From compliance to global regulatory guidelines and exposure to international practices together with the market development initiatives by the central government, Indian pharma is now among the top six in the international arena. The five countries ahead of India are the US, UK, EU, Japan and China.
The sector accounts for largest production of generics and almost 50 per cent are exported. Every fifth drug prescribed by global healthcare players is from India. The government’s Make in India initiative and its Foreign Direct Investment (FDI) policy permitted owning of 100 per cent business of the Greenfield pharma projects through automatic route. For the brownfield pharma projects, FDI is allowed up to 74 per cent through the automatic route and beyond that through government approval.
The industry grew by 29 per cent to Rs. 2,04,627 crore (Rs 2.04 lakh crore ) in 2015-16 from Rs 1,77,734 crore in 2014-15. It attracted foreign direct investment to tune of $2.5 billion during April 2014-2016.
In 2015-16, the export of drugs, pharmaceuticals and fine chemicals was Rs 1,06,212.4 crore. In the generics market, the country exports 20 per cent of global generics making it the largest provider of the same.
India Pharma 2017 expo
In this context ‘India Pharma & India Medical Device 2017’ being held in Bengaluru is quite significant because it has the potential to catapult the sector to greater heights as it would play the role of a meeting point for international regulators, international buyers, investors and CEOs from the global pharma & medical devices sector that will provide ample opportunities to the participating companies to network and learn amongst themselves.
The Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, along with Federation of Indian Chambers of Commerce & Industry (Ficci), is organising the ‘India Pharma & India Medical Device 2017’, with the Vision - ‘For Responsible Healthcare’ from February 11-13, 2017.
The prime objective of organizing the event is to project India as an attractive investment destination for pharma sector and to bring foreign investment to new areas such as research & development, clinical trials by promoting joint ventures with the Indian manufacturers and bringing in best practices in the sector from around the world.
The event will have participation by companies from pharma formulation and bulk drugs, machinery and technology segments which will showcase the strength and capabilities of the sector. The event will also provide ample opportunities to the participating companies to explore new business avenues. It will be a platform to the global investment community to connect with pharma industry in India , besides, central and state governments. The participants will also include business leaders, top executives from the industry and academics from around the world.
According to the Union Minister for Chemicals & Fertilizers and Parliamentary Affairs, Ananth Kumar, the international event would be an opportunity to project India as an attractive investment destination for pharmaceuticals & medical devices and bring in foreign investment to new areas such as research & development, clinical trials by promoting joint ventures and bring in best practices for the sector from around the world.
The initiatives during the three -day programme are designed to focus on contemporary policy interventions, ease of doing business, sharing best practices & fostering collaborations with the global regulatory framework and to deliberate on sectoral reforms which would bring India on forefront of global attractiveness for investments in manufacturing and R&D.
Minister Kumar also stressed the need to encourage the Small & Medium Enterprises (SMEs) to increase exports in the pharmaceuticals & medical device sector. The two co-located events during the conference would provide an excellent podium for both pharmaceuticals & medical devices to showcase products to new business opportunities. He invited the Karnataka- based pharmaceutical & medical device manufacturers to participate at the event and get benefited by collaborating with their prospective clients.
According to Minister Kumar, with the joint efforts made by Department of Pharmaceuticals and Ficci, the second edition of the event is likely to witness a 25 per cent growth in number of exhibitors, number of delegates and business visitors and international delegations participation. Over 250 exhibitors from the pharmaceuticals & medical device sector, buyers from over 24 countries, international regulators from six countries (USFDA-USA, PMDA-Japan, MoH-Malaysia etc), over 29 embassy officials and over 10,000 business visitors will be participating in the three -day event. While Karnataka will be the host state of the event, Chhattisgarh will be the partner state.
India pharma exhibition will cover all the segments spanning from finished formulations, Active Pharmaceutical Ingredients (APIs), bio-pharmaceuticals, fine chemicals and intermediates, natural extracts, excipients. India medical device exhibition will be showcasing the technology innovations in India across segments from preventive to therapeutic care.
Sessions on biopharmaceuticals include 'The New Engine of Growth', 'Scaling Med-Tech Manufacturing' and the Investors Meet, which will be a step forward to the ‘Make in India’ mission of the Government of India.
Make in India initiative
Make in India is one of the excellent initiatives by the Government in the recent times. There is a respect for entrepreneur's job creation initiatives and innovation, pointed out Harish K Jain, secretary, Karnataka Drugs & Pharmaceutical Manufacturers Association (KDPMA) and director, Embiotic Laboratories.
According to Suresh Khanna, former president, KDPMA and chairman, Stabicon Life Sciences Pvt Ltd, “Bulk drug is the backbone of the pharma industry. While in the 80s and 90s , India was producing many APIs from basic stages or near basic stages. Today, we are totally dependent on imports of finished drugs or penultimate stage intermediates. Imports from other counties have a stranglehold on our formulations manufacturing companies. Under this scenario, we can land into a serious situation not only for exports but for domestic consumption also. Therefore, the most important need of the hour is a total review of the policies including environmental norms and to extend financial or tax benefits to the companies who manufacture from basic stages, thereby making India self-reliant. We have enough technical capabilities and expertise in the country to take up this challenge. Therefore the slogan ‘Make in India’ should be changed to ‘Make in India ....from basic stages’ as far as Indian bulk drug industry is concerned.”
According to Jatish N Sheth, past president KDPMA and director Srushti Pharmaceuticals, the industry must capitalize on the Make in India programme to maximise the advantage of its high quality trained manpower and prove that we can manufacture at a much more economical cost. In the case of adopting new technology, government has to play major role to provide the required funds to the SME sector to be able invest in this. Now the issue is that raw materials for pharma manufacture like the APIs and intermediates need to be imported and this comes at a high cost.
Karnataka to attract investors
KDPMA has successfully prevailed upon Karnataka Government to include investment in pharmaceuticals as a focus sector. Karnataka is seeing India Pharma 2017 as platform to show case its capabilities and potential. “There is a huge potential in the state due to easy availability of technical professionals owing to a large number of pharmacy colleges and other world class technical institutes,” said Jain.
Karnataka is recognised world over as quality manufacturing destination with many number of USFDA, UKMHRA, EUGMP etc. approved plants. Many MNCs are based here like GSK, Astra Zeneca, Mylan, Novo Nordisk, Medriech-Meiji and Apotex PharmChem etc.
It is also considered as the start-up & tech capital of the country lending support services for manufacturing and innovation. The state is having good law & order and almost negligible labour unrest. It also provides a conducive environment for pharma manufacturing in terms of moderate temperature and humidity leading to low investment on HVAC & other climate control measures. Moreover there is good availability of water and power and the infrastructure is quite good. Overall the standard of living is quite high.
The ability of Karnataka to attract investments is there. Our pharmaceutical policy which is part of the industrial policy is a case in point. The government needs to earmark land and the concept of clusters will change the face of things, said Jatish.
Pharma park in Karnataka
The state govt has also earmarked about 500 acres for a bulk drug park in Karnataka. Many bulk drug manufacturers have applied for allotment of land in Yadgir. Government is committed to provide modern infrastructure including CETP (common effluent treatment plant), said Jain.
“KDPMA is actively engaged with the government and the senior officials of state department of industries and commerce. With the efforts of KDPMA, the amended pharmaceutical policy was included as a separate chapter in the state industrial policy. The government is also focusing on ease of doing business. The problems faced by the industry are considered positively and are being resolved in the best possible manner,” said Jain.
New central schemes
The Union government is all set to come out with a scheme to provide new pharma and medical devices parks in the country. All the investments for the common facilities like effluent treatment plants and test centres among others will be borne by the Central government and the respective state governments.
“The move by the Union government is to ensure that the pharma and medical devices industry are able to lower the production cost by 30 per cent. When the cost comes down by 30 per cent, the industry will be able to compete globally. Therefore to provide that global edge, we are coming out with a new scheme because the government has modified the old cluster scheme announced in 2015-2016”, said Ananth Kumar.
“Visakhapatnam in Andhra Pradesh has already taken lead with 300 acres allocated by its state government for a pharma park which is expected to come up fast. Recently, the chief minister of Telangana too evinced interest for pharma and medical devices park near Hyderabad. Due to the interest shown by the Gujarat chief minister, a third park is on the anvil, in Ahmedabad which is also a Greenfield project . This will be followed by a park similar to that of Baddi in Himachal Pradesh. Discussions with Karnataka chief minister Siddaramaiah to identify land for pharma and medical devices park are on”, Minister Kumar added.
Woes of API units
According to the Indian Drug Manufacturers Association (IDMA), there are issues related to the active pharmaceutical ingredients (API) industry which needs to be addressed in terms of environmental compliance, power and water costs, grant of compulsory licenses, central and state financial grants for CETPs.
There are more than 7,000 SMEs in India and many of them were started by pharmacy graduates. They represent the future of Indian pharmaceutical industry. Whenever new regulations are introduced by the Government, the SMEs need to be given time and hand-holding for development, said SV Veeramani, president, IDMA(Indian Drug Manufacturers’ Association).
Minister Kumar pointed out about the need to overcome the dependence on China for imports of bulk drugs and intermediates and voiced his concern over the unfair competition they posed. "We informed the Commerce Ministry that we are in agreement with the Drug Controller General of India (DCGI) proposal to hike the import fees as we are also being made to pay such fees when registering for exports to various countries", he said.
The API industry is struggling to survive not only because of the imports from China, but also due to internal pressures such as the NGT(National Green Tribunal) shutting down manufacturing units due to stringent environment issues. Though 2015 which was the year of APIs has gone by, the support from the Government for this sector is much lesser than requirements, rued industry experts.
There are slew of regulations coming in from global regulators which will require training and funding for technology upgradation. There is a steep increase in the cost of land, machinery and equipment and the project cost for the upgradation comes to around Rs.4 to Rs.5 crore.
The Pharmaceutical Technology Upgradation Assistance Scheme (PTUAS) envisages support to medium scale manufacturing units in bulk drugs and formulation manufacturing sectors for their upgradation from Schedule M compliance to WHO GMP compliance. The scheme is being considered for the medium sector, but should extend to small sector also. There is also a need for ease of accessing funds / finance from banks – reduce paperwork, easy payment facilities, lower interests, said the industry.
With the impending changes in the US following election of President Donald Trump, who said, pharma industry is ‘getting away with murder’. The pharmaceutical companies will be coming back to the US from overseas.
“India accounts for the maximum number of US FDA approved plants outside US. The manufacturing cost in India is approximately 35-40 per cent lower than in US as installation and labour costs are lower. However, to remain competitive and allow the market forces to overcome President Trump’s moves, Indian pharmaceutical industry will have to ensure that the labour cost remains not only low but also is skilled enough to maintain the rigorous regulatory and compliance norms and also maintain that sales realization is economically viable, said an industry observer.
“In order to drive grow, the pharma sector will have to look at newer markets because entry into the US will be a challenge. While cost of manufacture is not the issue, it is largely because of that government’s intent to spur local manufacturing there,” noted Jatish.
Emerging trends to spur growth
According to Khanna, the recent announcement for emphasis on generics with a view to make prices cheaper to the patient, thereby bringing the medicines within the reach of the economically under privileged class, will result in increased consumption. This would lead to spike in demand which will automatically help in overall growth. In the Union budget 2017, there are many measures to augment rural earnings. This will help in increasing demand as much of the rural population will be able to afford the expenditure on medical treatment. Also the recent medical insurance schemes for healthcare will accelerate the overall growth of this sector which in turn would help pharma sector's growth.
Jain pointed out that due to the growing awareness, market development initiatives by Government are at the highest level and exposure to global practices, compliance with global regulatory guidelines has improved significantly in the last few years.
Challenges faced by pharma industry
There has to be a consistency and uniformity of laws. The proposed new GMP (good manufacturing practice) guidelines in line with international norms and rigid price controls are the two major challenges for future investments. Innovation must be rewarded in some way so that industry can strive to bring in new products and drug delivery systems into the Indian market, noted Khanna.
The big challenge for the SME pharma would be to retain what they have. The sector should aim at growth and move to the next level of the value chain. With contract manufacturing not being an viable model for revenue generation, SMEs will need to look at exports into the semi and un- regulated markets and scout for tie-ups in marketing, technology transfer and product development, said Jatish.
The major challenges are specially for SME are the skill development on continuous basis, environment issues and access to low cost finance for upgradation, noted Jain adding that in order to give a fillip to the sector, there is need for incentives to upgrade units to global standards and removal of VAT(value added tax) and excise duty on unbranded NLEM(National List of Essential Medicines).
“The paucity of capital is a problem and this is where we look at constant flow of funds from the government which needs to happen because The bank insists on collaterals. We need to have a nodal agency for the Pharma Association and the MSME sector to ensure constant flow of funds. SME is the backbone of the pharma industry and it needs to nurtured and not neglected, pointed out Jatish.