Market_Assessment_Market_Sizing_Forecasting_O by Sutherland Global Services

Case Study and Sample Slides India: Market Assessment – Pharmaceutical Packaging

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Indian pharmaceuticals market has registered substantial growth, led primarily by growth in exports Indian Pharmaceutical Market CAGR

$24

Market Size in $ billion

Domestic

$21.3

Exports

$18

$15 $12

$4.0 $6

$16.6

$11

$9.4

31.6%

$6.0 $3.0

$4.3

$6.0

$7.1

$7.0

$5.0

2002-03

2003-04

2004-05

2005-06

2006-07

$5.2 16.6%

$3.0

$1.0 $4.1

$18.52

$9.0

$10.3

2007-08

2008-09

• Revenues from pharmaceutical manufacturing in India, hit $18.52 billion in 2008-09 making it the 14th largest market in the world Domestic 70%

Exports 30%

• Pharmaceutical industry is almost equally split between domestic demand and exports, with the latter exhibiting a faster growth rate over the years • Despite the spectacular growth registered in exports of pharmaceuticals from India, significant room for further market expansion exists as India accounts for a miniscule ~X.X% of the world exports of pharmaceuticals

Exports 41%

Domestic 59%

Source: Department of Pharmaceuticals (Government of India)

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Pharmaceutical exports are dominated by finished dosages (formulations) but APIs are an equally important constituent Composition of India’s Pharmaceutical Exports

Total: $7,XXX million

(55%)

(43%) (2%)

Formulations • Drugs ready for consumption by patients in the form of tablets, capsules, injectables, or syrups are called Formulations • Can be subdivided into two categories: generic drugs and branded drugs • Also known as final dosage forms

• Packaged in bulk or dosage forms for retail distribution

• Glass, plastic, or aluminum foils used for packaging in bottles, tubes, vials, jars or pouches

Bulk Drugs / APIs • Active chemical substances in powder form, the main ingredient in pharmaceuticals – chemicals having therapeutic value, used for the production of formulations

• Also known as bulk actives, active pharmaceutical ingredients (APIs) or active ingredients • Bulks drugs which are in the form of liquids or dry powders are traded in bulk or large quantities

Herbals • Herbals are plant extracts or a combination of plant extracts and other medicaments that have therapeutic value

• Herbals can be packaged in plastic and glass containers

• They are thus packaged in large HDPE drums

Source: Department of Pharmaceuticals (Government of India)

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~XXXX firms are engaged in the manufacture of formulations in India; Export of formulations expected to reach $1X.X billion Formulations Exports from India

Rank

CAGR: ~16%

10.27 6.25 1.25 2002-03

3.25 2007-08

2011-12E

2015-16E

Major Formulations Exported

Antibiotics – Others

Ayurvedic Medicants

Amoxycllin in Capsules etc.

Ibuprofen Paracetamol & Combinations

Omeprazole & Lansoprazole

Insulin Injection

Tranquilizers

Mixed Vaccines for MMR

Cimetidine, Rantidine

Ciprofloxacin

• Large number of drugs going-off patent to lead favorable environment for formulations export from India Formulations 83%

Formulation Manufacturers in India (FY 200X-XX)

• Regulated markets to hold major share in overall formulations demand from India • Focus on R&D, developing a strong product pipeline, and being dynamic on ANDA fillings is increasing India’s global footprint • Over three fourths (XX%) of all the manufacturing units in India are involved in formulations

Source: Organization of Pharmaceutical Producers in India, Department of Pharmaceuticals

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North America is the largest destination region for pharmaceutical exports from India, with US being the single-largest export country Pharmaceutical Exports by Geography

0.4% 5%

Others Latin America

CIS & Baltic

16%

Europe

2009-10

94%

Exports to the US ($ million) Canada

17%

Asia & ASEAN

CAGR 12%

$982.0

21%

$856.0

Africa

$700.0 $550.0

22%

200X-XX

North America

2006-07

2007-08

2008-09

2009-10

Source: India Export-Import Data Bank

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Prospects for exports to the US continue to appear bright as India dominates in the number of DMFs and ANDAs filed with the US FDA Global DMF Filings (FY2009)

Total DMF Filings: XXX

XX%

FY 200X

India, 286

US, 196

China, 92

Others *, 180

* - Italy, Germany, France, Japan, Taiwan, Switzerland

70 68

• Indian pharmaceutical companies targeting generic drugs in the US thus actively pursuing DMF/ANDA registrations

55 38 19

2003

2004

2005

2006

2007

2008

• Aggressive submissions by companies such as Aurobindo Pharma, Dr. Reddy’s Laboratories, Matrix Laboratories, Sun Pharmaceuticals, and Orchid Pharmaceuticals facilitated India’s strong position

India’s ANDA Filings (200X-XX) Source: US FDA

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Outline

Overview of Indiaâ&#x20AC;&#x2122;s Pharmaceutical Exports

Overview of Pharmaceutical Packaging Market in India

Overview of Packaging Regulations for Exports to the US

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Plastic bottles and jars dominate the solid pharmaceutical exports to the US Packaging of Tablets/Capsules for US Exports

10%

Solid Pharmaceuticals by Form

Pouches & Bags

25% Strips & Blisters Tablets 45%

• Pouches are sometimes used for bulk drugs as they offer flexible packaging

• Bottles offer the flexibility of various sizes and act as a convenient method of storage • Jars are typically used to package large quantities of tablets meant for supply to pharmacists and hospitals

Capsules 55%

65% Plastic Bottles & Jars

• In the USA, blister packs are primarily used for packing physician samples of drug products, or for OTC products • While in other countries blisters are the main packaging type

US Exports of Tablets & Capsules by Packaging Source: Primary Research, SGS Analysis

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Safety norms make child resistant caps for a majority of bottle packaged drugs in the US mandatory Number of Caps & Closures Sourced for Packaging Pills in Containers Exported to the US (caps in million)

Types of Caps Sourced for US Exports

165

185.64

125.65 86.9

92.56

2007-08

2008-09

Child Resistant 70%

Circular Threaded 30%

56.5 2006-07

2009-10

2010-11F

2011-12F

• Child resistant caps are mandatory for any drug sold OTC • Demand of caps & closures is directly related to demand growth of containers

• In India, only select domestic players (Shriji Polymers) have developed the capability to manufacture CR caps locally • Typically CR caps are purchased from foreign suppliers who are well versed with the technology • CR caps are not mandatory for bottles of sizes larger than 1000 cc volume Source: Primary Research, SGS Analysis

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Bulk bottles are often sourced by pharmacies and hospitals to take advantage of cost efficiencies Size & Price of Bottles

Bottle Capacities by Number of Bottles Sourced

25%

30cc-60cc

Size of Bottle

Price per 1,000 Bottles

30-60 cc

$XX-XX

70-100 cc

$XX-XX

120-200 cc

$XX-XX

250 cc

$XX-XX

500-1,000 cc

$XX-XX

> 1,000 cc

$XX-XX

16%

28%

70cc-100cc

120cc-200cc

250cc

18%

500cc-1,000cc

4% 3%

> 1,000cc

Key Insights  Popular for individual buying purposes (OTC) and prescription forms  Popular for packaging drugs for seasonal illnesses available OTC (e.g. Paracetamol for flu)  CR caps are mandatory for small bottles  Used for supply to retail and OTC channels of distribution  Products can be offered in different quantities to provide choice to buyers  Mainly used for supply to distributors (pharmacists, hospitals, other health & welfare organizations)  CR caps may or may not be mandatory in case of large quantity bottles  Utilized for packaging dietary supplements bought OTC

• Historically, pharmacists and hospitals sourced drugs in bulk (XXX-XXXX tablets) capacity entailing lower costs • However, introduction of stringent packaging norms led to increase in demand for bottles of smaller quantities (XXcc-XXXcc) • In addition, there has been a change in the trend wherein hospitals and pharmacies are also sourcing drugs in smaller quantities (XXXcc-XXXcc)

Source: Primary Research, SGS Analysis

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End of Presentation