Covid-19 thrusting the pharma industry to expand

Prime Minister Narendra Modi said India can help in bringing the world out of the coronavirus crisis with mass vaccine distribution once all trials are completed successfully.

October 7, 2021 3:48 PM
zaydus-cadila-2India remains committed to its promise with the export of Covid vaccines all over the world. (File)

By Gaurav Gupta

India has emerged as a leader in pharmaceuticals, more so after the Covid-19 outbreak. The country is at the forefront of not only vaccinating its own citizens but also exporting Covid-19 vaccines to the world for which it has received praise from all over, including the United Nations.

In his virtual address to the United Nations General Assembly last year, Prime Minister Narendra Modi said India can help in bringing the world out of the coronavirus crisis with mass vaccine distribution once all trials are completed successfully. India remains committed to its promise with the export of Covid vaccines all over the world. The pharma sector is poised to gain in the post-Covid world.

The Indian pharma industry has grown 10 times in the last two decades driven by its strength in the global generics space, according to an EY report. Also, the Indian pharma industry is expected to grow at a compounded annual growth rate (CAGR) of 12% to reach $130 billion by 2030 from US$41.7 bn in 2020, the report said. The domestic pharma market turnover in India has reached Rs. 1.4 lakh crores in 2019, up from Rs 1.29 lakh crores in 2018, as per the government data.

That said, due to its position as the global supplier of innovative medicines, it becomes imperative for India’s pharma industry to explore possibilities to consolidate and strengthen its positioning and expand in the post-pandemic world. The Indian pharmaceutical industry supplies over 50 percent of the global demand for vaccines. India is the 3rd largest producer of drugs in terms of volume and vaccine production accounts for 60 percent of global production. Indian pharma products are exported to more than 180 countries, including the US which is a big market for the Indian sector. The Indian pharmaceutical exports reached $16.28 billion in FY 20. The medical device industry in the Indian market is expected to reach $25 billion by 2025. To become the pharmacy of the world, India needs to focus and support its pharma sector as the country has industry leaders with the potential to steer the industry to greater heights.

The Covid-19 pandemic affected all major sectors, but the pharmaceutical sector flourished immensely. Initially, the pharma industry also faced a setback as the manufacturing, supply chain, and import of active pharmaceutical ingredients (APIs) were affected, however, the sector handled the challenges well and rebounded again with help from favorable policies from the government.
India faces competition from China for the supply of APIs at a lower cost, it imports 70 percent of the APIs from China. This high dependence on Chinese APIs has prompted the government to review and overhaul the API sector. The government has proposed an incentive package of Rs 13.76 billion for the promotion of domestic manufacturing of critical starting materials, drug intermediates, APIs, and medical devices. The government also amended the Foreign Direct Investment policy to allow up to 100 percent FDI under the automatic route for manufacturing medical devices. The pharma sector attracted cumulative FDI inflow worth $16.54 billion from April 2000 to 2020 June, according to DPIIT data. The Government has also initiated a PLI scheme for the pharma sector worth Rs 15,000 crore. India has planned to set up Rs. 1 trillion funds for boosting the pharma sector to manufacture pharmaceutical ingredients domestically by 2023. India has offered Rs. 6,940 crore production linked incentives between 5-20 percent for incremental sales and plans to set up three mega drug parks to drive sustainable cost competitiveness.

The medical spending in India is expected to grow between 9-12 percent over the next five years, leading India to become one of the top 10 countries in terms of medical spending. The government has taken steps to bring down healthcare expenses. Generic drugs have been in focus and are expected to benefit the Indian pharmaceutical companies. Rural health programs, lifesaving drugs, and preventive vaccines will provide a boost to pharmaceutical companies. There has also been an incremental growth in the number of people visiting India for medical treatment. The Government has relaxed the rules for promoting India as a better medical tourist destination by issuing fast-track medical visas, rapid airport clearances for those visiting as medical tourists.

The Covid-19 pandemic has also accelerated digital transformation in the country’s pharmaceutical sector. India recently also unveiled plans to collaborate with the Netherlands with an aim to provide digital health facilities. The digital transformation is now focused on improving operational efficiency, integrated approach, and automated processes for better patient care. Digital platforms can bring data into proper use and can help improve the speed of healthcare. In such cases, the Internet of Things (IoT) paired with application development can help pharma companies to perform and record inspections.

The Indian pharma sector has over time proven its mettle and it needs to expand as the world sets its eyes on India. The government has indeed taken valuable initiatives and the digital transformation is set to change the face of the sector.

(The author is Co-Founder of Navia Life Care- a health tech startup. Views expressed are personal and do not reflect the official position or policy of the Financial Express Online.)

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