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Many developing countries seek to enhance local production of pharmaceuticals and the transfer of relatedtechnology.Such countries benefit from the study of policies and measures of countries such as India, which have successfully developed local production capacities.Inthe1960s, Indian policy makers identified distortions in the domestic pharmaceutical market, andin 1970 decided to eliminate pharmaceutical product patent protection. Local scientists were able to reverse engineer pharmaceutical compounds manufactured in industrialized countries.Local entrepreneurs-built manufactur in gfacilities;refined manufacturing technologies; and produced and sold increasingly large   volumes of pharmaceutical products that were subject to patent protection elsewhere. The success of India’s pharmaceutical industry is attributable to more than elimination of patent protection. For example, Indiahasapopulationofapproximately1.25billionpeople, representing a large, built-in internal market. This allowed local manufacturers to achieve economies of scale before they sought to enter export markets.

Policies and Programmes in India
Governance in the pharmaceutical sector
Department of Health and Family Welfare, Ministry of Health and Family Welfare http://www.mohfw.nic.in/
Central Drug Standards Control Organization (CDSCO), Ministry of Health and Family Welfare
Department of Commerce, Ministry of Commerce and Industry
Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry
Controller General of Patents, Designs and Trademarks, DIPP http://www.ipindia.nic.in/
Department of Pharmaceuticals (DoP), Ministry of Chemicals and Fertilizers http://pharmaceuticals.gov.in/
Department of Biotechnology, Ministry of Science and Technology http://www.dbtindia.nic.in/
Council of Scientific and Industrial Research (CSIR) http://www.csir.res.in/
Indian Council of Medical Research (ICMR) http://www.icmr.nic.in/
Pharmaceuticals Export and Promotion Council of India (Pharmexcil) http://www.pharmexcil.com/
National Pharmaceutical Pricing Authority (NPPA) http://nppaindia.nic.in/
Ministry of Finance
Bureau of Pharma PSUs of India, Jan Aushahi

Key Documents:
- Consolidated FDI Policy (Effective from 1 April 2014), Department of Industrial Policy and Promotion.
- Annual Report 2014-15. Department of Pharmaceuticals. Drugs (Prices Control) Order, 2013.
- Department of Pharmaceuticals (To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii) dated 15th May 2013).
- Guidelines on Similar Biologic: Regulatory Requirements for Marketing Authorization in India.
- Department of Biotechnology and Central Drugs Standard Control Organization (2012).
- XIIth Pharmaceutical Plan Report (2012-17); Working Group Report.
- India Planning Commission.National Manufacturing Policy.
- Press Note No. 2 (2011 SERIES), File No. 10 (6) I 2010 - MPS Dated: 4th November 2011.
- Indian Bio pharmaceutical Industry: Important Guidelines & Incentives Available to Exporters of Pharmaceuticals, Biologicals, Biopharma and Bioservice Sectors (2015, 4th ed (Updated)).
- Pharmexcil.Planning and Management of Industrial Parks (Dr P. P. Lal Krishna).
- Ramky Pharma City (India) Ltd.Specialized Financing Programmes for Pharmaceutical Industry. Export-Import Bank of India (16 April 2012).

1. The historical development of India’s pharmaceutical sector involved forgoing pharmaceutical product patent protection, establishment by the Government of public manufacturing facilities and financial opportunities for local producers based on large differences between prices charged by multinationals and local producers for finished products. Although LDCs may forgo pharmaceutical product patent protection, other developing countries are now bound by WTO TRIPS Agreement rules that mandate such protection. Also, the spread between prices of generic products supplied by multinationals and local producers does not provide the type of opportunity that existed at the initial phase of India’s pharmaceutical industry development.

2. The success of India’s pharmaceutical sector today seems largely grounded in dynamic private companies seeking to take advantage of market opportunities. A major driver of revenue growth has been exporting of generic formulated products to high-value developed country markets, particularly those of the United States and Europe. The revenues from exports have allowed the major Indian generic producers to invest in upgrading of plant and equipment so as to allow conformity with strict regulatory requirements, enabling export expansion

3. The Indian domestic market for pharmaceuticals is divided among the major producers and a large number of SMEs. The latter are supported by procurement of essential medicines by state governments and the Central Government. Because the SMEs have not upgraded plant and equipment to meet strict regulatory requirements, they do not engage in exports to high-value markets.

4. There have been questions raised regarding the quality of medicines on the Indian domestic market, and in response the Government is substantially expanding the number of central government inspectors. Training programmes are being initiated for those inspectors. In addition, operators of small enterprises are being encouraged to move to providing services to the larger operators because the small operators do not have the financial capacity to substantially upgrade their plants and equipment. It is important to coordinate central and state government regulatory controls on manufacturing facilities since, at present, once a medicine is approved by the central authority, the responsibility for inspection of plants is mainly in the hands of the state government regulators. The India state central authority views cooperation with the US FDA as a positive development.

5. The India Government has promoted the concept of the pharmaceutical cluster, which provides exemption from import duties for products that are exported, and from local taxes (depending on the state government). The net benefit from producing in a cluster from a tax standpoint appears to be about 14% (the ordinary 34% corporate rate is reduced to 20%).

6. Recognizing that Chinese pharmaceutical companies have made significant inroads into India’s production and export of APIs, the India Government is actively studying proposals for the creation of API-specific clusters situated nearby to existing petrochemical complexes that will enable Indian API producers to exploit lower costs. This would involve the establishment of common infrastructure support (which exists already for certain pharmaceutical clusters), including pipelines to carry chemicals such as solvents from the petrochemical complexes. As a corollary to the establishment of API-specific clusters, the Government is also studying Chinese practices with respect to energy costs, which some believe may be inconsistent with WTO dumping and/or subsidies rules.

7. The India Government is anxious to promote transition to R&D on new pharmaceutical products, both small molecule/synthetic chemistry and biological products. Potential revenues and profits from sales of patented original pharmaceutical products are substantially greater than those from generic products. While the major Indian pharmaceutical companies have begun to invest significant amounts in R&D, this is not yet half (as a percentage of revenues) of the equivalent percentage of OECD originator companies (8% India versus 16-20% foreign multinational companies). Also, the base of revenues of the Indian companies from the sale of generic products is substantially lower than that of the multinational originators, so the aggregate amount invested in R&D is relatively quite low.

8. Looked at from the standpoint of rupee/dollar amounts, India Government programmes to encourage domestic R&D are very modest in comparison with those of the United States, for example.

9. The Government of India has promoted exports through establishing and supporting Pharmexcil. Pharmexcil provides information to its member companies regarding export opportunities and supports participation in international trade shows. Pharmexcil advocates for the interests of Indian companies in foreign markets, such as when regulatory issues arise. It hosts visitors from foreign enterprises seeking to procure medicines from Indian companies.

10. The Government of India is interested in promoting biotechnological invention as well as the production of biosimilar products. It has established a programme for subsidizing future technologies, and in connection with that provides for joint ownership of inventions with the private sector. Currently, India does not have legislation providing for private ownership of patents arising out of government-sponsored research more generally but is studying such legislation. India recognizes that it does not have a venture capital risk-taking tradition in respect to biotechnological R&D investments and has contemplated the creation of a government-sponsored venture capital fund.

11. India has an excellent educational system in terms of developing and promoting scientific talent. It has a number of high-level public education institutions with entry based on competitive testing. In addition, India has established a network of pharmaceutical industry-specific educational institutions, principally for post-graduate research, referred to as NIPERs. Top Indian students also received post-graduate training at educational institutions in the United States and Europe. In general, the availability of scientifically trained personnel is a strength of the Indian pharmaceutical industry.

12. While the India Government is supportive of the private pharmaceutical sector, and promotes its interest in multinational and regional fora, it does not make a substantial financial contribution to promotion of that sector. This is largely explained by the private sector has been successful, and there are many areas with-in India that need government financial support.

13. One of the key features of India’s current success in the pharmaceutical sector is the evolution of a robust ‘ecosystem’ of supporting infrastructure, suppliers and service industries. Such an ecosystem may develop as a natural consequence of dynamic eco-nomic activity around a industry. The cluster concept in part may be a way to facilitate the development of an ‘artificial ecosystem’ (i.e. one that evolves based on government policy).

14. The transition to a pharmaceutical product patent protection regime in India is creating a new environment under which local producers are no longer automatically able to produce and supply the newest pharmaceutical products without infringing third-party patents. Consequently, there is a good deal of local activity in challenging patent applications and grants at the Indian Patent Office and in the courts. This is creating tensions with home countries of originator companies, including those based in the United States, Europe and Japan. It is also leading the United States, Europe and Japan to seek to ‘ring fence’ India’s pharmaceutical industry and prevent penetration of foreign markets through negotiation of restrictive free trade agreements, such as the Transpacific Partnership Agreement.

15. To protect the interests of the public, the India Government has issued one compulsory license with respect to a patented pharmaceutical product. Such licensing generates tensions with the home countries of affected patent owners and is bound to be a source of continuing dialogue.

16. The Government seeks to protect the interests of the local population by maintaining a system of price controls on essential medicines that today uses market-based reference pricing to establish benchmarks for pharmaceutical products. This is viewed by industry as a major improvement over the former system that was based on cost-plus formulas. While industry is generally satisfied with the transition to market-based reference pricing controls, there is also advocacy for open tender-based procurement intended to drive down prices through market forces.

17. A combination of central and state government programmes is intended to provide essential medicines to the public free of charge, yet availability of such free medicines is a major continuing issue. The Central Government has recently cut a public health budget that is already comparatively low by international standards. The Central Government must commit to more significant expenditure on health care in general, and medicines, if the situation regarding local access to medicine is going to change.

Source: WHO
Pharmaceutical Intermediates by SGRL
Fine Chemicals by SGRL