Indian Pharma Industry: Changing Dynamics_An essay by Yash Nandwani

Hippocrates, the father of medicine once foretold that there would come a time when “Medicine would be thy food and food will be thy medicine”. We are certainly witnessing that era, as mankind has become greatly dependent on drugs for its survival be it-Natural Products, Pharmaceuticals or Biologicals. We have come way ahead of the times of Galen, who produced the first cold cream to modern medicines that involve complex mechanism of actions requiring a very dedicated research. In order to understand the ever changing dynamics of the pharma industry, we need to first look into what got us to this pinnacle which we have achieved in these years. Firstly, Drugs and Cosmetics Act was enacted in 1940 that lead to the modernization of the industry for the first time, simultaneously; developments such as Federal Food, Drug, and Cosmetic Act (FD&C Act) in the US changed how drugs were administered. Secondly, the tragedy of thalidomide shook the world which led to extensive requirement of safety parameters of new drugs, further accelerating the development of Hatch Waxman Act that balanced the power tussle between the innovator and the generic manufacturers. Patents Act of 1970 and subsequent amendments in 2005 with respect to TRIPS agreement led to the end of process patents that served as a boon for the pharma industry as it protected both the product as well as process of drug manufacture from infringement and promoted cross-licensing of the formulation. Furthermore, the clause of compulsory licensing in the worst case scenario such as patent abuse by innovator as well as in case of national emergency infused trust in the lacs of patients requiring life saving drugs in their treatment course.

The pharmaceutical industry, as we all know, is involved in formulation of large scale of quality dosage forms which may seem as a solely profit-oriented field - “The BIG PHARMA” to the public, but one should keep in mind the billions of dollars spent on research and development of newer better drugs with various kinds of formulation technology- Nanotechnology and Biotechnology. Research involves the blood, sweat, toil, and tears of pharmacists which begins with synthesis and high throughput screening of the plethora of compounds by medicinal chemists, later giving them structural modifications to give a good lead compound. Once all this is established, it involves the hardwork of formulation scientists to convert lead into a suitable dosage that is mass-producible and patient compliant. Moreover, robust documentation and marketing of a drug is also carried out considering it as an essential part in the lifecycle of a product. It finally ends up at the community pharmacist who is directly interacting with the patient. Thus, this network of pharmacists of various fields forms an indisposable link which holds together the discipline of modern medicine.

In light of the new laws being framed, Drug Price Control Order (DPCO) 2013 is a game-changing tool which has brought around 640 drugs in the ambit of price control under scheduled drugs and formulations which some consider as a bane to the MNCs as the margins are fixed according to the market players dealing with a similar product leading to lower profits. All things considered, it seems reasonable to assume that the Indian pharmaceutical industry will grow at a CAGR of 15% in the next 10 years which includes both API coupled with formulations. India being a semi-regulated market is focussing on better laws which compel the manufacturer to follow GMP, GLP, as given in schedule M and ICH. Moreover, the increase in harmonization due to efforts of the US, EU, and Japan, is causing the other markets to tend towards a nearly ideal situation. On the other hand, the development of National List of Essential Medicines (NLEM), similar to the WHO list, is an applaudable job done by the National Pharmaceutical Pricing Authority(NPPA). Also, documents such as guidance to the industry are worth mentioning as the recommendations given in them are a useful requirement for getting to know newer technology which FDA is focusing on.

Indian pharma is taking huge leaps of success with its futuristic approach involving - novel drug delivery systems, mobile based applications, precision drug delivery and patient-specific drug delivery which includes optimization according to the need. Having said that, India can be truly considered as the future pharma capital of the world given the fact that a high number of quality medicines are being produced at a very low cost. In comparison to other countries, India bagged almost 40% of the ANDA approvals due to the aggressive filing of dossiers. Also, Para IV filing which offers market exclusivity for 180 days is being utilized as an effective tool in combating competition. It is worth mentioning that although market exclusivity for the firm will be offered; filing by many parties on the same day can lead to shared exclusivity which gives the sense of competition in the pharma industry. Significantly, as a result of patent cliff and patent expiration of a majority of innovator compounds, the potential for growth is multifold and opportunities are immense. India has an enormous potential given the fact that setup of plant and labour costs are very less, and the academic base of people is strong with the technical skill set required for jobs.

Now, as we have seen, the pharma industry can be considered to be a farrago of complexities with so many players in the organized as well as unorganized sectors. The growth of contract research and manufacturing service companies (CRAMS), together with clearing and forwarding agents (CFA), is the evidence to the paradigm shift of the MNCs towards just marketing of the product rather than full-scale manufacture by outsourcing various activities although, still maintaining profits higher than their counterparts. Then again, the services offered by research organizations have an additional advantage owing to the high amount of English speaking manpower when compared to China in the service sector. Moreover, Pharmacy Act, 1948 has regularised education to a large extent, increasing academia related technology transfer, which is playing an important role in the complete 360º development of the industry.

Another advancement is the growth of continuous manufacturing lines undergoing a transition from the traditional batch processing such as GEA Continuous Tableting Line in compliance with Good Automated Manufacturing Practices (GAMP) has cut down labour to a maximum extent, decreased the time (20mins from API to Tablet) and improved efficiency of methods. The implementation of socioeconomic zones (SEZ) caused nullification of excise duty leading to a win-win situation for both employer and employees in underdeveloped regions. However, with the GST regime in place, it has steered us towards a level playing field for all. Retail pharmacies are surging on e-platforms improving their customer base and reliability thanks to the door-to-door services that they offer at affordable rates. India remains a “to go” destination for clinical trials with a wide variety of human resource pool galvanized with a large number of GCP/GLP approved bodies for carrying out trials in an ethical manner.

Meanwhile, Indian exports consisting of a myriad of products ranging from vaccines to medical devices has spiralled simultaneously, with the setting up of units in African and south-east Asian countries. On the contrary, imports just remain confined to certain essential API such as vitamins and antibiotics, which the government is planning to reduce by providing incentives to fermentation setups. The CDSCO in its new draft policy, along with state and central machinery is planning to introduce BA/BE studies for all generics, which will be a commendable step in the direction of compliance with international standards of production. As we are moving towards an era of innovation and novelty, the rise in the number of startups is catapulting growth in healthcare sector such as the insurance field. Another key development is in the field of low-cost research and development by foreign companies taking benefit of 100% Foreign Direct Investment(FDI) in greenfield and 74% in brownfield pharma, thereby boosting mergers and acquisitions along with private equity investments.

One more reason to these changing dynamics is the enormous transformation of the mindset of pharma community adhering to values and strong rules which abolished the release of counterfeit and Non-Standard Quality (NSQ) drugs that were a menace during the early times of implementation of policy. On the other hand, intellectual property management is what is making the difference between the good and excellent, as marketing in terms of trademarks, copyright, and patents is the driving force in today’s economic scenario. Now, a time has come where people buy drugs with the same caution as they would buy any other thing, as people are aware of what is generic and what is called to be a branded product. Gone are the days when Indian pharma was looked down upon as a speck of dust which now after decades of improvement, is shining as bright as the North Star.

To give an illustration, Indian pharma sector is poised to grow at a humongous rate with its patent, price and quality model which is at a very advantageous situation when compared to other countries. Truly, India can be considered as the “Pharmacy of the developing world” owing to its strong organization which acts as a buffer to inflation. And even when other sectors might be affected, the pharma industry remains strong as ever. Likewise, red tape prevailing in the DCGI office has been minimised and NDA approvals are faster; generic substitutions are allowed while doctors have been provided incentives to prescribe generic instead of costly branded drugs. The widespread rumour that small and medium scale units cannot match international standards is being squashed time and again and stereotyping of the Indian methods is plummeting at the global level. Furthermore, institutions such as Bulk Drug Manufacturers Association India (BDMAI) and Indian Pharmaceutical Association (IPA) are strengthening the core roots of Indian pharma. Additionally, the recent release of Indian Pharmacopoeia 2018 with updates to monographs and amendments is improving the quality of the finished product.

The field of biosimilars is trending upwards while pseudogeneric filing and patent evergreening is being nipped in the bud by authorities combined with the genesis of consumer activism. Yet, there are a few concerns such as surprise checks being done by the USFDA on units which can be termed as harsh, as well as prejudiced in nature. Furthermore, Indian pharma sector is seen as a highly fragmented niche overloaded with generic producers, leading to a topsy-turvy situation. Also, there is a pretty high amount of corruption in the procurement of drugs by public sector undertakings as well as improper government tenders which is a serious challenge to look forward to. The recent Pharmacy Practice Regulations, 2015, has brought in penalties for malpractices carried out in the retail units. It has restricted one pharmacist to only one pharmacy and focussed on improving ethics. That said, one cannot underestimate the hidden potential of Indian manufacturers which is like an iceberg that looks small superficially, but is immensely gigantic underneath. One must not forget the contributions made by stalwarts such as Prafulla Chandra Ray who set up Bengal chemicals and pharmaceuticals in 1901 and ML Shroff who laid the foundation of what we call now as “The Indian Advantage”- The Indian Pharma Industry; which is a self-sufficient entity fulfilling needs of the entire humanity. With changing times and increased number of diseases, revolutionary reforms are needed arising from the source trickling down to the consumer, only possible through maintaining a positive mindset, thus terming Indian pharma industry as a constructive “BETTER PHARMA”, rather than the capitalistic “BIG PHARMA”.