The imposition of excise duty on MRP will have little impact on large and medium sized pharma companies as most of them have chalked out strategies to overcome this. One move is to set up a base at one of the excise-free zones in Himachal Pradesh, Uttaranchal and Jammu and Kashmir. This would give the companies the much needed relief as they will have a cost advantage and will also help them to expand their market share by passing on the benefit to the customer.
The sector that will suffer because of excise duty is the small scale ones. The problems of higher excise duty will be compounded by the implementation of Schedule M, which requires adherence to GMP norms. Further, IPR regime, which will put an end to copying of molecules, will hit the small scale sector badly since this sector depended on this to sell their products a low cost will negligible investment, Dr. Ajit V Dangi, director general, OPPI told Pharmabiz.
The only option open to small scale units is to either close down or look at outsourcing opportunities. For the pharma industry, this is a positive development since there is no such thing as “seconds''. There is room only for those who conform to stringent GMP.
In principle, there is nothing wrong in the SSI, but now the situation demands that a qualified technocrat with a background in pharma and management should be at the helm. Only such entrepreneurs with foresight will be able to find several outsourcing opportunities to be able to survive, observed Dr Dangi.
The pharma industry in the country will be witnessing a phase of consolidation now. It is only in India that there is a proliferation of pharma units far above the required numbers. The country doesn't need more than 500-600 manufacturers. “Rather than having so much of fragmentation, it is better to consolidate to avoid hassles of counterfeit and spurious drugs,'' Dr Dangi informed.
The other issue facing the Indian pharma industry is the lack of hardcore discovery skills. Most companies are engaged in only development of me-too-drugs and rarely develop new molecules. There are only a few exceptions like Ranbaxy and Dr. Reddy's Labs. Another lacunae is the absence of marketing skills. A typical situation in India is that after the discovery of a new molecule with phase I and II clinical trials data, Indian companies license it out rather than taking on the responsibility of marketing it globally. This serious drawback means Indian pharma companies have an insignificant presence in the global market. Today 80 per cent of $550b sales of pharma industry is coming from US and Europe. The remaining 20 per cent is shared by other countries and India's market share is barely one per cent. Indian companies have to become aggressive, perceive the market demands to be able to tap it and increase the market share. Hence it is not just being cost competitive but have innovative marketing strategies, averred Dr Dangi.