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The NAMO Effect


The Namo government has not really wooed the pharma sector in it’s first tenure. Despite some significant measures, the industry continues to wait for crucial reforms to fast-track its progress

The Union Budget 2018-19 was the last full-fledged budget by the Modi government before 2019 elections. Though the pharma industry had a lot of expectations from the budget in terms of reducing the API dependency, increasing R&D investment, support to SMEs etc., it was left disappointed as no major reforms or incentives were announced by Finance Minister, Arun Jaitley. Nevertheless, the government has taken some pivotal decisions in its tenure like Jan Aushadhi Scheme, capping of drug prices, GST and demonetisation etc., which has significantly affected the pharma industry. This issue of Express Pharma analyses the impact of Modi government on the pharma industry and also tries to find out what should be the Modi government’s manifesto for the pharma sector, if it is re-elected to power after 2019 election.

How did these initiatives fare?

There are quite a few initiatives undertaken by the government for the pharma industry’s growth such as the Jan Aushadhi Scheme, Cluster Development Programme for pharma sector, revamping pharma policy, Pharmaceuticals Promotion and Development Scheme, Make in India initiative and monitoring the price of drugs and medical devices.

The Jan Aushadhi Scheme was introduced with an aim to increase the accessibility and affordability of medicine in the country. Under the Jan Aushadhi Scheme, the government intended to open 3,000 stores by March 2017 to provide quality generic medicines at affordable prices, in place of branded medicines. Under the scheme,generic medicines are provided in remote areas. The fund required to open a store is Rs 2.5 lakhs. However, the scheme requires more attention and proper management by the government to make it more successful. Till date, Bureau of Pharma PSU of India (BPPI) has listed 3,111 Jan Aushadhi stores on its website. But, due to lack of management and supply of medicines, few stores are on the verge of closing down their shutters. On the other hand, many stores have  received government approval but are not functioning.

Rao VSV Vadlamudi

Rao VSV Vadlamudi, President, Indian Pharmaceutical Association (IPA) says, “The government has been partly successful in increasing accessibility and affordability by promoting availability of generics by separately creating Jan Aushadhi outlets dispensing exclusively generic medicines. However, this initiative is yet to gain momentum across the entire country. Some major issues have not been addressed adequately to make sure that the Jan Aushadhi scheme becomes highly effective and successful. Firstly, it is necessary to ensure that a clear understanding of what is a generic and what is a branded drug needs to be created in the minds of all stakeholders. This is very important since in our country several brands of the same drug molecule are available and in reality, these are all branded generics. Secondly, it is necessary to ensure that generic drugs are not only cheaper but are also |of the same quality as those of branded drugs. It is also necessary to ensure that all generics are manufactured in facilities that have fulfilled all the regulatory requirements specified under Schedule M.”

He further opines, “It is necessary to understand that increasing accessibility of quality medicines to public at affordable prices would also tend to increase medication-associated problems such as medication errors, irrational use of medicines, particularly of antibiotics and antimicrobials leading to antimicrobial resistance (AMR) and other adverse events, unless enhanced accessibility is under proper supervision of a technically competent and trained individual i.e. a pharmacist. One more issue that needs to be tackled is the fact that all NLEM drugs are not available in the generic form in adequate quantities for providing uninterrupted supply to all Jan Aushadhi outlets to make the scheme successful.”

Eshwar Reddy

Citing another example of government measures to reform the pharma sector, Eshwar Reddy, Executive Director, Bulk Drug Manufacturers Association (India) [BDMA(I)] says, “Modi’s government is successful to a great extent in bringing down the cost of drugs used for life style diseases under Drug Price Control Order (DPCO). There have been a lot of deliberations on the policies to be adopted for the growth of pharma industry. However, no concrete steps have been taken. The Make in India initiative has also not taken off as expected. Even the new proposed pharma policy had failed to address many of the critical issues being faced by the industry.

However, offering a different perspective, Vadlamudi believes that National Pharmaceutical Pricing Authority (NPPA) has already taken some proactive measures to improve access to medicines by fixing prices medicines and medical devices such as cardiac stents and prosthetic devices. However, he also presents the flip side of stringent price control of essential drugs. It is the unavailability of those drugs as many manufacturers are opting out of producing them due to poor viability. To ease this situation, a more rational drug pricing policy needs to be developed with greater priority.

Deepnath Roy Chowdhury

Deepnath Roy Chowdhury, National President, Indian Drug Manufacturers Associations (IDMA) also appreciates the government’s committment towards ushering growth in the pharma sector and says, “The government has been working to improve the quality of medicines by having dialogues with international regulators. In the domestic market, inspections on pharma plants have been intensified and areas of improvements have been conveyed to the concerned units. As far as lower price is concerned, NPPA has been very active.”

Challenges unaddressed

Vadlamudi lists down the major issues faced by the industry, which are:

  • Over dependence on China for imports of drug intermediates and APIs and no significant incentives to support manufacturing of intermediates and APIs.
  • Reforms in clinical trials regulations is moving at a slow pace and the clinical trial industry is slowly diverting to other avenues for sustainability.
  • Lack of sufficient and effective support for R&D from the government.

Chowdhury elaborates on these issues and says, “Critical dependence on Chinese import for APIs still continues. Pharma SMEs are badly in need of technology upgradation funds, which is not forthcoming. There have been frequent changes in drug regulations leading to uncertainty and lack of preparation on the part of the manufacturers. Demonetisation and GST have severely hit the growth of the pharma industry during the current financial year. The industry is now limping back to normal.”

Picture used for representational purpose only

Thus, it is a mixed bag of reviews for Modi government’s performance when it comes to the pharma sector. When the associations were asked to rate it on a scale of five, BDMA and IPA have rated it three. Thus, the indication is clear. The industry expects a lot more from the government to spur its progress. While there have been discussions on issues like pricing mechanism, generic drugs, ease of doing business etc., and there have been several proposals for strengthening the Indian API sector and technology upgradation fund for pharma SMEs, nothing concrete has emerged yet.

If Modi 2.0 becomes a reality….

If the current government comes back to power in 2019, pharma associations are strongly demanding government support to reduce API dependency on China and revival of API sector. Along with this, IDMA also wants the government to provide enough funding for the SME sector to make them globally competitive. It also highlights that there should be a stable pricing policy and a consistent regulatory regime.

BDMA gives an elaborate list of initiatives that it recommends the government to implement in the next five years for the growth of the sector:

Fiscal incentives

  • The government should create large scale pharma clusters to take the benefit of economy of scale.
  • Provide common infrastructure like utilities and effluents treatment facilities at par with world class standards through government funding;
  • Revival of sick public sector units HAL and IDPL – Role played by PSUs in establishing manufacturing base in India for APIs and formulations has been totally down played in the draft policy.
  • Give physical and financial incentives and support to R&D initiatives.


  • Dedicated pharma/ chemical parks with all supporting infrastructure needs to be created. The clusters will ensure the benefits of shared infrastructure and economy of scale for cost competitiveness.
  • Provide fiscal incentives for the initial phase of cluster development.
  • The government should revive PSU manufacturing critical APIs and intermediates that cannot be addressed by the industry due to commercial non-viability and unreasonable prices offered by foreign producers to make local industry unviable.

Environmental measures

  • Develop flexible and simple environmental laws and policies to help in establishing manufacturing plants without compromising on the environmental standards.
  • Environmental clearances and other related consents to be on category wise instead of product wise.
  • Central and State Pollution Control Boards should be made responsible for facilitating environment management systems.
  • Rules and regulations to check the pollution levels and at the same time support the industry to adopt best environmental technologies. In this regard Central Pollution Control Board (CPCB) and National Environmental Engineering Research Institute (NEERI) should provide expert technical guidance and advice which is totally absent at present. Common Effluent Treatment Plants (CETPs) and other central environmental abatement facilities operated by expert agencies should be encouraged. All industries irrespective of size and quantity of effluents generated can make use of these facilities rather than having these facilities put up and operated by individual units.

Approvals and licenses

The approval process of central or state drug regulators should be shortened to three months and standardised on one time basis with periodic inspections if required.

  • The API industry requires almost 20 different licenses from various departments for operating the unit. Government should simplify licensing procedures. The licenses may be provided to the industry on permanent basis with provision of monitoring compliances periodically by regulator. Various government panels have pointed to the corrupt nexus between regulatory agencies and manufacturers while providing marketing approval for new drugs. In spite of these, there are no concrete mechanisms in place to oversee the approval of new medicines and importantly the weeding out of already approved irrational formulations. The new policy must provide concrete directions regarding how these can be accomplished.
  • Loan licensing to be allowed up to only 10 per cent of the total production of the company.
  • Formulations by units manufacturing APIs to be restricted to a maximum of 50 per cent of their production and the balance API quantities to be offered to other pharma formulators similar to what is being practised in pesticides industry.

Several interventions by the government earlier led to the development of a robust domestic industry in the pharma sector. During the year 1978 policy introduced ‘ratio parameters’ requiring  manufacturers to produce APIs (also called ‘bulk drugs’) and finished formulations in certain ratios. Larger manufacturers were required to produce larger quantities of APIs. With the introduction of liberal reforms, ratio parameters were discontinued and  Chinese APIs are preferred over locally manufactured APIs due to cheaper price. Our increasing dependence on imported APIs is a matter of grave concern.

Skill development

API manufacturing requires highly skilled scientists and technicians to manufacture globally compliant products. This is to be addressed to develop competent and trained manpower pool.

Capital grants

  • The government should provide capital grants for setting up R&D and testing facilities. There is an urgent necessity to invest in R&D as there is increased competition from countries like China and Russia and India needs to be proactive in safe guarding its position in generic pharma sector.  To retain leading position it has to continuously upgraded its portfolio with drugs and pharmaceuticals that come out of patent protection.
  • Introduction of new and improved generic drugs is also because they are inexpensive and can directly benefit the common man. Following categories need to be addressed: HIV (AIDS), Hepatitis C drugs, cancer drugs, intermediates and pharma excipients.

Thus, the industry expects a lot more from the government if it comes to power in 2019. Will the Modi government get a chance to live up to these expectations? Only time will tell.

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