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Outsourcing industry expected to double in next 4-5 years: Hitesh Windlass

Anurag More, Mumbai
Monday, October 4, 2021, 08:00 Hrs  [IST]

The growing need for novel therapeutics has prompted many small and major pharmaceutical companies around the world to form partnerships with a number of contract development and manufacturing organizations (CDMOs) in order to shorten drug development timelines.

In India, CDMOs are often clubbed with CMOs (contract manufacturing organization) and the total outsourcing industry for this is roughly close to about Rs. 20,000 crore. However, this is expected to double in the next 4-5 years. The key drivers for this growth are the new products that are being launched in the Indian market by the branded generic players. These products are manufactured in partnership with CDMOs, said Hitesh Windlass, managing director, Windlas Biotech.

Secondly, because of the low cost of R&D and manufacturing, as well as the highly qualified workforce, the Indian market is expected to expand the fastest in the CDMO arena. Indian CDMOs have a proven track record. In the pharmaceutical sector, India is the leading exporter of OTCs to the United States, accounting for over 40% of the market, ensuring that the drug's quality would not be compromised owing to years of expertise. The most significant benefit of outsourcing to India is the cost as compared to the United States and Europe; it is estimated that outsourcing to India will cost 37.5%far less than its competitors.

India is the largest manufacturer of vaccines. During the pandemic, the country has not only met domestic needs but has provided vaccines to developing and undeveloped countries, though this had seen a temporary pause plans on resuming the export of vaccines have seen a start yet again. Covid-19 directed focus on the Indian pharma industry for efforts made on ensuring manufacturing quality, innovation, speed, and prices. Such a performance is being noticed all over the world and hence should only open more business opportunities for India.

"Many developed countries offer innovator markets where patented drugs are being sold in large. However, in the case of generic drugs, India has a much bigger volume share, but in terms of value, it’s way lesser than any other market. The country contributes over 20% by value to the global generics market, with Indian products contributing over 40% (by volume) of US drugs. Remarkably, its prices are among the lowest in the world. Despite having some of the lowest prices, large Indian companies are capable of serving not only the Indian market for essential drugs but also the global market," he said.

The CDMO sector is highly fragmented consisting of huge numbers of players, from small, medium-sized companies to large ones. This fragmentation results in the unclear demarcation of strong quality manufacturer from a price-focused manufacturer. Moreover, such a fragmentation becomes a challenge as the quality manufactures have to ensure to not let the costs increase too much.

Another challenge is the cost of sourcing the raw material, packaging and delivery of the end product. While customers don’t expect the CDMOs to bear the price difference still the volatility associated with pricing can sometimes impact delivery timelines. Lastly, due to Covid-19, the CDMO industry is experiencing constraints on external R&D and production initiatives; the plan now is to bring back the production to pre-Covid scenario and focus on scaling up the overall capacity and operation to be able to meet the demands.

Talking about expansion he said, "Yes, we do have plans on expansion. We have essentially chosen the field of injectables. At present, we are large scale manufacturers of tablets, capsules, oral solids, and liquids. In order to cater to different therapeutic segments, our primary focus for R&D is expanding and diversifying our product and delivery system offerings. We continue to focus on expanding our product development and manufacturing capabilities in complex generic products by developing products such as alternate dosages; coating technologies, including, pellet coating using bottom spray, pH dependent coating, API coating, and nanonized crystals; nutraceuticals dosages such as biscuits, protein powder, supplements, etc; and ayurvedic products for wellness, hair oils and cough syrups.

“From here we want to move towards injectables where we want to build in a similar business of trade generics and exports. We are now in the process of building our new brownfield project for injectables".

"We export to some Southeast Asia, Africa and CIS countries and have plans to export to more countries. Most of our revenue comes from the Indian market. As of now, the export contributes to 5% of our total revenue," he said.

 

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