Brexit: Impact on the Indian Pharma Industry
BREXIT- a portmanteau which is comprised of ‘Britain’ and ‘Exit’, shook the world as the United Kingdom voted the referendum in favor of moving out of the European Union to take greater control on its borders and economy. This will impact various countries involved in trade and business with the UK due to uncertainty in political, regulatory and economical scenario. The Indian pharmaceutical industry, being one of the exporters to the UK will also view certain aftermath of Brexit, albeit very limited, due to modified supply chain requirements, uncertain regulatory scenario, revised intellectual property laws, and depreciating currency. However, Pharmaceutical R&D and clinical trials set up might get a boost as the UK will look out for more economical collaborators in the absence of huge funding which the UK was receiving from the EU. Nevertheless, all these changes are not expected to happen in near future as after triggering of Article 50, the UK will have two years exit negotiation time, which will be sufficient enough to rework on strategies.
‘The UN-backed medicines patent pool entered in to a generic manufacturing license with seven pharmaceutical companies to manufacture antiretrovirals and direct acting anti-viral for treatment of hepatitis C. Out of the seven companies, six are Indian pharmaceutical players.’1
India is the leading global provider of low-cost drugs (branded-generics/generics) with Indian generics accounting for 20% of global exports in terms of volume.2 According to a study, the Indian pharmaceuticals market is the third largest in terms of volume and thirteenth largest in terms of value.3 The global pharmaceutical market is valued at USD 943 billion, which is dominated by the United States (US) (47% market share, 10% growth rate). The United Kingdom (UK) has a market share of 3% with growth rate of 4%, where as India has a market share of 1.5% with a growth rate of 6% (as of May 2016).4 India's total pharmaceutical exports in 2015-16 were USD 13 billion. Of these, the European Union (EU) accounted for USD 1.51 billion, the UK and US accounted for USD 469 million and USD 5.02 billion respectively.5 Indian pharmaceutical companies are growing faster than global pharmaceutical market and hold a share of 2.5% in global market.4
To traverse further opportunities, many large Indian pharmaceutical players have set up their subsidiaries, acquired smaller companies, and even taken up manufacturing plants in developed countries like the US and the UK. Approximately 30 Indian pharmaceutical players have entered into various types of deals such as Merger and Acquisition (M&A), Early Drug Discovery, Manufacturing, Supply & Distribution (MS), and Commercialization Licensing (CL) with UK based partner companies.
Piramal group is leading with seven deals including three M&A deals with the UK based Pfizer, Solvay, GSK, etc. Dr. Reddy’s has six collaborative deal agreements with UK-based AZ, GSK, BMS, Dow Pharma, ClinTec International and Argenta Discovery Ltd. Similarly, Divis Laboratories has three drug manufacturing, supply and distribution deals with AZ and GSK. Sun Pharmaceutical has four deals with GSK and AZ, of which two are for drug manufacturing, supply and distribution. (Source: Newport Premium).
These collaborations with developed markets have enhanced global outreach of Indian pharmaceutical players with both pros and cons. The pros are increased profitability, and market share; whereas the cons are dependability on global political and economical scenario. One such scenario has recently emerged with the UK referendum to move out of European Union-BREXIT.
Impact of Brexit on Indian Pharmaceutical Industry is expected to be multifold, though it is too early to predict much in the wake of uncertainty looming on the time of actual exit, new government’s preferences and policies and the stability of economical scenario. Nevertheless, there are few important considerations that might impact the Indian pharmaceutical players operating in EU/UK.
- Six Pharma companies get new licenses to supply generic drugs. Available at: https://donttradeourlivesaway.wordpress.com/2016/07/19/six-indian-pharma-companies-get-new-licences-to-supply-generic-drugs/. Accessed on 11th August, 2016.
- Industrial sectors: Pharmaceuticals. Available at: http://indiainbusiness.nic.in/newdesign/index.php?param=industryservices_landing/347/1. Accessed on 11th August 2016.
- Indian Pharmaceutical Industry. Available at: http://www.ibef.org/industry/pharmaceutical-india.aspx. Accessed on 11th August 2016.
- IMS Health Market Reflection Report – June 2016. Available at: http://medicinman.net/2016/07/ims-health-market-reflection-report-june-2016/. Accessed on 11th August 2016.
- Brexit to have limited impact on pharma industry: ICRA. Available at: http://indianexpress.com/article/business/economy/brexit-to-have-limited-impact-on-pharma-industry-icra-2873885/. Accessed on 11th August 2016.
To read more, please click here