Domestic pharma sector faces pricing issues: Satish Reddy

Written by fe Bureau | Hyderabad | Updated: Aug 2 2014, 04:42am hrs
The domestic pharmaceutical industry is affected by pricing and regulatory issues, which raises serious doubts on policy implementation. Price controls definitely bring a short-term solution to affordability of certain medicines, but, in the long term, they are not sustainable, said Satish Reddy, chairman, Dr Reddys Laboratories.

The recent decision to bring 108 additional products under price control raises serious doubts on policy implementation for the industry. A policy notification that adopted essentiality as the primary criteria for inclusion of medicines under price control and left room for extraordinary circumstances for bringing additional controls has clearly been overstepped in this case. Such decisions are detrimental to the health of the industry that seeks a balance between affordability and availability, he said while addressing the shareholders during the companys 30th AGM. The move has wide-reaching consequences for an industry that ranks third in terms of production volumes (10% of global share) and is growing at a compounded rate of 13% (2009-13).

What is needed is a collaborative approach from the regulatory regime just as it did when the new pricing policy was being formulated. If the objective is to make inexpensive medicines available to people, the answer cannot be in passing on the subsidy to pharma companies to bear the burden. It is important that the government sees the bigger picture, he said. As the new patent era came into place in 2005, is was important to shift gears to develop novel proprietary products that also comes at a huge cost. So what was required was an environment that encouraged innovation, he added.

Then there are the regulatory issues. On one hand, with the stepped up scrutiny of regulators especially the USFDA in India, we have seen some setbacks to major firms. On the other hand, we see conduct of clinical trials come under a cloud with a sort of a moratorium imposed leading to clinical trials shift abroad at higher costs. Again, these issues have implications for the industry and one needs to have an overall perspective in mind when addressing the challenges. Or else, just like we ceded space in our API industry to China for large volume products, our thriving pharmaceutical industry will once again stand to lose, he cautioned.

Meanwhile, on worldwide trends, he said that global spending on medicines will near $1 trillion and is expected to reach $1.2 trillion by 2017, as per IMS. Overall, spending on generics is expected to increase from 27% to 36% in 2017. The key drivers behind this growth are increasing access to medicines in emerging markets and the rise of biologics.

In emerging markets, governments are making a concerted effort to improve healthcare infrastructure, thereby increasing access to healthcare and medicines. Spending on traditional medicines in these markets to treat hypertension, diabetes, pain, and anti infectives is expected to grow 69% through 2017 as demand goes up. In developed markets, the spend on higher priced drugs, such as Specialty medicines, is going up significantly.