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Posted: January 25, 2008

India Will Emerge As A Dominant Force On The Global Arena

(Nanowerk News) By Dr Ajit Dangi Ex-Director General Organisation of Pharmaceutical Producers of India.
The pharmaceutical industry in India has made phenomenal progress in the past 10 years. With over $ 8 billion in domestic sales and another $ 5 billion in exports in the year 2006, both growing at double digit, it has acquired its place in the sun. It has also started making global footprints and over $ 2.5 billion worth of acquisitions were made overseas in past couple of years. Undoubtedly, the major inflexion point in the history of Indian pharma industry is the passage of product patent law in 2005. This has resulted in many pharma majors almost doubling their R&D investment and it is likely that New Chemical Entities (NCEs) will start trickling down from Indian R&D labs, in few years time. However, before we start patting ourselves on the back for these commendable achievements, we must remember that India contributes less than two percent of the global pharmaceutical sales of about $ 650 billion. While McKinsey has projected a domestic sales of $ 20 billion by the year 2015, we need to identify key strategic drivers for growth and use these levers to accelerate the pace. While robust economy with eight-nine percent GDP growth will certainly give right business environment, there are other internal factors which will act as catalysts. These are:
Intellectual Property Rights(IPR)
Pharma business is innovation based and R&D is the core of this industry. To foster an environment where innovation flourishes, it is important to protect and reward innovation. Implementation of strong IPR regime in letter and spirit will be a primary requirement to create such an environment. Hence, correcting some deficie-ncies in the present I P law such as broadening the scope of compulsory licence, narrowing the definition of patentability, lack of provision for data protection, frivolous pre-grant oppositions to delay the granting process and having world class IP infrastructure are of immense importance.
Government pricing policies
For the past three decades, successive governments in their enlightened policies, reduced the span of price control in a phased manner and today only 74 drugs are under price control. This positive trend is now being reversed and under the National Pharmaceuticals Policy 2006 all 354 drugs under National List of Essential Medicines are being considered for price control over and above 74 drugs which are currently under price control.
This policy, if implemented, will not only seriously affect profitability of pharma companies but will limit their ability to invest in R&D and also to develop the business globally. While industry is sensitive to needs of BPL families for affordable healthcare, the key issue is access to medicines and not the medicine prices. Access can be improved by improving the health infrastructure, expanding the health insurance, reducing the transaction costs, which include trade margins, multiple of taxes and duties, etc. and making the supply chain more efficient. Obsession with medicine prices will only take us farther from affordable healthcare.
Regulatory reforms
In most developed countries regulatory bodies like FDA, not only play a regulatory but also developmental role for the pharma industry. Harmonising our regulatory practices to global guidelines such as ICH, WHO, etc. for new drug approval processes, Good Manufacturing Practices, Good Clinical Practices, biosimilars approval pathway, etc will go a long way in making Indian pharma industry globally competitive and will open several opportunities for contract research, clinical trials and R&D alliances with research based international companies. The proposal towards formation of Central Drugs Authority on the lines of US FDA, therefore, is a welcome step.
Scientific and technical manpower
Although we pride ourselves in having the third largest scientific and technical manpower in the world, we need to develop a new skillset required for discovery research and move away from chemistry based reverse engineering, the skill we mastered in the last few decades. Biotechnology and nanotechnology are the emerging sciences and we need to have a sustainable pool of scientists and technologists to harness these new age technologies. Industry academia partnership therefore is of crucial importance.
Capital funding
Pharma research needs deep pockets and long periods of sustenance. Raising money from the capital markets is one avenue to fund such projects. Indian companies should consider listing on NASDAQ, NYSE, etc. Currently, only one Indian pharma company is listed on NYSE as against several from a small country like Israel. The current trend of floating R&D as a separate legal entity also needs to be evaluated. While we have made significant progress in generic markets, time has come to move up the value chain and establish Indian brands in the developed world through alliances, out-licensing, mergers and acquisitions, etc.
Political leadership
Lastly, political leadership plays an important role in development of any industry. The IITs, IIMs, CSIR, TIFR, etc which are producing outstanding intellectual outputs, are the result of vision of India's first Prime Minister, Pandit Jawaharlal Nehru, who conceived these great institutions in the 60s. We need visionary leadership of this kind to take our Industry to the next level.
While there are several factors other than above, if these are taken care of the pharma industry in India will emerge as a dominant force on the global arena by 2020.
Source: Express Pharma