Notwithstanding its successes in generics, India needs to become self-sufficient in drug and medical equipment manufacturing powered by a set of domestic players. While COVID-19 did amplify the country’s excessive import dependence for APIs and intermediates on China, the equally disproportionate import dependence for medical devices – with as much as 80 per cent coming from outside – has gone under-reported. An all-out indigenisation movement with an eye on improving productivity as well as upgrading quality –backed with cutting-edge innovation – can pull the country out of this dependency trap paving the way for self-sufficiency in these strategic areas.
It goes without saying that the nature of production as also the supply chain ecosystem can be honed to make Indian pharma truly self-sufficient further reinforcing India’s position as the ‘Pharmacy of the world’.
Clustering of manufacturing plants for APIs and medical devices
It’s a no-brainer that ramping up manufacturing by aggregating manufacturing clusters of APIs and medical/devices can bring economies of scale and reduce dependence on imports. To promote APIs, provisioning for common testing facilities, training centres, R&D centres, logistics centres and effluent treatment plants backed by economical captive power supply– all within a designed cluster can be collectively and efficiently harnessed by different pharma companies. A similar clustering approach can be adopted for medical devices by setting up dedicated manufacturing hubs and medical device parks complemented by focused centres of excellence to support product development and validation. Although there are a few API and device clusters already present in some States, there is a need to develop clusters in a more calibrated and scientific manner. At the same time, the operations of the existing clusters particularly for APIs, need to be fast-tracked. Operationalising a project within a reasonable period is critical to avoid escalation of project costs and eventual pushing up production costs. Experts take the view that if everything went according to plan, it would take at least three years to show some results. Given the highly capital-intensive nature of bulk drug production requiring huge tracts of land with long gestation periods, the government must throw its full weight behind these API clusters. Likewise, pivoting from the prevailing low-end medical equipment ecosystem in the country to production of high end medical electronic devices requires solid government support.
Incentivising domestic production through policy support
Not all companies and pharma institutions are likely to come onboard the clustering programmes announced by the government. Yet, even for those companies, the government must put in place a set of production-linked policy schemes with incentives for faster land, environment and utility clearances, etc., – all through a single window. At the same time, land power and water must be made available at highly affordable rates, presently a major competitive disadvantage. The states in this respect must come forward and become active partners to industry. The recent announcement of giving policy support to greenfield plants and investments for the production of 53 critical APIs covering 41 products[1] including anti-TB drugs, vitamins, steroids, antibiotics, cardiovascular, anticonvulsant, hormones and antiretroviral, among others, is a significant step in this regard. Reportedly, 20 per cent incentive for fermentation-based APIs and 10% for chemical processes- based APIs based on their respective annual sales value for the first six years is in the offing. This may need to be sweetened further.[2] Similarly, the announcement of production-linked incentives for making cancer care/radiotherapy medical devices, radiology & imaging devices, nuclear imaging devices, anaesthetics & cardio-respiratory medical devices and implants are the first steps in the right direction. Again, five per cent incentive for the first five years has been proposed.[3] However, the size of this list needs to get bigger and more must follow as India plays catch-up.
Financial assistance
Related with the policy support cited above is the financial assistance through subsidised loans, capital subsidies, tax exemptions and duty exemption for capital goods imports all of which are essential to give an impetus to the domestic production of APIs. It is a competitive world and capital being mobile will move across borders to where manufacturing advantages are significant. Likewise, manufacturing of high end electronic medical equipment requires assistance in the form of inexpensive finance, minimum import duty on raw material and input equipment. In the interim, levelling import duties will be required to nurture a fledgeling industry. Preferential treatment to locally produced devices in govt procurement is another way forward.
Usage of cheaper raw materials
Making use of alternative raw material is another way to cut costs, improve production and gain a competitive edge in the market. Especially for fermentation-based APIs, we need to take a leaf out of China which uses cheaper raw material such as cauliflower for fermentation. Unlike that in India, drugmakers use glucose and lactose as raw materials using submerged fermentation technology. Since this technology also involves bioreactors, expensive machinery for fermentation, the overall costs go up. With this in mind, experts have advised on the need to explore the production of APIs and intermediates even from wasted vegetables and food grains.[4] Along the same lines, there should be high-quality plastic available as also other cheaper raw material for domestic device manufacturers. Already, COVID-19 has led to the acceleration in making of masks, ventilators, PPEs, swabs and sanitising products while precipitating an organic rise of many first-time and some first-time products such as anti-microbial gloves. This is an encouraging sign.
Low-cost production technologies for APIs – R&D and skill support for medical devices
India also needs to develop low-cost production technologies for APIs which can give a competitive edge to the Indian companies. The way the sector gave an account of itself through its extraordinary contribution to the development of generic medicines during the 1970s and 1980s, the same spirit of pursuit must prevail now to give a momentum to the development of APIs and medical devices in the country. For its part, the government must give a fillip to the industry-academia collaboration through adequate grants and scholarships. In a similar vein, the promotion of indigenous development of medical devices must be done through R&D support and incubation centres at the universities and research institutions. Native med-tech start-ups should be incentivised while leveraging new-age technologies such as 3D printing, AI, smart sensors and robotics. Given the technology-intensive nature, IP could be made available for non-core activities through the creation of an IP exchange. Also, skill development through updated vocational educational curricula and product training must be focused upon.
In all, a combination of clustering, production linked incentives, financial assistance, usage of cheaper raw materials, development of low-cost technologies and skill-building will catapult India into a self-reliant pharma and medical device manufacturing nation. The make-in-India push from the government in tandem with the COVID-19-induced shock has set the ball rolling in this direction. Evolving a separate regulatory mechanism for medical devices as distinct from drugs while aligning BIS standards with international standards such as CE and FDA will also prepare the indigenised manufactures to make a dent in the global export markets.
With all this underway, India has a definite chance to emerge as a front runner in furthering the cause of Universal health.
References
[1] https://swarajyamag.com/news-brief/modi-govt-unveils-3-production-incentive-schemes-worth-rs-12000-cr-to-boost-local-manufacturing-of-api-medical-devices-and bulkdrugs#:~:text=1800%20crore%20Production%20Linked%20Incentive,manufacturing%20and%20attract%20large%20investments
[2]https://www.businesstoday.in/current/economy-politics/new-scheme-to-boost-bulk-drugmedical-device-manufacturing-reduce-dependency-on-china/story/405641.html
[3]https://www.businesstoday.in/current/economy-politics/new-scheme-to-boost-bulk-drugmedical-device-manufacturing-reduce-dependency-on-china/story/405641.html
[4]https://www.expresspharma.in/guest-blogs/reducing-indias-import-dependence-on-apis-a-possible-way-out/