April. Eisai hopes to cut costs of drugs in its generics portfolio, which includes cancer and allergy formulations, by sourcing made-in-India APIs. Eisai is considering supplying quality, low-cost APIs manufactured at its Indian facilities to other generic producers, as well, according to reports.

Albany Molecular Research Inc. (AMRI) was holding talks with Indian companies to acquire an API manufacturing facility, reports said quoting William Marth, president and chief executive officer of the U.S. firm. Stressing AMRI’s focus on APIs, the chief executive said the company was looking for an API site with FDA approval for products and DMFs filed from India. AMRI already has a large factory manufacturing APIs in Aurangabad, in the state of Maharashtra in west India. The site, however, was yet to secure approvals from the U.S. FDA, Mr. Marth said explaining the reason for another acquisition to the investors in March.

As the API environs turn hectic in response to the widening popularity of generics worldwide, several desi companies have also embarked on an expansion spree.

Scaling Up
Biocon Ltd, India’s leading biotherapeutics firm, informed the Bombay Stock Exchange in March that its research services arm Syngene International was in the process of acquiring land in Mangalore, south India, for setting up “commercial scale facilities to manufacture novel active pharmaceuticals ingredients, advance ingredients and agro chemicals for Syngene’s client.”
Divis Laboratories is another case in point. The API maker from south India has ear-marked about $80 million for capacity expansion. The CMO is planning to set up its third manufacturing unit in Andhra Pradesh, a location well-known for bulk drug manufacturing in India. So far, Divis has submitted over two dozens DMFs to the FDA and made several CoS submissions to EDQM across various product lines.

Among others looking to augment capacity is the New Delhi-based Mankind Pharma. A fast growing company, Mankind would be building a new API center in the northern Indian state of Rajasthan by spending around $16 million. The facility is expected to go on stream by the end of this year said the company.

Various state and central authorities are also considering certain strategies to attract investment in the API sector and encourage domestic production as part of the program to make India self-reliant in APIs in the coming years. Union ministry of chemicals and fertilizers announced plans for establishing pharma clusters to boost API production enhancing competitiveness and quality.

In February, the chemical ministry launched the “2015 – Year of Active Pharmaceutical Ingredients” campaign assuring reforms in the sector. The industry, meanwhile, is pinning its hope on the comprehensive national API policy, which is expected to be announced soon.