India, the pharmacy of the world, needs stronger government support

India is known as the ‘Pharmacy of the World’. During the COVID-19 pandemic, India supplied vaccines and essential medicines to many countries in their time of critical need. India fulfils 40% of the generic drug demand in the U.S. and 25% of all medicines in the U.K. Moreover, 60% of global vaccine production takes place in India, making it a key supplier of affordable medicines to regions such as Africa, Latin America, and Southeast Asia.

The pharmaceutical industry in India was valued at $50 billion in 2023 and is estimated to grow to $130 billion by 2030. India is home to several world-class pharma companies, including Sun Pharmaceuticals, Cipla, Dr. Reddy’s, Lupin, Zydus, and Mankind Pharma, with many others on the rise.

One of these, Mankind Pharma, a relatively new company based in Meerut, has achieved meteoric success through innovation, integrity, and bold strategic acquisitions such as Panacea Biotec’s domestic formulations business (2021) and a stake in Medi360, a digital healthcare and vaccine provider. Recently, Mankind Pharma made headlines by acquiring Bharat Serums and Vaccines (BSV) for Rs. 13,600 crore, a move that strengthens the company, already a leader in the Indian gynecology market. BSV is renowned for its work in women’s health and critical care, with an R&D center in Mumbai housing over 100 scientists, and operations in more than 70 countries, including subsidiaries in Germany, the Philippines, and the U.S.

During the pandemic, India’s pharma and healthcare industry rose to the world’s rescue. Serum Institute of India became a global leader in vaccine production, supplying billions of COVID-19 vaccine doses. Meanwhile, companies like Cipla, Sun Pharma, and Dr. Reddy’s scaled up the production of critical drugs such as Remdesivir, Favipiravir, and steroids, which were crucial in treating COVID-19. India supplied vaccines to over 95 countries, elevating its global stature through the Vaccine Maitri initiative. India’s swift response in providing medical equipment, PPE kits, and ventilators worldwide proved life-saving during this crisis.

India’s pharma industry, however, faces several regulatory challenges:-

Complex Regulatory Approvals

Drug Approvals: Regulatory approvals for new drugs is lengthy and cumbersome, involving multiple authorities like the Central Drugs Standard Control Organization (CDSCO) and Ministry of Health, often delaying time-to-market for new drugs.

Clinical Trials: Stringent and outdated regulations for conducting clinical trials create barriers to innovation, especially for smaller companies.

Fragmented Regulatory Framework: India lacks a unified and cohesive regulatory structure, which leads to inconsistencies and inefficiencies.

Price Control Mechanisms: The National Pharmaceutical Pricing Authority (NPPA) imposes price ceilings on essential drugs, which, while ensuring affordability, can sometimes stifle the profitability and innovation drive of pharmaceutical companies.

Intellectual Property (IP) and Patent Issues

Evergreening of Patents: The problem of evergreening of patents near the time of expiry is a critical issue which needs to be attended to by the Indian patent regime for encouraging domestic players.

API Dependency

India relies heavily on imports of Active Pharmaceutical Ingredients (APIs), particularly from China, which makes the sector vulnerable to supply chain disruptions. The government has launched the Production Linked Incentive (PLI) scheme, but further efforts are needed. 

Need of a few Key Reforms

Streamlining Drug Approval Process

Single Window Clearance: A unified regulatory authority or "single-window clearance" for drug approvals can significantly reduce time-to-market, helping innovation.

Fast-Track Approvals: Implementing fast-track approvals for critical and innovative drugs, in areas like biotechnology and biosimilars, boosting R&D efforts.

Boosting API Self-Sufficiency

PLI Scheme Expansion: The government may expand the Production Linked Incentive (PLI) scheme for domestic API production, provide incentives to companies that invest in API manufacturing facilities through tax incentives, subsidies, and low-interest loans.

Infrastructure Development: Building API parks with world-class infrastructure to support efficient and cost-effective production.

Indian pharmaceutical industry is a sunrise sector, associated with healthcare, not only in India but globally. It is time that the government provides it the much needed support to reach our goal of Viksit Bharat.

Dhanendra Kumar is the First Chairman of CCI, Executive Director at World Bank for India, Sri Lanka, Bangladesh and Bhutan. He is currently Chairman of Competition Advisory Services India LLP