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Future of growing pharmaceutical market in 2023

Upendra Nath Sharma & Ksanjana Chana
Wednesday, February 8, 2023, 08:00 Hrs  [IST]

Grown from strength to strength in the last few years, the Indian Pharmaceutical market ranks third in pharmaceutical production by volume. By ensuring continuous availability of critical life-saving medicines and affordable vaccines, the Indian pharmaceutical industry has shown tremendous resilience in responding to the Covid-19 pandemic. Needless to say, this industry has significantly contributed towards improving public health, both in India and across the globe.

Given the brief background, this article aims to discuss the next set of key avenues which would feed the growth engine of this industry. This article also sets out some of the key potential developments and challenges that we expect for this industry in the coming year.

Draft Drugs, Medical Devices & Cosmetics Bill, 2022
One of the key regulatory developments in relation to the pharma industry has been introduction of the Drugs, Medical Devices and Cosmetics Bill, 2022 by the Ministry of Health and Family Welfare, Government of India for public consultation on July 8, 2022 (Drugs and Cosmetics Bill). Considering the public comments and suggestions on the Drugs and Cosmetics Bill, the draft may undergo further changes before being introduced in the Parliament, which will hopefully be in the next year.

Once enacted, the Drugs and Cosmetics Bill will repeal India’s current primary legislation governing drugs and cosmetics i.e., the Drugs and Cosmetics Act, 1940 (D&C Act)

Some of the key aspects of the Drugs and Cosmetics Bill are briefly discussed below.
New definitions: The Drugs and Cosmetics Bill has introduced numerous new definitions including over-the-counter (OTC) drugs, bioequivalence study, bioavailability study, etc. for better clarity and understanding of the legislation.

Further, the Drugs and Cosmetics Act regulates the medical devices which are notified by the Central Government, from time to time, under the definition of “drug”. However, in February 2020, a broad definition of medical devices was notified under the Medical Devices Rules, 2017. Notably, the Drugs and Cosmetics Bill provides a separate and a broad definition of “medical devices”.

Online sales of drugs: Presently, there is no legislation regulating the sale and distribution of drugs through an online medium. With a view to remedy this gap in regulation, the Drugs and Cosmetics Bill introduced the provision of sale and distribution of drugs through an online medium after obtaining a license. While the Drugs and Cosmetics Bill is silent on the procedure to obtain such license and other compliance requirements, it is anticipated that the Central Government may, once the Drugs and Cosmetics Bill is in effect, frame guidelines in relation to the same.

This can be considered a constructive step taken in the right direction by the Central Government as the e-Pharmacy industry has immense potential to improve accessibility of medicines especially in the remotest parts of the country, provided the Central Government implements comprehensive guidelines to protect the potential misuse of such law.

Clinical trials: Some of the key provisions of the Drugs and Clinical Trial Rules, 2019 have been imported into the Drugs and Cosmetics Bill. The Drugs and Cosmetics Bill provides for, amongst others, compensation to participants or their legal heirs for injury or death suffered in clinical trials and investigations for drugs and medical devices. Further, if any person fails to pay such compensation, then further penalty of imprisonment, which may extend to one year or with fine which shall not be less than twice the amount of compensation, can be imposed on such person. This penalty provision is likely to create a deterrent effect as it would hold companies accountable for any injuries and deaths suffered in clinical trials and impose punishment which includes imprisonment.  

Revised guidelines for PLI Scheme for promoting domestic manufacturing of medical devices
On August 18, 2022, the Department of Pharmaceuticals, Ministry of Chemical and Fertilizers revised the guidelines for the Production Linked Incentive Scheme for Medical Devices (Revised PLI Scheme). The Revised PLI Scheme provides for a financial incentive to approved medical device manufacturers to help boost domestic manufacturing and attract large-scale investment in medical device segments.

The revised PLI Scheme classifies medical devices into two categories i.e., Category A and Category B. Further, the Revised PLI Scheme amends categorization of medical devices and the corresponding eligibility threshold criteria. Given that the revised PLI Scheme lowers the eligibility threshold limit for certain medical devices, it is likely that the Scheme will attract more applicants under the said Scheme and in turn strengthen domestic manufacturing capabilities of medical devices in the coming year.

Rise in healthcare start-ups
Through their innovation and agility, health care start-ups in India are gradually carving out a niche for themselves. The need for affordable and quality medical care along with an increase in digitalisation has facilitated a rise in the health care start-ups over the last few years. In India, several health care start-ups are emerging, focussing in the following areas: (i) healthcare discovery (i.e., platforms that connect customers to doctors and help them book an appointment), (ii) pharmaceutical delivery, (iii) home healthcare services (start-ups which offer homecare services in the form of nurses, care attendants, home ICU services), and (iv) information management systems.

To boost the start-up ecosystem, the Central Government has taken several initiatives for example, the Department of Biotechnology, Department of Science & Technology, Council of Science & Industrial Research and Biotechnology Industry Research Assistance Council have allocated generous amounts of funds to biotechnology start-ups and provided them mentoring and good infrastructure. Considering the rising demand for better health care along with technological advancements and the government support, it is expected that the coming year will also witness a rise in healthcare start-ups.

Way forward
While the Indian pharma sector has achieved considerable growth in both domestic and global markets, the sector needs to continue building on its strength and apply learning from the challenges and best practices that emerged during the Covid-19 pandemic for example, leveraging technology to (i) further increase the competence and efficiency of the workforce (i.e., through interactive symptom screening algorithms, tools for diagnosis and monitoring, and artificial intelligence based clinical decision support system), and (ii) create health related awareness (such as HealthifyMe is an Indian digital health and wellness company, which provides an app with services such as calorie tracking and advice on nutrition and fitness).

Further, some of the key drivers of growth of the pharma sector in the next year are expected to be: (i) Low cost of production, (ii) Increase in foreign direct investment, (iii) Government incentives and, (iv) Rise in demand of healthcare insurance which will lead to increase in expenditure on healthcare and medicine.

Lastly, to build on the vision of Aatmanirbharta and augment value to the status the Indian pharmacy holds i.e., the “pharmacy of the world”, all the key stakeholders of the Indian pharma industry including the policymakers, pharma industry players, academia and service providers including the logistics and distribution, information technology etc. will need to make a collective effort to boost the health care ecosystem.
(Upendra Nath Sharma is partner, Ksanjana Chana is associate of J Sagar Associates on the themes)


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