The pharmaceutical industry continues to play a pivotal role in the global market. For decades, India has been known as the ‘Pharmacy of the World’. The industry represents over 20 percent of the global generics supply by volume and caters to approximately 60 percent of the global demand for vaccines.
Recently, the Organisation of Pharmaceutical Producers of India (OPPI) launched a report in collaboration with EY Parthenon and it revealed that the Indian pharmaceutical industry has the potential not only to meet expectations but transcend with a deliberate emphasis on strategic investments and value-driven transformative innovation. The report was launched during OPPI’s annual summit.
During the summit, Financial Express.com got to speak to the recently appointed Director-General of OPPI, Anil Matai. During the conversation, Matai shared his vision for OPPI, the industry’s expectations, need for disruptive innovation among others. Excerpts:
As the new DG of OPPI, what are your plans for the industry that OPPI is looking forward to raising its voice for?
Since I’m from the industry, I’m familiar with the key challenges, and things to be addressed. My first priority is to let people know what all OPPI is doing for the country. We are clearly saying we have been doing things for the country. OPPI member companies have been here in India for more than a century. They are still here. And they continue to be there. And there are lots of good things which OPPI member companies are doing. I would first like to project all that the OPPI member companies are doing for our country. Whether it is in the domestic market, by way of domestic sales, marketing, clinical trials, or setting up global capability centers to develop an ecosystem. Some of our member companies have thousands of people working in the global capability centers, be it scientists, researchers, or people who are doing analytics. So it’s high-end scientific work, which is being done.
Another priority is how to drive innovation as a country. Around innovation, what do we need to do? Also, we need to move the needle away from incremental innovation to disruptive innovation. Because incrementally innovation has brought us to where we are, we are a pharmacy to the world, but that’s mainly because of the cost factor, but that may not remain the case because there are countries like Bangladesh which have the potential to overtake us. So they have low cost, they have manufacturing facilities.
During COVID, the new vaccines came out of disruptive innovation. We need more such innovations, and only then will we be able to move up the value chain. A lot has been said recently about quality because of maybe a couple of cases, but those being blown out of proportion. But those are happening, its not like those cases are not happening. In terms of quality, if you take a look at our member companies, each member company has 15 to 25 contract manufacturers. So they have their own manufacturing and contract manufacturing and the import-export. All put together we may 500-600 contract manufacturers. Each one of these is globally audited and approved by global auditors. All these have been scaled up, be it in terms of manufacturing facility, upskilling, mindset or training.
Maybe the bottom 5-10% who’re not meeting the quality standards need to be weeded out because they’re just not adhering to quality and thereby giving a bad name to the country. But for that, again, to happen at the government level, you need a regulatory infrastructure.
One major challenge is to provide quality access because we need to reach our products much deeper to tier 2 and tier three markets as well. That infrastructure needs to develop and only the private sector cannot do it. Case for public-private partnerships, to be made, with more role of the public sector in the creation of doctors, nurses, chemists, etc.
Even though we are the pharmacy of the world with respect to generics, we are still not able to tap into the drug discovery segment and still import a very large number of drugs for rare diseases. Could you give an overview of what we need to improve on an immediate basis to tap into the Drug Discovery Segment, just like we have done with biosimilars and generics?
Whenever an innovator company invents anything, by the time it hits the market, almost 12 years are gone. And only seven, eight years of residual shelf life of the patent remain by then. And for discovering a drug you spend billions of dollars. So how does a commercial organization recover the cost? So what we need is signs from the regulatory bodies that they value IP (Intellectual Property) to show the researchers to the inventors that their inventions are being valued and protected. Because why would someone invest? For a 1000 cr company, whose average spent globally on research is 15 to 20%, they’re putting 150-200 crores in research, and not all of their drugs are successful in hitting the market. Then how can they recover that money, since they’re not a charitable organization or loss-building organization?
So the government needs to give some indicator or take some concrete measures to truly demonstrate that they value intellectual property and protect intellectual property. We’re not saying lifelong protection. So till that doesn’t happen, the country is not tempting enough for overseas investors. In cases of rare diseases, it’s not a profit-making proposition but they don’t want to lose money. Given our population, we know that for every rare disease, the population of people suffering from that rare disease may be equivalent to people suffering from a regular disease in a smaller developed European market. I’m not saying that rare diseases should be a commercial proposition, but it should be a fair proposition to the inventor. Because to identify, there’s a smaller patient pool and even for clinical trials there’s extra efforts required.
There has been a lot of emphasis on moving from value and recently a lot of questions have been raised on the quality of the products that we are exporting.How can we maintain the highest standard of quality with respect to generics or any other drug that is being exported out of the country?
As an industry we already built a community of maybe 500-600-700 contract manufacturers who are of global standards. It is how we use it as a fulcrum to spread more of quality awareness, quality training, quality skills, and quality mindset to other contract manufacturers. But 500- 600 of us can’t go to 10,000 11,000 contracts. So it’s the government that needs to play a role. Drug regulators and drug inspectors who have to be there.
And we have to set some examples because they’re very few black sheep but if we find that they are flouting quality norms, they are bypassing them, they are adopting shortcuts, then we need to show by example. And we are talking about a very small population, maybe 5%, and when people know that the regulator is strong, and they’re going to take action, they will dare not indulge in activities, which lead to substandard drugs.
How do you see the performance of the Indian pharmaceutical companies with respect to market growth as compared to global peers? Do you think there has been some significant growth?
If you look at the market, unlike other segments or other industries, where you see growth going to 100% or 50%, or even going negative, we don’t see it in the pharma industry in India. We have seen growth happening in worse cases in mid to high single digits. In the best cases, it is higher teens. So that’s the range which we have seen. And globally also if you see the growth rates are lower than that. But in our case, because inflation is also there and there is price-led growth also. So currently, volume-led growth has come down. We are seeing more price-led growth. And that is because we have better sanitation levels, etc. So the acute diseases have come down. That’s more chronic and quality of life related which have gone up. If pollution remains the way it is, respiratory diseases will go through the roof.
Our growth has been modest. So it’s not that growths are not happening. They are either equal to or if not equal, at least a little better than the global growth rates. Because we have a large untapped potential out there. People are not even aware of diseases. Treatment comes later on. So we will continue to have good potential but we have to create awareness. And also awareness will lead to good prevention, which will lead to a lower incidence of disease. So it’s all about a lot of work which needs to be done.
You spoke of how the pandemic triggered some kind of movement in the market and led to a lot of innovation. How do you see that happening in a non-pandemic situation, more sustainably?
We have to factor in that anything can happen any time. So pandemic preparedness has to be there. I’m now not talking of global companies or Indian companies, because large Indian companies are also investing in research. But otherwise, the ecosystem of innovation needs a regulatory mechanism whereby we see concrete action happening to protect intellectual property in any field. Because if that doesn’t happen, it is a disincentive to innovate. Then only incremental innovations will take place.
But incremental innovation has brought us to where we are now. We need to move ahead. 20-30 years ago also India was number three in Volume, and number 13-14 in value. We’re still there and the needle hasn’t moved. It’s good that we have started talking about this but now’s the time to bring in some guidelines to give confidence to parent companies or global companies that things are changing.
Recently it was reported that even if we have a very high volume of generic drugs, the accessibility issue is still there. Do you think that the Public Private Partnership model will help us tackle the burden or issue of accessibility?
If you go to a place 70-80 km out of Delhi, where are the doctors? Where are the nurses? Where are the chemists’ stores? So how will access improve because there’s a lack of physical infrastructure, regulatory infrastructure, there’s a lower number of doctors, etc? The whole ecosystem around health has to develop. Our spending overall on health has to improve as a percentage of GDP. Globally it is around 2.5-3% but we’re languishing at 1.2 or 1.3%
