There are several issues affecting the Indian pharmaceutical industry and all pharma companies, whether big or small. To name a few, the new Drug Price Control Order (DPCO) that prescribes a ceiling price on many of the vital medicines and patent issues with big multi-national pharmaceutical giants are reasons of concern for the domestic Indian pharmaceutical industry. Then, there are some other challenges as well-
· Increased centralization
· Increased approval time
· Push towards ‘genericization’
· Increased competitive intensity as big pharma’s are venturing into branded generics.
· Overall change in industry dynamic
Thus, it’s essentially an era of consolidation for the smaller and mid-size pharma players working in the Indian market where there is a very high competitive intensity. These pharma players lack a global platform and face serious competition from large foreign firms venturing into branded generics. Due to the changing regulatory requirements, like the introduction of new Drug Price Control Order (DPCO) 2013 and increased government intervention in the pharma sector, these issues have come under substantial control but until and unless DPCO is fully effective, there still remains some problems. As such, the coming 4-5 years are going to be challenging for the industry. Once the DPCO comes into full effect when the government figure out drug prices and there is full-fledged government support to domestic companies relating to product approvals, clinical trials etc., Indian pharma sector will definitely reach up to global standards and in the long run, this intervention will bear fruits.
There is a need to ramp up the innovation and R&D efforts in India hindered by capital intensive nature of indigenous businesses. Due to this hindrance, investment in innovation has been flat as a percentage of revenue. Some companies are making headway in innovation but it is still a long way to set a benchmark. It will take time to develop in India and for that companies will have to adopt different models and venture into areas such as biosimilars or different business lines such as OTC (over the counter) or different sources of revenue such as animal health or NME (new molecular entities).
India is under increased scrutiny by US FDA as it exporting a lot more to the U.S. now. So, it is also important that Indian pharma companies maintain the highest global standards at all times. There is a lot of noise in the global environment and India about patents but as US FDA’s approach in every matter is extremely rational and consistent across the globe, so there is nothing to worry about issues relating to US FDA. The patent related issues or disputes are common in the world and since patent law in India is still evolving and getting robust with time, things will definitely improve over time.
Future of the pharmaceutical industry
Focus of Indian pharmaceutical industry shall remain on enhancing its global prospects and innovation. To fight the severe competition from foreign players, turn this into a profitable business and gain from exports, the only feasible and logical solution is that major pharma companies in India, in this kind of environment, target the global market. It is also because India is now following GATT and new patent laws, as such, new product approvals are far more challenging, and companies focusing on India business will have to exit if this isn’t taken seriously. Moreover, the industry is flooded with cut throat competition and the scenario is not likely to be changing for the coming 3-5 years. Thus, hugely innovative products are required in the patent portfolio of each company for it to reap maximum profit and fight competition. It is to be realized by every domestic pharma company in India that almost in 5 years from now, only those companies will have an edge in the pharma market that will hold the most patents.
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