Indian drugs and pharmaceutical industry has advanced perceptibly and is getting ready for the new patent regime and to withstand global competition, which is expected to be unleashed by new winds of liberalisation - a new era of liberalisation - much different from what was ushered in since the conclusion of the Uruguay Round and the establishment of the World Trade Organisation.
The industry has been expanding at annual rates ranging between 8 to 10% (against global growth rate of 6%). According to a study by McKinsey, Vision 2010, the domestic pharmaceutical industry could attain a size of $25 billion (Rs 1200 billion) by 2010 by focusing on two areas: first, innovation-led research, development and new drug discoveries; and second, information technology-led remote sales and marketing. The market for bulk drugs and formulations had increased from about Rs 103 billion in 1990-91 to an estimated Rs 435 billion at the end of 2003-04. The prices of Indian essential drugs are among the lowest in the world. Apart from strides made by the industry in the last half-a-century, lower production cost due to reverse engineering and low R&D outlays has been a major factor in keeping the prices under check.
The global pharmaceutical industry is estimated at $ 300 billion, not all representing cross-border trade. India's measly share of $ 1.5 billion in global trade represents an untapped potential. Under the regime of economic liberalisation underway since early 1990s, the drugs and pharmaceutical sector witnessed initiatives at fresh investment in the sector. Nearly 1735 investment proposals of the order of around Rs 166 billion were initiated. The foreign collaboration proposals approved numbered around 425 with a foreign direct investment (FDI) component of over Rs 25 billion. The pharmaceuticals have figured high on the export front. In 2001-02, the sector was estimated to have registered a growth of 17.6% at around Rs 20.3 billion.
In the wake of economic liberalisation, many a overseas players returned or contemplated returning to India. These include Ivox Corp (USA), Taro Pharmaceuticals (Israel) and Merck (USA). These are out either to set shop or looking for acquisitions in India. Hexal AG of Germany has established a liaison office in India. MILLIONCs like Rocha, Bayer, Aventis and Chiron are making India a regional hub for bulk drugs.
The Export Import Bank of India (Exim Bank) had doubled its corpus for the pharmaceutical industry to Rs 2 billion as a result of increased activity in the industry, especially in the external sector. The fund is used for the development and commercialisation of the new products and applications, significant improvement in the existing design of products, setting up and expansion of pilot plants, research studies for obtaining regulatory approvals, cost of filing and managing international patent and R&D Centres.
It needs, however, to be recognised that the presence of small scale manufacturers has resulted, on the one hand, in a highly fragmented industry, and on the other, it has made it possible to supply a near 100,000 drugs including vitamins, antibiotics, antibacterials, cardio-vascular and other essential drugs. These account for nearly 37% of the market. While each of about 80% of the manufacturers has annual sales below a billion rupees, top ten companies are known to control over 30% of the market. At present there are more than 20,000 players in the country.
The major players are: Alembic Chem, Aurobindo Pharma, Cipla, Dr. Reddy's, FDC, IPCA Labs, Jagsonpal Pharma, J.B. Chemicals, Kopran, Lupin Labs, Lyka Labs, Morepan Labs, Nicholas Piramal, Ranbaxy Labs, Sun Pharma, Themis Medicare, GlaxoSmithkline, Astrazeneca, Aventis, E-Merck, Torrent Pharma, TTK Healthcare, Unichem Labs, Wockhardt and Zandu Pharma. Until recently, only a few of the Indian companies had gone into any serious R&D activity. Much of the effort was directed to affordable analogue research. The R&D level in the country is low with even well-placed pharma companies spending less than 2% of turnover on R&D. MILLIONCs are known to contribute as much as 10% or more of their turnover to R&D. While India is very strong in process chemistry, biology and applied bio-chemistry, initiatives at all levels - government, academia, private sector - involving heavy financial outlays, are called for.
Ayurveda continues to remain a preferred system of medicine for a vast segment of population in the country. The country has over 400,000 registered practitioners of the Indian system of medicine. Around 170 institutes properly affiliated to various universities impart under- or post-graduate courses each year. These institutes churn out some 5,500 fresh practitioners. The practitioners are supported by 12,000 dispensaries and 2,100 beds available for ayurveda treatment countrywide. The emerging biotechnology sector has already taken by storm and is offering sops to states to make these as the thriving ground for the highly potential segment in medicare.
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