India’s Thriving Pharmaceutical Industry
India’s pharmaceutical industry is currently brimming with activities. The recent drug and plant approvals received by US Food and Drug Administration (FDA) has made Cadila Healthcare (Zydus Cadila) the most valuable pharmaceutical company by market capitalisation after Lupin. It is also expected that Company’s Moraiya plant, located in Gujarat, will soon receive clearance to market the generic version of Mesalamine tablets in the US. Cipla, the pharmaceutical major has pledged to sharpen focus on core areas of respiratory, oncology and anti- HIV drugs. Also, Cipla has received approval from US FDA for its generic tablet used for HIV infection. Pfizer India, with an aim to accelerate its growth and strengthen its leadership position in the gastrointestinal therapy area has entered into an acquisition agreement with Astrazencea, a Swedish multinational pharmaceutical, to acquire latter’s drug Neksium.
It was anticipated that Trump’s call to pharma to move back to America and his ‘Buy American’ move would affect the largest market for Indian pharmaceutical companies but the recent approvals received by Indian pharmaceuticals by US Drug regulator brings back a ray of hope of improving growth prospects in the US.
In the fiscal year 2017, five top drug makers- Sun pharma, Lupin, Cipla, Aurobindo Pharma and Dr. Reddy lab has spent Rs. 8025 crore in R&D which is about 9% of the total revenue. This hefty investment for the future reflects the strong potential this industry possesses and also brings us at par with global peers.
Indian pharmaceutical industry is a boon for the developing countries of Latin America and Africa. India is a prime source of generic drugs and has competitive edge over others like US AND Europe. India’s expertise in reverse drug engineering has helped it to produce generic versions of expensive drugs at a significantly lower cost. India supplies 20% of global generic medicines making the country the largest producer of generic medicine globally and is projected to grow to USD 55 billion by 2020 from USD 36.7 billion in 2016. Our pharmaceutical industry exports over to 250 countries and produces over 60% of global vaccines. Drugs and pharmaceuticals constituted 4% of total FDI inflows and the share of pharmaceutical products in total exports from India was 4.7% in 2016.
Recognising the potential and scope this industry has for further development and expansion, GOI has launched an initiative “VISION PHARMA 2020” to propel growth in pharma industry. The aim is to make India the top destination for drug innovation, discovery and production by 2020. In an effort to boost domestic manufacturing of pharmaceuticals and reduce the manufacturing cost of drugs, the government is planning to establish an exclusive pharma and medical technology zone at Bengaluru. FDI policy of India in pharma sector permits 100% FDI in Greenfield pharma and up to 100% FDI under government approval in brownfield pharma. This policy will allow India to invest in R&D, enhance local capabilities and thus will complement the long term Pharma Vision of the government. The initiative has unquestionably opened up avenues for profitable investment for both foreign and domestic investors. The trend in the investment will depend on how the investors perceive this opportunity and how optimistic they are about future prospects of India’s growing pharma industry. The ball is in the court of investors now.
To dream of success seems rosy but one must not forget that the path to success is full of obstacles. India can escape these hurdles if it learns from its past mistakes. Recently, Indian pharma sector has faced regulating wrath over the quality of medicines exported from India and sold in the US and other overseas market. Even the top notch companies- Ranbaxy, Sun Pharma and Dr. Reddy’s could not get their drugs approved because of the low quality standards and lack of efficacy. In order to make most of the available global opportunities, India needs to make sure that it is able to meet the quality standards set by drug regulators of its importer countries.