Regulatory Crisis for Indian Pharma Industry: Who are the Real Culprits? Having emerged as an important player in the global pharmaceutical supply chain, Indian pharmaceutical industry now faces a serious credibility crisis due to concerns regarding manufacturing practices, pricing controls, lack of clarity and certainty in regulations governing the drug industry. This article attempts to analyze such impediments to industrial growth and ways to overcome these barriers.
T
he current impasse of regulations, malpractices in the healthcare market, is making the essential drugs costlier for masses. A corrective action is required to provide cheaper, if not free, universal healthcare to all Recently a news report highlighted that private hospitals are selling cheaper drugs at higher costs making it unaffordable for even those who can spend on their health cover. The pricing of drugs has been a contentious issue despite the fact that our pharmaceutical industry accounts for 8 per cent of global production, and is exporting to over 200 countries. 1 The Indian healthcare and pharmaceuticals industries are going through an interesting yet challenging phase. The very basis of these industries - availability of drugs and healthcare services, their affordability and their easy accessibility - have become key concerns for the industry, the masses and the government. The ever flourishing industry that has been leading among the India Inc. since the 2008 financial crisis has been witnessing a slow growth. It is predicted that exports growth in formulations declining sharply to 10-12 per cent annually over the next 5 years (towards the end of the decade), compared with approximately 19 per cent growth seen in the previous decade. 2 However, recent move by the government to place the pharmaceutical sector under the ambitious 'Make in India' initiative has the potential to provide the necessary impetus to the industry. It is estimated to be an ` 2,400 billion industry and is expected to grow at approximately 12 per cent compound annual growth rate (CAGR) over the next three years. 3
Swadeep Srivastava VP & Country Head Ebix ADAM India 36 ď‚ƒOctober 2016
The Indian pharmaceutical market is dominated by Branded generic drugs which contribute 70 per cent of market share in terms of revenue. The patented drug
market contributes 21 per cent whereas; over the counter (OTC) drug market contributes 9 per cent of total market. 4 Internal domestic demand for more potent and affordable drugs, greater penetration within the rural market, fast growing prominence of healthcare insurance in the country are some of the factors that are driving the growth of the industry. Additionally, the formation of the Department of Pharmaceuticals under the Ministry of Chemicals and Fertilizers (MoCF) will create some focused action. Challenges within the market But the road ahead is not going to be a smooth sail. There are multiple challenges to this growth. Challenges such as growing concern on the quality drugs, pricing controls, lack of clarity and certainty in regulations governing the drug industry are proving to be some of the impediments to this growth. Additionally, complexities pertaining to the intellectual property rights (IPR) and stringent regulations over research and development of drugs have slowed the pace of innovation and invention in the country. On the foreign soil too, the Indian pharma companies have been facing hostilities from the external regulators such as the Food and Drug Association (FDA), USA. The import ban by the FDA on certain products manufactured by Indian companies have tarnished the image of Indian pharmaceutical industry. While the international market seems to be much more organised, country's regulatory framework woven around the Central Drugs Standard Control Organisation is fragmented and presents problems for quality and standards. The most deprived of all is the rural sector which forms a large section of the underprivileged population, where there is Pharma Bio World