The year 2002 will come to end within a week from now. It is therefore appropriate to take stock of the progress made by the Indian pharmaceutical industry and the policy initiatives of government so far while doing some introspection.
The notable developments that took place during the year are:
n The Government announ-ced must awaited Pharmaceutical Policy 2002 in February.
n The Union Budget for the first time imposed countervailing duty on the imported products to provide "level playing field" to local industry.
n The Parliament passed The Patent (Second Amendment) Bill, 2002 in May.
n Torrent joined the league of DRL and Ranbaxy by licensing its new molecule to a multinational corporation.
n DRL won the patent infringement case against Pfizer for amlodipine maleate.
n The double-digit growth of the domestic market.
What do all these mean for the Indian Pharmaceutical Industry?
The Pharmaceutical Policy 2002, announced after more than two years'' deliberations by various expert committees raised hopes of deregulation and encouragement for research and development as the government for the first time recognized the pharmaceutical industry as one of the most important knowledge based industries in which India has a comparative advantage. Introduction to the Pharmaceutical Policy 2002 said:
"However, the drug and pharmaceutical industry in the country today faces new challenges on account of liberalization of the Indian economy, the globalization of the world economy and on account of new obligations undertaken by India under the WTO Agreements. These challenges require a change in emphasis in the current pharmaceutical policy and the need for new initiatives beyond those enumerated in the Drug Policy 1986, as modified in 1994, so that policy inputs are directed more towards promoting accelerated growth of the pharmaceutical industry and towards making it more internationally competitive." But the hopes were short lived. Though the policy was announced at the beginning of the year, the government has failed to deliver on its promise either in the field of deregulation of price controls or encouragement for greater spending on the R&D. The much-publicised R & D fund announced in 2000 by the then Finance Minister Yashwant Sinha has also not yet been established. The relaxation in price control has also not materialised as, first the government took its own time to revise the Drugs (Prices Control) Order and, before it was announced, the Hon''ble High Court of Karnataka stayed its implementation by an order passed on 12th November, 2002. The Government has still to form its response to this order. Thus, at the end of the year, the industry has neither a new liberal pricing policy nor an R&D fund.
The second major event was "level playing field" in the area of duty exemption. It took more than two years to convince the government that exemption from CVD granted to an imported product on the ground of it being a life saving drug, should also be extended to the same product manufactured locally. The indigenous industry now is not at a disadvantage over the imports. But, beyond this, the budget was a disappointment for the pharmaceutical industry. It did not contain any initiative for implementing R&D measures enumerated in the Pharmaceutical Policy 2002.
The Patent Bill as passed by the Parliament brought some relief as it endorsed the demand of the local industry for incorporating provision for compulsory licensing and exemption for research and development during the life of patent. But, it left many questions unanswered compelling the local industry to be on guard.
On the industry side, Torrent successfully licensed its new discovery to a multinational corporation, raising hopes that more Indian companies will succeed in their R&D efforts. This was reinforced by DRL''s success in the US court in the patent infringement case against Pfizer for amlodipine maleate. The success paves the path for more adventurous to risk challenge route for windfall gain! The year 2002 thus began a new chapter for the research oriented Indian companies.
And finally, in terms of market, the industry is expected to record double-digit growth for the first time in the last five years. See Five-Year Market Profile on page 6.
The IMS Health data for 10-month period upto October 2002 reports total market of Rs 15,061 crore. It is estimated that the MAT for 12/2002 will cross Rs. 18,000 crore mark to record 10 per cent growth over the previous year.
As the year comes to close, the industry is somewhat despondent at the insufficient encouragement and inadequate support it got from the government during the year to emerge as a major global player. The industry has only two more years for the transition to a new regime of product patent, but the government seems to be oblivious to the urgency and importance of strengthening capabilities of the indigenous pharmaceutical industry.
Five-Year Market Profile
Rank
Therapeutic Segements
Jan - Dec 1998
Jan - Dec 1998
Jan - Oct 2002
Jan-Oct 2002
MAT ~ 12/1998
MAT ~ 12/1998
YTD ~ 10/2002
YTD - 10/2002
LC-RUPEES
% of Total
LC-RUPEES
% of Total
Val in Rs Crs
Val in Rs Crs
TOTAL MARKET
12,935
15,061
SYSTEMIC ANTI-INFECTIVES
3,539
3,655
ALIMENTARY T.& METABOLISM
2,945
3,596
RESPIRATORY SYSTEM
1,286
1,317
CARDIOVASCULAR SYSTEM
1,314
CENTRAL NERVOUS SYSTEM
MUSCULO-SKELETAL SYSTEM
BLOOD + B.FORMING ORGANS
DERMATOLOGICALS
G.U.SYSTEM & SEX HORMONES
* Others *
1,221
1,311
Courtsey: IMS Health
- The author is CEO-Vision Consulting Group, www.vision-india.com