Drugs and pharmaceutical industry plays a vital role in
the economic development of a nation. It is one of the largest and most
advanced sectors in the world, acting as a source for various drugs, medicines
and their intermediates as well as other pharmaceutical formulations.
Being the intense knowledge-driven industry, it offers innumerable business
opportunities for the investors/ corporates the world over. The existence
of well-defined and strong pharmaceutical industry is important for promoting
and sustaining research and developmental (R&D) efforts and initiatives
in an economy as well as making available the quality medicines to all
at affordable prices. That is, it is essential to improve the health status
of the individuals as well as the society as a whole, so that positive
contributions could be made to the economic growth and regional development
of a country.
The Indian drugs and pharmaceutical industry, over the years, has shown tremendous progress in terms of infrastructure development, technology base creation as well as product usage. On the global platform, India holds fourth position in terms of volume and thirteenth position in terms of value of production in pharmaceuticals. The pharmaceutical industry has been producing bulk drugs belonging to all major therapeutic groups requiring complicated manufacturing processes as well as a wide range of pharma machinery and equipments. It has also developed excellent 'good manufacturing practices' (GMP) compliant facilities for the production of different dosage forms. Besides, the amendment to the Patents Act, 1970 [enactment of Patents (Amendment) Act, 2005], has opened up new avenues for the sector. The new patent regime has ushered in the era of product patents for the pharmaceutical sector, in line with the obligations under the World
Trade Organisation (WTO) and Trade-Related
Aspects of Intellectual Property Rights (TRIPS) Agreement. As a result,
the Indian pharmaceutical industry has become self-reliant in several
areas and has developed a more sound and technologically advanced R&D
segment.
The industry offers several opportunities for investments
and trade owing to the following advantageous features:-
- Self-reliance displayed by the production of 70 per cent of bulk drugs and almost the entire requirement of formulations within the country;
- Low cost of production of quality bulk drugs and formulations
- Low R&D costs
- Strong scientific, innovative and technical manpower
- Excellent and world-class national laboratories specialising
in process development and development of cost effective technologies
- Increasing balance of trade in pharma sector
- Efficient and cost effective source for procuring generic
drugs, especially the drugs going off patent in the next few years
- Excellent centre for clinical trials in view of the
diversity in population
- Fast growing biotech industry which has great potential
in the international market
- Apart from its strengths in manufacturing and exporting
allopathic medicines, the systems of medicines like Ayurveda, Unani,
Siddha, Yoga, Naturopathy and Homeopathy are also prevalent in the country.
Driven by all such factors, India has been recognized as one of the leading global players in pharmaceuticals. The annual turnover of the industry is estimated to be about US $ 17 billion (over Rs. 68,000 crores) during 2006-07. Indian exports are destined to more than 200 countries around the globe including highly regulated markets of US, Europe, Japan and Australia. The value of exports of drugs and pharmaceuticals has increased to Rs. 24,942 crores in 2006- 07 from around Rs. 22,216 crores in 2005-06. While, the imports of medicinal and pharmaceutical products have been around Rs. 5867.3 crores (provisional) in the year 2006-07. It is estimated that by the year 2010, the industry has the potential to achieve over Rs. 1,00,000 crore in formulations and bulk drug production. Moreover, increasing number of Indian pharmaceutical companies have been getting international regulatory approvals for their plants from agencies like USFDA (USA), MHRA (UK), TGA (Australia), MCC (South Africa), Health Canada, etc. India has the largest number of USFDA approved plants for generic manufacture. Leading Indian companies are now seeking more Abbreviated New Drug Approvals (ANDAs) in USA in specialized segments like anti infectives, cardiovasculars and central nervous system groups.
The concerned authority in India is the Department
of Chemicals and Petro-Chemicals, under the Ministry of Chemicals
and Fertilizers, which is responsible for planning, developing and regulating
the drugs and pharmaceuticals industry. The Department seeks to ensure
abundant supply of good quality essential pharmaceuticals/ drugs for mass
consumption and at reasonable prices within the country. It aims to formulate
and implement policies and programming of the chemicals, petrochemicals and drugs
and pharmaceutical sectors in the economy.
The major activities handled in the Pharmaceutical division
of the Department relate to the development of the pharmaceutical industry,
that is, its production, exports, imports, R&D, pricing, duty matters,
etc. There is a 'Export Promotion Cell' in the division which acts as
a nodal agency in the matters related to export of pharmaceuticals. The
Cell collects statistical data on export and import of pharmaceuticals
in the country as well as undertakes promotional activities for the acceleration
of their exports.
There is an attached office of the Division, known as 'National
Pharmaceutical Pricing Authority (NPPA)', which looks after price
fixation/revision of pharmaceutical and other related matters. That is,
it aims to fix/ revise the prices of controlled bulk drugs and formulations
as well as enforce prices and availability of the medicines in the country.
It also monitors the prices of decontrolled drugs and formulations in
order to keep them at reasonable levels and oversees the implementation
of various provisions of the Drug
Prices Control Order 1995. This order has been issued by the Government
of India under Section 3 of Essential Commodities Act, 1955 for regulating
the prices of drugs. It includes the list of price controlled drugs, procedures
for fixation of prices of drugs, method of implementation of prices fixed
by Government, penalties for contravention of provisions, etc.
Broadly, the functions of NPPA are to:-
- Implement and enforce the provisions of the Drugs (Prices
Control) Order in accordance with the powers delegated to it
- Deal with all legal matters arising out of the decisions
of the Authority
- Monitor the availability of drugs, identify shortages,
if any, and to take remedial steps
- Collect/ maintain data on production, exports and imports, market share of individual companies, profitability of companies, etc. for bulk drugs and formulations
- Undertake and/ or sponsor relevant studies in respect
of pricing of drugs/ pharmaceuticals
- Recruit/ appoint the officers and other staff members
of the Authority, as per rules and procedures laid down by the Government
- Render advice to the Central Government on changes/
revisions in the drug policy and
- Render assistance to the Central Government in the parliamentary
matters relating to the drug pricing.
There are five public sector undertakings (PSUs) in the
pharmaceutical sector, namely:-
With liberalization, globalisation and new obligations undertaken
by India under the WTO Agreements, the drug and pharmaceutical industry
in the country has been facing many new challenges. Accordingly, the Department
has undertaken several policy initiatives in order to improve R&D
conditions in the industry. The major policy being the Drug
Policy, which has been announced and modified, from time to time,
with the aim of achieving the following objectives:-
- Ensuring abundant availability, at reasonable prices,
of essential life saving and prophylactic medicines of good quality
- Strengthening the system of quality control over drug
and pharmaceutical production and distribution as well as promoting their rational use
- Encouraging R&D in the pharmaceutical sector in a
manner compatible with the country’s needs and with particular
focus on diseases endemic or relevant to India
- Strengthening the indigenous capability for cost effective
quality production and exports of pharmaceuticals by reducing barriers
to trade in the sector and
- Creating an environment conducive to channelising new
investments into the pharmaceutical industry and to introducing new
technologies and drugs.
Similarly, in order to achieve such objectives, another
policy has also been framed namely the 'Pharmaceutical
Policy' in 2002, which aims to bring new incentives into the sector
beyond those enumerated in the drug Policy, so that policy inputs are
directed more towards promoting accelerated growth of the pharmaceutical
industry and towards making it more internationally competitive. Some
of the salient features of this policy are:-
- Abolition of Industrial licensing for all bulk drugs
cleared by Drug Controller General (India), all their intermediates
and formulations, subject to stipulations laid down from time to time
in the Industrial Policy, except in the cases of:-
- Bulk drugs produced
by the use of recombinant DNA technology
- Bulk drugs requiring
in-vivo use of nucleic acids as the active principles and
- Specific
cell/tissue targetted formulations.
- Permission of foreign investment upto 100 per cent, subject
to stipulations laid down from time to time in the Industrial Policy,
through the automatic route in the case of all bulk drugs cleared by
Drug Controller General (India), all their intermediates and formulations,
except those referred in the above point, kept under industrial licensing.
- Availability of automatic approval for 'Foreign Technology
Agreements' in the case of all bulk drugs cleared by Drug Controller
General (India), all their intermediates and formulations, except those
referred in the first point, kept under industrial licensing for which
a special procedure prescribed by the Government would be followed.
- Measures to give impetus to R&D in the drugs sector
are as follows:-
- Constitution of the Pharmaceutical Research and
Development Support Fund (PRDSF) and the Drug Development Promotion
Board (DDPB)
- A manufacturer producing a new drug patented under
the Indian Patent Act, 1970, and not produced elsewhere, if developed
through indigenous R&D, would be eligible for exemption from price
control in respect of that drug for a period of 15 years from the date
of the commencement of its commercial production in the country
- A manufacturer producing a drug in the country by a process developed
through indigenous R&D and patented under the Indian Patent Act,
1970, would be eligible for exemption from price control in respect
of that drug till the expiry of the patent from the date of the commencement
of its commercial production in the country by the new patented process
etc.
- The system of the price control would be operated through
a single list of price controlled drugs selected on the basis of criteria
as laid down in the policy and formulations based thereon, with a Maximum
Allowable Post-manufacturing Expenses (MAPE) of 100% for indigenous
formulations and margin upto 50% for imported formulations.
- Ceiling prices may be fixed for any formulation, from
time to time, and it would be obligatory for all, including small scale
units or those marketing under generic name, to follow the price so
fixed.
- Setting up of the 'National Institute of Pharmaceutical
Education and Research (NIPER)' as an institute of national importance
in order to achieve excellence in pharmaceutical sciences and technologies,
education and training. Besides tackling problems of human resources
development for academia and the indigenous pharmaceutical industry,
the institute seeks to make efforts to maximize collaborative research
with the industry and other technical institutes in the area of drug
discovery and pharma technology development.
Due to various policy measures taken by the Government in recent past, research and development (R&D) activities in this sector has not only increased quantitatively but also qualitatively. Presently, atleast 10 leading Indian pharma companies are into new drug discovery and some of them have increased their R&D spending by over 5 per cent of their respective sales turnover. There are other efforts like providing fiscal incentives to R&D units in pharma sector as well as streamlining procedures related to development of new drug molecules, clinical research and new drug delivery systems. As a result, India is emerging as an alliance and outsourcing destination of choice for global pharma companies across the value chain.
Hence, the drugs and pharmaceutical is one of the most diversified
of all the industrial sectors. The accumulated knowledge of traditional
medicinal system and large bio-diversity of India offers great advantage
to the drug industry. The rapidly changing economic, trade and intellectual
property scenario, nationally and internationally, poses many challenges
to it, including the challenge of becoming leaders and competitors globally.
This necessitates a shift in the approach of the industry, that is, moving
away from manufacturing only known drugs to discovering and commercialising
new molecules through innovative process routes. It would mean that the
Indian pharma industry has to focus more on R&D, so as to enable India
to maintain its status in the world pharma market and move ahead to become
a global leader. In other words, the strength of the industry lies in
leveraging the country’s power in organic synthesis and process engineering
as well as developing cost-effective technologies in the shortest possible
time for drug intermediates and bulk activities, without compromising
on quality.
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