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Indian Economy

Indian Pharma Sector

  • 11 May 2022
  • 9 min read

For Prelims: Indian pharmaceutical industry, Active Pharmaceutical Ingredients.

For Mains: India’s Pharma Sector - associated challenges and steps that can be taken to boost the sector, Making India the world’s pharmacy in terms of value.

Why in News?

Recently, the Ministry of Chemical & fertilizers released guidelines on pharmaceutical innovation and entrepreneurship for academic institutions to Catalyze Indian Pharma Sector.

  • The Department of Pharmaceuticals has established NIPERs (National Institutes of Pharmaceutical Education and Research) as institutes of national importance for providing quality education and conducting high-end research.
  • The Department is also soon coming up with a ‘Policy to catalyze Research & Development and Innovation in the Pharma- MedTech Sector in India’.

What Do the Policy Guidelines Seek?

  • These policy guidelines aim to transform academic research into innovative and commercially applicable technologies.
  • It seeks to build a strong ecosystem for entrepreneurial activities and contribute to a Self-Reliant India Mission.
  • The policy guidelines will encourage faculty, staff and students to pursue entrepreneurship.
  • The availability of resources needs to be ensured for pre-incubation and providing common facilities for prospective inventors and entrepreneurs.
    • Budgetary provisions should be available in terms of allocation of a fixed percentage (such as not less than 1%) of institute's annual budget for funding, promoting and supporting innovation and startup-related activities.
    • In return for the services and facilities provided, an institute may take a fixed percentage of (2 - 9.5%) equity in the startup/spin-off company, based on employee contribution, support provided and use of the institute's Intellectual Property.
  • The entrepreneurial initiatives shall be evaluated on a regular basis using well-defined impact assessment parameters such as IP (Intellectual Property) filed, products developed and commercialized and number of employments generated, and startups created.
  • To encourage students, relaxation in attendance should be provided to enable them to dedicate time for entrepreneurial activities, and they should be allowed to sit for the examination, even if their attendance is less than 75 %, adding institutes should provide relaxation to the PhD students in terms of a semester/year break or more, if needed, to devote time on startup ventures.

What is the Status of the Indian Pharma Sector?

  • India is the largest provider of generic drugs globally. It supplies over 50% of global demand for various vaccines, 40% of generic demand in the US and 25% of all medicine in the UK.
  • The Indian pharmaceutical market is estimated at USD 40 billion and pharma companies export another USD 20 billion.
    • However, this is a miniscule portion of the USD 1.27-trillion global pharmaceutical market.
  • Globally, India ranks 3rd in terms of pharmaceutical production by volume and 14th by value.
  • India has more than 30% share in the global generic market but less than 1% share in the new molecular entity space.
    • New Molecular Entity: A novel compound that has not previously been approved for use in humans.
  • According to the Economic Survey 2021, the domestic market is expected to grow three times in the next decade.

What are the Issues with the Indian Pharma Sector?

  • Lack of Capabilities in Innovation Space: India is rich in its manpower and talent but still lags in innovation infrastructure. The government needs to invest in research initiatives and talent to grow India’s innovation.
    • The government should support the clinical trials and subjectivity in certain regulatory decision-making.
  • Effect of External Markets: Reports comments that India is heavily dependent on other countries for Active Pharmaceutical Ingredients (API) and other intermediates. 80% of the APIs are imported from China.
    • So India is, therefore, at the mercy of supply disruptions and unpredictable price fluctuations. Implementation of infrastructure improvement in the field of internal facilities is necessary to stabilize supply.
  • Quality compliance inquiry: India has undergone the highest number of Food and Drug Administration (FDA) inspections since 2009; therefore, continuous investment for upgrading quality standards will distract the capital away from other areas of development and growth is reduced.
  • Lack of Stable Pricing and Policy Environment: The challenge created by unexpected and frequent domestic pricing policy changes in India. It has created a vague environment for investments and innovations.

What is the Need for Innovation in the Pharma Sector?

  • Changing perspective and increasing the use of technology were the need of the hour. But now it is essential that innovation is at the core of business, and there is a dire need to embrace it if India wants to continue to be of relevance in the global pharmaceutical space.
  • India playing at scale in the innovation space will not just help the country but will create a source of sustainable revenues, bringing new solutions to unmet healthcare needs.
    • In India, this would lead to reduction in disease burden (development of drugs for India-specific concerns like tuberculosis and leprosy does not get global attention), creation of new high-skilled jobs, and probably around USD 10 billion of additional exports from 2030.
    • Countries like China have already leapfrogged ahead, skipping the generic medicine based development.

What are Government Initiatives?

  • Strengthening of Pharmaceutical Industry Scheme:
    • A total financial outlay of Rs. 500 crore (USD 665.5 million) for the period FY 21-22 to FY 25-26 were announced under the Scheme.
  • First Global Innovation Summit of the pharmaceuticals sector:
    • In November 2021, Indian PM inaugurated the first Global Innovation Summit of the pharmaceutical sector, where national and international speakers deliberated on a range of subjects including regulatory environment, funding for innovation, industry-academia collaboration and innovation infrastructure.
  • Production Linked Incentive (PLI) Scheme:
    • The PLI scheme aims to promote domestic manufacturing of critical Key Starting Materials (KSMs)/Drug Intermediates and Active Pharmaceutical Ingredients (APIs) in the country.
  • Promotion of Bulk Drug Parks Scheme:
    • The government aims to develop 3 mega Bulk Drug parks in India in partnership with States to reduce manufacturing cost of bulk drugs in the country and dependency on other countries for bulk drugs.

Way Forward

  • Medicine spending in India is projected to grow 9-12% over the next five years, leading India to become one of the top 10 countries in terms of medicine spending.
  • Going forward, better growth in domestic sales would also depend on the ability of companies to align their product portfolio towards chronic therapies for diseases such as cardiovascular, anti-diabetes, anti-depressants and anti-cancers, which are on the rise.
  • The Indian Government has taken many steps to reduce costs and bring down healthcare expenses. Speedy introduction of generic drugs into the market has remained in focus and is expected to benefit the Indian pharmaceutical companies.
  • In addition, the thrust on rural health programmes, lifesaving drugs and preventive vaccines also augurs well for the pharmaceutical companies.

Source: PIB

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