The National Skill Development Corporation (NDSC), which is a not-for-profit nodal agency for skill development & entrepreneurship (Skill India Initiative) under current ministry of finance, GOI has reported a major skill deficit in human resources for Indian pharmaceutical industry until 2022.
KPMG advisory and audit services on behalf of NDSC conducted this research on human resource development and skill gap studies for at least 28 major industry sectors and 34 sub sectors across different states (including all districts of the state) and nation-wide studies. Pharmaceutical and bulk chemical industry was a major part of their study to determine importance of skilled workforce in all demography, which contributes to substantial portion of economic growth in India.
According to the report, India has competitive advantage that favours the FDI policies, manufacturing growth and labor workforce but the demographic characteristics of skilled workforce in pharma lack adequate job roles, work incentives, training, resources and other support functions. The growth of Indian pharmaceutical industry has been phenomenal in the past two decade, which includes associated industries in technology development, manufacturing, infrastructure, marketing, logistics and knowledge-based industries ahead of its support functions like agriculture, FMCG, F&B, dairy, textiles or paper industry as per 2010 Mc Kinsey study.
Safety of medicines (CSM) under the terms of medicines act 1968 provided the first legal framework for the control of medicines in England and Europe to comply with quality standards for healthcare products and ensure validation through inspection, commissioning, reporting systems, and intelligence about illegal activity. Pharmacy council of India (PCI) has been working on similar guidelines since 2002.
According to PCI, there is a heavy responsibility on the legal system to ensure proper functioning of organizations associated with the life sciences, biotechnology and bio-medical business. Independent regulatory agencies are growth drivers for smooth functioning. Vigilance officers must regularly check for pharmacy license pertaining to particular operation in manufacturing, distribution and quality control. Certificates must be validated timely for drug stock and hospital functions. Approval from government accreditation center for independent labs, scientific research organizations, clinical trial agencies and production units through appropriate certificate will ensure clean functioning of industry and human resource.
Pharmacists in the country should ensure that patients are purchasing medications with valid prescriptions. Most prescriptions are marked with generic drugs that do not have valid certificate for quality assurance or sale in particular territory. The World Health Organization estimates that fake medicines already make up more than 10 per cent of the global medicines market causing infection causing agents to built-up resistance against drugs.
National industry classification (NIC) scheme places manufacturing of pharmaceuticals, medicinal biologics and botanical products under division 21. This broad classification includes chemical and molecular characterization of compounds as allopathic drugs, narcotics, vitamins, sulpha drugs, serum, homeopathic and herbal formulations. Regulations and protocol development pertaining to other functions are classified separately such as R&D (division 721), wholesale trade of consumer goods (division 464), and retail sale of goods (division 477) and so on. Pharmaceutical industry is placed under broader umbrella of life sciences and formulations are categorized into five broad disciplines – Domestic, Export, API, Nutraceuticals and Contract manufacturing (See Figure 1).
Pharma industry is generally confined to rural and semi-urban areas, which accompany unhygienic environmental condition, unorganized management practices and lack of occupational healthcare. These are some major drawbacks that inhibit graduates from making permanent career in this sector. Skilled labor laws in country are not enriching to afford quality education, training and resources to fit into specific job roles. Use of modern technology is putting additional burden with rise in cost of quality medicine. Roots of this problem have also been tracked to various factors like financial practices (capitalism, socialism and communism) and acceptance of medical philosophy with political, cultural and traditional system of practice of medicine in the country.
An overview of Indian pharmaceutical industry
Generic formulations in India started to grow in the year 1990 when bulk drugs from multinational companies entered our market to dominate domestic sales figures. Domestic producers started to repack generic drugs into more complex formulations to diversify their portfolio for liberalized domestic and international (export) market. Currently, our pharmaceutical sector ranks third globally in terms of volume sales and 13th in terms of value segment. Organization of Pharmaceutical Producers of India (OPPI) estimates currently around 10,000 units in India are producing around 400 bulk drugs and more than 60,000 formulations in over 60 therapeutic categories, which includes both chronic and acute disease segments. Chronic diseases relate illness that develops over the long-term. It forms low market share but designated as high value segment. Acute diseases are highly infectious and carcinogenic, which is driven by large volumes. It is designated as low value segment. Indian pharmaceutical industry makes substantial contribution to global pharmaceutical market in both chronic and acute segments. Drug manufacturing in India derive inherent strength due to many factors as listed below:
Government policies: Government of India (GOI) work favorable policies towards interest of both public and private sector. Ratio of government funding to that of private or foreign investment remains at all time low. In past two decades FDI investment in this sector witnessed 100 per cent growth as compared to domestic investments. Over 300 projects were successfully implemented in healthcare with total estimated revenue over US$ 2500 billion by 2007.
Recent cumulative figures for FDI in pharma sector for the financial period 2009 – 2012 stood around US$ 4.2 billion. GOI has launched two new schemes namely, drugs & pharmaceutical research program (DPRP), and new millennium Indian technology leadership initiative (NMITLI). The government has set up pharmacopeia commission to support Indian system of medicine ayurveda, yoga and naturopathy, unani, siddha and homoeopathy (AYUSH department) through guidelines laid down in the review of the 11th five year plan. State governments have expressed in revival of pharmaceutical growth in regions that currently lack infrastructure and other support facilities. Excise free zones, SEZs, Pharma parks in north India promise growth incentives for SMEs in manufacturing and other activities pertaining to pharmaceutical industry.
Alliances and partnerships: Domestic and international collaborations have strengthened in past two decades. Mergers and acquisitions has become proven tool to seize growth opportunities by companies with strong foundation. GOI provides good support structure and business arrangements for public-private enterprises. The government has launched “Pharma Vision 2020 document”, which plans to make India as one of the top five pharmaceutical innovation hub by 2020. It focuses mainly on public-private partnership model (PPP) to harness growth capacity of new and existing drugs. Objective is to widely resort companies by either moving up the value chain or by integrating downstream production. It also aims to successfully implement patent regime for generic companies that look to establish low-cost production system through contract manufacturing organizations (CMO). The public segment (~25%) caters to economy class that remains price sensitive whereas private segment (~75%) comprise of several market brands that are customized by producers to satisfy quality needs of middle and higher class society. Around 30% of families avail facilities and service through health insurance and public distribution system while 70% either borrow or sell assets to cover-up for their healthcare costs.
Raw material, labor and consumables: Asian markets always had the edge due of low cost labor and easy availability of wide variety of raw materials. India maintains its position on labor cost index as compared to Asian, European and western countries of the world. Despite labor it also has large workforce of technical and skilled labor. It has favorable geographic and agro-economic conditions.
Infrastructure & technology: India is one of the major technology hubs, which use modern and sophisticated equipments. Setting-up of Bengal chemicals and pharmaceuticals in 1892, Bengal immunity in 1919 and Alembic chemical works in 1907 proved India’s capability to manufacture quality drugs through indigenous production units. Strong demand for quality in healthcare delivery, rising middle class income and FDI is fueling pharma growth through infrastructure development and R&D. Government funds mainly focus on human resource, academic institutions and council funding. There is 25% rise in government expenditure for setting-up training and education infrastructure (AIIMS like institute), biotechnology incubation hubs and pharma parks.
Rising population: India is one of the largest pools of patients in the world. Planning commission recommends nutritional surveillance system across the country and set-up of welfare clusters. Though increase in population has its drawbacks, it also has its benefits. Population has also been a major contributing factor driving healthcare in India, which resulted in rise of consumption of healthcare products and promoted growth of pharma industry.
Only few Indian companies have strong R&D pipeline that indicates positive growth in terms of value proposition. Top companies with strong research establishment, manufacturing units, legal, administrative and market support function includes Ranbaxy, Dr. Reddy’s Labs, Sun Pharma, Cipla, Cadila Healthcare, Jubilant life, Torrent Pharma, Glenmark, Himalaya herbals and Reliance Life Sciences. A company’s own supply chain enables them to maintain a comprehensive database of core products in domestic and export markets.
Former listed companies are major contributors to the export market whereas latter names contribute mainly to domestic customers. Average stake of Indian pharmacy in domestic market is between 3-5% and international market is around 0.2-0.5%. MNC’s in Indian market (like Pfizer, Novartis, GSK) account for 26 – 28% share as per recent statistics. The export segment consolidates major share (~70%) of total revenue generated by Indian pharma, which is estimated around US$ 25 billion by year 2012. Comparison between domestic companies to that of international brands in the Indian market can be seen from figure 2. It also indicates average percentage share enjoyed by local and international companies in domestic healthcare. Despite growth, healthcare market in India has to face big challenge for generating organized trade, efficient utilization of resources and balance supply to demand during unfavorable factors such as economic downturn and turnover of human resource.
NSDC is a new government body with a mandate to enable support systems for quality assurance, information systems, vocational training and enhance governing model for enterprises. To ensure superior and speedy decision making process NDSC has formed several governing councils, which include 15-member board with at least six government nominees, one of whom is chairman of public-private corporation and other members of private organization (academica and industry). For example, healthcare sector council includes members from government departments of AYUSH, CII, NIHFW, PHFI, AIIMS, AFMC, NDSC, FICCI & members from participating companies. NDSC can frame many regulatory policies for pharmaceutical sector in coming years to safeguard interest of domestic companies, public health, standards of hygiene, medical practices and preservation of environment and country’s precious natural resources. Some guidelines for academic structure and skill training have already been developed and implemented. Growth of healthcare and pharmaceuticals is includes differential factors like time for development, laborious data analysis or strategic failures. Financial practices in this industry are risk oriented and returns depend upon market demand and exports.
According to Sebi, Indian firms are forming consolidated market share for exports but pharmacy practice in each geography is different. Foreign capital investment must focus on services, labor & education along with goods & commodities to bring the needed healthcare reforms. Some key recommendations for stakeholders of the industry include:
- Improvisation in pharmacy curriculum with equal focus on medical, pharmacy and technical education
- Preference to graduates from pharmacy and healthcare background for employment in the sector
- Integration of industry with universities for teaching & education, pilot projects, and networking
- Improvement in industrial practices to provide better training and support services for employees to perform their job functions
- Proper audits and records for laboratory manuals, batch documents, technical and financial records, administrative functions and company’s legislature
- Integrating role of management, administrative and vigilance officers to maintain quality
(The author is MD of VMG Biotech Consultants, New Delhi, a premier biotechnology consultancy and contract research organization)