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Post-Covid pharma manufacturing scenario in India

Gaurav Kaushik
Thursday, January 28, 2021, 08:00 Hrs  [IST]

In addition to being a global health emergency, the novel Coronavirus (Covid-19) has proved to be a major disruptor for several industries. These unprecedented times have posed unique challenges for almost all sectors of the economy, more particularly manufacturing. In the pharma manufacturing sector, it has put India on a global map as the ‘pharmacy of the world’.

India – the global pharma hub
Indian pharmaceutical industry holds a formidable position in the world, catering to over 50 per cent of the global demand for various vaccines, 40 per cent of generic demand in the US and 25 per cent of all medicine demand across UK. The country ranks third globally in terms of total production volume and tenth in terms of value. According to the National Indian Promotion Agency, India is the largest producer of generic medicines and vaccines, comprising 20 per cent volume share in generics and 62 per cent in vaccines.

Pharma exports from India, which include bulk drugs, intermediaries, drug formulations, biologicals, herbal products and surgicals, stood at $16.28 billion in FY20. Till October 2020, the exports stood at $13.87 billion for FY21. The export market can be classified into four main segments viz APIs (branded as well as generic), formulations (branded and generic), contract research and manufacturing services (CRAMS) and biosimilars. The domestic market includes acute therapies, accounting for 66 per cent of the market share while the rest is comprised of chronic therapies. In terms of revenues, anti-infectives, cardiac and gastrointestinal demand the largest market share.

The Covid-19 outbreak has presented a greater opportunity to the Indian pharmaceutical players. India possesses the ability to manufacture high-quality medicines at lower costs, the cost of production being nearly 33 per cent lower than that of the US. However, despite lower costs, many pharma leaders still possess the capacity to not only cater to the domestic market but also meet the global demand.

Moreover, India has the largest number of US FDA approved drug manufacturing plants in the world and is home to around 1400 WHO – Good Manufacturing Practices and 253 European Directorate of Quality Medicines (EDQM) approved plants. Besides, the country also has a rich pool of scientists and researchers, which has the potential to establish India as a great knowledge hub for the pharma industry.
Over-reliance woes
As the pandemic gained ground, the Indian pharmaceuticals industry rose to the occasion, offering millions of doses of anti-malarial medicine, hydroxychloroquine to the world.  However, with China being the epicentre of the crisis, the supply of active pharmaceutical ingredients (APIs), the main raw material for drug manufacturing, got disrupted, prompting the need to bring in greater geo-diversity within the entire supply chain. Low availability of key starting materials (KSM) during the crisis was another pain point.

India imports both KSM and APIs, mostly from China, to manufacture life-saving antibiotics, steroids and other medicines, with 70-80 per cent of basic raw materials being imported for making medicines. Of late, China has hiked the prices of KSM, which is seen to be another hurdle in India’s efforts to make its drug industry self-reliant or ‘Aatmanirbhar’. The increase in prices of imported KSM would thwart indigenous API manufacturing in India, making production unviable and less competitive in comparison with Chinese products in the global market.
Policy initiatives
In order to achieve reduced dependency on external factors and a sustainable supply chain, India needs to have clear and targeted initiatives that will help boost local manufacturing. In this direction, the government has been taking many policy interventions to spur domestic production of drugs and to streamline indigenous pharmaceuticals manufacturing. In addition to pharmaceuticals, financial incentives are also required to promote manufacturing of diagnostics kits and medical equipment, for which again India is heavily dependent on imports for raw materials.

Towards this, the government recently announced its decision to set up common infrastructure facilities in three bulk drug parks with an investment of Rs 3,000 crore over the next five years. Furthermore, the government is committed to create a production linked incentive (PLI) for promotion of domestic manufacturing of critical KSMs, APIs and drug intermediaries in the country. Other than this, financial incentives to the tune of Rs one lakh crore would be provided to help companies manufacture pharmaceutical ingredients domestically by 2023.

It would be pertinent to note here that a number of pharma manufacturers engaged in the production of APIs and other intermediaries continue to operate below their optimum capacity levels. This issue also needs to be addressed by way of policy intervention so that existing units are efficiently utilized.

Other policy initiatives include revamping of health centres at an investment of Rs 3,400 crore while another Rs 400 crore have been earmarked for development of medical equipment parks across various states. This is being regarded as a positive step towards creating a self-sufficient pharma ecosystem within the country and would provide the necessary fillip to the industry.

In the field of research, India is taking rapid strides in the development of new molecules for treatment of various ailments, at a large scale, many of which are now in clinical trial stages. However, price control measures have proved to be detrimental to these efforts.

The government, thus, needs to relax drug pricing control in a manner that it is lucrative to both researchers and pharma companies to undertake innovation while making drugs affordable and accessible to all at the same time. Financial and other incentives should also be provided to pharma companies to undertake more research and innovation initiatives. Meanwhile, there is a need to develop more research and development centres of excellence and to nurture industry-academia co-operation.
End note
The Covid-19 outbreak has proved to be both a curse and a blessing of sorts. While it has posed many healthcare challenges, it has also offered an opportunity for the Indian pharmaceuticals industry to play a greater role in ensuring global drug supply security. The pharmaceuticals industry is a strategic industry and can help India reinstate its position on the global pharma map. To achieve sustainable growth of domestic manufacturers, innovation and equitable pricing controls are the need of the hour.

While the government has taken the right steps to ease its protectionist policies, effective and timely implementation of the measures would be key to establish domestic pharma manufacturing on a firm footing. As the world looks towards India in its fight against Covid-19, it is India’s chance to not only become Aatmanirbhar but also lead the rest of the world.

(The author is Managing Director and CEO, Meteoric Biopharmaceuticals)


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