Executive_summary__30 11 Pharmax IPR 3000 Wg Pharma2902

User Manual: IPR 3000

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EXECUTIVESUMMARY

TheIndianpharmaceuticalIndustryhaswitnessedarobustgrowthofaround14%since

thebeginningofthe11thPlanin2007fromaboutRs71000crorestooverRs1laccrores

in2009‐10comprisingsomeRs62,055croresofdomesticmarketandexportsofoverRs

42,154crores.Thisalsoamountstoaround20%oftotalvolumeofglobalgenerics.

However,theIndustryisquitefragmentedandcomprisesofnearly10,500unitswith

majorityoftheminunorganizedsector.Ofthese,about300‐400unitsarecategorizedas

belongingtomediumtolargeorganizedsectorwiththetop10manufacturersaccounting

for36.5%ofthemarketshare.AsregardstheBulkdrugscomponentoftheindustry,the

marketisaroundRs42,000croresgivingitashareofaround50%ofthetotaldomestic

market.ThisgivestheIndianBulkDrugindustryashareofabout9%oftheglobalbulk

drugmarket.

Indiaisamongthetop20pharmaceuticalexportingcountriesandtheexportshave

grownverysignificantlyataCAGRofaround19%inthe11thplanperiod.Indiandrugs

areexportedtoaround200countriesintheworldwithhighlyregulatedmarketsofUSA,

UKetc.Themajortherapeuticcategoriesofexportareantiinfective,antiasthmaticand

antihypertensive.

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TheDepartmentofPharmaceuticalshasaVisionforthedevelopmentoftheIndian

PharmaceuticalIndustry.ThisVisionis–

“TomakeIndiatheLargestGlobalProviderofQualityMedicinesatReasonablePrices.”

TheVisionistobeachievedasperthefollowingMission:

• DevelopHumanResourcesforPharmaceuticalIndustryandDrugResearchand

Development

• PromotePublic‐PrivatePartnershipfordevelopmentofpharmaceuticalsIndustry

• PromotePharmaBrandIndiathroughInternationalCooperation

• PromoteenvironmentallysustainabledevelopmentofPharmaceuticalIndustry

• Enableavailability,accessibilityandaffordabilityofdrugs

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InordertorealisetheMission,theDepartmenthassetthefollowingGoalsfor12thplan:

• ProductionsizeofUS$60bnandexportsizeofoverUS$25bn.

• UpgradationofSMEstoWHO‐GMPandtrainingofprofessionalstherein.

• EstablishmentofPharmaGrowthClusters.

• FacilitategrowthofCentralpharmaPSUs.

• DevelopPharmaInfrastructureandCatalyzeDrugDiscoveryandInnovation

• DevelopPharmaHumanResourcesthroughincreasedM.PharmaandPh.D

programsinNIPERS

• ProvideInfrastructureandstafffornewNIPERsandstrengthenNIPERMohali

• Open10newNIPERs

• JanAushadiCampaignandimplementationofBusinessPlanforsettingupof3000

JanAushadhiStores(uptoSubdivisionlevelinthecountry)

• IncentivizingPrivateSectorfordevelopmentofnewDrugsfordiseasesendemic

toIndia

FortheachievementoftheseGoals,itisnecessaryfortheIndianPharmaceuticalIndustry

tobecomegloballycompetitivethroughworldclassmanufacturingcapabilitieswith

qualityandcostefficiencyofproductioncapacityandradicalupgradationofresearchand

developmentcapabilitiesfornewdrugsandassociatedactivitieslikeclinicaltrialsand

contractmanufacturing.Thereisneedtodevelopworldclasssupportinfrastructure

bothforproductionandresearch.

Withthisapproach,thepreparationofthe12thPlaninvolvedadetailedSWOTanalysisof

theIndianPharmaceuticalsIndustry.Thisanalysishasrevealedthefollowingstrengths:

(a)StrongLowcostmanufacturingsector(b)Significantbreadthanddepthofproduct

expertise(c)LowcostofgrowingHumanresourcesinthePharmasector.Themajor

weaknessesare–(a)Highemphasisongenericsbothfordomesticandinternational

marketswherefilingandapprovalofANDAsandDMFshaveleftlittleroomforR&Don

drugsdevelopment(b)InadequateR&DInfrastructure(c)PoorIndustry‐Academia

linkage(d)Lackofrequiredhigh‐endproductdevelopmentcapablehumanresources(e)

Lackoftimedrivenregulatoryinfrastructure(f)PoorSMEbaseforhigh‐endmanufacture.

Themajoropportunitiesavailableare‐(a)GlobalopportunityforincreasingGenericsand

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bio‐genericsmarketbothindevelopedandemergingcountriesduetopressureon

budgetarylimitationsofthesecountriesaswellasemergentpatentcliffduetooff‐

patentingofmajorhigh‐valuedrugs(c)Lowcostgoodskilldestinationforcontract

researchandmanufacturingandresultantopportunitiesindrugdiscoveryaswellas

clinicaltrials(d)Highgrowthofdomesticmarketattractingmulti‐nationalsbothfor

brownfieldandgreenfieldinvestmentsinproductionandcapacitybuilding.Thethreats

totheindustryarefrom‐(a)Ever‐greeningstrategyofMNCsfordenyingandlimitingthe

patentcliffopportunitieswithdebatablerecoursetoTRIPsandFTAs(b)Increasingly

stringentregulatoryandnon‐tariffbarrierstogenericsmarketsindevelopedcountries(c)

Increasedcompetitionforgenericsandbio‐genericsproductionintermsofhighcapacity

andproductioncosts(d)High‐entrybarrierstoenablemarketshareindevelopmentof

newdrugs.

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BasedontheaboveSWOTanalysis,recommendationshavebeenmadeinthe12thPlan

Documentfor–

1) DevelopmentandgrowthoftheIndustry

2) StrengtheningofR&DCapabilities

3) StrengtheningofhumanresourcebaseforIndustry

4) AffordabilityandAccesstoQualityDrugs

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ThemajorrecommendationsconcerningsupportforIndustrygrowthare‐(a)Schemes

forUpgradationofSMEstoWHO‐GMP,USFDA/EDQM/TGAandotherInternational

Standards(b)Supportfornewgenericsandbio‐genericsthroughsettingupof

FormulationDevelopmentCentersandManufacturingStandardsTrainingCenters(c)

Regionalcluster‐basedIndustrydevelopmentthroughestablishmentandupgradationof

10PharmaGrowthAreaClusters(d)IndustrysupporttoInternationalmarketaccess

throughcapacitybuildingandinter‐governmentalcooperation.TheMedicalDevice

IndustryisalsoproposedtobesupportedthroughthedevelopmentofaMedicalDevices

ParkinAhmedabad,Gujarat.

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IntheareaofR&Dandhumanresourcedevelopmentthemajorrecommendations

concern(a)settingupofNationalExcellenceCentrescomprisingthreeforResearchand

DevelopmentinPhyto‐pharmaceuticals,Nano‐PharmaceuticalsandBio‐Similars,onefor

settingupofNationalfacilitiesforNewDrugsDevelopmentalongwithanotherforEnd

ToEndLarge‐ScaleAnimalHouseandsettingupofaNationalCentreforR&DinAPIs(b)

SchemesforsupportingR&DinIndustrythroughassistanceforsettingupof

GLP/GCP/AnimalHouseLabSchemes(c)SettingupofPharmaVentureCapitalFundto

fundinnovationsindrugdiscoveryincludingincubatordriventranslationalresearch(d)

PharmaInnovationandInfrastructureDevelopmentInitiativeforR&Dinfrastructure

developmentincludingfundingofprivatesectorinitiativesinPPPmode.Emphasison

supportingextramuralresearchindevelopmentofnewdrugsanddosageformsformass

afflictiondiseaseslikeJE,Chikungunya,TB(resistantstrains),leishmeinasis,malaria,and

therecentlifestylediseaseslikediabetesandCVD,etc.

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AsregardsstrengtheningofHumanResourcebase,itisestimatedthatdirect

employmentinPharmaceuticalsIndustryhasincreasedfromabout6.9lacspeoplein

2006to8lacspeoplein2008with20%ofthismanpowerbeingengagedinresearchand

testing.Theprojectedhumanresourcerequirementisaroundanestimated21.5lacsby

2020.BasedonthisitisproposedtofilltheHRrequirementsthroughSchemessuchas

(a)ExpandingthestudentoutputatNIPERMohali(b)Developmentof6NewNIPERS

alreadysanctionedinthe11thPlanand(c)Settingupof10NewNIPERsetc.

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The12thPlanDocumenthighlightsthevitalroleDrugpriceplayinaccesstoessential

medicinesacrosstheworld.WhileitisafactthatthedrugsmanufacturedinIndiaare

consideredtobeamongstthelowestpricedinternationally,still,avastsectionofIndian

populationisnotinapositiontoaccesstheneededhealthcareaswellasthemedicines

duetovariousreasonsofaccessandaffordability.Accordingly,therecommendations

madebytheTaskForceunderDr.PronabSenmadehavebeenconsideredandadraft

NationalPharmaceuticalsPricingPolicyhasbeenformulatedwhichseekstocontrolthe

pricesofessentialdrugsaspertheNationalListofEssentialMedicines2011(NLEM‐

2011).Furthertothis,theDepartmentwouldtakeupissuespertainingtoprescription

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andpromotionofunbrandedgenericdrugswiththeDepartmentofHealth.Issues

relatedtopricingofpatentedmedicineswouldalsobesuitablyconsideredinthelightof

needforpromotingindustrygrowthandresearchaswellasdevelopmentofnewdrugs

alongwithaffordabilityofnewpatentedmedicinesforbettertherapeutictreatmentof

themasses,especiallyindiseasespertainingtocancerandHIV.Accordingly,itis

proposedtocontinueschemesforstrengtheningoftheNPPA,forsuchfunctionsas‐(a)

StrengthenMonitoringandEnforcementWork,(b)BuildingConsumerAwareness

aboutpricingandavailabilityand(c)CreationofNPPACellsinStates,etc.

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ThepresentmarketsizeofMedicalDevicesandEquipmentsisaroundRs15,000crores.

ThemedicaldeviceIndustryinIndiaisverynascentandislargelyimportdependent.More

than65%ofIndia’srequirementofmedicaldevicesandequipmentsaremetthrough

importswithdomesticproductionbeinglargelyrestrictedtolowtechnologydisposable

equipments.TheSWOTanalysisofMedicalDeviceIndustryshowsthatitsmajorstrengths

are–(a)WelldevelopedMicroelectronic,Telecommunication,SoftwareandPrecision

EngineeringIndustry,(b)Abilitytoattractforeigninvestmentsand(c)Abilitytohandlelow

valuelargevolumeproductionasperglobalqualitystandards.Themajorweaknessesare–

(a)Lowpercapitaexpenditureonhealthcare&lowhealthinsurance,(b)Lackofadequate

andtrainedmanpower,(c)Lackofincubationandsuitableecosystem,(d)Lackof

regulation/standardsetc.Themajoropportunitiesare‐ (a)Hugemarketpotential,(b)

Growingopportunitiesinexportmarket,(c)Growingdemandonaccountofchanging

demographicprofile,increasingincidencesoflifestylediseaseslikecancer,CNSand

diabetics,etc.Themajorthreatsare–(a)Growingcompetitioninexportmarkets,(b)

Increasingdependencyonimports,(c)Unorganizedmarketformedicaldisposables,(d)

Lackofregulationsinmedicaldisposablesandsurgicalitems.Togiveaboosttothe

MedicaldevicesSector,anumberofschemeshavebeenproposedsuchasfor‐(a)

Settingupgreen‐fieldMedicalDevicesParkand(b)SettingupNationalCenterforR&Din

MedicalDevicesatNIPERAhmedabad

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The11thPlanaimedatmakingthesickCPSUsfinanciallyviablethroughsupportfor

modernisationandrehabilitationaswellaswaiverofduesandpaymentofVRSpackages.

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

Accordingly,HindustanAntibioticsLtd(HAL)andBengalChemicalsandPharmaceuticals

Ltd(BCPL)weregivensupportofoverRs.1000croresinthe11thPlanperiodinvolving

waiver,settlementandcashassistanceformodernisation.KarnatakaAntibioticsand

PharmaceuticalsLtd(KAPL)andRajasthanDrugsandPharmaceuticalsLtd(RDPL)were

alsogivenfinancialsupportfollowingtheirdelinkingfromHALandIDPLrespectivelyso

astomakethemindividuallymoreviableandindependentinpursuinggrowthplans.As

aresult,thePharmaPSUshavebeenabletoachieveacombinedbusinessofmorethan

Rs.600crores.Itisexpectedthattheywouldgrowinthe12thPlanforwhich

Governmentsupportformarketingwillberequired.Accordingly,nomajorschemehas

beenproposed.TherehabilitationofIndianDrugsandPharmaceuticalsLtd(IDPL)could

beconsideredduringthe12thPlanasperapprovaloftheCabinet.



Asregardsaccesstoqualitydrugsataffordableprices,apartfromthepricecontroland

monitoringinitiative,theGovernmentproposestofurtherexpandtheJanAushadhi

Schemestartedinthe11thPlanwiththeobjectiveofmakingavailableunbranded

genericmedicinesataffordablepricesthroughtheproposed3000dedicatedoutlets

acrossthecountry.The12thPlandocumenthassupportedtherevisedbusinessplanof

theJanAushadhiSchemewhichhasbeenpreparedafteradetailedanalysisofshortfalls

andpossiblesolutionsincludingspecialfocusonsupplychainmanagement.



Finally,theDepartmentofPharmaceuticalshasnotbeenabletotakeuporlaunchany

majornewactivityinlinewithitsmandateevenafterthreeyearsofitsexistence.The

mainreasonforthisliesinlackoftechnicalcapabilitysinceitsinception.Thereforethere

isanurgentneedofstrengthentheDepartmentintermsofrequiredhumanresources.

Forthis,supportofatechnicalcadrehasbeenproposed.



Itisexpectedthatgoingforwardinthe12thPlan,theDepartmentwouldbeabletoplaya

vitalcatalyticroleinspurringthegrowthofthepharmaceuticalindustryinthecountry

andstrengthenittobecomeagloballeaderinthecomityofnationsintheglobal

economy.



vii



SUMMARYOFSCHEMES

SlNoSchemeBriefdescriptionBudget(Rs

Crores)

1INDUSTRYPROMOTION&DEVELOPMENT

1.1ExistingSchemes–Continued

from11thPlan



(i)PharmaPromotionand

DevelopmentScheme(PPDS)

GrantassistanceforIndustryStudies,Workshops,

Seminars,etc

10

(ii)IntellectualPropertyRights

FacilitationCenters

CapacitybuildingGrantassistance(capitaland

revenue)forsettingupofIPRcentresby

Pharmaexcil,Industrybodies,etctoassistindustryin

IPRmatters

26.5

1.2NewSchemes 

(i)InternationalPharma

CooperationInitiative(IPCI)

SettingupofJointtestingandlabfacilitiesfor

certificationofIndianpharmaproducts,

developmentoflocallysustainableformulationsand

drugdeliverysystemsandothermutuallybeneficial

schemes

50

(ii)UpgradationofSMEsto

WHO‐GMPstandards

Interestbasedsubsidyschemeattherateofabout

Rs1crsperunitofassistancetobeimplementedin

partnershipwithIDBI/SIDBIforupgradingSMEsto

WHO‐GMPmanufacturingstandardstocapitalizeon

theGenericsOpportunity–about1200unitsoutof

about10,563SMEsinthecountry

1200

(iii)Capacitybuildingthrough

trainingof5000Working

ProfessionalsinWHO‐GMP

Toprovidemanufacturingcapabilityupgradation

assistanceforcapitalexpenditure,skilldevelopment

ofpersonnelrequiredforsuchupgradationand

sustenanceofsupplyofskilledpersonnel.

250

(iv)UpgradationofSMEsto

USFDA/EDQM/TGAandother

InternationalStandards

SpecificassistanceforstandardshigherthanWHO‐

GMPtoselectedSMEs–250innostobuild

Competitivenessofveryhighstandardsandsecond

lineofinternationallycapableindustryforhighvalue

pharmaproductsforstrongregulatedbuthighvalue

markets

500

(v)SettingupofoneNational

andfiveRegionalFormulation

Developmentand

Manufacturingstandards

trainingcentres

SchemetosetupFormulationdevelopmentcentres

totapthepatentcliffopportunityandbecome

globalleaderinGenericsandBio‐similars

160

viii



(vi)Establishmentand

upgradationof10Pharma

GrowthClusters

Infrastructurebuildingforpharmaindustry

particularlyforSMEs–buildingonstrengthof

existingClusterssoastoprovideinfrastructuregaps

forhigherproductionincludingtakingcareof

environment,powerandlabstesting,etcneeds.

500



(vii)Infrastructuresupportfor

ColdChainforhighenddrugs

forexports

Inordertoenhanceexportscapabilityforhighend

drugsrequiringexactcoldchainstandardstillthe

timetheyareexportedfromthecountryinlightof

stringentdevelopedmarketrequirements

50

(viii)Schemeforenvironment

standardscomplianceand

requiredinfrastructure

supportincludingcapacity

building

providingfinancialandtechnicalassistanceto

improvefinancialsustainabilityofSMEsonone

handandalsosafeguardtheenvironmentfrom

thehazardsassociatedwiththeunplanned

growthoftheindustry.



100

2R&D,CAPACITYBUILDINGANDEMPLOYMENT

2.1ContinuingSchemes

2.1.1ForNIPERMohali

(i)ThecontinuationofthePG

andthePhDeducation

ThecontinuationofthePGandthePhDeducation

atpresentstrengthlevelswouldrequirebudgetary

support

100

(ii)CapacityEnhancementfor

supportingrequiredindustry

humanresourcesandcapacity

buildingrequirementbythe

Institute

a. Additional1000PGsandPhDs 

b. TrainingIndustryandRegulatorypersonnel

c. PublicHealthandPharmacovigilanceTrg.

d. InfrastructureUpgradation



200

25

250

2.1.2ForNewNIPERs

(i)Permanentestablishmentand

operationof6NewNIPERs

2000

2.1.3OtherSchemes

(i)SettingupofNationalCenter

forPhyto‐pharma

development

MajorcapitalexpenditureofaboutRs100crsbeing

metfromDONER.Presentallocationsoughtfor

initialyearsoperationasperadvicefromDONER

20

(ii)GLP/GCP/AnimalHouseLab

Schemes

ForsettingupofGLPcompliantLabs,GCPcompliant

LabandaAnimalHouseLabonPPPbasisisunder

implementation

50

ix



(iii)ContinuingR&DSchemesFor

NiperMohali

NiperMohaliispresentlyimplementinganumberof

projectsinR&Dforvariouspharmaareaslike

neglecteddiseases,infectiousdiseases,vectorborne

diseases,etc.Inadditionanumberofprojectsare

beingimplementedforPublichealth,

PHarmacovigilance,Regulatorycapacitybuildingfor

academiaandindustry,etc.

(iv)ContinuingschemeatNew

Nipers

JointdevelopmentofTuberculosisrelateddrugsat

NiperAhmedabadandAIIMS,Delhi

2.2NewSchemes

(i)EstablishmentofNewNew

NIPERs

Inordertomeetthegapofaverylowgraduateto

postgraduatepharmaeducationseatscapacityof

1:10(51000graduateseatsvs5100PGseatsinthe

entirecountry)thereisneedtosetupfurthernew

Nipersapartfromthe6approvedinthe11thplan.It

isproposedtosetup10NewnewNIPERs

3000

(ii)NewSchemesatNiperMohali R&DCentreforBiologicalsandNCEsR&DCentrefor

NDDS,Settingup20NewIncubators,Incentive

SchemeforCROsDevptforNew,DrugDiscovery

PartnershipwithInternationalCentresofExcellence

825

(iii)PharmaVentureCapitalFundToconsiderinvestmentofidentifiedfundsintoa

newlycreatedspecialisedprivateequity/venture

capitalfundthatundertakesR&Dinvestmentsinto

companiesinthepharmaceuticalindustry

500

(iv)PharmaInnovationand

InfrastructureDevelopment

Initiative(PIIDI)

Developtechnicalandinnovationcapacityof

Indianpharmaformanufacturingquality

affordablemedicines,developInternational

competitivenessoftheIndianPharmasoasto

bethelargestproducerofgenericmedicinesin

theworld,TomakeIndiaapreferred

destinationforglobalinitiativesincuringthe

world’sailmentsspeciallythedevelopingworld

inavaluebasedmanner

2000

(v)AtNIPERHyderabad:Setting

upNationalCenterforR&Din

BulkDrugsatNIPER

Hyderabad

BuildcompetitivenessthroughInnovationand

ProductivityefficienciesintheAPIindustry.Alsotap

Genericsopportunityandmeetcompetitionof

China,etc.

x



(vi)AtNIPERKolkattaNational

Pharmaceutical

NanotechnologyCenter

TobesetupatNIPERKolkattafordevelopmentof

Nano‐materialsfrominorganicsubstratesfor

innovativedrugsanddrugdeliverysystems

(vii)SettingupNationaland

RegionalBiosimilarExpertise

Centers

Toprovideexpertadviceandassistancetoindustry

onregulatoryissuespertainingtoClinicalTrials,

TestingandApprovalprocessforBiosimilars–One

nationalcentreatBangaloreand3regionalcentres

atChandigarh,HyderabadandAhmedabad

60

(viii)SettingupofaIndustry

focusedAnimalHouse

EndtoendservicesfromPrimatestosmallanimals

forpre‐clinicaldrugdevelopment

100

(ix)SupporttoAcademia,

ResearchInstitutionsand

privatesectorforExtraMural

Research

Forfundingbothacademiaindividually,asan

institutionandprivatecompaniesfortargeted

drugdevelopmentincludingassistancefor

clinicaltrials.

100

(x)SupporttoAcademia,

ResearchInstitutionsand

privatesectorforExtra

Labsupgradation

Forfundingupgradationoflabsintheprivateand

governmentsectorwithsharingbasison50‐50

patternforthelabupgradationforequipments

deployedfordrugdevelopmentunderspecifically

identifiableprojects

(xi)AllNIPERs:International

cooperationinR&D

TopromoteR&DinCISanddevelopingcountriesfor

mutualadvantages

25

3Pricing

3.1Continuingschemes

(i)MonitoringandEnforcement

Work

StrengtheningtheExistingMonitoringand

EnforcementWork

2

(ii)AwarenessandPublicitytConsumerAwarenessandPublicitythroughPrint,

ElectronicandotherMedium

20

3.2NewSchemes 

(i)CreationofNPPA‐State

GovernmentCoordination

CellsinStates

Schemeoriginallyproposedin11thPlanbutnot

approvedbyPlanningCommission.Henceproposed

for12thPlan.Willhelpinstrengtheningthe

MonitoringObjectiveofdrugsprices.



25

(ii)SchemeforInteractionwith

States

Schemeoriginallyproposedin11thPlanbutnot

approvedbyPlanningCommission.Henceproposed

for12thPlan.Willhelpinstrengtheningthe

MonitoringObjectiveofdrugsprices.



2

xi



4MedicalDevicesindustrydevelopment

(i)Settingupgreen‐fieldmedical

devicesandequipmentparks.

TappingtheopportunityUS$200Bnglobalindustry300

(ii)SettingupNationalCenterfor

MedicalDevicesatNIPER

Ahmedabad.

PromotingindigenousR&DinMedicaldevicessector50

5CPSUsandJanAushadhi

(i)IDPL





Tokenallocationforminimalregulatory

compliances.Actualwoulddependontheapproval

byCabinetforrevivalofIDPLpackage

10

(ii)HAL  MinimalUpgradationoffacilities 10

(iii)BCPLMeetinggapsintherevivalpackage 10

(iv)JanAushadhiContinuingschemetobestrengthenedinthe12th

planforensuringaccesstoaffordablequality

unbrandedgenericmedicinesforthepoormasses

200

TOTAL12922.5

xii



METHODOLOGY



(A) ConstitutionofWorkingGroup

PlanningCommissionconstitutedaworkinggrouponDrugsandPharmaceuticals,videtheir

letternoI&M‐3(25)/2011,dated10.5.2011.

(a)TermsofReference(TOR)oftheWorkingGroup

TheworkinggroupwasgivenfollowingTermsofReference:

i. Toarticulatethelongtermgoalstobeachievedintermsofgrowth,

competitivenessandshareinglobaltradeforthedomesticDrugs&

PharmaceuticalIndustries.

ii. ToreviewthecurrentstatusofdomesticPharmaceuticalsSectorhighlightingthe

achievementsduringthe11thPlanandreasonsformajordeviation/shortfall,if

any,inrespectoffulfilmentoftargetsandidentifyingareasofstrengthand

weaknessoftheIndianindustryvis‐à‐visinternationalDrugsand

PharmaceuticalsIndustry.

iii. Tobenchmarkindigenousdrugs&pharmaceuticalsindustryagainstinternational

drugs&pharmaceuticalsindustryandsuggestappropriatemeasuresforbridging

thegapswherenecessary,includingtheneedsforfurtherR&Dactivitiesand/or

technologycollaborationforupgradingtechnology.

iv. Toexaminethestructureandcapabilityofthedomesticdrugs&pharmaceutical

industry,itsexporttrend&performanceandidentifyemergingareashaving

specificpotentialforgrowthandcompetitivenessaswellastosuggestmeasures

forputtingtheindigenousindustryonsoundfootingandgrowthpathkeepingin

viewthegoalstobearticulatedunderitem1above.

v. ToreviewthepresentstatusofWHO‐GMP(WorldHealthOrganization–Good

ManufacturingPractice)certificationandschedule‐Mcomplianceandsuggest

measuresforraisingthelevelofcompliancebymanufacturersofdrugsand

pharmaceuticalproductsinthecountry.



xiii



vi. Toexaminetheimpactofnewpatentregimeondomesticpharmaceutical

industryincludingitsimplicationondrugprices.

vii. Tostudytheefficacyandappropriatenessofcurrentdrugpricingsystemaswell

asitscontrolandenforcementmechanismandsuggestmeasuresforfurther

improvement,ifapplicable.

viii. Toassessthepresentcapabilityforinnovationvis‐à‐visR&Dstatusofthe

domesticDrugs&Pharmaceuticalsindustryandtosuggestwaysandmeansto

improvethedomesticefforts,enhanceindustryparticipationandintensify

Industry‐Institutional/academialinkagetopromotedomesticR&Dfor

establishmentofitsinternationalcompetitivenessandmeetingtheemerging

challengesarisingoutoftheWTOregime.

ix. Tostudychangeinstructureofdomesticpharmaceuticalsindustryinthelightof

currenttrendofmerger&acquisitions/takeovers/collaborationsandits

correlationwithrelatedFDInormsandsuggestmeasurestosafeguardnational

interests.

x. ToexaminethetrendofemploymentgrowthintheDrugsandPharmaceuticals

industryandprojectlikelyrequirementofskilledmanpowerduringtheTwelfth

Planperiodaswellastomeetthelongtermgoals.Tosuggestmeasuresfor

puttinginplaceadequateacademicandtraininginfrastructureandfacilitiesto

meettherequirements.

xi. Toassesstheadequacyandrelevanceofpresentregulatorymechanismofdrug

andpharmaceuticalssectorandexamineneedforfurtherstrengtheningtotackle

themenaceofspuriousdrugsetc.andexamineneedforanapexauthorityto

controlprice,qualityandsupplyofdrugs.

xii. Tosuggestmeasurestowardsimprovementofaccessibilityofessential

medicinesforcommonmanparticularlythepoorersectionsofthepopulation

andtoidentifystepsrequiredforfacilitatingimplementationoftheNational

HealthPolicy.

xiii. Toassessthecurrentstatusofdomesticmedical/surgicalequipmentindustry,its

exportpotentialandcompetitivenessandsuggestmeasuresforimprovement

andaugmentationofcapabilities,wherenecessary.



xiv



xiv. Toindicatethemilestonestobeachievedinthe12thPlaninthecontextoflong

termgoalsasperitem‐IoftheToRandrecommend

pogrammes/schemes/measuresthataretobeinitiated,continuedor

discontinuedinthe12thPlanperiodandestimatedfundrequirement.

xv. Tomakeanyotherrecommendationsasmaybeappropriateforsustained

growthandcompetitivenessofthesector.



(b)MembersoftheWorkingGroup

Theworkinggroupconsistedoffollowingmembers:

1.Secretary,DepartmentofPharmaceuticals(DOP) Chairman

2.Secretary,DepartmentofScientific&Industrial

Research/DG,CouncilofScientific&Industrial

ResearchorhisRepresentative

Member

3.PrincipalAdviser/Adviser(Health),Planning

Commission

Member

4.Secretary,MinistryofHealth&FamilyWelfareor

Nominee

Member

5.Secretary,DepartmentofScience&Technologyor

Nominee

Member

6.Secretary,DepartmentofBio‐TechnologyorNominee Member

7.Secretary,DepartmentofConsumerAffairsorNominee Member

8.Chairman,NationalPharmaceuticalPricingAuthority Member

9.AdditionalSecretary&FinancialAdviser,Department

ofPharmaceuticals(DOP)

Member

10.Adviser(I&VSE),PlanningCommission Member

xv



11.JointSecretary(PI),DepartmentofPharmaceuticals

(DOP)

Member

12.JointSecretary(Pharma),Departmentof

Pharmaceuticals(DOP)

Member

13.Director,CentralDrugsResearchInstitute,Lucknow Member

14.Director,NationalInstituteofPharmaceutical

Education&Research,Mohali,Punjab

Member

15.Chairman,PharmaceuticalsExportPromotionCouncil,

Hyderabad

Member

16.President,IndianDrugsManufacturesAssociation Member

17.Chairman,ConfederationofIndianPharmaceuticals

Industry

Member

18.SecretaryGeneral,IndianPharmaceuticalsAlliance Member

19.President,OrganisationofPharmaceuticalsProducers

ofIndia(OPPI)

Member

20.President,BulkDrugManufacturersAssociation Member

21.Chairman,Dr.Reddy’sLaboratoriesLtd.,Hyderabad Member

22.Chairman,CIPLALimited,Mumbai Member

23.Chairman,LupinLimited,Mumbai Member

24.EconomicAdviser,DepartmentofPharmaceuticals

(DOP)

Member



xvi



(B) ConstitutionofSubWorkingGroups



BasedonthethrustoftheToRs,DepartmentofPharmaceuticalsconstitutedfoursub

workinggroups.ThemembersandToRsofthesubworkinggroupsareasbelow:

(a) Sub‐GrouponStatusandStructureofthePharmaceuticalIndustry

CompositionoftheSub‐Group

1.JointSecretary(AJ),DepartmentofPharmaceuticals Chairman

2.NomineeofSecretary,DepartmentofScientific&Industrial

Research

Member

3.NomineeofSecretary,MinistryofHealth&FamilyWelfareMember

4.NomineeofSecretary,DepartmentofScience&Technology Member

5.Adviser(I&VSE),PlanningCommission Member

6.Chairman,PharmaceuticalExportPromotionCouncil,

Hyderabad

Member

7.President,IndianDrugsManufacturersAssociation Member

8.Chairman,ConfederationofIndianPharmaceuticalsIndustry Member

9.SecretaryGeneral,IndianPharmaceuticalsAlliance Member

10.President,OrganisationofPharmaceuticalsProductsof

India(OPPI)

Member

11.President,BulkDrugManufacturersAssociation Member

12.DeputyDirectorGeneral,DepartmentofPharmaceuticals Member

13.Director(BKS)MemberSecretary



TermsofReference(TOR)

(i) Toarticulatethelongtermgoalstobeachievedintermsofgrowth,

competitivenessandshareinglobaltradeforthedomesticDrugs&

PharmaceuticalIndustries.

xvii



(ii) ToreviewthecurrentstatusofdomesticPharmaceuticalsSectorhighlightingthe

achievementsduringthe11thPlanandreasonsformajordeviation/shortfall,if

any,inrespectoffulfilmentoftargetsandidentifyingareasofstrengthand

weaknessoftheIndianindustryvis‐à‐visinternationalDrugsand

PharmaceuticalsIndustry.

(iii) Tobenchmarkindigenousdrugs&pharmaceuticalsindustryagainstinternational

drugs&pharmaceuticalsindustryandsuggestappropriatemeasuresforbridging

thegapswherenecessary,includingtheneedsforfurtherR&Dactivitiesand/or

technologycollaborationforupgradingtechnology.

(iv) Toexaminethestructureandcapabilityofthedomesticdrugs&pharmaceutical

industry,itsexporttrend&performanceandidentifyemergingareashaving

specificpotentialforgrowthandcompetitivenessaswellastosuggestmeasures

forputtingtheindigenousindustryonsoundfootingandgrowthpathkeepingin

viewthegoalstobearticulatedunderitem1above.

(v) Tostudychangeinstructureofdomesticpharmaceuticalsindustryinthelightof

currenttrendofmerger&acquisitions/takeovers/collaborationsandits

correlationwithrelatedFDInormsandsuggestmeasurestosafeguardnational

interests.

(vi) Toassessthecurrentstatusofdomesticmedical/surgicalequipmentindustry,its

exportpotentialandcompetitivenessandsuggestmeasuresforimprovement

andaugmentationofcapabilities,wherenecessary.

(vii) Toindicatethemilestonestobeachievedinthe12thPlaninthecontextoflong

termgoalsasperitemIoftheToR(ByPlanningCommission)andrecommend

pogrammes/schemes/measuresthataretobeinitiated,continuedor

discontinuedinthe12thPlanperiodandestimatedfundrequirement.

(viii) Tomakeanyotherrecommendationsasmaybeappropriateforsustained

growthandcompetitivenessofthesector.



xviii



(b) Sub‐GrouponRegulatoryIssuesinthePharmaceuticalIndustry



CompositionoftheSub‐Group

1.JointSecretary(DC),DepartmentofPharmaceuticals Chairman

2.NomineeofSecretary,MinistryofHealth&FamilyWelfareMember

3.NomineeofSecretary,DepartmentofScience&TechnologyMember

4.NomineeofSecretary,DepartmentofBio‐TechnologyMember

5.PrincipalAdvisor/Advisor(Health)orNominee,Planning

Commission

Member

6.DrugControllergeneralofIndia/NomineeMember

7.President,IndianDrugManufacturersAssociation Member

8.Chairman,ConfederationofIndianPharmaceuticalsIndustry Member

9.SecretaryGeneral,IndianPharmaceuticalsAlliance Member

10.President,OrganisationofPharmaceuticalsProductsof

India(OPPI)

Member

11.President,BulkDrugManufacturersAssociation Member

12.Director(MV),DepartmentofPharmaceuticals MemberSecretary



TermsofReference(TOR)

i. ToreviewthepresentstatusofWHO‐GMP(WorldHealthOrganization–Good

ManufacturingPractice)certificationandschedule‐Mcomplianceandsuggest

measuresforraisingthelevelofcompliancebymanufacturersofdrugsand

pharmaceuticalproductsinthecountry.

xix



ii. Toassesstheadequacyandrelevanceofpresentregulatorymechanismofdrug

andpharmaceuticalssectorandexamineneedforfurtherstrengtheningtotackle

themenaceofspuriousdrugsetc.andexamineneedforanapexauthorityto

controlprice,qualityandsupplyofdrugs.

iii. Toindicatethemilestonestobeachievedinthe12thPlaninthecontextoflong

termgoalsasperitemIoftheToR(ByPlanningCommission)andrecommend

pogrammes/schemes/measuresthataretobeinitiated,continuedor

discontinuedinthe12thPlanperiodandestimatedfundrequirement.

iv. Tomakeanyotherrecommendationsasmaybeappropriateforsustained

growthandcompetitivenessofthesector.



(c)Sub‐GrouponPricingandAvailabilityofDrugs

CompositionoftheSub‐Group

1.Chairman,NationalPharmaceuticalPricingAuthority Chairman

2.NomineeofSecretary,MinistryofHealth&FamilyWelfareMember

3.NomineeofSecretary,DepartmentofConsumerAffairsMember

4.Adviser(I&VSE),PlanningCommission Member

5.MemberSecretary,NPPAMember

6.SecretaryGeneral,IndianPharmaceuticalsAlliance Member

7.President,OrganisationofPharmaceuticalsProductsofIndia

(OPPI)

Member

8.President,IndianDrugsManufacturersAssociation Member

9.Chairman,ConfederationofIndianPharmaceuticalsIndustry Member

10.President,BulkDrugManufacturersAssociation Member

11.Director(Monitoring),NPPAMemberSecretary

xx



TermsofReference(TOR)



i. Toexaminetheimpactofnewpatentregimeondomesticpharmaceutical

industryincludingitsimplicationondrugprices.

ii. Tostudytheefficacyandappropriatenessofcurrentdrugpricingsystemaswell

asitscontrolandenforcementmechanismandsuggestmeasuresforfurther

improvement,ifapplicable.

iii. Tosuggestmeasurestowardsimprovementofaccessibilityofessential

medicinesforcommonmanparticularlythepoorersectionsofthepopulation

andtoidentifystepsrequiredforfacilitatingimplementationoftheNational

HealthPolicy.

iv. Toindicatethemilestonestobeachievedinthe12thPlaninthecontextoflong

termgoalsasperitemIoftheToR(ByPlanningCommission)andrecommend

pogrammes/schemes/measuresthataretobeinitiated,continuedor

discontinuedinthe12thPlanperiodandestimatedfundrequirement.

v. Tomakeanyotherrecommendationsasmaybeappropriateforsustained

growthandcompetitivenessofthesector.



(d)Sub‐GrouponR&D,TrainingandEmploymentGenerationinthePharmaceutical

Industry

CompositionoftheSub‐Group

1.Director,NIPER,Mohali,Punjab Chairman

2.NomineeofDG,CouncilofScientific&IndustrialResearchMember

3.NomineeofSecretary,DepartmentofScience&TechnologyMember

4.NomineeofSecretary,DepartmentofBio‐TechnologyMember

xxi



5.ProjectDirector,NIPER,Hyderabad Member

6.Director,CentralDrugsResearchInstitute,Lucknow Member

7.SecretaryGeneral,IndianPharmaceuticalsAlliance Member

8.President,OrganisationofPharmaceuticalsProductsofIndia

(OPPI)

Member

9.Chairman,Dr.Reddy’sLaboratoriesLtd.,Hyderabad Member

10.Chairman,CIPLALimited,Mumbai Member

11.Chairman,LupinLimited,Mumbai Member

12.DeputyDirectorGeneral,DepartmentofPharmaceuticals. Member

13.Director(SCS),DepartmentofPharmaceuticals MemberSecretary



TermsofReference(TOR)

i. Toassessthepresentcapabilityforinnovationvis‐à‐visR&Dstatusofthe

domesticDrugs&Pharmaceuticalsindustryandtosuggestwaysandmeansto

improvethedomesticefforts,enhanceindustryparticipationandintensify

Industry‐Institutional/academialinkagetopromotedomesticR&Dfor

establishmentofitsinternationalcompetitivenessandmeetingtheemerging

challengesarisingoutoftheWTOregime.

ii. ToexaminethetrendofemploymentgrowthintheDrugsandPharmaceuticals

industryandprojectlikelyrequirementofskilledmanpowerduringtheTwelfth

Planperiodaswellastomeetthelongtermgoals.Tosuggestmeasuresfor

puttinginplaceadequateacademicandtraininginfrastructureandfacilitiesto

meettherequirements.

iii. Toindicatethemilestonestobeachievedinthe12thPlaninthecontextoflong

termgoalsasperitem‐IoftheToR(ByPlanningCommission)andrecommend

xxii



pogrammes/schemes/measuresthataretobeinitiated,continuedor

discontinuedinthe12thPlanperiodandestimatedfundrequirement.

iv. Tomakeanyotherrecommendationsasmaybeappropriateforsustained

growthandcompetitivenessofthesector.



AstheToRswerehavingnomentionofCentralPublicSectorUndertakings(CPSUs)inthe

DepartmentofPharmaceuticals,itwasdecidedtohaveasubgrouponCPSUsalso.

Thesubgroupconsistedoffollowingmembers

1.JointSecretary(DC),DepartmentofPharmaceuticals Chairman

2.CMD,IDPLMember

3.MD,HALMember

4.MD,KAPLMember

5.MD,BCPLMember

6.UnderSecretary(ShriA.K.Sah) MemberSecretary



TheToRsofthesubgroupareasbelow:

i.Toarticulatethelongtermgoalstobeachievedintermsofgrowthand

competitivenessofPharmaPSUs.

ii.Toindicatethemilestonestobeachievedinthe12thPlaninthecontextoflongterm

goalsasperitem(i)aboveandrecommendprogrammes/schemes/measuresthat

aretobeinitiated,continuedordiscontinuedinthe12thPlanperiodandestimated

fundrequirement.

iii.Tomakeanyotherrecommendationsasmaybeappropriateforsustainedgrowth

andcompetitivenessofthesector.



xxiii



TheworkinggrouponDrugsandPharmaceuticalsfirstmeton29.06.2011.Thereafter

differentsubworkinggroupsheldtheirmeetingsseparatelyandfinallysubmittedtheir

reportswhichwasseenandanalysedbytheworkinggroupmeetingheldon12.08.2011.



TheToRshavebeenarrangedinvariousChaptersbasedonthefocusareaasbelow:

Chapter1‐IndustryStructure&SWOTAnalysisconsistsoffollowingToRs:

(i) Toarticulatethelongtermgoalstobeachievedintermsofgrowth,

competitivenessandshareinglobaltradeforthedomesticDrugs&

PharmaceuticalIndustries.

(ii) ToreviewthecurrentstatusofdomesticPharmaceuticalsSectorhighlightingthe

achievementsduringthe11thPlanandreasonsformajordeviation/shortfall,if

any,inrespectoffulfilmentoftargetsandidentifyingareasofstrengthand

weaknessoftheIndianindustryvis‐à‐visinternationalDrugsand

PharmaceuticalsIndustry.

(iii) Tobenchmarkindigenousdrugs&pharmaceuticalsindustryagainstinternational

drugs&pharmaceuticalsindustryandsuggestappropriatemeasuresforbridging

thegapswherenecessary,includingtheneedsforfurtherR&Dactivitiesand/or

technologycollaborationforupgradingtechnology.

(iv) Toexaminethestructureandcapabilityofthedomesticdrugs&pharmaceutical

industry,itsexporttrend&performanceandidentifyemergingareashaving

specificpotentialforgrowthandcompetitivenessaswellastosuggestmeasures

forputtingtheindigenousindustryonsoundfootingandgrowthpathkeepingin

viewthegoalstobearticulatedunderitem1above.

(v) ToreviewthepresentstatusofWHO‐GMP(WorldHealthOrganization–Good

ManufacturingPractice)certificationandschedule‐Mcomplianceandsuggest

measuresforraisingthelevelofcompliancebymanufacturersofdrugsand

pharmaceuticalproductsinthecountry.

xxiv



(ix) Tostudychangeinstructureofdomesticpharmaceuticalsindustryinthelightof

currenttrendofmerger&acquisitions/takeovers/collaborationsandits

correlationwithrelatedFDInormsandsuggestmeasurestosafeguardnational

interests.

(xi) Toassesstheadequacyandrelevanceofpresentregulatorymechanismofdrug

andpharmaceuticalssectorandexamineneedforfurtherstrengtheningtotackle

themenaceofspuriousdrugsetc.andexamineneedforanapexauthorityto

controlprice,qualityandsupplyofdrugs.



Chapter2:Research&DevelopmentconsistsoftheToR(viii)whichisasbelow:

(viii) Toassessthepresentcapabilityforinnovationvis‐à‐visR&Dstatusofthe

domesticDrugs&Pharmaceuticalsindustryandtosuggestwaysandmeansto

improvethedomesticefforts,enhanceindustryparticipationandintensify

Industry‐Institutional/academialinkagetopromotedomesticR&Dfor

establishmentofitsinternationalcompetitivenessandmeetingtheemerging

challengesarisingoutoftheWTOregime.



Chapter3:CapacityBuildingandEmploymentconsistsofToR(x),whichisasbelow:

(x) ToexaminethetrendofemploymentgrowthintheDrugsandPharmaceuticals

industryandprojectlikelyrequirementofskilledmanpowerduringtheTwelfth

Planperiodaswellastomeetthelongtermgoals.Tosuggestmeasuresfor

puttinginplaceadequateacademicandtraininginfrastructureandfacilitiesto

meettherequirements.



Chapter4:PricingandAvailabilityconsistsofToRs(vi),(vii)and (xii)whichareasbelow:

(vi) Toexaminetheimpactofnewpatentregimeondomesticpharmaceutical

industryincludingitsimplicationondrugprices.



xxv



(vii) Tostudytheefficacyandappropriatenessofcurrentdrugpricingsystemaswell

asitscontrolandenforcementmechanismandsuggestmeasuresforfurther

improvement,ifapplicable.



Chapter5MedicalDevicesconsistsofToR(xiii)whichisasbelow:

(xiii)Toassessthecurrentstatusofdomesticmedical/surgicalequipmentindustry,its

exportpotentialandcompetitivenessandsuggestmeasuresforimprovement

andaugmentationofcapabilities,wherenecessary.

Chapter6isrelatedtoCentralPublicSectorUndertakings.

Chapter7isResourceRequirementintheDepartmentofPharmaceuticals

Chapter8SchemesandProposalsconsistsofToRs(xiv)and(xv)whichreadasbelow:

(xiv) Toindicatethemilestonestobeachievedinthe12thPlaninthecontextoflong

termgoalsasperitem‐IoftheToRandrecommend

pogrammes/schemes/measuresthataretobeinitiated,continuedor

discontinuedinthe12thPlanperiodandestimatedfundrequirement.

(xv) Tomakeanyotherrecommendationsasmaybeappropriateforsustained

growthandcompetitivenessofthesector.



Page 1 of 153

Chapter1

PHARMACEUTICALSINDUSTRY:STRUCTURE&SWOTANALYSIS



1.1 INTRODUCTION

TheIndianpharmaceuticalIndustryisdrivenbyknowledge,skills,lowproduction

costs,quality.Duetothisthereisdemandfrombothdomesticaswellas

internationalmarkets.Thishasresultedinarobustgrowthofaround14%sincethe

beginningofthe11thPlanin2007fromaboutRs71000crorestooverRs1laccrores

in2009‐10comprisingsomeRs62,055croresofdomesticmarketandexportsof

overRs42,154crores(Table‐1).

Table‐1:ExportandDomesticGrowth

*Provisional

TheIndustryisranked3rdgloballyinvolumeand14thinvalue,supplyingaround10%oftotal

globalproduction1.Thisalsoamountstoaround20%oftotalvolumeofglobalgenerics.Thus

every5thTablet,CapsuleandInjectableingenericsdrugsconsumedanywhereintheworld

ismanufacturedinIndia.Infact,Indiamanufactures30%oftheworldrequirementofAnti‐

HIVdrugs.Allofthisgrowthhasbeenwithaffordablepricetothecommonman–oneofthe

lowestintheworld.Goingforward,itisexpectedthatthegrowthwillbesustained

notwithstandingtherecentinitialdecreaseduetoglobaleconomicslowdownas

broughtoutinthedecreasedgrowthratefrom18.65%in2009‐10over2008‐09to

9.38%intheperiod2009‐102.

1.CygnusReport‐CygnusBusinessConsultingandResearchisaservicesorganizationfocusingonanalysisand

researchofEconomies,IndustriesandCompanies

2.FICCI‐IMSReport

YearExportsGrowth DomesticGrowth%TotalGrowth%

Mar20062123023.233998917.176121919.21

Mar20072566620.894536713.457103316.03

Mar20082935414.37 50946 12.30 8030013.04

Mar20093982135.66554548.859527518.65

Mar201042154*5.866205511.901042099.38

Page 2 of 153

Indianpharmaceuticalindustryistrulyinternationalwithleadinginternational

manufacturerscompetinginIndiandomesticmarketandseveralIndianpharma

companieshavingasignificantpresenceininternationalmarket,especiallyinthe

genericsegment.However,theIndustryisquitefragmentedandcomprisesofnearly

10,500unitswithmajorityoftheminsmallsector.Ofthese,about300‐400unitsare

categorizedasbelongingtomediumtolargeorganizedsectorwiththetop10

manufacturersaccountingfor36.5%ofthemarketshare3.



Medium&LargeDomesticCompanies:Themediumandlargedomesticcompanies

havebeenthedriversofgrowth,contributing75%ofdomesticsalesandover90%of

exports.Theexportoftop50companiesfortheyear2009‐10revealthat

pharmaceuticalindustry’sforayintheglobalmarketisdrivenmainlybythedomestic

companiesasmaybeseenbelow.Thustop50exportersaccountedfor76%oftotal

exportsofRs36,683crin2009‐10.Itisnoteworthythatonlytwoforeigncompanies

featureinthislistcontributinglessthan2%ofthetotalpharmaceuticalexports.



Table–2:Internationalsalesonconsolidatedbasis(Rscrore)2010‐114

3 Indian Institute of Management, Bangalore – Report on “Viable Strategies to make Pharmaceutical CPSEs

Self-Reliant” prepared for DoP in 2009-10

4 Pharmabiz analysis

Consolidated International Exports as % of net sales

net sales sales 2010-11

Ranbaxy Labs 8960.77 6771.74 75.6

Dr Reddy's Labs 7236.80 5940.70 82.1

Lupin 5706.82 3983.08 69.8

Cipla 6130.31 3361.49 54.8

Sun Pharma 5721.43 2898.20 50.7

Wockhardt 3751.24 2709.91 72.2

Jubilant Lifescience 3433.40 2369.11 69.0

Cadila Healthcare 4464.70 2288.70 51.3

Biocon 2300.52 1956.79 85.1

Glenmark Pharma 3089.59 1955.83 63.3

Stride Arcolab 1695.84 1637.67 96.6

Plethico Pharma 1535.20 1367.22 89.1

Piramal Healthcare 2509.86 1280.58 51.0

Divi's Labs 1307.11 1204.95 92.2

Aurobindo Pharma 4381.48 1112.06 25.4

Page 3 of 153



1.2DOMESTICMARKET

1.2.1Structure&GeographicalDistribution

TheDomesticPharmaceuticalMarkethasreachedtooverRs60,000croresin2009‐

10.Understandably,themarketisskewedtowardscitieswiththetop23cities

accountingforalmost25%ofpharmasalesofwhichtheTier‐Itownsaccountforone

thirdofsalesandTier‐IIcities(populationlessthanonelac)includingtherural

marketaccountingforabout40%ofmarketshare.Thisisfortheobviousreasonsof

betterhealthcareaccessibilityandpurchasingpoweroftheresidentmiddleclass

incomegroup.However,duetoshiftingruralandsemi‐urbaneconomicstatusas

wellaslivinglifestyles,theruralareasarewitnessingamarketincreasegrowthof

morethan30%annually.Thisincreaseinthegrowthiscatchingattentionofthe

majorcompanieswhoarenowfocusingonthemforfuturegrowth.



Statewisedistributionis:

Table‐3:GeographicalDistributionofPharmaCompanies

S.No.StateNumberofManufacturingUnits Total

 FormulationBulkDrugs

1.Maharashtra192812113139

2.Gujarat1129 397 1526

3.WestBengal69462756

4.AndhraPradesh528199727

5.TamilNadu47298570

6.Others34234223845

Total8174238910563



Torrent Pharma 2121.97 1101.57 51.9

Ipca Laboratories 1882.54 1025.18 54.5

Dishman Pharma 990.84 911.56 92.0

Orchid Chemicals 1781.79 725.85 40.7

Shasun Chemicals 799.42 676.78 84.7

Panacea Biotec 1143.78 610.44 53.4

Page 4 of 153

1.2.2FormulationsandTherapeuticsegmentsinthedomesticmarket:

WithintheDomesticformulationsmarketthemajortherapeuticcategoriesare‐

anti‐infective,gastrointestinal,cardiac,gynecologyanddermatology5.Theleading

drugclasseswereCephalosporin,Anti‐pepticulcerants,oralanti‐diabeticand

Ampicillin/Amoxycillin,etc.Thetoptendugclassescontributed35%oftotal

domesticmarket.AsperIMS‐Health6themajortherapeuticsegmentsasperMAT

valueare:



Table‐4:MarketTurnoverofMajorTherapeuticSegments

MajorTherapiesMATDEC'05

(ValinCrs)

%

Contribution

MATDEC'10

(ValinCrs)

%

Contribut

ion

Anti‐infectives4,056 17.6 8,060 17.2

Cardiac2,378 10.3 5,318 11.4

GastroIntestinal2,537 11.0 5,099 10.9

Respiratory2,170 9.4 4,080 8.7

Pain/Analgesics2,059 8.9 4,038 8.6

Vitamins/Minerals/

Nutrients2,1059.13,6257.7

AntiDiabetic 998 4.3 2,743 5.9

Gynaecology1,261 5.5 2,658 5.7

Neuro/CNS1,231 5.3 2,633 5.6

Derma1,255 5.4 2,554 5.5

  Source:IMSHealth



Indiaislargelyself‐sufficientincaseofformulations,thoughsomelifesaving,new‐

generation‐technology‐barrierformulationscontinuetobeimported.Thisisevident

fromthefactthatoutofthelistof348medicinesenlistedas“EssentialMedicines”

intheNLEM2011,allaremanufacturedbydomesticpharmaindustry.



1.2.3BulkDrugIndustry

5 IMS-Health

6 IMS-Health

Page 5 of 153

The Bulk drugs component of the domestic industry is around Rs 42,000 crores giving

it a share of around 50% of the total domestic market7. This gives the Indian Bulk

Drug industry a share of about 9% of the global bulk drugs market of about US$ 102

Bn in 20098.

The bulk drugs produced in Indian market fall under 21 major therapeutic classes with

Antibiotics constituting more than 50% of the total production. This is because of

anti-infectives being the therapeutic segment of highest demand in accordance with

the prevailing disease class in India. Analgesics and Anti-pyretics account for 18%

and Anti-Dysentery and Vitamin constitute about 8%.

AsregardstheexportsofBulkdrugsithasshownaCAGRof16.98%inthelast3

years–seeTable‐5below:

Table‐5:BulkIndustryGrowth

(InRsCrores)

2007‐082008‐09 2009‐10 CAGR

12,647.5116,360.71 17,307.02 16.98%



WhiletheIndianbulkdrugindustryiscateringtoaround70%requirementofIndian

PharmaceuticalIndustrythereisgrowingdependenceonChinawithlowimport

costs.ThisdependenceisparticularlymoreinfermentationbaseAPIssuchas

Pencillin,Erythromycin,etcwhereitisalmost100%dependentonChina.Thisissue

hasbeenvoicedatvariousforaincludingbyMoH&FWasbeingofstrategicconcern.



1.2.4BiopharmaIndustry

1.2.4.1OverviewoftheGlobalBiologicsSector

7 BDMA

8 Cygnus- Cygnus Business Consulting and Research is a services organisation focusing on analysis and

research of Economies, Industries and Companies

Page 6 of 153

Withglobalsalesofbiologicsreachingnearly$137billionin2009andthepatentson

atleast48biologicsduetoexpireoverthenextdecade,industryexpertspredictthat

theglobalbiosimilarsmarketcouldbeworthmorethan$43billionby2020.But

biologicsdifferfromconventionalpharmaceuticalsinsomefundamentalways.



1.2.4.2SizeandCompositionoftheGlobalBiologicsMarket

In2009,globalsalesofbiologicstotalled$136.6billion(Table‐6).Avastin

(bevacizumab)headedthelistofbestsellers,withsalesof$5.74billion,while

Rituxan(rituzimab)andHumira(adalimumab)camesecondandthird,respectivelyas

pertablebelow.

Table‐6:TheGlobalMarketforBiologicsin2009

Country 2009Sales($bn)

US69.02

Europe41.68

Japan10.29

Asia/Africa/Australasia14.4.0

LatinAmerica1.20

TotalBiologicDrugs

Market

136.59

Source:Visiongain&PricewaterhouseCoopersanalysis



Table‐7:The10TopSellingBiologicsin2009

BrandDrugName 2009Sales($bn)

Avastinbevacizumab 5.74

Rituxanrituximab5.62

Humiraadalimumab5.48

Herceptintrastuzumab4.86

Lantusinsulinglarine4.29

Enbreletanercept3.87

Remicadeinfliximab 3.51

Page 7 of 153

Neulastapegfilgrastim 3.35

Epogenepoetinalfa 2.56

Avonexinterferonbeta‐1a2.32

Source:EvaluatePharma

1.2.4.3SizeandCompositionoftheGlobalBiosimilarsMarket

Biosimilarsaccountedforsalesofjust$1.23billion–lessthan1%ofthetotal

biologicsmarket–in2009(Table8).However,thereisconsiderablepotentialfor

growth.

Table‐8:TheGlobalMarketforBiosimilarsin2009

Country2009Sales($

bn)

MarketShareof

Biosimilars(%)

US0.06 4.9

Europe0.14 11.4

OtherCountries

(incl.Chinaand

India)

1.03 83.7

TotalBiosimilars

Market

1.23 100

Source:IMSHealth&visiongain



1.2.5GROWTH

1.2.5.1DomesticIndustry:

Asstatedearlierabove,thedomesticpharmaceuticalIndustryhasgrownataround

12%CAGRsincethestartofthe11thPlanin2007,fromRs45,367croresin2007to

aboutRs62,055croresin2009‐10.Thisissustainedbythefollowingfactors‐

a) marketsizeincreaseduetoincreaseinthesizeofmiddlelevelincomeearning

populationsegmentasitgrowsinsizefromthecurrent270Mntosome583

Millionby20259;

b) Increaseinpurchasingpowerofthisgroup;

9 www.Mckinsey.com/mgi/mginews/bigspenders.asp

Page 8 of 153

c) AgingoftheIndianpopulationaslifeexpectancyhasincreasedfromabout42

yearsin1960sto66.95yearsatthebeginningofthe11thplantonow68.45years

in2010‐1110coupledwiththepurchasingpowerofthissegment.Itistobenoted

thatpeopleofoldagespendaround3to4timesmoreondrugsthanpeoplein

youngeragegroupsforobviousreasons;

d) greatermarketpenetrationduetoincreasingspreadofprivatesectormedical

insurancecoverdrivenbyliberalizationoftheinsurancesectorofthisburgeoning

middleclass;and

e) sustainedexpectedgrowthoftheIndianeconomyingeneralataGDPgrowth

rateofsome9%to9.5%inthe12thPlanperiod11



Goingforward,theabovefactorsforsustainedgrowthwillbematchedbythe

inherentabilityoftheIndianmanufacturerstoscaleupproductionwithlesscosts

andtime,aswitnessedintheoverRs29,000croresofinvestmentinsettingupof

newmanufacturingplantsinthecountryinthe11thplanperiod12.



Theproductpatentnowpermittedfollowingthe2005amendmentinthePatentAct

1970hasfurtherencouragedthenowreasonablypreparedIndianpharmaceutical

companiestomovefromitsexpertiseinprocesschemistrywhichhasserveditwell

forgenericsproductstomorecomplexskillsindrugmoleculeResearchand

Development.ThusR&Dinvestmentsofthetop15Indianmanufacturingcompanies

haveincreasedfrom3%ofsalesin2000tosome8.68%ofsalesin201013.Basedon

abovefacts,theprojectedgrowthofthepharmaceuticalsectorasperpresent

outlookis–

Table‐9:ProjectedGrowth

ValueinRscrs/Growthin%

YearDomesticExports Total

10 Census Commission

11 Planning Commission

12 IPA

13 IPA

Page 9 of 153

ValueGrowth Value Growth ValueGrowth

2016‐17130,00021% 158,000 16% 288,00018%

2019‐20233,00022% 248,000 17% 481,00019%



1.2.5.2BulkDrugIndustryGrowthcomponent:

InIndiathebulkdrugsindustryisamajordriverfortheoverallindustrygrowthbeing

drivenbythesame6reasonsasforthepharmaceuticalsformulationssector

mentionedearlier.AspertheestimatesofBulkDrugsManufacturersAssociation

(BDMA),thishighgrowthwillcontinueandthesectorwillbeofUSD20billionsizeby

2015growingataCAGRof20%from2008‐0914.Withtheseprojections,itis

expectedtotouchUS$28billionbyendof12thplanin2017.



1.3EXPORT:

1.3.1Structure

Indiaisamongthetop20pharmaceuticalexportingcountriesgloballyandhas

showncommendableexportperformancewithcontinuouspositivetradeofbalance.

ExportsconstituteamajorpartofIndianpharmaceuticalIndustryandatpresentitis

around45%oftotalturnoveroftheIndustry.AsperDGCIS,theexportduring2010‐

11hasreachedmorethanRs45,000crores.



Indiandrugsareexportedtoaround200countriesintheworldwithhighlyregulated

marketsofUSA,UKetc.ThetopfiveexportingdestinationcountriesareUSA,Russia,

Germany,AustriaandUKwithUSAaloneaccountingforalmost20%oftotalexport.

Themajortherapeuticcategoriesofexportareantiinfective,antiasthmaticandanti

hypertensive.Country‐wise,thepositionisasflows:



1.3.2Growth

14 BDMA

Page 10 of 153

ExportshavegrownverysignificantlyataCAGRofaround19%inthe11thPlan

period,fromRs25,666crsin2007tooverRs45,000croresduring2010‐1115.The

table‐10belowgivesapictureofgrowthofexportforlast5years.



Table‐10:ExportGrowth

YearExports(Rs.crores) Growth%

Mar20072566620.89

Mar20082935414.37

Mar20093982135.66

Mar2010421546.6

Mar2011457457.7



Thesustenanceinexportgrowthrateswillbedrivenbythreefactors–

i. Increaseddependenceongenericsproductionduetopatentexpiriesby

2015,estimatedatsomeUS$300Bnofconventionaland

biopharmaceuticals16;

ii. Slowdownindiscovery/inventionofnewmoleculesindevelopedcountries;

and

iii. pressureonthedevelopedcountrygovernmentslikeUS,Germany,Japan,etc

tocontaintheirhealthcareexpenditure;

Consequently,theglobalMNCsarenowincreasinglydependingontheIndian

genericsproducers,aswitnessedintheacquisitions/mergersofsixmajorIndian

PharmacompaniesataworthofoverUS$10billionsinthe2007‐2010periodwith

anaveragepurchasepriceofabout7to9timesthegrossrevenuesforagiven

company.



1.3.3GlobalShare

15DGCIS

16 McKinsey &Company,”Capturing the India Advantage-page 18

Page 11 of 153

India,atpresentisrecognizedasaleadingglobalplayerandholds3rdpositionin

termsofvolumeand14ththeintermsofvalueoftheproduction.Theglobalmarket

forgenericdrugsin2009wasworthUS$108billion(FICCI‐IMSreportonGlobal

GenericMarket)andIndianpharmamarket,whichaspointedoutearlierconsistsof

almostgenericdrugsonly,contributedaround20%intermsofvalue.Globally,inthe

overallpharmaceuticalsspace,withaturnoverofUS$21billionin2010,Indian

PharmaceuticalIndustryhasashareof2.4%intermsofvalueinglobal

pharmaceuticalindustrywhichishavingaturnoverofUS$878billionin201017.



1.3.4Regulatory

IndiaissignatorytotheWHOcertificationprotocolonthequalityofpharmaceuticals

productsandhasthereforeacceptedtheWHO‐GMPstandardsasanintegralpartof

thestandardsforexportofpharmaceuticalsproducts.Asperarrangement,WHO‐

GMPcertificationisgrantedbytheofficeoftheDCGI(CDSCO)andStateFDAs.The

certificationisfortwoyearsatatime.



Sinceexportofgenericstothehighgrowthemergingmarketsistobeakeystrategy

forgrowthofpharmaindustryinthecountry,henceupgradationofSMEstoWHO‐

GMPstandardswouldenablethemtoexporttheirproductsandtherebyincrease

profitability.Itisestimatedthatatpresentabout800unitsarecertifiedbyCDSCO

forWHO‐GMPproduction.Asthereareabout10,000plusPharmaSMEUnitsinthe

country,therefore,thenumberofWHO‐GMPstandardunitsneedstoberaisedtoat

least2000bytheendofthe12thplanin2017toenabletheSMEsectortoincrease

andsustainitsparticipationinthePharmaIndustrygrowthprocess.Accordingly

giventheambitioustargetofachievingUSD100Bnproductionby2020,itis

estimatedthatabout1000‐1200unitswillhavetobeassistedforraisingtheir

manufacturingstandardstoWHO‐GMPlevels.Atanaverageproductioncontribution

ofUSD10Mnperunit,thiswouldmeanadditionalcontributionofaboutRs.10Bn

fromtheabovetargetachievement.

17 April-10,2010. IMS – forecasts for global pharmaceutical market – Market Prognosis :

www.imshealth.com

Page 12 of 153



Further,thereisneedtoupgradeatleast250unitstoUSFDA/EDQM/TGAandother

InternationalStandardsby2017andtrainingof5000WorkingProfessionalsinWHO‐

GMPandotherInternationalStandardsGMPrequirements.



1.3.5CompetitivenessandBenchmarking

1.3.5.1Competitiveness



GlobalPharmaMarket

Theglobalmarketischaracterizedby‐

• Peakyearsofpatentexpiriesdrivinggrowthtowardgenerics

• Publiclyfundedmarketsfacingslowergrowthandaddeduncertainty

• Chinaonpathtobecomingworld’sthird‐largestmarketin2011

AsperestimatesofIMSHealth–aglobalpharmaconsultingorganization‐thesize

oftheglobalmarketforpharmaceuticalsisexpectedtogrownearly$300billionover

thenextfiveyears,reaching$1.1trillionin2014.The5‐8percentcompoundannual

growthrateduringthisperiodwouldreflecttheimpactofleadingproductslosing

patentprotectionindevelopedmarkets,aswellasstrongoverallgrowthinthe

world’semergingcountries.Itistobestatedthatglobalpharmaceuticalsalesgrew

at7.0percentto$837billionin2009,comparedwitha4.8percentgrowthratein

2008.

Themarketwillcontinuetodrivenbypatientdemanddespitetheongoingeffectsof

theeconomicdownturn.Indevelopedmarketswithpubliclyfundedhealthcare

plans,pressurebypayerstocurbdrugspendinggrowthwillonlyintensify,butthat

willbemorethanoffsetbytheongoing,rapidexpansionofdemandinthe

pharmergingmarkets.Netgrowthoverthenextfiveyearsisexpectedtobestrong

—evenastheindustryfacesthepeakyearsofpatentexpiriesforinnovativedrugs

introduced10‐15yearsagoandsubsequententryoflower‐costgeneric

alternatives.

Page 13 of 153



Goingforward,IMShasidentifiedthefollowingkeymarketdynamics:

i. Geographicbalanceofthepharmaceuticalmarketwillcontinuetoshift

towardpharmergingcountries.Pharmergingmarkets(BRIC,SouthKorea,

Turkey,ASEAN,etc.)areexpectedtogrowata14‐17percentpacethrough

2014,whilemajordevelopedmarkets(US.WestEurope)willgrow3‐6

percent.Asaresult,theaggregategrowththrough2014frompharmerging

marketswillbesimilartothegrowthexperiencedindevelopedmarkets—

about$120‐$140billion.Thiscomparestoaggregategrowthoverthepast

fiveyearsof$69billioninpharmergingmarketsand$126billionindeveloped

markets.TheU.S.willremainthesinglelargestmarket,with3‐6percent

growthexpectedannuallyinthenextfiveyearsandreaching$360‐$390

billionin2014,upfrom$300billionin2009.



ii. TheTherapyareagrowthdynamicswillbedrivenbyinnovationcycleand

areasofunmetneed.Asthepharmaceuticalindustry’sresearchand

developmentprogramsadjusttothebroadavailabilityoflow‐costgeneric

optionsinmanychronictherapyareas,highergrowthwilloccurinthose

therapyareaswherethereissignificantunmetclinicalneed,high‐costburden

ofdisease,andinnovativesciencethatcanbringnewtreatmentoptionsto

patients.Intheareasofoncology,diabetes,multiplesclerosisandHIV,

annualgrowthisexpectedtoexceed10percentthrough2014asnewdrugs

arebroughttomarket,patientaccessisexpandedandfundingisredirected

fromotherareaswherelower‐costgenericswillbeavailable.



iii. Broadcutsinspendingwillbeappliedbypublicpayerstoreducegrowthin

drugbudgets.Publiclyfundedhealthsystemsareunderincreasedpressure

toreducegrowthindrugbudgetsfollowingtheglobaleconomicdownturn.

Page 14 of 153

CountriesincludingTurkey,Spain,GermanyandFrancealreadyhave

announcedplanstoapplyacross‐the‐boardrestrictionsonaccessor

reductionsinreimbursementstoreducedrugspendinggrowth.Governments

inothercountriesseekingtorestorefiscalbalancemaytakesimilaractions,

orshiftmorecoststopatients.



iv. Peakyearsofpatentexpirieswillshiftmajortherapiestogeneric

dominance.Overthenextfiveyears,productswithsalesofmorethan$142

billionareexpectedtofacegenericcompetitioninmajordevelopedmarkets.

Collectively,theimpactofpatientsshiftingtolower‐costgenericsinmajor

therapyareassuchascholesterolregulators,antipsychoticsandanti‐

ulcerantswillreducetotaldrugspendingbyabout$80‐$100billion

worldwidethrough2014.ThisimpactparticularlywillbefeltintheU.S.,

wherenearlytwo‐thirdsofthetotalvalueofpatentexpirieswilloccur.

PatentexpiriesintheU.S.willpeakin2011and2012whensixoftoday’sten

largestproductsareexpectedtofacegenericcompetition.



v. Closerscrutinyofnewproductswillresultinrestrictedcontributestolower

initialspendingbypayers.Thenumberofnewmolecularentitieslaunched

annuallyoverthenextfiveyearsisexpectedtoremainintherangeof30to

35products.However,thesewillbesubjecttomorerigorousandcomplex

assessmentsbypayersbeforebeingacceptedintoclinicalpracticeand

reimbursed.Inmanycountries—includingChina,Spain,ItalyandCanada—

fundingandimplementationofhealthcareatregionalorlocallevelsis

becomingmoresignificant.Thisisexpectedtoextendthetimeittakesfor

newmedicinestobecomeavailabletopatients,andcontributetolower

initialspendingbypayers.

Page 15 of 153

Furtherthattheexpectedglobaleconomicrecoveryremovesanelementof

uncertaintyfortheindustryoverthenextfiveyears,althoughthewaypayers

addresslingeringbudgetdeficitswillremainanissueinmanymarkets.Health

systemreforms,suchasthosetobeimplementedintheU.S.,canspurfundamental

changeinthemarket—butthefullimpactmaynotbefeltuntilthelatterhalfofthis

decade.Leadingupto2020,IMSexpectstoseeacontinuingshifttoward

biopharmaceuticals,specialty‐drivenproducts,andchangesinthemixofdisease

areasofinterest.



1.3.5.2Benchmarking

i. Research,developmentandInnovation

ii. HumanResources

iii. TechnicalCapability

iv. Infrastructure

v. ColdChaininfrastructure



(i) Research,developmentandInnovation

ResearchandDevelopment(R&D)isthebackboneofthegloballeadersinthe

pharmaceuticalindustryallovertheworld.Thepharmacompaniesinthe

developingcountrieswithsomesizeableturnoverarenowincreasinglytherefore

lookingatinnovationandR&Daskeystrategiesforfuturegrowth.TheIndian

pharmaceuticalcompaniescannotaffordtobedifferent.SomeleadingIndian

companieslikeSun,ZydusCadilla,DRL,Lupin,etcareincreasinglyfocusedonR&D

totaptheupcomingopportunitiesfromexpirationofpatentsofseveral

blockbusterproducts.



TheglobalaverageR&Dexpenditurein2010was$68billionwhichwasaround8%

ofglobalPharmaceuticalsalesin2010i.e.$856billion1.Hence,althoughinterms

ofpercentagetheR&DexpenditureofbigPharmacompaniesinIndiaisalso

comparabletoglobalaverage,howeverthetotalexpenditureonR&DbyIndian

Page 16 of 153

firmsismuchlessascomparedtotheglobalexpenditure.Moredetailsofthisis

discussedinChapter3onR&D.



(ii) HumanResources

ThesubjectofHumanresourcesrequiredindetailintheChapter3onCapacity

BuildingandEmployment.Forsakeofacompletediscussionbrieflyitmaybe

mentionedherethattheGovernmentandtheprivatesectordoofferauseful

institutionalstructureforprovidingdiplomatoPhDlevelknowledgedevelopment

inthepharmaceuticalssector.TheGovernmentofIndia‐throughthehighend

NationalInstituteofPharmaceuticalEducationandResearchestablishedat

Mohali,Chandigarhin1997followedbysettingupofsixNationalInstitutesof

PharmaceuticalsEducationandResearch(NIPER)atRaeBareilly,Hajipur(Patna),

Hyderabad,Ahmedabad,GuwahatiandKolkata.Theseprovidepostgraduateand

PhDleveleducationandcontributetosome1800MastersandPhDsperyear.

Othercentralgovernmentinstitutesinclude–TheIndianInstituteofChemical

Technology(IICT),CentreforCellularandMolecularBiology(CCMB),National

InstituteofNutrition(NIN),CentreforDNAFingerprintingandDiagnostics(CDFD),

IndianImmunologicalLtd(IIL),etc.



AnumberofStateGovernmentUniversitiesandCollegesalsoofferbothgraduate

andpostgraduateeducationinpharmaceuticalsciences.Theaboveresourcesare

alsosupplementedbytheinstitutesandcollegesintheprivatesector.Together

boththegovernmentandprivatesectorrolloutsome51000graduatesand5200

PGsinpharmaceuticalsscienceseveryyear18.



(iii) TechnicalCapability

Thechemistryskillsproducedinthecountrythroughitscollegesanduniversities

supportedbytheirdemandinthegenericsdominatedproductionpatternin

IndianpharmahasplayedakeyroleinbuildingIndiandominanceintheglobal

genericssector.Thatthisskillhascomeatlowcostshasresultedamongstvarious

18 Report by Deloitte 2010 for DoP on setting up of new NIPERs

Page 17 of 153

otherfactorsinenablingIndianpharmatoproduceoneofthecheapestgood

qualitydrugsintheworld.AcomparisonofthedrugpricesinIndiaandPakistan

illustratesthispoint.Withhardlyanymanufacturingbasefordrugs,thepricesof

drugsinPakistanaremuchhigherthaninIndia(3to14times)eventhoughper

capitaincomesinboththecountriesaremoreorlesssame.HoweverwithChina

thereisatoughcompetitiononthisfront.Nevertheless,Indiaisamongstthefew

developingcountriestosucceedinbuildingstronglocalcapabilityinthe

technology‐intensivepharmaceuticalsector.



However,onceagainthetechnologydevelopmentbeinglimitedtogenericsAPIs

orformulationhasbeenmostlylimitedtocost‐effectiveprocessdevelopment.

Thishasresultedinpoordevelopmentofnewproducts.Howeveritcanbeargued

thatsincetheIndianpharmastarteddevelopmentonlyasfrom1960salbeitina

MNCdominatedenvironment,itisacredittoittobeabletodevelopeventothe

currentskillsascomparedtorestoftheworld.Surelyhighriskandhighskill

demandfornewdrugdevelopmentcanpossiblynotbedoneinbarely25yearsof

ahightechnologyindustryandtheIndianpharmarightlyfirstmettheneedsof

country’sdrugneedsinthemuchrequiredanti‐infectivessector(themoleculesin

thissegmentwereinearly1940‐50s)andisnowperhapswellplacedtotakeon

thenewdrugdevelopmentchallenges.Wereitnotso,Indiawouldnothavebeen

abletotaptheglobalizationandliberalizationopportunitynowwideopeninthe

genericssectorwithitslowcostgoodqualitybase.Thisisdiscussedmoreinthe

Section1.7onSWOTAnalysis.Goingforward,Indianpharmaindustrywould

needtofocusondevelopingcompetenceinadvancedareasofdrugmanufacture

e.g.biopharmaceuticals,DNAbaseddrugsetc.



(iv)Infrastructure

AlthoughIndianpharmahasgloballyrecognizedcapabilitiesingenerics

production,ChinaisforgingaheadwithhugeinvestmentsinAPIproductionwhich

requiresinter‐aliacheappowerandotherinfrastructurefacilities.Israel,Germany,

BrazilandTurkeyarealsobuildinglargestrengths.Inthefieldofmedicaldevices,

Page 18 of 153

theIndianindustryisinnascentstage.So,thereisaneedofdevelopingcommon

infrastructureindrugdiscoveryanddevelopment,manufacturing,distribution,

exports,medicaldevices,etc.



Thekeyareasare:

(a) GLPCompliantAnimalFacilities:Pre‐Clinicaltestingrequiresprimatebased

largeanimaltesting.Howevertherearelimitedprimatefacilitiesinthe

country.WhileICMRhasproposalsfortransgenicanimalfacilitiesanda

Nationalcenterfornon‐humanprimatebreedingcenterthereisneedtobuild

capacityinthisareaandtodoitfast.Thiswouldrequirelicensedbreeders

meetingandmaintainGLPstandards.



(b) BiologicalSampleStorageFacilities:Accesstostoragefacilitiesadheringto

appropriatebio‐safetylevelsisrequired,asIndiaaddresseschallengesof

infectiousdiseases.Currently,samplesusedinmanyoftheclinicaltrialsare

beingstored/archivedoutsideIndia.ManyIndianpharmaceuticalcompanies

outsourcesafety,pharmacologyandregulatorytoxicitystudiestoother

countries,duetolackofcomprehensivefacilityexistinginthecountry,which

couldcarryoutthesestudiesinanintegratedmanner.



(c)SharedInfrastructureforOptimalCapacityUtilization:Everyscientistore

R&Dinstitution/Industryfacilitydoesnotrequirecompleteself‐sufficiencyin

termsofin‐houseinfrastructure.Poolingofresourcesbetweengovernment

andindustryasalsoacademiaevenwhilesecrecyconditionswouldgoalong

wayinbuildingmutuallybeneficialpartnerships.



(v)ColdChainInfrastructure

ThePharmaceuticalSupplyChainisverycomplexandhighlyresponsibletoensure

thattheconcerneddrugreachesthetargetpeoplewithoutlosingitsefficacy

whereverthedrugsaretemperaturesensitivewheretheColdChainInfrastructure

Page 19 of 153

isparamount.ThisisparticularlyimportantforVaccinesandrelatedtreatments

likePolio,etc.



ThisfactisincreasinglyofimportancenowintheIndianmarketgiventhegrowing

accessalongwiththelargeandoftenpoorlyconnecteddistantplaceswhere

treatmentmedicinesaretobecarriedto.Hence,pharmaceuticalcompaniesin

IndiahaverealizedtheimportanceofSCMrelatedColdChainInfrastructureand

areaggressivelylookingforwaystoimprovethecostsassociatedwithSCM.

DistributioninIndiaisproportionallymuchmorecostlythanitisintheUSorEU

duetoinherentlypoortransportstructureavailablefordrugs.Uptoone‐thirdof

therevenuesareoftenspentonSCM.BecauseoflackofdevelopedSCM

infrastructurefordrugs,thecostishigherinIndiaascomparedtoUSandEU(2%

ofsalesinUS/EUascomparedto4‐%inIndia).(BioPharmInternational

www.biopharminternational.comSeptember200).



OneotherreasonfortheabsenceofamodernSCMinfrastructureisthatthe

medicinessupplychaininIndiaishighlyfragmentedwithmorethan550,000retail

pharmaciesspreadacrossvastdistancesoftenpoorlyconnectedinthecountry.

Thisalsoleadstosuchproblemsasconcerningrecallofdrugs.Newertechnologies

wouldhelpinkeepingtrackofproductsalongtheentirechainandwouldlimit

counterfeitdrugstoenterintothesystem.Theproblemsareobviously

compoundedwhenmandatedcoldchainrequirementsaretobemet.Thisisone

ofthemajorchallengesfacedbytheindustryiftheyaretoretainproductquality

duringshipmentspeciallythebiotechproducts.Thereforetheorganizeddrugretail

facesdauntingchallengeswhichwouldthereforebeakeyfactortoimprove

affordableandqualityhealthcareaccesstoall.



1.4IPRandInternationalCooperationIssues

1.4.1ThesubjectofIPR,TRIPS,PatentLinkage,FTAs,DataExclusivity,etc.aremuch

debatedinthenationalandinternationalfora.BothlargeandSMEunitsarefinding

itdifficulttocopeupwiththeincreasinglynewdemandsbeingplacedonthese

Page 20 of 153

issuesbythedevelopedmarkets.Itisalsowidelybelievedthatthisistobuildnon‐

tariffbarriersagainstthecapabilitiesoftheIndianpharmatogarneralargermarket

shareinthedevelopedmarketsnowhavingincreasingneedforgenericsforcost

containmentinthecontextoflimitedgovernmentbudgetsandthecontinuingslow

downoftheeconomies.



IndianPharmaIndustryconsistsof60%domesticand40%ofexportmarketon

accountofwhichtheexportswouldbeaffectedduetosuchanapproachofthe

developedmarketregulators.TheStandardOperatingProcedures(SOPs)ofdifferent

governmentsisdifferentinternationally.Thereforethereisarequirementto

educateSMEunitsaboutcountryspecificSOPsfortestingtheirproducts.



Inthisregard,thesituationisalreadypitiableevenfortestingofproductsforIndian

marketsduetolackofavailabilityofreferencestandardproductsasperIndian

Pharmacopeia(IP).Thuswhilemorethan1000moleculesarebeingmanufacturedor

marketedinthecountry,IPChasreferencestandardsforabout200productsonly.

Thusthesebatchspecificandtimelimitedreferenceproductshavetobeeither

importedorgotmanufacturedin‐houseorthroughotherunitswhichisavery

tediousandexpensiveprocess.Thereisaneedtolaunchpartnershipprogrammes

byDoPinpartnershipwithMoHFW/IPCtomakereferencestandardproducts

availablenotonlyforIPbutalsoforothercountrieswheremajorexportsare

focused.ThereisalsoneedforincreasedtrainingforSMEsregardingtheSOPsand

ensuringavailabilityofreferencestandardproductsfortestingandfulfilmentof

exportsrequirements.



1.4.2Non‐TariffBarriers(NTBs): Theexportingunitsbothbulkdrugsand

formulationsfacethreetypesofnon‐tariffbarriersrelatedtoregulatory

requirementsfromhighexportmarketsliketheEU.

Page 21 of 153

i. ThereisarequirementtoensurecompliancetoEDQMstandardswhichis

availableforonly3yearsatatimewithsuchhighcostsasEuro15,000

perdrugpertime.

ii. TheninadditiontoEDQMthereisfurtherneedtoobtaincertification

fromeachimportingcountry.

iii. Furtherinthecaseofbulkdrugs,athirdadditionalrequirementisofa

thirdpartyaudit.Thisauditcompelscompaniestodivulgetheir

intellectualpropertyinfringingontheirrighttoprotectdataguaranteed

underTRIPs.

iv. Then,EUisinsistingonverificationofpedigreeofActivePharmaceutical

Ingredientsincaseofexportofformulations.



Clearly,ifsuchNTBsaretobeaddressedthereisaneedtocreategreatersynergy

amongvariousgovernmentdepartments/ministriesviz.DepartmentofCommerce

(DoC),Pharmexcil,M/oHealth&FW,DoPforformulatinganintegratedstrategyto

tacklesuchbarriersandmayincludetakingcountermeasures.



Additionallythereseemstobelackofclarityinthemultipletradeagreementsviz.

TradeRelatedIntellectualPropertyRights(TRIPs)ofWTO,AntiCounterfeitTrade

Agreement(ACTA),etcduetoexportersarefacingproblemsinensuringtheir

compliancewhichisaffectingtheirexports.Theseissuesneedtobetackledina

comprehensivemannerbyjointeffortsofDoPandDoC.



Anotherissueconcernsarecentsteptakenbysomedevelopedcountiesintheform

ofTransPacificPartnershipAgreement(TPPA),anewregionalfreetradeagreement

whichincludetheUnitedStates,Australia,Peru,VietnamandMalaysia,Japan,etc.

TPPAhasdiscriminatoryarrangementsbetweensignatoryandnon‐signatory

countrieswhichisaviolationofTRIPs.



Page 22 of 153

AdditionalbarriersarealsobeingraisedinemergingmarketslikeArgentinawherein

thereisadiscriminationinimportregulationsbetweenbulkdrugs(whichare

allowed)againstformulationswhicharebanned.Hereinthereisalsoatrustdeficit

betweentheindustryandthegovernmentespeciallyinthecontextofgovernment

signingFreeTradeAgreement(s)withvariouscountrieswhereinfacilityofzeroduty

isbeingextendedthereiseverylikelihoodofcreationoffurtherproblemswithout

properinvolvementoftheIndustry.



InthespecialcontextoftheseregulationsimpingingonIndianPharma’sleadership

intheAPIsector,thereisaneedtostudythedetailsofAPIsproductionespeciallyin

Spain,Italy,PortugalandEasternEuropeandprepareareportonexportofIndian

APIs/formulationdrugstoEUanddetailsofAPIsbeingmanufacturedinthese

countries.Thereisaneedtotackletheseissuesinorganizedmannerwherein

representativesoftheindustryneedtobeco‐optedintheefforts.Itisproposedto

establishacellinIPA,tobefundedbyDoP,onallissuesrelatedtoIPR,regulatory

issues,etc.actingasbarriers. 



Inthisconnectionthereisneedtotapanewdevelopment–Theadoptionof

recommendationsofPharmaceuticalInspectionConventionandPharmaceutical

InspectionCo‐operationScheme(jointlyreferredtoasPIC/S).Thisagreement

providesforinteraliacooperationbetweencountriesandpharmaceuticalinspection

authoritiesforenablinginternationaldevelopment,implementationand

maintenanceofharmonisedGoodManufacturingPractice(GMP)standardsand

qualitysystemsofinspectoratesinpharmaproducts.Thisistobeachievedby

developingandpromotingharmonisedGMPstandardsandguidancedocuments,

trainingcompetentauthoritiesandregulatorsinthepharmasector.



1.52DBarcoding

2DBarcodinghasbeenmadearegulatoryrequirementforexportofmedicinesby

DGFTtopreventfakemedicinesandmis‐representationofIndianexportsinthe

Page 23 of 153

nameofothercountrieslikeChinaetc.TheSSIunitsdoingcontractmanufacturefor

tradinghousesandotherpharmaneedtobesupportedbygovernmentschemesfor

buildingthiscompetenciesbothbywayofinfrastructureandfinancialsupport.

Furthertheimplementationof2DBarcodingattertiaryleveli.e.atstriplevelalso

envisagedbyDoCcouldbecomeveryexpensiveandoffsetIndianprice

competitivenessinemergingmarkets.TheMNCswhoexporthighpricedpatented

drugshavenosuchproblem.Inthe11thplanrecommendationhadbeenmadefora

Rs.100croresassistanceforassistingSMEstobuildexportcompetitive

infrastructureandtechnologysupport.Howeverthesamecouldnotbe

implemented.Thereisneedtodoitnowforthe12thPlan.



1.5.1ApexAuthoritytoControlPrices,Quality&SupplyofDrugs

NPPAismandatedforpricingofdrugsandDCGIistheauthorityforensuring

standardsformanufacturingandqualityofdrugsinadditiontothebasicelementof

introducingthedrugitselfinthecountryforanytherapeutictreatment.Aneedfora

commonauthorityhasbeenfeltinthepastseveralyears(PronabSenReportof

200519)forensuringsupplyofsufficientgoodqualitydrugs.TheviewoftheDoPis

thatsuchanauthorityliketheNationalAuthorityonDrugsandTherapeutics(NADT)

addressingalltheseissuesinasinglewindowmodeifconstitutedshouldbepartof

theDepartmentofPharmaceuticalswiththeDoPitselfbeingpartofMinistryof

ChemicalsandFertilisersorotherwise.

1.6Environmentalissues:

1.6.1 PresentStatus

TheIndianpharmaindustryhasevolvedaroundindustrialdevelopmentclustersset

upbyvariousstategovernments.Inearlieryears,mostofthemanufacturingand

R&Dunitscouldtakebenefitofthethenprevalentlaxorotherwiseenvironmental

laws.Butnowinternationalcustomersfromdevelopednationsarebecomingmore

19 Dr. Pronab Sen Report Sept.2005

Page 24 of 153

stringentonensuringlocalenvironmentstandardcompliancestandardsandwant

companiestoadheretothesestandards.Thishasledtoabigchallengeforthe

Indianpharmaindustry,particularlysmallscaleunits,whicheitherhaveinvestment

concernsorlimitationsofgrowthbeyondtheirallottedunitareasintheindustrial

clusterssetupearlierwithantiquatedenvironmentstandardscompliancepotential.

DoPisexpectedtoplayavitalrolebyprovidingfinancialandtechnicalassistanceto

improvefinancialsustainabilityofSMEsononehandandalsosafeguardthe

environmentfromthehazardsassociatedwiththeunplannedgrowthofthe

industry.Thisisparticularlychallengingforthebulkdrugindustryalreadyasource

ofadversereactioninthepublicinareasaroundHyderabadandalsofornew

possiblegrowthcentersforthepharmasector.ThemissionshouldbeClean

business=morebusiness=BetterHealthCaremedicinesforall.



1.7SWOTANALYSIS

TheIndianPharmaceuticalindustryhasemergedasaleadinglowcosthighquality

genericmedicinessuppliertotheworld.Itsfuturegrowthispebbledwithseveral

aspectsofitsstrengths,weaknesses,opportunitiesandweaknesses.



1.7.1Strengths



(1)StrongLowcostmanufacturingsector

LiketherestoftheIndianmanufacturingandserviceseconomy,ascomparedtothe

EuropeanandUSlevels,thepharmasectorhasthestrengthof‐

i. lowwagecosts;

ii. lowmaterialcostslikethebulkdrugsandthechemicalsintermediates

requiredtomanufacturethebulkdrugsaswellastheexcepientswhichgo

intoformulationsmanufacture;and

iii. lowcostofliving.

ThusoveralldrugsmanufacturinginIndiaisupto50%cheaperthaninwestern

industrialcountries.

Page 25 of 153

Intermsofbreadthoftheindustry,theIndianPharmaceuticalsectorishaving

around10563manufacturersinthecountry20comprisingsome300largeand

mediumunitsandbalanceinthesmallscaleandunorganizedsector.Theemphasis

ongenericsandtheexistenceofprocesspatentonlyregimebetween1970and2005

helpedtheSMEsectortogrow.ItenabledIndiatosourcemorethan85%ofits

domesticdemandforbulkdrugs,drugintermediatesandisalmostselfreliantin

pharmaceuticalformulations,chemicals,tablets,capsules,oralsandinjectiblesup

fromdomesticproductionwith20%in1950s.



Thisgrowthwasinalargemeasuretriggeredbythegovernmentinitiativesinthe

publicsectorwiththesettingupoflargeplantsformanufacturingantibiotics–HAL

in1951,IDPLin1961KAPLin1981etc.Thisgrowthsharedasynergywiththegrowth

ofthechemicalssectorandthewholegamutofchemicalbasedindustriesprovided

thebasictechnologyandscienceskillfordrugsmanufacture.



Followingliberalizationthecontributionofthepublicsectorhasexpectedly

decreasedinanincreasinglycommoditizedmarket.Atpresent,theleading250

pharmaceuticalcompaniescontrol70%ofthemarketwithmarketleaderholding

nearly7%ofthemarketshare.



(2)CompetitivenessofIndianGenerics

AnimportantcharacteristicoftheIndianpharmaindustryisitsexportsaspointed

outearlier.Thisissustainedbytheincreasingcompetitivenessoftheindustryvis‐a‐

visthedevelopedandregulatedmarketswhichisreflectedinthelargenumberof

AbbreviatedNewDrugApplications(ANDA)andFirsttoFile(FTF)fillingsforthe

formulationssectorandDrugMasterFiles(DMF)filingsforthebulkdrugsbyIndian

companiesintheUSFDAforexportstoUSmarketwhichbyitselfisvaluedatUS$

20 DoP survery 2007 done in collaboration with MSME –First Pharmaceutical Census – DoP Annual Report

2010.

Page 26 of 153

300Bnin200921.Thus,in2010,over30%ofDMFapprovalsbyUSFDAwerefrom

India.ThisshowsthecompetitivenessoftheIndianpharmaascomparedtothe

otherleadinggenericsproducerslikeChina,IsraelandGermany.Itisnoteworthy

thatthisproportionoffilingsbyIndiancompanieshasincreasedfrom14%in200022.



ThiscompetitivenessisfurtherextendedintheEUmarketsaswitnessedbythefact

thatIndiahasaround461CertificateofSuitabilityi.e.19.78%ofthetotalgrantedby

EuropeanDirectorateofQualityMedicine(EDQM).Also,theproductsregisteredby

Indiavaryincomplexityandrangeoftherapeuticareas.Thisensuresthat

competitionfortheproductsofferedbyIndiancompaniesisrestrictedensuring

steadydemand.



(3)HumanSkill

ThehumanresourcesavailabilityinIndiaischaracterizedby:

• Significantbreadthanddepthinengineeringandscience

• Lowercostofinnovationandhighlymotivatedscientists.

• LargepoolofEnglishspeakingemployees,acomfortforinternational

customersandregulatoryagencies.

• Lowcostscientificpoolonshopfloorleadingtohighquality

documentationandprocessunderstanding

• Outsourcingservicesculture



Thereisabundanceoflowtomiddlelevelskillsinscienceandtechnologyingeneral

andasalsointhepharmaceuticalsciencessector.Thetable‐11belowmakesthis

clear.

Table‐11:HumanresourcepositioninIndia

SlItemTotalnumbers

1NoofUniversities 409

21IMS Health , Spring 2010

22 Cygnus Report

Page 27 of 153

2Noofcolleges25990

3Noofsciencecolleges 4696

4Annualstudentoutputatdegreelevelin

science

2000374

5Annualstudentoutputatdegreelevelin

engineering

1663619

6Totalnoofpharmacycolleges1162

7NumberofBPharmcolleges848

8NumberofMastersinpharmaceuticalsarea

andPhDofferingcolleges

191

9NoofBPharmstudentsinpharma51716

10NoofMastersandPhdstudentsoutputin

pharma

5648



Sufficeittosaythatthelevelofavailabilityofmanpowerinnumbersinageneral

skillcapacityisquiteabundant.Fordomesticpharmaindustrythisisadequatein

termsofbasicneeds.Tothatextentthesituationofdemand–supplyissimilarfor

theMNCsoperatinginIndia.Theskillbasehassofarservedwellformeetingthe

needsforchemistryskills,R&Dandmanufacturinginfrastructurewithproventrack

recordinadvancedchemistrycapabilities,designofhightechmanufacturing

facilitiesandregulatorycompliance.Thisisevidencedbythefactthatthelargest

numberofUSFDAapprovedplantsoutsideUSareinIndia.Still,thereisshortageof

skillinhigh‐techarea.

Lately,inthelast3to5years,therehasbeenanincreasingdemandforthecontract

researchandclinicaltrialsindustryfromtheMNCendaswellasfromdomestic

entities.Thisisfurthercatalysedbytheavailabilityofabundantdrugnaïve

populationandvarietyofgenepool.



1.7.2WEAKNESSES:

(1)LowR&DBudget:

AlthoughtheIndianpharmaceuticalindustryislargebyIndianstandards,onthe

worldmarketitsshareismerely2.4%.TheestimatedinvestmentinR&Dbymajor

IndianPharmacompaniesisaround8.68%oftheirsalesturnover.Asapercentageof

Page 28 of 153

totalproductionthisworksouttoonly4.4.%ofthetotalproduction.Comparedto

theR&Dinvestmentinthedevelopedmarketsofsome8%23theIndianinvestmentis

quitelow.Onereasonforthisistheemphasissofarongrowthbasedgenerics

productionandtheprevalentdiseasepatternofhighneedofgenericanti‐infectives,

antihistamines,painmanagementandotherthirdworldvectorbornediseaseslike

Malaria,Filariasis,Anti‐heleminthic,etc.Allthedrugsforthesetreatmentshave

beenalreadyinthegenericspacegloballyformorethan40yearsandhencethe

growthofgenericsisnotoutofcontext.Thepictureiscompletegiventhelow

purchasingpowerofthemiddleclassandtheruralareasupto1980s.



ThushighendR&Dwasnotarequirementanddiseasecontrolwasmoreanissueof

accesstopublichealthinfrastructureandlowcostmedicines.Tothatextentthe

Indianmanufacturingmodelhasservedwellfromthemanufacturingpointofview.

HowevernowthatIndiaispoisedforagreaterroleintheglobaleconomyingeneral

andalsointhepharmasectorforreasonsdiscussedearlierintermsofthegrowth

drivers,theweaknessinthesystemofpoorR&Disquiteevident.Theindustry’stotal

R&Dbudgetiscomparativelyverysmallascomparedtotheglobalcompetitors.Thus

individualR&DbudgetsofmanyUScompaniesprobablyamounttomuchmorethan

thecumulativeR&DbudgetsofallthecompaniesinIndia(in2009,Pfizerspent

around18%ofitssalesturnoverofUS$9.9Billion)24.Thisisfurthermanifestinsome

newareaslikepharmaco‐genomicsleadingtopersonalizedmedicineasthebasisof

therapeutictreatmentwithdrugtherapytailoredtoindividuals.Theemergingareas

ofbio‐pharmaceuticalswithhighlycapitalintensivehighfailurefeaturesfurther

raisestheentrybarriertomoderndaypharmaR&D.



TheproblemofR&DinvestmentisenhancedbyLackofsupportivefundingfrom

governmentashasbeenpossibleinothercompetingcountrieslikeIsrael,Singapore

andMalaysia.TheR&Disnowherenearthepossiblefundingindevelopedcountries

23 Pharma Times, June 11, 2011

24www.evaluatepharma.com/Universal/View.aspx?type=Story&id=217946&sectionID=&isEPVantage=yes

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likeUSundertheNationalInstitutesofHealthfundingprograms.Thishasalso

resultedinpoortappingofopportunitypresentedbytheintroductionofproduct

patentregimein2005.



MoredetailsonR&DmaypleasebereadinChapter‐2onR&D.

(2)InadequateInfrastructure

Whilethereisanestablishedbasicweaknessinbasicinfrastructurelikepower,roads

andcoldchainstheLackofadvancedlabandrelatedinfrastructurefordrugstesting

anddevelopedisacutelyperceivedintheneedofgreateremphasisonresearchand

developmentaswellaslargecapacitiesrequiredforAPIsandformulationsonthe

scaleatwhichcompetitorslikeChinaandIsraeloperate.Thisisparticularlytruefor

suchsectorslikeantibioticswherethecountryhasmigratedfromastateof

completeindependencetototaldependenceonimportsfromChinafor

fermentationbulkproductsduetounmatchedcostsofpowerandhighcapacity

buildupleadingtolowcostsofproduction.Thisinasenseisalsoastrategicissue

andhasassumedsignificancefollowingtheHINISwineFluepidemic.



Thedevelopmentofinfrastructureisakeytosuccess,andtheIndianPharmaceutical

Industryandsothereisneedtotakemoredefinitivestepstoovercomethis

weakness.



(3)DiffusedIndustrystructure

DiffusednatureoftheIndianpharmaceuticalindustrywhereby,onlyabout20to30

companiesarelargeenoughtobearthetransactionscostsassociatedwithsustained

productionincludingexportsparticularlyinthelightofincreasinglystringent

complianceentryregulationsofthedevelopedandemergingmarkets.Thusthereis

Lackofdepthandbreadthnowinthecontextoftheinternationalscenario.



(4)PoorIndustry‐Academialinkage

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ThereisaconspicuousLackofstronglinkagesbetweenindustryandacademiawhich

areessentialforgrowthoftheindustry.

(5)Limitationstodomesticmarketsize

Limitationsingrowthofthedomesticmarketsizeduetoconstraintsoflowmedical

andhealthcareexpenditureintheruralareasofthecountryinspiteofspecific

projectslikeNRHM,DOTS,NSAIDSandPulsePolio.

(6)Decreasinglabourarbitrage

Nowrapidlyincreasingcostsofskilledmanpowersuchasscientists/regulatory

compliancepersonnel/pharmaceuticallawyers/internationalbusiness

developmentpersonnelispushingupthecostofinnovationleadingtolossof

arbitrageoflabourascomparedtodevelopedandotheremergingmarketcountries.



(7)Poorworldclassprojectskills

Projectmanagementcapabilitiestoevaluatecontracts/alliancesetc.,isavailable

onlyintopcompanies.



(8)Non‐availabilityofmajorintermediatesforbulkdrugs

(9)Inadequateoverseasmarketinginfrastructure

TheIndiancompaniesareseverelyLackinginaglobalmarketingworkforcenodoubt

constrainedbysurpluscapitalandrecurringexpenditurecostsmuchrequiredfor

globaldominance.Thishasresultedinanumberofmarketingtie‐upsofIndian

companieswithMNCs.Thesetie‐upswhilebeingpresentedassuccessful

partnershipsmissthefactthatthelucrativeemergingmarketsarelostduetoLackof

abilitytotapthembyindigenousefforts.Whiletheexacttermsofdealarenot

publicprivy,thewin‐winsituationrequiresadeeperstudytoanlaysethelossof

opportunityduetotheweaknessofthemarketingforce.



(10)Lackofregulatoryinfrastructure

DuetomajorunderstaffingandLackofresourceswiththeCentralDrugsStandards

andControlOrganisation(CDSCO)undertheMinistryofHealththereisamajor

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bottleneckfortimelyclearancesfornewdrugtrials,pharmacovigilanceand

assistancetothewillingindustrymemberstoshoreuptheirtechnicalcapacitiesfor

betterregulatorycompliances.TheLackofdruginspectors,bothatthecentreand

thestatelevelintheFDAsisamajorhindranceinthesmoothgrowthoftheindustry.

Nowhereisthismoreevidentthaninthepoorpaceofclinicaltrialclearancesand

theFDCssegment.



(11) LackofproperRegulatoryFrameworkforbiosimilardrugs

Presently,biosimilarsareregulatedundertheprovisionsofEnvironmentProtection

Actof1970andtheDrugs&CosmeticsActof1940.Therearenosetofspecific

rulestoenablespeedierandunambiguousclearanceforproductionofbiosimilars.

Thisisimportantinthecontextofthefactthatbiosimilarsisaverystrongemerging

marketopportunityforthecountry.



(12)Regulationoffixeddrugcombinations.

Anotherimportantissueconcernsregulationforapprovalforfixeddrug

combinations.Thisneedstobeevolvedinconsultationwiththeindustry.TheDTAB

undertheDCGIshouldhavearepresentativeofDoPsoastoensurethatthePharma

Industryconcernsareaddressedinaspeedyandunambiguousmanner.



1.7.3OPPORTUNITES:



(1)Generics

AsperMcKenseystudyconductedbyDoP25,US$300Bnareexpectedtogooff

patentby2015forconventionalmoleculesandbiopharma.Factoringforthe

reductioninpriceandtheconsequentmarketvaluefrompatenttogenericsthisis

estimatedtobeatleast30‐35%whichtranslatestosomeUS$100Bn.



CompulsorylicensingprovisionsnegotiatedintheDohaRound,allowsforcountries

toimportcheapergenericversionsofpatenteddrugsintheinterestsofpublic

25 McKinsey &Company,”Capturing the India Advantage-page 18

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health.ThailandandSouthAfricahavealreadystartedsuchinitiativesfromwhich

Indianfirmshavebenefited.Thisisanopeningopportunityalbeitnotverylargefor

Indianpharma.



(2)Bio‐generics&BioPharma

Bio‐genericsarenothingbutgenericversionsofbiologicalproducts.India's

biotechnologysectorisgrowingfastandisintheearlystagesofdevelopmentwith

initialemphasisonvaccinesandbio‐services.Theindustrycurrentlyhasaround340

companieswhichemploymorethan25,000technologists.TheIndianBio‐Pharma

industryhasalreadyastrongglobalpresence,producingthefourthlargestvolumeof

productsintheworld.India’svastpoolofskilledmanpower,hugepatientbaseand

relativelylowcostsdrivesmanyglobalbiotechgiantstopartner,acquireor

outsourcetoIndiancompanies.Likewise,someofthelargerIndiancompanieshave

evenbegunacquiringforeignentitiesintheUnitesStatesandEurope,toretailtheir

productsandexpandproductofferings.



Internationallyspeaking,in a study conducted on behalf of Datamonitor by Bornadata

Bain, vice-president and global director of research and analysis, healthcare, and John

Shortmoor head of company analysis, both at Datamonitor Group, it has been stated

that the product mix of pharmaceutical companies' pipelines and commercial drugs is

of crucial importance to contract development and manufacturing organizations as

they evaluate their service capabilities and tailor them to demand. Market

fundamentals are changing. The erosion of the blockbuster-drug model, traditionally

supported by small-molecule drugs (i.e., drugs with a molecular weight of < 500 Da),

in favour of an increased emphasis on biologic-based development is an important

consideration not only for pharmaceutical companies' product strategies, but for

contract service providers that offer drug-substance and finished-product

manufacturing.

Page 33 of 153

Although small-molecule drugs will continue to dominate the overall pharmaceutical

market, market growth in small-molecule drugs will contract in the near term. In

biologics, mAbs will drive growth and so enticing a growing number of companies to

expand in this field with the hope of ensuring long-term growth. In fact, 36 of the top

50 pharmaceutical companies (excluding generics companies) will have a presence in

the mAb, therapeutic protein, or vaccines sector by 2014. Currently, 32 of the top 50

companies are now in those sectors. Vaccines will grow at a 5.5% compound annual

growth rate (CAGR) between 2009 and 2014, partly because of the emergence of new

technologies and the recent commercial success of several novel products such as

Pfizer's pneumococcal vaccine Prevnar and Merck & Co.'s human papillomavirus

vaccine Gardasil.

Biotechnologycompanieshavefocusedprimarilyonbiologics,butfrom2008to

2014,thedominanceoftherapeuticproteinswithinthemolecularclassmixwill

declinesteadilyasmAbsgainmarketshare.Nevertheless,therapeuticproteinswill

remainthedominantmoleculetypethroughout,accountingfor68.0%of2014sales.

ThisshiftinfocustowardmAbswillbespurredbythismolecularclass'srelatively

stronggrowthof$4.4billionin2008–2014,whichresultedprimarilyfromthelaunch

ofAmgen'sProliaandcontinuedsalesgrowthofMerckKGaA'sErbitux.Interestingly,

therapeuticproteinswilldelivergreatersalesgrowthuntil2014(i.e.,$5.2billion)

becauseofNovoNordisk'sinsulin‐analogportfolio,whichincludesNovoRapid,

NovoMix,andLevemir.Small‐moleculegrowthwilltotallessthanhalfofthat

deliveredbybiologics,at$3.1billion.

BiogenIdechasthebiggestmAbfocusandalsothebiggestbiologicsfocus;mAbs

andtherapeuticproteinsaccountedfor98.9%ofits2008sales.NovoNordiskwill

accountforthemajorityofthepeerset'stherapeutic‐proteinsalesgrowth,withan

increaseof$4.7billionforecastbetween2008and2014,tobesupportedprimarily

byGenzyme(Cambridge,MA,$1.3billion).Bycontrast,declinesof$741millionand

$221millionareforecastforBiogenIdecandAmgen'stherapeutic‐proteinportfolios,

respectively

Page 34 of 153

Reflecting the pharmaceutical industry's burgeoning interest in high-growth biologic

markets, 27% (seven out of 26) of US Food and Drug Administration new drug

approvals in 2009 were for biologic license applications (BLAs). This number

represents the highest proportion of biologic approvals since 2003 (2). In fact, the

growth in approved BLAs offset the decline in approved new molecular entities

(NMEs). Furthermore, the number of US orphan-drug designations has more than

doubled in the past decade, from 208 (2000–2002) to 425 (2006–2008) (3). The

number of orphan drug approvals grew from 32 to 47, an increase of 47%. In 2009,

the European Medicines Agency (EMA) granted orphan status to 103 medicines, the

highest number since European orphan-medicines legislation was introduced in 2000.

Injectable drugs will drive market growth

Despite the current dominance of oral drugs, which typically are associated with

small-molecule drug delivery, injectable drugs enjoyed strong growth between 2002

and 2008 at 20.8% CAGR. Injectables will continue to enjoy the fastest growth rate of

all delivery mechanisms (i.e., 4.9% CAGR) until 2014, aided by the development of

vaccines and mAb therapies which are typically delivered by this mechanism. The

loss of patent protection for blockbuster brands such as Pfizer's Lipitor (atorvastatin)

and Effexor (venlafaxine), and AstraZeneca's Seroquel (quetiapine) will trigger strong

generic-drug competition and sales erosion for oral drugs.

Secondary-care therapy areas would become a priority

Historically, small-molecule drugs dominated therapeutic areas such as cardiovascular

and central nervous system (CNS) conditions and contributed to significant sales

growth. However, these markets are not only saturated with me-too drugs, but also

suffer from rapid market erosion because of the influx of generic drugs after the

patent expirations of key brands. For example, in 2009, sales of cardiovascular drugs

totalled $99 billion; they are forecast to decline at 2.8% CAGR (2009–2014). The

forecast contraction in this market is likely the reason for Pfizer's announcement in

September 2008 that the company was ending its research and development (R&D)

investment in this therapy area—a landmark move, given the dominance of

cardiovascular drugs in Pfizer's portfolio.

Page 35 of 153

Now pharmaceutical companies are shifting their R&D focus toward developing

novel—often biologic—therapies for the treatment of niche indications, which should

ensure longer-term growth given biosimilars' minimal impact to date. Examples of

target therapy areas are oncology, immunology and inflammation, and endocrine

diseases, which are forecast to grow at rates of 5.9%, 4.0%, and 6.3% CAGR,

respectively, between 2009 and 2014.

In 2009, several noteworthy therapies were launched, representing truly novel drugs

that target unmet needs. Johnson & Johnson's (New Brunswick, NJ) Stelara

(ustekinumab) for plaque psoriasis stands out as a first-in-class agent with efficacy

superior to that of traditional therapies. Also, Takeda's Uloric (febuxostat) is the first

new treatment for gout in 40 years, and Forest's Savella (milnacipran) is the first drug

indicated solely for fibromyalgia .

In addition, these target markets—oncology, endocrinology, and immunology and

inflammation—will experience the highest sales growth and become the principal

growth drivers for the top 50 pharmaceutical companies (excluding generic-drug

companies), collectively generating an additional $45 billion by 2014. It is therefore

expected that an increasing number of companies will focus on these more profitable

markets.

Factors driving the shift away from the primary-care model

The cash-strapped payers now scrutinizing drugs' costs and clinical benefits and so it

is not surprising that the pharmaceutical industry is now focused on biologic therapies

in secondary care and niche markets. Additional factors that attract pharmaceutical

companies toward niche indications include the faster and cheaper R&D process that

results from the smaller patient populations and clinical-trial sizes. In addition, several

regulatory agencies provide incentives and subsidize R&D in the development of

orphan drugs. The agencies offer tax credits, regulatory assistance, and accelerated

approval. Also, one of the largest cost-saving factors for companies with a niche

product is that large-scale patient and physician marketing through various channels is

largely irrelevant. In fact, annual average marketing costs for an orphan drug are

seven times lower than those for nonorphan products. Figure 1 summarizes the factors

Page 36 of 153

inspiring the shift away from the primary-care blockbuster model toward niche

indications.

Big Pharma will remain dependent on small molecules, but biologics will spur

growth

The Big Pharma business model essentially was built on small-molecule products,

which are relatively inexpensive to develop and manufacture, thus allowing

companies to concentrate on fuelling growth with an assertive sales and marketing

strategy. However, once patent protection is lost, small molecules are easy for

generic-drug companies to manufacture. Manufacturers of generic drugs do not have

to support large R&D teams and they are able to compete aggressively on price. The

resulting commoditization of the small-molecule market has forced the Big Pharma

players to seek diversification into areas of high unmet need (e.g., oncology) or, in

terms of molecule type, into biologics. The Big Pharma shift to biologics will be led

by mAbs, which are forecast to grow by $22.1 billion during 2008–2014 at a 9.5%

CAGR, thus making them the biggest growth factor for this sector. Therapeutic

proteins also will experience strong growth during 2008–2014, contributing an

increase in sales of $9.2 billion at a CAGR of 3.6%. By contrast, small molecules—

which accounted for 80.4% of Big Pharma's 2007 sales—will decline by $25.6 billion

during 2008–2014. Despite these shifts, Big Pharma will remain dependent on small-

molecules, which will account for 71.4% of its sales in 2014. Biologics (i.e., mAbs

and therapeutic proteins combined) will account for 21.8% of sales, up 6.7% from

2008.

At a company level, a clear correlation can be drawn between small molecules and

declining sales versus biologics and sales growth. Of the top 16 Big Pharma

companies, only Novartis, Bayer, Merck & Co, and Boehringer Ingelheim will see net

positive growth from their small-molecule portfolios. By contrast, the remaining 12

companies are forecast to see a net growth in their biologics portfolios.

Roche - primarily through its acquisition of Genentech contributes about 51.4% of the

mAb growth for Big Pharma. Aside from Roche, Abbott Laboratories also will exhibit

strong growth in the mAb sector. Its growth is attributable to its acquisition of Knoll

and its licensing of international rights to Synagis and Numax from MedImmune.

Page 37 of 153

Johnson & Johnson also will exhibit strong growth, spurred by the growth of Simponi

(golimumab), Stelara (ustekinumab), and its share of bapineuzumab sales.

Growth from therapeutic proteins will be spread more evenly across Big Pharma.

Sanofi-Aventis, primarily through insulin analog Lantus; Pfizer, through Enbrel; and

Bristol-Myers Squibb, through Orencia and belatacept, will make significant

contributions. Novartis also will report growth in therapeutic proteins, primarily

attributable to its launch of biosimilar drugs through its generic-drug division Sandoz.

However, none of these companies will experience biologics growth remotely close to

the level of mAb growth forecast for Roche.

Looking forward

For the foreseeable future, blockbuster drugs will provide the bulk of sales for the top

50 pharmaceutical companies (excluding generic-drug companies). These drugs

generated $344 billion collectively in 2008, representing 66% of prescription sales.

However, the outlook for these drugs is less than stellar; 66 drugs with blockbuster

status in 2010 will see a sales decline of more than $200 million by 2014, in response

to me-too and direct or indirect generic competition. As a result, total forecast sales

for blockbusters will decline by 2.1% CAGR from 2009 to 2014. Pfizer will be the

hardest hit, with 2014 blockbuster drugs sales forecast to decline by $8.3 billion

versus its 2009 level. The Wyeth merger will soften the blow slightly for Pfizer, but

the company will remain the most strongly affected in terms of blockbuster

expirations and total sales losses over the 2009–2014 periods. Bristol-Myers Squibb

and Sanofi-aventis are also forecast to experience losses of $5.0 billion in

blockbuster-drug sales by 2014 versus 2009 because of the generic erosion of

blockbuster brands.

As the industry moves away from the old primary-care blockbuster model toward

targeting specialty secondary-care indications, several novel drugs launched in 2009

still have the potential for blockbuster status, including sanofi-aventis's antiarrhythmia

agent Multaq (dronedarone), Johnson & Johnson's Simponi (golimumab) indicated for

rheumatoid arthritis, and Bristol-Myers Squibb and AstraZeneca's Onglyza

(saxagliptin) for the treatment of type 2 diabetes. Nevertheless, entering a

Page 38 of 153

multibillion-dollar therapy area cannot guarantee blockbuster status, particularly in

today's price-conscious environment.

Key factors that will be important for determining blockbuster success within the

biologic markets include the ability to gain first-mover advantage within a given

indication, the subsequent horizontal expansion across disease stages and indications,

and the creation of high barriers to competition through the accumulation of clinical

safety and efficacy data. In addition, with the increasing cost pressures facing payers,

manufacturers will need to demonstrate comprehensive pharmacoeconomic data and

drug benefits for these therapies in relation to the disease frequency and severity.

They may also need to demonstrate an advantage in comparative effectiveness over

existing products. This competitive advantage may be achieved best through coupling

drugs with companion diagnostics or creating disease-management solutions.

Pharmaceutical companies frequently employ risk-sharing agreements as a means of

securing a place on reimbursement lists, thus sharing the risk between the payer and

the manufacturer. These schemes also encourage responsible prescribing by

healthcare professionals and ensure that resources are not wasted on ineffective

treatments. By addressing payer concerns regarding both economic and clinical

outcomes, risk-sharing schemes have the potential to change the pricing landscape of

high-cost drugs.

These very factors have led to the dominance of mAb products such as Roche's

Avastin (bevacizumab), Herceptin (trastuzumab), and MabThera (rituximab); Abbott's

Humira (adalimumab); and Johnson & Johnson and Merck & Co's Remicade

(infliximab), which together accrued a 72% share of mAb sales in 2008. However, the

market share of these top five brands will fall to 57% in 2014 because of increasing

competition from newly launched mAbs. In fact, from 2008 to 2014, the number of

mAbs achieving blockbuster status will increase from five to 15. Nine other mAbs

will generate sales of more than $500 million in 2014. Overall, the mAbs market will

remain healthy.

Clearly, a paradigm shift is taking place in the pharmaceutical industry, as the small-

molecule business model that historically inspired sales growth is replaced by a high-

value specialty-biologics model to fend off further sales erosion. As the patent cliff

approaches, it will be increasingly important for all pharmaceutical companies to

Page 39 of 153

consider putting a biologics strategy in place, either through organic means or through

partnerships, to avoid being left behind in this dynamic, competitive environment.

(3)AttractivedestinationforContractManufacturing&Research:

Theglobalpharmaceuticalindustryisatthecrossroads.Withmanyofthe

blockbusterdrugsgettingoff‐patentedandwithincreasingR&Dcosts,itshardbythe

companiestomaintaintheirbottom‐lineandremainunaffected.Theyhavefound

recoursetooutsourcingsomeoftheirresearchandmanufacturingactivitiesand

savingcostintheprocess.Thishasledtothegrowthofcontractresearchand

manufacturingservicesorCRAMSmakingthecompaniesinIndiatorejoice.Business

ofCRAMShascomeasaboontothemid‐cappharmacompaniesinIndia,these

companiesaremerrilyembracingCRAMStakingfulladvantageofthefeatures

enjoyedbyIndiaasacountryofdiverseoriginandstrongmanufacturingbasein

pharmaforyears.Indiacouldpotentiallycapture10%oftheglobalCRAMSmarketof

almostUS$200billionby201126.Overall,theCRAMSsegmentisexpectedtogrow

30‐35%perannumontopofagrowthof40‐50percentinthelastfewyears.In

termsofcontractresearch,someoftheknownfactsinrecentdrugdiscoveryare:



(4)DrugDiscovery

Inthedrugdiscoveryvaluechain,therearekeyblockslikebiology,chemistry,drug

evaluation,preclinicaltrialsandclinicaltrials.Buildingtheskillsetandinvestingin

theinfrastructuretoachievecriticalmasswillhelpdrawtheresearchworkintothe

countryperhapsinapiece‐mealinitially.Asthecomponentsgetbuilt,

entrepreneurialinitiativeswillkickoffonabroaderscale,establishingtheindustry.

VarioussurveysindicatethatIndiahasquiteanumberofresourcefulfirmsinthe

fieldofChemistryprovidinghighqualityoutputintimelyschedules,allowingmore

leadstopursue.Indiaissignificantlyaheadinchemistryservicessuchasanalog

preparation,analyticalchemistry,focuslibrary,combinatorialchemistry,structural

chemistry,structuraldrugdesign,computeraideddrugdesign,highthroughput

screeningandassaydevelopment.

26 Cygnus research

Page 40 of 153

IndiaatthispointisaheadofChinainchemistrybuttheimpressioninmany

countriesisthatIndiaisweakonbiologyfront.ItisfoundthatIndia’sstrengthin

biologysectorisverylimitedespeciallyingeneticallymodifiedanimals,biochipsand

basicmolecularbiology.Thebiologycapabilitiesaremainlyingovernmentinstitutes

withahandfulofcompanieshavingskillsinmolecularbiologyandprotein

expression.However,onlyahandfulofGLPlabsexistandtheavailabilityofclinical

investigatorsandclinicalpharmacologistsarenegligibleincomparisontoother

countriesinthefield.

Throughstrategicbuildingofinfrastructure,suchasorganizationsconducting

chemistryresearch,preclinicaltrialsandclinicaltrialsandlaterbiologyresearch,

Indiacancreateastrongvendorbaseallowingvariouscompaniesintheworldto

undertakenewdrugresearch.Biologyresearchservicesmarketandinfrastructure

shouldbedevelopedwithconsciouseffort.Suchservicesinallkeysegmentsbuilt

eveninpiecemealwillcreategoodvendorbaseandaugurswellinconvertingthe

countryintoanNCEhub.Obviously,sucheffortwillbeasuccessfuldrivertoearn

fromexportofpharmaceuticalservices.



(5)ClinicaltrialsIndustry

ThepressuresofdecliningR&Doutputandincreasingcostshasresultedinthe

globalizationofclinicalresearchandemergingmarketshavebegunplayinga

significantroleinthedrugdevelopmentvaluechain.Indiatoohasseenasurgein

clinicalresearchactivitywithanevolutionoverthelastdecade,frombeingan

industryfocusedonBA/BEservicestoincreasinglybeingviewedasserviceprovider

ofchoicebytheglobalpharmaceuticalandbiotechnologycommunityinthearenaof

PhaseI‐IVtrialsandalliedservices.

EmergingmarketslikeIndiaarenomoreanoptionbutastrategicimperativefor

globalclinicalresearch27.



27 “The Global Metamorphosis- Compelling reasons for doing clinical research in India – Report by E&Y and

FICCI, 2009

Page 41 of 153

TheUSD64Bnglobalclinicalresearchindustryiswitnessingatransitionaslife

sciencecompaniesareturningtowardemergingmarketsinAsia,LatinAmericaand

EasternEurope,topursueclinicalresearch.Increasingcosts,decliningproductivity

andrisingdrugdevelopmenttimelines,combinedwiththestrategicadvantages

offeredbytheseemergingmarkets,isdrivingresearch‐drivenpharmaceuticaland

biotechnologycompaniestoconductclinicalresearchbeyondestablishedmarkets.

Emergingmarketsnowcontributeto~36%ofglobalpatientenrolmentascompared

to~20%in2001.



Indiaisoneofthefastestgrowingclinicalresearchdestinationswithagrowthrate

thatistwoandahalftimestheoverallmarketgrowth.



Indiaparticipatedin7%ofglobalPhaseIIIand3.2%ofPhaseIItrialswithindustry‐

sponsoredtrialshavinggrownataspectacular39%CAGRbetween2004and2008.

ThenumberofinvestigatorsinIndiahasalsogrownthefastestamongAsian,Latin

AmericanandEasternEuropeancountrieswitha42%CAGRbetween2002and

2008.Indiahasoneofthelatestsubjectrecruitmentratesglobally(nearlythreeto

fivetimestheglobalaverage),withscreenfailureanddropoutrateslowerbynearly

40‐50%,ascomparedtoglobalaverages.Asaresult,Indiacontributes15‐30%of

globalenrolmentinmulti‐centricstudieswhereitisaparticipant.Indiaisranked

thirdacrossallcountriesaftertheUSAandChinaintermsofitsoverall

attractivenessasaclinicaltrialdestinationaccordingtoarecentATKearneyglobal

survey.



Further,India’sclinicalresearchlandscapeisundergoingaglorious

metamorphosis,aidedbymanyuniquelydifferentiatingcapabilities,arapidly

transforminghealthcaremarketandanenablingenvironmentthatisrapidly

adaptingitselftoglobalstandards.Theseare–



 (i)Scientificfeasibility:

Indiaconstitutes16%oftheglobalpopulationwith20%oftheglobaldisease

burden.With~32millionpatientsinurbanareasand~72millionpatientsin

Page 42 of 153

ruralareasatanygivenpointoftime,Indiahasadiversemixofsubjectswho

arerelativelytreatmentnaïveaswellassubjectswithahighstandardofcare

tomeetdiversestudyprotocols.



Thecountry’sdiseaseburdenisalsowellalignedwiththenewdrug

developmenttherapyfocusofglobalpharmaandbiotech,withashifttoward

non‐communicablediseases.Indiahas65millionpatientswithCNSdisorders,

31milliondiabetics,29millioncardiacpatients,41millionCOPDandasthma

patients,0.8millioncancerpatients,withmostoftheseailmentsexpectedto

increasebyover50%inthenumberofcasesby2015.



Allthefivemajorracialtypes–AustraloidMongoloid,Europoid,Caucasian

andNegroid–findrepresentationamongthepeopleofIndia,withCaucasian

beingthemostprevalent.



 (ii)MedicalInfrastructure:

Theurbanhealthcareinfrastructure,intermsofthenumberofbeds/

physicians/nursesper1000,iscomparablewiththeglobalaverage,Indiahas>

8,40,000urbanbeds.Thereareover6,00,000English‐speakingphysiciansand

nearly1,00,000specialists,withmanyofthemhavingbeentrainedinthebest

globalinstitutes.Thereare41hospitalsaccreditedunderInternationalSociety

forQualityinHealthcarebyNationalAccreditationBoardforHospitaland

HealthcareProviders(NABH)andJointCommissionInternational(JCI),while

84hospitalsarecurrentlyintheprocessofapplyingforNABH.



(iii)Regulatoryreforms:TheClinicalestablishment(Registrationand

Regulation)Act,whichisbeingpromulgatedbythegovernmenttoregulate

privatehospitalsandlaboratoriesacrossthecountry,willplayasignificant

roleindevisingandimplementinguniformstandardsoffacilities/servicesand

furtherenhancethequalityofcareprovidedbytheIndianhealthcaredelivery

system.



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ThusitmaybeseenthatIndiahassignificantvalidpopulationtoparticipatein

clinicaltrialsandthecountryalsohasprovencapabilitiesinmedicalskills,hospital

bedsandITcapability.Thisoffersanopportunitytocapturethemarketsharein

globalclinicalR&Dmarketsuchasclinicaltrials,datamanagement,testing,etc.By

buildingtheabovekeyblocksinthedrugdiscoveryvaluechain,Indiacanreachthe

statusofintegratedproviderinchemistryandbiologyservices.Thecountrycanlearn

skillswhileearning,atleastincertainpartsofdrugdiscoveryprocess.Thiscould

enablethecountrytoattractdrugdiscoveryfirmstoconductresearchinIndiawith

spin‐offbenefitsinmakingIndiaasanR&Dhubinthelongterm.



CostsofclinicaltrialsinIndiaarearoundone‐tenthoftheirlevelsintheU.S.

Currently,IndiaisexperiencingagrowingnumberofcollaborationsbetweenIndian

andforeignfirmsinthedomesticmarket,especiallyinvolvingthebiotechnology

sector,inawidevarietyofareassuchascollaborativeR&Dincludingdrugdiscovery

andclinicaltrials.However,scarcityofspecialistclinicalpharmacologists,clinical

investigatorsismostcriticalissuefacingIndianclinicaltrialindustry.



Anotherimportantareaisthelackofproperregulatoryframework.Someofthe

importantpointsinthisconnectionare28:

(i)SingleWindowClearance



Therearemultiplegovernmentdepartmentsthatmayhavetobeaddressedduring

theexecutionoftheclinicaltrialsforpermissionsandapprovals.TheyareDCGI‐

MinistryofHealthandFamilyWelfare,DirectorateGeneralofForeigntrade–

MinistryofCommerceandIndustry,DepartmentofBiotechnology–Ministryof

ScienceandTechnology,MinistryofEnvironmentandForestforbiotechproducts.

Theindustryfeelstheneedtohaveasinglewindowforapprovals.Whereasthe

specificdepartmentscancontinuetobethedecisionmaker,fortheindustryall

applicationstobemadeforpermissionshouldbeasinglewindow.

28 FICCI Report on Clinical Trials Industry, 2009 prepared for DoP

Page 44 of 153

(ii)HarmonizationOfTechnicalRequirementsWithICHRequirements



TohelpIndiagloballycompeteandgetnewtherapiestopatientsfasterandalso

buildearlydevelopmentalcapabilitiesandexperience.



(iii)Pre‐ClinicalRequirements



Today,regulatoryrequirementsforearlydrugdevelopmentinIndiaareseenas

beingmorerestrictivethanfacilitatingwhencomparedtootherglobalregulatory

bodies.ForexamplethedraftICHguidelinesforNonClinicalEvaluationforAnti‐

CancerPharmaceuticalsrequirea1monthtoxicologypackageintwospecies(rodent

andnon‐rodent)fortheevaluationofnewinvestigationaldrugsforthetreatmentof

advancedcancerinPhase1clinicaltrials.A3‐monthtoxicologypackageisonly

neededtosupportPhase3registrationstudies.AsperScheduleYthecurrent

toxicologyrequirementforIndiaisa6‐monthtoxicologypackagetoinitiatethefirst‐

in‐mantrialforallagentsincludinganticancercompounds.Duringtheprocessof

drugdevelopmenttheabovementionedpre‐clinicalstudiesareconductedlate,

beforePhase‐III.



IncertainareassuchascancertheIndianregulatorscaneasilyadopttheuniversal

regulatoryguidance(i.e.ICH–InternationalConferenceonHarmonizationof

TechnicalrequirementforPharmaceuticalsforhumanuse)toallowevaluationof

treatmentoptionsforthisdebilitatingdisease.Itshouldberecognizedthatsincethe

longevityofpatientswithadvancedcancerislimited,thePhase1evaluationmay

providesomenewertreatmentmodalitiesforsuchpatients.Patientsmayactually

benefitfromthenewerexperimentaloption.



(iv) DefinitionofPhase‐IClinicalTrials



ThePhase‐1studiesfallwithintherealmofexperimentalscienceandrequirearange

ofskillsandexpertiseofthehighestorder.Becauseofthehigh‐risknatureofthese

studies,theregulatorybodyiscalledupontoplayapivotalrole.PhaseItrialsare

Page 45 of 153

allowedonlyformolecules‘discovered’inIndia.Thesafety/tolerabilityissuesata

PhaseIstagearerelevantandapplicableformoleculeswhetherdiscoveredinIndia

oroutsideofIndia.USFDAandmanywesterncountriesallowtheevaluationofIndia

discoveredmoleculesintherespectivegeographiesaslongastheycleartheIND

(investigationalNewDrugs)and/orCTA(ClinicalTrialApplication)hurdles.Itshould

benotedthatthesameyardstickandrigorshouldbefollowedfortheevaluationof

Indiadiscoveredcompoundsversuscompoundsdiscoveredelsewhere.



Withmoreandmorepartnershipsandco‐developmentthereisneedtohavea

uniformunderstandingandinterpretationofIndianversusForeignmolecules.Itis

unclearwhatconstitutesanIndianmolecule.Therearemanyvariantsincluding

DiscoveredandDevelopedinIndia,DiscoveredoutsideIndiabutDevelopedinIndia,

DiscoveredinIndiaandDevelopedoutsideIndia,DiscoveredoutsideIndiabutare

partiallyorcompletelyownedbyIndiancompanies,DiscoveredoutsideIndiabut

handedovertoanIndiancompanywhichischargeofdevelopment.



Thedecisionsondevelopmentstrategiesfornewmedicineandtheexperimental

approachesusedtoassembleinformationrelevanttothesafetyoffirst‐in‐manand

Phase‐Iclinicaltrialsmustbescience‐based.



(v)CapacityBuilding



(a)Ethics:RegistrationandTrainingofEthicsCommittees



IndiahasalargenumberofResearchInstitutesandMedicalCollegesandHospitals

involvedinclinicalresearch.Duringthelastfewyearstheseinstitutionshavesetup

ethicscommittees.Variousindependentethicscommitteeshavealsocomeinto

existence.Thepurposeofethicscommitteeistoensurethattheresearchis

conductedinanethicalmanner,forwhichenablingethicalguidelines,lawsand

effectivereviewmechanismshouldbeinplace.TodaythereareICMRandthe

CDSCOGuidelinesforthispurpose.



Page 46 of 153

However,thefunctioningandoperationsofthesecommitteesisvariabledespite

havingtheguidelinesinplace.CurrentlyEthicsCommitteesacrossthecountrydo

nothaveacentralbodythatwouldeitherregisteroraccreditthesecommitteesto

ensureeffectivefunctioning.TheIndianCouncilofMedicalResearchhadinitiated

somestepstowardsregistrationofInstitutionalEthicsCommitteessometimeback

butnothingconcretehascomeoutsofar.Theimmediateneedsare:



• RegistrationofEthicsCommitteesbyacentralbodyandthedetailsofthese

committeesthatoverseetheclinicalstudiesofallphasesshouldbe

availableinpublicdomain.

• AccreditationofEthicsCommittees–Theprocessfollowedcouldbethatof

FERCAP(ForumforEthicsReviewCommitteesinAsiaandWesternPacific

Region).TwoEthicsCommitteesinMumbai‐KEMHospitalandTata

MemorialCentreareundergoingthisprocesscurrently



ABioethicscurriculumhasbeendevelopedundertheICMR‐NIHProgramme

Inthesecondphaseadistancelearningprogrammeisbeingdevelopedbythis

projectincollaborationwithIndiraGandhiOpenUniversity.



(b)InvestigatorTraining



InvestigatorsneedtobetrainedtobeabletoparticipateinClinicalResearch.The

trainingneedsarenotjustconfinedtoGCP.Aspracticingdoctors,theapproachto

traininghastobenovel.Theyhavetobetrainedinevaluatingprotocolfeasibility

anditsethicaladministration.



(c)NursesTraining



Nursesarekeyelementintheoverallhealthcaredeliverymechanism.Specificallyin

clinicalresearch,mostofstudycoordinatorsareNurses.UnfortunatelyinIndia,due

tolackoftrainednurses,theresponsibilitiesofastudycoordinatorisprimarily

shoulderedbyanInvestigator.Afocusedtrainingprogramfornursesinclinical

Page 47 of 153

researchcangoalongwayinreducingthecurrentburdenoninvestigators,andalso

offerenhancedopportunitiestothenursingprofession.



(d)RegulatoryCapacityBuildingforSiteInspections



ForthelastfewyearsregulatoryauthoritiesliketheUSFDAandEMEAhave

conductedvariousinvestigatorsiteinspectionsinIndia.Itisincommonknowledge

thattheDCGIofficeincollaborationwiththeUSFDAistrainingafleetofinspectors

forconductingregulatoryinspections.Thoughthisisawelcomestepanditneedsto

beviewedmorebroadly.Thereneedstobeanestablishedprocessforthese

inspectionsthattheseinvestigatorsaregoingtoundertake.Sincethesecapabilities

ofinspectionsarebeingdevelopeditisimportanttopredefinethecapabilities,the

qualifications,themethods/SOPsinatransparentwayreflectingandassuringgood

governance.



ItisalsoimportanttonotethatGCPcomplianceistakenasaresponsibilitysolelyof

themonitoringorganizationandsponsorbuttheinvestigatorsitesalsoshouldbe

equallyheldaccountableandresponsibleasrequiredbyvariousregulatoryagency

guidelinesincludingtheIndianGCPguidelines.Therehastobeamechanismfor

reportingscientificmisconduct/fraud.

Itmaybeimportanttohaveabasicmandatorytrainingforthe

investigators/coordinators/nursesthatiscertifiedbyabodyrecognizedbythe

competentauthorityandalistofsuchGCPtrainedandcertifiedinvestigatorscanbe

availableontheCDSCOwebsite.



Theregulatoryauthoritiesshouldmakeavailabletothepublic,inunderstandable

language,negativeandpositiveassessmentreportsoftheinspectiononlyafter

completingtheinspectionprocess



(e)InfrastructureforClinicalResearch



Page 48 of 153

ThereisaneedforClinicalResearchCentresforhighrisktrialslikePhaseI.The

availabilityofsuitablytrainedmanpower,andfacilityforcriticalcareisimportant.

Whereas,facilityforcriticalcarewillbelinkedtothehospital,theavailabilityof

trainedinvestigators,specialistfromnumerousdisciplinestrainednursesandtrained

studycoordinatorsarekeyelementsofanyworldclassclinicalresearchcentre.



(6)ITinPharmaR&D

ThereisagrowingimportanceofITinthepharmaindustry.Thus,eventhoughthepharma

industryisalifesavingproductsandhealthcareindustry,ithasbeenaslowandlate

implementerofITtools.UseofITcanhelpin–

i. Dataanalysisformolecularscreening

ii. Clinicalresearchdatamanagement(CDM)

iii. Animalmodeling

iv. Biomarkersforsafetyandeffectiveness

v. Bio‐statistics

vi. Bio‐informatics

vii. Genomeresearch

viii. ProcessimplementationintermsofERPs,Regulatorysubmissions

Developmentoftoolsfortheseandotheractivitiesisacontinuousandexpensiveprocess

particularlyfortheSMEsector.AtpresentDIT,DBT,DST,etcdonothaveanyschemeto

assistSMEsforcapacitybuildingandITtoolsdeploymentforbetter,newerandcheaper

drugs.Thisisespeciallyimportantinthebio‐pharmaindustrywhereIndianpharma

industryneedstodevelopskillsasgoodasinmedicinalchemistrytotakethenext

generationdrugrevolutionleadershipglobally.

Inthiscontextitmaybeusefultoconsideraschemetoforfillingthisgapandensure

capacitybuildingandtechnologyenhancementofthepharmaindustrytomakeitglobally

morecompetitive.



1.7.4THREATS

(1)FormulationsSector

Page 49 of 153

Thegenericsmarketindevelopedcountriesisbeingcurrentlyaffectedbyanumber

offactors:

a) Ever‐greeningstrategyofMNCstoprotectmarketlossduetoexpiryofpatents

b) IncreasedcompetitiontocountrieslikeIndiafromemergingmanufacturersin

ChinaandEastEuropenotonlyfromthemanufacturingpointofviewbutalso

barriersbeingraisedbythemtoprotectanddeveloplocalindustry.Thisisbeing

donebysuchprocessesaslongapprovaltimeandcostsforregistrationof

drugs.Insistenceoncompletinglongprocessforregistrationfordrugs

registeredearlierbywayofspecificrequirementsoffreshclinicaltrials

(marketslikeRussianFederation).

c) KeymarketsliketheUnitedStatesareenteringintoanumberofFTA’swith

differentcountrieswithintenttocontainIndianexports

d) PreventionfrombiddingforgovernmentcontractsasUSpermitsbidders

onlyfromcountriesthataresignatoriestoWTOAgreementon

GovernmentProcurement.

e) Submissionofseparatestatelevelapplicationsformarketingdrugsinthe

UnitedStatesasthereisnonation‐widesystemofapplicationeven

whereFDAapprovalhasbeenreceived.



(2)BulkDrugIndustry

StiffcompetitionfromChinaoncostfronthasledtotheIndianBulkDrugIndustry

particularlytheFermentationindustry,toastageofclosureduetovariousfactors

includingsubsidizedpowerandfinancecostsinthecomputingcountry.Asaresult,

nocompanyinIndiaismanufacturingantibioticslikePenicillinandErythromycinetc.



1.8GOALSANDRECOMMENDATIONS

(1)GrowthRate

Theglobalgrowthrateprojectedis6%withtheexpectedmarketsizebeingUSD$

1200Bnby2017.TheTable‐12belowmakesitclear29.

29IMS-2009

Page 50 of 153

Table‐12:GlobalPhamamarketgrowthrate

YearMarketinBillionUS$ %growthrate

2004620 7.9

2005664 7.2

2006710 6.9

2007756 6.4

2008801 4.9



ToplayaroleofgloballeaderinPharmaceuticalsIndustry,inlongrun,the

departmentofpharmaceuticalsissettingagoalofachievingaproductionsizeofUS$

60billionbyendof12thplanin2017withaCAGRof18%fortheplanperiodand

finallytouchingUS$100Bnby2020.



Asregardsbulkdrugindustry,itwillalsocontinuetogrowandthesectorwill

contributeanestimatedUSD20billionsizeby2015growingataCAGRof20%from

2008‐0930.Withtheseprojections,itisexpectedtotouchUS$28billionbyendof

12thplanin2017.



(2)GlobalShare

Theemergingmarketsaretargetedtogrowat14%.Inthiscontext,theIndian

marketisprojectedtogrowat18%.Accordinglygiventhecurrentdemandandthe

abilityoftheIndianpharmamanufacturingsectortocontinuetomeetthedemand

push,itisexpectedthattheIndianpharmasectorwouldbeofaboutUS$60billion

sizein2017.HenceitisexpectedthatIndianPharmaceuticalsindustrywillhavea

shareof5%inglobalpharmaceuticalindustrybytheendof12thFiveYearPlan.

(3)Exports

TheexportswhichhavegrownverysignificantlytooverRs45,000croresin2010‐11,

isprojectedtotoucharound130,000croresbytheendof12thfiveyearplan.



30 BDMA estimates

Page 51 of 153

1.9 INDUSTRYDEVELOPMENTSCHEMES

Onthebasisofanalysisofweaknesses,threatsandgaponotherinternational

parametersasexplainedabove,followingIndustryDevelopmentSchemesare

proposed:

(1)IndustryPromotion

i. PharmaPromotionandDevelopmentScheme(PPDS):Thisisanongoing

schemeforpromotionanddevelopmentofPharmasectorinthe

country.

ii. TheongoingschemeofIntellectualPropertyRightcentersinHyderabad

andChandigarhshouldbecontinued.NewIPRFCsatMumbai,Chennai

andAhmedabadcanbeopenedforeasyaccessofthecentersbythe

industry.

(2)IndustryUpgradationandCapacityBuilding

iii. ACapitalSubsidyofRs.1200croresfor1200unitsattherateofRs.1

croresperunitforupgradingtheunitstoWHO‐GMP.

iv. Toupgradeatleast250unitstoUSFDA/EDQM/TGAandother

InternationalStandardsby2017

v. Totrain5000WorkingProfessionalsinWHO‐GMPandother

InternationalStandardsGMPrequirements.

vi. Openinganational“InternationalManufacturingStandardsTraining

Centre”atNIPERMohaliandfiveregionalcentersatHyderabad,

Chennai,Ahmadabad,MumbaiandKolkata,especiallyfortheindustry

regulatoryskillbuilding.

vii. OpeningaNationalFormulationDevelopmentCentre(NFDC)toassist

theSMEsforthedevelopmentofnewformulationswhicharethe

sourceofincreasingproductioninthedomesticandexportmarket.

viii. Developasoftware,underthetechnicalguidanceofDCGI,forhelping

theSMEsinachievingvariousregulatorycomplianceswhichwouldbe

distributedbytheDepartmenttotheindustryfreeofcost.

ix. Establishmentandupgradationof10PharmaGrowthClustersby2017.

Page 52 of 153

OtherRecommendations:

i. MoHFW/IPCtoexplorethepossibilityofputtingPharmacopeiaontheinternetas

isthepracticeforseveralinternationalpharmacopeiasuchasUSPandBP.



ii. IncreasingthelimitofSSIcategorizationofpharmaunitsfromRs.5crorestoat

leastRs.8croresbothforDPCOincentivisationandMSMEassessment.Similarly

intheDPCO,theexemptionfrompricecontrolshouldbeprovidedtoPharma

UnitshavingappropriatelycertifiedinvestmentofuptoRs.8croresinplantand

machineriesandhavingWHO‐GMPcertification.



iii. Levelplayingfield:IndianBulkDrugIndustryismainlycomparedwiththat

odChina.InChina,theindustryisfullysupportedbyGovernment,right

fromprovidinginfrastructuretovariousbenefitsintermsofTaxesincase

ofexport.TopromoteourBulkDrugIndustry,governmenthastocomeup

withvarioussupportiveschemes.



iv. AntiDumping:Immediateactionneedstobeinitiatedforimpositionof

AntiDumpingDutyonPen‐Gand6APA.



v. SubsidizedElectricitySupply:Electricityneedstobesuppliedatsubsidized

ratesof@Rs.3.00‐3.50perunitatparoftheprevailingratesinChinain

ordertoenableIndianfermentationIndustrycompeteatalevelplaying

field.Thiswillleadtoreductionof~10%productioncostofPen‐G.



vi. SubsidizedSugar:Sugar,beinganimportantinputconstitutingaround30%

ofthetotalcost,needstobesuppliedtoPen‐Gmanufacturing

fermentationunitsatasubsidizedpriceofRs.20perKg.Thissubsidymay

resultinareductionof~7%intheproductioncostofPen‐G.



Thedetailsoftheschemeandbudgetaryrequirementsarementionedin

Chapter‐8.

‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐

Page 53 of 153

Chapter2:

RESEARCH&DEVELOPMENT



2.1Introduction

IndianPharmaceuticalIndustryhasalreadybeenplacedamongthetopfour

emergingmarketsinpharmaindustrybythemarketresearchreportpublishedby

IMSHealthInc.Theglobalpharmaceuticalindustry,inthelastfewyears,hasshown

highinterestinIndiapharmaindustrybecauseofitssustainedeconomicgrowth,

healthcarereformsandpatent‐relatedlegislation.Indiandomesticpharmaceutical

markethasseengrowthataCAGRofabout12%sincethestartof11thFiveYear

Plan.Thepositiveapproachtowardsproductpatentproducthasencouragedthe

IndianpharmaceuticalcompaniestoinvestmoreinResearchandDevelopment.

India’straditionalstrengthliesinsmallmoleculeAPIsandgenerics.Indiaranksthird

inworldwidevolumeofproductionandis14thlargestbyvalue.Themainreasonfor

thisdiscrepancyhasbeendeterminedtobethelowercostofsuchdrugsinIndia,

comparednotonlytothetraditionalmarketsbuttosmallermarketslikeZimbabwe

andSiLanka.However,intoptenglobalgenericsplayers,onlyoneIndiancompanyis

present.

Table‐13:TopGlobalGenericPlayers



(Source:CapitalIQ,EvaluatePharmaandDeutscheBankReport)

RankCompany

1Teva

2Sandoz

3Mylan/MerckGX

4WatsonAndrx

5Barr

6Actavis

7Ratiopharm

8Stada

9Ranbaxy

10Perrigo

Page 54 of 153

2.2ResearchandDevelopmentexpenditure



TheprivateinvestmentonR&DinPharmaceuticalSectorbydomesticcompanieshas

increased40‐foldoverthelast15yearsfromRs80.61crin1994‐95toRs3,342.32crin2009‐

10representing4.5%ofdomesticsalesin2009‐10.



Table14:ResearchandDevelopmentExpenditure



Year

GrowthinR&DExpenditure

–

Rs

Cr

R&DExpenditureAs%of

Sales

Domestic

Companies

Foreign

Companies

Domestic

Companies

Foreign

Companies

Mar199580.6164.131.340.77

Mar1996142.5083.37 1.71 0.91

Mar1997148.1289.41 1.55 0.95

Mar1998154.1590.651.430.88

Mar1999218.6679.781.560.70

Mar2000256.8090.171.560.66

Mar2001435.07109.812.300.72

Mar2002597.91110.04 2.64 0.65

Mar2003686.74232.73 2.93 0.71

Mar20041084.26346.693.811.10

Mar20051527.24510.504.981.63

Mar20061850.97816.025.352.39

Mar20072371.79695.625.012.67

Mar20082772.63700.184.782.86

Mar20093316.14846.054.893.84

Mar20103342.32934.404.504.01

Source: CMIE



Page 55 of 153

AscomparedtothisasregardsglobalR&Dinvestment,accordingtoThomsonReuters’2011

PharmaceuticalR&DFactbook,GlobalexpenditureonR&Dhasdroppedtoanestimated

$68billionfromthe$70billionspentineachof2008and2009.Thethree‐yearlow

demonstratestherecedingtrendsofdrugsuccess,theamountofdrugsenteringPhaseIand

IItrialsandthenumberofnewmolecularentities(NMEs)launchedintheglobalmarket.On

thecontrarydomesticcompanieshavebeenincreasingtheirresearchexpenditure,andnow

investaround4.5%oftheirsalesinpursuingR&D.Asagainstthis,globalspendisaround

8.68%ofthesalesininnovation.Worldwide,bigpharmacompanieswhoinvestin

"research''inpursuitofnewchemicalentities(NCE),havestartedcuttingbackasclinical

trialsareexpensive,andjackupdevelopmentcoststobillionsofdollars,whichsometimes

givedisappointingreturns.Incontrast,domesticcompanieshavebeeninvestingin

"development''ofcopiesofexistingmoleculeshavingmorethanabillionUS$annualsales

androllingoutgenericdrugsversionatafractionofdevelopmentcostofnewmedicines.

ThishasledtheglobalMNCstosetuptheirresearchfacilitiesincountrieslikeChinawhere

besideslowcostworkforceahugemarketisalsoleveraged.Theseare:31:

31 Mckinsey Draft Report for DoP, 2009

Sources: Interviews; literature search; company Web sites; analyst reports

Location

Shanghai

Business model

Captive

Time

2004

Size

•

Initial investment $12mn

•

~40 scientists

Research focus

•

Medicinal chemistry for drug discovery

programs in antiviral and anticancer areas

Shanghai,

Beijing Partner with National

Genome Centers 2001

•

More than $1mn

•

Epidemiology projects, focusing on genetic

predispositions to diabetes and Alzheimer's

disease

Shanghai Partner with Chem-

Explorer, Synchem 2003

•

100-200 local scientists

•

Custom synthesis and other chemistry

services

Shanghai Captive 2004

•

Investing $175mn

•

New regional headquarter and first clinical

trial center in Shanghai, including biometrics

capability to support regional and global trials

Partner with Shanghai

Huashan Hospital

Shanghai 2004

•

N.A.

•

Jointly setting up infectious disease

diagnosis and treatment center

CaptiveShanghai 2002

•

More than 40 staff

members

•

Established clinical research unit – East

Asia to support regional and global trials

Partner with WuXi

PharmaTech

Shanghai 2003

•

Multiyear, multimillion $

agreement

•

Dedicated full-time equivalents (FTEs) to

provide discovery chemistry services (e.g.,

library synthesis)

Partner with Shanghai

Institute of Meteria

Medica (SIMM)

Shanghai 2004

•

Multiyear agreement

•

Joint program to develop natural compounds

in traditional Chinese medicine (TCM)

CaptiveBeijing 2002

•

20, growing to 60

scientists in the next few

years

•

Center of excellence for molecular biology,

protein chemistry, and cell biology

This has resulted in a number of R&D centers being set up by

multinational pharmacos

ILLUSTRATIVE

DRAFT

Page 56 of 153

Thishasalsobeencatalysedbymassiveexpendituresupportofthegovernment.

Thus,ifonecompareswithChinathesituationisquitechallengingasseenbelowand

asbroughtoutbyMckinseyinaReportfortheDoPin200932.



Ascomparedwiththis,theR&Dspendscenarioisnotveryencouraging.Thus,the

R&DexpensesforIndiandomesticcompaniesarefirstofallinthedevelopmentand

filingdrugmasterfilings(DMF),andabbreviatednewdrugapplications(ANDA),

throughconductofbio‐equivalenceandbioavailabilitystudies.Eveninthisspace

thereareselectedfewbigspenderslike‐Lupin,DrReddy's,RanbaxyandSun

Pharmawithroughly8.5%,8%,5.6%&5.3%oftheirannualturnoversrespectively,

forthefinancialyearendedMarch2011.IfthisiscomparedwiththeR&Dspendof

bigpharmathesituationisquitechallengingasmaybeseeninthetablebelow:



32 Mckinsey in a Report for the DoP in 2009

China has made large investments to provide a congenial environment to

encourage R&D activities

Infrastructure

Policy

Description

•

Development of more than 20 high-tech parks (e.g.,

Shanghai Zhangjiang, Beijing Zhongguancun)

•

Six drug screening centers established to focus on

lead compound selection

•

QC procedures implemented in three good

laboratory practice (GLP) evaluation centers and

several GLP standard laboratories

•

10 good clinical practice (GCP) testing centers

established

•

Favorable policies toward life sciences investment

•

Strong government support for partnerships

between MNCs and domestic companies

•

Increased government funding for university

programs in science and engineering

•

Chinese government is actively encouraging

educated Chinese to return (e.g., free visits with

paid plane tickets and hotel rooms, development of

centers such as Shanghai Pudong Center for

Returned overseas Students to assist returnees)

100

2010E

8,800

2005

1,200

2001

Government investment in

biotechnology research

USD million

Tax

•

2 year tax exemptions on profitability for companies

involved in life science research

•

50% rebate on enterprise tax for the next 3 years,

usually extended for another 3 years

DRAFT

Page 57 of 153



Table‐15:R&DspendingofleadingIndianandGlobalpharmaceuticalMNEs,FY200933

IndianPharmaceuticalCompaniesGlobalPharmaceuticalCompanies

Rank

in

R&D

spendi

ng

Company

R&Dexp.

FY

2008/09,

millionUS$

RankinR&D

spendingCompany

R&Dexp.

2009,

millionUS$

1Ranbaxy*991Roche,CH8,570

2Dr.Reddy’s895GlaxoSmithKlin,UK6,286

3SunPharma6710ElliLilly,USA4,300

4Cipla5125Lundbeck,DNK615

5LupinLabs5050Watson,USA197



*RanbaxywasacquiredbyDaiichiSankyofromJapaninMarch2009.



2.3Bio‐pharmaConvergence



Biotechnologyhasemergedasoneofthekeytechnologiesofthiscentury.

Biopharmaceuticalshavebeenprojectedaspotentialdrugscuringmanydiseases.

Manyresearchpapershaveopinedthatchemistrybasedmedicalinnovationsofthe

previouscenturyarebecomingtorecedeinimportance,tobereplacedbyadvances

inbiopharmaceuticalresearchthatwillboostthegrowthofrevenuesandprofitsin

theyearstocome.Givenitspotential,mostoftheglobalpharmaceuticalcompanies

areshowinginterestinthebiopharmaceuticalssector.Thistrendislikelyto

32.Gert Bruche,- ‘Emerging challengers in knowledge-based industries? The Case of Indian pharma

Multinationals,’ Columbia FDI Perspectives, No. 41, July 1, 2011.

Page 58 of 153

continue,asthesecompanieswouldtrytoreapthebenefitoftheirsalesand

marketingcapabilitiesalongwithtechnicalexpertiseofbiotechnology.



Lastyear,thepharmaceuticalindustryspentabout$2billiononassortedR&D

activitiesinIndia.However,thisfigurecanreachupto$25billionby2025if

concertedeffortsaremadebyvariousstakeholderslikethegovernment,academia

andindustryondevelopingR&Dandinnovationinthebio‐pharmafield.Thisgrowth

wouldbedrivenbytappingthesynergybetweenexpandingactivitiesofIndian

companies,additionalgovernmentinvestmentandagrowingpoolofqualified

researchers,accordingtoanewreporttitled,'LifeSciencesR&D:“Changingthe

innovationEquation”bytheBostonConsultingGroupinitspositionpaper.



2.4PatentsProgress

Amongotherimpactofthe2005amendments,thenumberofpatentfilingsinIndia

forpharmaceuticalproductsincreasedsteadily.Thetotalnumberofpatentsgranted

inIndiajumpedfrom1911in2004‐05to4320in2005‐06.Thecurrentstatusof

pharmaR&DinIndiaisbestreflectedbythegrowthofdomesticpharmaindustryin

lastdecadeintermsofavailabilityoftrainedmanpower,publicationsandpatents,

valueandvolumeAPIfinishedformulationmarket,NDDSlaunched,INDs/NDAfiled,

Clinicaltrialpermissionsobtained,andannualgrowthinBiopharmaceuticals,Clinical

researchactivity.

Asper2009‐2010annualreportof“INTELLECTUALPROPERTYINDIA”,GOVERNMENT

OFINDIA,(MINISTRYOFCOMMERCE&INDUSTRY)themajorcontributiontopatents

wasfromCSIRandIIT.ThecontributionfromtheIndianuniversitieswasextremely

poor.NIPERMohalicontributedonly4patentsin2009‐10.Thisemphasizestheneed

todevelopNIPERsonIITpatterntoboostgrowthinpharmaR&Dsector,whichalso

performedpoorlyinpatentfilingrace.

Page 59 of 153



Thereh

biotech

Total(p

*

sbeenno

ectorsinIn

arma+bio

Thetotal

atentsfiled

ntributed

2005‐

rowthsinc

ia.

ech)Paten

patentsfil

byIndian

inIndiadur

ynonIndia

006 2006‐

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sFiled/Gr

d/granted

swellfore

ng2009‐10

entities.

007 2007

‐

numbero

ntedbyIn

aboveincl

gncompan

bypharma

‐

2008 2008

‐

fpatentsfil

ianpatent

deboth;t

ies/intstitu

biotechse

‐

2009 200

donwards

office*

eprocess

tions.Out

tor,moret

‐2010

TotalPaten

bypharma

andprodu

oftotal43

an75%we

sFiled

sGranted



+



t

3

e



100

150

200

250

300

heproduct

arketinga

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oweverthe

venueand

ourinnova

2003

Glob

2003 2

ivityofph

thorization

htheyard

sefiguresa

manpower

tioncapabil

2004 20

Cli

lClinicalTrials

04 2005

sewised

rmaIndus

(productl

sticksinth

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eployedsi

ityinterms

5 2006

icalTrial

permitted

2006 2007

stributio

rycanbe

unched)an

eplotsbel

impressive

ce2003on

ofourR&D

2007

from20

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2008 20

ofClinica

CG(I)

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/orclinical

wshows

fwecomp

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2008 20

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reitalong

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9 2010

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ittedby

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Page 62 of 153

2.5SWOTANALYSIS



2.5.1Strengths

i. Costcompetitiveness;thecostofdevelopinganewmoleculeinIndiaisless

than30%oftheAmericancost.Clinicaltrialscostapproximately$300to

$350millionabroad,whileitcostsonlyabout$20million(Rs100crores)in

India(Mr.VijayMoza,Vice‐ChairmanInstituteofClinicalResearch,India).

ii. EdgeinreverseengineeringforgenericproductsandglobalANDAfiling

iii. WelldevelopedchemistryR&Dandmanufacturinginfrastructure

iv. LowcostEnglishspeakingworkforce

v. Large,diverse,therapy‐naïvepoolofpatientpopulationinallkindofacute/

chronicdiseasesegments:Anidealforclinicalresearch



2.5.2Weakness

i. Lackofdevelopmentskillsincomplexanddifficulttoduplicategeneric

producttechnologies

ii. Lackofcultureforinnovation

iii. Poorindustry‐ academiainteractionandallaroundinfrastructure,

includingeducationalinstitutions

iv. Lowdoctortopatientratioinhospitals,renderingthemnon‐availablefor

clinicalresearch

v. Lackofexperience,capabilityandresourcesinindustryandinstitutions

engagedinnewdrugdiscovery

vi. Lowcapabilityandmotivationforcuttingedgeresearch,especiallyin

areasrelatedtounderstandingofdisease,andplatformtechnologiesfor

drugproducts

vii. Poorinfrastructure,trainingandnonavailabilityoftrainedmanpowerfor

clinicalresearch

viii. LowappetitetoriskandR&Dinvestment

ix. RatioofPhDtoMastersdegreeholdersinR&Dislow(1:10)against

target(1:5)

Page 63 of 153

x. Lowlevelofeducation&traininginthepharmacyinstitutionsand

universities

xi. Small,inefficientandin‐experiencedworkforcelackingcompetencyand

capacityinourconservativeregulatoryenvironmentisunabletosupport

innovation&newdrugdiscovery.



2.5.3Opportunities

i. Developmentofcriticalandhigh‐techmanpower(capacitybuilding)for

pharmaR&Dandalliedsectors

ii. ConvertinglowcostgenerictovalueaddedbrandedgenericbySME

sector

iii. Developplatformtechnologies(Newdrugdeliverysystems)for

improvisingconventionalgenerics

iv. Developmentofnewbio‐molecules,vaccinesandbio‐similar

v. ExploitationofclinicalresearchpotentialofIndia.Accordingto"Booming

ClinicalTrialsMarketinIndia<http://www.rncos.com/>",anewresearch

reportbyRNCOS,anumberoffactorssuchaslowcost,largepatientpool,

easyrecruitment,stronggovernmentsupportandstrengtheningofits

intellectualpropertyenvironmentwillenableIndiatoconductnearly5%

oftheglobalclinicaltrialsby2012.

vi. Indiaassumingleadershiproleamongstdevelopingcountriesforpharma

research,manpowerdevelopmentetc.



2.5.4Threats



ChinaisquiteaheadinAPI,naturalremediesandherbals,Clinicalresearchand

medicaldevices.



Page 64 of 153

2.6RECOMMENDATIONS

Indiaacknowledgedtheuniversalityofintellectualpropertyrightsbyembracingthe

harmonizedTRIPSpatentregimeandenforceditfromJanuary1st,2005.Sincethen,

anewwaveofprogresshassweptthecountry.Post2005,pharmaceuticaland

medicalbiotechnologycompaniesexperiencedsomeverycriticalchanges,andsince

then,theonlyrealdifferentiatorhasbeeninnovation.

2.6.1ENHANCEDINDUSTRY–ACADEMIALINKAGES



2.6.1.1StepsRequiredfromIndustry:

i. Indianacademia,especiallyinchemicalandlifesciences,isequivalenttoany

world‐classfaculty.Theindustrymusttakeadvantageofthisopportunityand

approachthemwithdefinedproblems.

ii. Industryshouldprovideopportunitytoacademicianstointeractwithindustry

scientistsandgetexposuretostyleoffunctioningofindustrialR&D.

iii. VariousschemestopromoteindustrialR&Dshouldbewidelycirculatedto

createawareness.

iv. Industriesshouldinteractwiththeacademiatobecomeawareofthestate‐

of‐the‐artfacilitiesavailableandinuse.



2.6.1.2StepsRequiredfromAcademia:

i. Academicinstitutionsshouldwintheconfidenceofindustrywithrespectto

confidentialityandactivecollaborationwhichisbeneficialtobothparties.

ii. Theacademianeedtointroducecoursesmorerelevanttothedevelopment

ofthepharmasector.Forexample,integratedmasters’coursesin

pharmaceuticaldevelopmentwithfocusonbio‐pharmaceuticalsandNCEs,

intellectualpropertiesissuesrelatedtopharmaceuticals,etc.canbe

developed.ThesecoursesshouldbecreatedafterconsultingOPPI,IDMAand

similarbodies.

Page 65 of 153

iii. TheacademicInstitutionsshouldinviteIndustrypartnerstoteachpartsof

thesecoursessothattheindustryviewpointcanbeconveyedtothenext

generationworkers.

iv. Facultymembersofpremierinstitutescanvisitindustriesandspendashort

periodtoapprisethemselvesofchangingindustryneeds.



2.6.1.3StepsRequiredFromGovernment

i. Thegovernmentneedstocreateastrongplatformforincentivisingthe

innovativeapproachtoproducesafeandaffordablemedicine.

ii. Public‐private‐partnershipswithindustryandleadingacademicpartners/

interestedstakeholdersmaybearrangedtoaddressinnovationissues.

iii. Theimportanceofcommerciallyorientedneedsshouldbeconveyedtothe

publicinstitutions.Otherwisetheserelationshipsmaynotsurviveinthelong

run.

iv. ProgrammeslikePRDSFneedtobeencouragedandtheirscopebroadened.

v. Governmentshouldgivesubsidisedloans/grants/fundingforNewDrug

Development.

vi. Start‐upcompaniesbasedonacademiageneratedIPthroughequitylinked

fundingshouldbeencouraged.Thiswillbeagoodstarttoanindustry

focusedapproach.

vii. Industryneedstobeincentivisedthroughattractivelicensingschemes.



Also,ithasbeenfoundbothstrategicalternativeswhichareusuallyfollowed–

genericmedicinesandinnovativeproducts–ascomplementary.Ifoneconsidersthe

hypothesisthatthegreatexpenseinR&Disproportionaltothecashflowofprevious

periods,thesuccessdomesticfirmsaregettingbysellingtheirgenericswillmake

themabletostrengthentheirfinancialmuscles,addingtotheirR&Dinvestments.

Evidencesexist,evenifincipient,toconfirmpreliminarilythisassertive.Additionally,

asthecompaniesstrengthentheirlinkswiththeinnovationsystems,theyreinforce

theirqualificationsintermsofR&D,openingthepossibilityofpartnerships

arrangementswithuniversities,localandforeigncompanies,andresearchinstitutes

–bothpublicandprivate.

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2.6.2MAKINGTHEDOMESTICR&DINTERNATIONALLYCOMPETITIVE

FormakingdomesticR&Dinternationallycompetitiveandalsoviable,onehasto

reviewnotonlythecurrentstateofindustrialR&Dgoingon,butalsoreviewthe

researchactivitiestakingplaceinvariouscentresorinstitutes.Thereviewcouldthen

befurthercategorizedkeepinginviewtherequirementofthevastconsumer

market,andthetimeframesfordevelopment.Suchactionsarehelpfultocurb

excessofimportsandbringingthepricingofhealthcare/biopharmaproductsin

control.Weneedtofocusonfollowingaspects:



2.6.2.1Regulatorysystemandfunding:

i. ThepresentweightedaveragetaxdeductionaccordedtoR&Dshouldcover

internationalpatentingcosts,regulatoryconsultants,outsourcedR&D

servicesandpatentlitigationexpenses.



ii. Regulatoryreformsarerequiredwhichcanreducethecurrentlyprevalent

approvaltimelines.Thecostadvantageisnegatedbytheinordinatedelaysin

approvalwhicherodepatentlife.



iii. A25%subsidyonsalariesofNRIspecialists/expertscouldhelpcompanies

attractandaffordhighendtalent.Industryshouldalsobepreparedtopay

competitivesalariestobench‐levelworkersandmiddlemanagementandnot

onlythehigh‐tiergroup.



iv. Indiancompaniesspend~4‐5%oftheirsalesonR&D,whichisonequarterof

thespendingbyproportionbyglobalpharmacompanies(Source:IDMA).

Governmentfundingandcollaborationwithacademicresearchinstitutesis

theneedofthehour.



v. Reductioninexciseandcustomsdutyofchemicalsandrawmaterialsthatare

importedforbiotechproductsisveryimportanttoreducethemanufacturing

Page 67 of 153

costs;alsotaxexemptionforexportmarketforacertainperiodhasbeen

suggested.



vi. Skilldevelopmentisthenextbigchallenge.Wehavetoencouragepeople

abroadtoreturnandsetstandardsinIndiainsomeoftheseareas.Asthe

academiahasbeenabletoattractthebestoftheIndianbrainsfromabroad

atmuchlowersalaries,industriesneedtolookattheirset‐uptoidentifythe

lacunaeandcorrectthem.



vii. Focusonresearchcapabilitiesshouldshifttoencompassbiopharma

development.Sincethisinvolveshigh‐endandcapital‐intensiveresearch,the

initialsupportfromgovernmentwillbewelcome.



viii. Anothersuggestionhasbeenintroductionofpartnershipbetweenpharma

giantsforeachpharmaceuticalinstitutedealingwithhighereducationinthis

area.Thecoreareasoftheseinstitutesneedtobestrengthenedtoensure

complementarygrowthofeach.Thiswillalsoleadtomorecollaborative

researchandnotcompetingwitheachother.BodieslikeOPPI,IDMA,etc.can

beconsultedforthispurpose.

2.6.2.2In‐houseR&Defforts:

i. AdefinedmechanismtostandardizethedomesticR&Deffortsagainstglobal

standardsneedstobeinplace.Thiscouldincludetheprocess/data/

informationstandardslikeISO/OECD/WHOguidelines.DSIR/NABL

certificationsaregoodmilestonesinthisprocess.

ii. Limitedmargins,duetolowpriceofproductsleadtoLackforinvestingin

R&Dandneedstobeincreasedbyallcompanies.

iii. SettingupanationalBiosimilarCenteratBangaloreandthreeRegional

BiosimilarCentersatChandigarh,HyderabadandAhmedabad.

iv. SettingupofaNationalPharmaceuticalNanotechnologyCenteratNIPER

Kolkota/Mohali.

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2.6.2.3Greaterfiscalsupportandincentivesareneededforinnovation.Tax

incentivesforproductsdesignedbydomesticcompaniesandforapplication

withinIndiae.g.grant‐in‐aidfunding,softloans,higherweightedaveragetax

deductionfordruginnovation,5yearNPPAexemptionfornoveldrugs,5year

taxanddutyexemptionfornewdrugs,etc.



2.6.2.4Supportfortheclinicaltrialssector: 

i. OrientationprogrammesonClinicalResearchorganizedbyindustry

associations,MedicalSchoolsviaconferences,CMEsetc

ii. Regulartrainingofsitestaffbysponsors/CRO

iii. Orientationprogrammesforadministrativeandlegaldepartmentsofthe

hospitals

iv. CRO/SponsortofacilitatedevelopmentofsiteSOPs

v. RegularRegulatoryinspectionsofsites/IRBs/CROs/Sponsorstoensure

quality

vi. Methodologyforreportingnon‐compliantinvestigators/sites

2.7NIPERMohali

Inordertostrengthenthepharmaandhealth‐caresectors,thereisadireneedto

strengthenNIPERsonthemodelsofnewlyset‐upIISERsandIITs.Thereisaneedto

thereforetheexistingalreadydevelopedNIPER‐SASNagarasaHubtoprovidefull

rangeofservicestodomesticpharmaR&D.



2.7.1RoleofnewNIPERs

ThenewlyestablishedNIPERsneedtobesupportedintermsofbasicinfrastructure

andrecruitmentoffaculty.Theycanworkasspecialisedinnovationhubssuchasfor

‐ thrustonnewchemicalandbiologicalentitiesIndustryneedstoconcentrateon

biologicsasanimportanttherapeutictoolbydevelopingfacilitiesforthesame,with

thehelpofacademia.NIPERscanplayothersignificantroles,intermsof:



(i) EndtoendsolutiontoIndianpharmaR&D,engagedindiscoveryand

developmentofNCEandBiologics.Thishadbeenamajorbottleneckforour

industryintakingupmoleculesallthewaytophaseIII.

Page 69 of 153

(ii) Train&developmanpowerintheseclinicalandnonclinicalstudieswith

labelledcompounds.

(iii) GiveaboosttoGenericsIndustrybyofferingsolutionsfor“difficult”

formulations,suchasthosefordrugswithpoorsolubility,poorbioavailability

orotherpropertiesthatpreventAPIsfromreachingthemarketorachieving

theirfulltherapeuticpotential.

(iv) SupportNovelDrugDeliverySystem(NDDS)groupsinNIPERandIndustry

speciallythoseofferinginhalationdeliverysystems.



2.7.2SynergismbetweenAcademiaandindustry:ANecessity

Inthefirstyearofthe12thfiveyearplan,consolidationofexistingdataisrequired.A

listofthelaboratoriesundergovernmentsector,engageddrugdiscoveryand

developmentrelatedareasisprovidedinAnnexure–A.Thelostleadsgeneratedin

theselaboratoriesneedtoberesuscitated.Thiscanbedonebycreatingadatabase

ofleadswiththesupportofDST,DBT,ICMR,etc.Analysisofthedatabasewillallow

onetoassessthegapsintheexistingknowledgebase.Thiswillbeagoodstarting

pointforinnovativeresearch,sincetheleadsfordrugdiscoveryarealreadypresent.

Tillnow,drugdiscoveryinacademiahasremainedapublicationtool.Themoney

investedbyvariousfundingagencieshasresultedintrainingofhumanresourceand

publicationsinpeer‐reviewedjournals.Onemajorreasoncouldbethatthefunds

investedinextramuralresearchprojectsarewaybelowthoserequiredforserious

drugdiscoveryefforts.Acleardemarcationoftherolesofvariouslaboratoriesis

required.Insteadofinvestinginallfacilitiesinalllaboratories,theinherentexpertise

ofeachinstituteneedstobeutilizedtothefullest.Thatwillresultinoptimum

utilizationoffundsandskillsetavailable.Thus,theaimofthenextfiveyearsofXII

planwillbetoprovidevalue‐addedreturntothepharmasector,bywayofproduct

development.

Basedonaboverecommendations,thedetailsoftheschemesproposedarein

Chapter8(Section8.2).

‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐



Page 70 of 153

CHAPTER:3

CAPACITYBUILDING&EMPLOYMENT



3.1STATUSOFEMPLOYMENTOFTECHNICALMANPOWER



TheemploymentdataforthepharmaceuticalsectorfromtheAnnualSurveyof

Industries(ASI)isgivenbelow:



Table–16:EmploymentDataforPharmaceuticalSector



Source:AnnualSurveyofIndustriesMinistryofStatistics&Programme

Implementation.

AccordingtoCMIEdatabase,thewagebillofthedomesticcompaniesreported

morethantwelve‐foldincreaseover15‐yearperiodfromRs664crin1994‐95toRs

8,172crin2009‐10.

3.2FUNCTIONALDISTRIBUTIONOFHUMANRESOURCESINTHEPHARMASEGEMENT*

YearNoofEmployees

Mar1995 1,81,497

Mar19962,04,609

Mar19972,11,614

Mar19981,89,295

Mar19992,13,999

Mar20002,43,410

Mar2001 2,33,704

Mar2002 2,26,416

Mar20032,23,556

Mar20042,40,791

Mar20052,65,396

Mar20062,90,021

Mar2007 3,36,211

Mar2008 3,53,692

Page 71 of 153

R&Dinthepharmaindustryismulti‐facetedanddrawsupontheexpertiseof

pharmacists,chemists,biologists,chemicalengineers,pharmacologistsandmedical

practitionerstonameafew.Thedifferentactivitiesincludedrugdevelopment

(synthesisandmanufacture),formulation,clinicaltrialsandevaluationandfinally,

launchingofthedrug.



WhilethesubjectofR&DhasbeendiscussedindetailinChapter3ofthisPlan

Document,therelatedsubjectofCapacityBuildingandEmploymentisdiscussed

herein.



Inthisconnection,itistobestatedthatcloselyassociatedwiththeR&Dand

regulatory/qualityassurancefunctionsistheneedtorelatetheimplementationof

thesefunctions/responsibilitieswithmanpowerrequirements,itwillleadto

increaseddemandforpharmacistsbesidesotherprofessionals.Contract

manufacturingisestimatedtogrowUS$30Billion,whereascontractresearchis

estimatedtoreachUS$6‐10Billionandthisispavingwayfornewjobopportunities

beingcreatedintheIndianPharmaceuticalmarket.Thissectorisexpectedtogrow

atarate17.2%in2011.



Itisestimatedthatabout20%ofthe3.53lacmanpoweraboveisengagedin

researchandtestingasshownbelowinthetable.

Table17:PercentagedistributionofMan‐powerinPharmaIndustry

FunctionDistribution

Production&QualityControl50% 50%

Research/Lab/Testing 20%

Sales,Marketing,Medicalassistance5‐10%

Purchase,Logistics,SupplyChain 5‐10%

Supportfunctions(HR,Finance,etc.)10‐12%

*NSDCreport

EducationalqualificationsofpersonnelemployedintheChemicalsand

PharmaceuticalsSegmentinthisrespectareestimatedtobeasfollows:*

Page 72 of 153

Table18:QualificationsofpersonnelemployedintheChemicalsand

PharmaceuticalsSegment

QualificationDistribution

Ph.D/MTech/MScetc.5‐8%

GraduateEngineers15‐25%

DiplomaEngineers10%

ITIandothervocationalcourses 15‐20%

Graduates(BA/BSc/BCom/others)15‐25%

12thstandardorbelow20‐25%

*NSDCreport

Withtheincreaseinnewtherapeuticinterventionsandintroductionof

genomics/proteomictechnologies,anupsurgeindemandforskilledmanpowerto

fuelthisgrowingsectorhasbeenseen.Ithasopeneddifferentjobprofilesfor

aspirantswhoarelookingforacareerinthisfield.AspirantsInterestedinR&Dsector

canworkondrugdiscovery,developmentofnewgenericproduct,analyticalR&D,

APIorbulkdrug,andformulationR&D.Drugdeliveryisalsoanotherareawhere

aspirantscanlookinto.RegulationinpharmaIndustryhasbeenthereforalongtime

nowanditisgettingstringentdaybyday.Professionalswithexpertiseinregulatory

affairsaregrowingindemandallovertheworld.WithIndia’sincreasingexportsand

growingdomesticindustryregulatoryaffairprofessionalwillbeakeytoany

organization’srapidgrowth.Intellectualpropertyandpatentservicesisanother

area,whichareanintegralpartofprotectingtheintellectualpharmaresearch

bringingnewertherapeutics.



Thereisanacuteneedofhumanresourcesintheareasof:

i. PharmaceuticalandBiopharmadevelopment

ii. Clinicaldevelopmentprogramswithcollaborationwithmedical

institutes.

AMckinseyReport34hasbroughtoutthisgapasbelow:



34 A Mckinsey Report for DoP 2009

Page 73 of 153

Pharma R&D talent gaps assessment in India



Aspertheindustry,thedemandofqualityprofessionalsisnotbeenwellsupported

bythesupplyofquantitymanpowerandthisleadstoanemploymentinequilibrium.

Thereisnecessitytoexpandhighereducationinpharmaandcertainareasasper

industryneedandforthisindustryparticipationmaybeneeded.



Inthepharmaceuticalsector,directemploymenthasbeensteadilyincreasing.Inthe

year2006therewere6.9lacspeopleengaged,whichhasrisensteadilyto8lacssin

theyear2008.



3.3GEOGRAPHICALDISTRIBUTION

Goa,Mumbai,PuneandHyderabadhavebeenthepreferreddestinationsfor

formulationplayersinthepast.However,BaddiinHimachalPradeshandPantnagar

includingHaridwarinthestateofUttrakhandaretheupcomingformulationclusters,

attractingformulationmanufacturersfromacrossthecountryduetofiscal

However, capability gaps exist around core health-care

innovation skills

* R. Maiti and M. Raghavendra, “Clinical Trials in India,” Pharmacological Research 56 (July 2007): 1-10

** MD Gupte, epidemiologist, Indian Council of Medical Research

Sources: Interviews; FICCI; HRI, 2006; Frost and Sullivan, 2005; literature searches

Degree of

bottleneck Rationale Impact

Principal

investigators

High

•

Only 700 ICH/GCP trained physicians

•

Investigators required for pharma

companies to do trials

•

Causes delay in patient

recruitment (6 to 8 months)

•

Affects quality of data

Clinical Research

Associates (CRA)

•

Three institutions train CRAs*; however

quality very low

•

CRAs trained in theory, not practice

Medium

•

Pharma companies have

to train internally

•

Impacts quality of data

Biostatisticians

•

Small number of institutes

•

Limited career opportunities

•

Migration to higher-value industries

Medium

•

Reduces ability to establish

research or pharmaco-

vigilance facilities

Epidemiologists Medium

•

Deep shortage of epidemiologists:

at least 1,000 required**

•

Reduces pharmacos’

ability to establish PV

facilities

Toxicologists Medium

•

Not enough institutions provide

this training

•

Talent attracted to other areas

•

Reduces pharmacos’

ability to conduct research

NOT EXHAUSTIVE

Biologists High

•

Lack of talent and experience in key R&D

processes (e.g., mammalian expression

systems)

•

Hinders ability to compete

in biologics, a $63bn

business in 2007

Medical device

specialists

High

•

$200bn industry in which India has a very

small presence and is falling further

behind China

•

Reduces willingness of

global device companies to

work in India

DRAFT

Page 74 of 153

incentivesofferedbythegovernment.Traditionalbulkdrugclustersarelocated

primarilyinGujarat,Maharashtra,AndhraPradesh,TamilNadu,Goa,Pondicherry

andKarnataka.VisakhapatnaminAndhraPradeshistheupcomingbulkdrugcluster

thathasgeneratedsignificantinterestintheAPIplayers.TheR&Dclustershave

followedasimilardevelopmentpattern.ApartfromtheNationalcapitalRegion

(NCR),otherR&Dclustershavebeenlimitedtotheestablishedpharmaceutical

regionsinthecountry.



3.4LIKELYREQUIREMENTOFSKILLEDMANPOWER



3.4.1Requirementby2015

Theprojectedhumanresource,keepinginmindthepharmaceuticaldomesticas

wellasglobalmarket,willbearoundapprox.15lacsby2015[Source:Human

ResourceandSkillRequirementsfortheChemicals&PharmaceuticalsSector(2022)

‐AReportbyNSDC].AsthepharmaIndustryislikelytogrowwitharateofaround

18%peryearandthisgrowthwillbefurtherenhancedbytheopportunitypresented

byUS$300bnworthofdrugs(includingBio‐Drugs)settogooff‐patentinnextfive

years,theindustrywillneedbulkofqualityprofessionalsinvariousareas,viz.

regulatoryaffairs,QC/QA,production,environmentandaffluentplanninganddrug

R&D.Industrialgrowthinthissectorisexpectedtocreatejobsforpeoplewith

mastersandPhDs.Singapor’sBiopolisistakingaleadingeneratingnearly7500

PhD’sforthatcountry.InIndia,weneedtohaveplanstobringasynergyamongthe

differentstatesengagedinlifesciences.



Druginnovationwillrequireaplethoraofspecialisedskills:medicinalchemists,

molecularbiologists,geneticists,microbiologists,immunologists,bioinformaticians,

pharmacologists,clinicalresearchers,biostatisticians,chemicalandbiochemical

engineers,clinicians,veterinarians,etc.Indianacademiaandindustrywouldrequire

atleast100,000professionalsby2015topursuemeaningfuldruginnovationof

globalscale.Someindustryexpertshoweveranticipateonlymarginalincrease,not

enoughtoabsorblargenumberofpharmagraduatescomingoutoftheuniversities.



Page 75 of 153

3.4.2Requirementby2020



Itisdifficulttopredicttherequirementatthismoment.Futureappearstobegood

providedweareabletocontainproductcosts(throughcontroloninflationand

prices,increasedproductivity,etc.)andproducevalueaddedproductsthrough

continuousinnovationandintellectualinputs.By2020,therequirementfor

manpowerisexpectedtobearound21.5lacs[Source:HumanResourceandSkill

RequirementsfortheChemicals&PharmaceuticalsSector(2022)‐AReportby

NSDC]keepinginviewthealreadymentionedgrowth.Astheeffortstowardsmaking

personalizedmedicinearealityareincreasing,inadditiontotheabovementioned

skillset,expertsinareaslikepharmacogenetics/pharmacogenomics/toxicogenomics

willbeneeded.Asmoreandmoredrugswillbemanufacturedandmarketed(off‐

patentsdrugs),therewillbeaneedtohaveastrongvigilanceframeworkandhence

hundredsofprofessionalsfrompharmacovigilance,PMS(postmarketing

surveillance),clinicalepidemiplogyandpopulationgeneticsbackgroundwillneedto

bemadeavailable.



3.5RECOMMENDATIONS:



i. Greatertransparencybetweenindustryandacademiaisapre‐requisiteforany

successfuldrugdiscoveryanddevelopmenteffort.AlthoughIndianacademiais

ratedamongthebestintheworld,ithasnottranslatedintoanynoticeable

successintermsofproductdevelopmentinthepharmasector.Essentially,a

‘culture’needstobefosteredwhereintransparencyandefficiencyaretheonly

operationalkeywords.



ii. Anappropriateclimatethatisconducivetoencourageinnovationneedstobe

createdinthecountry.Thiscouldbeachievedbybuildingateamofreturning

Indians,encouragingstudents’finishingschoolsabroad,trainingstudentsto

thinkoutoftheboxandfindcosteffectivesolutionssuitedtothecountry.



Page 76 of 153

iii. Thepresenceofdemographicandgeographicdiversitiesaswellasthe

multiplicityofproductrangeallowsfortheexistenceofanumberofbusiness

modelsandplayersofdifferentlevels.Thus,insteadofassumingan‘either‐or’

attitudebetweenthesmall‐and‐mediumscaleversusmultinationalentities,a

comprehensivestudyofthemarketanditsrequirementneedstobecarried

out.Thiswillhelpidentifythegapsandallowforthebestpossibleutilizationof

theavailableexpertise.



iv. IthasbeenprojectedthatIndiacouldcapture8‐10%oftheglobaloutsourcing

industryby2015(Source:McKinsey&Co.).Indiahasalargepoolofhighly

trainedbiologists,chemists,trainedinvestigatorsforclinicaltrials,

biostatisticiansandhospitalswithstate‐of‐the‐artfacilities.Whatisrequiredis

theidentificationofspecificareasinwhichtheIndianpharmasectorcould

contributeandmakeadifference.InordertoachieveIndia’struepotential,a

visionaryoutlookbackedbystronggovernmentpolicy,willbetheneedofthe

hour.However,mostoftheacademicinstitutes,outsideaselectfew,Lack

‘trainedtrainers’.Itisimperativethatthismiddletierbestrengthened.

Otherwise,thefunctionofthetopresearchinstitutesremainslimitedto

bringingthematparandnotgettinganyhigh‐endresearchdoneinthissector.



v. AsperAllIndiaCouncilforTechnicalEducation(AICTE)websiteinformationof

year2010,morethan75000studentsgraduateinPharmacy.Thisisadequate

tocatertothecurrentrequirementoftheindustry.However,thereisneedto

focusonhigherskillatthelevelofMPharmaandPh.Dinidentifiedareasof

expertiseforaddressingtheneedforResearchandDevelopment,whichisthe

keytolongtermgrowthofPharmaindustry.

Basedonaboverecommendations,thedetailsoftheschemesproposedarein

Chapter8(Section8.2).

------------



Page 77 of 153

Chapter4

PRICING



4.1INTRODUCTION

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Drugpriceplaysavitalroleinaccesstoessentialmedicinesacrosstheworld.Itisa

factthatthedrugsmanufacturedinIndiaareconsideredtobeamongstthelowest

pricedinternationally.Still,avastsectionofIndianpopulationisnotinapositionto

accesstheneededhealthcareaswellasthemedicinesduetovariousreasonsof

accessandaffordability.

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Undeniably,universalaccessofqualitymedicinesataffordablepricesisofcritical

importance.CentralGovernmenthasbeentakingvariousstepsinthisregardand

fromtimetotime,drugpolicieshavebeenadoptedtostrikeabalancebetweenthe

oftenconflictinginterestsofindustryandconsumersinmovingtowardsthe

objectiveofgreateraccessibilityandaffordabilityofdrugs.Unlikeinmostother

developedcountries,wherepublichealthcareandotherformsofsubsidizedor

prepaidcoverageaccountforasubstantialhealthcareexpenditure,outofpocket

expendituresonhealtharequitehighinIndia.Therefore,anyincreaseinany

componentofhealthcarecoststendstofallacrossaverywidecross‐sectionofour

people,whohavenofall‐backoptions.Thisisoneoftheprincipalreasonswhy

internationalexperiencesandpricecontrolmodelsmaynotbereadilyadaptable

fullytooursituation.Butcertainly,therelevantpartsofthosemodelsneedtobe

consideredonmerit.

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Itis,therefore,necessarytoevolveastrategywhichwouldmeetthetwinobjectives

ofensuringthattherelativepriceofdrugsdoesnotdeviatesharplyfromthepattern

andgrowthofpurchasingpowerincountry,andontheother,theIndian

pharmaceuticalindustrycontinuestomaintainitsrobustgrowthpath.

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4.2DRUGSUNDERDPCO’95:CURRENTPRICINGSYSTEM

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TheDrugsPricesControlOrder,1995(DPCO’95)waspromulgatedbythe

GovernmentofIndiaon6thJanuary;1995inexerciseofthepowersconferredby

Section3oftheEssentialCommoditiesAct.UnderDPCO’95,76bulkdrugs(now74

drugsasAmikacinSulphateandMefenamicAcidwereomittedbyS.O.626(E)dated

2/9/1997),thepricesofwhicharecontrolledunderDPCO1995,havebeenenlisted

intheFirstScheduleofthisOrder.Underpara3ofDPCO’95Governmentis

empoweredtofixtheMaximumSalePricesofBulkDrugsspecifiedintheFirst

Schedulewithaviewtoregulatetheequitabledistributionandincreasingsupplyof

BulkDrugsspecifiedintheFirstScheduleandmakingitavailableatafairpricefrom

differentmanufacturers.TheGovt.mayaftermakingsuchenquiryasitdeemsfit,fix

fromtimetotimebynotificationintheOfficialGazette,MaximumSalePriceat

whichsuchBulkDrugsshallbesold.

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4.2.1ScheduleDrugs

Para8ofDPCO,1995empowerstheGovernmenttofixfromtimetotimeretail

priceofscheduledformulationsinaccordancewiththeformulalaiddowninpara7

oftheDPCO.Underpara9ofDPCO,theGovernmentisempoweredtofixceiling

pricesofscheduledformulationsfromtimetotime,inaccordancewiththeformula

laiddowninpara7keepinginviewthecostforefficiencyforboth,ofmajor

manufacturersofsuchformulationsandsuchpriceshalloperateastheceilingsale

priceforallsuchpacksincludingthosesoldundergenericnameandforevery

manufacturerofsuchformulations.Thesepricesarefixed/revisedfromtimetotime

andnotifiedinofficialgazette.Themanufacturersandformulatorsarerequiredto

followthepricesfixed/revisedbytheGovernmentfromtimetotime(bothforbulk

drugsandformulationsincludingceilingprices)within15daysfromtheissuedof

suchorderbytheGovernment.Noonecansellanyscheduleddrug/formulationat

apricehigherthanthepricefixedbyNPPA/Government.

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4.2.2NonScheduledDrugs

Inrespectofdrugs,notcoveredundertheDrugs(PricesControl)Order,1995i.e.

non‐scheduleddrugs,manufacturersfixthepricesbythemselveswithoutseeking

approvalofGovernment/NPPA.Suchpricesarenormallyfixeddependingon

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variousfactorslikethecostofbulkdrugsusedintheformulation,costofexcipients,

costofR&D,costofutilities/packingmaterial,salespromotioncosts,trademargins,

qualityassurancecost,landedcostofimportsetc.Asapartofpricemonitoring

activity,NPPAregularlyexaminesthemovementinpricesofnon‐scheduled

formulationsonthebasisofmonthlyreportsofORG‐IMS(nowIMS‐Health)andthe

informationfurnishedbyindividualmanufacturersinfollowingconditions–

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(i) Increaseinpriceofmorethan10%inoneyear

(ii) IftheannualturnoveroftheformulationpackexceedsRs.1crores.

(iii) Theshareofformulationsinthatsegmentoftheformulationisrequiredto

beatleast20%ofthemarketorthemedicineisoneofthetop3brandsof

thatgroup.

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Ifaformulation/packmeetstheabovecriteria,thenthemanufacturerand/or

distributorisaskedtogivejustificationforpriceincreaseofmorethan10%per

annum.Ifnoinformationisreceivedaftertheletterandreminderorthereplyofthe

companyisnotsatisfactory,showcausenoticeisissuedtothemanufacturerstating

astowhyactionshouldnotbeinitiatedforpricefixationunderpara10(b)of

DPCO’95inlargerpublicinterest.Althoughthisprovisionhasnotreallybeenused,

thereisevidencethatitspresencehasmoderatedthepaceofpriceincreasesin

drugs.

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4.2.3PricingofImported&DomesticFormulations

Inrespectofformulationsmanufacturedinthecountry,ex‐factorypriceworkedout

byadoptingthenorms/guidelinesformsthebasiswhereasinthecaseofimported

formulations,landedcostofimportformsthebasisofpricefixations.Vastdifference

betweenimportedandindigenouslyproducedmedicinescontainingthesamesaltis

observedinalmostallcaseswhereverequivalentsubstitutesareavailablein

domesticmarkets.ThisisdespitethefactthattheprovisioninDPCOwas

incorporatedtoconsider/allowlowermargini.e.upto50%forimported

formulationsasagainstthe100%forindigenouslyproducedmedicinesunderpara7

ofDPCO1995.Eveninsuchcasesofimportedformulationswhenreducedmarginof

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35%isallowedbytheNPPA,thepricesworkedout/approvedarestillmanifold

higherand,hence,thereisnocomparisonwiththosethataremanufactured

indigenouslyduetothefactthatthereisnocontrol/examinationoftheCost,

InsuranceandFreight(CIF)/landedcostoftheimportedformulations.Thereisno

systemforcross‐checkingorexaminationoftheC.I.F./landedpriceoftheimported

formulationsdespitethefactthatNPPAhasbeenaskingforthesame.These

formulationsaremostlyimportedbythecompaniesfromtheirparentcompanies.In

theabsenceofdetailsrelatingtothecostofproductionofimportedformulations,

NPPAisnotallowing/consideringpriceincreasesbasedontheincreasedCIFprice

claimedbytheimportingcompanies.

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4.3PRICING&NEWPATENTREGIME

4.3.1.Impact

Theimpactofnewpatentregimeondomesticpharmaindustryismarginalasof

now,asmostofthedrugspatentedbefore1995arefreelyavailable.However,with

thepassingoftheyears,moreandmorepatentprotecteddrugswillbelaunchedin

India,beingaverylargemarket,atwhichtimetheimpactonpricingwillbesevere,

unlessgovernment/regulatorimplementsproperchecksandbalances/price

approvalmechanismforpatentprotectedproducts.

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Since2005only11moleculesunderproductpatenthavebeenlaunchedinthe

Indianmarket.Thuspatentedproductscontributelessthaneven0.5%oftotal

pharmaceuticalmarket.Thesearetherapeuticoptionsavailableataffordableprices

forthediseaseconditionsaddressedbythesepatentedmolecules.Thismeansthat

lifesavingdugsareavailableatdifferentpricepointstomeettheneedsofdifferent

socio‐economicgroups.Oneoftheotherpositiveoutcomesofthenewpatent

regimesince2005hasbeentheincreasedcollaborativeagreementsbetween

globalizedIndiancompanies(Sun,ZydusCadila,Aurobindo,Torrentetc)andMNCs

(MSD,Pfizer,GSK,AstraZenecaetc).Thisaugurswellforcollaborativeresearchand

partnershipstoaddressaffordablenewinventionstomeettherequirementsofthe

developingworld.

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InthisregardtheTaskForceunderDr.PranabSen,initsreportsubmittedin

September,2005hadmaintainedthatallpatenteddrugsandtheirformulations

shouldbebroughtunderpricenegotiationpriortothegrantofmarketingapproval.

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4.3.2IndustryObservations

Researchbasedpharmaceuticalcompanies,whoareintroducingthepatented

products,haveadoptedvaryingmodelstoensureappropriateaccesstosuch

medicinesbythepoor.

• Somecompanieshaveadopteddifferentialpricingstrategiestoextendaccesstolow

andmiddleincomegrouppatients.Somehaveloweredtheirinternationalpricesto

maketheirproductsaffordabletotheIndianmarket.

• AsperOPPIthepatenteddrugsarenewinventionsandresultoftime‐consumingR

&Dinitiativesand,hence,suchmoleculescannotbecomparedwithexistinggeneric

moleculesforpricingpurpose.

IPAstatedthatthereintroductionofproductpatentfrom1995hasbroughtabout

profoundchangesinthepharmaceuticalsector.Thesignificantamongthemaretwo

aslistedbelow:

• Transitionofthedomesticcompaniesfromgenerictoinnovativewiththe

ultimatefocusontheoriginalresearch.Thedomesticcompaniesare

consciousthatitisabigchallengebuthavestartedmovinginthisdirection.

TheincreasedspendonR&Disindicativeofthistransformation.

• Therevivalofforeigncompanies’interestinthedomesticmarket,leadingto

greaterpushforTRIPsplusIntellectualPropertyRights(IPR)regime.Thishas

ledtoshiftinfocusfromthemanufacturingtothemarketingandtheclinical

research(servicessector),resultinginslowdownininvestmentinfixed

assets,rushfordivestmentofmanufacturingplants,outsourcingof

manufacturingandimportingoffinishedformulations.



Boththesedevelopmentswillcontinuetoimpactthepricesofmedicinesinthe

country

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BDMAmaintainedthatinthenext3to4years,brandeddrugsintheUSAand

Europeworthabout$100Billionaregoingoffpatent.Indianproducerscanseizethis

opportunitybyexpandingtheircapacitiesinproducinggenerics.Howeverthere

couldbecostlypatentlitigations.Thegovernmentsshouldhelpthesmalland

mediumsectorunitsbymakingprovisionforfreelegalconsultancyservice.



4.3.3CompulsoryLicense

AlthoughcompulsorylicensingisaweaponinthehandsoftheGovernmentto

containpriceriseintheeventofsteepincreaseinthepricesofdrugsaffectedbythe

patentholderbutthatshouldnotsendawrongsignaltothepatentapplicantorto

theprospectiveinventor.Hence,theGovt.shouldspecifyvariousgroundsbasedon

whichtochannelofcompulsorylicensingcouldbeappliedandstipulationstobelaid

downforitsoperation.



Theobjectiveofcompulsorylicensingistoensureaccessibilityofpeopleatlargeto

thepatentedmedicinesatreasonableprice.Thismeasure,inturn,helpsin

protectionofpublichealthandnutrition.TheCompulsoryLicensingallowsthird

parties(otherthanthepatentholder)toproduceandmarketapatentedproduct

withouttheconsentofthepatentholder.ThissystemhasbeenmadeuseofinUSA,

Canada,UnitedKingdom,Italy,Brazil,SouthAfrica,KenyaandEcuador.Therefore,

recognizingthefactthatalmost70%ofthepopulationstillremainsuncoveredby

modernmedicines,itbecomesessentialtoincreasetheavailabilityofmedicinesat

affordablepricesthroughsuchameasure.Thisisexpectedtoimproveavailabilityof

medicinesespeciallyanti‐cancer,anti‐AIDS,severalmedicalimplants,etc.



4.3.4OTHERPRICINGMETHODOLOGIES



4.3.4.1ReferencePricing

Thereferencepricestobeusedfornegotiationsofthepricesofpatenteddrugs

shouldbebasedonthepremiumenjoyedbythedruginthelowestpricedmarket

abroadcomparedtoitsclosesttherapeuticequivalentinthesamecountry.This

premiumcanthenbeappliedtothecorrespondingpriceofthesametherapeutic

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equivalentprevailinginthedomesticmarkettodeterminethereasonablepricein

Indianconditions.Inotherwords,thepatenteddrugsshouldbeallowedthe

premiumitcommandselsewhere,butappliedtothepricesprevailinginIndia.



Evenfornonpatenteddrugs,asrecommendedbyPronabSenCommittee,the

pricingcanbebasedonreferencebasisratherthancostbasis.



4.3.4.2PricingofPatentedMedicinesinOtherCountries

(i) Canada:CanadahasapublicfundedHealthscheme,knownas“Medicare”,

whichprovidescomprehensivecoverage.Forthepricingofpatented

medicineunder“Medicare”,thereisPatentedMedicinesPriceReview

Board(PMRB),aquasi‐judicialbody,whichensuresthatpricesofferedby

manufacturersofpatentedmedicinesarenotexcessive.TheBoardcompares

theproposedCanadianpriceunder“Medicare”eithertopricesofexisting

drugsinCanada,ortopricesinsevenmarketsdesignatedintheregulation

(France,Germany,Italy,Sweden,Switzerland,theUnitedKingdomandthe

UnitedStates).Itensuresthatthepricechargedbypatentees,thefactory

gateprice,forpatenteddrugssoldinCanadatowholesalers,hospitals,

pharmaciesorotherforhumanandveterinaryusearenotexcessive.Ifthe

priceexceedsthenitconductsaninvestigationaspertheSchedule5ofthe

CompendiumofGuidelines,PoliciesandProcedures.Thisinvestigationmay

indicatethateitherthepriceiswellwithintheGuidelinesorthepatenteeis

requiredtoreducethepriceandtakemeasurestocomplybyaVoluntary

ComplianceUndertakingorapublichearingiscalledtodetermineifpriceis

excessive.Oncetheintroductorypriceisestablished,subsequentprice

increasesarelimitedtochangesintheConsumerPriceIndex.



(ii) France:InFrance,pharmaceuticalcompaniesselltheirproductsatanyprice.

Ifcompanieswantthenationalhealthcaresystemtoreimbursepatientsfor

thecostofthedrug,theymustagreetoanegotiatedprice.Negotiatedprices

andreimbursementratespaidbythehealthcaresystemarebasedonthe

therapeuticvalueofthedrugandthepriceofthedruginothercountries.

Page 84 of 153



(iv) OtherCountries:FreepricingisapplicableinGermanyandU.Konly.Pricesettingis

negotiatedmainlyonthebasisofnegotiationbetweenauthoritiesandcompaniesin

Belgium,France,Italy,NetherlandsandSpain.Formulationregulationofpremium

pricesbylawisonlythereinItaly.Therapeuticreferencepricingisavailablein

GermanyandNetherlands.Newdrugsareincludedinpositivelistsincaseof

Belgium,France,ItalyandNetherlands.Reimbursementisautomaticallygranted

oncemarketapprovalisobtainedinGermany,SpainandU.K.



4.4 ACCESSTOESSENTIALMEDICINES



4.4.1IncomelevelandAccessibility

Consideringthattheincomelevelsarelow(particularlyinruralareas)andtheoutof

pocketexpensesareasmuchas80%,thepricesofmedicinesplayavitalrolein

ensuringaccessibilityofthecommonpeople.InsurancecoverinIndiaisstillata

nascentstage,althoughprivatesectorhasbeenropedintoplaythisrole.The

contributionoftheStateandCentrealsoisonlyabout14%.



Itisquiteevidentthattheavailabilityofmedicinesandhealthfacilitiesinthehilly,

tribalandinaccessibleareasareeitherabsentorinadequate.Arelativelymuchlower

levelofpercapitaexpenditureonhospitalizationandmedicinesinruralareasandby

thepoorersegmentofpopulationsupportssuchasituation.Therefore,suchareas

needtobegivenspecialtreatmentinamission‐modeapproach,throughwhichthe

healthservicesandmedicinesareprovidedataffordablerates/prices.TheJan

AushadhiSchemeneedstobeexpandedtocovertheseareas.Oneofthemajor

componentsthatcanhelpreducingthisoutofpocketexpensesliesinprovidingbetter

publichealthinfrastructureingeneralbutspecificallyinensuringavailabilityofdrugs

atreasonableprices.TheDepartmentofConsumerAffairsstatedthatanassured

supplyofmedicinesinpublichospitalsandhealthcentreswillreduceunaffordable

sectionsofthepopulationinapproachingtheprivatesectorfortreatment.



Page 85 of 153

ItisquiteencouragingtofindthatseveralStateshavetakentheinitiativetoprovide

medicinesatamuchlowerpricethanthoseinthemarket.TheseStatesinclude

TamilNadu,Bihar,OrissaandRajasthan.Forinstance,Rajasthanhasdemonstrated

thatthroughtenderandnegotiationsifcompetitioncouldbeactivatedamong

differentreputedmanufacturers,thesuppliesofmedicinescouldbemadeavailable

atmuchmoreaffordableratesandinaviableandsustainablemanner.



Inthisregard,ifthetendersystemismeticulouslyfollowedandthepricesof

requiredmedicinesarecentrallydecidedatthestatelevelbyasingleagency,

essentialmedicinesofmassconsumptioncanbemadeavailableataboutonetenth

oftheprintedprice.Themodeldoesnotrequiregovernmentfundingorsubsidy,

unlesstheseareprovidedfreeofcost.Buttheproceduresandsystemsneedtobe

mademoretransparentforensuringsmoothsupplies.Thiswouldalsore‐assurethe

manufacturersofacontinuousandrisingdemandwhichwouldenablethemtoplan

theirproductionprogrammeinadvance.



4.4.2PromotionofUnbrandedGeneric



PromotionofunbrandedgenericsthroughJanAushadhiStores(JAS)needstobe

implementedassoonaspossibleforwhichtheMinistryofHealthneedstobringout

legislationforprescriptionofmedicinesingenericsnomenclaturebythedoctorson

amandatorybasisasdoneeveninadvancedcountrieslikeUS.ThiswouldhelpJAS

tobedevelopedasabrand.IncreasingprovisionofunbrandedgenericsthroughJAS

andpublichealthprogrammescanalsoaugmentavailability.



Affordabilitydoesnotmeanlowcostdrugsonly.Throughpromotionoftheindustry

includingassistancetoqualitystandards,moreunitswouldbesetup(includingSSI

units)resultinginhigherproductionofmedicines.Thiswillenhanceavailability.



Accessisasimportantasaffordability.Industryassociationsfeltalongthefollowing

lines:

Page 86 of 153

• IDMAmaintainedthattheGovernmentshouldincreaseprocurementofmedicines

andshouldmakethemavailableinRuralHealthCareCentres.Sincethis

procurementisdonebytendermechanism,itisalreadyatahighlycompetitive

price.Astheroads,electricity,communicationandotherinfrastructureimprovethe

accessibilitytomedicineswillimprove.ForBPLfamilies,medicinesshouldbegiven

free,whereasforAPLfamilies;costshouldberecoveredfully/partly.



• OPPIobservedthatthechallengeistochangecurrentperceptionsthrough

realizationthatmedicinesarejustapartofmuchbiggeraccessissueofaccessto

healthcarebythecommonman.Thisneedstobeaddressedjointlybywell‐

structuredpublic‐privatepartnershipinitiatives.Thereisaneedtostrengthenthe

linkagebetweenpricingandhealthcareinfrastructure,whichacollectivelyincrease

accesstomedicinesataffordableprices.



AcommongroundwasthattheGovernmentneedstopartnerwiththeprivatesector

toaddressIndia’sacutehealthcarechallengesthroughpublic‐private‐partnerships

(PPPs).RecentexamplesofsuccessfulPPPsinthehealthsectorincludeoutsourcing

ambulanceservices,mobilemedicalunits,diagnosticsandurbanhealthcentersin

severalstatestoprivateNGOs,hospitalsandclinics.PPPsinIndiashouldadequately

coverprimaryandspecialtyhealthcare,includingclinicalanddiagnosticservices,

insurance,telemedicine,hospitalsandmedicalequipment.



Allocatingresourcesfromnationalwelfareschemestowardshealthinsurance

coverageisastepintherightdirection.Forexample,aportionoftheMGNREGS

(MahatmaGandhiNationalRuralEmploymentGuaranteeScheme)fundscouldbe

spentonhealthinsurancepremiumsforlabourersengagedinsuchwork.



Oncethehealthinfrastructureisinplace,differentialpricingpoliciescomplemented

byaccessprogrammesofferedbypharmaceuticalcompaniesconstitutethebestway

forward.AccordingtotheOPPImarketcompetition,monitoringofpricesbyNPPAand

abundantavailabilityofgenericswillstabilizedrugpricesandnopricecontrolbythe

Governmentwouldberequired.

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4.4.4 Dr.PronabSenRecommendations

TheTaskForceunderDr.PronabSen(Reportdated20thSept2005)madecertain

importantrecommendations:



i. Inthecaseofproprietarydrugs,particularlyanti‐HIV/AIDSandCancerdrugs,

theGovernmentshouldactivelypursueaccessprogrammesincollaboration

withdrugcompanieswithdifferentialpricingandalternativepackaging,if

necessary.



ii. PublicSectorEnterprises(PSEs)involvedinthemanufactureofdrugsshouldbe

revivedwherepossibleandusedaskeystrategicinterventionsforaddressing

bothpriceandavailabilityissues.Arrangementsmayneedtobemadeto

ensuretheircontinuingviability.



iii. Availabilityofessentialmedicinesthroughpublichealthfacilitiesshouldbe

ensuredboththroughbulkpurchasesbygovernmentagencies,cooperativesor

consumerbodies,throughpublic‐privatepartnershipsifnecessary.



iv. Insurancecompaniesshouldbeencouragedtoextendhealthinsuranceto

covermedicines.



v. Aprocessofactivepromotionofgenericdrugsshouldbeputinplaceandall

publichealthfacilitiesshouldberequiredtoprescribeanddispensegeneric

drugs,exceptwherenogenericalternativeexists.



vi. Allpatenteddrugsandtheirformulationscouldbebroughtunderprice

negotiationspriortothegrantofmarketingapproval.Thereferencepricesto

beusedforsuchnegotiationscouldbebasedonthepremiumenjoyedbythe

druginthelowestpricedmarketabroadcomparedtoitsclosesttherapeutic

equivalentinthatsamecountry.Thispremiumcanthenbeappliedtothe

correspondingpriceofthesametherapeuticequivalentprevailinginthe

domesticmarkettodeterminethereasonablepriceinIndianconditions.

Page 88 of 153



vii. Acentralizedagencycanbecreatedfornegotiationofpricesofpatented

medicinesandtoensureitsavailabilitybycomparingpricesbasedon(i)same

activeingredient;(ii)drugsinapharmacologicalclass;and,(iii)drugswith

similartherapeuticeffect.



viii. IntheIndiancontext,itcouldalsobepossibletodrawfromtheCanadian

modelandsomeofthepracticesinEuropeancountries.



ix. Pricecontrolsshouldbeimposednotonthebasisofturnover,butonthe

‘essentiality’ofthedrugandonstrategicconsiderationsregardingtheimpact

ofpricecontrolonthetherapeuticclass.Thismustbeadynamicprocess.



x. Pricecontrolsshouldbeappliedonlytoformulations,i.e.themedicineactually

usedbytheconsumer,andnottobulkdrugs.Intra‐industrytransactions

shouldnotbecontrolledunlesstherearecompellingreasonsfordoingso.



xi. Theceilingpricesofcontrolleddrugsshouldnormallynotbebasedoncostof

production,butonreadilymonitorablemarket‐basedbenchmarks.



xii. Allotherdrugsshouldbebroughtunderacomprehensivepricemonitoring

systemwithappropriatemarketbasedreferencepricesandwithmandatory

pricenegotiations,ifnecessary.



xiii. TheNationalListofEssentialMedicines(NLEM)shouldformthebasisofdrugs

tobeconsideredforintensivepricemonitoring,ceilingpricesandfor

impositionofpricecontrols,ifnecessary.



Page 89 of 153

xiv. InthecaseofdrugsnotcontainedintheNLEM,intensivemonitoringshouldbe

carriedoutofalldrugsfallingintoapre‐specifiedlistoftherapeuticcategories.

Anysignificantvariationinthepriceswouldbeidentifiedfornegotiation.



xv. Overaperiodoftimemoreeffectivepricemonitoringneedstobeadopted.All

non‐controlleddrugscouldbebroughtunderacomprehensiveprice

monitoringsystemwithappropriatemarketbasedreferencepriceandwith

mandatorypricenegotiations,ifnecessary.Theceilingpricesofcontrolled

drugscouldbebasedonreadilymonitorablemarket‐basedbenchmarks.



GeneralRecommendationsofthePronabSenReport

i. Thereisaneedtobalancetheinterestsofconsumersandpharmaceutical

industry.Pricingofdrugsshouldneitheraffectthepharmaindustry,northe

patients.Hence,StateinterventionthroughschemesliketheNationalRural

HealthMission(NRHM)isimportant.



ii. India,beingaverylargemarket,overtheyearsmoreandmorepatent

protecteddrugswillbelaunchedhereatwhichpointoftimetheimpacton

pricingcouldbelarge;hence,theGovernment/regulatorwouldhaveto

implementproperchecksandbalances/priceapprovalmechanismforpatent

protectedproducts.



iii. Underthenewpatentregime,thetransitionofthedomesticcompaniesfrom

generictoinnovativewiththeultimatefocusontheoriginalresearchis

takingplaces.TheGovernmentneedstosupporttheR&Deffortonoriginal

research.



iv. ThegreaterpushforTRIPsplusIntellectualPropertyRights(IPR)regime

needstobeaddressed.IndiashouldrestricttoexistingprovisionsofTRIPS.



v. Theoptionofusingcompulsorylicensingcouldbeexploredincertaincases,

therebyallowingthirdparties(otherthanthepatentholder)toproduceand

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marketapatentedproductwithouttheconsentofthepatentholder.This

wouldensurebetteravailabilityofthemedicine.



vi. Thefocuscouldbeshiftedtoanessentialitycriterionassuggestedbythe

MinistryofHealth&FamilyWelfare.Theysuggestedthatifitisdifficultto

includethe348drugsandtheirformulationsunderDPCOwiththesame

trademargins;therecouldbeagradedsystemoftrade/profitmarginsfor

differentcategories.



vii. NewdrugsdevelopedthroughindigenousR&Dhavingproductpatentunder

theIndianPatentAct1970maybeexemptedfrompriceregulationfora

periodoftenyears.AlsoproductsofNewDrugDeliverySystem(NDDS)

developedthroughindigenousR&Dmaybeexemptedfrompriceregulation

foraperiodoffiveyears.



viii. Lackofproperinfrastructure,particularlyhealthinfrastructure;andpoor

deliverymechanismaremajorhindrancesfordistribution.Hence,thekeyto

healthcareisnotnecessarilypricingcontrolbutcouldbebetterachieved

throughanimproveddeliverymechanism,publicfundingandpromotionof

thepharmaindustry.



ix. Affordabilitydoesnotmeanlowcostdrugsonly.Throughpromotionofthe

industryincludingassistancetoqualitystandards,moreunitswouldbesetup

(includingSSIunits)resultinginhigherproductionofmedicines.Thiswill

enhanceavailability.



x. Thereisaneedtoensureaccessofcommonman(poorersection)to

medicinesthroughpublichospitalsetc.Thesuccessofdistribution/

procurementsystemoftheTamilNaduMedicalServicesCorporationisworth

replicating.

xi. ThesuccessofPPPmodelsinhealthsectorlikeoutsourcingambulance

servicesetc.toprivateNGOsasdoneincertainStatescouldbestudiedin

Page 91 of 153

otherStatesalso.PPPsinIndiamayhelpincoveringprimaryandspecialty

healthcare,includingclinicalanddiagnosticservices,insurance,telemedicine,

hospitalsandmedicalequipments.



xii. Allocatingresourcesfromnationalwelfareschemestowardshealthcoverage

couldalsobeconsidered.Forexample,fromthefundsallocatedforMNREGS,

someportioncouldbemadeavailableforpayingforhealthcoverageofthe

labourersengagedinsuchworks.



xiii. PromotionofunbrandedgenericsthroughJanAushadhiStores(JAS)needsto

beexplored.JAScouldbedevelopedasabrand.Increasingprovisionof

unbrandedgenericsthroughJASandpublichealthprogrammescanalso

augmentavailability.



xiv. Theavailabilityofmedicinesandhealthfacilitiesinthehilly,tribaland

inaccessibleareasareeitherabsentorinadequate.Therefore,suchareas

needtobegivenspecialtreatmentinamission‐modeapproach,through

whichthehealthservicesandmedicinesareprovidedataffordable

rates/prices.TheJanAushadhiSchemeneedstobeexpandedtocoverthese

areas.



xv. Inthecaseofproprietarydrugs,particularlyanti‐HIV/AIDSandCancerdrugs,

theGovernmentshouldactivelypursueaccessprogrammesincollaboration

withdrugcompanieswithdifferentialpricingandalternativepackaging,if

necessary.



xvi. PublicSectorEnterprises(PSEs)involvedinthemanufactureofdrugsshould

berevivedwhereverpossibleandusedaskeystrategicinterventionsfor

addressingbothpriceandavailabilityissues.Arrangementsneedtobemade

toensuretheircontinuingviability.

‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐

Page 92 of 153

Chapter5

MEDICALDEVICES



5.1StatusofDomesticMedical/surgicalIndustry:

AspertheestimatesofAllIndiaMedicalequipmentsandDevicesAssociation,the

presentmarketsizeofMedicalDevicesandEquipmentsisaroundRs15,000crores

withbreakupsaspertablebelow:







AspertheestimatesofAIMED,therearenearly750manufacturingunitswith

distributionofunitsbasedontheirsizeasbelow:



Table‐19:Turnover‐wisedistribution

Turnover%Distribution

0‐10Cr.70

10‐50Cr.20

50‐100Cr.5

100‐500Cr.3

500+Cr. 2



PresentStatusofIndianmedicaldeviceIndustry:

21.20%

24.90%

4.20%

16%

33.80%

consumables

DiagnosticImaging

Dentalproducts

orthoandImplantable

products

others

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(i) ThemedicaldeviceIndustryinIndiaisverynascentandislargelyimport

dependent.Morethan65%ofIndia’srequirementofmedicaldevicesand

equipmentsaremetthroughimportswithdomesticproductionbeinglargely

restrictedtolowtechnologydisposableequipments.

(ii) Asshowninabovetable,thedomesticmedicaldeviceindustryishighly

unorganizedandfragmentedinnature.Thehightechendofmedicaldevices

aredominatedbymultinationalswhichareimportedinthecountry.

(iii) Diagnosticimaging,withthemarketshareof24.9%andMedicalconsumable,

withmarketshareofaround22%dominatestheIndianMarket.

(iv) TheregulatoryregimeisstilldevelopingandDCGIisgoingtobringdetail

guidelinesonMedicalDevicesverysoon.



5.2Export&GlobalMarketPotential:



GlobalmarketformedicaldevicesisvaluedataroundUS$200billion,growingatan

averagegrowthrateofaround4.5%compoundedannuallyduringlast5years.

Growingawarenessabouthealth,newtechnologicalinnovationsintheareaof

diagnosisandtreatment,increasingoldagepopulation,changingdiseasepatterns

towardslongtermtreatmentsetc.,aresomeofthefactorsleadingtogrowthof

industry.



Thehealthcareindustryisshowingrapidgrowthinalleconomiesoftheworld

havingpopulationspreadacrossallagegroups.Inviewofthis,thegrowthof

medicaldeviceindustryisunquestionable.



“ConvergentMedicalTechnologies”arenowbeingdevelopedbymanycompanies.

Thesetechnologiesarebasedontwoormoreexistingtechnologiesplatforms.

Variousmedicaltechnologycompaniesaswellasgrowingenhancedmedical

technologycompaniesinvariouspartsoftheworldhaveemerged,wherecompanies

andresearchersareworkingtogethertoharnessthepotentialofconvergentmedical

technologies.Thekeysupportingtechnologiesintheseeffortsincludemedical

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diagnostics,therapeuticandsurgicaldevices,informatics,wirelessmonitoring

devices,nano‐technologies,tissueregenerationandspecializedmaterialsand

quoting.Thishasopenednewareaformedicaldevices.



WiththegrowingincomeinnewworldeconomiessuchasthoseofIndia,Brazil,

SouthAfrica,China,Singaporeetc.,hasopenedavastnewmarketformedical

devicesindustry.However,IndianMedicalDeviceIndustry,atpresentisnotina

positiontoreapthebenefitofthisglobalmarketpositionduetoitsnascentstage.



5.3SWOTAnalysis



5.3.1Strengths

i. WelldevelopedMicroelectronic,Telecommunication,SoftwareandPrecision

EngineeringIndustry,whicharesupportingindustriesformedicaldevices&

equipmentindustry

ii. Abilitytoattractforeigninvestmentsbecauseofstrongfinancialandlegal

system,ruleoflaw,democraticformofGovernment,goodI.P.laws

iii. Industry’sabilitytohandlelowvaluelargevolumeproductionasperglobal

qualitystandards

5.3.2Weaknesses

i. Lowpercapitaexpenditureonhealthcare&lowhealthinsurancewithan

underdevelopedhealthcareawarenessandinfrastructure

ii. Lackofadequateandtrainedmanpower

iii. Lackofincubationandsuitableecosystemencouraginginnovationandnew

products

iv. Absenceoflinkagesbetweenacademiaandindustry

v. Absenceofpropergovernmentalpromotionalpolicytoencourageexports

fromthesector

vi. Tariffstructureworkingagainstlocalmanufacturinginmanycases.

vii. Lackofregulation/standards

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5.3.3Opportunities

i. Hugemarketpotentialwithagrowingmiddleclassandrisingexpenditureon

healthcare

ii. GrowingopportunitiesinexportmarketparticularlyinEUmarketwhereEU’s

importsfromdevelopingcountriesareincreasingatover25%

iii. Growingdemandonaccountofchangingdemographicprofile,increasing

incidencesoflifestylediseaseslikecancer,CNSanddiabetics,etc.

iv. Lifecyclesofhighendmedicalequipmentsbecomingshorterduetohigh

levelofinnovation



5.3.4 Threats

i. GrowingcompetitioninexportmarketsfromcountrieslikeThailand,China,

Malaysia,Taiwanetc.

ii. Increasingdependencyonimports,whichisalready65%ofthetotal

demand

iii. Unorganizedmarketformedicaldisposables

iv. Lackofregulationsinmedicaldisposablesandsurgicalitemsleadingto

spuriousproducts



5.4 Recommendations:

i. Thereisaneedofindependentdefinitionformedicaldevicesandaseparate

provisionfortheregulationofthesedevices.TheMinistryofHealthand

FamilyWelfareworkingovertheseissues.



ii. Thereisaneedforinfrastructurecreationforsettingupgreen‐fieldmedical

devicesandequipmentparks.ThisparkmaycontainfacilitieslikeResearch

andDevelopmentCentrefocusedonMedicalDeviceIndustry,Testing

Laboratory,CommonSterilizationfacility,MedicalInstruments/Equipment

calibrationandvalidationfacility,EngineeringServices,atrainingcentreto

trainlabours,managersandentrepreneursetc.Thedetailsofthefacilities

areexplainedintheToRrelatedtobudgetandschemes.

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

iii. ThereisalsoaneedforNationalCenterforMedicalDevices,whichmayfocus

onnewproductdevelopmentandassessmentformedicaldeviceproducts.

Thiscentercancomplementthegreen‐fieldmedicaldevicesandequipment

parkasstatedabove.



ThedetailsoftheschemesareinChapter8.

‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐





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Chaper‐6:

CPSUs



6.1INTRODUCTION

TherearefiveCPSUsnamely,IndianDrugsandPharmaceuticalsLtd(IDPL),Hindustan

AntibioticsLtd(HAL),BengalChemicalsandPharmaceuticalsLtd(BCPL),Karnataka

AntibioticsandPharmaceuticalsLtd(KAPL)andRajasthanDrugsandPharmaceuticals

Ltd(RDPL).ThesefivePharmaPSUshaveacombinesbusinessbetweenINR600and

700crores.Thisworksouttobemere1%ofthedomesticPharmaIndustryturnover.

Thenaturalquestionthenwillbe“whatistherelevanceofPublicSectorunitsinsuch

acrowdedandlargelyself‐sufficientfield?”Theanswertothisliesinthehistorical

developmentofthedrugsectorandalsocurrentscenariowhenitcomestomaking

availablelowvaluelowmarginproductsforpublicgood.



6.2HISTORICALBACKGROUND

Historically,itcanbeseenthatwhennoprivateplayerwasreadytoinvestinthe

capital‐intensivedrugsectorinfiftiesandsixties,GovernmentofIndiainvestedhuge

capitalininfrastructureofthissectorestablishingpublicsectorunitstomakelife‐

savingmedicinesavailableataffordablepricesforgovernmenthealthprograms.This

alsosubstantiallyreduceddependenceonimportssavingthevaluableforeign

exchangewhenthecountryneededitmost.Evenwhenineighties,whenprivate

playersstartedenteringthisfield,publicsectorhelpedthegovernmenttokeepthe

pricesofessentialmedicinesundercontrol.Eventodaythecurrentscenariowith

respecttopovertyandpublichealthinIndiaposesseriousproblemsofaffordability

andavailabilityofkeymedicines.Additionally,incaseslikeepidemics,natural

calamitiesetcwhereemergencyinterventionsarerequired,Publicsectorunitsarea

vitaltoolinthehandsofthegovernmenttomakedesiredproductsavailablein

volumesandatareasonableprice.WhileitisadmittedthattheshareofPublic

SectorisminusculeinPharmasectortheycanhavesomestrategicimportance.It

couldbeusefultomaketheseunitscompetitiveandself‐sustaininginthelongrun

byprovidingthenecessaryfillipatthisjuncture.



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6.3CURRENTSTATUSOFCPSUs:

ThePharmaPSUSpresentamixedbagwithrespecttofinancialperformance.While

KAPLandRDPLhavebeendeclaringprofitsovertheyears,theremainingthree

companieshadturnedsickandwerereferredtotheBureauofIndustrialand

FinancialReconstruction(BIFR).BCPLandHALareonapathofrevivalpost

rehabilitationthroughinfusionoffundsandwaiverofinterest,penaltiesand

renegotiationoftermsforfinancialliabilities,IDPL’scaseforrehabilitationispending

beforethegovernment.CollectivelythefivepharmaPSUsgeneraterevenueof

aboutINR600crorestoINR700crores.Exportearningsarecurrentlyasmallfraction

ofKAPLandHALturnoverbutitisgrowing.



6.4 PerformanceofCPSUs:

Table‐20:PerformanceofCPSUs



ParameterKAPLRDPL BCPLHAL IDPLTOTAL

Sales(08‐09) 225.0180.7577.63147.3956.70594.37

TO/Employees

Rslacs

3052 10 11 23 19

TO/Sales

employeesRs

lacs

65304 134 134 236106

PATRscr5.880.01 ‐5.35 ‐22.08 ‐37900.9

Total

Employees

739181 742 1224 2433129

SalesStrength34531 58 105 24 563

Sales(08‐09) 225.0180.75 77.63 147.39 56.70594.37



6.5Personnel:

Thedistributionofpersonnelacrossfunctionsreflectstheorganizationalorientation.

KAPLandtoalesserextentHALhasasalesandmarketingorientationwithlarge

salesforcewhileothershavetraditionallyderivedalmostalloftheirsalesfrom

institutionalmarkets,mainlyfromthegovernmentandmanagethebusinesswith

limitedfieldsalesforceandseveralpersonnelinmanufacturingandoperations.In

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termsofeducationalprofile,theLackofR&Disunderlinedbythenearabsenceof

PhDsinthetalentpool.HALhasahighlyqualifiedworkforcewiththelargest

percentage(39%)ofemployeeswithpostgraduatedegreeamongitspeers.



6.6 SourceofRevenue

ThepharmaPSUShavebeengeneratingmostoftheirsalesthroughinstitutional

customers,includingtheCentralandStategovernments.Theshareofinstitutional

salesofpharmaproductsrangesfromabout60%forKAPLtoaround80%forHAL

andcloseto100%forRDPL,IDPLandBCPL.Attheaggregatelevel,thepharmaPSUS

generateabout70%ofsalesofpharmaproductsfromtheinstitutionalsegment.This

biasforinstitutionalsalesgetsreflectedinthecompositionofthesalespersonnel

wherebymostpeopleinthesalesdepartmentsaremanaginginstitutionalorders

andclients.KAPLhasthestrongestandtheyoungestfieldsalesforcefollowedby

HAL,whichhasover100salespersonnel.



KAPLandHALhavebeenexportingtheirproductsprimarilytothesemi‐regulated

marketsinAsia,AfricaandEasternEurope.KAPL’sexportsrepresentslessthan5%of

itsturnoverofRs.225croresin2008‐09whileHAL’sRs.4.73croresworthofexports

representsabout3%ofitsturnoverofRs.147croresin2008‐09.



6.7 SWOTAnalysis:

Overall,thesingularstrengthofmostPharmaPSUsistheirmanufacturingfacilities,

manyofwhicharebeingmodernizedandupgradedforWHOGMPcompliance.

Moreover,beingpartofagovernmentorganization,thereisaperceptionof‘good

quality’associatedwiththeirproducts,whichisanimportantdifferentiatorinan

otherwisecommoditizedmarketforgenericdrugs.SomePharmaPSUshave

developedproductsthatenjoydominanceinnichesegments(e.g.,agrovetproducts

forHAL,OTCandhomecleaningproductsfromBCPL)thathavepotentialforscaling

up.However,theabilitytoderiveadvantagefromtheirgoodqualitymanufacturing

processesandgainmarketshareiscriticallydependentonthecompetenciesthat

PharmaPSUsdevelopintradeandinstitutionalsales.Thisisfoundtobeinadequate

atpresent.MostofthePharmaPSUsaredependentoninstitutionalsalesthat

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happenasaresultofgovernment’spreferentialpurchasepolicy(PPP).Eveninthese

cases,PharmaPSUsarefeelingtheneedfordevelopingforecastingtechniquesand

needforhavinginventorybecausemarketpressuresarenolongerallowingthe

supplierstooperateonthebasisofmanufactured‐to‐order.Thebiggestinadequacy

ishoweverfeltintheareaoftradesaleswhere,apartfromKAPLandHAL,thefield

personnelforallPharmaPSUsaretoolow.Mostofthemhavenotbeenableto

attractandretainyoungfieldsalespersonnel,asaresultofwhichtheexistingfield

salespersonnelareagingandabouttoretirewithinthenextfewyears,whichwill

resultinseveretalentcrunch.TrademarketingwouldbecomePharmaPSUskey

sourceofrevenuegeneration,especiallywhenPPPiswithdrawn.Thiswouldinvolve

developingsophisticatedsystemsfordemandestimation,manufacturingresource

planning,inventorymanagement,brandbuildingandsalesforcemanagement–

noneofwhichisvisibleinmostofthePharmaPSUsatpresent.PharmaPSUshave

considerableoverlapinproductsandsometimescompetewithoneanother.



ManyofthePharmaPSUsarehamstrungwithinadequateworkingcapitalfinance.

Thisoftenresultsinthemoutsourcingtheirmanufacturingtothirdparty

manufacturers.Whileoutsourcingasashorttermmeasureisacceptable,thiscan

harmthereputationofPharmaPSUsinthelongrun,giventhefactthat

manufacturingofgoodqualitygenericdrugsisperceivedasthe“corecompetence”

oftheseorganizations.MostofthePharmaPSUshaveplansforexports.However,

theirstrategyordifferentiationinexportsmarketsisunclear.Whilesomeofthem

haveinstitutionalsalesinsemi‐regulatedmarkets,scalingupexportswillneeda

concertedeffortinbrandbuildingaswellasnegotiatingtheregulatoryenvironment

inthosemarkets.



6.8 Goals

ThemainvisionistomakealltheCPSUsself‐sustainingbyyear2020.Towardsthat

end,theroad‐mapforthe12thFiveYearPlanincludestheactionstobetakenin

immediatefuture,thesupportneededforthat,thechangeoforientationtoachieve

propermixofsociallyrelevantbusinessandcommerciallyviablerevenuegenerating

business.Moreovertherewillbesomegeneralgoalscommontoallfivethe

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commonpurposebeingthesocialrelevanceof,whiletherewillbePSU‐ specific

goalsdependingonindividualPSU’shistory,strengthandpresentpositiononmarket

ladder.



ItispertinenttomentionherethatalltheresourcesrequiredbytheCPSUsto

becomeselfsustainable,havetobegeneratedbythem,maybebysellingthe

surpluslandavailablewiththem.Thegovernmentassistancewillbelimitedtothe

casesofstrategicimportance.



6.8.1 ShortTermGoals:

Thiswillcoverfirstthreeyearsofthe12thFiveYearPlan.

1) ToupgradetheexistingmanufacturingfacilitiestoWHO‐GMPcompliance.

2) Toidentifyandintroducetheproductinkeytherapeuticsegmentsformass

publicuse

3) TointroducetheproductsfromlatestsociallyrelevantdiseaseslikeAIDS,

Canceretc.

4) Torationalizehumanresourcesforoptimalproductivity.

5) Toengageandexpandintheprescriptionmarket.



Thiswillprovidenecessarybaseandcriticalmasstolaunchintomorecomplexareas

inthelaterhalfoftheFiveYearPlanandbeyond.



6.8.2 LongTermGoals:



Thiswillcovertheperiodoflasttwoyearsof12thFiveYearPlanandbeyond.

1) Bio‐pharmadrugswithemphasisonVaccines

2) IVfluidsbothcurativeandnutritive.

3) Anti‐HIVandOncologymedicines

4) CVDandNon‐Communicablediseasesmedicines.

5) StrategicAPIs



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6.8.3 SalesGoalsforFiveCPSUs:



Table‐21:SalesProjectionofCPSUs

  RsCrores

YearIDPLHAL BCPL KAPL RDPL

2012‐1351.7 189 153.37 320108

2013‐1470215 176.57 360122

2014‐1580264204.73 425135

2015‐1692290237.6490150

2016‐17125.4319275.83 560165



6.9 Recommendationstoachievethegoals:



ThepharmaceuticalindustryinthecountrygrewataCAGRof14%during11thFive

Yearplan.Logically,PSUsshouldmakeanattempttokeeppacewiththeindustry.

However,thefactthatPSUswillhavetokeeponservicingthelowmarginsocially

relevantproductsandwillhavesignificancepresenceintheinstitutionalmarket,the

CAGRforPSUsneedssometempering.Alsothefactthreeoutoffivearepresently

notintheprescriptionmarketputssomerestrictionontherateatwhichtheycan

growintheimmediatefuture.Theself‐sustaininggrowthassumesthattheprofits

willbeinvestedingrowingthebusiness.AttheprojectedCAGRandROElevels,the

businessgeneratesenoughresourcestofunditsgrowth.Thecross‐linkagesbetween

strategy,operationalefficiencyandfinancialleveragegeneratereturnstothe

shareholders.Achangeinstrategyfrom‘lowcost’to‘differentiation’bychanging

theproductmixinfavorofhighermarginproductsinthechronictherapy,improving

operationalefficiencybygeneratingmoresaleswiththesameassetbaseanda

judiciousmixofdebtandequitycantakethefirmsonanacceleratedgrowth

trajectories.



6.9.1.Therapies:

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Thetop7therapiesinIndianpharmaformulationsproductsbelongtoAlimentary

Tract&Metabolism,SystemicAnti‐Infectives,CardiovascularSystem,Respiratory

System,Musculo‐SkeletalSystem,CentralNervousSystemandDermatologicals.

TheyhavegrownataCAGRofbetween12to17%andcontributetoover83%ofthe

industrysales.Ineachtherapy,thereisatremendousamountofconcentrationof

sub‐therapiesaswellasproductswithineachsub‐therapy.Therefore,itisrelatively

easytoidentifyandselectproductsfordrivinggrowthbyusingthecriteriaofannual

salesandgrowth.Atthesametime,theproductswithlargesalesandhighgrowth

arealsothemostcompetitive.Therefore,onemustlookatothercriteriaincluding

profitability,capabilitiesaswellasstrategicintenttoplayincertainproduct–

marketstocreateaportfoliothatwilldrivesustainablegrowth..



6.9.2.Marketstobeconcentrated:

UP,MaharashtraandAndhraPradesharethelargestmarketsfordomestic

formulations.IfoneincludesMumbai,thenMaharashtratakesthetopspotwitha

shareof17.5%ofthetotalsales.Theregionaldistributionofsalesisusefulin

identifyingandfocusingonmarketstoallocatethefieldsalesforceforgrowingsales

throughtrade.Whilethelargemarketsseemattractivefromtheperspectiveofsize,

theyarealsolikelytobethemostcompetitive.Atthesametime,severalofthe

smallerstates,intermsofphysicalsizeaswellassalesofformulations,maybe

underservicedbyleadingindustryplayersthusprovidingthepotentialfor

establishingstrongbrandsovera5‐6yeartimehorizon.Similarly,themetrosand

largecitiesaresaturatedwithcompetitorswhilethesmallertownsandruralareas

remainunderserviced.Anaddedadvantagewouldbetherelativelylowerexpenses

towardssalesforcecompensationandtheabilitytocreateforcemultiplierthrough

partialoutsourcingoffieldsalesstaffthroughBusinessAssociates(BA)/Franchisees.



6.9.3.Newproductsandverticals:

PSUshavetraditionallyremainedwithmainlytheproductsaddressedtothe

institutionalrequirements.Mostoftheseproductsfallunderthecategorieslikeanti‐

infectives,painmanagementmedicines,GItractandgynaecologyrequirements.

Furtherforreasonsofpricetheseareoldproducts.Inrunuptotheself‐sustainable

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performance,PSUswillidentifythenewmoleculesintheirareasofcompetence.At

thesametimesnewverticalsbothsociallyrelevantandcommerciallyattractivewill

beenteredinto.Additionaltherapieswillincludedermatologyproducts,

neutraceuticals,cardio‐diabeticmedicinesandAyurvedicproducts.

Twoothertherapiesneedaspecialmention.Theyareantiretroviraldrugsand

VaccinesandSera.



6.9.4 Antiretroviraldrugs:

WithspreadofHIVandsocialstigmaattachedtoit,Governmenthastakenupon

itselftoprovidethenecessarymedicationfortheaffectedindividuals.Thepurposeis

notonlytocurethespecificindividualbutalsotoarrestthespreadandprovide

betterqualityoflife.Thereareprivatecompaniesthatmanufacturethesemedicines

butconcentrateonexportbusinessforprofitabilityatthecostofdomesticpatient.

Therearealsothenewermedicinesthatfallunderpatentregimeandthereforenot

economicallyavailable.PSUscanplayamajorrolebyofferingtheirfacilitiesfor

formulationofthesemedicines.Governmentsupportintheformoflong‐term

contractatanassuredviablepricewillbenecessary.



6.9.5 VaccinesandSera:

ThisisanotherareaidentifiedbyPSUsintheirlong‐termstrategy.Governmentof

Indiaundertakesvaccinationofchildrenforcertainspecificailments.Thenumberof

suchailmentscoveredismuchlessascomparedtotheonesadvisedbyWHO.

Furthercertainepidemicsalsocallforinterventionatshorternotice.PSUswouldlike

toenterthisareastartingwithmarketingtogenerateaclientbase.Thiswillbe

followedbybackwardintegrationintomanufacturing.Thisofcoursewillrequire

establishingadedicatedstateoftheartfacilitythatiscapital‐intensiveactivityand

willneedbudgetarysupport.Thevaccinesthatcouldbelookedintoareinfluenza

vaccine,BCG,Tuberculin,AntiRabies,Hib,TT,Measles,RubellaandJapanese

Encephalitis.SimilarlySeraforrabies,SnakeVenomcanbehandledinthese

facilities.



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6.9.6 PurchasePreferencePolicy:

Overlastfiveyears,throughcabinetapprovedscheme,Governmenthasprovided

purchasepreferencefor102medicinesmanufacturedbyPSUs.Thishashelpedalot

inincreasingcapacityutilisation,improvingtop‐line,improvingbottom‐lineforprofit

makingPSUslikeKAPLandRDPLwhilehelpinginreductionoflossforthePSUsin

rehabilitationmode.Withdrawalofthispreferenceatthiscrucialjuncturewillnullify

thebenefitsofalltheeffortsmadeoverlast5yearsandendangerthebenefitsof

thebudgetarysupportenvisagedinthe12thFiveYearPlan.Thereforeitisabsolutely

essentialtocontinuethispreferencefortheperiodof12thFiveTearPlan.Since

MinistryofHealth&FamilyWelfareisalreadyplanningtoestablishacommon

procurementagencyforthemedicinesrequiredforthegovernmentaluse,along

termcontractcanbesignedbyPharmaPSUswithMOH&FWunderthisPurchase

PreferencePolicyinsteadofthebiddingsystemfollowedpresently.Thiscontract

shouldbeoveraperiodoffiveyearswithpricesbeingfixedinconsultationwithNPPA

andthedrugslistidentificationbytheMoH&FWaswellasotherprocuringagencies

likeRailways,ESIC,DGAFMS,etc..ThiswillprovideassuredrevenuetoPSUsinthe

earlyyearswhilethegovernmentwillbeassuredofsupplyofqualitymedicines.



6.9.7 WHO‐GMP:

Thelong‐termsustainabilityalsoincludesafactorofinternationalpresence.Thisis

possiblebyup‐gradingthefacilitiestointernationalstandardsasperWHO‐GMP.

Whilethenewprojectplannedinthe12thPlanwillfactorthisattheprojectstage

itself,theexistingfacilitiesmayneedface‐lifttoachievethosestandards.While

beyond3rdyearoftheplan,internalrevenuegenerationshouldnormallysupport

this,somebudgetarysupportmayberequiredoncase‐to‐casebasis.



6.9.8 R&Dinitiative:

Inadynamicindustrylikepharmaceuticals,thelong‐termsustenancecanonlybe

ensuredwiththeaccesstoknowledgedriventechnologies,eitherintheformofnew

moleculeornewdrugdeliverysystem.ArobustR&Disnecessaryforthis.To

achieveself‐relianceby2020,effortsinthisdirectionhavetostartinthesecondhalf

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ofthe12thPlan.Abasicinfrastructureneedstobeputplacseasacommonfacility

forallthefivePSUswithcontributioncomingfromthePSUsaswellasfundingfrom

government.



6.10Janaushadhi:

ThisisaflagshipprogramofDepartmentofPharmaceuticalsunderwhich

commonlyrequiredmedicineswillbemadeavailableundergenericnamesand

affordablepricesthroughdedicatedoutletsacrossthecountry.Apartfrommaking

themedicinesaccessibletopoorsectionsofthesociety,thisalsowillprovidea

platformforPSUstohavefootholdinthetrademarketandinthelongrun

eliminatetheneedofthecrutchesofpurchasepreference.Thepurposeofmaking

availablesociallyrelevantmedicineswillalsobesimultaneouslyserved.



6.10.1 ThekeyfeaturesoftheJanAushadhiSchemeare:



i. Makingavailablequalitymedicinesataffordablepricesforall,typically

thepoorandthedisadvantagedthroughspecializedoutletscalledJan

AushadhiStores(JAS)tobeopenedindistricthospitalsinthefirst

instanceasthisistheplacsewheretypicallythepoorersectionsofthe

massescomefortreatment.



ii. ProvisionofbuiltupspaceforJASindistricthospitalsbytheState

GovernmentswiththeoperationofJASbystateGovernmentnominated

OperatingAgencieslikeNGOs,CharitableOrganistionsandpublic

societieslikeRedCrossSociety,RogiKalyanSamitistypicallyconstituted

forthepurpose



iii. Operationalcoststobemetfromtrademarginsadmissibleforthe

medicines.



iv. SupplyofthegenericmedicinesinthefirstinstancebytheCentral

PharmaPSUssoastoensurebothqualityandtimelysupply.However

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wherevertherewouldbeneedandgap,medicinescouldbesourcedfor

qualitySMEunits.ThiswouldalsogivesupporttothePharmaSMEsector

alsoaswellaspromotepublic‐privatepartnershipandavenuesfor

achievementofcorporatesocialresponsibilities,goalsgearedtowards

affordablemedicareforthemasses.

v. StateGovernmentstoensureprescriptionofunbrandedgeneric

medicinesbytheGovernmentdoctors.Hencethelinkofdistricthospital

locatedJAStobeginwith.



6.10.2.StatusofJANAUSHADHIScheme



Thecentralobjectiveoftheschemetobeginwithwastomakemedicinesavailable

tothepooranddisadvantagedsectionsofthesocietythroughtheopeningoftheJan

AushadhiStores–oneineverydistricthospitalofthecountryieatotalof630.This

wastobeexpandedtoSub‐divisionandBlocklevelslater.However,only102stores

couldbesetupin9statesinthelasttwoyearswhichisacauseofconcern.



Severalreasonshavebeenidentifiedforthispoorprogress:



i. FirstlythatmostStatesdidseemtobesensitivetotheissueofavailability

ofqualitymedicinesataffordableprices,especiallyforBPLfamiliesbutstill

advocatedfreemedicinedisbursementfromthehospitaldispensary

withoutadmittingtotheLackofmedicinesavailabilityontimeandin

requiredquantitieswithassuredqualitytopatientsvisitingthese

dispensariesinthehospitalsatdistrict,subdivisionandblocklevels.The

freesupplyinanycaseisaburdenwhichcanbereducedifunbranded

genericmedicinesareprescribedandused,butforvariousreasonsthejan

aushadhiunbrandedgenericmedicineswasperceivedtobeagainstthefree

medicinesconcept.ThefeebleattemptsbysomegovernmentslikeBihar,

TamilNadu,APandsomedistrictsofRajasthanlikeNagaurandChittorgarh

donotlendthemselvestosustainableandtrueunbrandedgenericmedicines

supportasrequiredwhichiswhytheyhavenotbeenabletomakeanydent

intheproblem.ThesupportofthecentralgovernmentintheMinistryof

Page 108 of 153

Healthhasalsonotbeenadequateinasmuchthatthereisneedfor

supportingopeningofjanaushadhistoresincentralgovernmenthospital

premisescoupledwithmonitoredprescriptionofunbrandedgenericdrugsto

theout–patientsandindoorpatients.



ii. Lackofprescriptionofgenericdrugsbygovernmentdoctorswasabighurdle.

Fewstategovernmentscameforwardtoissueguidelinestogovernment

doctorstoprescribegenericmedicines.EventhosethatdidlikeRajasthan,

Punjab,Odhisa,Delhicouldnotenforceitproperly.Eventhenotification

dated19thMay2011bytheMinistryofHealthoftheGovernmentofIndiafor

allcentralgovernmenthospitalsandrelatedinstitutionshasnotbeenof

muchhelp.



iii. Boththeabovereasonsledtoverylessnumberofstores(102in9states)

whichdoesnotlenditselftoviableeconomicoperationbothfromthe

productionofgenericmedicinesinunbrandedgenericformandtheirsupply.



6.10.3Recommendations



i. Toovercometheaboveweaknessrevisedschemehasbeenprepared.Herein

focusedeffortswouldbemadeinthefirstinstanceinschemefriendlystatesandthe

MinistryofHealthwouldbeencouragedtoassistinimplementingtheschemein

centralgovernmenthospitals,MinistrieslikethoseofRailways,ESIC,Labouretc.A

schemeofRs200.00crsisbeingproposed.



ii. Makingtheschemeimplementationmandatoryaspartofthehealthsectorfunds

allocationforsupportingtheschemethroughstategovernmentrunhospitals.This

couldbeensuredthroughamechanismtyingupthereleaseoffundsfromthe

Centralschemetothestatedependantontheprogressofthescheme.Appropriate

deliverableparameterstobeputinplaceforthisinconsultationwithDepartmentof

PharmaceuticalsandthePlanningCommission.

Page 109 of 153



iii. Mandatoryprescriptionofunbrandedgenericmedicinesbystategovernmentand

centralgovernmentinstitutionsdoctorsandmechanismtoensureitscomplianceby

appropriateauditprocesses



iv. InvolvementoftheDepartmentofConsumerAffairsandInformationand

Broadcastingalongwithrelatedstategovernmentdepartmentsformediaassisted

coveragesoastoensurewidespreadruralandtargetgroupoutreachononehand

andtogeneratedemandsidesupplypushsoastomaketheoperations

economicallyviableontheother.



‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐

Page 110 of 153

Chapter7

RESOURCEREQUIREMENTINTHE

DEPARTMENTOFPHARMACEUTICALS



7.1IntheDepartment

TheDoPhasnotbeenabletotakeuporlaunchanynewactivityinlinetoits

BusinessAllocationevenafterthreeyearsofitsexistence.Themainreasonforthis

liesinlackoftechnicalcapabilitysinceitsinception.



7.1.1ExistingTechnicalresponsibilities



i. Examination&processingofapplicationsforImportofitemsrestrictedfor

imports.

ii. Examination&processingofapplicationsforDSIR'srecognitionofin‐house

R&DunitsofPharmaIndustry.

iii. AlltechnicalmatterspertainingtoNLEM&regulatorysystemsunderDrugs&

CosmeticsAct,DPCO,NDPSAct,

iv. AlltechnicalmattersconcerningIPR,WTO,patenteddrugs&medical

devices.

v. Inter‐DepartmentalmattersincludingFreeTradeAgreementsandJoint

Commissionsandotherbilateraltechnicalmatters

vi. TechnicalissuesrelatedtoPharmaPolicy.

vii. ProjectplansforsettingupNationalCentreofR&DinPhytopharmaceuticals

(NCRDP)tobesetupatNIPER,Guwahati.

viii. Examination&processingofapplicationsconcerningfixationofStandard

Input‐OutputNorms(SION)fordrugsandpharmaceuticals

ix. Examination&processingofapplicationsconcerninglicensingmatters,

foreigncollaborationetc.

x. Examination&processingofreferencesaboutdevelopmentofInfrastructure,

manpowerandskillsforthePharmaceuticalssectorandmanagementof

relatedinformation.



Page 111 of 153

xi. Educationandtrainingincludinghighendresearchandgrantoffellowshipin

Indiaandabroad,exchangeofinformationandtechnicalguidanceonall

mattersrelatingtoPharmaceuticalssector.



xii. PromotionofPublic–Private–PartnershipinPharmaceuticalsrelatedareas.



xiii. Inter‐sectoralcoordinationincludingcoordinationbetweenorganizationsand

institutionsandinstitutesundertheCentralandStateGovernmentinareas

relatedtothesubjectentrustedtotheDepartment.



xiv. TechnicalsupportfordealingwithnationalhazardsinPharmaceuticalsector.



7.1.2DifficultiesduetoUnavailabilityofTechnicalOfficers



OwingtounavailabilityofTechnicalOfficers,theDepartmentisfacingalotof

problemsinconsiderationofvariousissuescoveringdevelopmentsofthepharma

industry.Additionally,itisnotabletocontributetointer‐departmentalissueswith

DST/DBT,etc.anddisposalofvariousreferencesreceivedfromdifferentsources

dependinguponthenatureofabovereferredactivities.Insomecases,theschemes

cannotbepursuedatrequiredpace.TheR&DsectionintheDepartmentisvirtually

defunctasitisdifficulttodevelopnewschemesformuchrequiredR&Deffortsin

drug/pharmadepartment.Insomeofthehighlevelcommittees,suchasGLPExpert

CommitteeandDPRPExpertCommittee,properrepresentationfromthe

DepartmentcouldnotbemadeduetolackofseniorlevelTechnicalOfficers.The

requirementoftechnicalofficersisverycrucialinevaluatingmanyproposals

receivedfromDGFTintheDepartmentaboutfixationofSIONforbulkdrugs,drug

intermediatesandformulationsbeingexportedfromIndia



7.1.3Actionneeded



Inviewoftheforegoingitisproposedthatactionforcreatingthepostsmaybetakenas

proposedbelow:



Page 112 of 153

(i)DrugsPriceControlDivision



Table‐22

S.No.Nameofpost/PayscaleNo.ofPostsExpenditure

1JointDirector(Cost)

(Rs.15600‐39100,GP‐7600)

170762

2ScientistGd.C

(Rs.15600‐39100,GP‐6600)

168882

3DeputyDirector(Cost)

(Rs.15600‐39100,GP‐6600)

168882

4AssistantDirector(Cost)

(Rs.15600‐39100,GP‐5400)

266626x2=1,33,252

5JuniorAnalyst

(Rs.9300‐34800,GP‐4600)

252630x2=1,05,260

Total(for1month)4,47,038

Total(for1year)53,64,456



(ii)ProjectsAndTradeRegulatoryDivision



Table‐23



S.No.Nameofpost/PayscaleNo.ofPostsExpenditure(in`)

1DeputyDirectorGeneral(DDG)

(Rs.37400‐67000,GP‐10000)

1121992

2ScientistGd.C

(Rs.15600‐39100,GP‐6600)

168882

3DeputyDirector(Statistical)(Rs.15600‐

39100,GP‐6600)

168882

4ResearchOfficer/AssistantDirector

(EconomicService)(Rs.15600‐39100,GP‐

5400)

166626

5(a)SeniorInvestigator(StatisticalService)

(Rs.9300‐34800,GP‐4800)

253006x2=1,06,012

5(b)JuniorAnalyst(ScienceCadre)

(Rs.9300‐34800,GP‐4600)

252630x2=1,05,260

6(a)JuniorInvestigator(StatisticalService)

(Rs.9300‐34800,GP‐4600)

252630x2=1,05,260

6(b)JuniorTechnicalAssistant(ScienceCadre)

(Rs.9300‐34800,GP‐4200)

251878x2=1,03,756

Total(for1month)7,46,670

Total(for1year)89,60,040



Page 113 of 153

(iii)ResearchAndDevelopmentDivision



Table‐24



S.No.Nameofpost/PayscaleNo.ofPostsExpenditure

1ScientistGd.E

(Rs.37400‐67000,GP‐8700)

1119548

2ScientistGd.D

(Rs.15600‐39100,GP‐7600)

270762x2=1,41,524

3ScientistGd.C

(Rs.15600‐39100,GP‐6600)

268882x2=1,37,764

4ScientistGd.B

(Rs.15600‐39100,GP‐5400)

266626x2=1,33,252

5JuniorAnalyst

(Rs.9300‐34800,GP‐4600)

252630x2=1,05,260

6JuniorTechnicalAssistant

(Rs.9300‐34800,GP‐4200)

251878x2=1,03,756

Total(for1month)7,41,104

Total(for1year)88,93,248



(iv)EducationAndTrainingDivision



Table‐25



Thetotalexpenditureonthesalary,forimplementingaboveproposalwouldbe

approximatelyRs2.9croresperannum.

S.No.Nameofpost/Payscale No.ofPosts Expenditure

1ScientistGd.C

(Rs.15600‐39100,GP‐6600)

268882x2=1,37,764

2ScientistGd.B

(Rs.15600‐39100,GP‐5400)

266626x2=1,33,252

3JuniorAnalyst

(Rs.9300‐34800,GP‐4600)

252630x2=1,05,260

4JuniorTechnicalAssistant

(Rs.9300‐34800,GP‐4200)

251878x2=1,03,756

Total(for1month)4,80,032

Total(for1year)57,60,384

Page 114 of 153



7.2NationalPharmaceuticalPricingAuthority



7.2.1PresentStatus

NPPAsinceitsinceptionishavingtotalsanctionedstrengthof60regularpostsincluding

costing,technicalandadministrativeofficials.SinceNPPAdoesnothaveitsowncadrefor

recruitmentoftheirofficials,therequiredmanpowerisbeingprovidedtoNPPAbydifferent

cadrecontrollingauthoritiessuchasIndianCostsAccountsService,Departmentof

Fertilizers,DepartmentofChemical&Petrochemicals,IndianEconomicServiceetc.



7.2.2StudiesforManpower



StaffInspectionUnit(SIU)hadconductedastudyin2003forassessmentofworkandstaff

requirementforNPPA.However,nofinaldecisioncouldbetakenonthisreport.

Subsequently,aWorkStudywasconductedbyIndianInstituteofPublicAdministrations

(IIPA),whichsubmittedareporton23.11.09.Further,IIPAsubmittedasupplementary

reportinJanuary,2011.



7.2.3ObservationsofIIPAStudy



AsperreportofIIPA,thefunctioningofNPPAisheavilydependentuponthe

outsourced/contractualstaffsi.e.DEOs/YPsasNPPAhashired40DEOs/YPsinorderto

supportits31regularstaffsoutofthetotal71workingstrengthofNPPAasonJanuary

2011.AsperobservationofIIPA,NPPAneedadditionalregularstaffforsmoothrunningof

followingmainfunctionsIIPAhasreassessedthetotalstaffstrengthto132posts.



7.2.4NPPAProposal



NPPAsubmitteddetailsforcreationof44additionalpostsatvariouslevelsand

simultaneouslyabolishmentof15,thusincreasingthestaffstrengthofNPPAfrom60

presentsanctionedstrengthto89.

ThusthetotalsanctionedstrengthofNPPAwouldbeasunder:‐

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Table‐26



Sl.

No.

DesignationofPostExisting

Sanctioned

Strength

Concurredby

IFD

1234

01Chairman11

02MemberSecretary1 1

03Advisors/Directors54

04 DeputySecretary(Legal)01

05UnderSecretary01

06Dy.Directors(Cost)75

07Dy.Directors(Tech.) 34

08DeputyDirector(Econ)01

09SectionOfficer3 2

10Asstt.Director(Tech.)103

11Asstt.Director(Cost)20

12Asstt.Director(Stat.)001

13PrivateSecretary11

14PersonalAssistant/StenoGrade‘C’25

15PPS11

16SeniorInvestigator1 2

17Assistant16

18LawOfficer/LegalAssistant02

19TechnicalAssistant28

20JuniorInvestigator10

21HindiTranslator11

22StenoGrade‘D’8 1

23UDC1 1

24LDC/Typist816

25StaffCarDriver22

26Daftry21

27Peon/Messenger59

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

Consequentuponimplementationoftheabovere‐structuringofNPPA,thenetfinancial

implicationwillbeRs.74.89lacsperannum



‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐





28Safaiwala1 2

29Group‘D’0 3

30DatabaseOperator01

31Sr.CounselOperator ‐‐ 1

32DEO02

Total6089

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CHAPTER‐8

SCHEMEPROPOSALS



8.1IndustryPromotionandDevelopment

8.1.1ExistingSchemes–Continuedfrom11thPlan

8.1.1.1PharmaPromotionandDevelopmentScheme(PPDS):

ThisisacontinuingschemeforpromotionanddevelopmentofPharmasectorinthe

country.Underthescheme,followingactivitiesareundertaken:

i. OrganizingSeminars,Conferences,exhibitions,mountingdelegationsto

andfromIndiaforpromotionofexportsaswellasinvestments,

conductingstudies/consultanciesforfacilitatinggrowth,exportsand

criticalissuesaffectingPharmaSector.

ii. AnyotheractivityrelatingtothepromotionofPharmaSector,exportand

investment.

Anumberofstudiesareproposedtobeconductedforproperscheme

planningandprojectdevelopment.Thesecouldbe–

• CensusofMSMEincollaborationwithDCGI,MSMEandMinistryofStatistics

&PI

• Studyonpharmaceuticalindustryanalysisofcompetingcountries–study

couldbedoneoravailablereportsprocuredoff‐shelf.

• Studiesrequiredforthedetailedformulationofvariousschemesgiveninthis

PlanDocumentandfurtherasmayberequired

Itisproposedtocontinuetheschemeforthe12thPlanforthesamesetofactivities

whichwouldberequiredmoresonowthatthedepartmentwouldbeableto

implementitmoreeffectivelybasedontheexperiencegainedinthelastthreeyears

followingthesettingupofthedepartmentinJuly2008.



Budgetaryrequirement:Accordingly,thebudgetaryrequirementforthescheme,

attherateofRs.2.0croresperannumwillbeRs10.0crores.

Page 118 of 153



8.1.1.2IntellectualPropertyRightsFacilitationCenters:

Thisisacontinuingschemeandwasstartedin11thFiveYearPlanandtwocenters

oneatPharmexcilHyderabadandotheratNIPERMohalihavebeenopened.The

existingobjectivesoftheseIPRFacilitationCenters(IPRFCs)are:

i. StrengtheningofinteractionbetweenPharmaIndustry,Pharmaindustry

supportinstitutionsandassociations,IPofficesandotherrelevant

governmentorganizationswithaviewtobetteridentifyingtheneedsof

PharmaIndustryfacilitatingtheimplementationofcustomizedtargeted

activitiesaddressingthespecificIPneedsofeachsector,grouporcluster.

ii. SupporttonationalandinternationaleffortsforfurtherintegrationofIP

issuesinprogramsandpolicyinitiativesaimingatfosteringthetechnological

andinnovativecapacityandtheexportpotentialofPharmaIndustry.

iii. IncreaseawarenessandunderstandingofIPissueswithinthePharma

businesscommunitythroughawarenessraisingcampaignsandtargeted

trainingprogramswiththeoptimaluseofmoderninformationand

communicationtechnologiestomaximizetheirbenefitsfromtheuseofIP

systems.

iv. AdvisegovernmenttotakeintoaccountthespecificneedsofPharma

IndustryintheirIPPolicies.

v. DisseminateinformationonbestpracticesontheuseofIPbyPharma

Industryandoftheirexploitationoftechnologicalknowledge.

vi. Makeanaccesstotechnologicalknowledgeeasierandcheaperforthe

industry.

vii. AdetailedstudywouldbegotdoneontheimpactofIPRissuesonthedrug

pricesandavailabilityindevelopingcountries.Forthisfundingwouldbe

donefromthebudgetaryresourcesofPPDSscheme.



Thereisacontinuedneedtofurtherstrengthenthesecentersandbroadenthe

scopeofworkbyhelpinginfilingapplicationsrelatedtoDMF,ANDA,MHRA,etc

giventheincreasingemphasisonpatentissuesbythecompetitivemarketsand

Page 119 of 153

companiesasalsothekeyrolewhichIndianpharmacompaniescanplayinbringing

outnewproductpatentsaswelladvancetheirshareoftheFirst‐to‐fileapplications

intheregulatedmarketslikeUS,JapanandEU.Accordingly,newIPRFCsatMumbai,

ChennaiandAhmedabadcanbeopenedforeasyaccessofthecentersbythe

industry.



Budgetaryrequirement:Thebudgetaryrequirementwouldbe:

• OneTimeCostofsettingupthreeCenters Rs.1.5crores

@Rs0.50crspercentre

• RecurringCostforfivecenters Rs5croresperannum

 TotalBudgetfor12thFiveyearPlan: Rs26.5crores



8.1.2NewSchemes

8.1.2.1InternationalPharmaCooperationInitiative(IPCI)

WiththeincreasinginfluenceofIndiainglobalpharmaproduction,mutually

beneficialinternationalpartnershipsisacrucialissuewithrespecttogainingaccess

toemergingmarketsandsustaininggenericscapabilitiesinthedevelopedmarkets.

Forthisatwofoldapproachisproposed‐

i. HereinthefocuswouldbeonBRIC,IBSA,CIS,EE,WA,AfricaandASEAN

marketswhicharegrowingat10%+annuallybutwhereinIndianpharma

productsarebeingtargetedbycompetitiveMNCsonvariousgrounds

includingqualityandmanufacturingstandards.Theschemeaimstomeetthis

challengehead‐on.Itisaccordinglyproposedtohavemutuallybeneficial

capitalinvestmentprojectsonapartnershipbasistotacklesuchneedssuch

as–

• SettingupofJointtestingandlabfacilitiesforcertificationofIndian

pharmaproductsimportedintotheaboveidentifiedimporting

countries–ThiswillenableIndianproductstoenablefaster

registrationandlatercontinuedexportssustainabilityduetobuilding

ofmutualtrustinrespectofqualityofdrugsimportedascertifiedby

thejointfacilities

Page 120 of 153

• Developmentoflocallysustainableformulationsanddrugdelivery

systemsforimportingcountrybyjointpartnershipprograms

• Capacitybuildingofregulatorsofimportingcountrytoenablebetter

appreciationofIndianmanufacturingstandards

• Othermutuallybeneficialdrugdevelopmentandcapacitybuilding

projects

• Capitalsupportforexportcapacitybuildingsuchas2Dbarcodingand

suchotherrequirements

• DossierspreparationsupportforSMEsforregistrationoftheir

productsintargetedcountries

• Studiesandreportsofcompetingcountriesontheirpharmaindustry

developmentandopportunities.

• Jointfinancingofresearchanddrugdevelopmentprojectsofmutual

interest



ii. Hereinthefocuswouldbeongettingagreatershareofthegenericsinthe

developedmarketsliketheUS,EUandJapanwhichwhilegrowingata

comparativelyslowpaceareneverthelessofhighunitvaluefortheproducts

exported.Thispossiblegainishoweverrestrainedbythelackoftechnology

forproductionandfilingofsuchinitiativesas–FirsttoFileincaseofUS

markets,multipletestingrequirementsofTestinginEUcountriesandnow

increasinglyinCISandWestAsianmarkets.Similarlyaccessingmarketshare

innewlyopenedgenericsmarketslikeJapanareofkeyimportance.For

meetingthesechallengesandtakingadvantageofthesenewopportunities,it

isproposedtolaunchJointPartnershipProgramssuchas‐

• Developmentofgenericsfortheconcernedmarkets

• Supportforfilingofgenericsdrugsintheconcernedmarketsintermsof

dossierfiling,clinicaltrialssupportandothersupportasrequiredtogain

accesstothehighvaluemarket

• Jointfundingofschemesforcollaborationinpharmasector

developmentasinnewdrugsorareasofmutualinterest



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

TheimplementationoftheseprojectswouldbeprecededbyMoUsfor

mutualpartnershipatInter‐governmentallevelandappropriate

implementationthroughSPVsasmayberequired.Theprojectsthemselves

wouldrequirebothcapitalandrevenueexpenditure.



OnthewholetherewillbeanemphasisontheMoUmechanismforbridging

partnershipswithcountriesacrosswhereverIndianpharmahaskeymarket

interests.



ItisproposedtoallocateRs50crsforthisforthe12thPlan.



8.1.2.2UpgradationofSMEstoWHO‐GMPstandards

Inthe11thPlanupgradationofSMEstoSchedule‐MGMPwasenvisaged.This

assistancedidnotincludeupgradationtoWHO‐GMPandhigherInternational

standardsrequirementswhicharenowincreasinglyrequiredformakingtheSME

Pharmasustainableinanincreasinglycompetitiveanddemandglobal

manufacturingenvironment.AccordinglyitisproposedtolaunchaSchemein

the12thPlanforupgradationof1200SMEpharmaunitstoWHO‐GMPand

Internationalstandardsmanufacturingstandards.Forthis,asregards,MSME,it

wouldaccordinglyincludetherequiredupgradationlistinthelistofequipmentsfor

financialassistancetoSSIs.Howeverthiscouldpresentdifficultiesintotalproject

admissibleundertheon‐goingschemeofCLCSSoftheMSMEfortechnical

upgradationofSSIsasitisestimatedthatupgradationtoWHO‐GMPstandards

wouldrequireacostofaboutRs.3crores.



Accordingly,itisproposedthatassistancetoSSIPharmaUnitsundertheCLCSSmay

beprovidedforprojectcostofuptoRs.3croreswithcapitalsubsidyofRs.1crores

fromthecurrentlevelofRs.25lakhscapitalsubsidyonatotalprojectcostofRs.1

crores.Also,theassistanceshouldbedovetailedtoprovidesoftloaninterestrates

of5%bytheBanksforthisupgradation.Similarassistancewouldbeprovidedto

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themediumscaleenterpriseswhoarenotWHO‐GMPstandardbutwishtoachieve

thelevelforincreasingtheircompetitiveness.



Onthewholefor1200unitsattherateofRs.1croresperunitwouldrequiretotal

financialassistanceofRs.1200croresassubsidyfortheperiodupto2017.The

subsidyisbettergivenasinterest‐basedsubsidywhichwouldhelpstaggertheplan

allocationsonayearlybasisandtakecareofthewageandmeanslimitationsofthe

budget.



HencetotalBudgetaryrequirementisRs.1200crores



8.1.2.3Trainingof5000WorkingProfessionalsinWHO‐GMP/International

manufacturingstandards:



Whileschemesabovewouldprovidemanufacturingcapabilityupgradation

assistanceforcapitalexpenditure,skilldevelopmentofpersonnelrequiredforsuch

upgradationandsustenanceofsupplyofskilledpersonnelwouldalsoberequired.

Itisestimatedthatforthisthereisaneedfortrainingofatleast5000working

professionalsinWHO‐GMPandotherInternationalStandardsGMPrequirements

by2017.ThiswouldentailexpenditureofaboutRs50,000lacperperson.

AccordinglyasumofRs250crsisproposedforthis.



HencetotalBudgetaryrequirementisRs.250crores



8.1.2.4UpgradationofselectedPharmamanufacturingfacilitiesincludingbio‐

pharmatoHighRegulatedmarketofUSFDA/EDQM/TGAandother

InternationalStandardstoenableGlobalGenericsandBiosimilars

capabilities:

TheexportofPharmaceuticalproductsconstitutesnearly45%oftotalturnoverof

IndianpharmaIndustry.Inviewofthegrowingimportanceofgenericmedicines

andtheadventofBio‐similarsinhighregulatedworldmarketIndianPharma

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manufacturersneedtobuildcapacityforcompliancetothestringentstandardsof

highregulatedyethighvaluemarketcountries–US,WestEU,AustraliaandSouth

Africa.Therefore,itisproposedthat250selectunitsbeprovidedassistanceby

2017toupgradetheirfacilitiesaspertherequirementofthesecountriesandother

internationalstandards.Thiswillbedoneattherateof50unitsperyearatthecost

ofRs.2croresperunitandatotalcostofRs.500crores.Theassistanceproposedto

begivenwouldbeone‐timecapitalassistancetoenablequicktimebound

implementationgiventheurgencyofcapacitybuildinginlightofthesteeppatent

cliffofsmallandlargemoleculesvaluedatUS$300Bnby2015.



TheTotalBudgetaryrequirementisRs.500crores



8.1.2.5SettingupofoneNationalandfiveRegionalFormulationDevelopmentand

ManufacturingstandardtrainingCentres(FDC):



Developmentofgenericformulationsfrompatentproductsforsmallandbig

molecules(Biosimilars)isachallengefortheSMEs.Forthis,itisaccordingly,

proposedtosetupFormulationDevelopmentCenterswhichwouldassisttheSME

Pharmafordevelopmentofnewformulationswithaviewtotapingthevast

opportunityopeningupduetooffpatentingofanumberofmoleculesvaluedat

aboutUS$300Bn.(traditionalgenericsandbio‐similars)inthenextfivetoseven

years.ItisproposedtosetupofatleastoneRegionalFormulationDevelopment

Centre(RFDC)ineachoftheidentifiedclustergrowthareasofthepharmasectorin

thecountry.ThismaycostRs.100crores.



Consequenttotheneedofcapacitybuildingofthemanufacturingpersonnel

requiredformanufacturingstandardsupgradation,itisproposedtosetupofone

NationalandfiveRegionalmanufacturingstandardstrainingcentresatthetotal

costofRs.60crores.



HencetotalBudgetaryrequirementisRs.160crores



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

8.1.2.6EstablishmentandUpgradationof10PharmaGrowthClusters



Thereisaneedofsynergystrategiestoaddressinfrastructuredevelopmentissues

forpromotingintegratedgrowthofthepharmaindustries.Forthis,Clusterbased

approachisanimportantstrategyandisnowincreasinglybeingrecognizedasan

effectiveandsustainablestrategyforcompetitiveenhancementofMSMEs.

Accordingly,itisproposedtoimplementaSchemeforClusterDevelopmentof

PharmaCompaniestoprovideanintegratedsetupforenablingQuality,

Productivity&InnovativemanufacturingbythePharmaSMEsinexistingandnew

clusters.Identifiedclustersare‐Baddi(HP),Hardwar(Uttarakhand)andGurgaon

(Haryana)inthenorth,Pattancheru,PashmalyramandKhazipalli(inA.P),Alandur

andAmbattur(bothinTN)intheSouth,Thane,Nashik,Aurangabad(allin

Maharashtra),VadodaraandAhmedabadinGujaratintheWestandGoa/Sikkimin

otherspecialareas.Theproposedcentralinfrastructurewhichwouldbedeveloped

couldinclude:



• CentralfacilitiesforEnvironmentstandardscompliance

• CentralFacilitiesCentreforQualityTestingandRegulatorycompliances.

• ColdChainfacilities

• FormulationandProductDevelopmentFacilities.



TheassistancewouldbeintheformofaGranttorecognizedbodies–associationof

industriesintheconcernedclusterswithpropersafeguardmechanismsand

procedures.Theassistancewouldberestrictedtoassistanceforbuildingand

machineries.Theoperationalcostofthecentralfacilitiessoestablishedtothe

extentof70%wouldbemetbytheindustryonarecurringbasis.



Itisaccordinglyproposedtoestablishsuchfacilitiesat10PharmaClustersbythe

endofthe12thPlanandsuchclusterswouldbelabeledasPharmaGrowth

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Clusters.ItisestimatedthateachclusterwouldrequireassistanceofaboutRs.50

crores.Accordingly,thetotalbudgetaryrequirementwouldbeofRs.500crores.



HencetotalBudgetaryrequirementisRs.500crores



8.1.2.7InfrastructuresupportforColdChainforhighenddrugsforexports



Inordertoenhanceexportscapabilityforhighenddrugsrequiringexactcoldchain

standardstillthetimetheyareexportedfromthecountryinlightofstringent

developedmarketrequirements,thereisaneedtoestablishcoldchainfacilities.

TheDepartmentofPharmaceuticalproposestoprovideassistanceforsettingupof

suchcoldchainfacilitiesandaprovisionofRs.50croresisbeingmadein12thFive

YearPlan.

HencetotalBudgetaryrequirementisRs.50crores



8.1.2.8Schemeforenvironmentstandardscomplianceandrequiredinfrastructure

supportincludingcapacitybuilding.

Theinternationalcustomersfromdevelopednationsarebecomingmorestringent

onensuringlocalenvironmentstandardcompliancestandardsandwantcompanies

toadheretothesestandards.ThishasledtoabigchallengefortheIndianpharma

industry,particularlysmallscaleunits,whicheitherhaveinvestmentconcernsor

limitationsofgrowthbeyondtheirallottedunitareasintheindustrialclusterssetup

earlierwithantiquatedenvironmentstandardscompliancepotential.DoPis

expectedtoplayavitalrolebyprovidingfinancialandtechnicalassistanceto

improvefinancialsustainabilityofSMEsononehandandalsosafeguardthe

environmentfromthehazardsassociatedwiththeunplannedgrowthofthe

industry.

AbudgetaryprovisionforRs100croresisproposedin12thFiveyearplan



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8.2.R&D,CapacityBuildingandEmployment

ThefollowingaretheSchemes,aspertherecommendationsmadeearlierinthis

PlanDocument:

8.2.1ContinuingSchemes

8.2.1.1NIPERMohali:

(i)ThecontinuationofthePGandthePhDeducationatpresentstrengthlevels

wouldrequirebudgetarysupport.



ForthisbudgetaryallocationofRs100crswouldberequiredforthe12thPlan

period.



(ii)GiventhehugedemandforHRdevelopmentatMastersandPhDlevelitis

proposedtoexpandthestudentoutputundertheexistingschemeofNIPERMohali

anditisaccordinglyenvisagedtoexpandasperbelow:



Physicaltarget    Budget(Rscrs)

a. Additional1000PGsandPhDs  200

b. TrainingIndustryandRegulatorypersonnel25

c. PublicHealthandPharmacovigilanceTrg.25

d. InfrastructureUpgradation  250

Total500

Thiswouldinvolvebothcapitalandrevenueexpenditure.



8.2.1.2ForHRDevelopmentat6NewNIPERS–Raebareilly,Kolkatta,Guwahati,

Hajipur(Patna),AhmedabadandHyderabad



Thesettingupofthe6newNiperswasstartedfollowingtheapprovaloftheScheme

inthe11thPlan.TheCabinetfirstapprovedthesettingupoftheNIPERsin2007.

Followingtheprogressmade,nowtheCabinethasapprovedthepermanent

establishmentoftheNIPERsinOctober,2011.Thiswouldnowenablethefullscale

workforestablishmentoftheNIPERs.Asperestimatespreparedbytheexpert

Page 127 of 153

consultants,Deloitte,TouchandTohamatsu,aboutRs2000crswouldberequired

bothforcapitalandrevenueexpenditure.



ItisaccordinglyproposedtoallocateRs2000crsforthese6newNIPERs.



8.2.1.3OtherSchemes

8.2.1.3.1SettingupofNationalCentreforPhyto‐pharmadevelopment

MajorcapitalexpenditureofaboutRs100croresbeingmetfromDONER.Present

allocationsoughtforinitialyearsoperationasperadvicefromDONER.Aprovisionof

Rs20croresisbeingmadein12thFiveyearPlanfromDoP.



Hence,totalbudgetaryrequirementisRs20Crores.



8.2.1.3.2GLP/GCP/AnimalHouseLabSchemes:

UndertheR&D/ERPSchemealreadyapprovedforthe11thPlantheSchemefor

settingupofGLPcompliantLabsonPPPbasis,GCPcompliantLabonPPPbasisanda

AnimalHouseLabonPPPbasisisunderimplementation.Theselectionof

ConsultantsforimplementationoftheschemeisunderwayattheDepartmentlevel.

Preparationofreportanditssubsequentimplementationwouldcontinueinthe11th

Plan.ItisproposedtoallocateRs25crsforthisschemeforthe12thplanperiod

accordingly.AsregardstheERPcomponentoftheexistingapprovedschemeprojects

forthesamewouldbefinalisedinthe12thPlanforthePrivatesector.Additional

allocationofRs25crsisproposedforthiscomponent.

HencetotalbudgetaryrequirementisRs50Croresin12thFiveyearPlan.



8.2.1.3.3ContinuingR&DSchemesforNiperMohali



NiperMohaliispresentlyimplementinganumberofprojectsinR&Dforvarious

pharmaareaslikeneglecteddiseases,infectiousdiseases,vectorbornediseases,etc.

InadditionanumberofprojectsarebeingimplementedforPublichealth,

Pharmacovigilance,Regulatorycapacitybuildingforacademiaandindustry,etc.

NIPERMohaliwouldacompleteassessmentregardingtheobjectivessetforthese

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projectsandtheachievementssofar.Thereafterassestheadditionalbudget

requirementsforsuccessfulcompletionofsuchprojectswouldbeassessed.After

thirdpartyassessmenttherationaleforcontinuanceofsuchprojectsinproper

schemeformatwouldbeconsidered.Thentheconcernedprojectswouldbesought

tobecontinued.



BasedonthismethodologyitisproposedtoallocateRs50crsforsuchprojectsfor

the12thPlan.



8.2.1.3.4ContinuingschemeatNewNipers

AtpresentthereisonlyoneprojectunderimplementationwhichisforJoint

developmentofTuberculosisrelateddrugsatNiperAhmedabadandAIIMS,Delhi.

Thisprojectwouldspilloverforoneyearofthe12thPlan.AccordinglyaBudget

requirementofRs1.00crsisenvisaged.



8.2.2NewSchemes

8.2.2.1SettingupofNewNewNIPERs

AspointedoutinthediscussioninChapter3ofthisPlanDocument,thereisa

shortageof45,000seatsgiventhe1:10ratioofPGseatsvsGraduateSeatsfor

Pharmacystudiesinthecountry.Accordingly,itisproposedtomeetthisgapto

someextentbysettingupof10newNiperswhichwouldprovideabout5000more

PGseatsandalsocatertothePhDrequirements.ThisisnecessaryalsoasIndiais

targetedtobecomeaglobalhubfordrugdiscoveryandinnovationforwhicha

globalstudybyErnst&Younghasalreadybeencommissioned.Thesettingupof

these10NewNewNiperswouldrequireabudgetallocationofaboutRs3000crs.

TheseNiperswouldfollowthesametestedmodelimplementedhithertoandthe

required100acreslandforeachforthemwouldbeprovidedfreeofcostbythe

stategovernments.

RequiredBudgetAllocation: Rs3000crs



8.2.2.2NewSchemesatNiperMohali

ItisproposedtolaunchnewschemesasbelowatNiperMohali‐

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

SchemeBudget(Rscrs)

a. R&DCentreforBiologicalsandNCEs 250

b. R&DCentreforNDDS   250

c. Settingup20NewIncubators  100

d. IncentiveSchemeforCROsDevptforNew 200

DrugDiscovery

e. PartnershipwithInternationalCentres 25

ofExcellence  

Total825

ThustomakeIndiaselfreliantandgloballycompetitiveinnicheareasofdrugsand

pharmaceuticalsinHR,R&DandtoboostEmploymentledgrowththefund

allocationofaroundRs825croresisprojected.



8.2.2.3PharmaVentureCapitalFund

ThegrowthoftheIndianpharmaceuticalindustryoverthepastfewdecadeshas

predominantlyarisenfrommanufacturinggenericdrugsforexportsanddomestic

use.R&Dinthepharmaceuticalindustryhaswitnessednosuccessincreatinganew

drug,despiteitseffortsforthepastsixteenyears.Thisismainlyduetolackof

venturefundindustryinIndiaascomparedtodevelopedcountriesforthepharma

sector.Itneedstobepointedoutthatinvestinginafledglingstart‐upfirm,aiming

forR&Dinthepharmaceuticalindustry,isriskybecauseofthehighrateoffailure

amongnewfirms.Establishedfirmspreferastrategyhingedonsteadyreturnsas

opposedtothehigh‐riskR&Dpathtohighreturns.Thisliabilityofnewness"(botha

newfirmandthenewuncertainidea)formsthebasisfortheneedforchannelling

publicresourcesintodrugdesign,discoveryanddevelopment.



Afterconsultationwiththeindustry,ithasbeenfeltthatitwouldbeappropriateto

harnesstheventurecapitalindustrytechnicalandfinancialacumenforthedelivery

ofpublicresourcesintodrugdesign,discoveryanddevelopment.Venturecapitalists

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(VC)havetheexpertiseinhandlingallaspectsofahighriskundertaking;theyraise

fundsforsuchinvestmentandareprofessionalswithspecificindustryexperience.

Theyalsoprovideassistanceofotherkindsthatareimportantforthesuccessofa

newventure:keypersonnel,strategicadvice,financialmanagement,andmost

importantlyestablishkeygovernanceparametersforconstantmonitoringand

evaluation.



TheDoPthereforeproposestoconsiderinvestmentofidentifiedfundsintoanewly

createdspecialisedprivateequity/venturecapitalfund(IPIF)thatundertakesR&D

investmentsintocompaniesinthepharmaceuticalindustry.Thisinvestmentwillbe

subjecttoamarkettestattheleveloftheprivateequity/venturecapitalfunds

wherethefundunderquestionwouldhaveraisedalargesubstantiveportionof

capitalventurefundthemselveswhereininvestmentdecisionsaretakenby

impartial,experienced,andhighlycompetent,motivatedandtrainedfund

managers.



AtpresenttherearenosuchexistingventurecapitalfundsinIndiathatinvestin

innovationinthepharmaceuticalindustry.Accordingly,DoPhasdecidedtowork

closelywiththeNationalInstituteofPublicFinanceandPolicy(NIPFP)underthe

MinistryofFinanceforcreationofsuchafundandthemechanismforits

implementation.ItisproposedtoinvestaboutRs500crsinthefundforthe11th

Plansothatthesamecouldbeleveragedwiththesupportoftheprivatesector.



AbudgetallocationofRs500crsisenvisagedforthisscheme.



8.2.2.4 PharmaInnovationandInfrastructureDevelopmentInitiative(PIIDI)

AsdiscussedinChapter‐8,thereisneedto

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• DeveloptechnicalandinnovationcapacityofIndianpharmaformanufacturing

qualityaffordablemedicinesforthecommonmaninIndiaatparwiththe

world

• DevelopInternationalcompetitivenessoftheIndianPharmasoastobethe

largestproducerofgenericmedicinesintheworld

• TomakeIndiaapreferreddestinationforglobalinitiativesincuringthe

world’sailmentsspeciallythedevelopingworldinavaluebasedmanner

ToachievetheseobjectivesitisproposedtoimplementaPharmaInfrastructureand

InnovationDevelopmentInitiativewiththefollowingbasicstrategyelements:



a. Multiplepartnershipsasakeydenominatorbecauseinnovativedrug

developmentisnolongerasingleagencyorentityinitiativepossibility.Thisis

becauseindividualentities(governments,companies,academicbodies,etc)

cannoteasilyperceivethecompleteorsignificantlyholisticcommitments

required,thepossiblegainsandtheircontributiontoindividualandcollective

growthinanInternationallyCompetitiveenvironment.Norcantheindividual

entrepreneurialcompaniesandinitiativescommandadequateresourcesfor

creatingthecriticalmassforsuccessfulclosureandexecutionoflarge

projectsintermsofmanagerialandfinancialcapacitymuchlessthe

innovationcapabilityrequiredtobringuponapossiblesuccessfulproject.

PIIDItherefore,intendstoestablishamechanismforseekingthe

involvementofMultipleStakeholdersinsucheffortsthroughassistance

linkedtoInternationalCompetitivenessperformance.



b. CoordinatedeffortsbytheCentralandstateGovernmentsincludingthe

academiaandtheindustryarenecessaryfordevelopmentofPharmainan

internationallycompetitivescenario.Inthiscontextitisimportantto

understandthatthegrowthinIndianpharmahasbeenpossiblelargely

throughdiffusedandunconnectedeffortswithsomeopportunitiesthrown

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upfromtimetotimethroughpolicymeasureslikeprocesspatentonone

handfollowedbyproductpatentontheotherlaterintheday.Alongwitha

generalindustry,thepharmasectoralsogrewandnotspeciallysoasa

specificsector.Thestateandthecentralgovernmentshavetakenrather

uncoordinatedstepstoenablethegrowthwhichjusthappenedinagrowing

industrialeconomy.Nowwithincreasingcompetitionandvariouscountries

takingfocusedstepsthereisneedtoputupanintegratedeffortalsofrom

Indiaifitissustainitsleadershipandbuildonitwiththenewopportunities

onoffer.



c. ThePIIDIstrategywouldthereforerestonwaystore‐structureandsynergise

severalhithertounconnectedgovernmentalandprivatesectoreffortssuch

asforfundingofrelevantdrugdiscoveries,upgradationtointernational

standardsofmanufacture,qualityandbrandpromotionforgreateraccess

andprojectstoreduceproductionandprocesscosts,valuebased

technologiesinclinicaltrialsanddrugproduction.



d. Thereneedstobespecialdispensationalsobythegovernmenttoenable

governmentrelatedacademiatoparticipateintheSPVwithappropriate

permissionfromtheemployeeinstitution.AccordinglyprojectsunderPIIDI

couldformpartofthepermissibleprojectactivitieswithintheemployee

institution.Asrequired,theHeadoftheconcernedinstitutionwouldbe

memberoftheappropriatemonitoringcommitteefortheprojectsunder

PIIDIconstitutedforthepurpose.Thisarrangementisnecessarytoharness

thelargelatentpotentialoftheIndianscientificgroupworkingin

governmentprojectsinthecountryandattunethemforidentifiedgainswith

thesupportoftheprivateentrepreneurshiprightfromtheconceptionstage

itself.AppropriatePhDprojectsbeingconductedbyvariousUniversities

wouldalsobeharnessedforthispurpose.ThepromotersoftheSPVselected

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forimplementationoftheprojectwouldbepermittedtoappropriatesweat

andotherequitytosuchpersona.



e. Inordertokickstartthis,aninventorywouldbemadeofallthecurrentR&D

projectsunderwaywithvariousleadinstitutionsofnationalimportancealong

withresidentresearchcapabilities.



AbudgetallocationofRs2000crsisenvisagedforthisscheme.



8.2.2.5SettingupNationalCenterforR&DinBulkDrugsatNIPERHyderabad:

IndianBulkDrugIndustryisfacingproblemsofinnovationandcapacitybuildinginan

increasinglycompetitiveenvironmentspeciallyfromcountrieslikeChina,Israel,

Brazil,etc.TheindustrybeingpopulatedbySMEsishighlyfragmented.Hencethe

industrylacksinitsabilitytoinvestinR&D,makeprocessesmorecosteffectiveand

scaleupoperations.ThereforeaneedhasbeenfelttofocusonR&DinBulkDrugs

Sector.ItisaccordinglyproposedtoestablishaR&DcenterforBulkDrugsatNIPER

Hyderabadasaround30%ofbulkdrugproducersareinAndhraPradesh.



Thecenterwillbenefitboth,theinternalstakeholdersi.e.studentsandfacultyof

NIPERaswellastheexternalstakeholderslikeindustry,entrepreneursandindustry

associations.Thestudentsandfacultywillhavefacilitiesofacademicresearch,

processorientedresearch,trainingforindustrypracticesetc.Ontheotherhand

industrywillgetprocessinnovation,productrelatedR&D,Analyticalfacilities,

consultancyservices,developmentofbetterandgreenerprocessetc.

Thekeyobjectivesofthecenterwouldbe:

a. TobecomeaninnovativeR&Dproviderinthefieldofbulkdrugsandoffer

solutionsforcompetitiveandenvironmentallyfriendlytechnologies.

b. Toprovidecentralizedresearchfacilitiesandequipments,analytical

facilitiesfordrugtestingandconsultingservices.

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c. Toestablishaplatformfor,maintainingindustry‐academiaandacademia‐

academialinkages.

d. ToenhancethecapacityofstudentsandfacultyatNIPERHyderabadby

providinghigheracademiccourses.

e. Totranslateconceptsdevelopedinbasicbulkdrugresearchto

commerciallyviabletechnologies.



ThebudgetaryrequirementforsettingupthiscenteratNIPERHyderabadisRs

56crores.



8.2.2.6 NationalPharmaceuticalNanotechnologyCenter

‘Pharmaceuticalnanotechnology’involvesuseofnanomaterialsforemerging

industrieslikemedicaldevicesindustryandfornewinnovativedrugdelivery

systems,diagnostic,imagingandbiosensorequipments,etc.Medicaldevices

industryisgrowingat30%perannum.Accordingly,thereisaneedtodevelop

indigenousproductdevelopmentcapacityinthefieldofnano‐technology.Itis

accordinglyproposedtosetupaNationalCenterforPharmaceutical

NanotechnologyatNIPERKolkata,withfollowingobjectives:

(a) DevelopmentofNanomaterials

(b) NewDrugDeliverysystemsbasedonnanotechnology

(d) Nano‐toxicologyandRegulatoryaspectsconcerningnanodrugsand

devices

Budgetaryrequirement:   Rs.50crores



8.2.2.7SettingupNationalandRegionalBiosimilarCenters



Thefirstgenerationofbiologicaldrugs,whichhaveintroducedmanyrevolutionary

treatmentstolife‐threateningandrareillnesses,iscurrentlyfacingpatent

expiration.Asaresult,research‐basedandgenericspharmaceuticalcompaniesalike

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arepursuingtheopportunitytodevelop“generic”substitutestooriginalbiologics,

whicharealsoknownasbiosimilars.

Yetthefieldofbiosimilarspresentsseveralimportantchallenges–safety,

regulatory,legalandeconomic–whicharethetopicofdiscussionacrosstheglobe.

Mostofthesediscussionsstemfromtheideathat,unliketherelatively

straightforwardprocessofintroducingagenericequivalenttoanoriginaldrug

basedonanewchemicalentity(NCE),theprocessofintroducingabiosimilartoan

originalbiologicaldrugisfarmorecomplex.

Thesafetyandregulatoryissues,arealsoequallyimportant,includingtheamount

ofclinicalstudiesthatshouldberequiredaspartofthetestingandapproval

process,aswellaswhetherthebiosimilarsshouldbeconsidered“automatically”

interchangeablewiththeoriginalbiologic.



Theresearchinfrastructure,talentpoolandacademicnetworkinIndiaareatthe

nascentstagesofarasbiosimilarsindustryisconcerned.Theregulatoryhurdlesare

bothatdomesticaswellasgloballevel.Thecostsandtechnologyrelatedchallenges

forbiosimilararealsohigher.



Inviewofabovefacts,tofacilitatethegrowthofbiosimilarindustry,thereisa

proposaltoopenoneNationalBiosimilarCenteratBangaloreandthreeRegional

BiosimilarCentersatChandigarh,HyderabadandAhemedabad,wherefollowing

activitiesmaybeundertaken:

(a) ConsultingActivity:TheissuesrelatedtoIPRandotherregulatoryaspects

like,regulationsofdifferentcountriesonbiosimilars,domesticand

internationalregistrationrequirementsetcwouldbediscussedandexpert

groupswouldbetheretoguidetheindustry.Therewouldbeexpertgroups

forguidancerelatedtoissuesonclinicaltrialsandtestingandapproval

processofbiosimilar.

(b) Providingcommoninfrastructure:Theequipments,whichcouldbeusedby

industryoracademiaforcarryingoutbasicresearchworkrequiringhigh

precisioninstruments.Thiswillhelpinreducingthecostofdevelopmentof

biosimilars.

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

Foropeningofonenationalandthreeregionalcenters,thebudgetaryrequirements

wouldbe:

(a) OnetimecostRs31crores

(b) Recurringcostfor4centers1styearRS01crores

(d) Recurringcostfor4centers3rdyearRs06crores

(e) Recurringcostfor4centers4thyearRs08crores

(f) Recurringcostfor4centers5thyearRs10crores



TotalBudgetrequirementisRs60crores.



8.2.2.8SettingupofaIndustryfocusedAnimalHouse

TheAnimalhousewillmeettherequirementofendtoendservicesfromPrimates

tosmallanimalsforpre‐clinicaldrugdevelopment.

AbudgetaryprovisionofRs100croresisbeingproposedforthishouse.



8.2.2.9SupporttoAcademia,ResearchInstitutionsandprivatesectorforExtra

MuralResearch



TheAcademia,variousR&DinstitutionsinthegovernmentasinCSIR,etcandthe

privatesectorcompaniesaredoingresearchindrugrelatedareas.Howeveras

discussedinChapter8onR&D,anevaluationrevealsthat–whilethegovernment

fundedresearchwhetherbyCSIR,CentralLabs(CDRI,etc),DSTandDBTwithatotal

ofsome51researchinstitutionsaredoingresearchinanon‐appliedmannerwith

clearlackoftargeteddrugdevelopmentasinstagesofNCEdevelopment,pre‐

clinicalstudies,etc,theprivatesectorismostlylimitedtoformulationanddrug

deliverysystemsdevelopment.Onlyafewcompaniesareconcentratingnewdrug

developmentandanumberofcompanieslikeGlenmark,Suven,etchadto

outlicensetheirinitialdevelopmentstoothercompaniesforfurtherdevelopment

thusnotbeingabletotakefulladvantageofthefulldrugdevelopmentcycle.Itis

accordinglyproposedtolaunchaschemeforfundingbothacademiaindividually,as

Page 137 of 153

aninstitutionandprivatecompaniesfortargeteddrugdevelopmentincluding

assistanceforclinicaltrials.Thedetailedschemewouldbepreparedafterathorough

studyastotheoutputsfromtheexistingfundinginthissectorbyvarious

governmentbodiesandorganizations/schemesandtofillthegapasmaybe

required.TheindividualprojectscouldbeimplementedbyNipersincollaborative

partnershiporundertheiraegisandguidance.



ItisproposedtoallocateRs100crsforthisscheme.



8.2.2.10SupporttoAcademia,ResearchInstitutionsandprivatesectorforExtra

Labsupgradation

Theschemewillalsohaveprovisionforfundingupgradationoflabsintheprivate

andgovernmentsectorwithsharingbasison50‐50patternforthelabupgradation

forequipmentsdeployedfordrugdevelopmentunderspecificallyidentifiable

projects.Thiscapacitybuildingasaformofinfrastructuresupportwillalsobe

deployedfortraininginadvancedlabtechniquesofpersonnelintheindustryona

mutualsharingbasis.Thetrainingpartwillrequire25%fundingfromtheprivate

sectorside.

ItisproposedtoallocateRs10crsforthisscheme.



8.2.2.11InternationalcooperationinR&D



ThereisaneedtopromoteR&DinCISanddevelopingcountriesformutualadvantages.



ItisproposedtoallocateRs25crsforthisscheme.



8.3Pricing

TheroleofNPPAwouldcontinueunderexistingandpotentiallynewdrugspolicy

followingtheorderoftheSupremeCourtin2003.Inthisconnection,NPPAhadalready

submittedfiveNewPlanschemesforthe11thFiveyearPlan2007‐08to2011‐12tothe

PlanningCommission.Thesecouldnotbefinalisedduetodelayinfinalisationofthe

Page 138 of 153

newpolicy.Itisexpectedthatthenewpolicywouldbefinalisedinthe12thPlanandthe

Planschemesenvisagedforthe11thPlanwouldneedtocontinueforthe12thPlan.

Accordingly,followingbudgetaryrequirementsareenvisaged:

Table‐27



OutoftheaboveschemeatSr.No.1titled“Proposalforbuildingrobust&

responsivestatisticalsystemforNPPA”wasapprovedbythePlanningCommission

andimplementedduringthe11thfiveyearplan.Ithasalsobeenimplementedwith

thehelpofNIC.TowardstheendofSeptember2011,PlanningCommissionhas

accordedin‐principleapprovalfortheSchemeonBuildingAwareness.Detailsof

implementationofthisschemearebeingworkedoutbyNPPAincollaborationwith

DepartmentofConsumerAffairsasrequiredbythePlanningCommission.



AnotherimportantneedofNPPAistheavailabilityofPrimaryDataBaseonpricingof

drugs.Presentlyitsourcesthemfromonlyoneavailablesource–IMSHealth–aprivatesector

organization.Thislackofindependentofficialdatahasbeenadverselyremarkedinseveralcourt

judgmentsunderDPCO’95fromtimetotime.Evenotherwisedependantonaprivatesource

andthattooonlyone,isacauseofconcernforapublic/governmentbodychargedwiththe

responsibilityoffixingofpricesforanentireindustry.TheDPCOprovisionsthemselveshavenot

helpedincollectionofdataascompaniesdonotgivedataasperprescribedformsona

voluntarybasis.Coercionisnotthebestoption.Henceitisproposedtolaunchaschemefor

collectionofpricingandrelateddatabyNPPAthroughpossiblepartnershipswithdatacollection

agenciesandasfaraspossiblewithMinistryofStatisticsandProgramImplementationinthe

GovernmentofIndia.

SrNoSchemeAmount

(Rs.Crs)

ContinuingScheme

1MonitoringandEnforcementWork2.00

2BuildingConsumerAwarenessaboutpricingand

availability

20

NewSchemes

1CreationofNPPACellsinStates25.00

2SchemeforinteractionwithStates2.00

TOTAL49.00

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

8.4DevelopmentofMedicalDevicesSector

8.4.1 Settingupgreen‐fieldMedicalDevicesPark:

Inordertotapthehighgrowingmedicaldevicesmanufacturingindustry,particularly

inthecontextofIndia,itisproposedtosetupaspecializedParkinthegreenfield

whereintegratedsetoffacilitieswouldbeprovidedforpromotinggrowthofMedical

Devicesindustry.TheenvisagedMedicalDevicesParkwouldfocuson:

• TestingLaboratoryandCommonSterilizationfacilityforMedical

Devices

• MedicalInstruments/Equipmentcalibrationandvalidationfacility

• EngineeringServiceslikesurfacetreatment,coating,electricaland

mechanicalmaintenanceetc.

• Atrainingcentretotrainshop‐floor,managersandentrepreneurs

levelskillsforMedicalDevicesIndustry

• Facilitationofbusinessdevelopmentonregulatorycertifications,and

productdevelopments.

TheGovtofGujarathasalreadyearmarkedlandfortheprojectandthiswouldhelp

theprojecttotakebenefitsfromtherecentlyannouncedNationalManufacturing

Policy2011.



ThebudgetforthesettingupofthePark:Rs300crores.



8.4.2SettingupNationalCenterforR&DinMedicalDevicesatNIPERAhmedabad.

AsacomplimentaryfacilitytotheMedicalDevicesPark,itisproposedtosetupa

dedicatedR&DCentreforMedicalDevicesIndustry.ThisCentrewillprovidehigh

endeducationalfacilitiesforteachingandresearchwithamulti‐disciplinary

approachtowardsinnovationinmedicaldevices.Therewillbeincubatorfacilitiesas

wellasreferencetestfacilitiesforstandardscertificationofmedicaldevices.

FacilitieswouldalsoexistforPreclinicaltestingofmedicaldevices.Itisproposedto

setuptheCentreatNIPERAhmedabad.

Page 140 of 153

TheenvisagedbudgetaryrequirementisRs.50Crores.



8.5CPSUsandJanAushadhi



8.5.1CPSUs



ForHALMinimalUpgradationoffacilities,forIDPLtomeettheregulatory

ComplianceandforBCPLtomeetthegapinrevivalpackage,aprovisionofRs10

croresforeachitemandatotalofRs30croresisbeingmadeinthe12thPlan.



HencetotalbudgetaryrequirementforCPSIUsisRs30crores



8.5.2Janaushadhi



Asdiscussedearlier,theCampaigntomakeavailableaffordabledrugswithensured

qualityatlowpricestothemassesisacontinuingcommitmentfromthe11thPlan.

Accordingly,theJanAushadiSchemelaunchedin11thPlanandfurtherstrengthened

throughtherevisedBusinessPlanwouldbefurtherwidenedanddeepenedinitsreach

bothintermsofgeographyandtherapeuticcoverage.Itisenvisagedthatforcovering

thewholecountryataneffectivelevel,aboutRs.200Croreswouldberequiredinthe

12thPlan.

Budgetaryrequirement: Rs.200Crores



Page 141 of 153

Annexure‐I

GOVERNMENTINSTITUTIONSENGAGEDINPHARMAR&D



A.UnderCSIR:

1. InstituteofIntegrativeandGenomicBiology(IIGB),Delhi

2. InstituteofMicrobialtechnology(IMTech),Chandigarh

3. CentralDrugsResearchInstitute(CDRI),Lucknow

4. CentralInstituteofMedicinalandAromaticPlants(CIMAP),Lucknow

5. IndianInstituteofToxicologicalResearch(IITR),Lucknow

6. IndianInstituteofIntegrativeMedicine(IIIM),Jammu

7. InstituteofHimalayanBioresourceTechnology(IHBT),Palampur

8. IndianInstituteofChemicalTechnology(IICT),Hyderabad

9. CentreforCellularandMolecularBiology(CCMB),Hyderabad

10. CentralSaltandMarineChemicalsResearchInstitute(CSMCRI),Bhavnagar

11. NationalChemicalLaboratory(NCL),Pune

12. IndianInstituteofChemicalBiology(IICB),Kolkata

13. NorthEastInstituteofScienceandtechnology(NEIST),Jorhat

B.UnderDBT

1. NationalInstituteofImmunology(NII),NewDelhi

2. NationalInstituteofPlantGenomeResearch(NIPGR),NewDelhi

3. IndianVaccinesCorporationLimited(IVCOL),Gurgaon

4. NationalAgri‐FoodBiotechnologyInstitute(NABI),SASNagar

5. BharatImmunologicalsandBiologicalsCorporationLimited(BIBCOL),Bulandshahar

6. NationalCentreforCellSciences(NCCS),Pune

7. CentreforDNAFingerprintingandDiagnostics(CDFD),Hyderabad

8. InstituteofLifeSciences(ILS),Bhubaneswar

9. RajivGandhiCentreforBiotechnology,Thiruvananthapuram

10. InstituteofBioresourcesandSustainableDevelopment(IBSD),Imphal

11. BiotechConsortiumIndiaLimited(BCIL),Delhi

C.UnderDepartmentofHealthResearch

1. NationalInstituteofMalariaResearch(NIMR),Delhi

2. NationalInstituteofPathology(NIOP),Delhi

Page 142 of 153

3. NationalInstituteofMedicalStatistics(NIMS),Delhi

4. InstituteofCytologyandPreventiveOncology(ICPO),Noida

5. NationalJALMAInstituteforLeprosy&OtherMycobacterialDiseases(NJILMOD),

Agra

6. NationalInstituteforResearchinEnvironmentalHealth(NIREH),Bhopal

7. DesertMedicineResearchCentre,Jodhpur

8. NationalInstituteforResearchinReproductiveHealth(NIRRH),Mumbai

9. NationalInstituteofImmunohaematology(NIIH),Mumbai

10. EnterovirusResearchCentre(ERC),Mumbai

11. NationalinstituteofVirology(NIV),Pune

12. NationalAIDSResearchInstitute(NARI),Pune

13. RegionalMedicalResearchCentre,Bhuvaneshwar

14. RegionalMedicalResearchCentre,Dibrugarh

15. RegionalMedicalResearchCentre,Jabalpur

16. RajendraMemorialResearchInstituteofMedicalSciences(RMRIMS),Patna

17. RegionalMedicalResearchCentre,Belgaum

18. NationalInstituteofCholeraandEntericDiseases(NICED),Kolkata

19. NationalInstituteofOccupationalHealth(NIOH),Ahmedabad

20. TuberculosisResearchCentre(TRC),Chennai

21. NationalInstituteofEpidemiology(NIE),Chennai

22. NationalInstituteofNutrition(NIN),Hyderabad

23. CentreforResearchinMedicalEntomology(CRME),Madurai

24. VectorControlResearchCentre(VCRC),Puducherry

25. RegionalMedicalResearchCentre,PortBlair



Page 143 of 153

Annexure‐II



ListofAbbreviations

APIsActivePharmaceuticalIngredients

CAGRCompoundAnnualGrowthRate

CDSCO CentralDrugStandardControlOrganisation

CEP CertificateofSuitability

CMIECentreforMonitoringIndianEconomy 

CROsContractResearchOrganisations

CSIRCouncilofScientificandIndustrialResearch

DBTDepartmentofBiotechnology

DCG(I) DrugcontrollerGeneral(India)

DMFSDrugMasterFiles

DoPDepartmentofPharmaceuticals

EDQMEuropeanDirectoratefortheQualityofMedicine&HealthCare

EHSEnvironmentHealthandSafety

FICCIFederationofIndianChambersofCommerceandIndustry

GDPGrossDomesticProduct

GLPGoodLaboratoryPractice

GMPGoodManufacturingPractice

GXPGoodXPractice

ICMRIndianCouncilofMedicalResearch

IDMAIndianDrugManufacturingAssociation 

IMSInstituteofManagementStudies  

IOMAInstituteofManagementandAdministration

IPAIndianPharmaceuticalAssociation

IRBInstitutionalReviewBoard

MOHMinistryofHealth

NCEsNewChemicalEntities

NDDNewDrugdevelopment

NPPANationalPharmaceuticalPricingAuthority 

NSDCNationalSkillDevelopmentCorporation 

OPPIOrganisationofPharmaceuticalProducersofIndia

Page 144 of 153

PPPPublicPrivatePartnership

PRDSF PharmaceuticalResearch&DevelopmentSupportFund

R&DResearchandDevelopment

SMESmallMediumEntrepreneur

SOPsStandardOperatingProcedures

TORTermofReference

WTOWorldTradeOrganisation



Page 145 of 153

Table‐1:ExportandDomesticGrowth



Table–2:Internationalsalesonconsolidatedbasis



YearExportsGrowth DomesticGrowth%TotalGrowth%

Mar20062123023.23 39989 17.17 6121919.21

Mar20072566620.894536713.457103316.03

Mar20082935414.375094612.308030013.04

Mar20093982135.66554548.859527518.65

Mar201042154*5.866205511.901042099.38

Consolidated International Exports as % of net sales

net sales sales 2010-11

Ranbaxy Labs 8960.77 6771.74 75.6

Dr Reddy's Labs 7236.80 5940.70 82.1

Lupin 5706.82 3983.08 69.8

Cipla 6130.31 3361.49 54.8

Sun Pharma 5721.43 2898.20 50.7

Wockhardt 3751.24 2709.91 72.2

Jubilant Lifescience 3433.40 2369.11 69.0

Cadila Healthcare 4464.70 2288.70 51.3

Biocon 2300.52 1956.79 85.1

Glenmark Pharma 3089.59 1955.83 63.3

Stride Arcolab 1695.84 1637.67 96.6

Plethico Pharma 1535.20 1367.22 89.1

Piramal Healthcare 2509.86 1280.58 51.0

Divi's Labs 1307.11 1204.95 92.2

Aurobindo Pharma 4381.48 1112.06 25.4

Torrent Pharma 2121.97 1101.57 51.9

Ipca Laboratories 1882.54 1025.18 54.5

Dishman Pharma 990.84 911.56 92.0

Orchid Chemicals 1781.79 725.85 40.7

Shasun Chemicals 799.42 676.78 84.7

Panacea Biotec 1143.78 610.44 53.4

Page 146 of 153

Table‐3:GeographicalDistributionofPharmaCompanies

S.No.StateNumberofManufacturingUnits Total

 FormulationBulkDrugs

1.Maharashtra192812113139

2.Gujarat11293971526

3.WestBengal69462756

4.AndhraPradesh 528 199 727

5.TamilNadu47298570

6.Others34234223845

Total8174238910563



Table‐4:MarketTurnoverofMajorTherapeuticSegments

MajorTherapiesMATDEC'05

(ValinCrs)

%

Contribution

MATDEC'10

(ValinCrs)

%

Contribut

ion

Anti‐infectives4,056 17.6 8,060 17.2

Cardiac2,378 10.3 5,318 11.4

GastroIntestinal2,537 11.0 5,099 10.9

Respiratory2,170 9.4 4,080 8.7

Pain/Analgesics2,059 8.9 4,038 8.6

Vitamins/Minerals/

Nutrients2,1059.13,6257.7

AntiDiabetic 998 4.3 2,743 5.9

Gynaecology1,261 5.5 2,658 5.7

Neuro/CNS1,231 5.3 2,633 5.6

Derma1,255 5.4 2,554 5.5



Table‐5:BulkIndustryGrowth

(InRsCrores)

2007‐082008‐092009‐10CAGR

12,647.5116,360.7117,307.0216.98%



Page 147 of 153



Table‐6:TheGlobalMarketforBiologicsin2009

Country2009Sales($bn)

US69.02

Europe41.68

Japan10.29

Asia/Africa/Australasia14.4.0

LatinAmerica1.20

TotalBiologicDrugs

Market

136.59





Table‐7:The10TopSellingBiologicsin2009

BrandDrugName2009Sales($bn)

Avastinbevacizumab5.74

Rituxanrituximab 5.62

Humiraadalimumab 5.48

Herceptintrastuzumab4.86

Lantusinsulinglarine4.29

Enbreletanercept3.87

Remicadeinfliximab3.51



Table‐8:TheGlobalMarketforBiosimilarsin2009

Country2009Sales($

bn)

MarketShareof

Biosimilars(%)

US0.06 4.9

Europe0.14 11.4

OtherCountries

(incl.ChinaandIndia)

1.03 83.7

TotalBiosimilars

Market

1.23 100



Page 148 of 153

Table‐9:ProjectedGrowth

ValueinRscrs/Growthin%

YearDomesticExportsTotal

ValueGrowthValueGrowthValueGrowth

2016‐17130,00021% 158,000 16% 288,00018%

2019‐20233,00022% 248,000 17% 481,00019%



Table‐10:ExportGrowth

YearExports(Rs.crores)Growth%

Mar200725666 20.89

Mar200829354 14.37

Mar200939821 35.66

Mar201042154 6.6

Mar201145745 7.7



Table‐11:HumanresourcepositioninIndia

SlItemTotalnumbers

1NoofUniversities 409

2Noofcolleges25990

3Noofsciencecolleges4696

4Annualstudentoutputatdegreelevelin

science

2000374

5Annualstudentoutputatdegreelevelin

engineering

1663619

6Totalnoofpharmacycolleges1162

7NumberofBPharmcolleges848

8NumberofMastersinpharmaceuticalsarea

andPhDofferingcolleges

191

9NoofBPharmstudentsinpharma51716

10NoofMastersandPhdstudentsoutputin

pharma

5648



Page 149 of 153

Table‐12:GlobalPhamamarketgrowthrate

YearMarketinBillionUS$ %growthrate

2004620 7.9

2005664 7.2

2006710 6.9

2007756 6.4

2008801 4.9



Table‐13:TopGlobalGenericPlayers



RankCompany

1Teva

2Sandoz

3Mylan/MerckGX

4WatsonAndrx

5Barr

6Actavis

7Ratiopharm

8Stada

9Ranbaxy

10Perrigo

Page 150 of 153

Table14:ResearchandDevelopmentExpenditure



Year

GrowthinR&DExpenditure–Rs

Cr

R&DExpenditureAs%of

Sales

Domestic

Companies

Foreign

Companies

Domestic

Companies

Foreign

Companies

Mar199580.6164.13 1.34 0.77

Mar1996142.5083.371.710.91

Mar1997148.1289.411.550.95

Mar1998154.1590.651.430.88

Mar1999218.6679.781.560.70

Mar2000256.8090.171.560.66

Mar2001435.07109.81 2.30 0.72

Mar2002597.91110.042.640.65

Mar2003686.74232.732.930.71

Mar20041084.26346.693.811.10

Mar20051527.24510.504.981.63

Mar20061850.97816.025.352.39

Mar20072371.79695.625.012.67

Mar20082772.63700.184.782.86

Mar20093316.14846.054.893.84

Mar20103342.32934.40 4.50 4.01



Page 151 of 153

Table‐15:R&DspendingofleadingIndianandGlobalpharmaceuticalMNEs,FY2009

IndianPharmaceuticalCompaniesGlobalPharmaceuticalCompanies

Rank

in

R&D

spendi

ng

Company

R&Dexp.

FY

2008/09,

millionUS$

RankinR&D

spendingCompany

R&Dexp.

2009,

millionUS$

1Ranbaxy*991Roche,CH8,570

2Dr.Reddy’s895GlaxoSmithKlin,UK6,286

3SunPharma6710ElliLilly,USA4,300

4Cipla5125Lundbeck,DNK615

5LupinLabs5050Watson,USA197



Table–16:EmploymentDataforPharmaceuticalSector



YearNoofEmployees

Mar19951,81,497

Mar19962,04,609

Mar19972,11,614

Mar1998 1,89,295

Mar19992,13,999

Mar20002,43,410

Mar20012,33,704

Mar20022,26,416

Mar20032,23,556

Mar2004 2,40,791

Mar2005 2,65,396

Mar20062,90,021

Mar20073,36,211

Mar20083,53,692

Page 152 of 153

Table17:PercentagedistributionofMan‐powerinPharmaIndustry

FunctionDistribution

Production&QualityControl50% 50%

Research/Lab/Testing 20%

Sales,Marketing,Medicalassistance5‐10%

Purchase,Logistics,SupplyChain 5‐10%

Supportfunctions(HR,Finance,etc.)10‐12%



Table18:QualificationsofpersonnelemployedintheChemicalsand

PharmaceuticalsSegment

QualificationDistribution

Ph.D/MTech/MScetc.5‐8%

GraduateEngineers15‐25%

DiplomaEngineers10%

ITIandothervocationalcourses 15‐20%

Graduates(BA/BSc/BCom/others)15‐25%

12thstandardorbelow20‐25%



Table‐19:Turnover‐wisedistribution

Turnover %Distribution

0‐10Cr. 70

10‐50Cr. 20

50‐100Cr. 5

100‐500Cr.3

500+Cr.2



Table‐20:PerformanceofCPSUs



ParameterKAPLRDPL BCPLHAL IDPLTOTAL

Sales(08‐09) 225.0180.7577.63147.3956.70594.37

TO/Employees3052 10 11 23 19

Page 153 of 153

Rslacs

TO/Sales

employeesRs

lacs

65304 134 134 236106

PATRscr5.880.01 ‐5.35 ‐22.08 ‐37900.9

Total

Employees

739181 742 1224 2433129

SalesStrength34531 58 105 24 563

Sales(08‐09) 225.0180.75 77.63 147.39 56.70594.37



Table‐21:SalesProjectionofCPSUs

  RsCrores

YearIDPLHAL BCPL KAPL RDPL

2012‐1351.7189153.37 320108

2013‐1470215176.57 360122

2014‐1580264204.73 425135

2015‐1692290 237.6 490150

2016‐17125.4 319 275.83 560165



Executive_summary__30 11 Pharmax IPR 3000 Wg Pharma2902

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