Focus Sectors

Synopsis

India is one of the largest exporters of pharmaceutical products and biosimilars to the world, supplying ~20% of the global generic medicines in volume terms.

However, India’s pharmaceutical exports constitute just ~4% of Australia’s imports.²⁴⁰ Indian companies can therefore target to increase their exports to the Australian market.

The following opportunities have been identified for this sector:

• Increasing exports of Indian pharmaceutical products and biosimilars to Australia
• Collaborating in clinical trials
• Promoting traditional Indian medicines and practices such as yoga and ayurveda in Australia

Overview

Australia

The pharmaceutical sector in Australia is well established and is supported by a well- developed knowledge and technology base in the country. Australia makes up about 1% of the pharmaceutical sales globally, making it the 12th largest pharmaceutical market in the world. The pharmaceutical sector in Australia includes biotechnology and medical research companies, pharmaceutical manufacturers, wholesalers and distributors. About 150 companies, both foreign and local, operate in the pharmaceutical sector in Australia and employ about 40,000 people, with about 40% of them engaged in manufacturing. The country is a net importer of medicines, primarily from the US, Germany, Switzerland, Ireland and the UK.²⁴¹ The Pharmaceutical Benefits Scheme (PBS) under the National Medicines Policy, provides access to subsidized medicines for all medicare card holders in Australia. The country is also home to a small but thriving biotechnology sector. To strengthen the sector, the Government established the Medical Research Future Fund (MRFF) with a funding of AUD 20 billion (USD 14.29 billion)^.242

The competitive landscape of the pharmaceutical sector in Australia is dominated by foreign firms selling patented drugs. Most multinationals, such as Pfizer, Novartis and Sanofi are represented in Australia through local subsidiaries. For instance, AstraZeneca, Eli Lilly, Merck & Co and GlaxoSmithKline manufacture locally in the country. Local producers, on the other hand, tend to focus more on generic drugs. Leading domestic generic drug firms include Sigma Pharmaceuticals, Australia Pharmaceutical Industries and Alphapharm.

Australia is a heavily regulated market. The Therapeutic Goods Administration (TGA) regulates the import-export and supply of medicines in Australia. The body oversees the supply of all medicines such as OTC, generic medicines as well as vaccines. TGA approves medicines based on quality, safety, efficacy and availability. Further, the TGA grants the license to manufacture therapeutic goods for local manufacturers. For manufacturers located in other countries, a GMP clearance is required to be granted by the TGA.²⁴³ The regulatory process is generally speedy for products that have already received approvals from regulatory bodies in the US and Europe.

India

The Indian pharmaceuticals market has emerged as a reliable source of affordable and qualitative medicines for the world. The Indian pharmaceutical market has been valued as the tenth largest in the world and is also the third largest producer of medicines in the world (10% of world production).²⁴⁴ Generics constitute about 75% of the Indian market. India is a net exporter of pharmaceuticals with about 55% of the exports directed towards developed nations such as USA and the UK.²⁴⁵ Biosimilars have also grown in India. Indian regulations for biosimilars, unlike many other emerging markets, have matured such that they are consistent with regulations in other countries. This has made it easier for Indian products to gain traction in international markets.

Australia was the 13th largest destination for Indian pharmaceuticals exports in 2019-20 with total exports amounting to USD 274 million. India is the ninth largest exporter of pharmaceutical products to Australia.²⁴⁶ The Australian market is dominated by incidence of non- communicable diseases such as neuropsychiatric conditions (33%), cancer (17%), respiratory diseases (15%) and cardiovascular diseases (13%). The demand for traditional AYUSH products i.e. Ayurveda, Yoga, Unani, Siddha and Homeopathy has also increased considerably in the last few years in Australia.

Impact of Covid-19 on India’s Pharmaceutical Sector

India is dependent on China (~70%) for pharmaceutical raw materials such as APIs. With the onset of the novel corona virus pandemic, India experienced shortage of raw materials during the first quarter of 2020. This led to supply chain disruptions and limited the ability of Indian pharmaceutical companies to meet their customer demand (both domestic and foreign). Due to the criticality of the sector and its strategic relevance especially in a pandemic scenario, India is likely to increase its domestic production of APIs. This will also help reduce its imports from China, minimise price fluctuations and improve profitability of the Indian companies. While the current lockdown is expected to create supply disruptions in the short-run, pharmaceutical manufacturing has been exempted from this lockdown. Pharmaceutical companies backed by government incentives are now determined to improve the overall capacity of APIs to constrain ongoing shortages. Moreover, key representatives in the pharmaceutical industry and NITI Aayog are expected to undertake speedy approvals for pharmaceutical infrastructural developments through a slew of measures such as rapid clearance from relevant ministries, tax exemptions and subsidies to secure and ramp up the supply of APIs within the county. As recent as in March 2020, the Indian Government approved a budget of USD 394 million for building infrastructure for three bulk drug parks in the country.

India is the largest supplier of generic drugs (by volume) to the world. The country supplies low cost generic drugs to millions around the globe and currently has over 250+ U.S. Food and Drug Administration and Medicines and Healthcare products Regulatory Agency (MHRA UK) certified plants. Given the shortages experienced globally in the procurement of APIs for niche drugs from China during the current pandemic and China’s ongoing struggles with drug and PPE quality issues, India has an opportunity to establish itself as the alternative source for pharmaceutical imports for countries within the developed economies of the world such as North America, EU as well as other economies such as South East Asia, Latin America, Australasia and Africa. While India was itself under a nation-wide lockdown, it was able to send shipments of drugs such as HCQ to 55+ coronavirus hit countries such as US, Afghanistan, Bhutan, Bangladesh Nepal, Maldives, Mauritius, Sri Lanka and Myanmar, etc. to meet their requirement at a critical time during the current pandemic. Australia can partner with India to address this need of the global pharmaceutical supply chain caused by the pandemic and not just look at India as an alternative source of drug imports but also as a potential partner to co-develop drugs for supplying to the world.

Opportunities for collaboration

This sector has already witnessed a few academic collaborations in the past. For example, the Indo-Australian Career Boosting Gold Fellowships (IACBG Fellowships) that has supported 28 fellows so far. The IACBG Fellowship was a joint initiative between the Department of Biotechnology of India and the Government of Australia in inviting Indian PhD scholars to partake in a collaborative research on Agriculture or Medical Biotechnology at the University of Australia. Similarly, the PhD Fellowship Programme of IITB-Monash Research Academy has also lent support to 65 students in the field of biotechnology. An extension of support to these fellowship programmes can further solidify the groundwork of ongoing research in the field of biotechnology.

1. Collaboration on Vaccine Development

The Covid-19 pandemic has highlighted the urgency for international scientific collaborations in research and development, manufacturing equipment and identifying treatments to face such global health emergencies. Exchange of knowledge and skill sets on these fronts can help overcome hindrances in innovation and provide support to public health at a global scale.

In April 2020, Australia’s Griffith University and Hyderabad-based Indian vaccine manufacturer, Indian Immunologicals Ltd (IIL), entered into a research collaboration to develop a vaccine for the novel coronavirus. Both enterprises are committed towards developing an affordable vaccine that can offer strong cellular and antibody immune responses against the virus. The vaccine is also expected to offer long-lasting protection with a single-dose administration. IIL and Griffith University have previously worked together to develop the Zika virus vaccine, which is currently at the pre-clinical toxicology testing stage. Additionally, this scientific collaboration can lay the foundation for future collaborations in areas such as manufacturing personal protective equipment (PPE), ventilators etc.

2. Generics and Biosimilars

Biosimilars and generic drugs are alternatives to branded medicines. They are generally cheaper than their branded counterparts, mainly on account of differences in development and registration costs. There are minor differences in generic drugs and biosimilars. While the active ingredients of generic drugs and branded medicines are the same, biosimilars are highly similar to the branded product, except for small differences in clinically inactive components.

The generics market accounted for USD 3.2 billion out of the USD 17 billion pharmaceuticals market in Australia in 2017.²⁴¹ The market for biosimilars in Australia is growing and is estimated at USD 2.6 billion in 2017.²⁴⁷ Healthcare spending in Australia has also been increasing rapidly growing at 6-7% in recent years, higher than the decade average of 4.5%.²⁴⁸

The increasing healthcare and pharmaceutical costs, especially with an ageing population, have put additional pressure on the Government to regulate healthcare budgets in Australia. Currently, Pharmaceutical Benefits Scheme (PBS) covers ~90% of the pharmaceutical costs in Australia.²⁴⁶ As a result, there is not much incentive for the end consumer to prefer a generic drug instead of a branded one. In 2010, only 19.5% of prescriptions suggested by a doctor in Australia contained the molecule name instead of a brand name, as compared to 83% for the UK.²⁴⁹ Australians tend to be loyal to particular brands and generic medicines are still catching up in Australia. The PBS has thus been stressing on application of generic drugs and biosimilars rather than their branded equivalents, which is an internationally proven approach to reduce pharmaceutical expenses. The usage of biosimilars provides greater access for patients to life changing medicines at low cost. The Generic and Biosimilar Medicines Association (GBMA) in Australia has also been set up to promote the growth of generic and biosimilar medicines industry.

Prices of generic drugs in Australia remain higher than those in the UK, New Zealand and specified provinces in Canada. Some medicines in Australia are as much as 3.7 times higher as compared with international prices.²⁵⁰ India is a manufacturing hub for generic medicines and biosimilars. India supplies ~20% of the global generic medicines in volume terms.²⁵¹ The prices of generic drugs manufactured in India are lower than in other countries on account of availability of labour and other resources at a lower cost. While India exports to Australia, its pharmaceutical exports constitute just ~4% of Australia’s imports.²⁵² The TGA has adopted many guidelines under the European Medicines Agency (EMA) for regulating standards for quality, non-clinical and clinical data requirements for biosimilarity, etc. This opens up a market for Indian companies, already compliant with EMA guidelines, currently operating in the biosimilar and generics space, to export to Australia.

Indian pharmaceutical companies have found it difficult to increase exports to Australia substantially in view of preference for branded drugs manufactured in developed markets like UK, USA, etc. even though they may be compliant with EMA guidelines and may have been already registered in the USA market. However, Indian companies such as Glenmark Pharmaceuticals has recently received approval from the TGA to sell one of its products in Australia in collaboration with Seqirus, owned by CSL, an Australian pharmaceutical group.

Indian pharmaceutical companies should engage with the Government and chambers of commerce to ensure that a forum is set up to exchange views and clarify procedure for registration and sale of pharmaceuticals, generics and biosimilars of Indian origin in the Australian market in order to facilitate Indian exports in this sector.

3. Clinical Trials

Rising time and cost of research and clinical trials in Australia has opened up opportunities for Indian clinical research companies to collaborate with Australian drug manufacturers. This collaboration can be on medical research and clinical trials to expedite timeline from research to the market for Australian medicines. This can increase the research efficiency of Indian clinical research companies and also provide access to advanced Australian pharmaceutical companies. Clinical trials can be conducted in India at almost half of the cost incurred in developed countries like the US, UK, Germany, etc. There has been a significant rise in clinical trials conducted in these countries especially in India.

Central Drugs Standard Control Organization (CDSCO) is the central regulatory body governing clinical trials in India. CDSCO has recently introduced regulatory reforms such as online submission of clinical trials and reduced timelines for the approval of clinical trials. Updating clinical trials’ results in online registry and online availability of minutes of subject expert committee meetings have reduced the overall timeline of clinical trials in India and increased transparency. The average time for obtaining approvals for clinical trials has reduced from 6 to 7 months in 2016 to 4 months in 2018.²⁵⁴ Outsourcing of the administrative parts of research, as well as regulatory and ethics filings, to India can significantly save time and expenses incurred on clinical trials.

India offers a large and diverse genetic pool of patients for clinical trials. Given the difficulty in sourcing patients for clinical trials in developed countries, the concept of expanding the pool of available patients in emerging countries, combined with the overall cost savings, positions India well to conduct clinical trials. The emergence of chronic diseases such as cancer, diabetes, cardio vascular system (CVS) and central nervous system (CNS) disorders may drive demand for newer therapies. Moreover, as the Indian oncology community increasingly uses genomic testing for its patients, India will offer tremendous opportunities in contributing data for global oncology trials.

India has the highest number of FDA-approved manufacturing plants outside the U.S. With increasing focus on constraining healthcare costs, India’s low-cost manufacturing capabilities are advantageous.²⁵⁵ Indian contract clinical research and drug discovery companies can collaborate with Australian pharmaceutical companies to expedite the research process and move to becoming a clinical research hub for global pharmaceutical companies. This shall also give an impetus to the patented pharmaceutical market in India and raise the number of patents filed by Indian companies in the future, possibly lowering the cost of patented drugs, which are typically imported into India.

4. Ayurveda and Traditional Medicine

The emerging trend of using alternative and complementary medicines is picking up in Australia. With greater acceptance and uptake by Australians, alternative medication has witnessed growth in demand in Australia. Currently, the sector is valued at AUD 4.9 billion (USD 3.3 billion) in the country covering various segments such as vitamin and dietary supplements, sports nutrition, herbal/traditional products and weight loss products.²⁵⁶

The Ministry of AYUSH(Ayurveda, Yoga &Naturopathy, Unani, Siddha, Sowa Rigpa and Homoeopathy),Government of India, in cooperation with Quality Council of India has developed accreditation standards certified by the National Accreditation Board for Hospitals and Healthcare Providers (NABH) for Ayurveda Hospitals. These standards measure the quality and safety aspects of care delivered to patients. In addition, the Ministry of AYUSH has also developed Standard Treatment Guidelines and has taken utmost care to ensure high standards of quality of services, treatment, infrastructure as well as medicine for Ayurveda Hospitals.

In order to promote alternative treatments in Australia, insurance coverage policies, in collaboration with the Ministry of AYUSH, may also be provided by Australian agencies for Ayurvedic treatments taken by Australian citizens in India.

In 2019, the All India Institute of Ayurveda (AIIA), under the Ministry of AYUSH, signed an MoU with Western Sydney University, Australia. This MoU has been entered into with the aim to promote collaboration in research and formulating guidelines to integrate principles of Ayurveda with modern medicine. The institutes have also committed to identify specific areas for collaboration in education and research, while ensuring appropriate quality standards are met. This collaboration is expected to combine best practices of traditional medicine and modern medicine that will further contribute scientific evidences for the global medical community.²⁵⁷

²⁴¹ Healthcare in Australia Report, EIU
²⁴² Medical Research Future Fund, MRFF, Department of Health
²⁴³ Overview of supplying therapeutic goods in Australia, Australian Government, Department of Health
²⁴⁴ India Emerges As Top Five Pharmaceuticals Markets Of The World, Business World; EIU Report
²⁴⁵ Pharma exports up 3 pc to $17.3 billion in 2017-18, The Economic Times
²⁴⁶ Regulatory and Market Profile of Australia, Pharmaceuticals Export Promotion Council of India
²⁴⁷ Key Figures on Biosimilars, Generic and Biosimilar Medicines Association
²⁴⁸ Australia Institute of Health and Welfare, Growth in health spending at 5 year high driven by Government spending
²⁴⁹ Prescribing generic drugs will reduce patient confusion & medication errors, 2017, Business Standard
²⁵⁰ Strong Growth for Global Generics Market, 2017, AJP
²⁵¹ Pharma exports up 3 pc to $17.3 billion in 2017-18, The Economic Times
²⁵² HS code 30; Trade Map
²⁵³ India poised to become ‘one of the largest clinical trial hubs,’ says CRO, Outsourcing Pharma
²⁵⁴ India poised to become ‘one of the largest clinical trial hubs,’ says CRO, Outsourcing Pharma
²⁵⁵ Conducting Clinical Trials In India: Opportunities And Challenges, Clinical Leader
²⁵⁶ Australia’s Complementary Medicines Industry Snapshot 2018, Complementary Medicines Australia
²⁵⁷ All India Institute of Ayurveda (AIIA) signs MoU with Western Sydney University, Australia, 2019,
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