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Why is China surpassing India almost in all the verticals of Pharmaceutical industry?

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To make India a major hub for Pharmaceutical outsourcing of all types, the country has all the required ingredients. India has indeed the potential to be a contender for global supremacy, in these fast growing sectors. However, despite all these, China is racing ahead to effectively avail these global opportunities and in that process fast distancing itself from India, widening the competitive performance gap between the two countries.Why is it happening? In this article, I would like to focus on some of these areas to assess the progress made so far, in a comparative yardstick, by these two countries and the key factors responsible for such growing disparity.China is ahead of India in country ranking both in value and growth terms:

In global ranking, China is currently the seventh largest pharmaceutical market and is expected to be the fifth largest market by 2010 and the third largest by 2020. The Chinese pharmaceuticals market is expected to grow by around 15% per annum at least in the next five years.

China is also ahead of India in healthcare coverage of its population:

In China, out of a population of 1.3 billion, 250 million are covered by insurance, another 250 million are partially covered by insurance and balance 800 million are not covered by any insurance. Against these statistics of China, in India total number of population who have some sort of healthcare financing coverage will be around 200 million and penetration of health insurance will be just around 3.5% of the population. India is fast losing grounds to China mainly due to better response to healthcare infrastructure and regulatory challenges by China.

Strong commitment of the Chinese Government in globalization process:

A very high level of commitment of the Chinese Government to make China a regional hub of pharmaceutical R&D and contract research and manufacturing (CRAM) activities within next seven to ten years is paying rich dividends.

Department of Pharmaceuticals (DoP) of the Government of India (GoI)recently expressed its intention to make India a R&D hub in not too distant future. This cannot be achieved just by good intent of investments of couple of million U.S$ through public Private Partnership (PPP), as announced by the DoP recently through the media . A strong commitment of the GoI to hasten regulatory reform processes with visble action, will be the deciding success factor. IPR regime in the pharmaceutical industry has been put in place, but in half measure. While product patent is in place, regulatory data protection (RDP) both against disclosure and unfair commercial use is yet to see the light of the day.

Regulatory data protection and better infrastructural facilities make China a better destination for Clinical Trials:

In China, the local law provides for 6 years regulatory data protection (RDP). Drug Registration Regulation (DRR) September 2007 of China is based on common technical data standards and allows only use of published data during protection period. In preclinical testing and animal experimentation, China is far ahead of India, because of regulatory constraints in our country. The report from ‘Biospectrum, Asia edition, Resource Guide 2009’, the number of Clinical trials being conducted in China was 961 against 834 in India. As a result, towards clinical trials China is attracting more foreign direct investments (FDI) than India.

‘Country Attractiveness Index’ for clinical trials:

‘A.T. Kearney’ developed a ‘Country Attractiveness Index’ (CAI) for clinical trials for pharmaceutical industry executives to make more informed decision regarding offshore clinical trials. As per this study, the CAI of China is 6.10 against 5.58 of India.

China is ahead of India in pharmaceutical patent filing:

In patent filing also China seems to ahead of India. Based on WIPO PCT applications, it has been reported that 5.5% of all global pharmaceutical patent applications named one inventor or more located in India as against 8.4% located in China. This will give an Indication how China is making rapid strides in R&D areas.

China will replace India as country with largest pharmaceutical exports, by 2010:

Both India and China used to be the preferred pharmaceutical outsourcing destinations across the globe. Though pharmaceuticals exports of India are currently ahead of China, PriceWaterhouseCoopers (PWC) reports that China may reverse this trend by 2010, establishing itself as the largest country in the world for Pharmaceutical exports. In API exports, China already overtook India in 2007. The report titled, “The Changing dynamics of pharmaceutical outsourcing in Asia” indicates that in 2007 against API exports of U.S$ 1.7 billion of India, China clocked a figure of US$ 5.6 billion. In 2010, China is expected to widen this gap further with API exports of U.S$ 9.9 billion against India’s U.S$ 2.8 billion.

Brain drain from India to China:

Korn/Ferry International has reported recently that more and more Indian talent is being pulled to China to fill key roles, especially in the API sector, signalling ‘brain drain’ from India to China.

Where India is regarded as a preferred destination:

However, India is globally considered as a more mature venue for chemistry related drug-discovery activities than China. Probably, because of this reason companies like, Ranbaxy, Aurigene, Advinus, Piramals and Jubilant Organosys could enter into long-term collaborative arrangements with Multinational Companies (MNC) to discover and develop New Chemical Entities (NCEs).

As I said earlier and as reported by Korn/Ferry that China’s infrastructure in the pharmaceutical space is better than India, primarily due to firm commitment of the Chinese government to accelerate reform measures to fetch maximum benefits of globalization process in the country.

Government of India seems to have fallen short of this commitment and is embracing more protectionists policies, which have been proved counterproductive almost all over the world to bring forth rapid progress to the nation and make the industries globally competitive.

Just a wishful thinking sans prudent regulatory policy reforms processes will helplessly make us see the gap between the Chinese and Indian pharmaceutical industry, fast widening.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Growing menace of counterfeit drugs in India: why is the domestic pharmaceutical industry still so apprehensive with the new Amendments of the ACT?

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The growing menace of Counterfeit drugs has remained a serious threat to the healthcare space of India.
Do we have any credible data to assess the magnitude of this menace in India?

No we do not have, as yet. At this stage, the magnitude of the problem is anybody’s guess. Earlier a study sponsored by the World Health Organization (WHO) and conducted by SEARPharm reported that only 0.3% drugs were spurious and 3% of drugs were counterfeits.

Government of India has initiated the largest study in the world to quantify the problem:

To scientifically assess the magnitude of the problem in terms of real size of counterfeit drugs market in India , the Drugs Controller General of India (DCGI) India’s, for the first time ever, has initiated one of the largest studies in the world, as reported by the Times of India May 14, 2008.

The study has already identified 61 popular drug brands from nine therapeutic categories for testing 24000 samples. These include drugs prescribed for tuberculosis, malaria, allergic disorders, diabetes cardiovascular conditions, vitamins etc. This study is expected to cost 50 million rupees or about U.S$1.0 million and is expected to be published, soon.

Making provisions for stricter penalties through amendment of the Drugs and Cosmetics Act, 1940:

To bring into effect stricter penalties for those involved in counterfeit drugs, the process of amendment of the Drugs and Cosmetics Act, 1940 was proposed by the Ministry of Health in October, 2007. These amendments are expected to make the drug-related offences, cognisable and non-bailable.

The latest amendment to the Drugs and Cosmetics Act, 1940 became a law in 2008. The punishment for selling or distributing spurious drugs, which are likely to cause death and grievous hurt to the patients, is now imprisonment for a term not less than 10 years and fine not less than Rs 10 lakh or three times the value of drugs confiscated, whichever is more.

The Minister of Health of India announced in November 2008, that with this amendment the Government of India will “go all out to do away with spurious drugs.”

India working closely with WHO Anti-counterfeiting Taskforce:

India being a part of ‘International Medical Products Anti-Counterfeiting Taskforce’ (IMPACT), established under WHO in 2006, decided to work together to combat the growing menace of counterfeit medicines.

The Drugs Controller General of India (DCGI) was reported to have several discussions with the convenor of the IMPACT to effectively address the issue of such serious threats to the patients at large. Many people believe that China and India are the main source of counterfeit drugs in the world.

Apprehensions of the Indian Pharmaceutical Industry with new Amendments in the Law:

Indian Pharmaceutical Industry although welcomed the stricter punitive provisions in the law, expressed its apprehensions due to lack of clear demarcation between the definitions of spurious drugs and those which can lose their original potency because of improper transportation and storage.

If the law-enforcing authorities pick up such medicines from retail outlets, those can easily get categorised as spurious medicines under Section 17A and 17B of the Drugs and Cosmetics Act, 1940. Consequently the concerned manufacturers could be put behind bars with, presumably, no fault at their end.

While stringent punishment is essential for those involved in such heinous crime, the Government should take enough measures to ensure that genuine drug manufacturers are not harassed by the law enforcing authorities, as the courts will have no judicial discretion to award less than minimum punishment, as prescribed under this Act.

Need for clear guidelines for implementation of the amended ACT:

To allay the major apprehension of the industry regarding possible misuse of some provisions of the Act, the Ministry of Health is expected to work out and quickly announce clear guidelines for implementation of the act by the law enforcement agencies in different parts of India.

Will this amendment help to win the fight against counterfeit drugs?

Only time will be able to give that answer. However, by amending the Act, the Government of India has demonstrated its resolve to address the threat of counterfeit drugs with iron hand. Through enunciation of above guidelines, all concerned are expected to be taken on board to effectively curb, if not totally eliminate this growing menace, for the sake of humanity.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Global Pharmaceutical Industry: Capturing the micro-trends, having potential to become future mega-trends.

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The situation:Almost the entire developed world is reeling under recession… Slowed down business growth… Gradual drying up of research pipeline… Skyrocketing R&D cost… Pressure on product price …Market capitalization going south… Cut throat market competition… Depressed business sentiments…Past M&As are no longer yielding desired results… Global pharmaceutical companies are to lose nearly US$100 billionin sales as many blockbuster drugs are set to go off-patent over the next five years. Sounds quite like a dooms day! No, in my view, the industry including in India, is going through a transformation process. Is any trend emerging through this process? Yes, of course. Let us now try to capture these micro-trends, which have a potential to become tomorrow’s mega-trends.The response:

Before we delve into that, let us see how the global pharmaceutical industry has been responding to such a situation during this trying time. A strong instinct of survival, in such a situation, will undoubtedly prevail. This instinct is driving some of the large companies, with reasonably deep pocket, towards consolidation. This is happening through mergers, acquisitions and even through hostile takeovers.

Globally, from 2008 to date about 58 mergers and acquisitions have taken place, mega, big or small. Amid the biggest financial crisis since the Great Depression, Pfizer Inc., Merck & Co. and Roche Holding AG could raise a mindboggling amount of US $155 billion to expand and survive in their business.

This month Merck & Co acquired Schering Plough for US$41.1 billion in a cash-and-stock deal that will create the second largest pharmaceutical company in the USA. Richard Clarke, Chairman and CEO of Merck said that the merged company would benefit from the rich R&D pipeline, a significantly broader product portfolio and a wider presence in the global markets.

Besides enriching R&D pipeline and achieving substantial revenue synergy, the merged entity is expected to achieve significant cost synergy of about US$ 3.5 billion by 2011. This deal comes just six weeks after Pfizer Inc swallowed up Wyeth for a record US$68 billion. This move of Pfizer’s is not only expected to enlarge its product portfolio, but also to significantly reduce its dependence on Lipitor, which goes off-patent in 2011.

Just after these, Roche clinched a deal to acquire 44% of Genentech Inc with US$ 46 billion. In 2008 almost 75% of Pharmaceuticals sales of Roche were contributed by the products brought in from Genentech stable. This signifies the importance of acquisition of Genentech by Roche.

Will the M&A strategy be viable in the longer term?

All these companies are basically looking for various avenues to tide over the impending crisis, especially in their R&D pipeline by acquiring other suitable companies. However, looking at the past records, it appears that many of these mega mergers may not fetch a sustainable longer term gain. Insatiable desire to merge or acquire another company for various reasons, keep coming back to these companies after a little while, once again. Pfizer, GlaxoSmithKline (GSK), Sanofi Aventis etc will stand as good examples. Some believe that merging just for the sake of width and depth of the R&D pipeline could have its underlying risks, as business compulsion of two different research cultures to come together may cause a serious adverse impact on ‘the climate of innovation’. Such a congenial environment very often plays a critical role in the process of discovery of breakthrough drugs. Probably because of this reason many questioned whether Genentech’s productive R&D culture can flourish under Roche’s full control.

Let me now deliberate on emerging micro-trends in the global pharmaceutical industry. All these micro-trends, in my view, are having potential to get transformed into mega-trends in not too distant future.

Micro-trend 1: Reorganization of large R&D set-ups into smaller units to foster innovation.

Despite creating large R&D set-up through mega mergers, we have also witnessed that some pharmaceutical majors like, GSK, are reorganizing the large R&D set-ups into smaller units to foster innovation, under the leadership of Andrew Witty, the current CEO. This strategy is expected to reap rich harvest.

Micro-trend 2: From concentrating exclusively on innovative medicines to expansion into low risk generic medicines.

Not so long ago Global R&D companies focused only the business of innovative prescription medicines. Low margin generic business was not their cup of tea. Today the scenario has made a 180 degree shift. Low risk, low cost and high volume turnover of generic business is now attracting many R&D based companies.

We are now witnessing another model of mergers and acquisitions, which was pioneered by Novartis some time back. An increasing number of companies are planning to spread their business in less risky generics pharmaceutical businesses. This business model will not require going through lengthy R&D and ever increasing stringent regulatory approval process for their entire product portfolio, in the developed markets of the world. Following this business model Daiichi Sankyo acquired Ranbaxy, in India. Sanofi-Aventis is in the process of acquiring the generic company of Eastern Europe, Zentiva. GSK acquired Pakistan operations of Bristol Myers Squibb, other generic business in South Africa and Egypt and mature products business of UCB in some selected markets of the world. Pfizer has also recently made somewhat similar move in India by entering into a strategic alliance with Aurobindo drugs for sourcing generic formulations for their global markets.

Micro-trend 3: From only prescription medicine business to businesses like, OTC, Nutrition, Diagnostics, Animal Health products, to reduce the business risk.

Some research based companies are now trying to somewhat insulate themselves from high risk R&D business by focusing on, besides generics, other low risk areas like, over the counter medicines (OTC), nutrition products, diagnostics, animal health businesses etc. Companies like, GSK, Pfizer, Roche will be good examples for such strategy.

Micro-trend 4: From sharp business focus mainly on top 10 markets of the world to extension of focus on key emerging markets of the world.

Not so long ago, large multinational companies (MNCs) used to have major focus on top 10 markets of the world. Now a days many of these companies are extending their business focus on emerging markets, like, India, Brazil, China, Russia, Turkey, Mexico etc, which are riding high on a very strong growth curve, unlike USA, Europe or Japan.

In these markets to gain a critical mass, the MNCs will need to enter the generic business and the best way to do it is by acquiring a good generic company. For this reason, in India we may soon start witnessing MNCs acquiring large to mid-size domestic Indian pharmaceutical companies. Daiichi Sankyo has just shown the way by acquiring Ranbaxy in India. This process has not started in full swing, as yet, probably because of expected very high valuation for their respective companies, by the Indian promoters following Ranbaxy deal.

Micro-trend 5: Gradual shift in R&D focus from infectious to chronic to preventive (vaccines) to personalized medicines.

Global pharmaceutical industry got a head start with the innovative drugs to treat infectious diseases. It gained growth momentum by changing its R&D focus on non-infectious chronic disease areas. We now observe a micro-trend to move towards preventive therapy like vaccines even for cervical cancer. With the emergence of stem cell research in the USA and with the rapid progress of RNAi technology, very soon we may enter into the area of personalized medicines, as well. Thus, in my view preventive and personalized medicines will be the high growth pharmaceutical business of future. At that time, the pharmaceutical business model will change significantly though, to adapt to the changing business environment.

Is the era of Blockbuster drugs over?

Let me now reiterate that contrary to the belief of many, future R&D pipelines of the global pharmaceutical companies are not too dry, either. I am not in agreement with many pontificating that the future of blockbuster drugs is over. Published reports indicate that 581 primary-care driven NCEs covering disease areas like, Central Nervous System (CNS), Cardiovascular, Vaccines, Respiratory, Anti-infective etc, are currently in Phase I and Phase II stages. Similarly 637 specialist-care driven NCEs covering disease areas like, Oncologics, Autoimmune agents, HIV, Immunostimulants, Alzheimer, Immunosuppressive etc, are also in phase II and Phase III clinical trial stages. Altogether 1218 NCEs are currently in Phase II and Phase III stages of clinical trial.

Indian Pharmaceutical Companies – are they in a dilemma?

In sharp contrast to prevailing scenario in the global pharmaceutical industry, in India, after a paradigm shift to a new IPR regime, the domestic pharmaceutical industry seems to be in a great dilemma, to some extent they seem to be in a state of identity crisis. Many domestic companies seem to be getting too overawed by the change in their ‘reverse engineering’ business model, as a fuel for growth.

At this stage, it is very important for all these companies to appropriately change their business model based on their competitive strength and quickly adapt to the new paradigm. Instead of considering the research based global companies as competitors, they should look at them as potential collaborators for various outsourcing opportunities; starting from contract research, contract manufacturing to contract marketing, as well. Why not?

Need to move from fragmentation to consolidation for leveraging the business growth:
Indian pharmaceutical industry is now highly fragmented. This is the high time to move away from fragmentation to consolidation, which will help the domestic pharmaceutical industry to attain adequate scale to invest significantly in their well considered business model to fuel the growth engine.

India is making progress in pharmaceutical R&D:

In India some domestic pharmaceutical companies have made significant progress towards R&D output. Published information indicates that Biocon, Piramal Healthcare, Glenmark, Ranbaxy and Suven Life Sciences have between them 45 NCEs. Most of these fall under oncology, infectious, metabolic and respiratory disease areas. Out of these 19 NCEs are in pre-clinical and the balance are in Phase I& Phase II clinical trial stages.

To sum-up, I witness the following micro-trends globally, which we should keep tracking with interest:

 Reorganization of large R&D set-ups into smaller units to foster innovation.

 From concentrating exclusively on innovative medicines to expansion into low risk generic
medicines.

 From only prescription medicine business to businesses like, OTC, Nutrition, Diagnostics, Animal
Health products, to dilute the business risk.

 From sharp business focus mainly on top 10 markets of the world to extension of focus on key
emerging markets of the world.

 Gradual shift in R&D focus from infectious to chronic to preventive (vaccines) to personalized
medicines.

WILL THE BALL GAME BE QUITE DIFFERENT TOMORROW?

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Allegation of ‘Marketing Malpractices’ in the pharmaceutical Industry of India has assumed a huge proportion– who will ‘bell the cat’?

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Sometime back, in its January – March, 2004 issue, ‘Indian Journal of Medical Ethics’ (IJME)in context of marketing practices for ethical pharmaceutical products in India commented:“If the one who decides, does not pay and the one who pays, does not decide and if the one who decides is ‘paid’, will truth stand any chance?”Three year after, in 2007 the situation remained unchanged when IJME (April – June 2007 edition) once again reported:

“Misleading information, incentives, unethical trade practices were identified as methods to increase the prescription and sales of drugs. Medical Representatives provide incomplete medical information to influence prescribing practices; they also offer incentives including conference sponsorship. Doctors may also demand incentives, as when doctors’ associations threaten to boycott companies that do not comply with their demands for sponsorship.”

This situation is not limited to India alone. It has been reported from across the world. ‘The New England Journal of Medicine’, April 26, 2007 reported that virtually, all doctors in the US take freebies from drug companies, and a third take money for lecturing, and signing patients up for trials. The study conducted on 3167 physicians in six specialities (anaesthesiology, cardiology, family practice, general surgery, internal medicine and paediatrics) reported that 94% of the physicians had ‘some type of relationship with the pharmaceutical industry’, and 83% of these relationships involved receiving food at the workplace and 78% receiving free drug samples. 35% of the physicians received re-imbursement for cost associated with professional meetings or continuing medical education (CME). And the more influential a doctor was, the greater the likelihood that he or she would be benefiting from a drug company’s largess.

Even our own ‘The Times of India’ reported the following on December 15, 2008:

1. “The more drugs a doctor prescribes of a company, greater the chances of him or her winning a
car, a high-end fridge or TV set.”

2. “Also, drug companies dole out free trips with family to exotic destinations like Turkey or Kenya.”

3. “In the West, unethical marketing practices attract stiff penalties.”

4. “In India, there are only vague assurances of self-regulation by the drug industry and reliance on
doctors’ ethics.”

Such issues are not related only to physicians. ‘Scrip’ dated February 6, 2009 published an article titled: “marketing malpractices: an unnecessary burden to bear”. The article commented:

“Marketing practices that seem to be a throwback to a different age continue to haunt the industry. Over the past few months, some truly large sums have been used to resolve allegations in the US of marketing and promotional malpractice by various companies. These were usually involving the promotion of off-label uses for medicines. One can only hope that lessons have been learnt and the industry moves on.”

“As the sums involved in settling these cases of marketing malpractices have become progressively larger, and if companies do not become careful even now, such incidents will not only affect their reputation but financial performance too.”

Huge settlement sums involved in such ‘federal misdemeanour’ cases could act as a reasonably strong deterrent in the USA. However, in India, even the written complaints to the Drug Controller General of India (DCGI) about ‘off label’ promotion of drugs attracts no such punitive measure. Marketing malpractices in India seems to have now become a routine, as it were. All stakeholders, in principle, agree that it should stop. But in absence of any strong deterrent, like in the USA, will it remain just as another wishful thinking?

Both the Government and the industry talk about ‘self regulation’ to address this issue. This is indeed a very pragmatic thought. A part of the industry already has such a self regulation system in place. But the moot question that comes in everybody’s mind is it working, effectively?

To effectively address this issue should the entire pharmaceutical industry in India together not form a self regulatory body in line with “Consumer complaint council” of “The Advertising Standards Council of India”, as was created by the Fast Moving Consumer Goods (FMCG) industry? The decisions taken by the ‘pharma council’ against each complaint of marketing malpractice should be disseminated to all concerned, to make the system robust and transparent…and in that process it will act as a strong deterrent too.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Innovation, IPR and Indian Pharmaceutical Industry – a growth formula is brewing.

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Innovate or perish:Many of us expect that ‘tomorrow’ will be a ‘mega today’ and prefer to run our business more or less the same way, as what we are doing today. At the same time the global market keeps us sending, in very small measures though, but definite and continuous signals of change. As we move on, we realize that ‘tomorrow’ will not be a ‘mega today’, just as ‘today’ is not a ‘mega yesterday’. To meet such challenge of change squarely and realistically, we need to embrace a culture of ‘continuous innovation’.Therefore, the name of the game, while competing within the globalised economy is “continuous innovation”. An innovation, as we know, is more than a novel idea. It is, in fact, the process of translating the novel idea into reality.

Like other industries, the pharmaceutical industry in India will also have to innovate with cutting edge ideas, convert them to innovative and implementable business models, which in turn would help these companies to remain competitive in the market place. The innovation, which I am talking about, extends beyond Intellectual Property Rights (IPR).

While innovation is an absolute must to remain and grow the business, having patented products and marketing these brands effectively are desirable and not a ‘must do’ in the pharmaceutical industry of India.

Many would like to ‘stick to knitting’ and innovate:

Indian Pharmaceutical Industry is now an internationally acclaimed player in process development, contract research, manufacturing and domestic marketing skills. The Government of India created this environment for the industry through amendments of the Indian Patents Act 1970.

During post product patent regime in India, there is no dire need for the entire domestic industry to shift its focus from world class process development skills to new molecule development skill. On the contrary, the strengths acquired by the domestic industry in such skill sets should be further honed, to utilize benefits from opportunities that arise out of basic R&D processes. Some of these are collaborative activities with the multinational companies (MNCs) to create a win-win situation in areas like, contract research, clinical development, contract manufacturing and domestic marketing of in-licensed products.

The domestic pharmaceutical industry should therefore adopt strategies like manufacturing off patent products, like recent collaboration between Aurobindo Pharma and Pfizer, Jubilant Organosys with French company Guerbet, for distribution of its nuclear medicine products in Europe. ‘Financial Express’ dated March 13, 2009 reported “Eli Lily seeks partner for Indian TB initiatives.

Such opportunities will keep on coming, may be more frequently and more in number, especially when global innovator companies take more interest in the generic pharmaceutical business, like, Novartis, Daiichi Sankyo, GlaxoSmithKline, Sanofi Aventis etc.

To grab such opportunities, the strategy of ‘stick to the knitting’ with continuous innovation is expected to help the domestic pharmaceutical companies immensely.

IPR regime – emerging opportunities:

Discovery Research:

While above approach will help many small and medium sector enterprises, many large pharmaceutical companies and research boutiques in India are investing significantly to discover New Molecular Entities (NMEs). It has been reported that by 2011, at least two Indian pharmaceutical companies are planning to launch their NMEs.

Biotech Research:

Research in the field of Biotechnology is rapidly evolving, especially in the areas of diagnostics, vaccines, cellular and molecular biology. It is heartening to note that for doing stem cell research National Institute of Health, USA, identified Reliance Life Sciences in Mumbai and the National Institute of Biological sciences in Bangalore to receive state funding from the USA. Both these two organizations entered into contracts to supply embryonic stem cells to the US based researchers. Moreover, in the field of ‘Biometrics’ raw clinical data are now being transmitted to the specialists in India for their scientific evaluation.

It has been reported that in the developing countries of the world malaria afflicts about 300-500 million population and kills 1-3 million of them. Malaria also allows some fatal genetic illnesses, like sickle cell anaemia to thrive in the gene pool. Hence a vaccine developed for this disease through Indian biotech initiatives, would indeed be a great boon for the developing countries of the world.

Industry – Academia Collaboration:

In the Western countries, close collaboration exists between the industry and academic institutes in the field of Pharmaceutical Research. Such type of collaboration has now started developing in India too, where Council of Scientific and Industrial Research (CSIR) is playing major role.

An effective collaboration between the pharmaceutical industry and the academia will ensure productive use of research talents where both the parties will draw benefits. The research done by the CSIR, Indian Institute of Technology (IITs), Indian Institute of Science and various universities is expected to throw open new avenues of collaboration and partnership between industry and Academia.

Benefits of Technology Transfer and increased Foreign Direct Investment (FDI):

The new product patent regime is also expected to facilitate flow of technology and foreign direct investment in India with adequate patent enforcement mechanism being put in place. Inadequate patent and regulatory data protection are considered by the developed nations as the key barriers, which restrict the flow of both technology and foreign investments.

In these areas, India mainly competes with China and Brazil, besides other emerging markets. Degree of patent and regulatory data protection in each of these countries will eventually decide who will emerge as a winner in these fields.

The issue of ‘Access to New Innovative Patented Drugs’:

Innovative pharmaceutical products patented in India will facilitate access to the latest modern medicines to Indian population. Such medicines will help to meet the unmet needs of the ailing population. Many multinational companies like, Merck, GlaxoSmithKline (GSK) have already announced a differential pricing mechanism for such medicines in the developing countries.

Moreover, to improve access of such medicines to the common man, the Government of India should have robust plan to purchase these medicines, at a negotiated price, for supply to Government Healthcare Units

Improving ‘Access to affordable modern medicines’ – a challenge to the nation

There are three key elements to improve access to affordable medicines to a vast majority (650 million) of Indian population:

1. Healthcare infrastructure and delivery
2. Healthcare financing
3. Procurement price of these medicines at the Government Healthcare units

Price of patented products will not have any impact on existing medicines available in the market. However, the reality is, price regulation in some form will continue to play a key role in India. The long overdue new Drug Policy of India is now expected to come only after the new Government takes charge, post General Election of the country. The new policy is expected to articulate the details on this important subject both for patented and generic medicines, in India.

A determined and focused approach of the Government on the above three elements would effectively address the key healthcare issues of India.

Small Scale Enterprises in India – expecting large scale consolidation:

In India over 70% of the small-scale units, within the pharmaceutical industry, currently operate as contract manufacturers, either for the domestic or multinational companies. These small scale units with their low operating cost ,make the contract sourcing model an attractive proposition. Many of these small scale enterprises, are mostly catering to the export business in non-regulated markets.

The demand for high quality standard by the drug regulatory authorities of various countries is fast increasing. It is, therefore, essential for these units to make significant investments to qualify for such stringent quality requirements. Some units would be able to invest enough to meet such regulatory standards. However, the cost of production for those units, which will invest towards facility up gradation is expected to increase significantly, leading to fierce cut throat competition. In a situation like this, we can expect to witness a large scale consolidation process within the industry.

Intense competition from China – cannot be ignored:

Globalisation of the markets could lead to significant dumping of products in different countries. Such a situation may adversely affect the cash flow of business, making the domestic industry highly vulnerable. Currently, Indian manufacturers are facing intense competition from China, in Pharmaceutical Intermediates (PI) and Active Pharmaceutical Ingredient (API) segments. This is mainly because China has a much better economies of scale in manufacturing, which gives them a pricing edge over their Indian counterparts.

PI and he API manufacturers in the small scale enterprise segments of India have already been very adversely impacted, leading to closure of many units in various states like, Andhra Pradesh, Karnataka and Gujarat.

Conclusion:

The issue of a robust world class patent regime in India has sparked off an intense debate with a heavy dose of acrimony. The key areas of concern of various stakeholders are as follows:

1. General public: inadequate access of affordable modern medicine to the common man
2. Domestic generic industry: overall industry growth and to some extent its survival
3. The Government of India: combination of 1&2

After many years of tough resistance mainly from the domestic generic pharmaceutical industry, in January 1, 2005, India re-entered into the pharmaceutical product patent regime. In this article, I have tried to give a snapshot of this new regime, for a quick reading.

Despite tough competition from China and increased possibility of consolidation within small scale pharmaceutical units, overall emerging scenario in India is indeed encouraging. Imbibing innovation culture and with the opportunities available in the new IPR regime, Indian pharmaceutical industry, I believe, will be able to catapult itself to newer heights of global success.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.