The Changing Dynamics of the Indian Pharmaceutical Industry

The Indian pharmaceutical industry has emerged as the third-largest country in the world in terms of volume with a turnover of about $22 billion US dollars in 2009. Moreover, as estimated in 2011, the Indian pharmaceutical industry includes more than 20,000 licensed companies that employ 500,000 people on an average. Throughout the decade-long list of successes, the Indian pharmaceutical industry has taken huge leaps in terms of its futuristic approach involving novel drug delivery systems, mobile-based applications, precision drug delivery, and patient-specific drug delivery, which is optimization-oriented according to the need. Furthermore, the industry secured the top position among the science-based industries through a range of capabilities in production and technology.

Exports From The Indian Pharmaceutical Industry:

Being the largest exporter in the pharmaceutical industry among all the developing countries, India’s pharmaceutical market is driven by the price, quality, and safety of the products. The Indian market has been recorded to grow from $7.24 billion US dollars in 2007 to $9.35 US billion dollars in 2009. The largest imports of the Indian pharmaceutical market have been recorded from the USA, Europe, Japan, and Australia, showcasing an annual growth rate of 12.8% in the Indian market exports, during 2003-2005.

Dynamics of the Indian Pharmaceutical Industry:

Before the introduction of the patents act of 1970, multinational companies dominated the Indian market. However, soon after, Indian companies started entering the market, nurturing expertise in pharmaceutical production at relatively lower costs. In light of the new laws being framed, Drug Price Control Order (DPCO) 2013 is a game-changer which has brought around 640 drugs into the ambit of price control under scheduled drugs and formulations, which some consider a bane to the MNCs as the margins are fixed according to the market players dealing with a similar product leading to lower profits. India, being a semi-regulated market, is focusing on empowering new laws that will mandate the manufacturers to follow GMP, and GLP, as given in schedule M and ICH. Furthermore, the development of the National List of Essential Medicines (NLEM) by the National Pharmaceutical Pricing Authority (NPPA), which is similar to the WHO list, is also gaining a lot of appreciation across the country and worldwide. Additionally, documents such as guidance to the industry are worth mentioning as the recommendations provided in them are a useful requirement for getting to know newer technology that FDA is focusing on.

The Indian pharmaceutical industry has exhibited a higher growth rate through the improved range, technology, and quality of products being manufactured. Additionally, the demand drivers for the changing dynamics in the Indian pharmaceutical industry also include the growing and aging global population. This favorable change in demographics, socio-economy, and urbanization led to the rapid transition, driven by the active participation of pharmaceutical chemicals. Also, many MNCs have captured the Indian market through acquisitions and launching new products. 

The Indian pharmaceutical industry is rather complex due to the presence of multiple players in the organized as well as the organized sectors. The growth of CRAMS, along with CFA, is evidence of the paradigm shift of the MNCs towards marketing the product rather than full-scale manufacturing, enduring higher profits than their counterparts. Another advantage is the growth of continuous manufacturing lines undergoing a transition from traditional batch processing such as the GEA Continuous Tableting Line in compliance with Good Automated Manufacturing Practices (GAMP) has cut down labor to a maximum extent and decreased the time and improved methodological efficiency.

Although Indian exports consisting of a myriad of products ranging from vaccines to medical devices has spiraled simultaneously, on the contrary, imports just remain confined to certain essential API such as vitamins and antibiotics. As we are moving towards an era of innovation and novelty, the rise in the number of startups is catapulting growth in the healthcare sector such as the insurance field. Another key development is in the field of low-cost research and development by foreign companies taking benefit of 100% Foreign Direct Investment (FDI) in greenfield and 74% in brownfield pharma, thereby boosting mergers and acquisitions along with private equity investments.

Lastly, another reason for these changing dynamics is the enormous transformation of the mindset of pharma-community adhering to values and strong rules, which abolished the release of counterfeit and Non-Standard Quality (NSQ) drugs that were a menace during the early times of implementation of policy. On the other hand, intellectual property management is making differences between the good and excellent, as marketing in terms of trademarks, copyright, and patents are the driving force in today’s economic scenario.

Future of the Indian Pharmaceutical Industry:

The growth of the pharmaceutical industry in India is hindered by various challenges. However, the major obstacle has been government intervention in the form of hasher price controls and taxes, mandating overall pressure on the market. The government has laid down stricter rules governing the development and production of medicines.

However, despite all the shortcomings, the future of the Indian pharmaceutical industry is believed to be driven by profits and operational excellence. The manufacturers will be competing in terms of ground and increase in complexity, additional controls, and market disruptions in the global supply. The industry needs to generate efficiency to drive the market by achieving cost efficiency. The future trend will be driven by companies specializing in differentiated products which will require reinventing the operative model and pursuing a systematic investment strategy.