HYDERABAD: The Indian pharmaceutical industry, which is battling a host of challenges, including scrutiny by the US FDA, litigation on alleged drug price rise in the US, and global headwinds, hopes that the Modi government will kick off reforms and policy initiatives that couldn’t be rolled out in its previous tenure.
For instance, in 2015, the government announced setting up of a uniform code for pharmaceutical marketing practices but is yet to introduce a law or issue any relevant regulations. The proposed code prevents alleged unfair practices and nexus between pharma companies and medical practitioners to market drugs.
Also, unlike developed countries, India doesn’t have a body that regulates healthcare innovation and grants exclusivity. Once the exclusivity period ends, the drugs enter the price control regime. Globally, the pharma industry has been taking regulatory stick allegedly for high prices (recall the recent litigation in the US against 20 large pharma companies including Indian firms), but most countries have designated laws preventing authorities from overstepping.
Back home, while the National Pharmaceutical Pricing Authority identifies the list of essential medicines to be brought under price control, the pharma lobby is miffed that it discourages investments in innovation.
“This could even derail the government’s ambition of moving from ‘Made in India’ to ‘Developed in India,’” said an industry analyst.
A key thing the industry would like is a cut in GST to 5 per cent on the rental of healthcare properties to fund capacity expansion, besides a policy on healthcare skill development and a research agency for healthcare and pharma studies.
“Earnings should post a cyclical recovery (led by launches and facility clearance), but structural challenges persist and we expect margins and return ratios to remain below historical levels, even in the medium term,” said brokerage Jefferies India, adding that the monthly growth in the past year was above 10 per cent and the sector is expected to maintain it in the coming months. China offers a big market opportunity and a bilateral trade dialogue to ease processes would lift the Indian pharma sector.
Indian firms face challenges in China
Indian firms face hurdles due to delays in product registration in countries like China, and high costs incurred during the process as against, say, Chinese firms having minimal obstacles in contract manufacturing in India. Also, clinical trials and bioequivalent studies done in India are accepted by the US FDA and EU regulators, but not by China.