Like other industries, the pharmaceutical industry in India will also have to innovate with cutting edge ideas, convert them to innovative and implementable business models, which in turn would help these companies to remain competitive in the market place. The innovation, which I am talking about, extends beyond Intellectual Property Rights (IPR).
While innovation is an absolute must to remain and grow the business, having patented products and marketing these brands effectively are desirable and not a ‘must do’ in the pharmaceutical industry of India.
Many would like to ‘stick to knitting’ and innovate:
Indian Pharmaceutical Industry is now an internationally acclaimed player in process development, contract research, manufacturing and domestic marketing skills. The Government of India created this environment for the industry through amendments of the Indian Patents Act 1970.
During post product patent regime in India, there is no dire need for the entire domestic industry to shift its focus from world class process development skills to new molecule development skill. On the contrary, the strengths acquired by the domestic industry in such skill sets should be further honed, to utilize benefits from opportunities that arise out of basic R&D processes. Some of these are collaborative activities with the multinational companies (MNCs) to create a win-win situation in areas like, contract research, clinical development, contract manufacturing and domestic marketing of in-licensed products.
The domestic pharmaceutical industry should therefore adopt strategies like manufacturing off patent products, like recent collaboration between Aurobindo Pharma and Pfizer, Jubilant Organosys with French company Guerbet, for distribution of its nuclear medicine products in Europe. ‘Financial Express’ dated March 13, 2009 reported “Eli Lily seeks partner for Indian TB initiatives.
Such opportunities will keep on coming, may be more frequently and more in number, especially when global innovator companies take more interest in the generic pharmaceutical business, like, Novartis, Daiichi Sankyo, GlaxoSmithKline, Sanofi Aventis etc.
To grab such opportunities, the strategy of ‘stick to the knitting’ with continuous innovation is expected to help the domestic pharmaceutical companies immensely.
IPR regime – emerging opportunities:
Discovery Research:
While above approach will help many small and medium sector enterprises, many large pharmaceutical companies and research boutiques in India are investing significantly to discover New Molecular Entities (NMEs). It has been reported that by 2011, at least two Indian pharmaceutical companies are planning to launch their NMEs.
Biotech Research:
Research in the field of Biotechnology is rapidly evolving, especially in the areas of diagnostics, vaccines, cellular and molecular biology. It is heartening to note that for doing stem cell research National Institute of Health, USA, identified Reliance Life Sciences in Mumbai and the National Institute of Biological sciences in Bangalore to receive state funding from the USA. Both these two organizations entered into contracts to supply embryonic stem cells to the US based researchers. Moreover, in the field of ‘Biometrics’ raw clinical data are now being transmitted to the specialists in India for their scientific evaluation.
It has been reported that in the developing countries of the world malaria afflicts about 300-500 million population and kills 1-3 million of them. Malaria also allows some fatal genetic illnesses, like sickle cell anaemia to thrive in the gene pool. Hence a vaccine developed for this disease through Indian biotech initiatives, would indeed be a great boon for the developing countries of the world.
Industry – Academia Collaboration:
In the Western countries, close collaboration exists between the industry and academic institutes in the field of Pharmaceutical Research. Such type of collaboration has now started developing in India too, where Council of Scientific and Industrial Research (CSIR) is playing major role.
An effective collaboration between the pharmaceutical industry and the academia will ensure productive use of research talents where both the parties will draw benefits. The research done by the CSIR, Indian Institute of Technology (IITs), Indian Institute of Science and various universities is expected to throw open new avenues of collaboration and partnership between industry and Academia.
Benefits of Technology Transfer and increased Foreign Direct Investment (FDI):
The new product patent regime is also expected to facilitate flow of technology and foreign direct investment in India with adequate patent enforcement mechanism being put in place. Inadequate patent and regulatory data protection are considered by the developed nations as the key barriers, which restrict the flow of both technology and foreign investments.
In these areas, India mainly competes with China and Brazil, besides other emerging markets. Degree of patent and regulatory data protection in each of these countries will eventually decide who will emerge as a winner in these fields.
The issue of ‘Access to New Innovative Patented Drugs’:
Innovative pharmaceutical products patented in India will facilitate access to the latest modern medicines to Indian population. Such medicines will help to meet the unmet needs of the ailing population. Many multinational companies like, Merck, GlaxoSmithKline (GSK) have already announced a differential pricing mechanism for such medicines in the developing countries.
Moreover, to improve access of such medicines to the common man, the Government of India should have robust plan to purchase these medicines, at a negotiated price, for supply to Government Healthcare Units
Improving ‘Access to affordable modern medicines’ – a challenge to the nation
There are three key elements to improve access to affordable medicines to a vast majority (650 million) of Indian population:
1. Healthcare infrastructure and delivery
2. Healthcare financing
3. Procurement price of these medicines at the Government Healthcare units
Price of patented products will not have any impact on existing medicines available in the market. However, the reality is, price regulation in some form will continue to play a key role in India. The long overdue new Drug Policy of India is now expected to come only after the new Government takes charge, post General Election of the country. The new policy is expected to articulate the details on this important subject both for patented and generic medicines, in India.
A determined and focused approach of the Government on the above three elements would effectively address the key healthcare issues of India.
Small Scale Enterprises in India – expecting large scale consolidation:
In India over 70% of the small-scale units, within the pharmaceutical industry, currently operate as contract manufacturers, either for the domestic or multinational companies. These small scale units with their low operating cost ,make the contract sourcing model an attractive proposition. Many of these small scale enterprises, are mostly catering to the export business in non-regulated markets.
The demand for high quality standard by the drug regulatory authorities of various countries is fast increasing. It is, therefore, essential for these units to make significant investments to qualify for such stringent quality requirements. Some units would be able to invest enough to meet such regulatory standards. However, the cost of production for those units, which will invest towards facility up gradation is expected to increase significantly, leading to fierce cut throat competition. In a situation like this, we can expect to witness a large scale consolidation process within the industry.
Intense competition from China – cannot be ignored:
Globalisation of the markets could lead to significant dumping of products in different countries. Such a situation may adversely affect the cash flow of business, making the domestic industry highly vulnerable. Currently, Indian manufacturers are facing intense competition from China, in Pharmaceutical Intermediates (PI) and Active Pharmaceutical Ingredient (API) segments. This is mainly because China has a much better economies of scale in manufacturing, which gives them a pricing edge over their Indian counterparts.
PI and he API manufacturers in the small scale enterprise segments of India have already been very adversely impacted, leading to closure of many units in various states like, Andhra Pradesh, Karnataka and Gujarat.
Conclusion:
The issue of a robust world class patent regime in India has sparked off an intense debate with a heavy dose of acrimony. The key areas of concern of various stakeholders are as follows:
1. General public: inadequate access of affordable modern medicine to the common man
2. Domestic generic industry: overall industry growth and to some extent its survival
3. The Government of India: combination of 1&2
After many years of tough resistance mainly from the domestic generic pharmaceutical industry, in January 1, 2005, India re-entered into the pharmaceutical product patent regime. In this article, I have tried to give a snapshot of this new regime, for a quick reading.
Despite tough competition from China and increased possibility of consolidation within small scale pharmaceutical units, overall emerging scenario in India is indeed encouraging. Imbibing innovation culture and with the opportunities available in the new IPR regime, Indian pharmaceutical industry, I believe, will be able to catapult itself to newer heights of global success.
By Tapan Ray
Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.