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Indian Pharma

9th May – Indian Pharma

India can become the world’s pharmacy

In 1969, Indian pharmaceuticals had a 5 per cent share of the market in India, and global pharma had a 95 per cent share. By 2020, it was the reverse, with Indian pharma having an almost 85 per cent share and global, 15 per cent. Over the last 50-plus years — in terms of both, meeting the domestic needs as well as building a leading position in the global pharmaceuticals landscape — Indian firms have been successful. India already contributes over 20 per cent by value to the global generics market, with Indian products contributing more than 40 per cent (by volume) over US drugs.

Competitive market –

  • The Indian pharma industry has been growing steadily for the past few years. The industry in India is worth about $37 billion, with exports accounting for about $18 billion.
  • Interestingly, the prices of medicines in India are amongst the lowest in the world, partly because they are characterised by very high competition.
  • On the whole, the analysis of the Indian pharmaceutical industry reveals a highly competitive industry structure, and based on the standard economic theories, the competitive market structure should lead to market-clearing prices and increased consumer surplus. With increased competition comes an automatic downward price pressure.
  • The AIOCD-AWACS MAT 2019 report shows that 11 per cent of the formulations in India are under the price point of ₹5. There are studies which document that the prices of Indian generic medicines are amongst the lowest in the world.

Production boost –

  • We should increase the production of drugs in India by supporting and streamlining pharmaceutical manufacturing through initiatives such as consistent implementation of policies on manufacturing personnel movement across all States (including formal notification to all State governments/ local authorities); consistent implementation of policies across all States to ensure streamlined logistics for pharmaceuticals material, eg material movement across State borders; and support to ancillary suppliers (eg packaging material, solvents) of pharmaceutical manufacturers.
  • The low prices make the drugs acceptable everywhere in the world. With quality that is enforced by the USFDA (India has the largest number of USFDA-approved plants in the world), which has a reputation for topnotch standards, India will be able to supply quality medicines at low prices.
  • Second, to increase production, the government needs to launch targeted financial incentives to promote the manufacturing of diagnostic kits and other medical devices — especially given that the raw material for manufacturing of these devices is heavily dependent on imports.
  • We should also aim to bring a much larger proportion of manufacturing of APIs back into India, so that the country is not dependent on imports of critical inputs.
  • Going forward, India’s self-reliance in pharmaceutical manufacturing can be further enhanced by providing incentives/support to API and intermediates/KSM manufacturing, such as through provision for SEZs for manufacturing bulk drugs.

Increased research –

  • Third, the Indian pharma industry is now at the cusp of developing new molecules for treatment of various medical conditions at scale. Developing new drugs costs money, and the government needs to provide the conditions for sufficient profits for investment in new molecules while holding the firms accountable for producing new drugs for India and the world.
  • There is a need to finetune the drug pricing policy to generate enough surpluses to invent new molecules while keeping the price levels reasonable with the objective of providing affordable healthcare.
  • In this connection, the government can boost Indian pharma R&D by implementing streamlined and accelerated regulatory and testing pathways for all drugs. The increase in overall innovation/R&D can provide a long-term thrust to Indian pharmaceuticals. Three recommended moves to enable this are encouragement of R&D expenses and outcomes; increase in availability of funding for R&D; and creation of a closer cooperation process between public institutions like CSIR laboratories and NIPERs with private R&D.

Conclusion –

The Indian pharmaceutical industry is a strategic industry for the nation, with the advantage of scale (at $37 billion in 2019-20, it contributed 1.5 per cent to the GDP directly, with another 3 per cent coming indirectly). The industry also has global reach, and is a net foreign exchange earner of more than $10 billion annually. Pharma can do for India what software was able to do in the 1990s and 2000s.

SourceThe Hindu Business Line

QUESTION – With a highly competitive market, pricing and research, India has the potential to become world’s pharmacy. Comment.

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