Why India, the pharmacy of the world, needs government support

India is known as the ‘Pharmacy of the World.’ During the COVID-19 pandemic, India supplied vaccines and valuable medicines to many countries in their critical time of need. India fulfills 40% of the generic drug demand in the U.S. and 25% of all medicines in the U.K. Sixty percent of global vaccine production happens in India, making it a key supplier of affordable medicines to Africa, Latin America, and Southeast Asia.

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The industry had a market size of $50 billion in 2023, which is estimated to grow to $130 billion by 2030. There are several world-class pharmaceutical companies in India, such as Sun Pharmaceuticals, Cipla, Dr. Reddy’s, Lupin, Zydus, and Mankind Pharma, among others, that are rapidly expanding.

One of these is Mankind Pharma, a relatively new company from Meerut, which has seen a meteoric rise through sheer innovation, integrity, and bold strategic acquisitions like Panacea Biotec’s domestic formulations business (2021) and a stake in Medi360, a digital healthcare services and vaccines provider. It recently made an eye-popping move by acquiring Bharat Serums and Vaccines (BSV) for ₹13,600 crore, adding considerable strength to the company, already a leader in the Indian gynecology market. BSV is renowned in women's health and critical care, with an R&D center in Mumbai housing over 100 scientists, operations in more than 70 countries, and subsidiaries in Germany, the Philippines, and the U.S.

During the pandemic, India’s pharma and healthcare industry rose to the world’s rescue. The Serum Institute of India became a pivotal leader in global vaccines, supplying billions of doses of COVID-19 vaccines. Pharmaceutical giants like Cipla, Sun Pharma, and Dr. Reddy’s scaled up production of critical drugs like Remdesivir, Favipiravir, and steroids, which were crucial in treating COVID-19. India supplied vaccines to over 95 countries, boosting its global stature through the Vaccine Maitri initiative. India’s swift response, including the global supply of medical equipment, PPE kits, and ventilators, proved to be a lifesaver during the crisis.

However, India’s pharmaceutical industry faces several regulatory challenges:

Complex Regulatory Approvals

• Drug Approvals: The regulatory approval process for new drugs is lengthy and cumbersome, involving multiple authorities like the Central Drugs Standard Control Organization (CDSCO) and the Ministry of Health, often delaying time-to-market for new drugs.
• Clinical Trials: Stringent and outdated regulations for conducting clinical trials create barriers to innovation, particularly for smaller companies.
• Fragmented Regulatory Framework: India lacks a unified and cohesive regulatory structure, leading to inconsistencies and inefficiencies.
• Price Control Mechanisms
• The National Pharmaceutical Pricing Authority (NPPA) imposes price ceilings on essential drugs. While this ensures affordability, it can sometimes stifle the profitability and innovation drive of pharmaceutical companies.

Intellectual Property (IP) and Patent Issues

• Evergreening of Patents: The issue of evergreening patents near their expiration is a critical concern. The Indian patent regime needs to address this to encourage domestic players.
• API Dependency: India relies heavily on the import of Active Pharmaceutical Ingredients (APIs), particularly from China, making the sector vulnerable to supply chain disruptions. The government has launched the Production Linked Incentive (PLI) scheme, but further efforts are needed.

Key Reforms Needed

Streamlining the Drug Approval Process

• Single Window Clearance: A unified regulatory authority or "single-window clearance" for drug approvals can significantly reduce time-to-market, fostering innovation.
• Fast-Track Approvals: Implementing fast-track approvals for critical and innovative drugs, especially in biotechnology and biosimilars, would boost R&D efforts.

Boosting API Self-Sufficiency

• PLI Scheme Expansion: The government could expand the Production Linked Incentive (PLI) scheme for domestic API production and provide incentives to companies investing in API manufacturing facilities through tax breaks, subsidies, and low-interest loans.
• Infrastructure Development: Building API parks with world-class infrastructure would support efficient and cost-effective production.

India’s pharmaceutical industry is a sunrise sector, deeply intertwined with healthcare, not only in India but globally. It is time for the government to provide the necessary support to help achieve the goal of Viksit Bharat.

(Dhanendra Kumar is the First Chairman of CCI, Executive Director at World Bank for India, Sri Lanka, Bangladesh, and Bhutan. He is currently Chairman of Competition Advisory Services India LLP.)