Detailed Project Report on Bulk Drugs (E.O.U)

BULK DRUGS

[EIRI/EDPR/1495]  J.C.: 280 

INTRODUCTION

A bulk drug — also called active pharmaceutical ingredient (API) — is the chemical molecule in a pharmaceutical product (medicines we buy from the chemist) that lends the product the claimed therapeutic effect.

In other words, it is the substance responsible for the product being a medicine, penicillin to give one example. As is evident from this, there are ingredients other than the API in products sold as medicines. These inactive ingredients-excipients — may or may not change from product to product, while the bulk drug would inevitably remain the same as it is the identity of the medicine.

When the bulk drug is absent, the product is no longer a medicine and when it is changed, it is a new medicine. One may ask if the existence of the inactive ingredients signify anything to the patient. In the case of most of the existing bulk drugs, change of inactive ingredients don't impact the curative quality of the product, although there are exceptions.

This means the drug manufacturers more or less have the liberty to "formulate" the bulk drug using excipents of his choice depending on chemical feasibility and commercial interests. The medicines in the markets in the "form" of tablets, capsules, syrups, drops, intravenous fluids etc., are therefore "formulations." In plain language, the products we refer to as medicines are formulations (of bulk drugs) and not bulk drugs per se.

What are the regulatory procedures for introduction of a new bulk drug/formulation in the market?

Launching a new bulk drug is a hugely expensive proposition requiring rigorous scientific research, enormous risks of costly failures and validation trials. Some MNCs say they spend $800m for a new drug invention. An investigational new drug application is being filed before a regulator when a company wants to introduce a new chemical entity — bulk drug — with a presumed therapeutic effect.

On the other hand, the formulator merely requires to prove that his product is bio-equivalent to the existing formulations in the class- that is, the rate and extent of drug absorption don't vary beyond permitted limits from the extant formulation/s of the bulk drug. In the case of established drugs, the formulators are practically exempted from this requirement, while in the case of drugs that so far remained under a patent — which means that only the inventor's formulation/s of the bulk drug existed thus far — bio-equivalence studies are mandatory for marketing permit for at least the first few new formulators. This is what happens when Indian firms closely follow patent expirations to launch their formulations of the patent-expired drug.

Can a formulation have more than one bulk drug?

Although most formulations contain only one bulk drug, there are a large number of formulations containing more than one bulk drug. The number of such fixed dose combination (FDC) formulations is increasing. Regulators see a new FDC made by combining two bulk drugs as a "new drug" because unlike inactive ingredients, these active ingredients require to be verified for their safety and efficacy given the chance of clinically adverse interactions.

What is a generic drug?

A generic drug is a drug named after the internationally accepted scientific name of the API. For example if a company sells antibiotic bulk drug Ciprofloxacin by that name, it is generic Ciprofloxacin and if a formulation of the drug is sold as Ciprofloxacin in the retail market, it is generic formulation of Ciprofloxacin.

If a company sells the same formulation under its proprietary brand name, then it is a branded drug. Branded names are capitalised while generic names are not. Generally, prices of generic products are expected to be lower than the prices of branded items. Although it may be an exemplary ethical practice for a registered medical practitioner to prescribe the generic name of the drug, it is increasingly becoming a norm to prescribe brands also. But, the term generic drug is also relative and contextual. This is because it is increasingly being used to refer drugs that are off-patent. Branded off-patent drugs too are described as generic drugs in the highly regulated and patent-prevailing markets like the US, whereas in countries like India where there is no product patent on pharmaceuticals, a non-branded medicine is a generic medicine. To distinguish between the two meanings of generics, non-branded drugs are also referred to as "generic generics."

At present the global Pharma market is estimated at US$ 500 billion. The market is expected to continue to grow at the rate of 5 to 6% per year. During the last decade India has built up strong position as a bulk drug (Active Pharmaceutical Ingredients – API) supplier to the international market and expects to further consolidate the position. For this reasons many new entrepreneurs are considering entering this industry. New aspirants will have to consider following aspects at the time of making the investment decision

WTO regime that came into effect from 2005 provides for product Patent protection.

Environmental protection rules are stringent now CGMP (current good manufacturing practices) requirements are to be met.

In effect there are entry barriers for small units. However a well planned medium size unit is still an attractive investment proposition

Proposal:

A grass root project in a declared chemical zone, having environmental clearances is a profitable proposition. The plant should be constructed to meet environmental and GMP Requirements

Product mix

A number of APIs have come off patent are about to come off patent during 2007. . The new project can be planned with one or two of these products along with one two older products.

COST ESTIMATION

Land & Building (3570 Sq.ft)                      Rs 3.88 Cr
Plant & Machinery                                       Rs.5.31 Cr         
W.C. for 3 Months                                        Rs.5.57 Cr         
Total Capital Investment                             Rs. 15.37 Cr              
Rate of Return                                             63%   
Break Even Point                                        40%

CONTENTS

INTRODUCTION

MARKET POSITION

MANUFACTURER/SUPPLIERS OF BULK DRUGS

MANUFACTURING PROCESS OF DRUGS

REFERENCE EXAMPLE

MANUFACTURING PROCESS

FLOW DIAGRAM OF BULK DRUG MANUFACTURING PROCESS

MANUFACTURERS/SUPPLIERS OF PLANT & MACHINERY

REACTION VESSEL

MANUFACTURERS/SUPPLIERS OF RAW MATERIALS

WORKING CAPITAL REQUIREMENT/MONTH

APPENDIX – A:

01. PLANT ECONOMICS

02. LAND & BUILDING

03. PLANT AND MACHINERY

04. OTHER FIXED ASSESTS

05. FIXED CAPITAL

06. RAW MATERIAL

07. SALARY AND WAGES

08. UTILITIES AND OVERHEADS

09. TOTAL WORKING CAPITAL

10. TOTAL CAPITAL INVESTMENT

11. COST OF PRODUCTION

12. TURN OVER/ANNUM

13. BREAK EVEN POINT

14. RESOURCES FOR FINANCE

15. INSTALMENT PAYABLE IN 5 YEARS

16. DEPRECIATION CHART FOR 5 YEARS

17. PROFIT ANALYSIS FOR 5 YEARS

18. PROJECTED BALANCE SHEET FOR (5 YEARS)