In order to tap the huge businesses potential existing in the pharmaceutical sector, India and China are working out modalities to accelerate the export business between the two countries. Despite having vibrant pharmaceutical industrial bases, the two big neighbours upto this time have not fully utilised the existing opportunities.
According to Dr. P.V. Appaji, Director General of Pharmaceutical Export Promotion Council of India (Pharmexcil), the Union Ministry of Commerce in consultation with the council and the Drug Control General of India (DCGI) are conducting regular meetings with their Chinese counterpart and the trade associations in China to expedite product approvals by setting up fast track clearance and also to smoothen rigid regulations that are hindering exports to China.
“Our main aim is to improve pharmaceutical exports to china in a big way. The Chinese regulations are rigid and they are imposing standards that are even tougher than US and EU regulators. To remove these trade hassles, we are working closely with the Chinese authorities. At the same time the having identified the Indian strength in oncology and cardiovascular products, Chinese too are keen on bridging the negative trade gap between the two countries,” said Dr. Appaji.
With the CPhI China fast approaching, both the Chinese and the Indian authorities are preparing to present their view points at the big global pharmaceutical business forum to be held in Shanghai from June 26 to 28, 2014.
The Pharmexcil has already roped in about 20 Indian companies to exhibit their products at the event. “The Indian government is taking all the necessary steps to remove all the trade related hiccups between India and China. The Indian exporters should utilize this opportunity and take advantage of government efforts to build their business relations with Chinese traders,” opined Dr. Appaji.
With a host of activates , the Indian pharmaceutical exporters, traders and the industry regulators could take this opportunity to not only build their business relations with the Chinese counterparts but can also gain much about the Chinese markets and their requirements.
Strengths and challenges of Indian and Chinese companies
According to S.V.Krishna Prasad, MD and CEO of Cito Healthcare, India and China are strong in certain key areas such as sourcing and R&D. “Sourcing and R & D are the key areas that China and India are strong at and it is in these two areas both the Asian giants can be competitors as well as complement each other.”
Advocating state and central government support for the pharmaceutical sector in India, Prasad says, "Now we have a person in the government who has a vision and passion for development and growth. We are hopeful that the new government will understand and fulfil the aspirations of the pharma and biotechnology industry in the country.”
The Indian pharma market amounts to nearly Rs 73000 crores as per last year figures. The market reflected a reduced growth pattern up to 9.8 per cent down from 16.6 per cent in the year 2012. This slowdown can be attributed to the new drug pricing policy and the regulatory interventions over the last year. The new government is expected to drive a positive note here.
Currently, the Indian pharmaceutical industry is witnessing regulatory challenges like delays in clinical trial approvals, uncertainties over the FDI policy, the new pharmaceutical pricing policy, a uniform code for sales and marketing practices and compulsory licensing. To counter this and for a, a healthy growth rate in future, companies will have to rethink the way they are doing their businesses today. The government will have to play a great role in establishing a strong regulatory set-up as well as a speedy redressal for related issues.
Quality and regulatory concerns could also lead to greater regulatory agency scrutiny in future. Companies will have to step up their quality and manufacturing compliances in line with the global guidelines. Companies will also have to think if their governance and compliance framework is robust and is updated with the constantly changing regulatory requirements. Undoubtedly, organizations need to focus on using the new technologies to connect better with their key stakeholders like subjects, patients, healthcare providers, regulators, government, players and the society at large for sustainable growth.
According to a CII report, the economic environment in India is tougher now than ever before. While pharma companies focus their attention on measures to combat the growth slowdown, they will need to work with the government and other stakeholders to discuss and resolve regulatory challenges. Resolving the impasse with clinical trials will help companies continue with R&D which is central to their growth strategies.
With numerous companies operating in multiple jurisdictions, the pharma and life sciences industry is one of the most heavily regulated in the world. Not surprisingly, the burden of successfully managing complex rules and regulations is a major issue facing the C-suite of pharma and life sciences companies worldwide.
Instituting compliance programmes catering to regulatory requirements is not enough in today’s volatile market where reputation is at stake. Companies need to take a 360-degree approach for their compliance programmes encapsulating not only compliance with regulatory requirements but also their internal code of conduct and ethics code.
A compliant pharma or life sciences company with a strong team at the top will gain better competitive advantage in this economic environment in the long run. IT and emerging technologies such as SMAC present opportunities for pharma companies to engage with external stakeholders such as patients, healthcare providers and governments to develop products and services designed to make the goal of health for all a reality.
Challenges for China
China, despite its positive prospects of growth, is also having various challenges to overcome to push its pharmaceutical markets effectively across the globe. Particularly the recently modified patent law has become a big concern for the pharma investor in the country. A part from this, other challenges that are hindering pharma sectors growth in China include ineffective operational efficiency and lack of technology transfer relationships among the firms.
According to experts, China is described as “an opportunity that had been in the sky – everyone wanted in.” Despite the huge potential the Chinese market hold, some companies have failed miserably and others have done fairly well. Understanding what distinguishes successes from the failures require seeing where competitors are shifting their resources. Since the ‘sure bets’ are no longer ‘sure bets,’ getting pharma strategy in China right is becoming harder, because the market is growing more mature and the Chinese companies are gradually moving upstream, opined Prasad.
During the last few years, the Chinese pharmaceutical sector has been adopting a dynamic strategy on various fronts such as enhancing their API exports and pushing forward their generic capabilities to the regional markets. Overall one can say that the pharma industry is undergoing an early process of what the medical devices industry had witnessed 10 years ago in the country. The price and margin pressures facing the pharmaceutical sector in China is comparatively less severe than what the device industry has already faced.
The medical devices market in China has become a big success. The Chinese medical devices companies have adopted dynamic strategies to accommodate the needs of different customers such as local, national and international customers. From the Chinese customer’s standpoint, device companies in China understand their domestic customers really well and have segmented the different customer types. Device manufacturers have gone after premium products and sold them into Tier 1 and Tier 2 cities. Over the years the Chinese companies have become more sophisticated and can address the needs at different price points.
Having such deep strategic and dynamic approach, the Chinese companies are finding it even tougher to sell their product in the domestic market. Overall both devices and pharmaceutical companies are realizing that selling in China is “just much more complicated.”
HR challenges
In addition to challenges of domestic competition and price pressures, the other most important challenge for the pharmaceutical firms in china is tackling human resources issues in the pharmaceutical sector. Retaining professionals in the pharmaceutical industry is a big challenge as the staff is highly mobile in China. To overcome the challenge of retaining the highly mobile staff, the Chinese pharma industry has introduced novel ideas like perks linked to turnover on a day-to-day basis.
Enhancing R&D productivity
Research and development is the backbone for pharma industry to sustain in the market. In china the pharmaceutical industry is developing new approaches to enhance and sustain R&D productivity. Although intellectual property protection issues are still lingering in China, this may prove positive for the country as return of talent from overseas will help push R&D to change its course from a closed to an open system.
With captive (wholly owned) R&D centres growing in low-cost countries like china and India, the global pharma companies are now outsourcing all phases of their product development, including drug discovery and research and development, as well as clinical trials, to low cost countries like China to reduce expenses.