Post on 03-May-2018
Life Sciences Compliance Risks - Focus on India
October 2013
Yogesh BahlPartnerLife Sciences Industry SectorDeloitte Financial Advisory Services LLP
©2013 Deloitte Touche TohmatsuDeloitte presentation on Pharmaceuticals Industry in India
Disclosure
Information in this presentation represents the presenter’s opinions and recommendations and thus, may or may not be aligned with his or her
company’s views.
Information in this presentation is not intended to provide legal or other advice on any matter, in general or specific terms.
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©2013 Deloitte Touche TohmatsuDeloitte presentation on Pharmaceuticals Industry in India
Discussion Topics
• Market Overview
• Regulatory Environment & Compliance Issues
• Physician Code of Ethics – Interesting Excerpts
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©2013 Deloitte Touche TohmatsuDeloitte presentation on Pharmaceuticals Industry in India
Market Overview
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CAGR – 17.8% from 2008 to 2016F
Source: IBEF Pharmaceutical Market March 2013
India is now among the top five pharmaceutical emerging
markets.
The front runner in a wide range of specialties involving complex drugs' manufacture, development, and technology.
Number of pharmaceutical companies are increasing their
operations in India.
Extremely fragmented market with severe price competition and government price control.
Domestic pharmaceutical market is expected to register a strong double-digit growth of
13-14 per cent in 2013.
Increasing sales of generic medicines, continued growth
in chronic therapies and a greater penetration in rural
markets.
©2013 Deloitte Touche TohmatsuDeloitte presentation on Pharmaceuticals Industry in India
Product Segments
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API is the active chemical or ingredient used in the manufacturing of a dosage form of a drug. Active pharmaceutical ingredients (APIs) is the largest segment of the Indian pharmaceuticals industry
APIs
Contract research and manufacturing services (CRAMS) is a fragmented market with more than 1000 players in IndiaCRAMS
Formulation is the process in which different chemical substances, including the active drug, are combined to produce a final medicinal product. It consists of prescription and OTC drugs
Formulation
Segments – A Sampling
Biosimilars are generic versions of the Biologics (therapies derived from living organisms or organic substances and include therapeutic proteins, DNA vaccines, monoclonal antibodies and fusion proteins, as well as new experimental modalities)
Biosimilars
©2013 Deloitte Touche TohmatsuDeloitte presentation on Pharmaceuticals Industry in India
API Market in India
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Regulatory Changes in 2013•USFDA recent norms on Regulatory Classification of Pharmaceutical Co-Crystals•The EMA guidelines on exposure limits for production of varied medicinal products in shared facilities •The Central Drugs Standard Control Organisation (CDSCO) guidance document for the issue of Written Confirmation (WC) certificate for active substances exported to the European Union (EU) for medicinal products for human use
• The role of Indian API manufacturers in the global pharmaceutical supply chain is gradually evolving with increasing presence in synthesis and manufacture of late stage intermediates and APIs.
• Traditionally, innovators have frequently opted to perform final stages of API synthesis in-house or partner with specialized European suppliers while outsourcing early stage intermediates to Indian manufacturers. However, in recent times, the reputed track record of Indian companies in supplying quality products coupled with complex synthesis capabilities has enabled increasing participation in supply of late stage intermediates to innovator companies.
Indian API industry is now opting for environmentally- friendly production
processes.
Paradigm shift in the use of low-cost API drugs especially in innovative drugs which could further fuel the overall growth of the API market.
Producers moving away from multi- functional plants and instead of opting for specific activities at
particular sites.
API manufacturers are using various novel technologies to reduce the
processing time as well as to yield more production.
The patent expiry provides a significant opportunity for supply of
APIs to manufacturers of generic drugs.
Increased opportunities in outsourcing of bulk drugs by multinational pharmaceutical
companies.
©2013 Deloitte Touche TohmatsuDeloitte presentation on Pharmaceuticals Industry in India
CRAMS Market in India
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• CRAMS business consists of the CMO and CRO, of which CMO constitutes a major portion (>60%) of the overall business.• CRAMS industry would continue to be dominated by the CMO segment forming larger portion of it, however we expect the share
of CMO is likely to narrow down from ~61% in 2010 to 55% in 2014E; foreseeing revival in CRO segment.• Indian CRAMS companies are the most preferred players for global pharmaceutical companies due to their product mix being
skewed towards high-end research services, biologics and complex technology services, at low cost. • Increase in cost of R&D for new chemical entities, raw materials and wage inflation are few additional factors causing pharma
companies to look out for outsourcing solutions in Indian markets.
DriversDemand for new
drugs/generics and patent cliff/cost
pressures
OpportunitiesDevelopment in co- development rather than outsourcing
agreements
ChallengesUnorganised regulatory procedures, reduction
in budgets, competition from other
countries
StrengthsTechnologically
oriented, a strong man power, cost differential
benefits
©2013 Deloitte Touche TohmatsuDeloitte presentation on Pharmaceuticals Industry in India
Formulations Market in India
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CAGR – 14%CAGR – 12.2%
OpportunitiesHigh penetration in the global markets and increase of
share in Abbreviated New Drug Application (ANDA) filings are likely to power growth of the formulations
market.
Formulations Market
Chronic Therapy Acute Therapy
• Cardiovascular• Neurological• Anti-diabetes• Oncology
• Anti-infective• Gastro-intestinal• Respiratory• Analgesics/Pain
Management• Vitamins/Neutraceu
ticals
ChallengesComplex drug distribution system, diverse market and rural penetration, evolving regulatory infrastructure, brand visibility and uncertainty in pricing policies.
StrengthsIndia is almost self sufficient
in formulations and formulations is a high-margin business. external sales is coming from value-added
formulations.
TrendsPrice pressure as benefits of cheaper drugs have been
shifted to end-users and trade channels. Hence, consolidation, partnership and alliances are expected to
gather momentum in the near future.
©2013 Deloitte Touche TohmatsuDeloitte presentation on Pharmaceuticals Industry in India
Biosimilars Market in India
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CAGR – 30%
OpportunitiesBiologics worth US$79 billion is expected to go-off patent
globally by 2015. This will provide an opportunity for Biosimilar companies
ChallengesRegulatory approvals for guidelines for biosimilars
Advantage IndiaIndia is a semi-regulated market and no phase I/II studies are
required for biosimilars. To conduct a phase III study is a mandatory step and minimum 100 patients are needed for
this study.
Due to the legislation and the environment in the country, the development of a biosimilar can be between US$10-20
million in India, much cheaper than the fully regulated countries. And with this regard, the price of a biosimilar, can
be 25-40% cheaper than the originator.
Some of the drivers include rising healthcare costs, better tertiary care centers, patented drugs going off , patents, shift
in disease patterns and product demand .
PlayersThe country has around 100 companies involved in
research and development of biosimilars.
Market shareCurrently, China and South Korea dominate the
biosimilars market. India is at a distant No.3, with a share of about 3%.
Future outlookIndustry analysts expect biosimilars to replace about 70%
of the existing chemical pharma molecules
ProductsAvesthagen, Intas, Biocon, Cipla, Dr Reddy’s, Reliance
Lifesciences and Wockhardt launched a total of 16 products in the market.
©2013 Deloitte Touche TohmatsuDeloitte presentation on Pharmaceuticals Industry in India
Regulatory Environment in India
National Pharma Policy 2011 bring greater transparency in pricing of essential drugs
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Essentiality of drugs
• Essentiality of drugs is determined by inclusion of the drug in the National List of Essential Medicines (NEDL)
• Promote rational use of medicines based on cost, safety and efficacy
Market-based pricing
• Cost based pricing is complicated and time consuming in comparison to market based pricing
• Market based pricing is expected to create greater transparency in pricing information would be available in public domain
Price control of finished medicines only
• Only finished medicines are to be considered essential which would prevent price control of APIs which are not necessarily used for essential drugs
Policy support
• Reduction in approval time for new facilities. E.g. NOC for export license issued in two weeks compared to 12 weeks earlier.
• MOUs with USFDA, WHO, Health Canada, etc. to boost growth of the Indian Pharma sector by benefiting from their expertise.
• Government of India plans to set up a US$640 million VC fund to boost drug discovery and strengthen the pharma infrastructure.
• Pharma Vision 2020 by the government’s Department of Pharmaceuticals aims to make India a major hub for end-to-end drug discovery.
• Zero duty for technology upgrades in the pharmaceutical sector through the Export Promotion Capital Goods (EPCG) Scheme
©2013 Deloitte Touche TohmatsuDeloitte presentation on Pharmaceuticals Industry in India
Regulatory Bodies and Regulations
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Central Drugs Standard Control Organization (CDSCO), Ministry of Health & Family Welfare, Government of India provides general information about drug regulatory requirements in India.
CDSCO
Drugs (Price Control) Order 1995 and other orders enforced by National Pharmaceutical Pricing Authority (NPPA), Government of India.NPPA
The Drugs & Cosmetics Act, 1940 regulates the import, manufacture, distribution and sale of drugs in India.
D & C Act, 1940
Regulatory Resources – A Sample
Schedule M of the D&C Act specifies the general and specific requirements for factory premises and materials, plant and equipment and minimum recommended areas for basic installation for certain categories of drugs.
Schedule M
Source: Indian Pharmaceutical Association
©2013 Deloitte Touche TohmatsuDeloitte presentation on Pharmaceuticals Industry in India
Challenges for the Industry
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Infrastructure development
Quality Management
Drug price control
Effects of the new product patent
Conformance to global standards
Regulatory reforms
©2013 Deloitte Touche TohmatsuDeloitte presentation on Pharmaceuticals Industry in India
Compliance-Relevant Developments
- US FDA tightens regulatory enforcement on drug companies in India; focus on cGMP
- Anticorruption Legislation
- Clinical trials
- Increase in complaints involving ties between doctor and pharmaceutical companies
- The government is considering a 'Uniform Code of Pharmaceutical Marketing Practices' to deal with the alleged nexus between regulatory, doctors and drug companies
- Compulsory Licensing – R&D Strategy, Commercial Strategy, and Intellectual Property ramifications
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©2013 Deloitte Touche TohmatsuDeloitte presentation on Pharmaceuticals Industry in India
Medical Counsel of India – Code of Medical Ethics Excerpts
3.2 Consultation for Patient’s Benefit: In every consultation, the benefit to the patient is of foremost importance. All physicians engaged in the case should be frank with the patient and his attendants.
6.4.1 A physician shall not give, solicit, or receive nor shall he offer to give solicit or receive, any gift, gratuity, commission or bonus in consideration of or return for the referring, recommending or procuring of any patient for medical, surgical or other treatment. A physician shall not directly or indirectly, participate in or be a party to act of division, transference, assignment, subordination, rebating, splitting or refunding of any fee for medical, surgical or other treatment.
6.4.2 Provisions of para 6.4.1 shall apply with equal force to the referring, recommending or procuring by a physician or any person, specimen or material for diagnostic purposes or other study / work. Nothing in this section, however, shall prohibit payment of salaries by a qualified physician to other duly qualified person rendering medical care under his supervision.
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Source: Indian Medical Council, Professional Conduct, Etiquette, and Ethics Regulations
©2013 Deloitte Touche TohmatsuDeloitte presentation on Pharmaceuticals Industry in India
Medical Counsel of India – Code of Medical Ethics Excerpts (cont)6.8.1a) Gifts: A medical practitioner shall not receive any gift from any pharmaceutical or
allied health care industry and their sales people or representatives.
b) Travel facilities: A medical practitioner shall not accept any travel facility inside the country or outside, including rail, air, ship , cruise tickets, paid vacations etc. from any pharmaceutical or allied healthcare industry or their representatives for self and family members for vacation or for attending conferences, seminars, workshops, CME programme etc as a delegate.
c) Hospitality: A medical practitioner shall not accept individually any hospitality like hotel accommodation for self and family members under any pretext.
d) Cash or monetary grants: A medical practitioner shall not receive any cash or monetary grants from any pharmaceutical and allied healthcare industry for individual purpose in individual capacity under any pretext. Funding for medical research, study etc. can only be received through approved institutions by modalities laid down by law / rules / guidelines adopted by such approved institutions, in a transparent manner. It shall always be fully disclosed.
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Source: Indian Medical Council, Professional Conduct, Etiquette, and Ethics Regulations
©2013 Deloitte Touche TohmatsuDeloitte presentation on Pharmaceuticals Industry in India
Medical Counsel of India – Code of Medical Ethics Excerpts (cont)6.8.1e) Medical Research: A medical practitioner may carry out, participate in, work in research
projects funded by pharmaceutical and allied healthcare industries. A medical practitioner shall:
(iv) Ensure that the source and amount of funding is publicly disclosed at the beginning itself.
(vii) Ensure that while accepting such an assignment a medical practitioner shall have the freedom to publish the results of the research in the greater interest of the society by inserting such a clause in the MoU or any other document / agreement for any such assignment.
f) Maintaining Professional Autonomy: In dealing with pharmaceutical and allied healthcare industry a medical practitioner shall always ensure that there shall never be any compromise either with his / her own professional autonomy and / or with the autonomy and freedom of the medical institution.
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Source: Indian Medical Council, Professional Conduct, Etiquette, and Ethics Regulations
©2013 Deloitte Touche TohmatsuDeloitte presentation on Pharmaceuticals Industry in India
Medical Counsel of India – Code of Medical Ethics Excerpts (cont)6.8.1 g) Affiliation: A medical practitioner may work for pharmaceutical and allied healthcare
industries in advisory capacities…shall always:
(i) Ensure that his professional integrity and freedom are maintained.(ii) Ensure that patients interest are not compromised in any way.(iii) Ensure that such affiliations are within the law.(iv) Ensure that such affiliations / employments are fully transparent and disclosed.
h) Endorsement: A medical practitioner shall not endorse any drug or product of the industry publically. Any study conducted on the efficacy or otherwise of such products shall be presented to and / or through appropriate scientific bodies or published in appropriate scientific journals in a proper way”.
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Source: Indian Medical Council, Professional Conduct, Etiquette, and Ethics Regulations
Contact Information
Yogesh BahlPartnerDeloitte Financial Advisory Services LLPT: +917.306.7882E: ybahl@deloitte.com
Yogesh helps companies mitigate enterprise risks, investigate financial crimes, and manage commercial disputes. Yogesh has advised multinational companies on risk, contract and accounting issues involving a broad range of products within the pharmaceutical, medical device, biotechnology and consumer sectors. Yogesh has also been engaged as an expert and an arbiter with respect to litigation involving intellectual property, breach of contract and industry practice issues. Yogesh is currently focused on helping companies develop various tools and analytics to manage third party risks. Yogesh has also advised a number of companies in various industries on compliance issues, preventing and detecting fraud, managing third party risk. In addition, he has strong experience with the financial structure and provisions of joint venture, co-development, co- promotion, and cross-licensing deals. Yogesh has earned his MBA in Finance and Statistics and his BS in Accounting and International Business from NYU’s Stern’s School of Business. Yogesh is also a Certified Public Accountant.
©2013 Deloitte Touche Tohmatsu
Dhruv PhophaliaSenior Director Deloitte Touche Tohmatsu India Private Limited T: +91 (22) 6185 5208E: dnphophalia@deloitte.com
Dhruv is a Senior Director (Partner) at Deloitte Touche Tohmatsu India Private Limited. Dhruv focuses on the life sciences industry in India and has advised various life sciences clients in the U.S., and India on a wide range of areas such as compliance and risk management, anti-fraud programs and controls, anti- corruption consulting, investigations and cross-border disputes/arbitrations.Before relocating to India , Dhruv worked with Deloitte in the United States for over 12 years where he led and managed engagements for a number of Fortune 500 companies. He has led and managed a number of high profile engagements in India, Southeast Asia, Europe, and United States of America for domestic and international clients representing a wide range of industries including life sciences, technology media and telecommunications, manufacturing, construction, financial services, and oil and gas. Previously, Dhruv was also involved in setting up Deloitte’s forensic and dispute consulting business in India.
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©2013 Deloitte Touche Tohmatsu
Source for quantitative information:IBEF Pharmaceutical Market Report March 2013