The Indian pharmaceutical sector is at a crossroads, both in domestic and overseas markets. At a time when the industry is set for a takeoff, the sector is burdened with regulatory issues and cost competitiveness for active pharmaceutical ingredients (APIs) in the domestic market while quality issues are taking a toll on brand India in the global markets. Satish Reddy, president of Indian Pharmaceutical Alliance (IPA) and chairman of Dr Reddy’s Laboratories, tells BV Mahalakshmi that India is on a quick learning curve and the industry will continue to focus on creating an ecosystem to maintain high quality while being a low-cost generic provider to the global markets. Excerpts:
What are the immediate challenges faced by the R70,000-crore Indian pharmaceutical industry?
The US Trade Representative (USTR) report that alleges inadequate protection and enforcement of the IPR regime is a priority issue. Dialogues between India and the US will come to a centre stage when Prime Minister Narendra Modi visits the US. The implications are large as the US has put India on the “priority watch list”. Brand India has its inherent strengths with the highest USFDA-approved plants and the number of ANDAs filed along with right pricing. The US accounts for about $4-billion export revenues from the total exports of $13 billion ? leading to huge savings in the healthcare system. The time has come to let the truth be known that Indian manufacturers of generic drugs are producing high-quality medicines at a fraction of the price of branded pharmaceuticals. IPA, along with Coalition for Affordable Care, under the leadership of former US-India Business Council president Ron Somers, will continue to mobilise like-minded constituents for low-cost and high-quality medicines and cut down on short-sighted tactics and negative campaigns.
How is the sector positioned in the domestic market, given the numerous challenges?
The domestic industry is currently facing major challenges such as patent issues, price controls, compulsory licensing, besides improving healthcare access in the rural markets. The biggest challenge is to make the Indian government sensitive to the agenda of the developed countries to shut off affordable medicines from India.
On the domestic front, we need to streamline the whole process of regulation. There were over 200-odd approvals five years back which has come down to 20 products per year now. This is a vicious cycle. When some problems arise in clinical trial, the whole approval process comes to a halt because of lack of clear decisions. Companies look for alternatives and start doing the trials outside, and at a much higher cost. This affects the local players who are striving hard to make research and business go together for making affordable medicines. Similarly, the national pricing must focus on entire chain and fix prices accordingly.
What about manufacturing?
In the manufacturing sector, cost competitiveness of the API industry is another challenge. This is a serious issue as there is dependance on China for some drugs which include metformin and 15-odd other products. There is a 100% dependance on Beijing as Chinese companies have the scale, state subsidy and lesser cost of utilities. Any breakdown in China will have a major impact. We have been requesting the government to set up industry clusters which will provide infrastructure, utilities, effluent treatment plants all under one roof and give a boost to manufacturing.
How can the industry revive growth in exports?
Growth in drug exports from India fell to 2.6% in FY14 to about $13 billion due to quality issues. Two years ago, there was a 23% rise in drug export value, but this year also, it is estimated to be flat. However, we are confident that pharma exports from India will be more than the size of the domestic sales by FY15. Indian generics market is expected to grow to $26.1 billion by 2016 from $11.3 billion in 2011. Besides, the government plans to create a special entity in partnership with private firms for a ‘Brand India Pharma’ campaign with the objective of improving the image of drug exporters. The special purpose vehicle (SPV) will be in operation in the next few weeks.
How is Dr Reddy’s driving patents, trademarks to protect its innovations?
We have filed and have been issued numerous patents in our principal areas of operations which include global generics, pharmaceutical services and active ingredients and proprietary products. We expect to continue to file patent applications in several countries, including the US. As of March 31, we have registered more than 1,091 trademarks with the registrar of trademarks in India and also filed registration applications for non-US trademarks in other countries.