With the increasing geo-political tensions between Russia and Ukraine, the Indian pharmaceutical segment is expected to witness a tremor in its operations. For a long time now, the Indian pharmaceutical segment has been directly affected by global tensions and unavoidable situations.
For example, the COVID pandemic had a lasting effect on the pharma segment, and nearly crumbled the industry, exposing the overdependence of it on procurement of raw materials from other nations. The existing scenario of the Indian pharmacy segment has major loopholes that are impeding the growth of the pharma industry. Starting from overdependence on the procurement of APIs to low investment on R&D.
The pharma segment will have to work on manifold directions in order to address the persistent scenario and achieve the goal of being Atmanirbhar. That being said in this article let's understand the key pain points that the nation's pharma industry will have to overcome for a self-dependent future.
Indigenous development of Raw Materials
According to a report by The Free Press Journal, the country has almost 1,400 WHO-GMP (good manufacturing practices)-approved pharmaceutical factories and 253 European Directorate of Quality Medicines (EDQM)-approved pharmaceutical plants, making it the world's third biggest by volume. Despite having the world's third-biggest pharmaceutical sector by volume and being the world's largest producer of generic pharmaceuticals, India is significantly reliant on China for active pharmaceutical ingredients imports (APIs).
According to the Trade Promotion Council of India (TPCI), India's competitiveness in the pharma industry, which employs a large number of MSMEs, is harmed by its substantial reliance on imports of bulk pharmaceuticals or APIs, particularly from China. The Indian pharmaceutical industry, like many other sectors, imports a large amount of vital inputs from China.
According to industry data, India imports 70% of its API requirements from China, mainly vitamins and antibiotics. To address this, the nation must invest and explore innovative ways to provide new programmes and policies. To begin, programmes such as Ideate in India, Innovate in India, and Make in India are already making an impact on the market.
The government of India has announced the commencement of the PLI plan as part of the "Atmanirbhar Bharat '' initiative, which aims to localize the manufacturing of 53 essential APIs and intermediates. However, in order to promote indeginious API production, the nations' producers must match the previously established Chinese market's pricing.
To meet demand and move customers of China's API to India, significant investment is required.
Building R&D infrastructure
India's medicine costs are widely regarded as the lowest in the world. However, the government's rigorous price control rules do not allow manufacturers to spend in R&D for novel medicine formulations, nor do they provide universal access. Uninspected manufacturing units around the country, as well as a reliance on low-cost imports, have boosted local drug formulation capacity.
However, because overproduction does not always satisfy global standards, exporters who buy from third-party producers find it difficult to expand into new markets. To overcome this situation, nation’s pharma companies in collaboration with the government should take collective and coordinated steps to build robust infrastructure.
For example - the Government’s plan for a drug park is the right path to develop a robust infrastructure in the nation. A drug park with common infrastructures like Central Effluent Treatment Plants and Captive Power Plants, Steam and Cooling systems, Solvent Recovery and Distillation Plant, Advanced Common Testing Center, can be a boost to the nation's R&D segment.
Localize supply networks
India's path to self-sufficiency will be paved by a network of SMEs that will localize and mobilize raw material requirements across the country. They will act as vendor partners and create creative ways to get APIs and raw materials as part of the supply chain network.
The government or big firms may perfect these ideas and execute them internationally on a much larger scale. As a result, giving domestic producers a boost will open up new doors and propel them to the forefront of the global pharma industry.
The future
To achieve an all-conducive supply chain, India requires clear and aggressive measures. This will help to enhance local production while also reducing reliance on foreign forces. India's 'Look East' policy aims to reduce reliance on the United States and the European Union for trade.
In accordance with such a goal, the government should endeavor to overhaul the pharmaceutical industry's structure. The government has introduced targeted financial incentives to stimulate raw material manufacturing and return the majority of API production back to India.
The Union Cabinet has taken the bold step of establishing three API parks with shared utilities, identifying and decreasing China's reliance on 53 APIs, and introducing a Production-Linked Incentive (PLI) plan to further reinforce this commitment.
Innovative business methods for medicine price management and local manufacturing costs should be established for a sustainable market and a robust growth rate. Despite the government's efforts to soften its protectionist policies, timely and efficient execution is critical to meeting the pharmaceutical industry's concerns.
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