AIDS, TB next big revenue source for pharma majors

[Guest guest]

AIDS, TB next big revenue source for pharma majors

Bhuma Shrivastava / New Delhi August 25, 2006

The Indian pharmaceutical companies are faced with a $2 billion

opportunity each year, with the AIDS epidemic and resurgence in

tuberculosis (TB) and malaria sweeping the world.

While the early movers like Cipla, Ranbaxy Labs, Aurobindo and Lupin

have already begun to move in to capture this market, others like

Hyderabad-based Hetero Drugs, Matrix, Strides and Ipca Labs are the

next batch of likely entrants.

According to a sector study by investment banking firm Edelweiss,

roughly funds worth $4 billion are being pooled yearly till 2015 by

agencies like World Health Organisation, United Nations Organisation

and other global agencies to fight these diseases.

As a result, campaigns like Global Fund for AIDS, TB and Malaria,

President Bush's Emergency Plan for AIDS Relief (PEPFAR), Stop TB

Partnership and Roll Back Malaria are being effected.

Indian companies, owing to their cost advantage, expertise in anti-

infectives segment and experience in procuring regulatory approvals,

are uniquely positioned to capture at least 50 per cent of this

market, states the report titled `Epidemics — India Advantage at

Help'.

Indian companies also have the highest number of USFDA approved

plants outside of the USA and have an edge over their US and

European counterparts in generics, as India has the same disease

patterns within the country.

However, Indian companies have not fully realised the pot of gold

they are sitting on.

" There are a lot of companies that are in the anti-infectives

segment in the domestic market that have not moved in to supply for

such sponsored programmes. More companies will jump onto this

bandwagon as the visibility of the opportunity increases and returns

start flowing to the existing players, " said Nimish Mehta, assistant

vice-president, Edelweiss.

Ask Mehta if this is a short-term opportunity centred on the funding

by these agencies and he explains, " Till 2015, the quantum of this

opportunity through such agency-based funding is certain. Even after

that, these diseases are here to stay and would need sustained drug

supplies from companies, which can provide them at competitive

prices. "

The total burden of these three diseases is $23 billion annually

(including prevention, diagnosis, treatment and care), as estimated

by various global agencies.

While 80 per cent of the 40 million AIDS patients remain untreated,

the new forms of TB and Malaria are increasingly adding to the

menace.

HIV-induced TB is also increasing rapidly, adding 8.9 million new

cases and 1.7 million deaths, stated the report. Indian generics —

anti-retrovirals for AIDS and anti-infectives for treating TB and

malaria — are roughly 20 to 30 per cent cheaper to the generic drugs

supplied by the US and European companies.

The report has estimated that during 2006-2010 period, AIDS

programmes alone would receive funds worth $3 billion, tuberculosis

about $450 million and malaria another $768 million, each year.

Roughly 50 per cent of it could accrue to India.

Some challenges, however, remain before the companies are able to

convert this opportunity. " Indian companies would have to make

investments in procuring WHO approvals, attain efficiencies in

supply chain management to ensure timely delivery of drugs as well

as maintain the cost advantage, " said Mehta.

Dealing with bureaucratic hassles of the local government of the

country receiving the funds would be another issue the companies

would have to work around, he added.

http://www.business-standard.com/compindustry/storypage.php?

leftnm=1 & subLeft=6 & chklogin=N & autono=102684 & tab=r