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 India to move away from China for pharmaceutical supplies will not happen overnight. It will take some time. At the end of the day, all of us will have some dependency on China or any other country for some raw materials and products. However, we can see some shift in the supply chains moving to India in the next 5-10 years, said Priyanka Chigurupati, Executive Director, Granules India, in an email to Nandita Vijay. Excerpts:
Do you envisage in the long-term Indian pharma to counter the China capability with the government announcing Productivity Linked Initiative (PLI) scheme and Atmanirbhar?
For India to compete or reduce its dependency on China, pharma companies with expertise in process efficiencies are the backbone. This, accompanied by scale should be the focus to achieve economics-of-scale. Chinese API companies have an inherent advantage because the support from the government in the form of financial incentives, infrastructure and regulatory policies. While the government of India has been proactive with its PLI and Atmanirbhar, a few tweaks would be helpful.
It is appreciable that the government has made some effort towards providing incentives for the API sector to become self-reliant. It is also listening to industry opinions and introducing new policies.
How enabling are bulk drug parks to speed up manufacture in Telangana and how does the company plan to capitalize such parks to its advantage?
The new bulk drug parks scheme to be established at various locations across the country and PLI scheme to promote domestic manufacturing of critical APIs/KSMs/drug intermediates is a welcome move. Some of the key considerations for companies to consider setting up units in bulk drug park which would enable manufacturing of APIs to be done on a large scale would be the land cost which is generally expensive, common effluent discharge/treatment facility, availability of utilities like power and piped steam, speedy approvals from various regulatory stakeholders and various other incentives provided by the Central and State governments.
In terms of regulations, we want you to elaborate on where does India need to strengthen for approval of APIs and formulations? What more support is envisaged in further improving the regulatory environment to facilitate speedy approvals? When would India be as good as international regulatory offices of US FDA and UK MHRA or EMA?
India has strong regulatory systems, but the adherence and enforcement of those regulations should be done in order to strengthen the approval for APIs and formulations. The manpower also has to be beefed up at DCGI and skill enhancement of the reviewers should be carried out to be on par with the reviewers of the US FDA. More importantly, adherence to timelines is very important. Streamlining the filing process and increasing the transparency would help in obtaining speedy product approvals.
What are your views on the need for pharmaceuticals to be disassociated from the Ministry of Chemicals and Fertilizers and become a standalone Ministry? Please elaborate what are the advantages and disadvantages?
The multiple regulatory mechanism very often slows down the growth of these sectors. The government has taken cognizance of the issue from the fact that it created a separate Department of Pharmaceuticals (DoP) in July 2008 for regulating all the issues, including pricing, of these two sectors. The creation of DoP was the first step in the right direction, but a dedicated Ministry for pharmaceuticals and medical devices would be the last answer to several issues confronting these sectors.
Currently, regulatory issues of these sectors are decided by different Ministries and Agencies. While all the administrative and pricing related policies of these sectors are decided by the Ministry of Chemicals and Fertilizers, all the issues related to quality of the drugs produced and marketed in the country are decided by the Union Health Ministry. Policies related to investment and IPR as well as that of exports are decided by the Ministry of Commerce and Industry.
In the area of pricing, would you agree that India needs an accommodative pricing policy which is now dominated by DPCO 2013, NLEM as API costs shoot up?
As API prices surge, the pharma industry is requesting the government to bring in some time-bound amendments in the DPCO 2013. To prevent the shortage of essential medicines in the domestic market, various industry bodies have requested the DoP to consider the recommendations about relaxing the provision of para 13 (2) of the DPCO 2013. So, all those manufacturers who are selling essential medicines below the ceiling prices can also follow the ceiling price and not have to discontinue the product.
For any product, when the price of the API used in it rises, the cost increases while the profit margin decreases. As per DPCO 2013, a limited increase in the MRP is permitted on an annual basis. If this increase of MRP does not absorb the increased cost of the API, the manufacturer suffers. The government must develop a mechanism to ensure that the profit margins, which are already low, are not further eroded. This is even more relevant in the case of low-value products where the unit price is below Rs. 4. The profits margin is in paisa and that gets further eroded. This justifies the demand of the industry to remove drugs with low unit price, out of price control.
In its representation to the DoP, various associations have also suggested that a provision of price fixation of the new drug is added to clause 6 of Para 15 of DPCO 2013. As per the Para 15 (2) of DPCO 2013, every manufacturer of the new drug needs to file for price approval application in Form 1. And, Para 15 (6) prohibits from selling any new drug at a price higher than price already fixed by the Government.
In the short-term, dependence on China for APIs has been a concern for industry and the ongoing COVID-19 is also seen to impact its supply. In such a scenario how is Granules India looking at Indian market opportunity?
Granules India has transformed from an API manufacturer to formulations/finished dosage manufacturer and is vertically backward integrated in its APIs for most of the core molecules/high volume products it manufactures. Most of the APIs we manufactured is for our captive consumption before being sold in the open market. We do depend on China for some KSMs and other intermediates. We cannot reduce our dependency overnight. We are working on a few differentiated technologies for a limited number of products to potentially backward integrate into in the medium-term. For the short-term, we have qualified alternate sources for our major products and are in discussions with other partners for a few of the remaining products.
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