Dr Ajit Dangi , President & CEO, Danssen Consulting, gives an insight on the need to take urgent majors to regain lost mojo
The Indian pharmaceutical industry has been facing strong headwinds for the last couple of years due to increasing span of price control, quality compliance and data integrity issues from international regulatory agencies, weak enforcement of IPR and intense competition resulting in low single digit growth. However, our fundamentals continue to be strong and it is not difficult to regain our lost mojo, if we take urgent measures to remedy the situation. Some of the priorities, among many others are:
w Quality: There is no other industry where quality plays a pivotal role than pharma as it directly impacts patient’s health. Business leaders have to realise that the cost of quality is the sum total of cost of conformance plus cost of non conformance. The cost of non-conformance also includes reputational damage it causes to the brand India which is often non-quantifiable. In fact, it is estimated that pharma industry lost close to ` 3500-
` 4000 crore in market capitalisation of Indian pharma majors last year due to GMP non-compliance and data integrity issues flagged by the international regulatory agencies affecting our exports significantly. The more one looks at this problem, one realises that it is more of a cultural and behavioral issue than being purely technical. It is heartening to see that pharma leaders have acknowledged this and many industry associations have begun to pay serious attention to this problem. IDMA–NSF training programme is one such laudable initiative. More and more such programmes will ensure that culture of quality is ingrained in our DNA. If Mumbai
dabbawallas can achieve Six Sigma results, I don’t see why Indian pharma industry, which employs some of the most highly qualified talent cannot achieve this goal. If we are aspiring to be a global leader in pharma, we have to fix this problem first.
w Innovation: While we have acquired the distinction of being ‘Pharmacy of the World’ by being the largest producer of generics, time has now come to move up the value chain by using innovation as a platform. Drug discovery is one such option and many Indian majors are spending upwards of 7-9 per cent of their sales on discovery research. Drug discovery however is expensive, has long gestation period and also is high-risk area as the outcome is often uncertain. Many global pharma majors, however, have prospered and built multi-billion dollar empires by using incremental innovation without discovering new molecules, but by using existing molecules in innovative way such as NDDS, new indication, chiral molecules, innovative delivery systems using technology such AI, 3D PRINTING, wearables, as well as developing biosimilars, biobetters etc. Some companies are breathing new life into old drugs by substituting hydrogen with deuterium, a process called deuteration.
Deuterium remains in the body longer than hydrogen as it is more difficult to break down by enzymes. Teva has already developed such a drug for Huttingdon disease which is currently undergoing US FDA review. Indian industry should explore such innovative approaches which do not require deep pockets. However, for incentivising such innovations we need ecosystem which protects the intellectual property of the innovator, encourages industry academia collaboration, and relaxation in rigid price control system.
w Consolidation: With over 10,000 manufactures churning out more than 70,000 generic brands and the top company having only 7-8 per cent market share, time has now come for consolidation. Because of this fragmentation of the market Indian pharma lacks scope and scale of economy which results in under utilisation of installed capacity, reduces cost efficiency and scatters valuable resources resulting in lack of focus. Rapid growth of Sun Pharma, Piramal Enterprises etc. in just couple of decades is a case in point. Johnson & Johnson, the number one healthcare company in the world with over $70 billion in sales is actually a conglomerate of over 200 companies using ‘String of Pearls’ strategy. Indian pharma has to actively pursue inorganic growth through M&A route as beyond a point organic growth has a limitation. With turmoil in developed markets such as Brexit in the UK, political instability in countries like Germany, Spain, saturation of the western markets, and proposed repeal of ‘Obamacare’ in the US etc., several midsize international pharma companies with innovative products are exploring out licensing, exiting mature portfolio and co marketing route to sustain survival. Indian companies should redouble their business development efforts to capitalise on such opportunities.
CDSCO is also planning to come out with new OTC policy. A resource starved country like India with patient to doctor ratio being one of the lowest in the world, offers good opportunity for ‘Responsible Self Medication’ and capitalising on this underdeveloped business segment, which has immense potential.
w Patient centricity: All along pharma industry has focussed its attention and resources on its immediate customer i.e. the medical profession, ignoring the fact that its primary customer is the patient. While patient centricity has become the new marketing buzz word, very little is being done on the ground. Time has now come to walk the talk and make patient centricity as a focal point to grow and sustain business. Every business decision has to be tested by asking the question ‘what value does it add to the patient ?’ Initiatives such as responsible pricing, ethical marketing by following a voluntary code of conduct without waiting for UCPMP being made mandatory and by putting in place an effective internal compliance review programme (EY recommendation), patient support programmes such as sugar clinics for diabetics, memory clinics for Alzheimer patients and their families, insurance tie up for expensive critical care therapies, and disease management programmes etc., will go a long way in restoring faith in modern medicine. This will require a cultural change with a passion for customer care driven from the top.
While some of these recommendations will certainly help the pharma industry to regain its growth momentum, the government will have to play a proactive role as an enabler to initiate policies such as strengthening IPR enforcement to incentivise innovation, increasing healthcare spend as a percentage of the GDP, reducing the rigors of stringent price control, reforming labour laws and generally improving ease of doing business.