The Indian pharma sector, estimated to be around Rs 1.5 lakh crore, recorded single digit growth for the first time in several years on account of deeper price cuts under pricing policy and selective boycott of companies by the retailers.
For the multinationals, it was a year to raise concerns over India's patent regime as Novartis' patent for cancer drug Glivec was rejected by Supreme Court, while patent for GSK Pharma's popular breast cancer drug, Tykerb was shot down by the Intellectual Property Appellate Board (IPAB).
It was also a year when the government decided not to lower FDI in existing pharma companies to 49 per cent despite concerns from many quarters over the increased takeovers of Indian firms by foreign companies.
Interestingly, the other highlight of the year was the overseas acquisitions made by domestic firms such as Dr Reddy's and Cipla.
In a big blow to domestic drug makers, including Ranbaxy Laboratories and Mumbai-based Wockhardt, the US health regulator (USFDA) continued its strict vigil over manufacturing standards, resulting into warning letters and ban of imports of drugs from their facilities.
The year will be remembered for Ranbaxy Laboratories' agreement to pay USD 500 million (around Rs 3,092 crore at current exchange rate) to US authorities after pleading guilty to felony charges over violation of manufacturing norms at its plants in Dewas in Madhya Pradesh and Paonta Sahib in Himachal Pradesh.
This was the culmination of a case that began in 2008 when the USFDA had banned the import of 30 generic drugs manufactured by the company at the two plants.
The trouble for the Gurgaon-based firm didn't end there though, as its third plant at Mohali was put under import alert by the USFDA in September which banned import of drugs manufactured there.
Ranbaxy was also in the news for another wrong reason as it was among nine firms which were imposed a total fine of 146 million euros by the European Commission for delaying market entry of cheaper generic versions of Danish company Lundbeck's branded citalopram, a blockbuster antidepressant.
Another domestic major, Wockhardt also had a rough time in 2013 dealing with regulatory and compliance issues. The company's manufacturing facilities at Waluj was pulled up by USFDA and UK health regulator MHRA which issued import alerts on the drugs produced there.
The MHRA also imposed restrictions on import of medicines made at Wockhardt's unit at Kadaiya in Nani Daman for manufacturing norms violation.
Adding to Wockhardt's woes, the USFDA also imposed restrictions on import of medicines produced at the company's Chikalthana plant at Aurangabad in Maharashtra.
While there was concern in India over acquisition of homegrown pharma firms by the multinationals, it didn't deter domestic firms from carrying out similar activities overseas.
Hyderabad-based pharma major Dr Reddy's Laboratories acquired 93 per cent stake in Netherlands-based speciality pharmaceutical company OctoPlus NV for an undisclosed sum.
Likewise, Cipla also completed the buyout of South Africa's Cipla Medpro for an aggregate consideration of Rs 2,707 crore. It also gained majority stake in Uganda-based Quality Chemical Industries Ltd with the acquisition of additional 14.5 per cent stake for USD 15 million.
During the year, Cipla also acquired Croatia-based firm Celeris d.o.o, distributor of its products in that country.
Similarly, Piramal Enterprises acquired over-the-counter (OTC) skincare brand Caladryl in India from Valeant Pharmaceuticals International Inc for an undisclosed sum.
Yet, it was not always a cake walk for the Indian firms as domestic major Sun Pharmaceutical Industries found out. It had to call off its Rs 3,100 crore bid to acquire outstanding shares of Israel's Taro Pharmaceutical citing pricing issues.
The unexpected development negated Sun Pharma's efforts to fully acquire Taro Pharmaceutical.
Keeping the merger and acquisition activity alive in the domestic scene, the year saw Torrent Pharmaceuticals' Rs 2,000 crore deal to acquire branded formulation business in India and Nepal of Elder Pharmaceuticals.
Vivimed Labs also acquired a manufacturing facility of Actavis Pharma Manufacturing Ltd for a total consideration of Rs 122 crore.
In another development UK-based GlaxoSmithKline Plc (GSK) announced an open offer to buy 24.33 per cent stake in its Indian arm GlaxoSmithKline Pharmaceuticals for a total consideration of Rs 6,389.02 crore.
The penchant for multinationals to take over Indian firms was clearly indicated when US pharma major Mylan Inc decided to acquire Agila Specialties, maker of generic injectable products, from Bangalore-based Strides Arcolab Ltd for USD 1.6 billion (about Rs 8,700 crore).
In a case highlighting uncertain nature of international collaborations, Dr Reddy's Laboratories and Fujifilm Corporation decided to terminate a pact to establish a joint venture and an exclusive partnership for generic drugs business in the Japanese market.
2013 will also go down in the history of Indian pharma industry when landmark decisions were made. The Supreme Court rejected plea of Swiss pharma giant Novartis, for a patent on cancer drug Glivec paving way for Indian generic firms to offer cheaper alternatives.
Ending a seven-year legal battle, the apex court dismissed the company's plea and held that there was no new invention and no new substance used in the drug.
The development raised questions over India's patent regime from multi nationals but the government stood firm and said Indian laws were WTO compliant and no country could allow "ever-greening" of patents.
In another blow to foreign pharma companies, the Intellectual Property Appellate Board (IPAB) ordered the revocation of the patent given to GSK Pharma's popular breast cancer drug, Tykerb.
In view of the developments, Swiss pharma major Roche Holding AG said it won't pursue the secondary patent for its breast cancer drug 'Herceptin' in India.
On the other hand, the government rejected a compulsory licensing application by BDR Pharmaceuticals to manufacture the generic version of patented anti-cancer drug 'Dasatinib', a decision that is seen as evidence that IP rules prevail in India.
Commenting on the developments, Novartis India Vice Chairman and Managing Director Ranjit Shahani told PTI: "As far as the innovator Pharma Companies were concerned they continue to face challenges on implementation of patents and threat of more compulsory licenses."
While most of the domestic industry welcomed India's stand on the patents, in an interview to PTI, Biocon Chairman and Managing Director Kiran Mazumdar-Shaw said that India needs to show the world that it respects intellectual property rights if it wants global pharmaceutical firms to invest in India.
It was not always the foreign multinationals who were at the receiving end, Indian major Sun Pharma along with Israel's Teva had to pay a sum of USD 2.15 billion to Pfizer and Takeda as part of patent infringement settlement for acid reflux medicine Protonix in the US.
As part of the agreement, Teva will have to pay Pfizer and Takeda USD 1.6 billion while Sun was to pay USD 550 million.
The year saw government continuing efforts to fix prices of essential drugs under the new drug pricing policy and continuation of collection of data on essential medicines from the pharma firms.
NPPA asked pharma associations to submit data so that prices of 348 drugs listed under National List of Essential Medicines (NLEM) could be fixed in time. The process of deciding the ceiling prices of medicines is already underway.
The industry, however, said new drug price control policy will negatively impact sales and margins of pharmaceutical firms in India.
With no let up in multinationals seeking nod to acquire stake in Indian pharma firms the issue of FDI policy in the sector was debated many a times at the highest levels. It was finally decided not to lower the FDI limit for existing pharmaceutical firms thus continuing with the policy of permitting 100 per cent FDI in brownfield pharma firms through clearance from the Foreign Investment Promotion Board (FIPB). To address the concerns that pharmaceutical firms may stop production of essential medicines, the government came out with an order mandating that the firms will have to issue a public notice and inform authorities six months in advance if they planned to stop production of any formulation of essential drugs.
"The industry feels let down by the Department of Pharmaceutical (DoP) and the National Pharmaceutical Pricing Authority (NPPA) as some key provisions of the National Pharmaceutical Pricing Policy (NPPP) are distorted while implementing the policy," Indian Pharmaceutical Alliance Secretary General D G Shah told PTI.
The year also saw Zydus Cadila getting patent for its patented diabetes drug Lipaglyn, buoyed by the achievement Zydus Cadila Chairman and Managing Director Pankaj R Patel told PTI that he expected at least two molecules out of the 20 currently under discovery research programmes to become successful by 2020.
In a major loss to the industry, 2013 witnessed the demise of Dr Reddy's Laboratories founder and one of the doyens of Indian pharma industry K Anji Reddy.