How is India streamlining the pharma sector?

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• India’s drug regulator, the Central Drugs Standard Control Organisation (CDSCO), has withdrawn powers delegated to State licensing authorities to issue NOCs (no objection certificates) for manufacture of unapproved, banned or new drugs for export purposes.
• This latest announcement covering drugs for export comes at a time when India has been under scrutiny for allegations of supplying substandard drugs causing health concerns in several countries. The CDSCO is now the sole authority for issuing manufacturing licences for drugs meant for export.

What is India’s role in the pharma market?

• India ranks third worldwide as a producer of drugs and pharmaceuticals by volume, exporting to around 200 countries/territories.
• The Indian pharmaceutical industry supplies 62% of the global demand for vaccines and is a leading supplier of DPT (diphtheria, pertussis and tetanus), BCG (Bacillus Calmette-Guérin, used primarily against tuberculosis), and measles vaccines.
• At least 70% of WHO’s vaccines (as per the essential immunisation schedule) are sourced from India- Government.

What will be the impact?

• India is a key player in the international generic medicine market and any change in policy has a direct impact on manufacturers and importers.
• The centralising of the licensing authority is significant, because according to a study conducted by the Department of Pharmaceuticals, India needs to get ready to take advantage of drug sales worth $251 billion going off-patent this coming decade.

Department of Pharmaceuticals Study Details

• The study notes: “In the years between 2022 and 2030, the pharmaceutical sector in India will undergo landmark changes as several drugs are expected to go off-patent and provide an opportunity for the entry of generic products.
• Expiry of patents is very promising for the Indian generic drug market as it is expected to expand and grow further with inclusion of these new drugs.
• With ongoing developments, India has started focusing on self-reliance at a large scale. Hence, it is imperative to identify these drugs beforehand, draft and implement strategies which help in their timely entry into the market by promoting generic drug manufacturing.

What are the challenges?

• India is dealing with several challenges, including tackling intellectual property rights, lack of research and development etc. The study points out that understanding the political, economic, sociocultural, technological, environmental, and legal factors is vital for assessing the opportunities and challenges in the pharmaceutical market in India.
• The industry must adapt to changes in these external factors, navigate regulatory requirements, leverage technology advancements, and align their strategies with the evolving needs of the pharmaceutical industry to succeed in the global market,” it noted.
• The move is welcome as the centralisation of NOCs will formalise the Indian pharma industry.
• This will result in the efficiency of the overall process along with bolstering pharma exports to key international markets.
• It will help to bring uniformity in protocols, achieve the target of reaching $450 billion by 2047.

What about the quality of manufacturing?

• The Indian government had cancelled the licences of over 10 pharmaceutical companies as part of a crackdown on poor quality manufacturing.
• The action last March 2023 came after an inspection of 76 drug firms across 20 States.
• The government is also understood to have given notices to a further 26 companies for not complying with good manufacturing processes.
• The Indian pharmaceutical industry has an estimated 10,500 companies, with drug exports having more than doubled in the past decade.
• But the industry has faced a series of scandals of late, including a World Health Organization investigation into four contaminated cough syrups that caused acute kidney injuries and were linked to the deaths of 66 children in the Republic of the Gambia last year.
• The latest order by CDSCO states that pharmaceutical companies will have to get their NOCs from the zonal offices of CDSCO online before applying for manufacturing licences from their respective State/UT drug regulators.
• In 2018, the CDSCO had permitted State and UTs’ drug licensing authorities to grant permissions to export some specific drugs. As per the new order, local regulators will have to hand over the details of all the approvals they have given from August 2018 to May 2024 to CDSCO.
• The Central government’s advisory group on drugs had earlier this year noted that getting NOCs from local drug regulators for pharmaceutical products is a tedious process, leading to delays.
• Local regulators will have to hand over details of all approvals given from August 2018 to May 2024 to the central drug regulator

INDIAN PHARMACEUTICAL INDUSTRY

The Pharmaceutical Industry’s Evolution

Four Stages of Expansion:

• Pre-1970: Dominance of foreign companies in the Indian market.
• 1970-1990: Emergence of domestic pharmaceutical companies.
• 1990-2010: Liberalization period leading to Indian companies expanding operations globally.
• Post-2010: Ongoing advancements and global expansion.

Impact of Patent Bill:

• The introduction of the patent bill in 1970 marked a significant milestone, reducing the reliance of the Indian pharmaceutical sector on intellectual property laws from other countries.

Growth Trajectory:

• The Indian pharmaceutical industry has experienced exponential growth, with its market size soaring from $40 billion in 2021 to an expected $130 billion in 2030. Projections even suggest a staggering $450 billion by 2047.
• This growth isn't limited to domestic demand; the industry also plays a crucial role globally. It commands over 20% of the global pharmaceutical supply chain and addresses approximately 60% of the worldwide demand for vaccines.

Industry Landscape:

• The Indian pharmaceutical industry comprises a vast network of 3,000 drug companies and 10,500 manufacturing units.
• Approximately 500 API manufacturers contribute about 8% to the global API Industry.

Transformation:

• The industry's transformation is remarkable, evolving into a dynamic powerhouse driving healthcare advancements worldwide.
• This transformation is evident in its technological sophistication, research capabilities, and manufacturing prowess.

Market Size:

• The pharmaceutical industry in India is projected to reach US$ 65 billion by 2024, US$ 130 billion by 2030, and a staggering US$ 450 billion by 2047.
• India's pharmaceutical exports are valued at over US$ 25 billion, accounting for about 20% of global exports in generic drugs.

Biotechnology Industry:

• India ranks among the top 12 destinations for biotechnology globally and is the 3rd largest in the Asia Pacific region.
• The biotechnology industry in India was valued at US$ 137 billion in 2022 and aims to achieve US$ 300 billion by 2030.

Medical Devices Sector:

• The medical devices market in India is estimated to be worth US$ 11 billion, with ambitions to reach US$ 50 billion by 2030.
• India's pharmaceutical market is expected to grow at a CAGR of 9-11% in the financial year 2024.

Leading Manufacturer of Generic Medicines:

• India holds the top position in the manufacturing of generic medicines worldwide.
• Supplying 50% of global demand for various vaccines, 40% of generic demand in the United States, and 25% of all medication in the United Kingdom, underscores India's pivotal role in global healthcare.

Global Presence:

• India's pharmaceutical prowess extends beyond its borders.
• It caters to 40% of the generic demand in the US and supplies a quarter of all medicines in the UK.
• Moreover, India boasts the highest number of USFDA-approved plants outside the U.S., emphasizing its global regulatory compliance and quality standards.

Exports:

• India is a top destination for pharmaceutical exports, with exports reaching more than 200 countries worldwide, including highly regulated markets like the USA, Europe, Japan, and Australia.
• Pharmaceutical exports from India recorded a strong year-on-year growth of 12% in FY24, totaling US$ 22.51 billion during April-January.
• The country is the 12th largest exporter of medical goods globally, with generic drugs accounting for 20% of global exports by volume.

Foreign Investment:

• The pharmaceutical sector is among the top ten attractive sectors for foreign investment in India, drawing investments from around the world.
• India supplied hydroxychloroquine to around 114 countries during the global pandemic, highlighting its significant role in global healthcare provision.

Factors Driving Growth:

• Dynamic global industry landscape.
• Skilled workforce.
• Upgradation of quality systems.
• Robust local market demand.

SWOT Analysis for Indian Pharma Industry

Strengths:

• Cost-effective manufacturing capabilities.
• Robust industrial sector.
• Highly skilled workforce.
• Strong marketing and distribution system.
• Diversified ecosystem.

Weaknesses:

• Insufficient investment in research and development.
• Lack of collaboration between industry and academia.
• Challenges in maintaining quality standards for low-cost medications.

Opportunities:

• Potential for rapid growth through increased export opportunities.
• Rise in export of generic medicines to developed markets.
• Potential for India to become a hub for international clinical trials.
• Emerging role in global pharmaceutical research & development.

Threats:

• Challenges posed by product patent policy.
• Pressure on product pricing due to government regulations.
• Impact of new excise duty structure on small businesses.

Government Initiatives and Policies Supporting Research and Innovation

Vision Pharma 2047:

• Aims to position India as a global leader in the manufacturing of affordable, innovative, and quality pharmaceuticals and medical devices.
• Emphasizes sustainability, accessibility, and affordability of patient-centric products, along with a focus on research in areas like natural products and non-communicable diseases (NCDs).

National Pharmaceutical Policy (2023):

• Drafted to address challenges faced by the Indian Pharmaceutical industry and provide policy interventions.
• Focuses on fostering global pharmaceutical leadership, promoting self-reliance, advancing health equity, enhancing regulatory efficiency, and attracting investments.

Liberalized Foreign Direct Investment (FDI) Limit:

• Allows up to 100% FDI through the automatic route for Greenfield investments and up to 74% for Brownfield investments.
• Attracted over $21.5 billion in FDI equity inflow since April 2000, contributing to the sector's growth and development.

Schemes for Strengthening Pharmaceutical Industry:

• Scheme for Strengthening of Pharmaceuticals Industry (2022): Aims to enhance capacity, facilitate regulatory compliance for MSMEs, and promote growth in the pharmaceutical and medical devices sectors.
• Scheme for Promotion of Bulk Drug Parks (2020): Boosts domestic manufacturing of key starting materials (KSMs), drug intermediates, and APIs by creating common infrastructure facilities in designated parks.
• Scheme for Human Resource Development in the Medical Device Sector (2023): Bridges the gap between industry and academia, fosters skilled workforce development, and supports research & development in the medical device sector.
• Scheme for Promotion of Research and Innovation in Pharma MedTech Sector (PRIP): Aims to shift the sector towards innovation-based growth by promoting industry-academia linkage and funding research in priority areas.
• Establishes specialized Centers of Excellence and provides funding for R&D initiatives.
• Production Linked Incentive (PLI) Schemes:
• PLI for Pharmaceuticals: Boosts manufacturing capabilities, incentivizes production, and contributes to product diversification.
• PLI for Medical Devices: Creates common testing facilities, reduces manufacturing costs, and supports the development of a robust ecosystem for medical device manufacturing.
• PLI Scheme for Promotion of Domestic Manufacturing of Critical KSMs/Drug Intermediates and APIs: Aims to attain self-reliance, reduce import dependence, and incentivize domestic production of critical pharmaceutical inputs.

Impact and Future Outlook

FDI Inflows and Import Reduction:

• PLI schemes have led to a 46% increase in FDI inflows and significant reductions in imports of raw materials in the pharma sector.
• These initiatives have strengthened domestic manufacturing capabilities and reduced dependency on imports.

Research and Innovation Environment:

• Initiatives like Vision Pharma 2047 and the National Pharmaceutical Policy foster an environment conducive to innovation.
• Collaboration between industry and academia, creation of specialized infrastructure, and funding for R&D initiatives support the sector's growth and competitiveness.

Challenges and Regulatory Landscape

Balancing Act:

• Balancing generic drug production with investment in research remains a challenge.
• Increased dependence on imports and dichotomy between fermentation and chemical synthesis-based APIs.

Regulatory Frameworks:

• Continuous refinement of regulatory frameworks is essential.
• Harmonization of regulations, both domestically and internationally, is imperative for global compliance and streamlining processes.

Research & Innovation: Catalysts of Transformation

Commitment to Research:

• India's reputation in generic drug manufacturing must be complemented by sustained investment in research and development.
• Collaborative initiatives among Industry stakeholders, academia, and research institutions are crucial for groundbreaking drug discovery and technological advancements.

Opportunities and Challenges:

• Exciting opportunities in discovering and developing innovative medicines.
• Challenges include limited access to risk capital, underdeveloped innovation ecosystem, and the complexity of deep science.

A Strategic Roadmap

Investment in R&D:

• Sustained investment in research and development is essential for securing a global position.

Collaborations and Skill Development:

• Strategic collaborations with global partners and skill development initiatives are crucial for fortifying the industry's resilience.

Vision for the Future:

• Envisioning a future where India becomes not only the 'pharmacy of the world' but also a global leader in research and innovation.

Future Prospects:

• India's pharmaceutical sector is well-positioned to continue its leadership in research and innovation.
• Strong government support, a large domestic market, and cost-competitive manufacturing capabilities will attract global pharmaceutical companies to conduct R&D in India.
• The sector's contribution to the economy is expected to grow significantly, reaching $65 billion by 2024 and $120 billion by 2030, further solidifying its position as a global leader in pharmaceutical research and innovation.

READ: https://www.iasgyan.in/daily-current-affairs/strengthening-of-pharmaceutical-industry-spi-scheme

https://www.iasgyan.in/daily-current-affairs/indias-health-diplomacy-and-indias-pharma-sector

SOURCE: THE HINDU