Pharmaceutical

UNIT 1 PHARMACEUTICAL Industry

INDUSTRY
Structure
1.1 Introduction
Objectives
1.2 Indian Pharmaceutical Industry
1.3 Evolution of Indian Pharma Industry
Historical Evolution of Indian Pharma Industry
Post 1995 Period — Key Reforms and Institutional Changes
1.4 Current Status of the Industry
Over-the-Counter Medicines
Outlook of India’s Pharmaceutical Industry till 2015
1.5 Global and Indian Scenario
Restructuring of Old Laws
1.6 Dynamics of Indian Pharmaceutical Industry
1.7 Summary
1.8 Terminal Questions
1.9 Answers
1.10 Suggested Readings

1.1 INTRODUCTION

The Indian Pharmaceutical Industry is the lifeline of Indian health sector. The
Indian Pharmaceutical Industry needs to be studied in detail in order to
understand its evolution, and historical background. In this era of globalization
the Indian Pharmaceutical Industry has achieved a height, which has made the
world to recognize its importance. The unit deals with the global and Indian
scenario and dynamics of Indian Pharmaceutical industry as well.
Objectives
After studying this unit, you should be able to:
• understand origin and history of pharmaceutical industry;
• understand the liberalization measures for Indian Pharma industry;
• discuss price control for Pharma industry;
• explain patent regime followed by pharmaceuticals;
• describe current status of Indian Pharmaceutical industry;
• explain global scenario of development for Indian Pharma industry; and
• understand the Indian scenario of development for Indian Pharma industry.

1.2 INDIAN PHARMACEUTICAL INDUSTRY

The Indian Pharmaceutical Industry (IPI) was estimated at about US$ 9 billion,
which has grown at a compound growth rate (CAGR) of 7% during the last six
years. Its ranks 4th in terms of volume and 11th in terms of value globally. 5
Drugs Regulatory India’s share in the global pharmaceutical market is less than 2% in value
Affairs terms as drug prices in India are one of the lowest in the world. The exports
contributed to more than half of IPI’s turnover during 2005-06 and have been a
major growth driver for the industry growing at a compound growth rate of
19% during the last six years.

The playing field for the domestic pharmaceutical companies changed

completely with the start of product patent regime from January 2005. The
Indian Pharmaceutical Industry is now exposed to a host of new opportunities
and risks. This has led the domestic pharmaceutical companies to pursue
various strategies on the business and R&D front with the aim of achieving
long-term sustainable growth under the new regulatory regime. Besides
changes in the patent laws, the issues with respect to drug pricing and the
Union Pharmaceutical policy will shape the regulatory environment for the
industry in future.

The change in dynamics of the global pharmaceutical industry especially that

of the regulated markets like the USA and Europe have presented a number of
capitalizable opportunities for IPI. Some of the major concerns been faced by
the global pharmaceutical industry are higher healthcare costs, patent expiries
for the blockbuster drugs, increasing competition from generics, and increasing
R&D costs. These translate into a significant growth opportunity for IPI in the
Generic is defined as form of exports of generics to the regulated markets and contract
A drug which is exactly manufacturing/ research for global pharmaceutical companies. In a report on
the same as a brand the Indian Pharmaceutical Industry it was shown that an Indian Pharmaceutical
name drug and which Industry Value Road has developed, which enlists various value opportunities
may be manufactured for the growth of Indian pharmaceutical companies. The IPI Value Road
and marketed after the attempts to establish a growth path for Indian pharmaceutical companies by
brand name drug's identifying six growth segments in an increasing order of perceived value that
patent expires. can be generated by following strategies focused on a particular segment. The
OR segments identified are bulk-drugs, domestic formulations, exports to non-
A chemical copy of a regulated markets, exports to regulated markets and NCE research. The various
brand name drug whose strategies adopted by Indian pharmaceutical companies focusing on each of the
patent is expired. The six segments are then identified and explained. These companies are mapped
colour or shape may be according to their current and future focus segments on the value road which
different, but the active are likely to shape their growth in the near to medium term. The growth of the
ingredients must be the Indian pharmaceutical companies in the domestic market gets restricted with
same the Multi National Companies (MNCs) introducing newer patented drugs in the
country. Under this scenario, growth of the formulation companies is likely to
OR
occupy from the generics opportunities in the regulated markets and
A drug without a brand
geographic expansion in the semi/non regulated markets. The value of drugs
name, which can be
manufactured without a going off-patent in the regulated markets is estimated at US$ 70-80 billon
licence, usually after during the next five years and this represents a huge opportunity for the Indian
the patent held by the pharmaceutical companies to establish their presence in these markets. Pricing
original owner has pressure in the regulated markets, high litigation expenses and counter
expired. strategies followed by the innovator companies are factors that could dampen
the growth of Indian pharmaceutical companies pursuing the generic
opportunity.
6
The recognition of product patent has provided global companies with a better Pharmaceutical
Intellectual Property (IPR) protection and as a result has opened up a new Industry
segment for the IPI in Contract Research and Manufacturing Services
(CRAMS). IPI is well positioned to take advantage of this opportunity with
world class manufacturing facilities adhering to various regulatory standards,
large pool of skilled manpower and cheaper cost of production. The investment
in R&D is also on the rise as it has become important for Indian companies to
start innovating new drugs in order to ensure long-term sustainable growth and
remain competitive at the global level. Indian companies have invested in New
Chemical Entity (NCE) research and are scouting for global partners for
pursuing collaborative research. The availability of large patient base, skilled
manpower and lower costs of carrying out clinical trials has made India a
favourable destination for R&D outsourcing. It is believed that in the near
future the growth of Indian Pharmaceutical Industry would be driven by
exports to regulated markets and Contract Research and Manufacturing
Services. Companies having strong presence in these segments are likely to
benefit more as compared to other companies.

Fig.1.1: An inside of machine room of an Indian pharmaceutical industry

1.3 EVOLUTION OF INDIAN PHARMA INDUSTRY

In this era of globalization the Indian Pharmaceutical Industry has achieved a

height, which has made the world to recognize the importance of Indian
Pharmaceutical Industry. In the coming paragraphs the historical evolution of
Indian Pharmaceutical Industry is being explained. 7
Drugs Regulatory 1.3.1 Historical Evolution of Indian Pharma Industry
Affairs
The earliest Indian records are the, Vedas. Medical descriptions are stated to
have been documented in the Rigveda (2500-3000 BC). Charaka is known as
the father of Indian Medicines. Later Susruta and Vagabhata established
schools and hospitals and their various medicinal preparations and their
instructions manuals were available and were in wide use. With the start of the
Christian era, chemical substances superseded ancient Indian medicines.

The early evidence for the manufacture of medicines and pharmaceuticals dates
back to 2735 BC and since then the development of the industry has spanned
centuries. The foundation of Indian Pharmaceutical was laid down when the
small Bengal Pharmaceutical works was established in Calcutta. The pioneer of
this achievement was Acharya P.C.Ray. Earlier to this there were two drug
manufacturing Govt. factories in Darjeeling (1887) and Nilgiri District (1897).
Three institutes that help the Indian Pharma Industry developed were Hollfkin
Institute, Bombay (1807), King Institute, Madras (1904) and Pasteur Institute,
Coonoor (1907).

The post independence period boosted up the pharmaceutical industry as it did

to the other industrial sectors. Public sector units like Hindustan Antibiotic
Ltd., Indian Drug and Pharmaceuticals were set up. This period also saw the
entry of other international organizations entering into the Indian market. The
industry then diversified into varied and bigger product range covering
antibiotics and vitamins etc.

The Indian pharmaceutical industry was in its infancy at the time of

independence in 1947 and was limited to a few companies engaged in the
manufacturer and packaging of formulation. During the 1950s, companies such
as Merck, Geigy and Squibb entered into collaboration with an Indian company
that brought in new medicines and associated technology transfer.

In 1954, Hindustan Antibiotic Ltd. began manufacturing penicillin at Pimpri

with world Health Organization (WHO) and United Nations International
Cultural Education Fund (UNICEF) assistance. Indian Drug and
Pharmaceutical Ltd., set up the manufacture of antibiotics in Rishikesh,
synthetic drugs in Hyderabad, and surgical instruments in operating under a
product patent cover.

By the early 1960s, drug price control was introduced (In 1961, the Kefauver
Commission cited India as one of the countries in the world with very high
drug prices). By this time, India had become relatively self-sufficient in the
industry sector and attention was turned to similar objectives in the production
of fine chemicals, intermediaries and bulk drugs.

In 1970, product patent was revoked under the new Indian patent Act (IPA).
This was followed in 1978 by the Government’s New drug Policy (NDP) to
promote technological self-reliance and liberal drug supply in the market place.
Drug Price Control order (DPCO-1979) was introduced to control drug prices
as well as profit margins.
8
SAQ 1 Pharmaceutical
Industry
Fill in the blanks:

a) ………………was the first Indian pharmaceutical established in India.

b) Drug price control was introduced in……….

SAQ 2

a) What is the full form of CRAMS?

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b) Who was the founder of Bengal Pharmaceuticals?

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c) Name the three institutes which helped Indian Pharmaceutical Industry to

grow in its earlier period.

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Drugs Regulatory 1.3.2 Post 1995 Period — Key Reforms and Institutional Changes
Affairs
The major transformation in the development of Indian Pharmaceutical
Industry happened in post 1995 period when in 1995, the Government of India
signed the General Agreement on Tariffs and Trade, GATT (which was
succeeded by WTO). As a signatory of GATT, India was expected to introduce
product patents and provide legal protection to Trade-Related Intellectual
Property. The paragraphs are going to explain the key reforms and changes.

A. Liberalization Measures

A severe economic crisis triggered a series of major liberalization measures

by the Indian government, starting in 1991, to establish stronger linkages
with the global economy. As a result, most of the industries in India and the
Indian pharmaceutical industry, in particular witnessed profound policy
changes over the period of the last one and a half decades. In line with the
economy-wide liberalization measures, the pharmaceutical industry too
underwent significant de-licensing and liberalization of imports and foreign
investment policies. Some of these key measures were as follows:

i) Industrial licensing for the manufacture of all drugs and

pharmaceuticals was abolished except for a few minor exceptions in
rare drugs.

ii) Reservation of drugs for manufacture by the public sector only was
abolished in Feb.1999.

iii) Foreign investment up to 51% of equity was allowed in India for longer
period in the pharma sector. These norms were further relaxed to allow
foreign investment through automatic route up to 74% first and to
100% later.

iv) Import tariffs on pharmaceutical ingredients were progressively

eliminated or reduced from as high as 85% in 1993 to a maximum of
30% in 2004; and

v) Automatic approval for foreign technology agreements was granted

except in the case of a few rare drugs.

B. Price Control— Progressive Relaxation

In 1970, when Drug Price Control Order (DPCO) was introduced, there
were 347 bulk drugs (pharmaceutical ingredients) and all their formulations
(finished dosages) under price control. DPCO was amended in 1979, 1987
and 1995, bringing down the number of drugs under price control. In
addition, there were amendments to allow higher returns on investment
(14% of the equity or 22% of the capital employed) for the drugs under
price control. DPCO was further amended by making the norms to bring a
drug under price control more transparent — with specific benchmarks on
turnover, market monopoly and market competition. In August 1997, an
independent body was set up to achieve the objectives of the drug policy
10 and to implement price control namely, National Pharmaceutical Pricing
 Authority (NPPA), thereby eliminating direct involvement of the Pharmaceutical
government in price control. In 2002, the Government formulated a Industry
pharmaceutical policy, which further relaxed the criteria for determining
the drugs whose prices should be controlled and has reduced the number of
drugs under price control to approximately 30.

By now, the government’s price control mechanism has become almost

redundant as the market prices of most controlled drugs are much below the
stipulated prices due to severe competitive forces in the industry.

C. Change in the Patent Regime

In 1995, the Government of India signed the General Agreement on Tariffs

and Trade, GATT (which was succeeded by World Trade Organization).
As a signatory of GATT, India was expected to introduce product patents
and provide legal protection to Trade-Related Intellectual Property Rights
(TRIPS). India was now under compulsion to introduce a product patent
regime by 2005 after a permissible transition period of 10 years. India
shifted from process-based patenting to product patents from 2005
onwards.

Recognition of product patent subsequent to India's entry into World Trade

Organization (WTO) in 1995 has been a critical regulatory reform in the
Indian pharmaceutical industry during the past one decade, just as the
introduction of process patents in 1970 had marked a turning point earlier.
Reverting to the product patent regime now would provide the protection
sought by international pharmaceutical firms to bring in their best products
to India and would result in a steep increase in competition. This also
marked a dramatic strategic change for Indian pharmaceutical firms, which
had traditionally survived by manufacturing and selling knockoffs of
patented drugs in India by exploiting the prevailing process-patent regime.
Since 1995, when India signed WTO, the Indian pharmaceutical companies
had been adapting themselves in response to the institutional changes and
the product patent regime that came into place in 2005. By the year 2000-
01 the size of the Indian pharmaceutical industry had grown to Rs.228.8
billion (USD 5.7 billion), resulting in a compounded growth rate of 15.9%
between 1994-95 and 2000-01. The Table 1.1 gives the phases of evolution
of Indian Pharmaceutical Industry.

Table 1.1: Evolution in Indian Pharma Industry

Year Phase Status

1970 Phase I - (Early years) • Market share domination by
foreign companies
• Relative absence of organized
Indian companies
1980 Phase II- (Governmental • Indian Patent Act –1970
Control) • Drug prices capped 11
Drugs Regulatory • Local companies begin to
Affairs make an impact
1990 Phase III- (Developmental • Process development
Phase) • Production infrastructure
creation
• Export initiatives
2000 Phase IV- (Growth Phase) • Rapid expansion of domestic
market
• International market
development
• Research orientation
2010 Phase V- (Innovation and • New IP law
Research) • Discovery Research
• Convergence

SAQ 3

a) Give the phases involved in evolution of Indian Pharmaceutical Industries.

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b) Write the full form of TRIPS and GATT.

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1.4 CURRENT STATUS OF THE INDUSTRY Pharmaceutical
Industry
The Indian Pharmaceutical industry has four broadly definable sectors namely
MNCs, Public (Government) undertaking, the Organized Indian Sector and
Small-Scale Industry. The Indian Drug manufacturer Association (IDMA)
represents the interest of the indigenously owned companies. Until 1970s the
MNCs dominated the marketplace. However, in recent years, Indian companies
have gained prominence in number and size. Small-Scale Industries have
rapidly mushroomed to a current estimated total 20,000 licensed owner,
including many that operate under a loan license. Several of them (exact
figures not known) typically obtain their products through “contract
manufacturing” and often do not have an in-house quality assurance unit. In
contrast, the large sector is composed of 250-300 units whose performance is
monitored by the Directorate of Technical Development (DGTD) located
within the Ministry of Industries in New Delhi.

India currently represents just US $6 billion of the $550 billion global

pharmaceutical industry but its share is increasing at 10% a year, compared to
7% annual growth for the world market overall. Also, while the Indian sector
represents just 8% of the global industry by volume, putting it in fourth place
worldwide, it accounts for 13% by value, and its drug exports have been
growing 30% annually.

The “organized” sector of India’s pharmaceutical industry consists of 250 to

300 companies, which account for 70% of products in the market, with the top
10 firms representing 30%. However, the total sector is estimated at nearly
20,000 businesses, some of which are extremely small. Approximately 75% of
India's demand for medicines is met by local manufacturing.

Top India's pharmaceutical companies include Ranbaxy, Cipla, Dr. Reddy's

Laboratories, Lupin, Nicolas Piramal, Aurobindo Pharma, Cadila
Pharmaceuticals, Sun Pharma, Wockhardt Ltd. and Aventis Pharma. Indian-
owned firms currently account for 70% of the domestic market, up from less
than 20% in 1970. In 2005, nine of the top 10 companies in India were
domestically owned, compared with just four in 1994.

India's potential to further boost its already-leading role in global generics

production, as well as an offshore location of choice for multinational drug
manufacturers seeking to curb the increasing costs of their manufacturing,
R&D and other support services, presents an opportunity worth an estimated
$48 billion in 2007.

SAQ 4

What are the major sectors of Indian pharmaceutical industry?

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Drugs Regulatory …………………………………………………………………………………...
Affairs
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1.4.1 Over-The-Counter Medicines

The Indian market for over-the-counter medicines (OTCs) is worth about $940
million and is growing 20 % a year, or double the rate for prescription
medicines. Developing an innovative new drug, from discovery to worldwide
marketing, now involves investments of around $1 billion, and the global
industry's profitability is under constant attack as costs continue to rise and
prices come under pressure. Pharmaceutical production costs are almost 50 %
lower in India than in western nations, while overall R&D costs are about one-
eighth and clinical trial expenses around one-tenth of western levels.

SAQ 5

How much market for over-the-counter drugs are occupied by the pharma
industry?

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1.4.2 Outlook of India’s Pharmaceutical Industry till 2015

India is to see expected rise in drugs sales by an annual 8% to nearly EUR 20

bn between 2006 and 2015. To be sure, this growth rate is higher than that seen
for the entire world (+6%). India’s share in world pharmaceutical sales will rise
marginally to a good 2%. Growth of India’s pharmaceutical industry and thus
its share in global drugs manufacturing could even be slightly higher if the
infrastructure problems could be remedied quickly. While the pharmaceutical
industries of China and Singapore will likely continue to show much higher
growth, India looks set to even lose market share in Asia. It is likely that many
14 of these companies will merge or disappear from the market altogether. By
contrast, large pharmaceutical companies with sales volumes of over EUR 50 Pharmaceutical
m will be able to increase their sales as they will be better equipped to adjust Industry
their product ranges to the demands of international markets. These firms will
expand their capacities in India – mostly in the sector’s clusters surrounding
Delhi and Mumbai – but will also take over firms in the industrial countries.
Medium-sized businesses will benefit from increasing contract production for
western firms. All in all, the share of pharmaceuticals in the total chemicals
industry in India will come to roughly 17% in 2015 (2006: 18%). Although
India’s pharmaceutical sector is growing strongly, the population’s demand for
drugs cannot be met by the country’s own production in all segments. On a
medium-term horizon, one-fifth of the world’s pharma sales will be accounted
for by the emerging markets. China will then be among the group of the five
largest manufacturers, while India will join the group of the ten largest
suppliers.

SAQ 6

a) Where is the ministry of Industries located?

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b) When did the change in the patent regime take place?

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15
Drugs Regulatory c) Give full forms of:
Affairs
i) OTC
ii) DGTD
iii) IDMA

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1.5 GLOBAL AND INDIAN SCENARIO

With a lack of new blockbuster drugs in the pipeline, the global pharmaceutical
industry is increasingly under financial pressure. During the years between
1993 and 2004 number of new drug applications to the US Food and Drug
Administration grew by only 38%, and discouragingly, nearly two-thirds of the
new applications were for drugs that were modifications of existing medicines
with only one-third for innovative new drugs. In addition to a significant pool
of trained biomedical and chemistry professionals and a strong bioinformatics
tradition, India has a large genetically diverse population to recruit patients for
clinical trials. Wyeth Pharmaceuticals in January 2006, based in New Jersey,
signed a five-year contract to collaborate on medicinal chemistry projects with
GVK Biosciences in Hyderabad.

Big pharma players with existing connections in India like Pfizer, Novartis,
and GlaxoSmithKline (GSK), and AstraZeneca have announced investments to
ramp up activities for drug discovery and clinical research at their existing
Indian centers. Even Merck, one of the few global drug companies without a
research center in India, announced partnership with Advinus Therapeutics, a
company based in Pune and Bangalore.

1.5.1 Restructuring of Old Laws

The recent restructuring of both the 1970 Patent Law and the Indian Drugs and
Cosmetics Act of 1940 has made India attractive for drug discovery. In 2005,
India adopted a new patent regime that is in compliance with the Trade Related
Intellectual Property Rights (TRIPS) under the World Trade Organization
(WTO) agreement. Prior to 2005, India only granted drug companies ‘process
patents,’ which protected the chemical processes for production of the drug but
not the drug itself. This enabled Indian drug companies to use modified
16
processes or “reverse engineering” to produce generic versions of branded
drugs. Under the new law, India now allows the granting of “product patents,” Pharmaceutical
which protect the final drug product and are recognized worldwide. Industry

For the last 25 years, the existence of process patents led many multinationals
to abandon the subcontinent, allowing India to become a leading producer of
generic drugs, accounting for 22% of the global generics market including the
antiretroviral drugs used for treating AIDS.

In addition to changes in Indian patent law, Indian Government amended its

Drugs Act in Jan. 2005 to allow concurrent global phase II and III clinical trials
to take place in India. Prior to this amendment, multinational drug companies
could conduct phase II and III clinical trials in India only if such trials already
had been conducted in other countries. Phase I clinical trials in India for
molecules not discovered and developed on the subcontinent are still
discouraged. However, the office of Drug Controller General of India (DCGI)
performs case-by-case exceptions, which can be made, based on the
therapeutic needs of the Indian population. According to the DCGI, this change
has resulted in a marked increase in the number of clinical trials being
conducted for drugs that are not currently sold in India. It is estimated that
eventually India could enroll 20% of all clinical trial participants worldwide.
India is also finalizing changes in its National Pharmaceutical Policy, which is
expected to grant data protection to drug companies for valuable data collected
dur`ing clinical research. The lack of such protection means that new drug
applications submitted for regulatory approval are not confidential, which
could enable copying of new drugs by local companies. Such sweeping
regulatory improvements have enhanced global confidence in the drug research
environment in India.

1.6 DYNAMICS OF INDIAN PHARMACEUTICAL

INDUSTRY

Traditionally, the Indian pharmaceutical industry has been characterized by a

core competency in generics’ manufacturing and relatively immature
capabilities in R&D. This outlook has evolved substantially since 1990s and
Indian companies have been making investments towards expanding drug
discovery and development capabilities. The acceptance of patent laws and the
rise of contract manufacturing have led to the diversification of revenue
streams, enabling Indian pharma companies to experience high market growth.
The Indian pharmaceutical sector has come a long way, being almost non-
existent before 1970 to a prominent provider of healthcare products, meeting
almost 95% of the country's pharmaceuticals needs. The domestic
pharmaceutical sales have increased from Rs.4billon in 1970-71 to
Rs.214billon in 2002, at a CAGR of 13.7% per annum. The total Indian
production constitutes about 1.3% of the world market in value terms and, 8%
in volume terms. The per capita consumption of drugs in India, stands at US$3,
is amongst the lowest in the world, as compared to Japan- US$412, Germany-
US$222 and USA- US$191. 17
Drugs Regulatory Indian pharmaceutical industry is mounting up the value chain. From being a
Affairs pure reverse engineering industry focused on the domestic market, the industry
is moving towards basic research driven, export oriented global presence,
providing wide range of value added quality products and services.
Government policies play an important role in defining the future of the
pharmaceutical industry. The product patent regime effective from January
2005 will lead to long-term growth of the IPI.

In 2005, the Indian pharmaceutical industry was valued at $4,660m,

representing an increase of 8.3% over previous year sales of $4,304m. A surge
in growth took place between 2006 and 2008, attributable to the opportunities
presented by contract research and manufacturing sourcing (CRAMS). MNCs
have a modest representation among the top 20 companies in the Indian
pharmaceutical industry. As the market leader, GSK captured a 6.3% share,
illustrating the highly fragmented nature of the market. The re-introduction of
the patent regime in 2005 has forced many smaller Indian companies to exit the
industry, while others have been forced to re-evaluate existing corporate
strategies.

The Indian market has been associated with generics, although a shift in
priorities has occurred with many companies increasing their investments in
research capabilities and thus establishing themselves as development partners
of choice with international companies. In the present scenario, the growth of a
domestic pharmaceutical company is critically dependent on its therapeutic
presence. The old and mature categories like anti-infectives, vitamins,
analgesics, cardiovascular agents, Central Nervous System (CNS), anti-
diabetic are expanding at a very high growth rates. Increased generic
penetration, intense competition, fragmentation of the industry has negatively
impacted the overall value growth of the domestic pharmaceutical market. In
this scenario, to grow in the domestic market, pharmaceutical companies are
constantly eyeing for innovation, introduction of new value added products,
product life cycle management and enlarging their market reach.

Indian companies are putting their act together to tap the generic drugs markets
in the regulated high margin markets of the developed countries. The US
market will remain the most lucrative market for the Indian companies led by
its market size and the intensity of blockbuster drugs going off patent.
Outsourcing in the fields of R&D and manufacturing is the next best event in
the pharmaceutical industry. Increasing cost, expiring patents, low R&D cost
and market dynamics are driving the MNCs to outsource both manufacturing
and research activities.

1.7 SUMMARY

The pharmaceutical industry is expanding worldwide. For some years now, it

has been benefiting from the particular dynamics of the Asian economies as
both purchasers and producers. It is not only the markets in China and India
18
that register high growth rates but annual growth rates are also impressive in
Singapore, Malaysia, Thailand and Indonesia. It is due to low costs, qualified Pharmaceutical
staff and extensive production and research units. India is becoming more and Industry
more a preferable pharmaceutical location. Drivers of growth are the growing
population, which at 1.5 bn would exceed that of China in 2025, as well as, the
larger number of older people with markedly higher demand for medicines. In
addition to this, the increase in middle-class households, which have
considerably higher incomes at their disposal than the population on average.

As a result of the new patent legislation, the country’s pharmaceutical industry

is reorienting itself and focusing on self-developed medicines and/or contract
research and production for western drug companies. Also the expansion of
Indian firms abroad sets to continue – preferred target markets are the US and
European countries.

Despite the positive outlook, India will lose market share in the Asian market
in future. The sooner India manages to close the infrastructure gap, the higher
the growth will be in the country’s pharmaceutical industry.

1.8 TERMINAL QUESTIONS

1. Give a brief summary on historical background of Indian Pharmaceutical

Industry.
2. What were the changes and reforms after 1995?
3. In a tabular form give the different phases in the evolution in Indian
Pharmaceutical Industry.
4. What are over-the-counter medicines?
5. Name some big pharmaceutical Industries in India.

1.9 ANSWERS

Self Assessment Questions

1. a) Bengal Pharmaceutical
b) 1960

2. a) Contract Research and Manufacturing Services

b) Acharya P.C. Ray
c) Hollfkin Institute, Bombay (1807), King Institute, Madras (1904) and
Pasteur Institute, Connor (1907).

3. a) The evolution in Indian Pharmaceutical Industries took place from the

year 1970 to 2010, where Phase I - (Early years, 1970), Phase II-
(Governmental Control, 1980), Phase III- (Developmental Phase,
1990), Phase IV- (Growth Phase 2000), Phase V- (Innovation and
Research 2010).
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Drugs Regulatory b) Trade-Related Intellectual Property Rights and General Agreement on
Affairs Tariffs and Trade.

4. The major sectors of Indian Pharmaceutical industry are:

i) Multinational Companies
ii) Public (Government) undertaking
iii) The organized Indian sector
iv) Small Scale Industry

5. Over-the-counter medicines (OTCs) is worth about $940 million and is

growing 20 percent a year, or double the rate for prescription medicines

6. a) The ministry of industries is located in Delhi.

b) The Change took place in 1995.

c) i) Over the Counter

ii) Directorate of Technical Development
iii) Indian Drug manufacturer Association

Terminal Questions

1. Charaka is known as the father of Indian Medicines. The evidence for

manufacture of medicines and pharmaceuticals dates back in 2735 BC .The
birth and foundation of Indian Pharmaceutical in real terms started when
the small Bengal Pharmaceutical works was established in Calcutta. The
pioneer of this achievement was Acharya P.C.Ray. Earlier to this there
were drug manufacturing Govt. factories in Darjeeling and Nilgiri District
in 1887 and 1897 respectively. Three institutes that help the Indian Pharma
Industry developed were Hafkine Institute, Bombay (1807), King Institute,
Madras (1904) and Pasteur Institute, Coonoor (1907).
2. The Changes after 1995 were as for:
a) Liberalization measures of Indian Pharmaceutical Industry
b) Drug price control
c) Change in patent regime
3. The students should refer to Table 1.1 of the chapter
4. The students should refer to section 1.4.1

5. Some big pharmaceutical Industries in India are Pfizer, Novartis, and

GlaxoSmithKline (GSK), and AstraZeneca

1.10 SUGGESTED READINGS

1. CRIS INFAC. 2004. Pharmaceuticals Annual review: February 2004,

Mumbai, Check E. The Treasure of Mumbai. WIRED Magazine 2006; 14:
12
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2. Gillespie, K., Alden, D., 1989. Consumer product export opportunities to Pharmaceutical
liberalizing LDCs: a life-cycle approach, Journal of International Business Industry
Studies, 20 (1), 93-112.

3. ICRA, 2002. ICRA Industry Watch Series – the Indian Pharmaceutical

Industry, compiled by ICRA Information Services, ICRA, Mumbai, India.

4. Joseph, J., 2008. Entering the contract research industry in India,

Contemporary ClinicaTrials 29, 311–313.

5. Khanna, T., Palepu, K., 2006. Emerging giants: building world-class

companies in developing economies. Harvard Business Review 84 (10),
60-70.

6. Organisation of Pharmaceutical Producers of India (OPPI) factsheet 2003.

7. Pharmaceutical R&D Outsourcing Strategies: An analysis of market drivers

and resistors to 2010 By Steve Birch, Business Insights Healthcare 2002.

8. Pharmaceuticals: The Indian Pharmaceutical Industry, Feb 2005, ICRA.

9. Ray, S., 2003. Strategic adaptation of firms during economic liberalization:

emerging issues and a research agenda. International Journal of
Management 20 (3), 271-281.

10. World Trade Organization – Trade Related aspects of Intellectual Property

rights www.wto.org

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