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The Indian pharmaceutical industry is one of the major contributors to the Indian economy and it is the third largest industry in the world by volume. The success of India’s pharmaceutical industry can be attributed to its world-class formulation development capabilities, the entrepreneurial abilities of its staff, and the vision of its business leaders to establish India’s footprint at United States and other major international markets. The generics industry plays a critical role in improving global health outcomes through the availability of affordable, high-quality generic drugs, reaching 60 percent of global vaccine production and around 40 to 70 percent of the WHO vaccine demand comes from India for Diphtheria, Tetanus and Pertussis (DTP); Bacillus Calmette-Guérin (BCG); and measles. It is estimated that around a third of all pills consumed in the US are made in India, while around 25 percent of drugs consumed in the UK are produced by Indian manufacturers. African countries with access to affordable Indian medicines have seen an increase in the number of people receiving AIDS treatment, and 37 percent of AIDS patients in 2009 received treatment compared to just 2 percent in 2003.
As the world’s leading supplier of drugs and bulk formulations, Indian pharmaceutical factories consistently attract the highest number of FDA approvals outside of the United States, and the country submits over 40% of all abbreviated requests Global New Medicines Global (ANDA). As India’s bulk drug industry has grown, it has gradually shifted from manufacturing single molecules for active pharmaceutical ingredients (APIs) to a preferred source of premium APIs with high added value. With an emphasis on the use of a skilled workforce and low-cost operations, the industry is ranked third globally, just behind China and Italy.
India’s Import Dependence on China for APIs
Although India is one of the major manufacturers of formulating drugs, its pharmaceutical industry is heavily dependent on bulk drug imports. Over time, Indian companies have moved towards the formulation part of the value chain which is considerably more profitable than API. The majority of the total Indian pharmaceutical market is formulations, with bulk drugs accounting for less than a quarter. According to data import reports, out of India’s total API imports, dependence on China accounts for around 65-70% of APIs. As there is a heavy dependence on imports from a single country, there is always a risk of price volatility and supply disruption, which in turn could cause drug prices to increase by formulation. To meet this challenge, Indian manufacturers should opt to build their own API production units.
Sixty percentage of global vaccine production and about 40 to 70 percent of WHO vaccine demand for diphtheria, tetanus and pertussis (DPT); Bacillus Calmette-Guérin (BCG); and the measles comes from India.
In 2020, the disruption of global supply chains was already apparent due to the COVID-19 pandemic. Several API prices have increased in response to this pandemic, which could disrupt the supply of drugs in the country. Supply chain disruptions have hit small manufacturers more than large companies, and antibiotics and vitamins have been the hardest hit areas of the drug portfolio. Various stakeholders are concerned about the current scenario, including government, industry and end consumers. The issue of health security concerns the government; the industry is worried about rising prices and the shortage of raw materials; and consumers are concerned about fake drugs. In API production, raw materials, labor, utilities, logistics and finance are major cost factors. Although labor is significantly cheaper in India, we are losing heavily on all other equally large costs, which are more expensive in India.
Challenges as an obstacle
The pharmaceutical and bulk pharmaceutical industries are regulated by multiple regulatory bodies, either directly or indirectly. The multiplicity of decision-makers can make it more difficult to resolve regulatory issues. In addition to long timelines (around two to three years) and bulky approvals (around 20 to 25 approvals), several stakeholders are involved in the approval process.
To make medicines affordable, the price control strategy has placed around 350 medicines on the National Essential Medicines List (NLEM); it also adversely affected the bulk pharmaceutical industry. Manufacturers of drugs listed in NLEM are not allowed to increase the selling price of these drugs even if there is an increase in the cost of raw materials and in order to protect their margins, companies choose to import less raw materials. dear ones from China.
Steps to Win the Battle
India’s ability to manufacture many drugs in bulk has been gradually eroded by imports. In the past, India had the capacity and capability to manufacture many APIs locally (as they are imported today). Unfortunately, as cheap imports became more prevalent, many of these API industries were shut down. Cheaper imports have resulted in lower tax revenues and reduced employment opportunities. In recent years, a number of national pharmaceutical companies have started to upstream their API manufacturing. However, India can only reduce its dependence on imports if it manufactures APIs / intermediates in an efficient and sustainable manner. For this, government intervention and support are crucial. In addition, panic erupted during the second wave of the pandemic over the rapid spread of the disease and the possible depletion of essential drugs. In response, India banned API exports and overturned the decision a few months later. To add to this, counter-threat measures included monitoring inventory levels of APIs and critical intermediates, assessing other sources of raw materials, as well as attempting to expedite the process of regulatory approval for certain APIs in areas where capacity is available.
In addition, in the face of Chinese imports, and as part of its efforts to boost domestic manufacturing of critical intermediates and APIs, a package of INR 9,940 crore was announced by the government in March 2020 to boost domestic production. and bulk drug exports.
In addition, in the face of Chinese imports, and as part of its efforts to boost domestic manufacturing of critical intermediates and APIs, a package of INR 9,940 crore was announced by the government in March 2020 to boost domestic production. and bulk drug exports. Within this framework, the government approved the establishment of three bulk drug parks costing INR 3,000 crores and a set of production-related incentives (PLI) of INR 6,940 crores.
In the global market, quality has always been under scrutiny and the Indian pharmaceutical industries have not been spared the impact of this growing oversight. As Indian companies have recognized the importance of quality, they are now investing much more in the adoption of Good Manufacturing Practices (cGMP) by modernizing their own facilities with process automation, installing high quality equipment and providing employees with training and development.
In addition to the government efforts listed above, other initiatives are under development. The Katoch Committee was compelled to provide recommendations to make India’s pharmaceutical sector independent and promote self-reliance. The main recommendations of the report were to establish API manufacturing clusters, financial incentives for manufacturers, tax holidays, one-stop environmental clearance, tax benefits, and liberalization of FDI policies. The 2017 draft pharmaceutical policy also proposed in favor of building the indigenous pharmaceutical sector through tax exemption, price monitoring, imposition of customs duties, etc.
The Indian pharmaceutical industry and Chinese API makers waged a very long war and India was losing its API manufacturing industry to China. But now, with government intervention, we hope to win this battle and revive the dormant API industry and make a significant contribution to the achievement of Atmanirbhar Bharat.
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