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Policy experiences of 2017 for pharma sector


Krishna Sarma, Managing Partner of Corporate Law Group, gives an insight about the need to take positive learnings from the experiences of 2017 and design further policy actions in a more inclusive way in the next year

Crowned with the glory of being the ‘pharmacy of the south,’ the health of the Indian pharma industry seems to be on somewhat of a decline of late. Once registering a healthy, near about of 15 per cent CAGR, the domestic market growth slowed down to near 11 per cent CAGR during the last five years. Whereas the challenge of healthcare access in an economically diversified demography like that of India cannot be understated by any accounts, it is more often witnessed that the burden of healthcare access is disproportionately passed on to the pharma industry.

The current work in progress, the Draft National Pharmaceutical Policy 2017 (Draft NPP 2017) is a viable medium of infusing the fuel of growth into the pharma sector, albeit, if the draft policy addresses the right issues, and more importantly, with the right approach.

Unfortunately, the draft that was published and stakeholders comments sought seemed to be more central to issues related to price and affordability rather that aimed at the well being of the industry itself along with its ability to partner the government in the endeavour to meet the unmet medical needs of the masses.

It is pertinent to note that the government, in its own admission, in the past has rightly held that access to medicines for the population and the economic well being of the industry, both has to go hand-in-hand and that the policy decisions on this subject must strike a balance between the two aspect of affordability of medicines and the industrial growth. During the recent past, this delicate balance seems to be getting more and more away from the aspect of industrial growth.

The year that it was, mounting pressures on the pharma and medical devices industry in form of price controls has been the flavour of 2017. A classic example is the case of price fixation of cardiac stents during early 2017. What was more serious was the fact that on one hand the government had capped the prices of stents, sometimes possibly at a commercially unviable level and on the other hand it also prohibited manufacturers from discontinuing some of the brand that became loss making for them. Needless to state, compelling an industry to do business at losses sends extremely negative signals for investments for future growth.

The pricing pressures in the base businesses and government’s initiative towards affordability is expected to continue. This year also witnessed the government’s incessant attention to generic medicines. Be it by making generic prescription mandatory for doctors through amendment in the Indian Medical Council (Professional conduct, Etiquette and Ethics) Regulations, 2002 or changes in labelling regulation under Drugs & Cosmetics Rules 1945 for printing proper name of drugs in bigger font sizes, the government has been adopting various mechanisms for promotion of generic drugs through amendments in drug laws. The Draft NPP 2017 also thrusts its weight behind this. All these measures are definitely guided by the right intentions, however, like other recent instances of government doling out abrupt policy decisions without proper planning and preparation and thereby causing some amount of avoidable collateral damage, these measures must also be well thought through and planned and not just be imposed upon without preparation.

The bulk drug industry is a glowing example of how policies can affect a sector as a whole. Now, after a decade, it is optimistic to see that through the Draft NPP 2017 the government is trying to revive India’s bulk drug market which has long gone to China. Whereas, a positive approach is that the suggestion of setting up of mega bulk drug parks. In the draft pharmaceutical policy 2017, one of the yet another approach that seems rather abrupt is the thought of the Draft NPP 2017 to recommend levy of ‘peak customs duty’ for all bulk drugs that can be indigenously manufactured.

Government policies have a far reaching effect upon shaping up an industry sector and determining its growth, both in fiscal terms and its capability to move up the value chain. Innovation is one aspect that is critical for the pharma industry to
develop its value profile. It is quite established by now that IPRs play a crucial role in providing incentives for innovation. One may find reference of IPR and innovation in every government policy. Yet the letters of policy still needs to be seen implemented in reality through concrete steps on the ground. Be it making the IPR environment more conducive for small and incremental innovation, getting IPR registrations in a faster and transparent manner and ensuring IPR enforcement more expeditious and friendly for the innovators.

It is therefore important to take positive learnings from the experiences of 2017 and design further policy actions in a more inclusive way in the next year so that growth and development is designed for all stakeholders and not designed to benefit one spectrum of the stakeholders at the cost of another.

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