Bus Env Mod 3-5 Pharma

BUSINESS ENVIRONMENT
MODULE 3-5
INDUSTRIAL POLICY OF GOVT. OF
INDIA
Prepared by Prof. C. Krishna Kumar

Only for use in ASB Classrooms
Policy of the Govt. of India w.r.t.:
Drugs &
pharmaceuticals

Indian pharmaceutical industry:
The growth of drugs and pharmaceutical
industry in India is primarily a post-
Independence phenomenon.
Before Independence, bulk of drugs was
imported and only processing and formulations
were done in the country.
This industry has made tremendous progress
during the last 40 years.
The Indian pharmaceutical industry is expected
to reach a revenue figure of US$ 50 billion by
2020.
India, today, is the largest provider of generic
drugs globally.

Top Indian
Pharma
Companies

Indian pharmaceutical sector industry supplies
over 50 per cent of global demand for various
vaccines, 30 per cent of generic demand in the
US and 25 per cent of all medicine in UK.
Presently over 80 per cent of the antiretroviral
drugs used globally to combat AIDS (Acquired
Immune Deficiency Syndrome) are supplied
by Indian pharmaceutical firms.

Before Independence, bulk of drugs was
imported and only processing and formulations
were done in the country.
Government invested in public sector
enterprises to reduce dependence on imports.

Central PSEs under the department:
There are five Central Public Sector Enterprises under
the Department of Pharmaceuticals.
* Indian Drug & Pharmaceuticals Limited (IDPL),
* Hindustan Antibiotic Limited (HAL)
*Bengal Chemicals & Pharmaceuticals Limited
(BCPL)
* Rajasthan Drugs & Pharmaceuticals Limited (RDPL)
* Karnataka Antibiotic & Pharmaceuticals Limited
(KAPL)

As in the case of many PSUs, the pharma
companies were inefficiently managed,
overstaffed and did not modernize in a timely
manner. Many turned into sick units.
Only KAPL is making profits now.
IDPL & RDPL are being closed down.
In case of HAL & BCPL excess land is being
sold, employees are offered VRS and then the
companies would be offered for sale.
Today there are both Indian and multinational
companies in the private sector that are
performing well.

Outside USA, India has the highest number of
USFDA approved plants for generic drugs
manufacture.
Major share of Indian Pharma exports is
sourced to developed western countries
especially USA.
(FDA- Food and drug administration, federal
agency of the United States Department of
Health and Human Services)
The department of pharmaceuticals was
created in 2008 under the Ministry of
Chemicals and Fertilizers.

The departments looks after various areas
like:
Drugs and pharmaceuticals
Medical devices
Research activities in the sector
Development of infrastructure, manpower &
skills for the pharma sector
International cooperation in research
Price monitoring and control
Foreign Direct Investment in
Pharmaceuticals Sector
Up to 100% FDI in pharmaceutical sector is
permissible through automatic route for
greenfield investment and 100% for
brownfield sector with government approval.

Government has signed up joint working group
and high technology cooperation group
agreements with various governments like the
EU, USA, Russia, Egypt, Philippines, Tunisia,
Algeria and Belarus.

Government arranges promotion of Indian
pharma products and medical devices by
arranging International exhibitions and
conferences in India.
The pharmaceutical promotion development

scheme (PPDS) extends financial support to
industries in the sector in development and
export promotions.
Pradhan Mantri Bhartiya Janaushadhi
Pariyojana (PMBJP)
The Jan Aushadhi Scheme was launched in the
year 2008 with the aim of selling affordable
generic medicines through dedicated sales
outlets.
More than 4100 kendras are now functional.

National Institutes of Pharmaceutical
Education & Research (NIPER)
7 institutes are operational and 4 more are
being set up.
Objective is to create a pool of skilled
manpower that can help India acquire
leadership position in drug discovery and
development.

National Pharmaceuticals Pricing Policy:
The policy of 2012 puts in place a regulatory
framework for pricing of drugs to ensure
availability of required medicines – “essential
medicines” – at reasonable prices.
At the same time, it provides sufficient
opportunity for innovation and competition to
support the growth of industry, thereby meeting
the goals of employment and shared economic
well being for all.
National Pharmaceutical Pricing Authority
(NPPA) is an independent body of experts formed
by the Govt. of India.
The functions of NPPA include fixation and revision
of prices of scheduled formulations under the Drugs
(Prices Control) Order (DPCO), as well as
monitoring and enforcement of prices.
NPPA also provides inputs to Government on
pharmaceutical policy and issues related to
affordability, availability and accessibility of
medicines.
Price Fixation of Devices
Government has notified the ceiling prices of
Coronary stents Rs. 7,400 for Bare Metal Stent( BMS)
and Rs 30,180 for Drug Eluting Stent (DES) with
effect from 1-4-2017.
The average MRP was Rs. 45,100 for BMS and Rs.
121,400 for DES.
The price reduction therefore worked out to 85% for
BMS and 74% for DES.
The fixation of ceiling price of coronary stents enabled
the annual saving of Rs. 4,450 crores to the public.
19 medical devices have also been defined as
drugs and their prices monitored and
controlled.
These include syringes, needles, intra ocular
lenses, heart valves, blood bags etc.

Other government initiatives:
* Six pharma parks are being set up in UP.
* The National Health Protection Scheme is
largest government funded healthcare
programme in the world, which is expected to
benefit 100 million poor families in the country
by providing a cover of up to Rs 5 lakh per
family per year for secondary and tertiary care
hospitalisation. The programme was announced
in Union Budget 2018-19.
* The Government of India is planning to set
up an electronic platform to regulate online
pharmacies under a new policy, in order to stop
any misuse due to easy availability.
* The Government of India unveiled 'Pharma
Vision 2020' aimed at making India a global
leader in end-to-end drug manufacture.
Approval time for new facilities has been
reduced to boost investments.
SWOT of pharma sector:
Strength-
• Low cost of manufacture
• Strong manufacturing base
• Availability of skilled workforce
• Effective marketing and distribution
channels

Weakness:
• Investments into research and development
low
• Poor coordination between industry and
academia
• Household expenditure on healthcare low
• Availability of low quality and fake
medicines

Opportunities:
• High growth potential
• Exports are showing increasing trend
• Requirement of generic drugs in
developing markets are growing
• India can become an international centre
for clinical trials
• India can become a key player in global R
&D
Threats:
* The product patent regime is one of the
major threats to domestic Industry
* Industry can be in trouble if it does not take
up R&D initiative aggressively
* The Drug Price Control order made by the
Government of India put undue pressure on
product prices which affects the profitability of
the pharmaceutical companies
IPR & Pharma Industry:

Intellectual Property Rights (IPRs) are the
rights given to the creators of intellectual
property (i.e., creations of minds), which
bestows exclusive right to the creator for that
product/property for a defined period of time.

IPR in the Indian Context:
The Indian IPR section is categorized into patents,
designs, trademarks, and geographical indices.
Indian “IPR” can be divided into three definite
eras:
* pre- independence,
* post-independence (before Trade Related
Aspects of Intellectual Property Rights or TRIPS),
and
* post-independence (after TRIPS) era.
The Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS) is an
international legal agreement between all the
member nations of the World Trade
Organization (WTO).
It sets down minimum standards for the
regulation by national governments of many
forms of intellectual property (IP) as applied to
nationals of other WTO member nations.
TRIPS is administered by the WTO.
TRIPS requires WTO members to provide
copyright rights.
TRIPS also specifies enforcement procedures,
remedies, and dispute resolution procedures.

A 2003 agreement allowed developing
countries to export to other countries where
there is a national health problem as long as
drugs exported are not part of a commercial or
industrial policy (AIDS medicines to Africa).
The obligations under TRIPS apply equally to
all member states, however developing
countries were allowed extra time to
implement the applicable changes to their
national laws.
Pre-independence era:
In India, the history of IPR dates back to pre-
independence era.
In 1856, India witnessed the first legislation
regarding patent.
The act was replaced/amended many times.

Post-independence era (before TRIPS):
In the post-independence era, multinational
companies governed the Indian medicine
market.
The drugs were imported at a higher cost, and
in terms of drug price, India ranked among the
highest priced nations in the world.

To provide medicines at a low cost, Hindustan
Antibiotics Ltd was set up.
The new Patents Act 1970 replaced all earlier
acts and remained in place for the next 24
years.
The Patents Act 1970 introduced the “process
patent” system, which came out to be very
advantageous to Indian Pharmaceutical sector.
As per this act, patents were valid for 7 years
Under a process patent, the patent is granted
for a particular manufacturing process, and not
for the product itself.
Any other person can produce the same
product through some other PROCESS,
modifying the various parameters.
Weakness of the process patent regime is that it
gives less protection for the inventor.

Post-independence era (after TRIPS):
In 1994 India became a signatory to GATT.
Non-compliance with TRIPS could lead to loss
of membership.
India moved to a product patent system and
increased the patent protection period from 7
years to 14 years.
India was given time till 2005 to implement the
product patent system.
According to industry estimates, the cost
incurred for research and development is
enormous:
* an average cost of developing a new drug is
USD $1.3 billion
* the average time spent is 12-15 years from
research to market of drug (with clinical trials
consuming anywhere from 6-8 years)

In a weak IPR protection economy, generic
drug manufacturers imitate innovations
without investing time and money to develop
new medicines.
As a result, branded drug manufacturers are
unable to recoup investments in new drug
development, thus finding it difficult to invest
in research and development (R&D) of new
drugs and costly diseases.
Every new drug in the marketplace has a long
history leading up to its appearance on the
countertop at your local pharmacist.
A pharma company develops a new molecule
or chemical entity. They apply for a patent for
this new entity.
The patent gives them the right of exclusive
use of this finding for 20 years.

The company then goes through extensive
clinical trials to find the efficacy of the drug.
This process can take 10-12 years.
Many drugs fail at various stages and do not
reach the market.

Since it is not possible to extend the term of
the initial patent filed, this requires creative
alternatives.
Innovators instead seek to reset the 20-year
clock by subsequently filing patents that are
minor variants of the parent compound, called
secondary patents.

This practice, known as evergreening, allows
a prolonged monopoly that unfairly denies the
public access to medicines at equitable prices.

The Indian Patents Act of 1970 had included a
section 3D in 2005 that permits extension of
patents only for real innovation and not for
trivial tweaks.
Many developing countries are following this
model.

Once the product patent expires, other generic
drug manufacturers bring out cheaper
alternatives at lower prices.

University examination questions:

Q. Discuss the impact of IPR laws on the
pharma industry (2 marks; Nov 2016)


Bus Env Mod 3-5 Pharma

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BUSINESS ENVIRONMENT

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

The pharmaceutical promotion development

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

Prepared by Prof. C. Krishna Kumar

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