India's "big pharma" is now the target

Indian generic giants Dr Reddy's Laboratories and Ranbaxy Laboratories are coming under increased competitive pressure. Not only are established brands defending their markets, but foreign generic competitors are moving to India, eager to take advantage of the very competitive advantages in labor costs and skilled technicians, that Indian firms have enjoyed.

According to a report published today in Business Week, a dozen Indian generic manufacturers export to the USA. Indian firms account for one sixth of the world's estimated $48.0 billion market for generic medicines. However, the drug majors have themselves begun manufacturing their own generic versions of their drugs, creating "pricing pressure that is quite brutal," according to Ranbaxy's vice-chairman, Brian Tempest. Already, generic manufacturers have seen their mark-ups drop from 25% to less than 5%, in the last few years.

The willingness of pharmaceutical firms such as the global giant Pfizer to litigate to protect their patents has already hit Ranbaxy, who recently lost a legal battle over Lipitor (atorvastatin calcium) in Finland. Indian firms are looking for other avenues to develop, through acquisitions and also joint-ventures, such as the agreement between Dr Reddy's and USA-based drug giant Merck & Co to produce an authorized generic of anticholesterol drug Zocor (simvastatin).