Prospects And Challenges Of Pharmaceutical Sector In India
2022 JAN 26
Mains >
Economic Development > Indian Economy and issues > Pharmaceutical sector
WHY IN NEWS?
- In its latest report, ICRA has argued that Indian pharma could clock in 9-11% of growth in FY22, driven by a push from domestic and emerging markets.
STATISTICS:
- 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.
- Economic Survey 2020 acclaimed Pharma sector as one of the top 5 sector which reduce trade deficit of India
- 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.
INDIA'S OPPORTUNITIES IN THE PHARMA SECTOR
- Human resource
- Low cost manpower with expertise in Pharma
- Large talent pool of scientists and engineers
- Market size
- According to the Indian Economic Survey 2021, the domestic market is expected to grow 3x 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
- 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
- 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
- Policy and regulatory challenges
- IPR regime of India not favourable to Pharma industry
- 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)
- Example : 77% of APIs are imported from China
- Quality issues
- This is evident from ban on certain drug on ground of poor quality by EU
- Lack of quality enforcement standards
- 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
INITIATIVES:
- Production Linked Incentive(PLI) Scheme for
- Bulk Drugs
- Medical Devices
- Institutions:
- Central Drugs Standard Control Organization (CDSCO) Source
- It is the Central Drug Authority for discharging functions assigned under the Drugs and Cosmetics Act
- National Pharmaceutical Pricing Authority (NPPA)
- It is a government regulatory agency that controls the prices of pharmaceutical drugs in India
- The NPPA regularly publishes lists of medicines and their maximum ceiling prices.
- Pharmaceuticals and Medical Devices Bureau of India (PMBI)
- To implement Pradhan Mantri Bhartiya Janaushadhi Pariyojana.
- National Biopharma Mission:
- Development of pharma products
- Development of products from leads that are at advanced stages in the product development lifecycle and relevant to the public health.
- Infrastructure:
- Strengthening and establishing shared infrastructure facilities for both product discovery validation and manufacturing
- Human capital:
- Developing human capital by providing specific training to address the critical skills gaps in researchers, value chain etc.
- Tech transfer:
- Creating and enhancing technology transfer and intellectual property management capacities and capabilities in public and private sector.
- Supports MSMEs:
- The Mission is supporting small and medium enterprises so that they can overcome the risks involved in early stages of product development.
- Promote entrepreneurship
- Mission is supporting enhanced industry-academia inter- linkages and providing mentoring and training for academia, innovators and entrepreneurs to translate knowledge into products/technologies
- Promote inclusiveness:
- Strengthening the ecosystem for affordable product through >> development of vaccine candidates for Cholera, Influenza, Dengue etc
- Bio-Technology Parks:
- These parks are successfully accelerating the commercialization of new technologies, assisting new enterprises to forge appropriate linkages with other stakeholder of biotechnology sector including academia, industry and Government
- Ex: Biotech Park, Lucknow
- Initiatives in Medical Device Sector
- 100% FDI is allowed under automatic route in this sector
- Setting up of 'Medtech Parks'
- Production Linked Incentive (PLI) scheme
- Scheme for Promotion of Medical Device Parks
- Medical Devices Amendment Rule 2020
- For making the sector more regularized.
- EEPC India's Medical Device Expo
- It seeks to link suppliers and vendors and help build a robust manufacturing eco-system.
- Pradhan Mantri Bhartiya Janaushadhi Pariyojana
- It aims to provide quality medicines at affordable prices to the masses.
- Under this scheme PMBJP stores have been set up to provide generic drugs, which are available at lesser prices but are equivalent in quality and efficacy as expensive branded drugs
- Investment:
- 100% foreign investment is allowed under automatic route in Medical Devices and pharmaceutical projects
- Affordability:
- Jan Aushadhi Suvidha Sanitary Napkin at Rs. 1 per pad
- Drugs and Cosmetics Act, 1940
- It aims to regulate the import, manufacture and distribution of drugs in India.
- The primary objective of the act is to ensure that the drugs and cosmetics sold in India are safe, effective and conform to state quality standards.
WAY FORWARD
- Increase in the budgetary allocation
- An increase in the budgetary allocation from the current 1.8 per cent of the GDP to 2.5-3 per cent, as envisaged in the National Health Policy 2017 along with a separate allocation for the bio-pharmaceutical sector Research and Development is imperative.
- Specialization in certain areas
- Establishing expertise in specialty and innovation-heavy pharmaceutical areas such as complex generics, novel biologics and biosimilars, preventive medication and those with unmet therapeutic needs will be the next step to fueling the engine of growth.
- Improve ease of doing business in the sector
- Simplification of various processes in order to enhance ease of doing business for the private sector companies.
- Focus on integrated capabilities
- In the post-pandemic world >> it is crucial to create and build infrastructural and linked integrated capabilities like telemedicine, home and senior care so that people can access quality and critical healthcare services equitably.
- Rationalization of GST
- The sector has not been able to derive the benefits of the GST transition.
- In fact, the embedded taxes in the sector have increased in the post-GST regime compared to pre-GST scenarios.
- Therefore, it is vital to rationalize GST to unlock the embedded credit which is trapped in the healthcare value chain
- Industry-Academia linkages:
- Strategically upgrade our academic curriculum to meet industry prerequisites and incentivising academic institutions to train and generate a pool of highly skilled human capital.
- Leveraging and fostering intellectual potential can help us gain a foothold in the international market which is veering towards personalised medicine.
- Continued fiscal support
- Government should continue with the existing Customs duty concessions for medicines as any discontinuation in the current scenario will impact the accessibility of medicines.
- Import duty exemptions for rare diseases innovator drugs developed globally should also be taken into consideration
- Implementing the recommendation of Malshekar committee on drug regulation
- Recommend a new structure for the Drug Regulatory System in the country including the setting up of a National Drug Authority
- Recommended that the State Drug Control Organisations should be urgently strengthened
- Creating a Digital Database:
- For patients, drug usage and risk associated with the intake of drug
- Revise the ethical code for Pharma companies
- To discontinue freebies and gifts
- Adequate infrastructure in tier 2 and 3 towns
- The pandemic has made us realise the need of providing hospitals in tier 2 and 3 towns with adequate infrastructure
- Rework with the IPR policies
- To make Indian Pharma companies for encouraging more patents.
- Addressing dependence on China for APIs:
- Government need to frame a National Plan on self-sustaining in API’s and avoid over dependence on China.
- Utilise the traditional knowledge in drug manufacturing
CONCLUSION
- The Indian pharmaceutical industry already has the advantage of scale and reach in the global pharmaceutical space.
- Our country now needs to move up the value chain by scaling up its R&D and innovation >> thus helping the industry to advance from ‘Make in India’ to ‘Discover and Make in India’.
PRACTICE QUESTION:
Q. “There is an opportunity for the Indian pharmaceutical industry to play a larger role in global drug supply-security”. Discus