Indian Pharmaceutical Industry and COVID19

The article examines key factors and regulations in the Indian Pharmaceutical industry that earned the title of pharmacy of the world to the country and its role during the COVID19 crisis.

Indian healthcare is slated to grow with CAGR of 22% for the period of 2016–22 to reach US$ 372 billion. It will become the 3rd largest healthcare market in the world. Healthcare does not only entails pharmaceuticals or the hospital sector but has a whole lot of other sectors coming under the umbrella. Some of these are the medical device industry, diagnostics industry, hygiene and sanitation industry, AI and IoT industry, etc. For this article’s purpose, we will focus on growth opportunities this pandemic provides to the healthcare industry focusing primarily on pharmaceuticals and related sectors.

At first, we will have a brief look at the overall healthcare trends:

• A shift of focus from infectious to lifestyle diseases
• Expansion to tier I and tier II cities
• The emergence of telemedicine, healthcare IT, AI, and IoT
• Mobile-based health delivery and more focus on home healthcare
• Increased penetration of medical insurance.

India has the second-largest population in the world. The population is also slow aging, and there is more prevalence of chronic and lifestyle diseases like cancer, diabetes, cardiovascular diseases, etc. On top of it, the rising disposable income of the general population makes it a really lucrative market worldwide. The incidence of COVID-19 has adversely affected some of the segments like hospitals and medical tourism etc. But at the same time, it has opened lots of opportunities for some segments like pharmaceuticals (APIs & Biologics), Ayurveda, AI, and IoT, etc.

Indian Pharmaceuticals is of around US$ 30–35 billion and placed third in the Asia-Pacific region after China and Japan. It is expected to grow to around US$ 100 billion by 2025. Few main characteristics of the Indian market are:

1. It supplies more than 50% of global demand for various vaccines and 90 % of the vaccine against measles.
2. It supplies 80% of the antiretroviral drugs used globally to combat AIDS, 40% of generic demand in the US, and 25% of all medicine in the UK.
3. Indian Generics is perceived to be very safe and of high quality in the developed markets.
4. India is a market dominated by branded generics. Approximately 80% of the generics are off-patented drugs sold under brand names by big pharmaceutical companies.
5. India is the largest player in the global Ayurveda market. Taking medicine or supplements for Boosting immunity is on the rise.
6. India imports over 60 percent of its Active Pharmaceuticals Ingredients (APIs) from other countries. India also imports more than 70% of its pharmaceuticals ingredients from China.

Regulatory Framework

• The national regulatory body for Pharmaceuticals products and medical devices is The Central Drugs Standard Control Organization(CDSCO).
• Within the CDSCO, the Drug Controller General of India (DCGI) is the regulatory body for pharmaceutical and medical devices under the umbrella of the Ministry of Health and Family Welfare.

Government Initiatives

• As per Economic Survey 2018–19, government expenditure (as a percentage of GDP) increased to 1.5% in 2018–19 from 1.2% in 2014–15 for health. The government aims to increase it to three percent of the Gross Domestic Product (GDP) by 2022.
• Under Budget 2020–21, the total allocation to the Ministry of Health and Family Welfare is Rs 65,012 crore (US$ 9.30 billion).
• Aimed at giving a push to the Make in India initiative, in March 2018, the DCGI announced its plans to start a single-window facility to provide consents, approvals, and other information.
• The National Health Protection Scheme: expected to benefit 100 million low-income families in the country for secondary and tertiary care hospitalization, It is the largest government-funded healthcare program in the world.

Government schemes

• Pradhan Mantri Jan Arogya Yojna: it aims to provide health insurance to over 100 million families.
• National Nutrition Mission
• Ayushman Bharat
• Mission Indradhanush — Nationwide Vaccination Drive; it provides vaccination for eight diseases and cover children up to two years and pregnant women

COVID-19 has created disruption in the global supply chain, including in China. China is the leader in the manufacturing of APIs and other pharmaceuticals ingredients. This disruption has caused problems for Indian pharma companies also since they have high exposure to cheap Chinese APIs and other pharmaceuticals ingredients. At the same time, it has given a window of opportunities to Indian APIs manufacturers to up their game and rise to the occasion. The government is also implementing a slew of measures to lessen the overall disruptions whereas also trying to supplement India’s capacity for APIs production within the country.

• Indian Postal Services is helping in the transportation of Pharma products and medical equipment.
• The government is also leveraging IT to track the real-time status of the movement and delivery of essential commodities as well as keep track of stockpiles of important drugs like Hydroxychloroquine.
• The government has initiated setting up of bulk drug parks and provided financial incentives to manufacture several critical bulk drugs.
• It is providing fiscal stimulus to local manufacturing sectors, which includes opening up of otherwise closed facilities because of strong competition from China.

Governments increasingly realize that healthcare holds the key to have a prosperous India. It shows in the slow but increasing financial allocation to this segment. COVID-19 has thrown challenging circumstances to Indian healthcare, but this sector also remains the best poised to convert these challenges into opportunities. It has all the potential to be future-ready, smarter, innovation-driven, customer-centric, and can create values for not only domestic but for the global market as well.

Written By —Alok Ranjan, Writer, PPC Publication, IIM Bangalore 2019–2021