India exports drugs worth $16.5 billion to the US annually. Assocham expects this figure to rise to $20 billion by 2020 a compounded annual growth rate of 30%.This shows aptly that India is the pharmacy capital of the world but many challenges are arising.
- The Indian drug industry is increasingly becoming dependent on China for the supply of bulk drugs and intermediaries.
- Road taken by the pharma companies is hampering the productive and competitive thrust of domestic firms.
- India focused too much on cost advantage while neglecting other aspects of competitiveness.
- While China’s growth is led by state-owned enterprises and very strong R&D-industry interaction, India has neglected its public sector drug manufacturers which have all closed down.
- Compulsory licensing and other patent issues.
- RCEP negotiations: Japan and South Korea are also demanding a ‘data exclusivity’ period of “no less than five years.” Data exclusivity creates a barrier to entry for generic producers, even when patents no longer apply or exist.
- US: There is going to be expedited approvals coming in from FDA and that would actually mean the intensity of competition is also going to be little more rampant.
- There is a need to explore new processes of upgrading of pharmaceutical manufacturing with all relevant stakeholders – government, industry, regulators and civil society.
- The tax benefits of carry-forward of losses and unabsorbed depreciation for companies undergoing amalgamation are currently restricted to certain sectors (e.g. computer software, electricity, power, telecom etc.). This benefit should be extended to pharma companies engaged in R&D as well.
- The government should facilitate industry to work with CSIR labs for process and yield improvement.
- If India wants to ensure health security of Indian people, revival of R&D and public sector API manufacturers is necessary.
- India needs four pillars for strengthening the innovation environment in the biopharmaceutical industry – (i) Human resources; (ii) Finances; (iii) Infrastructure; (iv) Legal and regulatory framework.
- Each of these pillars needs a concerted focus and a long-term commitment from industry as well as the government
- The environment to support the development of these verticals could emerge through various government-led initiatives such as Skill India, Make in India, Atal Innovation Mission, etc.
- Indian pharmaceutical sector has the potential to grow exponentially to the size of $300 billion by 2030. However, for achieving this, emphasis must be given to quality and R&D.