The Indian pharmaceutical industry is approximately 8 per cent in volume, but just one per cent of the world market in value because of low prices. We have more than 500 basic drugs which are being produced in the country, a majority of them in Andhra Pradesh. This has helped India to achieve a turnaround from being an importer to exporter of bulk drugs during the last two decades.

Almost 35 % of India's bulk drugs are produced in Andhra Pradesh, and rightly Hyderabad is called the Bulk Drugs Capital of India.

About 24,000 pharmaceutical companies are registered in the country, a majority of them in medium and small-scale sector. Barring a few exceptions, Indian drug industry lacks quality consciousness. In a majority of the units the present enforcement level of Quality Assurance system does not match the Good Manufacturing Practices (GMP), which are the basic requirements of the drugs and pharmaceutical industry the world over. Large units are gradually introducing Quality Assurance measures, but a vast majority of the units are yet to feel the pulse of future in this industry.

No doubt, the pharmaceutical industry is going through a period of great challenge and turmoil with the fast approaching world regulatory regime beginning 2005. It is under considerable pressure from a combination of factors. Patents are expiring in the near future on a large number of blockbusters, profitable drugs with nothing in the pipeline to replace them. Today's $300 billion pharma market could grow to more than a trillion dollars by the year 2005. Transitions of this nature throw up unique opportunities for grab.

According to P Koteswara Rao, [see picture], president, Organisation of Pharmaceutical Manufacturers and Director of Legend Drugs & Formulations Pvt. Ltd, the year 2005 will be an important turning point for Indian industry, especially the drugs and pharmaceutical industry. Speaking to Chronicle Pharmabiz, in an exclusive interview, Dr Koteswara Rao said India was slowly emerging as one of the key players in the pharmaceutical industry, both in bulk and formulations. For the formulations sector, the change would be considerable in the coming years, with generic formulations making sweeping impact on the economy.

About 80% of the generic formulations in the US are based on bulk drugs outsourced from other countries. The generic market is estimated to grow to around $50 billion, and the outsourcing route will become a common practice. If the Indian drug units do not come up to the level of the western manufacturing norms, not only the industry but also the country as a whole would be the big losers.

Realising this, OPM has started educating the existing formulators and those who like to enter the industry in a big way in Andhra Pradesh. More than 35 MNCs and Indian companies like Cipla, Johnson & Johnson, Ranbaxy and Nicholas, to name a few, are getting their products manufactured on PTP (party-to-party) or loan licence agreements. There are about 450 formulators in Andhra Pradesh, of which more than 200 are members of OPM.

According to Dr Koteswara Rao, the immediate concern of the industry is to gear up in order to compete in the world market. This means capacity and quality upgradation. The government of India has already undertaken the necessary steps in this direction by asking the manufacturers to upgrade their facilities conforming to ICH (International Conference on Harmonisation) and WHO standards. They are required to implement the process under Schedule M of the Drug and Cosmetic Act by 2003.

Though it is a welcome move, both for the industry and the country, it has raised problems for most of the formulators who are essentially in the small-scale sector. By the definition of SSI, their assets are expected to be below Rs one crore. Then how will they invest a huge amount for developing a modern facility with world-class GMP?

The Association, therefore, wanted the government to extend the time limit and also approached SIDBI to provide long-term financial assistance at concessional rates so that the small manufacturers could modernize their plants.

Asked about some of the major problems being faced by the industry, particularly in Andhra Pradesh, Dr Koteswara Rao said though the formulations units were exempted from obtaining pollution control certificates in some states, this was not being implemented uniformly. OPM had approached the AP Government through FAPCCI (Federation of Andhra Pradesh Chambers of Commerce and Industry) to consider this anomaly and take necessary steps to help the entrepreneurs.

Some states like Karnataka and Tamil Nadu had fixed a quota for SSI products for their purchases and pay a price preference of 15 %. OPM had asked the AP government to give a serious thought to this and follow the same practice in the state. Dr Rao was hopeful that the government would decide the issue in favour of the industry.

The AP government insists on WHO pre-qualification or certificates for supplying medicines to the government. Even a prestigious Biotech company like Bharat Biotech was sidelined recently in the purchase of hepatitis-B vaccine for use in the government's immunization programme. If such discrimination could happen to Bharat Biotech, one could imagine the fate of the SSI units. Dr Rao said OPM had taken up the issue with the authorities and he hoped that this stipulation would be discontinued soon.