" We owe a lot to the Indians, who taught us how to count, without which no worthwhile scientific discovery could have been made. " - Albert Einstein
These were the thoughts of one of the great emissaries of scientific revolution, giving utmost credit to Indians for the journey and contributions to the rational & scientific thinking.
When India regained its independence in 1947, the country's political, social, and economic fate was in its own hands for the first time in almost 90 years. The country embarked on a journey to establish a democracy and representative government, define a plan for economic development, and build a society within which its large, diverse, and fragmented population could prosper. More than five decades later, however, opinions differed as to whether or not India had realized the greater triumphs and achievements which Nehru anticipated. With 17% of the world's population, India generated only 2% of global GDP. Per capita income was less than $3,000 per year, with 25% of the country's one billion people living below the poverty line. India needed to sustain double-digit annual GDP growth, but realized only 8% growth for fiscal 2006/2007. Yet, the country had become the world's 12th largest economy (and the 3rd largest in Asia behind Japan and China). India had made significant progress towards establishing a competitive position in the global economy. Its services sector had demonstrated the country's capacity to be a pioneer.
India's policies embody a blend of pragmatism and nationalism, and its goals include both close relations with the US and recognition as one of the leaders in a more multipolar world. India's economic growth and ability to manage its key diplomatic relationships will determine the size of the international role it crafts over the next fifteen years. Its leaders' skill in balancing the competing objectives of its foreign policy will help shape the direction taken by both India and the world.
India is a potential world power. India's stable democratic political system, rising economic fortunes and global ambitions make it a potential power that could play a very important role in world business & economics. As services sector, manufacturing has also seen a transformation in last 10 years, especially in Pharmaceutical, life sciences and biotech industry.
Pharmaceutical Industry in India is one of the largest and most advanced among the developing countries. India's US$ 3.1 billion pharmaceutical industry is growing at the rate of 14 percent per year. It provides employment to millions and ensures that essential drugs at affordable prices are available to the vast population of India. A highly organized sector, the Indian Pharma Industry is estimated to be worth $ 4.5 billion, growing at about 8 to 9 percent annually. It ranks very high in the third world, in terms of technology, quality and range of medicines manufactured. Indian Pharmaceutical Industry has attained wide ranging capabilities in the complex field of drug manufacture and technology. From simple pain killers to sophisticated antibiotics and complex cardiac compounds, almost every type of drug is now made indigenously.
Indian pharma industry is playing a key role in promoting and sustaining development in the vital field of medicines. Around 70% of the country's demand for bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and vaccines is met by Indian pharmaceutical industry. A number of Indian pharmaceutical companies adhere to highest quality standards and are approved by regulatory authorities in USA and UK.
Indian pharmaceutical sector is highly fragmented with more than 20,000 registered units and is very top heavy. The leading 250 pharmaceutical companies control 70% of the market with market leader holding nearly 7% of the market share. There are also 5 Central Public Sector Units that manufacture drugs. These units produce complete range of pharmaceuticals, which include medicines ready for consumption by patients and about 350 bulk drugs, i.e., chemicals having therapeutic value and used for production of pharmaceutical formulations. India is largely self-sufficient in case of formulations. More than 85% of the formulations produced in the country are sold in the domestic market. Some life saving, new generation under-patent formulations are imported, by MNCs, which they market in India. Over 60% of India's bulk drug production is exported.
The balance is sold locally to other formulators.
Pharmaceutical industry in India has been de-licensed and industrial licensing for most of the drugs and pharmaceutical products has been done away with. Manufacturers are now free to produce any drug duly approved by the Drug Control Authority. Indian pharmaceutical industry got a major boost with the signing of General Agreement on Tariffs and Trade in January 2005 with which India began recognising global patents. After recognizing the global patent regime the Indian pharma market became a sought after destination for foreign players.
India holds the lion's share of the world's contract research business as activity in the pharma market continues to explode in this region. Over 15 prominent contract research organisations (CROs) are now operating in India due to efficient R&D on a low-cost basis. Thirty five per cent of business is in the field of new drug discovery and the rest 65 per cent of business is in the clinical trials arena. India offers a huge cost advantage in the clinical trials domain compared to Western countries. The cost of hiring a chemist in India is one-fifth of the cost of hiring a chemist in the West. The Pharmaceutical Industry, with its rich scientific talents and research capabilities, supported by Intellectual Property Protection regime is well set to take on the global market.
It's important to know what are those factors which will enable India to have a competitive advantage over other economies to establish a stronger footprint on the global pharmaceutical map.
Skilled talent: India has a pool of personnel with high managerial and technical competence as also skilled workforce. It has an educated work force with English as the common language. Professional services are easily available.
Cost efficient chemical synthesis: India's track record of development, particularly in the area of improved cost-beneficial chemical synthesis for various drug molecules is excellent. It provides a wide variety of bulk drugs and exports sophisticated bulk drugs.
Improved pharma research pipeline: Drug compounds that pharmaceutical companies license from third-party developers in India cost less, are more successful in clinical trials, and achieve commercial results successfully. Big pharmaceutical houses are relying on drugs developed by others-particularly biotechnology companies-to fill the gaps in their product pipelines. But pharma's licensing strategy has a serious flaw: deals are often struck too late to generate maximum value. A Monte Carlo simulation of 10,000 licensing agreements shows that pharma companies would capture the maximum value in 85 percent of all cases by acquiring the rights to a drug in the early (preclinical) stage of development even if that meant paying a lot more than these companies now offer for early rights.
Legal & financial framework: India has a 60 year old democracy and hence has a solid legal framework and strong financial markets. There is already an established international industry and business community.
IT network: It has a good network of world-class educational institutions and established strengths in Information Technology.
Globalisation: The country is committed to a free market economy and globalization. Above all, it has a 70 million middle class market, growing continuously.
Consolidation: For the first time in many years, the international pharmaceutical industry is finding great opportunities in India. The process of consolidation, which has become a generalized phenomenon in the world pharmaceutical industry, has started taking place in India.
Today Indian pharmaceutical industry has realized its full potentials and is aware of the manifold possibilities that will bring a radical change or paradigm shift to get the advantage over other economies to establish a stronger footprint on the global pharmaceutical map.
Indian pharma policy makers and industry need to take some steps to reach the status of established industry as of developed nations.
Indian drug manufacturers need to attain the right product-mix for sustained future growth. Core competencies play an important role in determining the future of many Indian pharmaceutical companies in the post product-patent regime after 2005. Indian companies, in an effort to consolidate their position, will have to increasingly look at merger and acquisition options of either companies or products. This would help them to offset loss of new product options, improve their R&D efforts and improve distribution to penetrate markets.
Research and development has always taken the back seat amongst Indian pharmaceutical companies. In order to stay competitive in the future, Indian companies will have to refocus and invest heavily in R&D.
The Indian pharmaceutical industry also needs to take advantage of the recent advances in biotechnology and information technology. The future of the industry will be determined by how well it markets its products to several regions and distributes risks, its forward and backward integration capabilities, its R&D, its consolidation through mergers and acquisitions, co-marketing and licensing agreements.
There is considerable scope for collaborative R&D in India. India can offer several strengths to the international R&D community. These strengths relate to availability of excellent scientific talents who can develop combinatorial chemistry, new synthetic molecules and plant derived candidate drugs.
R & D in the pharmaceutical industry in India is critical to find answers for some of the diseases peculiar to a tropical country like India and also for finding solutions for unmet medical needs. Industrial R & D groups can carry out limited primary screening to identify lead molecules or even candidate drugs for further in vivo screening, pre-clinical pharmacology, toxicology, animal and human pharmacokinetics and metabolic studies before taking them up for human trials. In such collaborations, harmonized standards of screening can be assured following established good laboratory practices.
The R&D expenditure by the Indian pharmaceutical industry is around 1.9% of the industry's turnover. This obviously, is very low when compared to the investment on R & D by foreign research-based pharma companies. They spend 10 - 16% of the turnover on R&D. However, now that India is entering into the Patent protection area, many companies are spending relatively more on R & D.
When it comes to clinical evaluation at the time of multi-center trials, India provides a strong base considering the real availability of clinical materials in diverse therapeutic areas. Such active collaboration will be mutually beneficial to both partners. Indian Pharmaceutical Industry, with its rich scientific talents, provides cost-effective clinical trial research. It has an excellent record of development of improved, cost-beneficial chemical syntheses for various drug molecules. Some MNCs are already sourcing these services from their Indian affiliates.
The Indian pharmaceutical industry is highly regulated. The Government controls prices of a large number of bulk drugs and formulations. Profit margins of players vary widely in both domestic and export sales due to many factors.
More than 85% of the formulations produced in the country are sold in the domestic market. India is largely self-sufficient in case of formulations. Some life saving, new generation under-patent formulations continue to be imported, especially by MNCs, which then market them in India.
As per WTO, from the year 2005, India will grant product patent recognition to all new chemical entities (NCEs) developed then onwards. The Indian Government's decision to allow 100 percent foreign direct investment into the drugs and pharmaceutical industry is expected to aid the growth of contract research in the country.
The Indian pharmaceutical industry is also getting increasingly US FDA compliant to harness the growth opportunities in areas of contract manufacturing and research. Indian companies such as Ranbaxy, Sun Pharma, and Dr. Reddy's are increasingly focusing on tapping the US generic market.
The future of Indian pharmaceutical sector looks extremely positive. Indian pharma companies are vying for the branded generic drug space to register their global presence. Several Indian pharmaceutical companies have acquired companies in the US and Europe and many others are raising funds to do so. For example, Ranbaxy acquired Romania's Terapia, Ethimed NV of Belgium and GSK's generic business Allen SpA in Italy. Dr Reddy's acquired German generic drug maker Betapharm. Companies like Glenmark Pharma, Lupin, Aurobindo and Jubilant Organosys are on the lookout for lucrative acquisitions.
However India still needs to address numerous challenges. In order to become a Pharamaceutical powerhouse, India must tackle several structural issues. India's economic growth and ability to manage its key diplomatic relationships with China will also determine the size of the international role it crafts over the next fifteen years.
Thus as it balances its commitment to innovation in this fluid and dynamic marketplace, the Indian pharmaceutical industry continues to maintain a forward-looking perspective. The industry has strengths that contribute new answers to the entire healthcare system. Working together with healthcare providers, patients, and policy makers, the Indian pharmaceutical industry can provide effective medical solutions. Patients stand to benefit as care improves with more comprehensive approaches to their needs and with better drug therapies in the future. Physicians and other healthcare providers will benefit, as new advance will give them more options to help patients, and new programs will assist them in their lifelong pursuit of medical knowledge. Society stands to benefit from lower total costs and greater productivity when better drug therapies that address currently untreatable diseases are available. The industry itself will benefit as some of the pressures from the marketplace will be addressed by better and more cost-effective medicines.
Whether the goal is cost management, improved innovation or improving quality of care, supporting the research based Indian pharmaceutical industry's commitment to innovation seems a long term wise investment.
(Surabhi Khanna is EC Member and Atul Kumar Nasa is President - Indian Pharmacy Graduates' Association (IPGA))