Pharmaceutical Sector in India

IN NEWS:

• Recently, the government launched three schemes to strengthen Micro, Small and Medium Enterprises (MSMEs) in the pharmaceutical sector.

MORE ON NEWS:

• The Ministry of Chemicals and Fertilizers rolled out the schemes under the banner of 'Strengthening Pharmaceuticals Industry' (SPI).
• The schemes provide for credit linked capital and interest subsidy for technology upgradation of MSME units in the pharmaceutical sector, as well as support of up to Rs 20 crore each for common facilities, including research centres, testing labs and ETPs, in pharma clusters.
• SIDBI will be the project management consultant for implementing the scheme.
• The Scheme has 3 components / sub-schemes:
  • Pharmaceutical Technology Upgradation Assistance Scheme (PTUAS):
    • The scheme would facilitate pharmaceutical MSMEs with proven track record to upgrade their technology.
    • The scheme has provisions for a capital subsidy of 10 per cent on loans up to a maximum limit of Rs 10 crore with a minimum repayment period of three years or interest subvention of up to 5 per cent (6 per cent in case of units owned by SC/ST) on reducing balance basis.
  • Assistance to Pharma Industries for Common Facilities Scheme (API-CF):
    • This scheme would strengthen the existing pharmaceutical clusters capacity for sustained growth.
    • It provides for an assistance of up to 70 per cent of the approved project cost or Rs 20 crore, whichever is less.
    • In case of Himalayan and north-east region, the grant-in-aid would be Rs 20 crore per cluster or 90 per cent of the project cost, whichever is less.
  • Pharmaceutical and Medical Devices Promotion and Development Scheme (PMPDS):
    • PMPDS would involve preparation of study reports on topics of importance for the Indian pharma and medical device industry.
    • The scheme is aimed at creating a database of pharma and medical device sectors.
• These schemes will increase investment, encourage research and innovation and enable the industry to develop futuristic products and ideas.

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:

• Market size:
  • According to the Indian 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:

• 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)
  • 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
• 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

MAJOR GOVERNMENT 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:
  • The National Biopharma Mission (NBM) is an industry-Academia Collaborative Mission for accelerating biopharmaceutical development in the country.
  • Under this Mission the Government has launched Innovate in India (i3) programme to create an enabling ecosystem to promote entrepreneurship and indigenous manufacturing in the sector.
  • The mission will be implemented by Biotechnology Industry Research Assistance Council (BIRAC).
  • The mission was approved in 2017 at a total cost of Rs 1500 crore and is 50% co-funded by World Bank loan.
• 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
  • 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.
• 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.
• 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.
• 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
• 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.
• 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
• Continued government 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
• Revise the ethical code for Pharma companies
  • To discontinue freebies and gifts
• Rework with the IPR policies
  • To make Indian Pharma companies for encouraging more patents.
• Utilise the traditional knowledge in drug manufacturing

PRACTICE QUESTION:

Q. “The pandemic demonstrated the Indian pharma industry’s ability to be a reliable supplier of high-quality, affordable medicines.” Discuss.