The domestic biotech sector, which had seen a healthy growth, has fallen victim to regulatory issues and price wars. Facing a critical situation after UN agencies imposed a ban on some Indian vaccine manufacturers, the industry is looking at a shot in the arm from stronger regulatory policy framework.

Reeling under the ban, companies had to cut prices by over 50%. For instance, the HiB (Haemophilus influenzae type-B) vaccine that costs R50 per dose is now down to R15, while the price of rabies vaccine has fallen to R140 from R240. The falling prices has especially hurt the high-risk, high-return industry.

?Pricing has become a major concern for the industry, with the spiraling costs in vaccine manufacturing,? says Pfizer India MD Keval Handa. ?There is uncertainty in regulatory issues and also uncertainty over what price point do we sell our products. The moment we launch the product, the generics come into the picture,? he told FE.

In the process, the industry is demanding a stronger regulatory policy framework as per the global standards apart from a law-enforcing system. A simplified regulation is the need of the hour for establishing a critical mass in the industry, according to Lupin president Cyrus Karkaria.

Bharat Biotech CMD Krishna Ella said that the absence of a uniform policy for the industry was a concern. ?The government has to formulate a national vaccine policy to meet the demands of public health and create an ecosystem for local manufactures. This can reduce the dependance levels and improve the local market needs.?

Ella says building credibility around vaccines is also a challenge in this country. There is a greater reluctance on part of the government in accepting new vaccines for immunisation programmes. However, there is abundant data available to make vaccines for rotavirus, cervical cancer and malaria as part of national immunisation programme, he said.

The government has to undertake immunisation programmes for various disease that would ultimately help decrease the burden public healthcare funding, Ella said, citing the example of the Chinese government, which has made it mandatory to source all vaccines only from domestic manufacturers.

There are some concerns on the quality front too. ?India has been masterful in taking technology and producing vaccines in large quantities at low cost. But quality is very critical. Companies that have lost their WHO certification and I would definitely advise them to focus on improving quality. I would also advise the government to see that a higher level of quality is maintained,? said GAVI Alliance CEO Seth Berkley. ?The Indian government and international regulatory agencies have to ensure there is no compromise on quality,? he said. ?Quality control procedures are a challenge to a healthy vaccine market.?

Berkley hinted that companies would lose out on huge orders given out by GAVI as it only procures vaccines from WHO-certified manufacturers. According to estimates, over 70% of the patients belonging to 87 developing countries received medicine procured from India by UNICEF, International Dispensary Association, the Global Fund and the Clinton Foundation.

However, the Pharmaceuticals Export Promotion Council of India (Pharmexcil), set up by the ministry of commerce & industry, is quite upbeat about the increasing demand for biotech products. ?The Drug Controller General of India (DCGI) is creating an improved ecosystem with more experts to strengthen the regulatory mechanism in

lieu of the global opportunities,? said Pharmexcil executive director PV Appaji.

?We are seeing good demand as more than 50% of the future drugs will be from the biopharma sector. Hence, we are gearing up to create capacity to promote quality products from the country,? added Appaji.

Vishal Gandhi, Yes Bank senior vice-president & life sciences head said: ?There has to be an ecosystem to transform the Indian biotech industry from a conventional manufacturing-led system to a more research-led sector. This is important for wooing more PE/VC investments into the industry.? According to an Yes Bank report, the PE investments in Indian life sciences industry increased from $470 million in 2003 to $8 billion in 2010 and in the three-year period from 2008-2010, PE/VC firms invested over $20 billion in Indian companies. Further, the year 2010 had over 150 exits at a value of $4.5 billion. However, China?s PE exit value was nearly twice that of India, which indicates that India as an investment destination is lagging behind.

The biotech industry is also hit by the slowdown in global private equity market. The bleak scenario is likely to remain in the coming years also because of tightening credit, volatile equity markets and the sovereign debt crisis in Europe.

BV Mahalakshmi