Pwc.in

India Pharma Inc.
through alliances and 04 Executive summary
06 Growing through alliances and partnerships
14 Bringing cost efficiencies
24 Newer growth trends

Foreword
The social, demographic and economic context in which the global pharmaceutical
industry operates is rapidly changing. Globally, pharma companies are facing pressure from governments and taxpayers alike for reducing prices of drugs and initiating outcome-based pricing. Simultaneously, there is a vast decline in R&D productivity, diminished pipeline for new drugs, increased drug discovery costs as well as increased regulatory measures that companies need to contend with. The Indian pharma industry is showing signs of robust growth. The domestic pharma market is expected to grow at a CAGR of 15% to 20% to reach a value anywhere between US$ 50 billion and US$74 billion by 2020.1 Foreign multinational companies along with Indian pharma companies are partnering together to tap opportunities in the fast growing emerging economies(BRIC nations) and the larger established markets in the West and Far East (Japan). Acquisitions, alliances and partnerships are some of the tools used to penetrate and capture a larger share of the potential opportunity in these markets. We are also seeing companies collaborating outside the realm of manufacturing and R&D with players in health insurance, medical technology, Information Technology and mobile technology to deliver superior sustainable healthcare services. These developments bode well for the pharma industry and society as a whole who stand to benefit from such alliances and partnerships through reduced costs and streamlined supply chains. Some Indian pharma companies are looking to increase the value of services they provide by moving early on in along the value chain into biotechnology, drug discovery & development, which have primarily been the domain of large innovator companies. In this report, we look at the different types of alliances and partnerships that have taken place in the Indian market, the synergies and benefits to the parties involved as well as the key success factors which need to be kept in mind to achieve productive and cohesive long term collaboration. Chairman - CII Pharma Summit 2011 and Vice Chairman & Managing Director - Hikal Ltd.
Executive Director - India Pharmaceuticals and Life Sciences Leader - PwC

The social, demographic and economic context in which the global pharmaceutical industry operates is changing. Developed economies with spiralling healthcare costs are looking to rein in healthcare expenditure. Payers are demanding a reimbursement model based on healthcare outcomes. The impending patent cliff and declining R&D productivity threaten the sustainability of the pharma industry's current business model. Emerging markets in general and India in particular offer a ray of hope for the global pharma industry. India's large domestic market, product development skills and scientific talent are being increasingly sought by pharma MNCs to tackle the challenges of growth and innovation. Indian pharma companies are also looking to move up the value chain and change the perception of India as a cheap manufacture base to that of a genuine intellectual contributor.
One of the main ways MNCs enter the Indian market is through acquisitions. However, given the scarcity of assets, valuations in the sector have increased over the last 12 to 18 months. Companies are now exploring other ways of collaboration through alliances and partnerships. Such collaboration began with product sourcing and has now blossomed into other areas such as drug discovery, clinical development and marketing and sales. Collaboration between big pharma companies and Indian drug 4
firms has proved beneficial not just In addition, they will have to to the two parties but to the Indian devise strategies for inclusive and patient society as a whole.
sustainable growth. A PwC survey of opinion leaders The pharmaceutical industry in in the Indian pharma industry India is poised for a period of robust revealed that quality as a key growth driven by alliances and determinant of the success of partnerships. Success in the market alliances and partnerships. Other will be dependent not only on the issues impacting success include pharma companies but also on management control, valuations, other stakeholders like healthcare corporate governance, cultural providers, health insurance differences and awareness of local companies, medical technology companies, government, patient The key point of note for these groups as well as society at large, companies looking to do deals acting in concert. How well they is to choose an alliance partner do will determine the future of the after conducting a thorough due diligence. While financial diligence is a standard and integral part of all deals and alliances, the pharma industry needs a more thorough operational due diligence prior to partner selection. No one size will fit all and companies will have to choose and implement the collaboration initiatives that best meet their strategic objectives. With increasing pressure on healthcare costs all over the world, pharma players will have to pay attention to cost reduction efforts. Efficient management of operations, supply chain and transfer pricing are thus issues of paramount importance. Pharma companies will also have to strengthen collaboration with key players outside the industry such as health insurance, medical technology and information and communication technologies. 5

Growing through
alliances and
Why partnerships
The global context
As population grows and ages, new
areas of medical need emerge. The diseases in the developing countries are growing increasingly similar to those of the developed world.
Demand for new anti-infectives is mounting, especially for diseases like multi-drug resistant tuberculosis. Global warming can bring diseases such as malaria, cholera, diphtheria and dengue fever to more developed regions. These changes will generate opportunities for the global pharma industry over the next decade. Despite robust demand for its products, the industry is facing unprecedented challenges. The impending patent cliff which could see big companies lose over US$ 118 billion worth of patented drug sales by 20152 is a cause of great concern. Compounding this is the increased cost for developing new drugs and requirements of regulators for enhanced safety and efficacy monitoring. The governments of developed economies with huge fiscal deficits are also under pressure to reduce spiralling healthcare costs. At the same time, healthcare payers and providers everywhere have recognised that current 6
According to PwC's pharma 2020 Trends shaping the
report, Challenging business
Lilly is currently transforming itself global industry
models, global pharma companies
from a traditional fully integrated pharmaceutical company into a will have to fundamentally change • Emphasis will be on fully integrated pharmaceutical their operating model to capitalise network, so that it can draw on a on future growth opportunities.
range of resources beyond its own • Compliance monitoring Most large companies have walls. Lilly hopes teaming up with will become a win-win traditionally done everything other organisations to create virtual for patients, payers and R&D programmes will enable it to from R&D to commercialisation get better access innovation, reduce themselves. By 2020, however • Focus will shift from costs, manage risks more effectively treatment to prevention.
and enhance productivity. For example, the Chorus Project is • New technologies will drive Bristol Myers Squibb (BMS ) uses a virtual organisation to take a slew of alliances, partnerships molecules quickly to proof of • The current linear phase R&D and acquisitions to complement concept. Lilly also uses external process will give way to in- its internal capabilities in drug networks comprising third parties life testing and live licensing.
discovery and development. such as Piramal Life Sciences, • There will be greater Hutchison MediPharma, Suven BMS calls its string of pearls international regulatory Life Sciences in the development of strategy in which each transaction will be aligned to the company's focus on specific • The blockbuster sales model disease areas.
will disappear.
40% of BMS patents and 50% • The supply chain functions Several pharmaceutical firms like of revenue come from such will generate revenue. Lilly and BMS have already begun • More sophisticated direct- to use more collaborative models. to-consumer distribution The pressure to change to new channels will diminish the business models, triggered by role of wholesalers internal and external factors has led this model may no longer work to increasing mergers, acquisition, for many organisations. If they alliances and partnerships in the are to prosper, they will need to healthcare expenditure levels are improve their R&D productivity, also unsustainable unless they reduce costs, tap the potential deliver more demonstrable care of emerging economies and and cost benefit over the long term. switch from selling medicines to Payers are demanding evidence of managing outcomes. Alliances and outcomes from pharma companies partnerships with firms within and before including the medicines in outside the pharma industry is a pharma benefit plans. key requirement of the pharma operating model of the future.
7
The Indian context Indian generic pharma companies The Indian pharma industry is have strong product development today, the third largest market skills and have set up world-class announces new norms
globally in terms of volume and active pharma ingredients (API) for FDI in pharma
14th largest by value. According and formulation manufacturing to PwC's report Capitalising
facilities to cater to the price- As of 2011, FDI through the on India's growth potential,
sensitive India market and global automatic route was allowed in the domestic pharma market is generics market. Many of these the pharmaceutical sector in India. expected to grow at CAGR of 15 dominate India's domestic market Currently, 100% FDI is permitted via the automatic route. to 20% annually to be a USD 49 through a large sales team, strong billion to 74 billion market by relations with physicians and Given the trend of acquisitions of medical institutions. Indian pharma domestic pharma companies by companies are now seeking to global players, the government India is an attractive market for a move up the value chain to drug has expressed concerns about the variety of reasons: discovery and development by accessibility and affordability of medicines in the Indian market. • India's economy continues to leveraging the country's scientific show signs of robust growth. talent. Given the strengths of To ensure that such deals do not The increased spending on Indian and and global pharma result in monopolies and an increase healthcare needs is expected companies, it makes sense for them in drug prices, the government is now mulling over placing a cap on to drive revenue growth for to come together to develop India's FDI in the pharma sector.
pharma companies. domestic market, source products for global market and to discover & A high-level committee has been • The emergence of chronic develop new drugs and therapies. appointed by the government of diseases like cancer, diabetes, India to look into this.
Cardio Vascular System (CVS) MNCs and Indian companies Government has decided the and Central Nervous System are stepping up their play in the (CNS) disorders is likely to drive market through various kinds demand for newer therapies.
of partnerships to achieve the • 100 % FDI through the automatic route would be • With increasing pressures allowed for Greenfield projects on curbing healthcare costs • Capitalise on the opportunities • 100% FDI through the FIPB in the US, India's low-cost provided by the Indian market approval route for Brownfield manufacturing capabilities • Make the most of India's investments in the pharma coupled with attention to quality capabilities in drug discovery, sector for a period of six months (India has the highest number product development and • During these six months, of FDA-approved manufacturing sourcing to serve overseas necessary enabling regulations plants outside the US.) will be will be put in place by the sought by MNCs.
Competition Commission This chapter explores the different of India (CCI) for effective • India has a large pool of kind of partnerships in the Indian threshold limits on mergers and scientific manpower which pharma space, the challenges acquisitions to ensure that there can be used in drug discovery, faced in creating and sustaining is a balance between public development and clinical trials. such partnerships and the benefits health concerns and attracting • India's diverse genetic pool of of these partnerships to various FDI in the pharma sector treatment-naive population is • After six months the oversight attractive for clinical trials.
will be done by the CCI entirely in accordance with the competition laws of the country 8
(FIPB nod will not be required) Serving the Indian market Types of Alliances
Given the growth slowdown in developed countries, pharma companies are keen to address the opportunities offered by the growing Indian market.
a. Mergers and acquisitions (M&A)The Abbott acquisition of Piramal Healthcare's domestic formulations business in 2010 is a good example. Other examples include Reckitt Benckiser's acquisition of Paras Pharmaceuticals and the acquisition of the nutrition business of Wockhardt by Danone in 2011. Addressing the opportunities in the Indian market was also one of the key drivers behind the acquisition of Ranbaxy by Daiichi Sankyo (though Ranbaxy did have a global presence).
Recent M&A for addressing the Indian player Nature of deal Acquisition for US$ However, given the scarcity of assets, valuations in the sector have gone Reckitt Benckiser Acquisition for US$ up over the last 12 to 18 months. Companies are now exploring other Piramal Healthcare methods of partnership.
b. Alliances and partnerships (A&P) business for US$ 3.7 Germany's Bayer Healthcare announced a 50-50 joint venture with Zydus Cadila to create a new company, Bayer Zydus Pharma focussed on Acquisition for US$ the India market. Bayer Healthcare's pharma division will contribute its Source: Industry reports, PwC analysis sales and marketing business in India (*) While these deals were predominantly aimed at gaining access to the domestic market, they also provided a to the new company while Zydus platform for the acquirers to target global markets. will contribute its women's health products, diagnostic imaging and other products.7 9
Lupin has signed a deal with drivers have created the need for the title of a genuine intellectual Eli Lilly for anti-diabetic drugs. collaboration between MNCs and Under the deal, Lupin will market Indian pharma companies to target Glenmark Pharmaceuticals became and distribute the entire range global opportunities. the first Indian company to out- of Huminsulin brand of Eli Lilly license a biological product. The in India and Nepal. Lupin will a. Mergers and acquisitions company licensed its biotech drug, deploy 300 sales representatives Pharma MNCs have acquired which has the potential to generate from its formulations business to Indian companies to maximise their revenue worth US$ 613 million,14 promote the product and will also capabilities in serving the global to French company Sanofi Aventis. provide education to physicians and market. The acquisition of Matrix Glenmark sold the marketing rights Laboratories by Mylan in 2006 for North America, Europe, Japan, Novartis has signed a deal with USV is one of the earliest examples of Argentina, Chile and Uruguay, while Ltd to market Galvus(Vildagleptin) this trend.11 More recent examples it retained co-marketing rights for in the Indian metros. USV will include the acquisition of the Russia, Brazil, Australia and New manage marketing activities in injectables business of Orchid Zealand. In India, the company Tier II and Tier III cities in the Chemicals by Hospira12 and retained its exclusive rights. next phase.9 Also entering the Sanofi's acquisition of Shantha Another example is of Jubilant. The fray is Belgium's Omega Pharma, company entered into a three-year which formed a JV with Modi- drug deal with US-based Endo Mundipharma Group to create Mergers and acquisitions to Modi Omega Pharma India. Eight target global opportunities brands from Omega's product portfolio will be manufactured in Indian player Nature of deal India by the Modi-Mundipharma Sanofi-Aventis Acquisition for US$ 781 Group. The marketing strategies and sales team will be provided by Acquisition for US$ 400 Modi Omega Pharma India. 10 Serving the global market Acquisition for US$ 736 Pharma MNCs are facing challenges Source: Industry reports & PwC analysis of impending patents and rising R&D expenditure. They are looking b. Alliances and partnerships Pharmaceuticals for developing for opportunities to increase the oncology drugs.15 Under the deal, drug pipeline and reduce costs. Previously, A&P were formed to Jubilant will receive research In addition, given the pressures source out products. Today, it has funding and milestone payment of reducing healthcare costs and expanded in R&D as well.
on successful completion of the increasing use of generics, predetermined targets. Endo will pharma MNCs are also looking Research and development own the developed drugs and will to partner with companies with Pharma MNCs are looking for pay royalties to Jubilant on the superior product development opportunities to co-develop drugs, successful commercialisation of the capabilities. At the same time, buy or in-license molecules from Indian companies are also looking Indian companies. Such deals to move up in the value chain by have helped India shed the tag of a discovering new drugs. These cheap manufacturing base and gain 10 PwC - CII
Other deals for R&D Similarly, Pfizer signed licensing Manufacturing deals are deals with Aurobindo Pharma17, Indian company Pharma MNCs common in India because Claris Life Sciences18, Biocon19 of the country's legacy in and Strides Arcolab. The deal will strengthen Pfizer's position in research chemistry, efficient production and cost advantage emerging markets and expand its medicine portfolio in established manufacturing. These skills coupled with the fact products business units (EPBU). that India has the highest The Indian companies will benefit Serum Institute MSD number of USFDA-approved from a steady revenue flow and the possibility of receiving significant plants outside the US, make manufacturing alliances an upfront payment and royalties. Source : Industry reports & PwC analysis attractive proposition. There Sun Pharmaceutical Industries and are several examples of such Merck and Co Inc entered into a alliances in India.
JV agreement to develop, produce Importance of Japan
GlaxoSmithKline (GSK) and market innovative generics in The Japanese pharmaceutical expanded its market share by emerging markets.20 market stands at US$ 96.5 striking a deal with Dr Reddy's Japan is an upcoming market for billion.21 This market is Laboratories16 and gaining collaborations given the opening- largely innovator-based with up of generics market by the the generics component access to a portfolio of more contributing about 25% of sales than 100 drugs. For Dr Reddy's, Japanese government. Please see by volume. In contrast, the the deal will help increase its the side bar for details. generics component of the US product reach in regions where, and UK stand at 88% and 71%22 till now, it only had negligible market presence. The Japanese market is fast shifting its focus towards A&P for product sourcing
generics, driven by the government's fiscal pressures Indian players Nature of deal and an ageing population.
Supply of generic medicines for developed and emerging markets The government of Japan has been aggressively promoting Strides Arcolab Ltd Supply of 67 generic drugs to Pfizer with focus on oncology generics by providing incentives to the industry and physicians. Supply of 18 products for various markets Hence, we see an increasing Range of ophthalmic products for 30 number of Japanese pharma companies seeking partnerships with Indian generics Development and manufacture of generic Pharmaceuticals drugs with market size of US$ 670 million Cadila Healthcare JV structure for the manufacture of patent Contract manufacturing of formulations PharmaceuticalsStrides Supply of drugs for semi-regulated markets ArcolabLimitedSource : ICRA Limited. ‘CRAMS India: Overview & Outlook'. June 2011 11
Benefits of collaboration Benefits of collaboration
Pharma MNCs collaborating with Indian companies bring to the table new products, latest technology, higher investments, quality systems and the knowledge of regulatory processes. On their part, Indian companies provide local market knowledge, cost advantage and local scientific talent. Such alliances have the potential to bring significant benefits to both parties and add value to society as a whole. Such partnerships bring in new drugs and therapies to the market and increase patient's awareness about diseases and wider treatment choices available. Success driversPwC's survey of opinion leaders in the Indian pharma industry revealed that issues related to quality, management control, corporate governance, valuations, cultural issues and understanding local regulations were crucial for any form of collaboration.
12 PwC - CII
1. Importance of quality bound to look at India as a low- 2. Transaction-related drivers As a result of increasing alliances cost manufacturing destination In addition to quality related issues, and the growing importance of as well as a strategic partner attention needs to be focussed on Indian pharma globally, prominent for specific operations. The key the following determinants too. Indian pharma companies have consideration for such MNCs is to These need to be discussed and come under the scanner of the US choose a partner after conducting resolved to the satisfaction of both Food and Drug Administration a thorough investigation and with the parties involved in the A&P: (USFDA) for varying degree of due diligence. While financial • Management control diligence is a standard and an integral part of all deals and • Corporate governance In India, USFDA audits and pre- alliances, the pharma industry approval inspections typically focus needs a more in-depth operational • Expectations of valuation on the following: approach prior to selecting a • Cultural differences • Management roles, • Local regulations responsibilities and training of Aspects to focus on include the personnel operating in USFDA- M&A along with A&P have a approved facilities major role to play in changing • Historical review of internal and the dynamics of the industry and • Filed application integrity with external regulatory audit data taking it to the next level of growth.
specific attention to records, manufacturing systems and • Extent to which audit findings A&P are likely to be more popular, laboratory test results have been remediated as they are mutually beneficial to both stakeholders. It can • Monitoring of impurities in APIs • Mechanisms put in place help Indian companies scale the and drug products to ensure implementation of adequate corrective and innovation curve, while at the same • Stability studies and preventive actions time helping to increase the drug investigation of out-of- pipeline curve for global players. specification (OOS) incidents • Regulations in place to ensure India's low-cost manufacturing sustainability of quality system capabilities will also help pharma • Safety and integrity of the MNCs meet the increasing global • Overall review of quality systems demand of generics. While the impact of this regulatory To ensure successful partnerships, crisis on alliances formed cannot issues such as quality, valuations, be muted, the more critical issue is Companies often require domain management control, corporate its impact on future alliances and specialists to understand the governance and cultural on the overall image of the Indian true nature of the above issues. A differences need to be identified, pharma industry. thorough operational diligence can help understand the appropriate discussed and resolved through Given the mounting internal and measures that can be implemented an in-depth financial, tax and external pressures on pricing and to mitigate any risks associated operational diligence. healthcare costs, MNCs are still No one size will fit all and companies will hav eto choose and implement the path that best meet their strategic objectives.
13
With increasing pressure on the Elements of cost reduction launching several improvement global healthcare industry to cut programmes to control these costs. costs, pharma companies will Like any other industry, While the sourcing teams focus on have to look at different avenues pharmaceutical cost has several getting materials at a competitive to achieve it. Efficient operations, direct and indirect costs: landed cost, many leading API management of the supply chain and transfer pricing are key areas where cost efficiencies can be Operations
improvement
Pharmaceutical companies
can achieve year-on-year cost reduction in their overall spending by rigorously identifying and eliminating wastes in their manufacturing and business processes. Today, for many companies, manufacturing costs, as a fraction of overall costs, is considerably higher. Therefore, it is quite logical to start with a cost reduction exercise in manufacturing.
Currently, pharma companies are players are undertaking initiatives taking a hard look at various cost to improve batch yields and the elements and are coming up with consumption of critical input various innovative ways to reduce Project teams use the DMAIC Material cost: Around, 60 to methodology to understand the 70%23 of pharma manufacturing reasons behind yield loss and cost is influenced by raw materials. implement an action plan towards Therefore, controlling material improvement. Today, companies costs is one of the most important set year-on-year targets for areas that companies need to focus improvements in yield, which in on. Leading pharma companies are turn get converted to the budgeted 14 PwC - CII
yield numbers in the next financial Most companies struggle with the Energy: The pharma industry year. This acts as a financial control question as to what is the right uses a variety of utility equipment, for ensuring sustenance. manning number. The industry including boilers, air compressors, defines manning for each function API companies use various levers chillers, brine units, air handling based on certain thumbrules and also fundamentally question units (AHU), vacuum pumps, (like ‘x' chemists per HPLC, ‘y' the type and quantity of solvents DG sets, etc. These machines use scientists per project, etc.), that required in the process. Companies electricity, coal and furnace oil as make it difficult to identify the right have in several instances been able sources of energy, all expensive number. Moreover, the industry to improve the recovery of solvents and subject to active cost reduction is also struggling with increased by identifying and addressing the requirement for casual labour. A source of loss. Some companies Savings in operating these units majority of the pharma companies have also adopted a better solvent primarily result from ensuring have started to think in terms of management process and have efficiency of these machines and defining manning norms. From a been able to eliminate a few preventing wastage. Companies shop-floor viewpoint, the more the solvents, either by adopting an typically look at generation, number of people on the shop-floor, alternate solvent or by an alternate consumption and distribution the greater are the chances of error manufacturing process.Similar and mix-ups.
efforts are initiated by formulations Benchmarking key performance players in terms of improving These questions exist for all levels parameters, such as efficiency, their rolled throughput yields. power consumption per unit Companies are looking at various generated, etc, of utility factors including breakages, machines can give insights into powder losses, etc to improve corrective actions required. Utility yields. They are also effectively requirements are very specific to embracing various concepts of the process and companies can do lean to eliminate wastes in their Leading companies are well to link utility consumption controlling cost by defining with production planning to Manpower cost: Like others, manning norms. In PwC's own optimise consumption and reduce the pharma industry also faces experience, a correct manning wastage. PwC's experience exercise involves the following: challenges such as an average suggests that energy costs can 15%24 growth in salaries and an • Activity driver based work be dramatically reduced by approximate 20%25 attrition rate synchronising planning and at operative and executive level. • Shared services and resource averaging out peak loads through This puts pressure on manpower proper scheduling.
costs, as the costs of recruitment • Span of control studies Most organisations today carry out • Process improvement for work rigorous energy audits and take Therefore, controlling manpower several steps including replacement cost is becoming an important of old energy-guzzling equipment agenda item for the top with new state-of-the-art energy- management. On an average, the efficient equipment. Companies pharma industry spends around 7 are adapting themselves to green to 10% on manpower costs. This is technologies to save energy costs. slightly higher as compared to the overall average. 15
This also contributes towards be cost-effective, while at the same Levers for cost reduction time adhering to delivery dates, Companies do implement Packing costs: Packing costs are enhancing equipment utilisation manufacturing cost reduction typically higher for formulations and identifying optimum manning programmes using levers such as compared to API. Packing costs as process improvements, shared can be reduced by at least 10%26 Cost of manufacturing decisions: services, standardisation, first by reducing packing rejections and Cost of manufacturing decisions principle costing, efficiency by value-engineering the packing work primarily at the strategic improvement, etc.
design. Companies use several and tactical domain, where the factors for reducing packaging cost. Each of these levers needs to be companies take decisions on the These include strip dimensions, addressed along two dimensions, number of colours used, packing material thickness, optimal fitment of tablets within strips, number • Where should the plant be located? of ply, shipper sizes, etc. PwC's • What are the RM and FG transportation costs? experience suggests that while • What is the technology and infrastructure such as reactors, layout, material handling systems, etc. to be utilised? primary packaging is a function of stability, companies do well by • What is the planned capacity utilisation of the plant? addressing elements of dimension • What should be the batch sizes to operate? and wastages in primary packing. • How much should be the inventory in process?• What is the production planning philosophy to be used? However, packing designs generally have a long gestation period as they • Which are the products or intermediates to make or buy? are subject to customer approval. Hence, the benefits of these Planned versus actual capacity strategic and operational. Decisions normally accrue over multiple years.
utilisation will have an impact for strategic cost reduction will Analysing costs: Quality costs (QC) on product costing in terms of have a long- to medium-term in most organisations were not apportioning fixed costs over the impact. However, the complexity tracked and it is only recently that quantity produced. Planning during will be high. In operational cost organisations have started looking the project phase ensures minimum reduction, the impact will be for time and cost overruns. This the immediate or medium-term but Today, organisations have gone reduces the cost of setting up the relatively less complex.
beyond the scope of production project. The cost of these decisions Many progressive companies use and have tried to implement cost is high, and so is the impact they lean management as a concept to containment in quality control have in the medium to long term.
identify and eliminate wastes in functions by reducing cost of Companies need to evaluate the process, thereby resulting in analysis. Companies use factors their make-buy decisions additional throughput and better such as material substitution, more rigorously on the back of service levels at a lower cost. optimising quantities drawn for contribution earned. Appropriate Companies have realised 10 to sample analysis, reduced testing, technology selection, plant location 15%27 reduction in overall costs standardising makes of chemicals and layout and production planning and improvement in bottom-line across sites, clubbing samples to influence cost of production.
savings by implementing structured cost reduction programmes. 16 PwC - CII

The Indian scenario distribution reach in domestic centric metrics, they are also Riding on the back of 12 to 13% markets. With these challenges, the focussing on delivering customer year-on-year growth, the Indian Indian pharma industry is seriously value at lower costs.
pharma industry is going through a evaluating the ways and means to The survey reveals that companies very interesting phase. It is rapidly reduce operation costs.
are targeting improved service achieving a distinctive position The recently concluded lean levels but at competitive costs.
in the global pharma space with implementation in the pharma It is clear that the Indian scenario generics, Contract Research and industry survey conducted by the is a peculiar one and delivering Manufacturing Services (CRAMS) Organisation of Pharmaceutical service and cost competitiveness and clinical trials. Also as foreign Producers of India (OPPI) and PwC need to go hand-in-hand. To MNCs fight for a share of the revealed some interesting evolving achieve sustainable improvement market, the fragmented domestic trends. Almost all participants programmes, companies need to market is poised for consolidation. cited improving service levels to execute holistic programmes. The In this scenario of increased the customer as one of their prime journey is difficult, but the rewards competition, companies will try to business needs, while reducing cost are fast and considerable.
differentiate on the basis of speed- and improving profitability came a to-market, cost competitiveness, close second. So, while companies quality, customer orientation and today are focussing on customer- 17
Supply chain
The nature of distribution such Analysis of the reasons behind as fragmented channel, channel the failure of the supply chain power of stockists, limited in meeting challenges of market As Indian companies look forward visibility and push-based supply growth points to a variety of to market growth on one side and also acts as a tipping point for practices within the Indian the need to reduce costs on the overhauling the supply chain.
pharma industry. These need to other, an agile, customised and Key concern areas be addressed if efforts to create an cost-efficient supply chain is of agile, responsive, customised and paramount importance. Companies Some of the key concern areas cost-effective supply chain are to in many industries have taken with the supply chain include pruning shears to their supply • Pharma supply chains operate chains to support profitable growth. • High logistics cost ranging Until recently, pharmaceutical from 4.72 to 6.22% of sales on a pure push: Salvage net is companies did not embrace this as against 0.5% in the US and the cost incurred by a pharma trend. However, the industry can no company due to expiry and longer afford a laissez faire position breakages of products in the • Ineffective control over on the operation of their supply market or at other storage channel inventory: 46 days locations. This is created due for a pharmaceutical company to the multiplying effect of as against 26 days for an Why focus on the supply inefficiencies in the supply chain. Some of the key reasons behind • Low ARPUs per stockist and this include the following: The contributors to growth • Push-based supply to depots, of the Indian pharma market stockists and retailers such as increasing disposable • Porous supply chain incomes, greater health insurance facilitating easy entry of • Misalignment between sales penetration and a gradual shift and supply chain organisation in disease profile pose several • Sub-optimal penetration of on timing (start and end) of questions on the existing supply chain configuration: • Inadequate access to • Budget-driven forecast leading • Is the existing supply chain secondary and tertiary to forecast bias, mismatched capable of supporting market sales information critical to planning horizon on account of creation (e.g. a supply chain that planning processes sales visibility and supply lead supports reach and coverage in the growing peri-urban markets, • Inadequate infrastructure to cold chain for biotech, etc)? support compliance to CGMP • Sub-optimisation at each stage in the distribution chain of supply chain impacting • Is there a need to tailor the inventory velocity supply chain across markets (Tier I, Tier II and rural) and • Inventory imbalance across stock disease profiles to support varied approaches in terms of products, • Lack of visibility on products pricing and sales coverage? 18 PwC - CII
• Inefficient warehousing • Homogenous supply chain processes related to storage, catering to varying customer Goods and services tax
handling and retrieval needs: A homogenous • Batch size economics in supply chain operating on a standardised lead time As seen in our previous report, transportation, manufacturing India Pharma Inc: Capitalising on restrains pharma companies India's growth potential, GST is a PwC believes that effective from effectively capitalising comprehensive value-added tax synchronisation between the on all business opportunities. (VAT) on the supply of goods or supply chain function and other The lead time required by the services. The GST will bring with it customer varies across product opportunities to realise efficiencies organisational functions like sales and markets. The figure below and related challenges. and marketing, finance and IT can lead to a reduction in salvage net.
illustrates an example of how The pharma industry (including lead time expectations vary FMCG)is significantly affected by across products and markets.
GST, since it disadvantages the classic manner of concentrated Pharma companies will have manufacturing and disaggregated to tailor their supply chain distribution across a national level strategy after understanding the requirements along the cost and At present, the biggest challenge for a pharma distribution company is the movement of goods across India, Lead time in number of days
to cater to the need of each state and thus save the CST payable otherwise on such inter- state movement. Also, several entities set up warehouses in attractive locations like Daman as the CST rate at such locations was previously lower than the rates prevalent in other states. This logistical challenge and the added cost of compliance will become a focal point of attention, post GST.
The distribution team needs to re- ascertain the warehousing locations from a commercial and logistic point of view rather than from a pure tax-saving perspective. Reduction in such warehouses will reduce the cost of distribution.
It is important for the pharma sector to understand the implications and challenges arising out of GST and to ensure that the business model and supply chains are re-engineered to maximise benefits.
19
• Sourcing from a perspective All these factors lead to significant Mitigating fraud in the Indian of aligning demand to supply value erosion. To participate in pharma supply chain often overlooked: Production future growth, the pharma supply The worldwide scale of plans at pharma companies are chain will need to focus on the pharmaceutical operations is governed by the availability of following dimensions: creating supply chains that are raw materials rather than being • Channel management extensive and globally dispersed. aligned to customer demand. • Supply chain planning This introduces heavy reliance The lack of a diversified supplier on third parties and increases the network constrains the pharma • Supplier relationship risk of fraud. In particular, India's company from aligning demand supply chain uses a fragmented and supply, thereby creating distribution network depicted in inefficiencies in the supply chain. • Security and compliance Source: Overview of the Indian Pharmaceutical Market (2010) published by Datamonitor 20 PwC - CII
A typical organisation loses 5% of the general tenets of good supply TP environment in India its annual revenue to fraud. When chain management. They need to applied to the estimated 2010 size establish a culture that supports Introduced in 2001, Indian TP of the Indian pharma market, this control efforts and whistleblowing regulations are broadly modelled figure translates to a potential total with clear, ethical guidelines. They in line with global practices fraud loss of more than US$ 600 need to build loyalty within the including TP guidelines issued by million. Managing risks and fraud organisation, give employees the the Organisation for Economic is therefore a key area of concern confidence to do the right things Cooperation and Development for Indian and global pharma and identify clear conditions for (OECD).31 Indian revenue those who commit fraud.
authorities have so far completed six rounds of audit and have made Fortune 500 pharma companies an astronomical adjustment of have established whistleblowing Managing transfer
about Rs 54,999 crore. reporting mechanisms which pricing (TP)
allow employees to raise concerns and seek guidance. They have Introduction of the concept Prominent TP
also initiated the concept of anti- of "Transfer Pricing (‘TP')" retaliation protection to ensure is a measure adopted by the challenges faced
that all employees can safely governments to ensure the by Indian pharma
report potential violations. protection of the tax base of their respective countries. TP refers to These companies are developing the basis adopted by a company • Comparison of import price robust compliance programmes while transacting with its group of original API with price of based on their ‘dipstick companies such that the same assessment' of business conducted reflect pricing and conditions • Comparison of the export by subsidiaries or affiliates in similar to those adopted in price of the product(s) with its Brazil, Russia, India, China (BRIC) transactions undertaken between price in the domestic market and east European countries. Such • Benchmarking clinical trial programmes are being rolled out support services provider with worldwide to ensure consistency in In current times, where pharma clinical research organizations compliance globally with specific companies are espousing austerity (CROs) and thereby expecting focus on entities that were rated measures on several counts unsatisfactory in the dipstick to remain cost-competitive, • Expectation of higher mark- it is important for companies ups for contract R&D services to understand TP issues and To identify processes vulnerable to prepare an upfront defence so as fraud, companies are conducting to mitigate future litigation. TP • Seeking justification or an enterprise-wide assessment of commercial rationale for principles will also aid phama existing fraud risks on a pro-active the payment of royalty or companies to effectively plan their management fee by the Indian basis. This assessment considers risks involved and the potential schemes to circumvent existing This chapter digs deeper into the • Alleging creation of marketing intangibles due to the control activities.
overview of the current Indian TP environment, key TP challenges for promotional spends incurred So, to avoid fraud and risk, the pharma industry and planning by the Indian taxpayer companies need to adopt many of opportunities using TP principles.
21

Key TP issues in the pharma industryOwning significant intangible property deployed across geographies) coupled with the multitude of cross-border transactions, Pharmaceutical industry has been exposed to some of the most significant TP litigation over the years. From an Indian TP perspective, following are the prominent challenges faced by the Pharma companies: Please see the side bar for details.
Possible solutions • API prices comparison Globally, the comparison of original (branded) API with generic API is one of the most contentious issues faced by pharma companies. The same has taken centre stage in the Indian TP context with the Income-Tax Appellate Tribunal (ITAT)32 ruling on the issue in case of UCB33 and Serdia.34 While in the case of UCB, ITAT ruled that original API cannot be compared with generic, in the case of Serdia, ITAT upheld the validity of such a comparison.
These rulings raise the question if such a comparison is valid and if not, how the arm's length nature of the imported API (branded) should be established. Instead of focusing on the technical difference (such as quality, efficacy, potency, etc.) in the two APIs, one can establish the appropriateness of the margins earned by the Indian company with regard to its functional profile 22 PwC - CII
(i.e., functions performed, assets The objectives and practical employed and risks assumed). implementation of a business restructuring are effectively • High mark-up for support and achieved by the application of TP principles i.e., an entity's A possible defence for the high remuneration is linked to the mark-ups anticipated by the function it performs, risks it tax authorities for the support assumes and the assets it employs.
services (such as clinical trial While business restructuring support, procurement support offer business advantages, such etc.) provided by Indian taxpayer exercise also pose significant lies in demonstrating the level of risks, including the potential the activities performed by the for significant transfer pricing Indian taxpayer and its relative adjustment. Therefore, it is contribution in the value chain.
imperative that any restructuring To develop a transfer pricing is undertaken after duly defence, the actual business considering the established TP conduct should be in sync with the underlying characterisation and should be supported by robust Going by the trend, the challenge • Business restructuring of audit and the level of dispute Business restructuring, involving (from tax authorities) faced cross border redeployment by this industry will increase. of functions, assets and risks Therefore, it is in the best interest is often undertaken by the of pharma companies to adopt a pharma companies to streamline more proactive approach to set their business operations. and monitor their TP policies. Commercial reasons such as They should also maintain robust increased competition, cost documentation to support the optimization, elimination of basis for setting these policies. duplicative functions, need for Apart from being viewed as centralisation, proximity to compliance requirement, TP market etc. compel the pharma should be used to optimise companies to adopt restructuring. business operations too. Given Business restructuring often the nexus of TP to both tax and results in achieving significant business, effective coordination tax optimisation by realigning between an organisation's tax and the distribution of profits across business functions is required to make the best use of TP principles. TP is not about documenting the end result, but about documenting 23
Newer growth
trends
Pharma companies will need to issued to each family. One of the RSBY is attracting a slew of create meaningful partnerships cards makes it possible for a worker entrepreneurs to set up hospitals with organisations in other based in a particular state to move primarily targeted at the rural industries like health insurance, to another place and continue to be population. Looking at the trend medical technology and IT to drive part of the scheme. The premium of private hospitals' participation, growth. In addition, they will have amount of the scheme is shared by the government wants to introduce to devise strategies to make growth the union and state governments in public-private partnerships, inclusive and sustainable.
75:25 ratio, with a nominal amount wherein the role of the government of Rs 30 being paid annually by will change from that of a provider Health insurance
the beneficiary. Till date, RSBY to that of a payer. has been successfully extended Less than 15% of the Indian In a recent PwC publication to 23 million poor families in 330 population is covered under any Healthcare Unwired, we have listed districts in 27 Indian states.36 form of health insurance, including recommendations and specific Beneficiaries are free to avail of government-supported schemes. solutions to improve the reach of healthcare from any empanelled Only around 2.2% of the population health insurance. Some of these government or private hospital of is covered under private health measures include creation of a their choice.
insurance. The awareness of health new business model, reducing insurance schemes in rural areas is Two private trusts, the IFMR Trust premiums and collection costs, disturbingly low. Health insurance that provides rural finance to 1.7 switching from patient cure to is, however, expected to grow at lakh households and the Manipal preventive care and simplifying a CAGR of 15% by 2015.35 Given Education and Medical Group policies and regulatory reforms in the diversity of India's population covering 80,000 families, were the healthcare and health insurance and its limited purchasing power, recently given the approval to space. Initiating these measures innovative insurance products at participate in the RSBY scheme. The will result in increased penetration multiple price points are needed to two trusts together will add nearly and improved coverage of health tap the market.
2.5 lakh families, a development insurance in India.
that promises to alter the delivery of The union government rolled healthcare to the poor.
out an insurance plan for the poor, Rashtriya Swasthya Bima The government is examining Medical technology plays a Yojana (RSBY) which provides the possibility of turning its pivotal role in improving access medical cover for families below two important social sector to affordable healthcare services. the poverty line (BPL). It includes programmes--old age pension It also helps early diagnosis of hospitalisation, out-patient scheme for the BPL and the Aam diseases and creating personalised treatment and surgical treatment Aadmi Bima Yojana (AABY) therapies for the Indian population.
in select hospitals. The medical targeting the rural landless--into insurance provides an annual universal schemes covering the The Indian medical technology cover of Rs 30,000 per household unorganised sector in phases. The industry, which comprises medical and covers five members of a two schemes will be linked with the equipment, medical implants, family. Plus, transport allowance smartcards given under the RSBY medical disposables and furniture, of up to Rs 1,000 a year is given scheme. If implemented well, is expected to grow from US$ 2.75 to BPL families. The scheme is they can help beef up the grossly billion in 2008 to US$ 14 billion37 administered through biometric inadequate social security cover in 2020, at a compounded annual smartcards with two smartcards available to the poor in the country. growth rate of approximately 15%. 24 PwC - CII
Post independence, India adopted • Usher further reform in the an import substitution policy for insurance sector to stimulate the development of indigenous health insurance. industries under the umbrella of a • Set up a venture investment fund • Transasia Biomedicals has strong public sector. The medical developed in-vitro diagnostic to address the lack of early stage technology sector, however, was not equipment through its R&D venture capital.
on the list of government priorities. Also, no pathbreaking effort was • Ensure a level playing field for • Sushrut Adler Group has made to build domestic capabilities all companies with a distinct developed an external fixator in R&D and manufacturing. The regulatory pathway for medical through its facility in Pune. seeds of import reliance were thus technology free of ambiguities.
• Johnson & Johnson has sown in the early years of free India. • Make research a rewarding developed a knee implant The reliance on imports continued in suitable for the Indian market the subsequent years in spite of high as well as a reusable stapler import duties and tariffs. Today, 80% • Reform the medical education for use in surgeries, both at system to include medical amenable price points for the of the medical technology market is technology education with Indian market.
through imports.
assistance from institutes • Roche Diagnostics has The last few years have seen like National Institute of developed a screening device an increase in the domestic Pharmaceutical Education and for cardio-vascular disease manufacture of medical equipment. Research (NIPER).
suitable for use in rural With impetus from the government, settings too.
India is finally being recognised as • Evolve medical technology clusters with common facilities • GE Healthcare has developed a manufacturing destination for for the benefit of small a low-cost ECG machine and a sophisticated medical technology. low-cost ultrasound machine International medical technology entrepreneurs who want to for the Indian market. companies are also using India set up companies focusing on medical technology.
• Philips Healthcare is using its as a manufacturing base by recent acquisitions in India to either setting up facilities of their • Assist existing manufacturers to develop and launch a low-cost own or by acquiring domestic upgrade their quality systems to cath lab for the Indian market.
match international standards.
There is also a strong need Medical technology is a of innovation in the medical nascent sector in India and the technology market given its opportunities for innovation-led ground realities. Innovation in growth are immense. Innovation medical technology, however, faces in medical technology requires a challenges that need to be addressed vibrant and participative ecosystem by the government. Some of the comprising patients, medical steps which the government can centres, universities, the industry, take include the following: health insurance companies and • Increase public spending in the government. All stakeholders healthcare from 1% of GDP to 3%. have to act in concert for the sustained growth of the industry and the benefit of patients. 25
Information
technology (IT)
Many pharma companies have
entered into strategic partnerships with Indian IT companies in areas of pharmacokinetic modelling, data management and validation, Clinical data and document management, pharmacovigilance and scientific writing Clinical data management and clinical submission support Clinical data management, clinical study set-up for electronic data capture, medical coding, adverse event Co-creation engagement model to design and implement research informatics system Co-innovation hub to accelerate the process of bringing ideas to fruition Source: Industry & PwC Analysis Mobile health
Mobile technologies are also
finding their way into areas like disease awareness, disease management, patient compliance to drug schedules, etc.
Mobility solution provider Diabetes disease management Mobile product authentication Source: Industry & PwC Analysis 26 PwC - CII
Sustainability
In recent years, addressing various
sustainability issues has become increasingly important for the pharma industry. Sustainability is about long-term value creation not only for businesses but also for all stakeholders such as employees, customers, the industry sector, investors and the communities where the company operates. Key focus area
Indian companies have started on environment
sustainability programmes on the lines of their global counterparts. • Adopting the use of They are at various stages in their sustainable packaging journey on sustainability reporting. An analysis of the sustainability • Reducing the use of reports of these firms identifies potentially hazardous input similar trends as those initiated by global majors. They develop CSR • Improving production programmes which focus largely processes to reduce on improving environmental environmental impacts performance of their operations • Reducing the emissions and providing better access to to air of Ozone Depleting Substances (ODSs) and Companies are also partnering Volatile Organic Compounds with suppliers to improve their Increasing energy efficiency in sustainability performance. Most the manufacturing process other companies have programmes • Reducing the use of coal focusing on social initiatives to and oil in manufacturing improve local infrastructure, economic and social conditions, • Implementing the organising various medical camps, requirements of the EU's providing free consultations and REACH legislation treatments and raising awareness about HIV-AIDS. Companies report extensively on their initiatives and performance, but do not focus on how to improve their communication and the reach of their sustainability programmes 27
The Indian pharma industry is on a major growth trajectory and is expected to reach US$ 74 billion by 2020. In order to realise the full potential of the market and tap growing global opportunities, companies operating here will have to collaborate in a mutually beneficial manner. As we move into the next decade, mergers and acquisitions, partnerships and licensing will drive future growth. MNCs will not be averse to acquisitions but high valuations will make M&As expensive in India. Alternatives such as alliances and partnerships will actually prove to be more flexible and value-enhancing in the long term. MNCs can benefit from the local market knowledge of Indian companies, the strength of their sales force and significant cost advantage across drug development and the manufacturing process. Global pharma companies have the capability of bringing in newer products, technology, capital and quality leadership. They can help their Indian counterparts in their desire to ascend the innovation curve.
However, alliances and partnerships face significant challenges of quality, valuation, 28 PwC - CII
management control, corporate sector needs to reduce its import governance as well as cultural reliance as well as create innovative issues. Success will depend on products and solutions keeping thorough due diligence of quality in mind the realities of the Indian aspects, appropriate valuation market. Government and industry and synergy derived from the must work together to reduce the barriers to innovation and create Given the price-sensitive nature a vibrant innovation ecosystem to of the Indian consumer as well deliver patient-centric solutions.
as cost pressures from developed In meeting the challenges of economies, pharma companies growth, pharma companies will will have to focus on improving have to ensure that it is sustainable. operational efficiencies. Creating Pharma MNCs as well as large an agile and responsive supply Indian companies are taking chain that is operationally efficient an interest in sustainability by and minimising the incidents implementing initiatives and of supply chain fraud will be of reporting on their success in significant importance. the areas of energy and water At the same time, companies consumption, emissions and waste entering cross border transactions treatment and handling, access should proactively set /monitor to medicine by using differential their TP policies and maintain pricing and voluntary licensing.
robust documentation. This will The pharmaceutical industry in assist companies in optimising India is poised for a period of their business operations.Health robust growth driven by alliances insurance is a significant driver for and partnerships. Success in the the growth of the overall healthcare market will be dependent not only market by improving access to on pharma companies but also on state-of-the-art medicines and other stakeholders like healthcare therapies. Medical technology providers, health insurance can also help improve access to companies, medical technology quality healthcare delivered in companies, government, patient a cost-effective way. Medical groups as well as society at large technology will also help drive acting in concert. How well they the trend towards personalised do will determine the future of the medicine. The medical technology Indian pharma industry.
29
1. PwC Report-India Pharma Inc.: 16. GlaxoSmithKline Press release: ‘GSK 31. TP: Transfer Pricing Guidelines for Capitalising on India's Growth potential, announces a strategic alliance with Multinationals and Tax Administrations Dr. Reddy's to further accelerate sales issued by Organisation for Economic 2. EP Vantage, ‘Patent storm gathering growth in emerging markets', 15th June, Cooperation and Development strength' 28 January 2011 32. ITAT stands for Income-tax Appellate 3. Redefining the Meaning of a Successful 17. Aurobindo Pharma Press release: Tribunal which is a second level 21st Century BioPharma Company, ‘Aurobindo Pharma Inks Marketing appellate authority "BioPharma and the String of Pearls" Deal With Pfizer For Finished Dosage 33. UCB India Private Limited v. ACIT 317 Products', 3rd May 2009 4. PwC Report – Pharma 2020; Challenging Business Models, 2009 18. Vishal Dutta: ‘Pfizer ties up with Claris 34. Serdia Pharmaceuticals (India) Private for injectables' Economic Times, 20 May, 5. PwC Report – India Pharma Inc: Limited - ITANos:2469/Mum/06,3032/ Capitalising on India's growth potential, Mum/07 and 2531/Mum/08 19. Biocon Press release: ‘Biocon and Pfizer 35. NIC has 20 % share in BPL health enter into Global Commercialization 6. PTI, ‘FDI in Pharmaceuticals to pass insurance scheme, Hindu, Provider: Agreement', 18th October, 2011 through filter', The Economic Times, 10 Kasturi & Sons Ltd, March 2011 20. Merck & Co. Press release: ‘Merck & Co., 36. Private healthcare in rural areas gets Inc., and Sun Pharma Establish Joint 7. Bayer Healthcare Press release: ‘Bayer RSBY push, Economic Times, May 12, Venture to Develop and Commercialize and Zydus Cadila sign Joint Venture Novel Formulations and Combinations Agreement to strengthen pharmaceutical of Medicines in Emerging Markets', April 37. NIPER Ahmedabad, Industry Analysis, business in India' 28th Jan, 2011 8. Lupin Pharma Press release: ‘Eli Lilly 21. IMS Health Market Prognosis, March 38. PwC Report: Enhancing access to India and Lupin announce strategic healthcare through innovation, June collaboration to help fight the battle against diabetes' 29th July, 2011 22. Generics and Biosimilars initiative: ‘Hospira looks to biosimilars and 9. Nina Mehta, ‘Novartis ties up with USV increased use of generics for growth' 16 to market Galvus in India' The Economic Times, 27th Nov, 2008 23. PwC analysis, Moneycontrol website 10. Khomba Singh, ‘Modi Mundipharma in JV with Belgian co', Economic Times, 24. C.H. Unnikrishnan, "Pharma salaries up 12% as India turns into top priority", 21 11. TNN, ‘US pharma major Mylan buys Matrix Labs', The Economic Times, 29 25. C. H. Unnikrishnan, Rediff business, "High attrition plagues Indian pharma sector", August 2006 12. Mohit Bhalla and Khomba Singh, ‘US- based Hospira to buy Orchid Chemicals' injectables biz for $400 mn', The Economic Times, 16 December, 2009 28. PwC report: India Pharma Inc.: 13. ET Bureau, ‘Sanofi-Aventis buys Shantha Capitalising on India's Growth Potential for Rs.3,740 cr', The Economic Times, 28 29. Eric Langer & Abhijeet Kelkar, ‘Pharmaceutical Distribution in India', 14. Glenmark Press release: ‘Sanofi-Aventis India Today (BioPlan Associates), and Glenmark Pharmaceuticals Sign License Agreement', 3 May, 2011 30. Sapna Dogra, ‘Revamping the 15. Jubilant Biosys Ltd Press release: distribution network', Express Pharma, ‘Jubilant and Endo Pharmaceuticals announce Late Stage Discovery Milestone in Oncology Program' 20 June, 2011 30 PwC - CII
We would like to express our gratitude for the input and help we received from the following experts who so generously donated their time towards the survey conducted for the report:• S Kalyanasundaram – Chief Executive Officer, Sun Pharma Industries Ltd.
• K V Subramaniam - President & Chief Executive Officer, Reliance • Prashant K Tewari - Managing Director - USV Ltd • Ranjit Shahani - Country President, Novartis India Ltd.
• Satish Khanna - Chairman, Fullife Healthcare Pvt.Ltd.
• Vivek Mohan - Managing Director, Abbott India Ltd.
We also take this opportunity to thank all the following team members from PwC for their contributions to this report:• Arun S Saripalli - Sr. Manager, Tax• Darshan Patel - Associate Director, FAS• Deeksha Vatsa - Associate Director, FAS• Krishnakumar Sankaranarayanan - Managing Consultant, Consulting• Nikhil Patil - Principal Consultant, Consulting• Nisha Vishwakarma - Manager, India Pharmaceuticals & Life Sciences • Madhur Rathaur - Director, PwC PRTM• Prahalad Chadrasekharan - Managing Consultant, Consulting• Suneel Aiyar - Associate Director, Consulting• Shubhra Jain - Manager - FAS• Vinita Vasanth - Experience Associate, PwC PRTM• Malvika Singh - Brand and Communication The views expressed herein are personal and do not reflect the views of the organisations represented by the individuals concerned. 31
The Confederation of Indian Industry (CII) works to create and sustain an environment conducive to the growth of industry in India, partnering industry and government alike through advisory and consultative processes.
Charu Mathur
CII is a non-government, not-for-profit, industry led and Regional Director industry managed organisation, playing a proactive role Confederation of Indian Industry (WR) in India's development process. Founded over 116 years 105, Kakad Chambers ago, it is India's premier business association, with a direct 132, Dr A B Road, Worli, membership of over 8100 organisations from the private as well as public sectors, including SMEs and MNCs, and an Phone: +91 22 24931790 indirect membership of over 90,000 companies from around 400 national and regional sectoral associations.
Fax: +91 22 24945831 / 24939463 CII catalyses change by working closely with government on policy issues, enhancing efficiency, competitiveness and expanding business opportunities for industry through a Dev Ranjan Mukherjee
range of specialised services and global linkages. It also Head - CII Gujarat State and Head - provides a platform for sectoral consensus building and networking. Major emphasis is laid on projecting a positive Confederation of Indian Industry image of business, assisting industry to identify and execute Western Region - Gujarat State Office corporate citizenship programmes. Partnerships with over 120 NGOs across the country carry forward our initiatives in integrated and inclusive development, which include Gulbai Tekra Road health, education, livelihood, diversity management, skill development and water, to name a few.
Ahmedabad – 380 006 Tel: 079 40279900 - 10 CII has taken up the agenda of "Business for Livelihood" for the year 2011-12. This converges the fundamental themes Fax: 079 40279999 of spreading growth to disadvantaged sections of society, building skills for meeting emerging economic compulsions, and fostering a climate of good governance. In line with this, CII is placing increased focus on Affirmative Action, Skills Development and Governance during the year. With 63 offices including 10 Centres of Excellence in India, and 7 overseas offices in Australia, China, France, Singapore, South Africa, UK, and USA, as well as institutional partnerships with 224 counterpart organisations in 90 countries, CII serves as a reference point for Indian industry and the international business community.
33
34 PwC - CII
PwC firms help organisations and individuals create the value they're looking for. We're a network of firms in 158 countries with close to 169,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find Sujay Shetty
out more by visiting us at www.pwc.com. Executive Director, In India, PwC (www.pwc.com/India) offers a India Pharmaceutical & Life comprehensive portfolio of Advisory and Tax & Sciences Leader - PwC (India) Regulatory services; each, in turn, presents a basket of finely defined deliverables. Network firms of PwC Phone: +91 22 6669 1305 in India also provide services in Assurance as per the relevant rules and regulations in India. Providing organisations with the advice they need, Manager, India Pharmaceutical & wherever they may be located, our highly qualified, Life Sciences - PwC (India) experienced professionals, who have sound knowledge of the Indian business environment, listen to different points of view to help organisations solve their business issues and identify and maximise the opportunities Phone: +91 22 6669 1100 they seek. Our industry specialisation allows us to help co-create solutions with our clients for their sector of interest. We are located in these cities: Ahmedabad, Bangalore, Bhubaneshwar, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai and Pune.
35
This publication does not constitute professional advice. The information in this publication has been obtained or derived from sources believed by PricewaterhouseCoopers Private Limited (PwCPL) to be reliable but PwCPL does not represent that this information is accurate or complete. Any opinions or estimates contained in this publication represent the judgment of PwCPL at this time and are subject to change without notice. Readers of this publication are advised to seek their own professional advice before taking any course of action or decision, for which they are entirely responsible, based on the contents of this publication. PwCPL neither accepts or assumes any responsibility or liability to any reader of this publication in respect of the information contained within it or for any decisions readers may take or decide not to or fail to take.
2011 PricewaterhouseCoopers Private Limited. All rights reserved. In this document, "PwC" refers to PricewaterhouseCoopers Private Limited (a limited liability company in India), which is a member firm of PricewaterhouseCoopers International Limited (PwCIL), each member firm of which is a separate legal entity.
MS 239- October 2011 Pharma report .inddDesigned by: PwC Brand and Communications, India

Source: https://www.pwc.in/assets/pdfs/pharma/pwc-cii-pharma-summit-2011-v2.pdf