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India among the top five global pharmaceutical innovation hubs by 2020 Mission Possible

Updated: January 23, 2010 11:16 am

The government proposes to develop India as one of the top five global pharmaceutical innovation hubs by 2020. The initiative led by the Department of Pharmaceuticals (DoP) at the chemicals and fertiliser’s ministry, claims to contribute additional about $ 20 billion to the country’s economy. This includes $ 4-6 billion worldwide sales generated by new Indian drugs, and $ 8 billion generated by off-shoring services and $ 5 billion from captive MNC R&D centres.

            A senior chemicals and fertilizer’s ministry official said, “The DoP is working on a detailed project report in consultation with global consulting firm McKinsey to be presented to the central government for its approval. This follows an in principle clearance to the vision 2020 concept by the Planning Commission based on the initial project report submitted to it.”

            The DoP is aggressively pursuing the 2020 proposal and has already held a series of high-level consultations with the Indian pharmaceutical industry. The $ 20 billion pharma industry is largely grouped along here on the lines of the strong domestic industry, a string of top MNC drug firms operating in the country, and a few associations representing the small-scale industry firms.

            DoP officials said apart from the highly positive economic impact of the 2020 initiative, the collateral gains included the employment

opportunity of five lakh new jobs. The initiative would also lead likely to every one out of five new drugs being developed in India.

            As part of this effort, the government wants to take deliverable efforts in four key areas: building infrastructure for growth and talent, encouraging public-private partnership in infrastructure development, offering financial incentives to encourage and innovate incubation and shaping a regulatory environment that is friendly.

            Further, investments would be scaled up significantly, potentially up to $ 1 to 2 billion annually until 2020, major part of which would be raised through the public private partnership efforts.

            The government is encouraged to go for the 2020 charter given the stupendous and sustained growth of the pharma industry in the country. According to the annual report 08-09 of the chemicals and fertilizer’s ministry, the Indian pharmaceutical industry stood at about Rs 89,335 crore (2008-09). The country ranks 3rd worldwide by volume of production and 14th by value thereby accounting for 10 per cent of world’s production and 1.5 per cent by value.

            Globally it ranks 4th in terms of generics production and 17th in terms of export value of bulk activities and dosage forms. Indian exports are destined to more than 200 countries around the globe including highly regulated markets of US, West Europe, Japan and Australia.

            Of the total market size of Rs 89,335 crore, domestic market is pegged at Rs 55,454 crore, exports at Rs 38,443 crore, and imports at Rs 8552 crore. India has several opportunities opening in the global markets. An estimated $ 103 billion of generic products are at risk of losing patents by 2012. Even at a conservative estimate there is a huge opportunity for India. India is also now emerging as a big global destination for contract research and manufacturing services (CRAMS). Big-ticket companies like Dr Reddy’s Laboratories, Lupin, Wockhardt and Piramal Health join specialist companies like Dishman and Jubilant Organosys.

            The DoP is already working towards the establishment of the infrastructure. It has set up six National Institute of Pharmaceutical Education Research (NIPER) including at Ahemdabad, Hyderabad, Calcutta, Rai Bareli, and Guwahati. The effort has been to fulfil the demand of the pharma industry of highly skilled manpower. The NIPER would not only award masters and doctors degree in various pharma streams but also give more emphasis on research and development as a genre of top priority. These institutes, as the 2020 initiative, are being equipped with international level standards and would collaborate with leading institutes across the world in their R&D activities. The DoP is working on the public private partnership in building these institutions in association with the mentor institutes.

            This R&D focus is because several official and unofficial studies pointe out that India and China are the new pharmaceutical research and development (R&D) hubs, with India having an edge in the race. An industry study by an independent agency said in fact India is more mature in chemistry and drug-discovery activities than China. Chinese firms are more prevalent in less lucrative segments such as pre-clinical testing, animal experimentation and manufacturing.

The study on the globalisation of the pharma industry also found Indian and Chinese firms to be heavily dependent on major multinational corporations for commercial development of new intellectual property.

            This was because they rarely have the capital and the regulatory expertise to develop a drug beyond phase II clinical trials, it said. The Ewing Marion Kauffman Foundation-sponsored study shows that big companies such as Merck, Eli Lilly and Johnson & Johnson are now counting on India and China for advanced R&D as well.

            Experts argue though that there are critical policy issues to be ironed out if India is to achieve the 2020 mission. The evolving domestic regulatory framework for the pharma sector too would play a key role in shaping the fortunes of the sector. The reconstituted Group of Ministers (GoMs) has not met even once and it is to take a view on the long pending National Pharmaceuticals Policy. The key bone of contention between the pharma industry and the government as part of the pharma policy is the drug price control issue.

            The pharma industry is opposed to expansion of the price control list of all the 354 essential drug items. Currently only 74 essential drug items are under direct price control of the government. The draft pharmaceutical policy has been hanging fire for several years now, and the Union Cabinet had referred the draft to the GoMs in January 2007. The GoMs was reconstituted last month but Agriculture, Food, and Consumer Affairs Minister Sharad Pawar was retained as the head of the GoM.

            Also, the industry is keen to achieve clarity on the specific roles and responsibilities of three ministries involved in the regulatory framework: the chemicals and fertilizers ministry that has a full-fledged pharmaceutical division with a secretary-level official at the helm of affairs, and there is the health and family welfare ministry, that has under it the Drug Controller General of India (DCGI) as also the Central Drug Authority and the state- level drug controllers and then there is the science and technology ministry that plays a vital role at the R&D perspective in the pharma industry.

By K Anjna

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