“Pharmaceutical exports growth in formulations (in terms of US dollar) is expected to decline sharply to 10-12 per cent annually over the next five years, compared to growth of 19 per cent seen in the last decade”, a credible research report projects. This has raised a serious concern over the growth and sustainability of Indian pharmaceutical industry. This is mainly due to decreased generic market in the US and is expected to decrease by 8-9 per cent over the next five years. Indian pharma’s main earning or revenue is from exports of generic products not the domestic sales. India used to export quality medicines to more than 200 countries including highly regulated markets and has been known as ‘Pharmacy of Third World’. If India’s export is not growing, it would cease the growth of domestic pharma.

While inaugurating the 67th Indian Pharmaceutical Congress in December 2015, the Minister in Charge of Pharmaceuticals linked the drug security to health security, one of the fundamental rights of the citizens of the country. He called upon the development of five Es: Effective, Efficient, Easy, Environmental-friendly and Economic processes in pharmaceuticals for achieving sustainability of Indian pharma which in turn lead to achieving drug security. While there is no universal consensus on term ‘health security’, the health security as commonly perceived, can be achievable through ensuring accessible, affordable, accountable and good quality healthcare. There are few issues which needs consideration in order to understand pharma’s sustainability.

One of the serious issues is over-dependence on import of bulk drugs or active pharmaceutical ingredients. The active pharmaceutical ingredients (APIs) are required to make formulations. Manufacturing of formulations at an internationally competitive rate is India’s strength. This import of active ingredients has increased over the years and that too from China. About 60 per cent of country’s active pharmaceutical ingredients is from China. “India runs the risk of a severe shortage of medicines because of its over dependence on China for sourcing raw material for drugs” warns the National Security Adviser. China is known to have antagonistic attitude towards other countries based on economic and strategic relationship. Following tension between China and Japan, the former had stopped supply of crucial category of minerals used in products like hybrid cars, wind turbines and guided missiles to the latter in 2010.

In order to prevent over-dependence and to achieve sustainability, the country must have its own mechanism to produce required bulk drugs. It is unfortunate that the big bulk drug manufacturing units like IDPL established in post-independent era are either dead or inoperative. Fortunately, the Government has realized the problem and coming with the idea to establish three or four pharma parks with reasonably good investment to boost manufacturing of bulk drugs. In addition, the Government proposes to form a regulatory system (pollution related) which would encourage investment in bulk drugs. In self-reliant situation, the China’s snapping of APIs supply would not affect our pharma and the healthcare as well.

India’s achievement to be self-reliant in pharmaceutical needs of the country is largely attributed to the patent regime of 1970s when country decided to have only process patent not the product patent. Domestic pharma exploited this favourable situation and produced generic formulations without patent hitch. This benefited not just the pharmas but the people of the country as the medicines were available at much affordable price compared to even the poorer neighbouring nations. As a part of International obligation, the new patent act was brought into practice allowing product patent. However, it has two public health provisions: protecting public health through provision of compulsory licensing and not allowing ever greening patents. But the new act has failed to achieve encouraging results in terms of innovations in pharma and new drug discovery.

The central government has just approved the new IPR policy aiming to establish an ecosystem in the country that is conducive to foster innovation and creativity. To be very specific, the new policy continues to prohibit granting of patent for new form of the same substance till improved efficacy is established, a stricter patentability standard. In addition, the provision of compulsory licensing is kept intact. This is all in the interest of the nation and the domestic pharma.

The new policy is perhaps a balance of inventability, innovation and public health. But the resources of domestic pharmas may not match to that of international giants for spending on research and development. The pharmas require government support either in terms of soft loan or tax concessions to encourage investment in research and development. The innovation and new drug discovery are extremely risky and require heavy investment. In a stricter regulatory regime, even conducting clinical trials is not easy and very expensive. There are issues of price control too. The price control helps in improving affordability but with reduced profitability for pharmas.

Until 1970 India was dependent on other countries for its pharmaceutical needs. In the next 20 years, the significant growth of pharmas due to liberal patent regime has made India to be self-reliant. The real growth of pharma is visibly seen in post economic liberal era (post GATT-WTO era) due to export of generic medicines to other part of the world. Now with new IPR regime, less number of drugs coming out of patent, increasingly difficult for domestic pharmas to compete with multinationals in terms of innovation and drug discovery, over dependence on API imports and projection of decreasing generic exports, it is necessary for both Indian pharmas and the Government to introspect and design mechanism to redress the bottlenecks to ensure sustainability of pharmas in the national interest.