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Economic Development > Indian Economy and issues > Pharmaceutical sector
REFERENCE NEWS
Aimed at ensuring robust quality control for pharma and biopharmaceutical products, the Union Health Ministry on January 6 notified revised rules under Schedule M of the Drugs and Cosmetics Rules, 1945.
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Schedule M prescribes the Good Manufacturing Practices (GMP) for pharmaceutical products. With the amendment, the words ‘Good Manufacturing Practices’ (GMP) has been replaced with ‘Good Manufacturing Practices and Requirements of Premises, Plant and Equipment for Pharmaceutical Products’.
MAJOR CHANGES INTRODUCED:
The revised Schedule M includes:
The introduction of a Pharmaceutical Quality System (PQS).
Quality Risk Management (QRM).
Product Quality Review (PQR).
Qualification and validation of equipment.
A computerized storage system for all drug products.
Guidelines for Manufacturing Pharmaceutical Drugs:
The revised Schedule M has 13 parts which provide GMP guidelines for the specific requirements for manufacturing pharmaceutical drugs.
Introduction of Five New Categories of Drugs:
The new categories (Not covered under Previous Rules) include pharmaceutical products containing hazardous substances such as sex hormones, steroids (anabolic and androgenic), cytotoxic substances, biological products, radiopharmaceuticals, phytopharmaceuticals, and investigational pharmaceutical products for human clinical trials.
Application of Rules:
Medium and small manufacturers will have to implement the revised rules within 12 months whereas large manufacturers will be given six months.
STATUS OF PHARMACEUTICAL SECTOR IN INDI
India is the largest provider of generic drugs globally.
Indian pharmaceutical sector supplies over 50% of global demand for various vaccines, 40% of generic demand in the US and 25% of all medicine in the UK.
Globally, India ranks 3rd in terms of pharmaceutical production by volume and 14th by value.
The domestic pharmaceutical industry includes a network of 3,000 drug companies and 11,000 manufacturing units.
Over 80% of the antiretroviral drugs used globally to combat AIDS are supplied by Indian pharmaceutical firms.
India's biotechnology industry was valued at USD 64 billion in 2019 and is expected to reach USD 150 billion by 2025.
India’s medical devices market stood at USD 10.36 billion in FY20. The market is expected to increase at a CAGR of 37% from 2020 to 2025 to reach USD 50 billion.
SIGNIFICANCE OF PHARMACEUTICAL SECTOR
Market size:
According to the Economic Survey 2021, the domestic market is expected to grow 3 times in the next decade.
India’s domestic pharmaceutical market is estimated at USD 42 billion in 2021 and likely to reach USD 65 billion by 2024.
Human resource:
Low cost manpower with expertise in Pharma.
Large talent pool of scientists and engineers.
Economic drivers:
High economic growth along with increasing penetration of health insurance to push expenditure on healthcare and medicine India.
Increasing population with health awareness also increases health care demand.
Global demand for generic drugs growth at 10-15% over the past few years
Patent expiration and aging population in the US, Europe, and Japan.
Cost competitiveness:
India ranks 3rd in terms of pharmaceutical production and 14th in terms of value >> which implies low cost
Vast network of drug manufacturing companies with more than 11000 units >> economy of scale
Tourism drivers:
Pharma sector is a crucial component of medical tourism.
Traditional system of medicine (AYUSH):
The traditional system of medicine (AYUSH) is being promoted by the government which provides brighter aspects for the pharmaceutical industry in India.
Export potential:
India’s drugs and pharmaceuticals exports stood at USD 24 billion in FY21.
India is the 12th largest exporter of medical goods in the world.
The country’s pharmaceutical sector contributes 6.6% to the total merchandise exports.
Increasing FDI inflow:
Pharmaceutical sector received cumulative FDI of USD 17 billion since 2000
CHALLENGES OF PHARMACEUTICAL SECTOR
Violation of IPR Rules:
Indian pharmaceutical companies have faced allegations of violating Intellectual Property Rights (IPR) laws, resulting in legal disputes with multinational pharmaceutical companies.
Ex: Swiss pharmaceutical company Roche and Indian drug manufacturer Cipla in 2014.
Quality Control Failures
In December 2022, CDSCO initiated a probe in connection with the death of 18 children in Uzbekistan allegedly linked to a cough syrup manufactured by Indian firm Marion Biotech.
Recently, US Centre for Disease Control and Prevention (CDC) and the Food and Drug Administration (USFDA) raised concerns over a drug-resistant bacteria strain allegedly linked to eye drops imported from India.
Recent regulatory inspections revealed that 48 drugs failed to meet quality standards. 3% of drugs used for common conditions like hypertension, allergies, and bacterial infections were found to be substandard.
Policy and Regulatory challenges
Drugs price control order puts pressure on prices
MRP based GST levy >> burdens companies with higher tax
Low data collection on drugs coupled with insufficient training to drug inspector leading to huge malpractice among drug sellers
Dependence on imports for Active Pharma Ingredients (API)
Despite being a leading supplier of medicines to several countries, Indian pharmaceutical industry is heavily dependent on China for Active Pharmaceutical Ingredients (API). 77% of APIs are imported from China
Marketing side
Pharma companies often resort to unethical practice of providing freebies and gifts to doctors to promote their drugs
Lack of adequate training to medical representatives along with prevalence of Quack (fake doctor) increases risk of life of patients.
Poor research and development
Due to fund constraint and lack of academia-industry linkage
Pricing and Affordability:
India is known for its generic drug manufacturing capabilities, which have contributed to affordable healthcare globally.
However, the pricing of pharmaceuticals within India remains a significant concern. Balancing the need for affordable medicines with the profitability of pharmaceutical companies is a delicate task.
Healthcare Infrastructure and Access:
Despite India's strong pharmaceutical industry, access to healthcare remains a challenge for a significant portion of the population.
Issues such as inadequate healthcare infrastructure, uneven distribution of healthcare facilities, and low health insurance coverage pose barriers to accessing medicines.
GOVERNMENT INITIATIVES
WAY FORWARD
Enhanced Budgetary Allocation: Increase the budget allocation for healthcare to 2.5-3% of GDP as outlined in the National Health Policy 2017. This should include a dedicated portion for bio-pharmaceutical sector research and development, ensuring more resources for innovation and development.
Improving Ease of Doing Business: Streamline processes to enhance the ease of doing business. This includes simplifying regulatory frameworks, reducing bureaucratic hurdles, and creating a more conducive environment for private sector companies in the pharmaceutical industry.
Reducing Dependence on Foreign APIs: Develop a National Plan for self-sufficiency in Active Pharmaceutical Ingredients (APIs) to reduce over-reliance on imports, particularly from China. This could involve encouraging domestic production through subsidies, tax breaks, or other incentives.
Focus on Integrated Capabilities Post-Pandemic: Develop integrated capabilities such as telemedicine, home healthcare, and senior care. This approach would provide equitable access to quality healthcare services and strengthen the healthcare infrastructure in a post-pandemic world.
Rationalization of GST in Healthcare Sector: Address the increase in embedded taxes post-GST implementation by rationalizing the GST structure. This would help unlock the credit trapped in the healthcare value chain, benefiting the pharmaceutical sector financially.
Strengthening Industry-Academia Linkages: Revamp academic curricula to align with industry needs and incentivize academic institutions to produce highly skilled human capital. This will foster innovation, especially in personalized medicine, and strengthen India's position in the global pharmaceutical market.
Implementing Malshekar Committee Recommendations: Reform the drug regulatory system by implementing the recommendations of the Malshekar Committee. This includes establishing a National Drug Authority and strengthening State Drug Control Organizations, which would enhance the efficiency and effectiveness of drug regulation in the country.
The pharmaceutical sector in India stands at a pivotal juncture, where strategic reforms and focused investments can propel it towards becoming a global leader in healthcare innovation and accessibility.
PRACTICE QUESTION
Q: India is known to be the pharmacy of the world. However, the Indian pharma sector faces many issues that it needs to rectify. Comment. (10M, 150W)
