Tapping the generics

market

P N Karlekar
Atul Limited
“Strategies for globalization and increasing
competitiveness of the Indian agrochemical
industry”

~ Backdrop – global agrochemical industry.

~ Generics - definition
~ Importance of generics
~ Strategies of major MNCs
~ Strategies of major generic companies
~ Indian industry - snapshot
“Strategies for globalization and increasing
competitiveness of the Indian agrochemical
industry”

~ Indian Industry – SWOT

~ Generic market potential for Indian Industry
~ Way ahead . . .
~ Must happen . . .
 Backdrop
Global agrochemical industry size : US$ 30 billion
(~Rs.135000 Cr.)
US$ billion

40
30
20
10
0
1990 1995 2000 2005

Six major MNCs cover 75% market : US$22 billion

(~Rs.100000 Cr.)
Four major generic Cos. cover 10% market : US$ 3
billion (~Rs.13500 Cr.)
Balance 15% covered by hundreds of other Cos. : US$ 5
billion (~Rs.21500 Cr.)
 Generics - definition
An active ingredient off-patent in the majority of its
markets.
A typical product life – cycle.

100

50
Grow th

0
10 20 30 40
Year
Proprietary Generic Commodity
 Importance of Generics

Generics’ market share : 65%

US$ 20 billion (~Rs.90000 Cr.)

MNCs dependence on generics : 40-50%

Generics’ market is growing…

~ Products introduced in 1980s and 1990s are getting
off-patent now.

~ NCEs have reduced considerably.

~ Mature Industry
 Generics - examples
The examples of a few generic molecules are as
under :

~ Glyphosate – introduced in the year 1972 by Monsanto

and having a value of US$ 3185 million.
~ Imidacloprid – introduced in the year 1991 by Bayer and
having a value of US$ 820 million.
~ Chloropyrifos – introduced in the year 1965 by Dow and
having a value of US$ 390 million.
~ Mancozeb – introduced in the year 1956 by Syngenta
and having a value of US$ 340 million.
 Strategies of major MNCs…

 Image

 Marketing…

~ Branding

~ Geographic reach

~ Newer formulations

~ Strategic alliances with local marketing companies

 Strategies of major MNCs…
 Marketing…
Combination products : Extend product life and offer solutions... a few
examples..

~ Metribuzin + CME (Canaopy) by Dupont

~ MSM + Thifensulfuron + Tribenuron (Canvas) by Dupont

~ 2,4-D+Picloram (Tordon) by Dow

~ Glyphosate + Picloram (Scout) by Monsanto

~ Cymoxanil + Azoxytrobin (Quadris) by Syngenta

~ Difenconazole + Propiconazole (Amure) by Syngenta

~ Imidacloprid + Azoxystrobin (Amistar admire) by Bayer

 Strategies of major MNCs…
 Marketing…

Merging Biotechnology with generics….

The traits are designed in the crops in such a way that the
application of only specific generic brings the best results…..

~ Monsanto’s Roundup ready soybean for Glyphosate

~ BASF’s Clear field project for Imidazolione group of products

(Imazathapyr etc..)…
 Strategies of major MNCs…

 Patents :

~ Supplementary protection certificates

~ Patent term extension

~ Novel formulation patents

~ Process patents (key intermediates, racemic mixtures)

~ Application patents
 Strategies of major MNCs…
 Registrations :

~ Registration withdrawals

~ Data protection

 R&D thrust

 Manufacturing alliances - Dupont recently acquired Khimprom to

form Dupont Khimprom, a manufacturing venture in Russia

 Safeguarding the access to critical intermediates.

 Intermediates strategies

Name of
Key Intermediate Company
Molecule

Glyphosate Diethanolamine Monsanto

Pyrimiphos Dicyanodiamine Syngenta

Indoxacarb Cinchonine Base DuPont

Picloram 2-Cyanopyridine Dow

Clodinafop S-(-)2-Chloropropionic Acid Syngenta

Carbaryl α-Naphthol UCB

 Strategies of major generic
companies…
 Alliances
~ M&A route

Makhteshim-Agan is today one of the top ten agrochemical company based on

this strategy. The recent acquisitions by the company include :

~ Farmoz in Australia

~ Mabeno in Netherlands

~ Biomarkt (70%) in Hungary

~ Control solutions incorporated (60%) in USA.

 Strategies of major generic
 Alliances
companies…

Other major M&A for the year 2005 were as under :

~ Aryta’s acquisition of 50% share of Volcano in South

africa.

~ Atanor’s acquisition of a Syngenta plant (fungicide) in Brazil.

~ Cheminova’s acquisition of Ospray (Australia) and Croptec (Colombia)

~ Nufarm’s acquisition of Agrogen (Colombia) and Nuturf to C K Life Sciences

(Australia)

~ UPL’s acquisition of Reposo (Argentina) and Cequisa (Spain)

 Strategies of major generic
companies…
 Alliances
Marketing alliances – a few recent examples…

~ Cheminova and MAI entered into an agreement with Bayer for the worldwide

distribution of Imidacloprid

~ Valent enterd into distribution arrangement with Bayer for Fluopicolide for US

and Canada

~ Arysta got the distribution rights for Clothianidin from Sumitomo for US market.

~ MAI entered into an agreement with Bayer for the distribution of Tebuconazole

in USA.
 Strategies of major generic
companies…

 Alliances

Acquire marketing rights for products divested by major

MNCs…

~ Amvac acquired Phorat from BASF.

~ Nufarm acquired Imazamethabenz from BASF.

~ Sumitomo acquired Trifone from BASF

 Contract R&D and manufacturing with Major MNCs

 Strategies of major generic
companies…

 Registration

~ Task force entry for US registration.

~ Registration in high priced markets like EU, Brazil

and Canada.

 R&D thrust
 Indian industry - snapshot

Domestic market : Rs.3500 Cr. (~US$ 750 million)

Exports : Rs.2000 Cr. (US$450 million)

Market share of MNCs : 50%+

The balance is shared between :

~ Basic manufacturing company (approx..100)

~ Formulators/ repackers/marketing companies (approx..200)

 Indian industry - SWOT
Strengths :
Exports to a large no. of countries.
Managerial / Technical pool of professionals.
Low cost manufacturing base.
Quality – at par with the MNCs.
Development of new and eco-friendly formulations..
WDG, SC, EW etc..
Technical competence…
Chemistry Expertise Thru’ Existing
Molecules
Category: Pyrethroids
Technological Aspect:
– Optical Resolution
– Asymmetric Synthesis
– Grignard reactions
Examples: Deltamethrin, Lambda Cyhalothrin

Category: Neonicotinoids
Technological Aspect:
– High Temperature Catalytic Chlorination
– Cyanation
– Cyclization
Examples: Imidacloprid, Acetamiprid, Thiamethoxam
 Chemistry Expertise Thru’ Existing
Molecules
Category: Carbamates
Technological Aspect:
– Multistep Synthesis using Catalytic Chlorination
– Asymmetric Induction
– Hydride Reactions
Examples: Carbofuran, BPMC, Indoxacarb

Category: Sulfonyl Urea

Technological Aspect:
– High Temperature selective phosgenation
– Cyclization
– Selective Halogenation
– Thioethylation
Examples: Sulfosulfuron, Chlorimuron Methyl, Metsulfuron
Methyl, Tribenuron Methyl
 Chemistry Expertise Thru’ Existing
Molecules
Category: Phenoxy
Technological Aspect:
– High Temperature Selective Halogenation
– Phosgenation
– Asymmetric Synthesis
– Fluorine Chemistry
Examples: 2,4-Dichlorophenoxys, MCPA

Category: Amino Acids

Technological Aspect:
– High Temperature Catalytic Chlorination with Exotic MOC
– Catalytic Oxidation
– Microbial Oxidation
– High Temperature Phosphochlorination
Examples: Glufosinate, Glyphosate, Picloram
 Indian industry - SWOT
Weakness:
Image
Infrastructure / labour laws.
Unhealthy competition
Global access : low price & low margin countries.
Limited knowledge :
~ High price markets
~ Patents
 Indian industry - SWOT
Weakness:

Limited financial muscles

Highly fragmented industry and hence powerless.

Lack of teamwork – a major drawback.

Some important technologies are untouched.

 Technological areas yet to be
explored
Many intermediates/products not made in India due to lack of
attention to certain technological areas

- Ammoxidation – Aromatic & Heterocyclic Nitrites

– Enzymetic Reactions – Selective Hydrolysis, Esterification
Etc.
– Oxidation (Metal Catalyzed)- Aromatic Aldehydes,
metaphenoxy benzaldehyde
– Phosphorylation (High Temperature) – Methyl Phosphorus
Chloride, Glyphosinate
– Effluent Treatment (Microbial) – Selective towards
PHENOLICS, CYANIDES, CHLORINATED PRODUCTS
– Mercaptans – Ethyl, t-Butyl
 Biochemical Molecules
(Microbial Synthesis)

New Molecules through Biochemical Approach

– AVERMECTIN (Insecticide, Acaricide)

– VALIDOMYCIN (Fungicide)

– SPINOSAD (Insecticide)
 Indian industry - SWOT

Opportunities
Large untapped Indian market.
Peak product introduction was in mid 1980s
to mid 1990s. A no. of them are getting off-
patent in the near future.
Special advantage of introducing products
patented before 1995 even if the patent is
internationally valid.
 Indian industry - SWOT

Opportunities
Product divestment by the MNCs.
For example… at the formation of Syngenta, from Novartis and
Zeneca in 2000…..
~ the combined number of the active ingredients of the two
companies totaled 121 active ingredients
~ by end 2002 this had been reduced to 89
~ the target has been to reduce this to just 76 by 2005
The phasing out/divestment of these brands is likely to make
approximately US$220 million to generic players
 Indian industry - SWOT

Opportunities

Indian industry’s technical competence can

be harnessed for manufacturing the products
that have recently come out of patent or will
be off-patent in the near future.
 Insecticides

Existing Chemistry New

Carbofuran Asymmetric Induction Bifenthrin

Deltamethrin High Temperature Gamma Cyhalothrin

Phosgenation

Lambda Cyhalothrin Thiochloprid

Selective Halogenation
(including
Thiamethoxam Fluorination) Fipronil

Optical Resolution
Imidacloprid Tefluthrin

Cyanation
Indoxacarb

Grignard Reaction on
Bulk Scale Lufenuron
 Fungicides

Existing Chemistry New

Phosgenation Cyproconazole

Hexaconazole Fluorination Fluazinam

Propiconazole Friedel Craft’s Fludioxonil

Synthesis

Tebuconazole
Oxirane Synthesis Difenoconazole

Epoxyconazole
Epoxidation
 Herbicides

Existing Chemistry New

Chlorimuron Ethyl High Temperature Thifensulfuron

Phosgenation

Nicosulfuron
Tribenuron Methyl Thioethylation

Primisulfuron &
Pyrimidine Chemistry Methyl
Sulfosulfuron

Bensulfuron
Selective Chlorination
Metsulfuron Methyl Rimsulfuron

Fluorination
Clethodim

Friedel Craft’s
Synthesis Difiufenican
 Herbicides
(Oxacetamide, Chloroacetamide, Anilides, Acyalanines)
Existing Chemistry New

Butachlor

Acylation Dimethanamide
Alachlor

Metalaxyl Asymmetric Synthesis Mefenacet

Pretilachlor

(Imidazolinone / Isoxazolidinone)
Existing Chemistry New

Picloram High Temperature Clomazone

pyridine chlorination

Chloropyriphor Imuzaquin
Cyanide Chemistry

Pyrethroids Imazethapyr
Pyridine Chemistry
 Herbicides (Phenoxy)

Existing Chemistry New

2,4-D Derivatives Selective Chlorination

Clodinafop - P

MCPA Phosgenation

Fenoxaprop

2,4-D B Asymmetric Synthesis

 Technologies common to
existing molecules & generics
Existing Chemistry New

Phosgenation
Metsulfuron methyl Indoxacarb
Cyanation
2,4-D Acid Halogenation (including Primisulfuron Methyl
Fluorination)
Chlorimuron methyl Chlorothalonil
Epoxidation

Imidacloprid Friedel Craft’s synthesis Thiochloprid

Hexaconazole Asymmetric induction Clodinafop Propargyl

Pyrimidine reactions Gamma Cyhalothrin

Carbofuran
Grignard reaction on Bifenthrin
Deltamethrin industrial scale

High Temp. pyridine Avermectin

Pretilachlor chlorination
Clomazone
Picloram Fermentation/ microbeal
reaction
 Indian industry - SWOT

Threats

Low price competition from China.

Defense strategies of majors.

Impact of Biotechnology

Resistance building

Obsolesces of product and technology

Generic market potential for Indian
companies…

 Generic market : US$20 billion (~ Rs 90000 Cr)

 Indian companies share in the generic market :

4% - US$800 million (~ Rs 3600 Cr)
 MNCs share US$11.25 billion (~Rs 50,000 Cr)
 Major generics share US$3 billion (~Rs 13,500 Cr)
 Way ahead..
 Market access..
~ Choice of market / product.
~ Image creation and branding.
~ Global tie-ups and marketing alliances.
~ Overseas offices and stock points..
 Registration
~ Data generation
~ Obtaining registration in the developed markets
 Technology
~ Developing the difficult technologies for the products getting
off-patent.
~ Mastering the art of making quality products with the lowest
input cost.
 Synergistic

partnerships

 Strategic alliances
 Must happen…

 Paradigm shift in the image of our country

for quality and the industry as a solution

provider

 Support from the Government authorities.

 Synergistic partnerships
Thanks…