The secret of success of the pharmaceutical industry lies in the Indian Patents Act 1970, although government support to give impetus to domestic production is lauded. India attained independence in the year 1947 and with this patent of British colonial masters came in the kitty with many other things. This Patent Act was enacted in the year 1911.
India today appears on the global map in this vital sector mainly because of its adoption of the Indian Patents Act 1970. This was a very bold step with a clear mandate offering opportunity to the domestic pharma industry to come out from the clutches of multinationals, which was a monopoly of importation. Sec 83 of the Indian Patent Act 1970 speaks as follows: "that patents are granted to encourage inventions and to secure that the inventions are worked in India on a commercial skill and to the fullest extent and not to enable patentee to enjoy the monopoly for importation".
It can be vouched for the pharma industry who have really done it which is evident from the fact that with a mere production of Rs.10 crores in the year 1947, today the pharma industry is that of
Rs 40000 crores. They never looked back till such time when once again they have met the crucial day of destiny, i.e. 1st Jan 2005 back to square one i.e. Product Patent but with a difference.
While talking of pharmaceutical industry the chemical industry has to be taken into consideration. It has been acknowledged that India has an extensive civilian chemical and pharmaceutical industry with annual export of chemicals in considerable quantity to countries like UK, US and Taiwan. The importance of this industry is judged by Chemical Warfare (CW) programme under the Ministry of Defence with DRDO (Defence Research and Development Organization) for conducting the research. It has contributed extensively to industrial and economic growth of the country with wide range of categories like inorganic and organic chemicals, drugs and pharmaceuticals, plastics, petrochemicals, dyes, pigments, fine chemicals, pesticides, agrochemicals and fertilizers. India is 12th largest producer of chemicals.
The industry has passed through various benchmarks in 35 years, shifting from product to process to product patent once again. The industry has attained wide exposure in the international market, learnt tricks of the trade and the moves of the multinationals, etc. The Indian pharma industry has been the most vibrant, knowledge based industry, highly dependable with constant growth against the presence of MNCs like Pfizer, which is good enough to swallow many many tiny, medium and even organized companies. The industry should have been wise enough to invest at least 25 paise for each rupee earned into R&D, the face of the pharma industry would have been very different in the present IPR regime. Against this backdrop, still the prices of drugs manufactured in India are the lowest in the world. We do not have much of infrastructure but of course, India is gifted with best scientific brains, resources, ability to sustain and development skills. India has all the good ingredients like technical skills, regulatory compliance, cost advantage and global relationship.
As we know, till recently the Indian pharma industry has been in process engineering of bulk drugs and in discovering new delivery system for formulations based on bioequivalence tests without any fear of attracting patent infringement suits from the international market, which has ended with the coming of product patent.
With product patent in place, pressure on domestic pharmaceutical industry is on to increase in R&D. Some of the salient features are:
-- Post 1995 molecules manufactured and marketed will continue on payment of royalty to the patent holder, but only once the patent is granted in India. Royalty, of course, is to be decided.
-- Although Indian generic companies cease to manufacture new molecule entities (NMEs) under patent but the leverage is time of nearly 10 years for the commercialization of the new product. Hence, immediately there is no danger.
-- Even after grant of patent, the inventor preference will be to market the medicine through in-licencing, i.e. right to other drug company for marketing against payment of royalty.
-- As we know, Indian pharmaceutical industry is highly fragmented with many players, nearly 50 companies estimated to hold 80% of the business. With GMP in force, small players will go for consolidation to achieve economies of scale in manufacturing and distribution. With these, research expenditure will be on increase.
-- The Indian pharmaceutical industry is likely to undergo various structural and strategic changes of mergers and acquisitions, which will increase focus on R&D.
Another important area is outsourcing opportunities, which was USD 24 Billion in 2002 and estimated to raise USD 48 Billion by 2007. Many pharma giants are making India their regional hub for clinical trials and use our resources at selective stages of research.
Advantage India is presence of generic market in abundance and till such time, it is fully groomed to come to terms with the IP regime, the huge global market in generics is in the waiting and it is growing with the expiry of many patents. Indian pharmaceutical industry stands to grow in the production of generics due to low cost manufacturing base and process development skills.
It is reported that Ranbaxy has set up a company to help drug firms in developing generic copies of new drugs. This will help drug makers to see if their copies are biologically similar to the inventor's drug.
The growth rate in exports is phenomenal. Today, our exports stands at 14000 crores with compounded annual growth over the last decade is more than 20% and some of the important destinations are countries like USA, Russia, Germany, UK, China, Europe and North America.
The pharma industry is traditionally associated with laboratories, scientific institutions, research associates, educational institutions and of course with research and development activities. It is known that in R&D the success rate is very low, this keeps a lot of constraints on the inventor keeping stringent regulatory requirements and heavy cost in drug development, pharma companies are often outsourcing R&D to contract research organizations.
Nearly 7000 products are estimated to be under development in the global pharmaceutical industry in 2005 at different stages.
R&D activities of the pharmaceutical industry have some special characteristics. It is not only inventing new molecules, but the scientists have to look into the growing resistance to the existing molecules and many many unmet medical needs. The pharmaceutical research thus has an immense scope and it is like a livewire for human beings and animals too. With the increase in complexity of health problem, technological advantages in regulatory processes, role of biotechnology in drug discovery, the concept of R&D has undergone significant changes. Each research requires monitoring and upgradation with the passage of time. Knowledge generated through basic research is of great significance for the disease processes that makes way for development of products.
The size of the global pharma industry, which is estimated at USD 466.3 billion in 2003, its concentration, is mainly from developed world with around 85% of the sales in North America, European Union and Japan
There are tremendous openings in R&D, but each company has to tap such opportunities, depending on their ability and how-much each company withstands the financial risk. The leading pharmaceutical companies in India have constantly been increasing their R&D budget over the years, although the R&D expenditure of the top 10 companies, the average is less than 2% of the turnover. Some of the prominent and top Indian pharmaceutical companies are spending 6 to 8% on R&D. The survival of pharma industry on par with the developed world and to cater the domestic market keeping in view the changes taking place in the ailments, R&D is the first step in the development of any molecule. Conducting research in the pharma industry is endless and the industry has to put its soul into it with government's support, which is mandatory. Government, in this direction has contributed Rs.150 Cr. as annual budgetary support with Pharmaceuticals Research and Development Support Fund (PRDSF) and Pharmaceuticals Technology Upgradation Fund (PTUF) is in place.
-- The author is with Indian Drugs Manufacturers Association