Where Are We Going?
The Indian pharmaceutical industry has come a long way since its humble beginnings at the time of independence. Legislation played a key role in the remarkable progress that the drug industry made over the years. The industry has been a net exporter for many years now. The recent changes that are proposed such as ban on brand names for drugs and bringing sixty to seventy per cent of the drugs under price control, however, do not augur well for the industry and if implemented could put the Indian drug industry. A look at the timeline presents a proper perspective both from historical and futuristic points of view.
1947: Product Patents
At the time of independence, the pharmaceutical industry in India was only about one hundred million in total sales. The size of the Indian pharma market is about ₹ 67,000-crore today. Product and process patents were in place even for pharmaceuticals in 1947. The industry was import-dependent with very little domestic production. Multinationals dominated the domestic market.
1970: Process-Only Patents
The 1970 amendment of the Patents Act from product and process patents to process-only patents has been a key driver for the growth of the drug industry in India. The Indian alchemists reverse-engineered virtually every new drug discovered in the world, marketed most of them in domestic market and exported to countries where there were no product patents. The industry grew dramatically particularly in the manufacture of APIs and drug intermediates. The domestic formulators to strengthened their position in the market place and improved their share of the domestic market significantly. The leading domestic companies started drawing their plans to enter the overseas markets in a phased manner in the early 90s.
1995: Product Patents
India became a signatory to GATT in 1995 and became TRIPS-compliant by 2005 after the ten-year transition period. Product patents, besides process-patents have come into place. Multinationals started showing greater interest in the large and rapidly growing Indian pharmaceutical market. The Indian drug manufacturers’ lobby was apprehensive of the product patent regime. Some of the more progressive Indian drug majors embraced the changes, showed strategic foresight and made remarkable progress. They accelerated the process of internationalizing their businesses and made significant headway. As a result India moved up to the thirteenth position by value and third position by volume in the world pharmaceutical market.
2012: What is At Stake?
What are the likely consequences, repercussions and implications of the proposed ban on brand names for drugs, and such a broad coverage of drugs under price control? It could stop the progress that the Indian drug firms are making in international markets in their tracks. The R&D effort would be severely constrained. The industry would lead its competitive edge as it would find it difficult to keep itself ahead technologically. Consider for a moment the progress that the Indian drug industry has made in the world pharma markets. Indian drug companies currently export their generic formulations and APIs to over 200 countries. They have built world class facilities to manufacture their products. In the world’s largest generics market, the US, drug master files (DMFs) from India account for over 30 per cent of the total filings. Three Indian drug companies were among the top generic companies in the US in 2011 for growth. All this is at stake considering these draconian proposals. Furthermore, TRIPS-compliance status could be at risk. It could be perceived as stalling the reforms process and market access for Indian firms could become more difficult. Mushrooming of poor quality vanilla generics would flood the market as they did in Pakistan when it implemented, and immediately corrected its decision by reversing it. Shouldn’t we learn from their experience? Are we going back to the brink?