According to the Federation of Indian Chambers of Commerce and Industry (FICCI), globally, India ranks third for pharma manufacturing volume and 14th in terms of value.

In itself India represents a major market for pharma companies with a population of over 1.2 billion yet the country posts an impressive export turnover of over US$10 billion, spread across 200 countries. Domestic and international pharma companies, however, face a number of major issues, including drug quality, clinical trial quality and patent protection.

Drug Quality

The World Health Organisation (WHO) estimates that up to 30 per cent of branded drugs sold in developing nations are counterfeit which can have profound implications for patients. For example, tuberculosis and Malaria counterfeits, which largely originate in India and China, are estimated to kill some 700,000 people a year! Counterfeiters, similar to legitimate drug manufactures, are keen to benefit from manufacturing costs in India that are around 40 per cent cheaper than other markets. As a result, India’s counterfeit market has reportedly grown at a rate of about 25 per cent per annum, and represents a significant proportion of the global counterfeit drug market (thought to be worth between $75 billion and $200 billion a year).

In response to the significant concerns raised by importers of Indian pharma products, the Indian Government, WHO, and the partnership for safe medicine (PSM) are putting in place initiatives to combat counterfeit drug manufacturing, including:

  • upgrading the capacity of the state governments by equipping the state drug testing laboratories with modern technology and latest rapid testing equipment
  • enforcing serialisation, non-clonable packaging and 2D barcoding
  • investing in more ‘new drug manufacturer inspectors’.

The intention being to identify quality and safe medicines from spurious and unsafe medicines in the supply chain, and ensure prompt action against manufacturers and dealers found trading in fake and unsafe medicines.

In addition to the challenge of counterfeit manufacturers, legitimate manufacturers making up India’s booming pharmaceutical export industry are also attracting the attention of foreign regulators such as the FDA. It’s easy to see why as India is the biggest foreign supplier of medicines to the US and has about 200 FDA-approved drug manufacturing facilities. Indeed, India produces nearly 40 per cent of generic drugs and over-the-counter products and accounts for 10 per cent of finished dosages in the US. The FDA has highlighted a growing number of quality issues and last year added seven new inspectors to its India office, bringing the total number of staff to 19. Increased FDA oversight has led to some 19 drug manufacturing factories across India being barred from supplying medicines to the US. With restrictions, including import alerts imposed on the facilities of a number of life science multinationals.

Clinical trial quality

In many ways India is the ideal location to conduct clinical trials given its diverse pool of patients with diverse treatment needs and access to a large, scientifically skilled, workforce. This has caused huge growth in the number of clinical trials however, capacity to regulate trials has not kept pace leading to a number of unethical practices such as; a lack of patient compensation for adverse events; approval of drugs without clinical trials and lapses in informed consent procedures. Again increases in regulatory control by the Indian government, in the form of mandatory trial registration and the creation of numerous committees tasked with overseeing trial approval, trial execution, and ethical treatment of patients, is starting to have a more positive impact. The bad news is that delays in new drug approvals as a result of the new regulatory control regime is forcing some multinational companies to rethink their clinical trial activity in this market.

Patent issues

In India, 70 per cent of expenditure on healthcare is out-of-pocket, which has led the government and its judiciary to take steps to promote the use of generic products and prevent prices of lifesaving drugs being set by market forces. This has caused a number of issues for multinational companies, leading some to question the commercial viability of India:

  • in April 2013, Novartis lost a six-year legal battle after the Supreme Court ruled that small changes to its leukemia drug Glivec would not get a new patent
  • recently India upheld a compulsory license of Bayer's cancer drug Nexavar, effectively allowing generics firms to copy the patented drug
  • the patent for Pfizer's cancer drug Sutent was revoked
  • Roche's patent on Pegasys, a hepatitis C drug, was denied.

These challenges, amongst others, have caused pharmaceutical industry growth to slow over the last year (from 16.6 per cent to 9.8 per cent), a trend that both domestic and multinational companies are looking to reverse. For this to be achieved companies will need to work closely with the Indian government, regulators and other key stakeholders to establish compliant business practices that are commercially viable. Some of the solutions include:

  • bolstering internal compliance to keep up with evolving global and domestic regulations concerning quality. This has the potential to drive significant competitive advantage
  • striking a practical balance between underpinning clinical trials with scientifically and ethically correct practices and maintaining the low R&D costs that fueled initial growth in India’s pharmaceutical market 
  • striking a balance between ensuring affordability of, and access to life saving treatments with securing the future of innovative new medicines globally. Current patent laws have good intentions however, multinational companies, looking to emerging markets for growth as the price squeeze continues in traditional markets, have been left in a difficult position. Can the developed world continue to foot the bill for innovation? Increasingly it seems R&D engines need all the help they can get! 

If India can adopt these solutions it has the potential to grow to a level that’s comparable (in value terms) to most developed markets by 2020 – something that pharma companies of today surely cannot ignore?

Karen TaylorKaren Taylor
Research Director, Deloitte UK Centre for Health Solutions




With research provided by Mohit Maheshwari, Business Research Center Hydrabad 


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