The new drug pricing policy and tightened regulatory environment have collectively dragged down the growth of Indian pharmaecutical market to single digit at 9.8 per cent in financial year 2012-13 as against a healthy 16.6 per cent a year ago.
The joint report by CII-PwC titled ‘India Pharma Inc: Changing Landscape of Indian Pharma Industry’, also said challenges such as delays in clinical trial approvals, uncertainities over the FDI policy, a uniform code for sales and marketing practices and compulsory licensing are plaguing the industry's growth.
“Though the market value has seen an increase, the sector overall has experienced a slowdown with its growth going down to 9.8 per cent from 16.6 per cent in 2012,” it said adding that the implementation of the National Pharmaceutical Pricing Policy 2012 by the government eroded margins from 20 per cent and 10 per cent to 16 per cent and 8 per cent for retailers and stockists respectively.
“This decrease in the stockist margins led to a significant uncertainty among many stockists regarding the feasibility of staying in business due to lower profitability post the margin reduction,” it said.
In the light of pharma companies like Ranbaxy Laboratories and Wockhardt coming under the US FDA scanner, the report said Indian firms sould step up their compliance to US FDA regulations as they drive their major share of exports from the US market.
“The sector is currently experiencing slow growth. Henceforth, both the Indian and foreign companies operating in India will have to device suitable strategies in order to be in the top 10 global markets by 2020,” Rajiv Modi, Chairman, CII Pharma Summit 2013.
According to Sujay Shetty, PwC India Leader (pharma & life sceinces) the economic environment in India is tougher now than ever before. “While pharma companies focus their attention on measures to combat the growth slowdown, they will need to work with the government and other stakeholders to discuss and resolve regulatory challenges,” he said.