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Explore the Emerging Markets with the ‘Wings of Courage’.

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Overall growth rate of the global pharmaceutical industry is currently hovering around 5%. Similar situation has been prevailing since last several years. There is no indication of acceleration of growth rate from any of the top 3 regions of the world namely the USA, EU and Japan, at least in the near future.

According to IMS, the global pharmaceutical market is expected to grow around 5%-7% in 2011 to US$ 880 billion, as compared to around 4%-5% of 2010.

The reasons of the slowdown, I have discussed several times in the past through this column and do not intend to dwell on that, at least, in this Article.

The Emerging Markets of the World:

Unlike developed markets, emerging pharmaceuticals market of the world, like, India, China, Brazil, Russia, Mexico, Turkey and Korea, are showing a robust growth rate, quite commensurate to the ascending GDP growth trend of these countries.

According to IMS, the projected CAGR trend of the developed and Emerging Markets for the period of 2007–11, are as follows:

Mature Markets

CAGR 2007-11

Emerging Markets

 CAGR 2007-11
USA 4-7% China 13-16%
Canada 6-9% Korea 8-11%
Japan 2-5% Brazil 9-12%
Germany 3-6% Russia 17-20%
France 2-5% Mexico 6-9%
Italy 3-6% India 11-14%
UK 4-7% Turkey 9-12%
Spain 5-8%

(Source IMS)

Branded Generics/Generics are now key growth drivers in the Emerging Markets:

It is worth noting, unlike the developed markets of the world, where high priced branded patented drugs drive the value growth of the industry, in the emerging markets, where investment towards R&D is relatively less, branded generic and the generic products are the key growth drivers.

Such an evolving situation has prompted large global majors like Pfizer, GSK, Sanofi-aventis, Daiichi Sankyo and Abbott Laboratories, to name a few, either to acquire large generic or Biosimilar drug companies or ink various interesting and win-win collaborative deals, in these markets, to maintain their respective business growth with the branded generic and generic products in the fast growing emerging markets of the world.

Will Emerging Markets be lucrative enough only with Generic and Branded Generic products, in the long run?

Some experts do feel that, in the long run, the emerging pharmaceutical markets, like India, may not prove to be as lucrative to the global pharmaceutical majors.

The key reason being, around 80% ‘out of pocket’ expenditure for medicines in India, could be the key impediment to expanded access to higher priced innovative medicines, in general. Such a situation could seriously limit the success of branded patented drugs in India following their global strategy, compared to the developed markets of the world. The issue of affordability of such medicines will continue to be a key factor for their improved access in India, if the ground reality remains unchanged. Top line business growth only with Generics and Branded Generics in the emerging markets may not be sustainable enough, in the long run, for the innovator companies to adequately fund their R&D initiatives to meet the unmet needs of the patients.

The other school of thought:

The other school of thought, however, argues that ‘out-of pocket” characteristic of  India is indeed more sustainable in terms of cost containment pressure, than those  markets where the government or health insurance companies cover a large part of the medical expenses for the population.

Every year around 1% of population comes above the poverty line in India together with a growing ‘middle income’ segment with increasing purchasing power. This cycle, in turn, will keep fueling the growth of healthcare space, contributing significantly to the progress of the pharmaceutical industry of the country.

‘One size fits all’ global strategy unlikely to succeed in the ‘Emerging Markets’:

In my view ‘One size fits all’ type of strategy, especially in the area of pricing, is unlikely to succeed in the emerging markets of the world. Pharmaceutical Companies will need to have  different types of ‘tailor made’ strategic approaches for markets like Brazil, Russia, India, China, South Africa, Mexico, Korea and Turkey.

Pricing Strategy will be a key determinant to success:

For better access to medicines, ‘differential pricing strategy’ has been the stated policy of large global companies like, GSK and MSD. If this trend continues, a win-win situation could be created, when unmet needs of a large number of patient groups could be met with innovative medicines, paving the way for the innovator companies to register a healthy, both top and bottom line, business growth in these markets to effectively fund their R&D projects, besides others.

The most successful brand launch in India, so far:

The credit for the most successful new patented product launch (launched in 2008) in the recent times, I reckon, should go to Januvia (Sitagliptin), an oral anti-diabetic molecule from the global major MSD. The reported global sales of Januvia in 2008 was US $1.4 billion and the sales reported in India was around Rs. 77 Crore (around US $17 million) in just over two years with around 2.4% market share in the large and fragmented Oral Ant-Diabetic segment (IMS, MAT March 2010). This could happen, in my view, not only due to a brilliant business strategy executed with military precision but also because of a differential pricing strategy adopted by the company for this particular product in India.

In recent times, it has not been difficult to record a turnover of around US $ 20 – 25 million by a large pharmaceutical brand either in India or China.

Conclusion:

If this does not happen, due to one reason or the other, it would arguably be quite challenging for the global innovators to be able to keep engaged in the high-cost and high-risk R&D initiatives, by driving their business growth mainly with generic and branded generic medicines in the fast growing emerging markets of the world.

Thus the name of the game for the global innovator companies will be to Explore the Emerging Markets with the ‘Wings of Courage’.

By: Tapan J 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.

Are Indian patients victims of “unnecessary tests and procedures, rewards for referrals and irrational use of drugs?” A perspective

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Since quite some time, serious concerns have been expressed by the media, government and the civil society at large about the means adopted by the pharmaceutical industry in general to get their respective brands prescribed by the doctors and why do some of the doctors prescribe what they prescribe to the patients out of multiple available choices.
The MCI Guidelines:
Being concerned mainly by the media outcry, the Medical Council of India (MCI), a year ago, amended their related guidelines for the doctor, clearly articulating what they can and cannot do during their interaction and transaction with the pharmaceutical and related industries.
The Ministry of Health believes that these guidelines, if strictly enforced, would severely limit what the doctors can receive from the pharmaceutical companies in terms of free gifts of wide ranging financial values, entertainments, free visits to exotic locations under various commercial reasons, lavish lunch and dinner etc. in exchange of prescribing specific brands of the concerned companies more…more…and more.
“The Lancet” report:
Let me now combine this scenario with a recent report on India dated January 11, 2011, published in ‘The Lancet’, which states in a similar, though not the same context, as follows:
1. “Reported problems (which patients face while getting treated at a private doctor’s clinic) include unnecessary tests and procedures, rewards for referrals, lack of quality standards and irrational use of injection and drugs. Since no national regulations exist for provider standards and treatment protocols for healthcare, over diagnosis, over treatment and maltreatment are common.”
2. “Most people accessed private providers for outpatient care – 78% in rural areas and 81% in urban areas.”
3. “India’s private expenditure of nearly 80% of total expenditure on health was much higher than that in China, Sri Lanka and Thailand.”
Considering the above three critical issues of India, as reported by ‘The Lancet’, the need to follow a transparent code of pharmaceutical marketing practices by the entire pharmaceutical industry is of utmost importance. Recently amended MCI guidelines for the doctors are welcome steps in the right direction.
Are patients just the pawns?
In the absence of all these, the patients of all socio-economic strata will continue to be exploited as pawns by some unscrupulous healthcare players to satisfy their raw greed for making fast bucks at the cost of the intense agony of the ailing patients and their near and dear ones.
As stated earlier, this phenomenon is not new at all. Over a period of time, many stakeholders of the pharmaceutical industry and the public at large have been raising the issue of physicians being influenced in their prescription decisions by various types of payments made to them by the pharmaceutical companies. Such types of significant and seemingly avoidable expenditures, presumed to be considered by the respective companies as a part of their ‘marketing costs’, are believed to be included in the maximum retail price (MRP) of medicines, making them more expensive to the patients.
On the other hand, most physicians believe that free entertainment, gifts, their travel costs and seminar sponsorships in no way influence their prescription decision for the patients.
This is not a just India specific issue. Some skeptics believe that it has now become an all pervasive global scandal.
Self-regulation by the industry is most desirable:
To address this issue effectively, some national and international pharmaceutical associations have come out with their own codes of ethical marketing practices along with appropriate stakeholder grievance redressal mechanism, effectively.
Despite all these, it is an undeniable fact that overall perceptual image of the pharmaceutical industry in this respect to the stakeholders, in general, is not as good as it should have been.
The Government intervened in India:
Being alarmed by various media reports on the alleged pharmaceutical marketing (mal) practices in the country, the Department of Pharmaceutical (DoP) had advised the pharmaceutical industry to develop an ‘Uniform Code of Marketing Practices (UCMP)’, which will be applicable to the entire pharmaceutical industry in India.
It has been reported that the said UCMP with its stakeholder grievance redressal mechanism in a transparent procedural format, was submitted to the government by the major pharmaceutical industry associations in India. However, because of dissent of some section of the industry, the UCMP has not received the ‘green signal’ of the government, as yet. It was expected that all stakeholders will help maintaining the sanctity of the UCMP to address this sensitive global and local issue, effectively.
An emerging trend of public disclosure:
Around third quarter of 2008, in an industry first step, Eli Lilly announced its intent of full disclosure of payments that the company made to the physicians for various commercial reasons. Eli Lilly indicated disclosure of payments of more than US $500 to the physicians for advice and speaking at the seminars. Over a period of time, the company indicated that it will expand such disclosure to include other forms of payments to the physicians like gifts, various entertainment and travel.
Eli Lilly was soon followed in this direction by global pharmaceutical majors like, Merck and GlaxoSmithKline (GSK).
However, in India, such instances have not been reported, as yet.
Skepticism with voluntary disclosure:
Some are still skeptical about announcements of such ‘voluntary disclosure of payment to the physicians’ by the global pharmaceutical majors to bring in better transparency in the functioning of the industry.

This section of people believes, there are hundreds and thousands of other pharmaceutical companies, who will not follow such precedence of voluntary disclosure in the absence of any properly enforced regulation.
Conclusion:
In all the countries and India is no exception, pharmaceutical companies, by and large, try to follow the legal ways and means to maximize turnover of their respective brands. Many follow transparent and admirable stringent self-regulations, stipulated either by themselves or by their industry associations.
‘Self-regulation with pharmaceutical marketing practices’ and ‘voluntary disclosure of payment to the physicians’ by some leading global pharmaceutical companies are laudable steps to address this vexing issue. However, the moot question still remains, are all these good enough for the entire industry?
It is about time that all players in the healthcare space realize, in case these voluntary measures of the industry and the guidelines of the regulators like MCI, do not work effectively for any reason, there will be no other option but for the government to step in with iron hand and ‘fool proof’ regulations.
The popular dictum, especially, used in the healthcare industry, “all these are for the patients’ interest” should not be allowed to be misused or abused, any further, by some unscrupulous elements and greedy profiteers, to squeeze out even the last drop of financial resource from the long exploited population of ailing patients of India.

By: Tapan J 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.

Indian Pharmaceutical Industry could well be a contender for global supremacy by the next decade, competing effectively with China

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By the next decade of this millennium both India and China are expected to be the top two emerging markets of the world in the pharmaceutical sector, registering a scorching pace of growth all around. The quality of consistency and sustainability of growth, will determine who will be the main contender of supremacy and the ultimate winner in this game of wealth creation for the respective countries and be the ‘Eldorado’ of the global pharmaceutical companies.

The financial reform measures in the run up to the process of globalization started earlier in China, in 1980 as against 1990 in India. In that sense China took a plunge to be an active member of the ‘global village of commerce’ at least a decade earlier than India.

Reform process started earlier in China:

The Product Patent regime in India was reintroduced in January 1, 2005. Well before that China started creating and encouraging a large number of independently funded pharmaceutical R&D institutions to create an environment of innovation within the country. Many of these institutions are now viable profit centres, creating wealth for the country.

At the same time, focusing on global ‘economies of scale’, Chinese pharmaceutical players have now become globally competitive, may be a shade better than India. Clear dominance of China in the business of ‘Active Pharmaceutical Ingredient (API)’ among many other, will vindicate this point. On the other hand in the formulations business, India is miles ahead of China, catering to over 20% of the global requirements for the generic pharmaceuticals. Moreover, in ANDA and DMF filings, as well, India is currently much ahead of China.

FDI in India and China:

The Pharmaceutical Industry in India has now started attracting increasing Foreign Direct Investments (FDI). As per the reply to question No. 615 tabled in the Parliament of India (Rajya Sabha) on November 25, 2009 by Mr. Jyotiraditya Scindia, Minister of State, Ministry of Commerce and Industry, from the year 2006-07 up to September 2009, India attracted FDI of US $ 817.30 million for Drugs and Pharmaceuticals with a compounded growth rate of around 60%. USA, Canada, Singapore, UAE and Mauritius contributed 82% to this FDI, which in turn helped significantly to fuel further development and growth of the Industry.

According to ‘The Survey of Foreign Investments in China’s Medicine Industry’ of the Government of China, the FDI in the pharmaceutical industry of the country for the three year period commencing from 2006 to 2008 was around US $ 1772 million, over one third of which coming from Hong Kong and around 11% from the USA.

It is worth noting that the financial and policy reform measures were initiated in China much earlier, as compared to India, which in turn have enabled China to attract more FDIs in the pharmaceutical sector, thus far. In the new paradigm of the post product patent regime both the countries are expected to grow at a scorching pace attracting more and more FDIs for their respective countries.

In this article, I would like to focus on some of these comparisons to assess the progress made so far by both the countries, in a comparative yardstick and the key factors, which will decide the pace-setter.

Country ranking both in value and growth terms:

In global ranking, China is currently the seventh (India: 14) largest pharmaceutical market and is expected to be the fifth (India: 10) largest market by 2015 and the third largest by 2020. Chinese pharmaceutical market is expected to grow by over 15% per annum in the next five years, which is higher than India.

Healthcare coverage of population:

China is racing ahead and gradually but surely distancing itself from India, widening the performance gap with rapid increase of domestic consumption of modern medicines. It is worth mentioning that as per WHO, the access to modern medicines in China is around 85% as against just 35% in India. Of a population of 1.3 billion, 250 million of Chinese are covered by health insurance, another 250 million partially covered by insurance and balance 800 million are not covered by any insurance. In India total number of people who are having some sort of healthcare financing coverage will be around 200 million and penetration of health insurance will be just around 3.5% of the population.

Currently India is losing grounds to China mainly in healthcare infrastructure development, with inadequate healthcare delivery systems and delay in rolling out a long overdue comprehensive healthcare reform process in the country.

Strong commitment of the Chinese Government to the globalization process:

Strong commitment of the Chinese Government to make China a regional hub of R&D and contract research and manufacturing (CRAM) activities within next seven to ten years is paying rich dividends.
Department of Pharmaceuticals recently expressed its intention to make India a R&D hub in not too distant future. This cannot be achieved just through investments of couple of million US $ through Public Private Partnership (PPP). A strong commitment of the Government to hasten regulatory reform processes will be the key factor. The new product patent regime for the pharmaceutical industry has ushered in a new paradigm, with the Government planning to strike a right balance between TRIPs compliant IPR regime and the ‘Public Interest’ and NOT one at the cost of the other.

India and China competing well in Pharma outsourcing business:

Since last 5 years both India and China have made rapid strides in the space of pharma outsourcing. Today the evolving business model of ‘Contract Research and Manufacturing Services (CRAMS)’, is shaping up quite well. To make India a global hub for Pharmaceutical outsourcing of all types, the pharmaceutical industry of the country has all the ingredients. India has the potential to emerge as a serious contender for global supremacy, in this fast growing sector, especially in ‘contract manufacturing’ area, having largest number of US-FDA approved manufacturing plants, outside the USA.

According to ‘Global Services”, in 2009 Pharmaceutical outsourcing market in China and India was of US $ 1.77 billion and US $ 1.42 billion, respectively with China growing at a faster pace. The future growth potential for both the countries is huge, as each enjoyed just 2% share of this outsourcing market in 2009.

It has been forecasted that China will have more environmental growth accelerators than India due to greater continuing fiscal stimulus and policy support by their Government, which could catapult the country ahead of India, just beyond 2010.

‘Country Attractiveness Index’ for clinical trials:

‘A.T. Kearney’ developed a ‘Country Attractiveness Index (CAI)’ for clinical trials, for the use of, especially, the pharmaceutical industry executives to make more informed decision on offshore clinical trials. As per this study, the CAI of China is 6.10 against 5.58 of India.

Pharmaceutical patent filing:

In patent filing too China seem to be ahead of India. Based on WIPO PCT applications, it has been reported that 5.5% of all global pharmaceutical patent applications named one inventor or more located in India as against 8.4% located in China. This will give an Indication how China is making rapid strides in R&D areas, as well.

Where India is regarded clearly as a preferred destination:

However, India is globally considered as a more mature arena for chemistry and drug-discovery activities than China. Most probably because of this reason, companies like, DRL, Aurigene, Advinus, Glenmark, Nicholas Piramal and Jubilant Organosys could enter into long-term deals with Multinational Companies (MNCs) to discover and develop New Chemical Entities (NCEs).

Pharmaceutical exports, by end 2010:

India is currently an attractive pharmaceutical outsourcing destination across the globe. Pharmaceutical exports of India is currently far ahead of China. However, PriceWaterhouseCoopers (PWC) reports that China may reverse this trend by the end of 2010, establishing itself as the largest country for Pharmaceutical exports. In API exports China has already overtaken India, way back in 2007. The report titled, “The Changing dynamics of pharmaceutical outsourcing in Asia” indicates that in 2007 against API exports of U.S$ 1.7 billion of India, China clocked a figure of US$ 5.6 billion. By the end of 2010, China is expected to widen the gap further with API export of U.S$ 9.9 billion against India’s U.S$ 2.8 billion.

Korn/Ferry International reports that more and more Indian talent is being pulled to China to fill key roles, especially in the API sector, signaling ‘brain drain’ from India to China.

Conclusion:

As I said earlier and as has been reported by Korn/Ferry, China’s current overall infrastructure in the pharmaceutical space is better than India primarily due to firm commitment of the Chinese government to initiate reform measures to fetch maximum benefits of globalization process in the country. Government of India seems to be lacking in its commitment to play its role both as a provider and also as an effective enabler in this important space of ‘knowledge economy’ of the world.

India has all the potential to surge ahead with more rapid strides in this ball game. To achieve this cherished goal, the government, other stakeholders and the domestic pharmaceutical Industry should play the ball well, effectively, and in tandem.

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.

India needs ‘Orphan Drugs Act (ODA)’ to counter growing threat of dreaded rare diseases and simultaneously boost global growth potential of the Indian Pharmaceutical Industry

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An orphan disease is a rare and uncommon disease and an ‘Orphan Drug’ is a pharmaceutical substance that has been developed to treat an orphan disease. The US FDA defines a rare disease, with a prevalence of 1 in 5,000 of the general population, whereas in the European Union (EU) defines it as a disease with a prevalence of 5 in 10,000 of the population.

Around 6-8% of the world population is manifested by such rare diseases. There are around 5000 of reported rare diseases with an ascending growth trend.

Despite such trend, high drug development cost coupled with low return on investment, do not encourage many innovator pharmaceutical companies to get engaged in R&D initiatives for such drugs. However, this perception is fast changing, as we shall see below.

US took the first step to encourage commercialization of ‘Orphan Drugs’:

Public awareness drives for ‘Orphan Diseases’ first originated in the USA with the formation of a rare disease support group representing around 200,000 patients suffering from such diseases. This awareness campaign ultimately culminated into a path breaking legislation in the US named, ‘Orphan Drugs Act’ (ODA), in 1983. The key purpose of ODA was to incentivize initiatives towards development of such drugs to treat around 25 million Americans suffering from ‘Orphan diseases’. The incentives included:

- Funding towards investigation for “Orphan Disease’ treatment
- Tax credit for Clinical Research
- Waiver of fees for New Drug Application (NDA)
- Offering more lucrative incentive than product patent (product patent requires the drug to be novel), as the orphan designation of the product by the US FDA and product approval by them are the only requirements for 7 year market exclusivity of an ‘Orphan Drug’ for the same indication.
- Market exclusivity of ‘Orphan Drugs’ become effective from the date of regulatory approval, unlike product patent, product development time remains outside this period.
- The drugs, which are not eligible for product patent, may be eligible for market exclusivity as an ‘Orphan Drug’ by the US-FDA

Thanks to this Act, currently around 230 ‘Orphan Drugs’ are available in the US for the treatment of around 11 million patients suffering from rare diseases. With the help of ‘Human Genome Project’ more orphan diseases are expected to be identified and newer drugs will be required to treat these rare ailments of human population.

1983 signaled the importance of ‘Orphan Drugs’ with the ODA in the US. A decade after in 1993, Japan took similar initiative followed by Australia in 1999. Currently, Singapore, South Korea, Canada and New Zealand are also having their country specific ODAs.

India needs ODA:

Unfortunately in India, we do not have any ODA, as of now. Such legislation could give a new fillip to the Indian Pharmaceutical and Bio-Pharmaceutical industry and at the same time usher in a new hope to thousands of patients suffering from rare diseases in India, with the availability of relatively lower cost medications to them.

The global market:

The global market of ‘Orphan Drugs’ is expected to grow to US $ 112 billion in 2014 from US $85 billion in 2009. Biotech products contribute around 70% of this turnover with relatively higher CAGR growth rate of around 7%. However, reluctance of the insurance companies to cover ‘Orphan Drugs’ due to higher price still remains a global issue.

Orphan drugs to create a paradigm shift in the Pharmaceutical Industry: says Frost & Sullivan:

“While the pharmaceutical industries have been focusing on ‘blockbuster’ small molecules (chemical drugs) for high revenue generation in the past, it is expected that in 5 years, around $90.0 billion worth of branded drugs will lose their exclusivity. The current economic situation plus the huge generic competition shifted the focus of pharmaceutical companies and they are moving to a new business model – ‘Niche busters’, also called Orphan drugs.”

It is believed that Orphan drugs will now offer an attractive opportunity to the pharmaceutical companies than ever before to significantly absorb the impact of the ‘Patent Cliff’. Various financial incentives provided by the governments of various countries under the ODA coupled with many smaller collaborative projects towards this direction will further encourage the global pharmaceutical players to develop ‘Orphan Drugs.

Currently, EU has granted over 700 ‘Orphan Designations’ and over 60 new drugs have received favorable response for Market Authorization.

Sales potential for ‘Orphan Drugs’:

Generally ‘Orphan Drugs’ were not expected to be very high revenue earners. However, about 4 year ago in the year 2006, about 50 ‘Orphan Drugs’ were reported to had crossed a sales turnover of US $200 million. In 2006 the following ‘Orphan Drugs’ with expired market Exclusivity in the US, had assumed blockbuster status:

- Enbrel (Immunex): US $ 4.38 billion
- Rituxan (Genentech): US$ 3.97 billion
- Nupogen/Neulasta (Amgen): US $ 3.92 billion
- Epogen (Amgen): US $ 2.50 billion
- Avonex (Biogen): US $ 1.70 billion
- Betaseron (Novartis & Bayer): US $ 1.33 billion
- Intron A/ PEG-Intron (Schering): US $ 1.07 billion
- Kogenate (Bayer): US $ 1.07 billion
- Ceredase/Cerezyme (Genzyme): US $ 1.00 billion

Key growth drivers for ‘Orphan Drugs’:

In my view the following key factors will play critical role in driving the growth for ‘Orphan Drugs’:

- Market exclusivity options for a number of FDA recognized ‘Orphan Indications’ for the same drug
- Market exclusivity for seven years in the U.S. and ten years in the EU for each of the ‘Orphan Indications’
- Oncology could be a good segment to get such multiple ‘Orphan Indications’ for the same molecule

Glivec of Novartis obtained approval for around five new ‘Orphan Indications’, the key indications being Chronic Myelogenous Leukemia (CML) and Gastrointestinal Stomal Tumors. The product has already assumed a global blockbuster status with an estimated sales turnover of over US $4 billion by 2011.

Biotech companies are champions for the development of ‘Orphan Drugs’, globally:

Since long, the Biotech companies are taking initiatives for the development of ‘Orphan Drugs’. The path breaker in this respect was Genentech of the US, which developed two growth hormone molecules with names Protophin and Nutrophin, way back in 1985. Now, having realized the hidden potential of this segment more number of pharmaceutical players are entering into this arena. Thus, it is no wonder that 13 out of 19 blockbuster ‘Orphan Drugs’ were biologics in the year 2006.

Conclusion:

It is interesting to note that some of the ‘orphan diseases’ are now being diagnosed in India, as well. As India takes rapid strides in the medical science, more of such ‘Orphan Diseases’ are likely to be known in our country. Thus the moot question is how does India address this issue with pro-active measures?
Currently, India is curving out a strong niche for itself in the space of biogenerics. Pfizer-Biocon deal will vindicate this point.

Moreover, with Pharmacogenomics keep gaining ground at a faster pace, as I mentioned earlier, there will be a shift towards personalized medicines, in not too distant future, in which case the blockbuster drugs as defined today, will be effective only for a smaller number of patients. If the Government of India visualizes this scenario sooner, and comes out with appropriate ODA for the country, domestic pharmaceutical industry of India, in general and biopharmaceuticals industry of the country, in particular, will be able emerge as a force to reckon with, in this important global space, much faster than what one would currently anticipate.

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.

Absence of appropriate and functional ‘Cold Chain’ infrastructure dedicated to pharmaceutical and bio-pharmaceutical products at the Indian airports and seaports – A serious concern

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Drugs are complex entities and many of these are temperature sensitive in nature. This entails them requiring precise and continuous temperature conditions in transit in order to retain their potency and resultant efficacy. Many lifesaving drugs including biotech products and vaccines fall under such category. Any break in the cold chain process for such drugs can lead to immediate denaturing or deterioration in their quality parameters. It is imperative that a careful consideration is given by all concerned including government agencies at the sea port, airports while providing storage space at their warehouses for such drugs.
Current bottlenecks: Currently in India there are bottlenecks at the Airports that include authorities not being able to assure cold room space despite getting advance notices from the companies about the possible unloading of large consignments of temperature sensitive products. Some of the other gaps include improper training and refresher courses for some of the handling staff who handles such products at the Airport. Storage of Pharmaceutical products along with meat and food products is against the GMP norms.

Lack of special temperature control:

Cold Chain Medicines require special temperature controlled Cold storage. There are two commonly recommended temperatures specified on labels on cold chain products:

1. Products requiring temperature between 2 to 8 degree centigrade
2. Products requiring temperature around -10 to -20 degree centigrade

Cold Chain is an uninterrupted series of storage and distribution activities which maintains required temperature range of 2 to 8 degree centigrade or -10 to -20 degree centigrade as per product requirement.

Ensuring the right product quality:

Proper Cold Chain Management of pharmaceuticals will ensure that the right quality of such products is maintained not only during storage but during transportation also to meet right regulatory specifications. There is a greater focus and stringent regulatory guidelines and standards today in the developed markets around the world on strict adherence to right storage and transportation process for cold chain sensitive pharmaceuticals.

It should be kept in mind always that Cold Chain products are mostly sensitive biological substances that can become less effective or lose potency if not properly stored.
Some examples:

Products requiring 2 to 8 degree storage will not be effective if:

i. They are frozen or stored below 2 degree centigrade
ii. Exposed to temperatures above 8 degree centigrade
iii. Exposed to direct sunlight or fluorescent light

The loss of potency is cumulative and irreversible. If products are exposed to conditions outside the established range, the quality may be adversely affected, reducing their assigned shelf life, diminishing their effectiveness or making them ineffective. The exposed product may look the same – the loss of potency may not be visible.

Quality of storage is critical:

Quality of storage and handling of Cold Chain Pharmaceutical products at Airports and Seaports in the course of Export from or Import into India requires special care and attention. Since multiple products are stored and handled at Seaports/ Airports, personnel may not be able to appreciate the special need for Cold Chain Pharmaceuticals Storage & Handling. Thus, there should be Standard Operating Procedures (SOPs) for storage and handling of pharmaceuticals laid down by the Port Management authorities, so that the personnel handling pharmaceuticals strictly adhere to the pre-set norms.

Rapidly growing demand of cold-Chain facilities:

Pharmaceutical Products for which efficient Cold Chain facilities are required are rapidly growing in numbers. In its movement across the supply chain from the manufacturers to the patient, the medicines are handled and stored by various stakeholders like transporters, Airports, Sea ports, Distributors, Stockists, Retailers etc. Since the storage and handling of Cold Chain Pharmaceutical Products are unique, an uninterrupted Cold Chain is to be maintained in the entire supply chain network without any discontinuity, even for a short while, so that medicinal products of high quality reach the patients, always. Thus it is very important for all concerned stakeholders to ensure maintenance of proper Cold Chain facility.

Currently no ‘Pharma Zones’ in India:

At present there are no ‘Pharma Zones’ in India. However, Mumbai International Airport Private Limited (MIAL) has created 4 new cold rooms for pharmaceuticals and Delhi International Airports Limited (DIAL) has reported to have assured that the new Cargo Terminal, which is expected to be commissioned later in the year, will have around 4000 square metres of additional cold room capacity compared to the current cold room capacity of 400 square metres. Similarly, MIAL has agreed for a dedicated Cold Room facility for Pharmaceutical Products in the proposed new set–up.

The serious Concern continues:

Poor cold room storage facility at the country’s major airports and seaports is indeed an ongoing serious concern.

Unfortunately, even today, pharmaceuticals and bio-pharmaceuticals are, by and large, treated like just any other common product at our ports. It is high time, the authorities should note that due to inadequate storage and handling of these lifesaving drugs at ports, high dwell time and dispersed multiple authorities from whom clearances are required, the quality of these products may get adversely affected exposing the user patients at a great risk. The absence of a temperature monitoring mechanism in such facilities adds to the concern.

Recent Plan of “Pharma Zones” in India:

The DCGI has planned a separate dedicated controlled environment – ‘Pharma Zone’, within the cargo premises at Airports and Sea Ports for proper storage of Pharmaceutical products in line with Good Manufacturing Practices and Good Distribution Practices so as to assure the quality, safety and efficacy of Pharma products, which are to be either imported or exported.

Need for outsourcing Cold Chain services:

In the developed markets of the world there are private cold chain storage and third party logistics providers to offer contract logistics and storage services especially to cater to the growing demands Biopharmaceutical segment, which is the fastest growing manufacturing sector within global pharmaceutical industry.

Thus it is expected that spend of the Biopharmaceutical companies towards outsourcing of cold chain facilities will grow by over 10 – 15% for the next three to five years in the developed markets. India being the second largest producers of Biopharmaceuticals after China, similar opportunities exist in the country.

In India some renowned international courier companies like DHL and World Courier have been reported to have developed an efficient cold-chain management process, especially for the pharmaceutical companies to maintain the cold chain in their logistics network.

Conclusion:

An efficient cold chain infrastructure and its efficient management within the country will help immensely to Indian domestic pharmaceutical companies as they are exploring more and more opportunities to export pharmaceuticals in the global market. To achieve this objective modern cold chain warehouses, their efficient management as per regulatory guidelines will play a key role in ensuring right product quality standard.

Over a period of time cold-chain management practices of global standards will be required to achieve this goal. Currently for both import and export of cold-chain sensitive pharmaceuticals, as indicated, before, this area in particular poses to be one of the key challenges encountered by the industry to maintain high product quality during shipment. Individual pharmaceutical companies like Eli Lilly, India have their own vehicles equipped with cold-chain management systems for transportation of their cold chain sensitive products.

Greater initiative by the DCGI in this area in collaboration with the pharmaceutical industry as a whole, sooner, is absolutely essential, for the patients’ sake.

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.

George Washington University Law School’s “The India Project” – Arguments and Counter Arguments

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Recently we witnessed yet another huge controversy on the ‘IP Summit’ organized by the George Washington University Law School (GWULS), USA. It was alleged that this summit supported by law firms, some pharmaceutical companies and others, was intended to influence the participating sitting judges on the pharmaceutical patent related cases currently being fought in various courts in India.

The Arguments:

However, the GWULS reiterated that this summit is intended to help India to build capacity in the IP law of the country. GWULS states the following in its magazine of winter 2009:

“From New Delhi to Bangalore, GW Law is building bridges of understanding between the United States and Indian legal communities through its fast-growing India Project, a collaborative enterprise fostering broad-based relationships and heightened international dialogue on issues of mutual concern”.

During their recent visit to India, in an announcement to the media GWULS explained the following:

“We have contributed to education by heightening the dialogue and understanding between India and the U.S. on IP law. We have done so in a collaborative way, as we have much to learn from our Indian counterparts. For example, the new Indian patent law, enacted in 2005, involves a range of issues that require clarification, and the project has resulted in a two-way discussion of real importance to the future of IP protection in India and across the world. Is the new law in compliance with Indian constitutional standards? How does it compare with U.S. law in addressing issues that arise during the processing of a patent application? (With regard to this question we recently held educational sessions with patent examiners at various Indian patent offices). Is it consistent with international standards? These are just some of the issues that attract the attention of people associated with GW’s India Project.”

The Counter Arguments:

The other group strongly counter argues highlighting that Indian judiciary and lawmakers have a long history of dealing with the patent laws since 1911. Although in between from 1970 to 2004, the situation slightly changed with the abolition of ‘Pharmaceutical Product Patent’, the re-introduction of the same effective January 1, 2005, does not call for an ‘un-called for’ indirect intervention in the judicial process of the country by law schools located beyond the shores of India.

This group feels that GWULS indirectly casts aspersions on the legal standard of the country and the competence of Indian judiciary, which needs to be protested, unequivocally. Moreover, the group argues, “even if IP awareness had to be taken to the people once again after the 2005 amendment, why did GWULS mount such a major campaign here?”

So far the Patent Law is concerned; this group accepts that our Patent Attorneys and particularly those lawyers who will argue the cases in front of the judges must possess impeccable knowledge in the nuances of patent law with all its nitty- gritty. Thus lawyers rather than judges should regularly update their knowledge on the details of patent related issues.

Laws are by and large country specific, with an exception probably of international law. After hearing the arguments of respective lawyers, this group feels that the judge will interpret the law of the land and give his/her judgment accordingly, as happens in any other comparable sphere of law. Just as for laws related to ‘terrorist’ act, India will not require its judges to be trained by other countries, this group reiterates, the same argument holds good for patent law, as well.

The Times of India (March 29, 2010), a leading daily of the country, reported the following in a news item titled, “’Vested interests behind discussion on patents”:

“Several civil society groups have come together to question the commerce and industry ministry’s alleged complicity in allowing meetings and interactions undermining India’s legal position on intellectual property (IP). These interactions are being organized annually with Indian judges and policy makers by the George Washington University Law School (GW Law), under its India Project, with funding from multinational pharmaceutical companies, industry associations and corporate law firms”.

Conclusion:

Be that as it may, the arguments from either side do not seem to be unbiased without any vested interests and are not convincing enough. In a globalized economy, from such comments it appears that the one group is feeling that Indian legal system is inefficient, if not incompetent, to deal with its patent related cases involving global pharmaceutical companies. On the other side, the local voice seems to be afraid of a ‘foreign hand’ intruding into the judicial space of India, which in my view is stretching the imagination far too much.

Overall, Indian Judiciary has a long tradition of keeping the institution robust enough and free from any external influences, whatsoever, notwithstanding GWULS coming to India almost every year, since around 2005.

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.

Access to affordable healthcare to 65% of Indian population still remains a key issue even after six decades of independence of the country.

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Despite so much of stringent government control, debate and activism on the affordability of modern medicines in India, on the one hand, and the success of the government to make medicines available in the country at a price, which is cheaper than even Pakistan, Bangladesh and Sri Lanka, on the other, the fact still remains, about 65% of Indian population does not have access to affordable modern medicines, as compared to just 15% in China and 22% in Africa.The moot question therefore arises, despite all these stringent price regulation measures by the government and prolonged public debates over nearly four decades to ensure better ‘affordability of medicines’, why then ‘access to modern medicine’ remained so abysmal to a vast majority of the population of India, even after sixty years of independence of the country?This vindicates the widely held belief that in India no single minister or ministry can be held accountable by the civil society for such a dismal performance in the access to healthcare in the country. Is it then a ‘system flaw’? May well be so.

Poor healthcare infrastructure:

As per the Government’s own estimate, India falls far short of its minimum requirements towards basic public healthcare infrastructure. The records indicate, as follows:

1. A shortage of 4803 Primary Health Centres (PHC)

2. A shortage of 2653 Community Health Centres (CHC)

3. No large Public Hospitals in rural areas where over 70% of the populations live

4. Density of doctors in India is just 0.6 per 1000 population against 1.4 and 0.8 per 1000 population in China and Pakistan respectively, as reported by WHO.

The Government spending in India towards healthcare is just 1.1% of GDP, against 2% of China and 1.6% of Sri Lanka, as reported by the WHO.

Some good sporadic public healthcare initiatives to improve access:

The government allocation around US$2.3 billion for the National Rural Health Mission (NRHM), is a good initiative to bring about uniformity in quality of preventive and curative healthcare in rural areas across the country.
While hoping for the success of NRHM, inadequacy of the current rural healthcare infrastructure in the country with about 80 percent of doctors, 75 percent dispensaries and 60 percent of hospitals located only in the urban India may encourage the skeptics.

PPP to improve access to medicines:

At this stage of progress of India, ‘Public Private Partnership (PPP)’ initiatives in the following four critical areas could prove to be very apt to effectively resolve this issue

1. PPP to improve affordability:

It appears that in earlier days, the policy makers envisaged that stringent drug price control mechanism alone will work as a ‘magic wand’ to improve affordability of medicines and consequently their access to a vast majority of Indian population.

When through stricter price control measures the access to medicines did not improve in any significant measure, the industry associations reportedly had jointly suggested to the government for a policy shift towards public-private-partnership (PPP) model way back in December 2006. The comprehensive submission made to the government also included a proposal of extending ‘concessional price for government procurement’ under certain criteria.

In this submission to the government, the industry did not suggest total price de-regulation for the pharmaceutical industry of India. Instead, it had requested for extension of the price monitoring system of the ‘National Pharmaceutical Pricing Authority (NPPA)’, which is currently working very effectively for over 80 percent of the total pharmaceutical industry in India. Balance, less than 20 percent of the industry, is currently under cost-based price control.

However, the argument of the NPPA against this suggestion of the pharmaceutical industry is that the market entry price of any formulation under the ‘price monitoring’ mechanism is not decided by the government. Hence without putting in place any proper price control/negotiation system to arrive at the market entry price of the price decontrolled formulations, the existing ‘price monitoring’ mechanism may not be as effective, as in future more and more high price patented non-schedule formulations are expected to be introduced in the market.

However, the government seems to have drafted a different drug policy, which has now been referred to a new Group of Ministers for approval. It is worth noting that to make the PPP proposal of the industry effective, the Ministry of Health, both at the centre and also at the state levels, will require to quickly initiate significant ‘capacity building’ exercises in the primary and also in the secondary healthcare infrastructural facilities. FICCI is reported to have suggested to the Government for an investment of around US$ 80 billion to create over 2 million hospital beds for similar capacity building exercises.

Frugal budgetary allocation towards healthcare could well indicate that the government is gradually shifting its role from public healthcare provider to healthcare facilitator for the private sectors to help building the required capacity. In such a scenario, it is imperative for the government to realize that the lack of even basic primary healthcare infrastructure leave aside other financial incentives, could impede effective penetration of private sectors into semi-urban and rural areas. PPP model should be worked out to address such issues, as well.

2. PPP to leverage the strength of Information Technology (IT) to considerably neutralize the healthcare delivery system weaknesses:

Excellence in ‘Information Technology’ (IT) is a well recognized strength that India currently possesses. This strengths needs to be leveraged through PPP to improve the process weaknesses. Harnessing IT strengths, in the areas of drug procurement and delivery processes, especially in remote places, could hone the healthcare delivery mechanism, immensely.

3. PPP in ‘Telemedicine’:

‘‘Telemedicine” is another IT enabled technology that can be widely used across the nation to address rural healthcare issues like, distant learning, disease prevention, diagnosis and treatment of ailments.
Required medicines for treatment could be made available to the patients through ‘Jan Aushadhi’ initiative of the Department of Pharmaceuticals (DoP), by properly utilising the Government controlled public distribution outlets like, ration shops and post offices, which are located even in far flung and remote villages of India.

4. PPP in healthcare financing for all:

Unlike many other countries, over 72 percent of Indian population pay out of pocket to meet their healthcare expenses.

While out of a population of 1.3 billion in China, 250 million are covered by insurance; another 250 million are partially covered and the balance 800 million is not covered by any insurance, in India total number of population who have some healthcare financing coverage will be around 200 million and the penetration of health insurance is just around 3.5% of the population. India is fast losing grounds to China mainly due to their better response to healthcare needs of the country.

As the government has announced ‘Rashtriya Swasthaya Bima Yojna (RSBY)’ for the BPL families, an integrated and robust healthcare financing model for all, is expected to address the affordability issue more effectively.

According to a survey done by National Sample Survey Organisation (NSSO), 40% of the people hospitalised in India borrow money or sell assets to cover their medical expenses. A large number of population cannot afford to required treatment, at all.

Conclusion:

An integrated approach by creating effective healthcare infrastructure across the country, leveraging IT throughout the healthcare space and telemedicine, appropriately structured robust ‘Health Insurance’ schemes for all strata of society, supported by evenly distributed ‘Jan Aushadhi’ outlets, deserve consideration of the government to improve access to affordable healthcare to a vast majority of population of the country, significantly.

Well researched PPP models in all these areas, involving the stakeholders, need to be effectively implemented, sooner, to address this pressing issue.

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.

Does the Indian Patents Act conform to Article 27 (Patentable Subject Matter) of TRIPS on the issue of ‘local working of patents’?

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India is one of the signatories of TRIPS and has a national commitment on adherence to this important international agreement. It is, therefore, widely believed that the amended Indian Patents Act will be TRIPS compliant.

A recent circular from CGPTD:

Recently, the Controller General of Patents, Trademarks and Designs (CGPTD) of India through a circular dated December 24, 2009, directed all Patentees and Licensees to furnish information in ‘Form No.27’ on ‘Local Working of Patents’ as prescribed under Section 146 of the Patents Act., Although this directive is again a statutory requirement, nevertheless it has given rise to many speculations in several quarters as to whether ‘importation’ of products patented in India, will be considered as ‘local working of patents’ or not.

The Last date for filing the information is March 31, 2010. Only history will tell us about the possible future impact of this notification.

What does Article 27.1 say in this regard?

The Article 27.1 of TRIPS, for which India is a signatory, indicates as follows on ‘local working of patents’:

“1. Subject to the provisions of paragraphs 2 and 3, patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application. Subject to paragraph 4 of Article 65, paragraph 8 of Article 70 and paragraph 3 of this Article, patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced.”

Thus as per Article 27.1 of TRIPS, if commercialization of a product patented in India, is done in India whether through imports or local manufacturing, will be considered as ‘local working of patents’.

Does Section 83 B of the Indian Patents Act conform to Article 27.1 of TRIPS?
One observes, despite Article 27.1 of TRIPS agreement, section 83 (General principles applicable to working of patented inventions) of the Indian patents Act says the following:

“(b) that they (patents) are not granted merely to enable patentees to enjoy monopoly for the importation of the patented article.”

Thus the questions that will need to be answered now are as follows:
i. Does Section 83.b conform to TRIPS 27.1?

ii. If yes, how?

iii. If not, does it merit an amendment?

iv. If the issue goes for litigation, what could the Indian High Courts likely to interpret as ‘local working of patents’?

Could it give rise to any possibility to trigger ‘Compulsory Licensing (CL)’?

For ‘Compulsory Licensing’, Section 84 of the Indian Patents Act indicates the following:

“At any time after expiration of three years from the date of the grant of patent, any person interested may make an application to the Controller for grant of compulsory license on patent on ANY of the following grounds namely:

(a) that the reasonable requirements of the public with respect to the patented invention has not been satisfied, or

(b) that the patented invention is not available to the public at a reasonable affordable price, or

(c) that the patented invention is not worked in the territory of India”

Once again, the answer to yet another question that all concerned will be interested to know is as follows:

i. What could possibly be the determinants for the India Patent Office (IPO) or High Courts to interpret, “available to the public at a reasonable affordable price?”

Conclusion:

If these two sets of questions could find conclusive answers, much of the speculations, which are now floating around on what could the information provided through ‘Form 27’ be used or misused by the interested parties, to revoke a patent on the grounds of ‘local working’ or trigger a CL under Section 84.

In my personal view establishing either of these two grounds to the IPO to derive sheer commercial benefits, could indeed be a daunting task for any interested party.

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.