Drugs & Pharmaceuticals Final

Policy of GOI on Drugs & Pharmaceuticals Industry

CONTENTS

Topics Page

1. Introduction 12. Incentives 13. Exports 24. Classification 25. Marketing Authorization 26. Drugs & Cosmetics Act, 1940 27. Drug Policy, 1986 38. Drugs Price Control Order, 1995 39. National Pharmaceutical Pricing Authority 410. National Pharmaceutical Policy, 2002 411. Draft National Pharmaceutical Policy, 2006 412. Patent 513. Draft National Pharmaceutical Pricing Policy 2011 514. Trade Names 615. Pricing 616. Restrictions Concerning Imports 717. Intellectual Property Rights 818. Foods Standard and Safety Act, 2006 819. Recent Developments 820. Drug Scenario 921.Clinical Research 922. Conclusion 1023. Reference

Page | 1


INTRODUCTION

The Indian pharmaceutical industry in recent years has grown in stature from anindustry that copies patent drugs and manufactures them cheaply. It’s now counted amongthe industries that are fueling India’s economic growth and holds vast potential. India-basedpharmaceutical companies are also predicted to gain considerable market share in the worldby the end of this decade. The industry is estimated to have generated revenue worthUS$13.1 billion in FY 2011, according to a new Research and Market’s report, “IndianPharma Sector Forecast 2014.”

For the country, pharmaceutical industry has always been a prominent industrialsector. “A Brief Report Pharmaceutical Industry in India,” published in January 2011, saidthat Indian pharmaceutical industry is a highly organized sector, and it ranks “very high”amongst all the third world countries in terms of technology, quality, and the vast range ofrange of medicines that are manufactured. The industry is expected go through majortransformation in the next ten years and enter the global top tier. Currently, it’s estimated tobe worth US$4.5 billion, and is growing at nearly 8 to 9 percent annually.

Last year, McKinsey & Company’s report, “India Pharma 2020: Propelling accessand acceptance, realizing true potential,” predicted that the Indian pharmaceuticals marketwill grow to US$55 billion in 2020; and if aggressive growth strategies are implemented, ithas further potential to reach US$70 billion by 2020. Market Research firm Cygnus’ report,published last year in December, forecast that the Indian bulk drug industry will expand at anannual growth rate of 21 percent to reach $16.91 billion by 2014. The report also noted thatIndia ranks third in terms of volume among the top 15 drug manufacturing countries.

The exports are expected to increase by 20 percent in 2011, taking the overall valueto £6.73 billion. Research and Market report noted that around 56 percent majority ofproducts exported are formulations, while bulk drugs account for a little over 40 percent andherbals for the remaining two percent.

INCENTIVES

Additionally, the government of India is also providing incentives to encourageinvestment in pharmaceutical sector and helping domestic players. Under the automatic routein the drugs and pharmaceuticals sector — including the companies using recombinanttechnology — the government has permitted 100 percent foreign direct investment (FDI).According to a report, the Indian government plans to set-up a US$639.56 million venturecapital (VC) fund. This fund is expected to encourage discovery of new drugs and also helpstrengthen the pharma infrastructure.

The Government has also issued Expression of Interest that says that they intend tofacilitate establishing new and also upgrade GLP Compliant Chemical Testing Laboratories;Compliant Biological Testing Laboratories; and GLP Compliant Large Animal Houses. TheGovernment plans to carry out these initiatives via Public Private Partnership (PPP).Through these initiatives the Department of Pharmaceuticals expects to facilitate innovationand catalyze and compliment the R&D efforts of the Indian Pharma Industry.

The Department of Pharmaceuticals has prepared a “Pharma Vision 2020” that aimsto make India one of the leading destinations for end-to-end drug discovery and innovation.It plans to provide world class infrastructure, internationally scientific manpower for pharmaR&D, venture fund for research in the public and private domain and more.

The Drugs and Pharamceuticals Manufactures Association has also received an in-principle approval for its proposal to set-up special economic zone (SEZ) forpharmaceuticals, bulk drugs, active pharmaceutical ingredients (APSs), and formulations.The zone will be located at Nakkaplli mandal (Vishakapatnam district), in the state ofAndhra Pradesh. It also proposes to set up a National Centre for R&D in bulk drugs at

Page | 2


National Institute of Pharmaceuticals Education and Research (NIPER), Hyderabad and aNational Centre for Medical Devices at NIPER, Ahmedabad.

EXPORTSIndia currently exports drug intermediates, Active Pharmaceutical Ingredients (APIs),

Finished Dosage Formulations (FDFs), Bio-Pharmaceuticals, Clinical Services to various partsof the world.Export of Drugs and pharmaceuticals from 2007-08 to 2009-10 are given below:

YearExports

(US$ billion)Growth

(in percent)2007-08 6.3 14.42008-09 8.6 35.72009-10 9.1 5.9Source: Directorate General of Commercial Intelligence and Statistics (DGCIS) Kolkata

CLASSIFICATIONIn India, the import, manufacture, distribution and sale of drugs and

pharmaceuticals are regulated by the Drugs and Cosmetics Act, 1940 (DCA), the Drugs andCosmetics Rules, 1945 (DCR), Drug Policy 1986, Modifications in Drug Policy 1986, Durgs(Prices Control) Order 1995 and Pharmaceutical Policy 2002.

MARKETING AUTHORISATIONThe major legislation for pharmaceutical regulation is the Drugs and Cosmetics Act,

1940 (DCA) and its subordinate legislation, the Drugs and Cosmetics Rules,1945 (DCR)1.Drug (Prices Control) Order, 1995, Drugs (Magic Remedies) Objectionable AdvertisementAct, 1954 and Pharmacy Act,1948 are other regulations which have a bearing on thepharmaceutical business in India. The legislations apply to the whole of India and to allcategories of medicines (e.g., allopathic, ayurvedic, siddha, unani and homeopathy.),whether imported or manufactured in India. The legislation is regulated by theCentral Government (Ministry of Health & Family Welfare) in New Delhi, which isresponsible for its overall supervision and enforced by State Government through its Foodand Drug Administration (FDA).

The office of the Drugs Controller General of India (DCGI) has the primaryresponsibility for approving new drugs, molecules and standards, Vaccines & Sera,new usage and claims, new method of administration, clinical research and trials,introductions of a new unique formulation and granting import and export licenses. Itoversees the activities of the Central Drugs Standard Control Organization (CDSCO). TheDCGI also exercises control over medical devices imported or manufactured in India.

However, power to provide manufacturing and selling licences - which are the twomain stages required to manufacture and sell a drug - belongs to each individual StateGovernment through its Food and Drug Administration (FDA). These Food and DrugAdministrations (FDAs) also carry out enforcement of the DCA and the DCR.

DRUGS AND COSMETICS ACT, 1940The Drugs and Cosmetics Act, 1940 is the first Act which came into existence in the

area of drugs and pharmaceuticals. This was an Act to regulate the, manufacture, distributionand sale of Drugs and Cosmetics in the country. The main object of the act is to preventsubstandard in Drugs & Cosmetics. To ensure the quality of drugs manufactured and sold inthe state, drug samples are taken from manufacturing units, hospitals and sales outlets andtheir quality is assessed after conducting test/analysis in the Drugs Testing Laboratory of theDrugs Control Administration.

Page | 3


During the last century, the Drug Industry was practically non-existent in India andpharmaceuticals were being import from abroad. During and after the First World War, anumber of Indian and Foreign companies start manufacturing pharmaceuticals at cheaperrates to compete with imported products. The Government was not happy with the quality ofdrugs produced. A Drugs Enquiry Committee was set up in 1931 with an aim to enquire intothe whole matter of drug production, distribution and sale by inviting opinions and meetingconcerned people.

The Drug Act was passed in 1940 taking the recommendations of the committee. Themain objective was to regulate the import, manufacture, distribution and sale of drugs. Underthe provisions of this Act, the Central Government appoints the Central Drug Authority,Central Drug Laboratory, Drug Consultative Committees.

DRUG POLICY 1986Drug Policy of 1986, titled "Measures for Rationalisation, Quality Control and

Growth of Drugs & Pharmaceuticals industry in India" under late Shri Rajiv Gandhi. ThisPolicy was modified in 1994.

The main objectives of the policy include: Providing abundant quantity, at reasonable prices of essential and life saving and

medicines of good quality. Strengthening the quality control system over drugs and medicines production and

promoting the rational use of drugs in the country. Creating an environment friendly to channelize new investment with an objective to

boost cost-effective production with economic sizes and introducing newtechnologies and new drugs.

Strengthening the indigenous capability for production of drugs. Providing abundant quantity, at reasonable prices of essential and life saving and

medicines of good quality. Strengthening the quality control system over drugs and medicines production and

promoting the rational use of drugs in the country. Creating an environment friendly to channelize new investment with an objective to

boost cost-effective production with economic sizes and introducing newtechnologies and new drugs.

DRUGS PRICE CONTROL ORDER (DPCO), 1995DPCO was first passed in 1970 and was revised in 1979, 1987 and 1995. The Drugs

Price Control Order (DPCO), 1995 is an order issued by the Government of India underSection 3 of the Essential Commodities Act, 1955 to regulate the prices of drugs. It providesthe list of price controlled drugs, procedures for fixation of prices of drugs, method ofimplementation of prices fixed by Government and penalties for contravention of provisionsamong other things.

Drugs and formulations have been subjected to price control for more than threedecades now. To review drug price control mechanism Drugs Price Control ReviewCommittee (DPCRC) was set up in 1999.

The essential features of DPCO covers the following questions:

How are the prices of drugs and medicines in the controlled category regulated?There are two prices for this fixed by the NPPA as per the provisions of DPCO-Ceiling and Non Ceiling Price .

Ceiling Price is the single maximum selling price fixed that is applicable throughoutthe country in the case of each bulk drug, which is under price control.

Non-Ceiling Price fixed by NPPA are specific to a particular pack size of scheduledformulation of a particular company.

Page | 4


Whether NPPA has any role to regulate prices of non-scheduled drugs (drugs notunder direct price control)?

What margins are allowed to a Wholesaler and a Retailer as per DPCO, 1995

NATIONAL PHARMACEUTICAL PRICING AUTHORITY (NPPA)The NPPA was established on 29th August 1997 as an independent body of experts

following the Cabinet Committee’s decision in September 1994 while reviewing the DrugPolicy. The Authority, has been entrusted with the task of fixation/revision of prices ofpharmaceutical products (bulk drugs and formulations), enforcement of provisions of theDrugs (Prices Control) Order and monitoring the prices of controlled and decontrolled drugsin the country For the purpose of implementing provisions of DPCO, powers of theGovernment have been vested in the National Pharmaceutical Pricing Authority (NPPA).

NATIONAL PAHARMACEUTICAL POLICY 2002The process of liberalization set in motion in 1991, has considerably reduced the

scope of industrial licensing and demolished many non-tariff barriers to imports. The impactof the policies enunciated, from time to time, by the Government has enabled thepharmaceutical industry to meet almost entirely the country’s demand for formulations andsubstantially for bulk drugs.

In the process the pharmaceutical industry in India has achieved global recognition asa low cost producer and supplier of quality bulk drugs and formulations to the world. Twomajor issues have surfaced on account of globalization and implementation of ourobligations under TRIPs which impact on long-term competitiveness of Indian industry.These have been addressed in the Pharmaceutical Policy-2002.

The main objectives of this policy are:-

a. Ensring abundant availability at reasonable prices within the country of good qualityessential pharmaceuticals of mass consumption.

b. Strengthening the indigenous capability for cost effective quality production andexports of pharmaceuticals by reducing barriers to trade in the pharmaceutical sector.

c. Strengthening the system of quality control over drug and pharmaceutical productionand distribution to make quality an essential attribute of the Indian pharmaceuticalindustry and promoting rational use of pharmaceuticals.

d. Encouraging R&D in the pharmaceutical sector in a manner compatible with thecountry’s needs and with particular focus on diseases endemic or relevant to India bycreating an environment conducive to channelising a higher level of investment intoR&D in pharmaceuticals in India.

e. Creating an incentive framework for the pharmaceutical industry which promotesnew investment into pharmaceutical industry and encourages the introduction of newtechnologies and new drugs.

NATIONAL PHARMACEUTICALS POLICY 2006The first comprehensive Drug Policy of 1978 and thereafter the Drug Policy of 1986

together with the application of process patent under the Patent Act of 1970 successfullypaved the way for development of indigenous pharmaceutical industry which went into theproduction of generic drugs in a big way. A conducive environment for success wasprovided by the then prevailing trade and economic policies. During the period range andmarket share.

The key Policy objectives include:a) To ensure availability of good quality medicine within the country at reasonable

prices.

Page | 5


b) To improve accessibility of essential medicines for common man particularly poorersections of population.

c) To facilitate higher investment for increased production of good quality medicines.d) To promote greater research and development in pharmaceutical sector by providing

suitable incentives in this regard.e) To enable domestic pharma companies to become internationally competitive by

implementing established international guidelines.f) To facilitate higher growth in exports of APIs and formulations by reducing the

barriers to international trade in pharmaceuticals sector.g) To develop India as the preferred global destination for Pharma R&D and

manufacturing.h) To facilitate implementation of the Health Policy of the Country.

PATENTIndian pharmaceutical industry has taken a quantum leap thanks to The Patents Act,

2005 (Amendment to The Patents Act, 1970). The Patent Act of 1970 saw the exodus of themultinational companies (MNCs) as it recognized only process patents. Indian companieshad the freedom to copy drugs manufactured by patent holding companies without payingany kind of royalty. They were protected by the patent act to legally reverse-engineerinternationally patented drugs and sell it within India and also in those markets that did notconform to drug patents.

To slow down the control of MNCs and cut down their dominance of the Indianmarket, the Government passed the Drug Price Control Order (DPCO) of 1970. The orderprovided process patents for 5 to 7 years and was seen as a move to make the domesticmarket self-reliant. For the MNCs, India ceased to be a profitable market and they slowlyleft the country and Indian companies grabbed the opportunity and stepped in. As a result,the country became self-sufficient in the manufacturing of basic drugs. From the 1970s to2005, many manufacturing units were established and researches were done to develop newprocesses for several drugs. Also, the DPCO put a limit cap on the prices of essential,lifesaving drugs, resulting in their availability in the domestic market at affordable prices.

The amendment act of 2005 altered the practice of manufacturing drugs withoutconforming to the patent laws of other countries. The act barred the companies fromproducing patent products without paying patent royalty. As India had signed the GeneralAgreement on Trade and Tariffs (GATT) and the Trade Related Aspects of IntellectualProperty Rights (TRIPS) Agreement — and joined GATT’s successor World TradeOrganization (WTO) in 1994 — it had to amend its patent act. The amendment in 2005opened the doors for MNCs. This time around, they have shed their reluctance to invest inIndia and are also collaborating with domestic players. Most of these companies areoutsourcing their manufacturing to the country. The Indian-based companies with more thantwo decades of experience in manufacturing drugs — thanks to a process patent system — isbenefiting them in the changed scenario. The MNCs are also bringing in their technologyand research and development (R&D) team to India.

Indian companies are also continuously increasing their investment in R&D and notlimiting themselves to only manufacturing drugs. They are spending around 6 to 8 percent oftheir turnover on R&D — earlier these companies did not spend more than 1 percent onR&D. R&D expenditure of Indian Companies in the year 2010-11 was USD 520 million,equivalent to 6.6% of pharmaceutical sales.

DRAFT NATIONAL PHARMACEUTICALS PRICING POLICY, 2011 (NPPP-2011)In the year 2000, further liberalization in the economy was effected, in light of

which, Foreign Direct Investment (FDI) in the pharmaceutical sector was brought inthe automatic route and the limit raised up to 100%. Following this, a new

Page | 6


pharmaceutical pricing policy was introduced in the year 2002 which further liberalizedthe span of control over pricing. The 2002 Drug Policy was, however, challenged inthe Karnataka High Court, which by order dated 12.11.2002 issued stay on theimplementation of this Policy. This order was challenged by the Government in theSupreme Court which vacated the stay but direct that the GOI shall consider andformulate appropriate criteria for ensuring essential and life saving drugs not to fall outof the price control and further directed to review drugs, which are essential and lifesaving in nature.

In the light of the order of the Supreme Court, it was decided that a freshPharmaceutical Pricing Policy be formulated and accordingly, the 2002 Drug Policywas never implemented and the 1994 Drug Policy continued to be applicable andcontinues till date. And in the mean time, even though the draft Policy of 2006 notified, itnever saw the light of the day as it advocated greater control on medicine prices. The DrugPolicy of 1994 needs to be modified in the context of changed global environment forindustry as well required changes in the mechanism to make available essentialmedicines to the masses.

The objectivesa) To put in place a regulatory framework for pricing of drugs so as to ensure

availability of essential medicines at reasonable pricesb) To provide sufficient opportunity for innovation and competition to support the

growth of industry, thereby meeting the goals of employment and shared economicwell being for all.

c) Promotion of research and development in the pharmaceutical sector, directlythrough research institutions and universities, as well as through provision of seedcapital, venture capital funding and subsidies to innovative drug companies.

d) Strengthening and rationalizing the drug regulatory system.e) Enablement of domestic pharmaceutical companies to achieve international

GMP/GLP and GCP standardsf) Development of Human Resource Development, particularly in critical areas to meet

the requirements of pharmaceutical industries.g) Setting up of common infrastructure through pharma development parks, pharma

cluster schemes in order to strengthen and facilitate the smaller units in thepharmaceuticalindustries.

TRADE NAMESTrade names are regulated by the Trade and Merchandise Marks Act

(TMMA). The TMMA provides for registration of trademarks for a period of seven years ata time, renewable after each period. For any item, trademarks should not be objectionablefrom a religious or social point of view. They should not contravene the Emblems andNames (Prevention of Improper Use) Act, 1950. They should also not yet be registeredor applied to be registered in India. The trademark can be registered even if the item isnot produced or sold in India at present.

A foreign trademark can be used without any restriction. Foreign companies canlicense their trade mark to their local subsidiaries or joint ventures. The Indian CopyrightAct, 1957 also provides protection for unique logos and designs on packaging.PRICING

Price control over drugs was first introduced in the country in the aftermath of theChinese aggression with the promulgation of the Drugs (Display of Prices) Order, 1962and the Drugs (Control of Prices) Order, 1963. These were promulgated under the

stDefence of India Act. With these orders, the prices of drugs were frozen w.e.f. the 1April, 1963. Thereafter, a series of price control regimes were notified through variousOrders in the country from time to time based on different principles, in which the span

Page | 7


of control of prices as well as the nature of control of prices varied from Order to Orderas per the disposition of the respective Drug Policies. These were the Drugs Prices(Control) Order of 1966, the Drugs Prices (Control) Order of 1970 issued under the“Essential Commodities Act 1955” by declaring drugs to be essential commodities underthe EC Act, 1955. Thereafter the Drugs Prices (Control) Order of 1978, Drugs Prices(Control) Order, 1979 and Drugs Prices (Control) Order, 1987 were issued followingthe declaration of the Drug Policy, Drug Policy, 1979 and Drug Policy 1986. All thesePolicies were broadly based on the principle of effecting control over prices of essentialdrugs, and later bulk drugs, as well as availability of drugs while at the same timeattending to the requirements of the indigenous industry for growth cost effectiveproduction, innovation and strengthening of capacity.

Price controls are exercised on certain drugs by virtue of the Drugs (Prices Control)Order1995 (DPCO), in the f ramework of the E s s e n t i a l Commodi t i es Act (ECA).The DPC O i s t he responsibility of the Ministry of Chemicals and Fertilisers and issupervised by the National Pharmaceutical Pricing Authority (NPPA). It ou t l ines theclassification of price-controlled products and methods of price fixation and revision. TheNPPA monitors drug prices by fixing and revising them. The 347 price-controlled drugsunder the Drugs (Prices Control) Order 1979 were brought down to 143 in the Drugs(Prices Control) Order 1987. Under the DPCO-1995, there are 74 bulk drugs and theirformulations under price control (known as scheduled drugs) covering significantpercentage of the total pharmaceutical market in India. Only a few OTC actives, e.g.acetylsalicylic acid and ephedrine and its salts, fall under the current DPCO price control.

The price of scheduled drug fixed by NPPA is revised from time to time. Themanufacturer is not allowed to increase retail price of scheduled drugs without approval ofNPPA. However, prices of non-scheduled drugs are fixed by the manufacturer subject to amaximum increase of 10% on the prevailing price over a 12-month period. However, at thebeginning of 2010 the Policy was still under review by a government-appointed highlevel committee of cabinet ministers.

RESTRICTIONS CONCERNING IMPORTSImports of formulations into India are negligible given the price disadvantage

arising from import tariffs and local manufacturing cost advantages. Further, the productapproval process for new molecules can be difficult and time-consuming. Price controlsare also an added negative factor.

The Ministry of Health and Family Welfare has published a Gazette NotificationGSR no. 604 (E) dated 24.08.2001 amending the various provisions of the Drugs &Cosmetics Rules, thereby introducing a new provision for the registration of themanufacturing premises of foreign drug manufacturers and individual drugs prior to theirimport into the country. The notification also introduced a few other provisions, e.g.enhanced import licence fees, increased validity period of licence, deletion of exemptionfrom requirement of import licence for bulk drugs for actual users, requirement of minimum60% of residual shelf life for imported drugs and provisions for import of small quantitiesof new drugs by Government hospitals for the treatment of their patients, etc.

Under these provisions, foreign manufacturers have to apply for a registrationcertificate for their manufacturing premises and the individual drugs they want to export toIndia. Authorised agents of foreign firms in India can make the appl icat ions . Thedocuments required for registration certificates are clearly specified in theamendments. The validity of registration certificates is three years from the date they areissued.

According to the modified rules, an import licence is required for all types of drugsinstead of the previous import licence requirements for Schedule C & C (1) and Schedule Xdrugs only.

Page | 8


OTHER NATIONAL DEVELOPMENTS

INTELLECTUAL PROPERTY RIGHTS

As a founder member of the World Trade Organization (WTO), India was obligedto introduce an Intellectual Property Rights (IPR) regime compliant with TRIPS (TradeRelated Aspects of Intellectual Property Rights) in January 2005. India ushered ina product patents regime by introducing The Patents (Amendment) Ordinance, 2004 on26 December 2004. After debating the provisions of the Ordinance, Parliament laterpassed The Patents (Amendment) Bill, 2005. This signalled the start of a new era forthe pharmaceutical industry in India.

The 2005 Act was expected to boost R&D, help bring in Foreign DirectInvestment and contribute to improved healthcare. As of now, patents can only begranted to new chemical entities. However, a committee has been formed to study thepatentability of Novel Drug Delivery System (NDDS), polymorphs, metabolites etc.

FOODS STANDARD & SAFETY ACT (FSSA)

This law was passed in 2006 by Indian Parliament, but guidelines were not in place.Food Standards & Safety Act will finally include guidelines that clearly state whichsupplements can be classed as foods instead of drugs, allowing mass market sale. Theseguidelines will remove ambiguities for VMS marketers and could encourage more pharmacompanies to move into OTC, food companies to move into functional foods and FMCGcompanies to shift to cosmeceuticals, all under the wellness umbrella.

RECENT DEVELOPMENT

INDIA TO RETAIN 100% FOREIGN PHARMA INVESTMENT

India will continue to permit 100% foreign direct investment (FDI) in new("greenfield") pharmaceutical industry projects, but foreign takeovers of Indian drugmakerswill come under tighter scrutiny, the cabinet agreed on 10th October 2011. FDI proposals formergers and acquisitions of Indian drugmakers - known as "brownfield" investments - willin future have to be channelled through the Foreign Investment Promotion Board (FIPB) fora period of up to six months, during which time the Competition Commission of India (CCI)will examine the proposed deal. The powers of the CCI are to be strengthened. The meeting,which was chaired by India's Prime Minister Manmohan Singh, and also included theministers of health, commence and finance, was called to discuss concerns expressed byhealth officials and the domestic drug industry that India's liberal FDI regime for thepharmaceutical sector, which was introduced in 2001, is making medicines less affordablefor the population by forcing up prices. They are particularly concerned about up to 61 top-selling drugs worth around $80 billion which are due to go off-patent by 2013, warning thatthe prices of these products will be unlikely to drop if they are still owned by multinationals.

The foreign takeovers are also harming local access by diverting Indian-made drugsinto more lucrative markets elsewhere in the world, say the critics, who also point out thatthe generous public funding for research made available by the government should be usedto provide benefits for the Indian population, rather than going into the coffers of foreign

Page | 9


owners. Moreover, they note that since the FDI policy was introduced 10 years ago, only10% of such investments have gone into greenfield investments.

The government had earlier set up a committee chaired by Arun Maira, a member ofthe Planning Commission, to investigate these concerns, which had been growing as a resultof the total or partial takeover of six large Indian drug makers during 2006-2010. One of thepanel's areas of scrutiny was whether the CCI should still be the official watchdog for thesector or whether that responsibility should move to the FIPB. Mr Maira and his colleaguesdecided that the CCI should retain its responsibilities in this area but with increased powers,the ministers agreed with this advice. The Finance Ministry had opposed any proposals torestrict foreign investment in the sector. Officials have in the past been reported as sayingthat arbitrary price rises could be tackled through the use of compulsory licensing and theDrug Price Control Order (DPCO), and that the CCI could dismantle any attempts toconstruct industry cartels.

DRUG SCENARIOIndia and China combined

represent close to 30% of the totalGlobal Drug Discovery

drug discovery expenditure.However, with the US and Europerepresenting 52% of theexpenditure, there is a hugeopportunity for the two fastestgrowing economies in the world.With growing financial pressureson the Western pharmaceuticalcompanies and rapid developmentof the Indian and Chinese market,coupled with high quality R&D at

Rest ofthe world13%

India &China30%

Market

Europe25%

USA27%

Japan15%

competitive costs, the percentagesplit is expected to change in favour

Sources: Cygnus market resources

of these two countries in the years ahead. So many countries like Europe, USA, Japan, India andChina remaining rest of the world has supply the drugs in a very high in the percentage the totalmarket that is shared by the about 67%. The cost involved in bringing a new drug to market, isapprox. US$1000m. It takes 10 to 15 years to a new drug to bring in the market.

A beginning has been made with the signing of General Agreement on Tariffs andTrade in January 2005 with which India began recognizing global patents. Soon after, theIndian pharmacy market became a sought after destination for foreign players. Foreigndirect investment into the country’s pharmacy industry touched US$ 172 million during2005-06 having grown at a CAGR of 62.6 per cent during the period beginning 2002-06.

CLINICAL RESEARCH- INDIA, MOST SIGNIFICANT EMERGING GEOGRAPHY

Indian clinical research industry is estimated at over US$ 100 million. It complieswith ICH- GCP protocols. It is a growing body of trained and experiencedinvestigators. India has captured about 10 per cent of the global clinical research market in2010.


There are 74 U.S. FDA-approved manufacturing facilities in India, more than inany other country outside the U.S, and in 2005, almost 20 per cent of all Abbreviated NewDrug Applications (ANDA) to the FDA were filed by Indian companies.

Growth in other fields notwithstanding, generics are still a large part of the picture.London research company Global Insight estimates that India’s share of the globalgenerics market will have risen from 4 per cent to 33 per cent by 2007.

The focus of the Indian pharma companies is also shifting from processimprovisation to drug discovery and R&D. the Indian companies are setting up theirown R&D setups and are also collaborating with the research laboratories like CDRI,IICT etc.

Market Share of Different Pharmaceutical Product Categories

Opthologicals Others Anti-infective2%

Antidiabetics4%

Neuro psychiatry5%

Gynaecology5%

Dermatological5%

11% 17%Gastrointestinal

11%

Cardiac10%

Pain/analgesic10%

Source: Report on India’s Drugs &Pharmaceutical Industry January 2011

Vitamins/minerals/nutrients10%

Respiratory10%

CONCLUSIONSome practical issues will need to be addressed, regardless of the business model

selected. Infrastructure deficits continue to exist, although some are being addressed.Intellectual property protection has improved substantially but some holes remain. Andwhile the regulatory environment in India has improved substantially in recent years, theindustry still faces a number of question marks. Finalisation of Government policies arounddrug price control, access to OTC drugs, tax policy, intellectual property protection andinfrastructure spending is still pending.

India’s appeal is growing rapidly in a number of respects. It has long been aformidable player in pharmaceutical manufacturing, but its socio-economic strengthsprovide even greater grounds for optimism. If the economy outpaces that of every otheremerging country for the next half century, as many commentators expect, large portions ofthe population will be able to afford modern medicines. India’s increasing scientific expertisewill also equip it to play a significant role in researching and developing those drugs. It has alarge pool of highly educated, English speaking scientists who can undertake research andconduct trials more cheaply and in some cases faster than their Western peers. These aremajor advantages in a world where drug development costs are soaring and getting tomarket fast is vital.

Page | 10


Reference

Ministry of Health and Family Welfare: http://mohfw.nic.in/ Drug Controller General (India): http://mohfw.nic.in/ph/tdghs.htm Central Drugs Standard Control Organization (CDSCO):

http://cdsco.nic.in/index.html Medicines laws: http://cdsco.nic.in Department of Chemicals (Ministry of Chemical & Fertilizers):

http://chemicals.nic.in/ National Pharmaceutical Pricing Authority (NPPA):

http://nppaindia.nic.in/index1.html Organisation of Pharmaceutical Producers of India (OPPI)

www.indiaoppi.com Pharma Times October 11, 2011 Issue http://www.drugscontrol.org Research and Market’s report, Indian Pharma Sector Forecast 2014. A Brief Report Pharmaceutical Industry in India, published in January 2011 “India Pharma 2020: Propelling access and acceptance,realizing true

McKinsey & Company, Asia Pacific Business & Technology Report October 5 2011National Portal of India

Drug Policy 1986* Modifications in Drug Policy 1986* Drugs (Prices Control) Order 1995* Pharmaceutical Policy 2002* Draft National Pharmaceuticals Policy, 2006

Pharma Professional, Vol 62 May 2011 Issue, [Joint Venture of IndianAssociation (IPA) and Cygnus]

Directorate General of Commercial Intelligence and Statistics (DGCIS) Kolkatawww.dgciskol.nic.in

Global pharma looks to India: Prospects for growth: Report ofPricewaterhouse Coopers

Drugs & Pharmaceuticals Final

Documents

Transcript of Drugs & Pharmaceuticals Final