Indian Pharmaceutical Industry And Its Latest Trends

pharma Today the pharmaceutical industry can be characterized as high technology industry with very deep historical roots which were less scientific at least when considered with today's measures dating back to the ancient Egyptians. Over the last three decades the Indian pharmaceutical industry has transformed into a world leader in the production of high quality generic drugs.

The Indian pharmaceutical industry is estimated to be around US$ 12 billion, growing at 9% annually. Indian pharmaceutical products are exported to more than 200 countries around the globe including highly regulated markets of USA, Europe, Japan, Africa and Australia. Significant growth was witnessed in the therapeutical segments like cardiac, diabetes and central nervous system. The pharmaceutical industry is viewed as an intellectual industry and investment in research and development is enhanced. Ranking 4th in terms of volume and 13th in terms of value in global pharmaceutical markets, India's pharmaceutical industry is growing at a fast pace and attracting attention and investments from some major global pharma companies, including GlaxoSmithKline and Novartis.

The Indian pharmaceutical industry consists of large as well as a number of small and medium enterprises. The government has reserved some items of pharmaceuticals to be exclusively manufactured by the SMEs. A large number of companies are involved in contract manufacturing and R&D. The major systems of medicines are allopathic, ayurvedic and herbal. There are thousands of products we can find in pharmaceuticals; these products are in the forms of tablets, capsules, drops, liquids, injectibles and dry powders, syrups and ointments.

India is also increasingly emerging as one of the most globally preferred outsourcing destination for pharmaceutical. This trend can be largely attributed to India's inherent competencies in terms of manufacturing cost, vast talent pool having excellent chemistry skills, diverse patient pool, and strong support from auxiliary industries such as bio-informatics, clinical data management etc and a favorable regulatory environment. Indian pharmaceutical industry is now broadening the scope of its service offerings by providing a wide range of services spanning the entire pharmaceutical value chain.

There are many clusters of pharmaceutical industry found in India. Some of the leading clusters are situated in Ahmadabad, Bangalore, Himachal Pradesh (Solan, Baddi), Cuttack and Hyderabad etc. There are currently 3500 drug manufacturing units in Gujarat. The major companies are Torrent Pharma, Zydus Cadila, Alembic, Sun Pharma, Claris, Intas Pharmaceuticals and Dishman Pharmaceuticals which have operations in the world's major pharmaceutical market. These clusters get there machinery and raw materials from Ahmedabad, Bombay, Hyderabad, etc.

Problems Faced by Indian Pharmaceutical Industry

Indian pharmaceutical industry is mainly dominated by Chinese pharmaceutical industry as the cost of the products is lower than the Indian pharmaceutical companies. But quality wise Indian industry is far ahead than the Chinese market, but lack of recognition is causing problem for the industry. The drug price control Act was establish for the interest of the consumers of drugs but it was a hurdle for the manufacturers of Pharmaceutical Industry as the price of raw material are rising at an increasing rate but the cost of the products remained the same. Thus, such regulations are causing hurdles for making profit for this industry and most of the companies think that it is unfavorable for them. There are shortage of labor in the region like Gujarat and Himachal Pradesh. Due to settings up of many pharmaceutical industries in these regions there is shortage for the labor. The skilled and unskilled labors are not easily available in these regions and thus causes hurdle for the industry to produce more.

Pharmaceutical Industry and Special Economic Zones

The pharmaceutical industries are moving towards the Special Economic Zones (SEZ) to save the tax as well as to get the labors. These SEZs are mostly captured by SMEs as their enable them to get abundant labors and enjoy the cost benefits. All the manufacturing houses are set up in SEZs for most of the companies. The major region for production of pharmaceutical industries is based in Himachal Pradesh as it is the tax free zone. The quality of the product that is developed by the Indian companies is far better than the other countries and is approved with certification of GMP, US FDA, etc. Indian Pharmaceutical Industry also has modern infrastructure facilities and a good value chain i.e. there is backward linkages with raw material suppliers and also a forward link with the various distribution networks like distributors, retailers, stockiest, etc. Indian pharmaceutical companies are based on contract manufacturing. These companies borrow the license from one another and manufacture the products. This industry also involves third party manufacturing.

Nature of Competition in Pharmaceutical Industry

There is huge competition based on the price for the product among the various companies of this industry. There are also issues related to the copying of products, influencing the customers, misinformation about the product etc, by the various competitors of these industries. The industry wants to have a competitive advantage over one another. There is also huge competition for the skilled laborers and innovative technology. There is a huge competition from China, Germany, US etc, in the market and the companies have to compete with these countries. To become part of the World Trade Organisation, India signed the General Agreement on Tariffs and Trade (GATT) in December 1994, packaged with it the trade related aspects of intellectual property rights. By virtue of signing the GATT, India was bound to recognise only product patents. Protected by the 1970 Patents Act, Indian pharmaceutical companies survived solely on drugs that were reverse engineered. The growth of the industry was dependent on the generics market only.

Advent of Intellectual Property Rights (IPR)

Managing the IP assets of a company in the pharmaceutical industry is more than just acquiring the formal IP rights through the national or regional IP office. Patent or trademark rights are not worth much unless they are adequately exploited. Moreover, some types of valuable IP (such as trade secrets) do not require formal registration but call for other practical measures for their protection (e.g. confidentiality agreements). Finally, the enforcement of IP rights might be crucial to ensure that the IP rights are respected in the marketplace. For example, Prescription drugs worth $40 billion in the U.S. and $25 billion in Europe are due to lose patent protection by 2007-08. Indian firms will likely take around 30 percent of the increasing global generics market, the Associated Chambers of Commerce and Industry of India (Assocham) forecast. Currently, the Indian industry is estimated to account for 22 percent of the generics world market.

Companies in the pharmaceutical industry willing to extract full value from their know-how, innovation and creativity should, therefore, take adequate steps to develop an IP strategy for their business and seek to integrate it within their overall business strategy. This implies, for example, including IP considerations when drafting business plans and marketing strategies. Understanding the relationship between the IP system and the system for obtaining marketing approval for new drugs by the relevant public health regulatory body is also important.

IP rights may be exploited in a variety of ways. These may include the commercialization of IP-protected pharmaceutical products benefiting from the exclusive rights provided by the IP system; the entering into exclusive and/or non-exclusive licensing agreements with one or more other companies; the sale or assignment of IP assets to other firms; the creation of joint ventures or strategic alliances in order to exploit complementary IP assets of other companies; the use of IP rights to obtain access to other companies' technology through cross-licensing agreements; and/or the use of IP rights to support an application for obtaining funds to take a patented product to market. Companies should decide in each case how they may best exploit their IP assets both domestically and internationally while ensuring that they have freedom to operate and do not unnecessarily run into trouble by infringing the IP rights of others.

India is becoming an integral part of the global pharmaceutical value chain and many Indian companies are participating in this global growth potential through their organic as well as in organic initiatives. Going forward, as India further increases its dominance in the world pharmaceutical market, Pharmaceutical industry with its growth enablers and strong building blocks can become a global pharmaceutical hub. However, this would attract call for enormous change in mindset and transformation to attract global capital talent. The path to globalization is full of opportunities but also fought with risks.

Future Trends of Pharmaceutical Industry

The future outlook for the pharmaceutical sector seems to be extremely positive. A number of acquisitions by the Indian pharmaceutical companies outside, particularly in the US and Europe, are helping Indian players to make their mark at the global level. The Indian drug companies account for over 25% of the total generic drug applications made to the FDA of USA. Indian pharmaceutical companies are vying for the branded generic drug space to register their global presence and are expected to grow by around 15% in the near future. India is also fast emerging as the global hub for contract research and manufacturing services. As compared to Western countries, India offers a huge cost advantage in the clinical trials domain. Factors such as reverse-engineering expertise, abundant investment in research facilities and availability of skilled manpower are likely to help the Indian pharmaceutical industry to be a dominant force in the manufacturing sector. Business observers predict that the Indian pharmaceutical market will escalate at an increasing mode as compared to the global pharmaceutical market, at a cumulative annual growth rate (CAGR) of 13.2% during the fiscal years 2009-14 to reach an overall worth of $15bn in 2014.