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‘Funding for pharma companies might be a way to move forward’

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Dr Dinesh Dua, Chairman,Pharmexcil, Chairman, Entrepreneurship & Start Ups, CII North India,CEO & Director, Nectar Lifescience

India is pharmacy to the world, supplying medicines to 195 countries, complying with quality and CGMP standards. It controls 40 per cent market share in volume of US, and about 25 per cent of the global generic market in volume. The industry has evolved in the last 20 years to reach a milestone of  $19.2 billion as of March 31, 2019. The domestic market is also vibrant at $20 billion, currently growing at 15 per cent CAGR in the last five years. The Indian pharma industry is expected to reach the milestone of $55 billion by the end of 2020.

Make in India

The pharma industry has been a classical example of ‘Make in India’, and is a powerhouse of low-cost generics manufacturing. However, there is still ample opportunity to enhance growth. To do so, some of the initiatives to boost manufacturing and employment in the sector include:

  • Foreign investments into the Indian economy: The existing FDI policy allows 100 per cent FDI under automatic route in greenfield projects, and up to 100 per cent FDI for brownfield projects. The government has decided to increase FDI to 74 per cent in existing pharma companies through the automatic route, thus attracting foreign investments into the Indian economy.
  • Increase in exports: With the government’s thrust towards manufacturing under the ‘Make in India’ initiative, the industry recorded a 15 per cent increase in exports in FY 2018-19.

Digital India

Digital India is one of the policies which has had a major impact on transformation of the pharma sector.

Jan Aushadhi Kendra’s

The Jan Aushadhi Scheme initiated by the government is a powerful intervention against the unjustifiable pricing of medicines by private pharma industry, to make the generic medicines available at affordable prices. It has been observed that lack of awareness in the public, distribution of free medicines by state governments, lack of support for JAS, poor supply chain, and doctors not prescribing generic medicines are the major constraints faced by the JAS leading to its lukewarm impact.


One major change after GST was seen in the form of revised tax rates on taxable products and services.

Challenges faced by Indian pharma sector

  • Compliance issues and good manufacturing practices Non implementation of Schedule-M has led to proliferation of sub-standard drugs and cross contamination issues. This need to be sorted out and taken forwards in consultation with the industry. The companies are trying to improve their standards and this issue can be solved by having officials who are more stringent, and having inspections on a regular basis.
  • Drug Price Control Orders – Without going into ground realities, CPCO & GOI have pushed the NPPA leading to serious shortage of drugs. Mechanism of fixing prices is not at all transparent and realistic; it needs huge consultation with the company in a very transparent and mutual conducive manner. The companies cite that the reforms of the government for the essential medicines have caused them to lower the price of drugs. This has been done by the government for the betterment of the public. But the government has to think of a way to promote the pharma companies as well. Funding for pharma companies might be a way to move forward.
  • Low input on R&D:   Pharma companies cite that due to the low income, they are not able to develop products the way they want.
  • Stronger IP regulations: IP regulation has always been a thorn in the skin for the companies, especially the foreign companies. The companies strongly feel that the rules have to be amended and the so-called victim of the lax regulations has been the foreign entrants. On the contrary, frivolous litigations and ever greening of process patents of flimsy product by foreign companies impedes the capability of Indian pharma companies. The solution to this answer might be provided by the IPR Think Tank formed by the government to draft a stronger national IP policy.

Expectations from the new government

  • R&D incentives:- There are no specific tax benefits for contracted/ undertaking R&D for group companies. The scope of in-house R&D expenses should be extended to cover significant expenditure incurred on consulting / legal fees for filings in US for NCE and ANDA, preparations of dossiers, etc. for defending patent rights.
  • Rolling out GST provisions: – Rolling out the long pending GST provisions will provide greater clarity and comfort coupled with much required certainty for those running business houses in the sector.
  • Reduction of customs duty on life saving drugs and related medical devices: – Higher rates of customs on life saving drugs, medical devices, diagnostic equipment, etc have made them less affordable. Bringing rates down would have the impact of greater affordability of drugs and of treating serious ailments.
  • Clarifications on margin requirement regulations: – Companies involved in import of products from related parties like APIs /finished drug formulations have to comply with transfer pricing provisions by maintaining higher margins/ lower import prices while customs (Special Valuation Branch) regulations demand higher import prices. Accordingly, there is a dire need for clarifications in order to harmonise the same.

Ratings for schemes on a scale of 10

  • Make in India –    7
  • Digital India –     6
  • Jan Aushadhi Kendra –    3
  • GST –    9

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