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India has the third largest pharmaceutical industry in volume and the fourteenth largest in value. A total of Rs. 2,89,998 crore was generated by the industry for the year 2019-2020, while pharmaceutical exports totaled Rs. 1,46,260 crore. Over 206 countries import Indian medicines and drugs, with the United States being the largest importer. Furthermore, it manufactures more than 60 per cent of all vaccines worldwide. It is not without reason that India is known as the 'Pharmacy of the World'.
Over the last decade, the Indian pharmaceutical industry has been striving for a huge expansion, but there are still over 20,000 registered units, making it extremely uneven, the sector meets approximately 70 per cent of the country's needs, and is highly fragmented. There has been a rise in price competition and government price control. In this regard, companies in the field differ greatly in their innovation capabilities, and they can be divided into three types - innovators, niche operators and manufacturers - each requiring different policies to sustain their growth.
In terms of industrial marketing, the Indian pharmaceutical industry is most relevant because it is in the process of transformation, seeking to establish greater credibility at national and international levels, especially with the government implementing the new intellectual property regime that is compliant.
In support of the marketing impact of the industry, the Indian government has provided several policies; however, tax-related benefits would be beneficial. To encourage pharmaceutical research and development, intellectual property rights (IPRs) are the most effective measure.
It may be possible for domestic companies to improve their future performance from a financial perspective by increasing their working capital (tax benefits as deferred liquidity, for example), but in order to maximize their enterprise value, they must invest in research and development and produce cost-effective drugs in large quantities, which are inevitably influenced by the financial structure of firms, with the current ratio affecting research and development investment positively, while the debt ratio affecting research and development investment negatively.
Achieving growth despite challenges
Indian pharmaceutical companies entered into strategic alliances with global pharmaceutical companies to provide better access to critical drugs or new treatments for Covid-19 such as Molnupiravir and Remdesivir, among others. In 97 countries, the government delivered over 14.68 crore doses of vaccines under the Vaccine Maitri initiative. Additionally, government laboratories and private entrepreneurs are collaborating to develop vaccines through these changes.
Statistical analysis at the descriptive and inferential levels of the Indian pharmaceutical industry shows a situation of continuous growth in recent years. A greater expectation is being placed on both the amount of production and the value of the trade balance.
The Indian pharmaceutical industry remains largely focused on generic drugs despite several issues concerning internal (fragmented) and external (innovative) competition, as well as drug price controls and patent regimes having a significant impact on its effective functioning. Many Indian companies prefer to remain in the generic drug business despite investing heavily in R&D. Numerous small companies produce the same generic drugs due to the low cost of developing new molecules, creating tough competition in the domestic market.
Though India leads the world market in generic drug formulations, it has a high dependency on China for raw material supply for pharmaceutical formulations and even medicines. China, supplying 70 per cent of the raw materials, is India's largest raw material supplier.
Consequently, from a practical standpoint, it is expected that entrepreneurs, managers, and professionals in the field will also focus primarily on innovative and patented drugs, avoiding dangerous competition based on low prices and forming coalitions for legally influencing government officials. Using the positive outlook that emerged from the field investigation, as well as a long-range perspective at the national and international levels, it is imperative to develop innovative strategies for “transition,” which could help companies sustain their financial performance.
Due to increasing spending capacity and higher penetration of health-care services, per capita health-care expenditures in India will grow exponentially in the coming years.
Government initiatives to support, the intensity of R&D investments, and the increase in foreign investments are other influencing factors
Therefore, considering the positive financial impact of generic drugs, Indian pharmaceutical companies are somehow forced to continue leveraging their expertise in this field. At the same time, according to an ambidextrous perspective, they should invest in R&D to acquire new opportunities arising from the increasing health demands of the growing income classes. It is necessary to devise innovative formulas of collaboration at the private and public-private levels, since private companies are becoming increasingly important in this field. A correct and forward-looking alliance should be formed for the development of the sector on a national and international scale.
Challenges for drug development
Undiscovered biological mechanisms: There are many physiologic mechanisms for various disorders that are yet to be fully understood. Many neurodegenerative diseases, like Alzheimer's disease, still lack a clear mechanism of action. As a result, targeted therapies are slow to develop. By understanding the underlying mechanism, more effective therapies can be developed.
Inability to rely on published data: Statistical credibility cannot be determined unless the papers and studies are published in a reputable journal. Reproducibility is ultimately hampered by this.
Patient recruitment and retention: There is no guarantee of retention for those recruited for rare diseases, even if they are recruited. Most rural patients are hesitant to enroll in a clinical trial because they worry about being duped and view trials as fraudulent. The urban population is also hesitant to participate in clinical trials because they believe they can get better treatment elsewhere by simply paying a higher price. Due to this, patient recruitment becomes extremely difficult, especially for rare diseases.
Rise in cost and time: The development of a drug is a long and complex process that begins at the pre-clinical stage with trials in vitro, then in vivo on laboratory animals to evaluate its pharmacological and toxic effects before entering clinical trials at various stages. Lack of funding is usually the biggest problem that young researchers face during this process, since each step is extremely costly. In addition, taking the time to develop a drug is not necessarily a sign of success. Even after numerous trials, some drugs fail.
Government regulations: The recent DPCO 2013 (Drug Price Control Order) seems to have increased the number of bulk drugs from 74 to 348 under Indian law. A drug that qualifies for bulk status is required to have an end-price regulated by the government. There is another concern here.
Heterogeneity of population: Drugs are usually more effective in certain groups of people and less effective in other groups. Patients are usually heterogeneous, which leads to this problem. It will be possible to more effectively stratify patients in the future by investigating genetic and phenotypic mechanisms and thus improve the likelihood that a drug will be successful.
Conclusion
There have been significant increases in the production of pharmaceuticals, medicinal chemicals, and botanicals for health care in India each year. A significant portion of the country's exports is generic medicines, which are mainly exported to America and Europe.
There have been considerable improvements in the industry's infrastructure and R&D capabilities over the last few years, but many challenges remain, mainly related to pricing regulation, sector fragmentation, and intellectual property.
Despite many concerns, the Indian pharmaceutical industry is overall in a positive economic, business, and commercial position. But the real challenge for the sector is likely to involve a sustainable compromise between the legitimate expectations of innovative growth from the business perspective and the fundamental necessities of affordable health from the social perspective.
(Author is co-founder, DPHS Pvt. Ltd.)
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