Today, India’s dependence on China for key APIs is nothing short of a health security risk. As one of the stories in the September 16-30 Express Pharma issue analyses, the situation can be rectified but it needs both short and long term strategies. In the short term, API manufacturers need financial and technology inputs from the government as incentives to continue investing in API development. This would revive their business outlook and prospects. For the long term, we need a bulk drug policy that will create an ecosystem to ensure the country’s self sufficiency for key APIs and bulk drugs. Various ministries in the government were in discussions to put together the bulk drug policy, as it is in line with the Make in India theme of Prime Minister Modi. (See story, Countering the Chinese threat, pages 22-25, in September 16-30, 2016 issue of Express Pharma)
But now there are reports that these plans for a bulk drug policy have been shelved or postponed. According to Ananth Kumar, Minister for Chemicals and Fertilisers, instead of a bulk drug policy from the centre, the states will have to allocate land and resources for “bulk drug parks” to support bulk drugs manufacturing. In other words, central funds will not back this project; the onus will be on each state to create and nurture their own bulk drug ecosystem. This is even more obvious when you consider reports that from an initial promised investment of Rs 5000 crores, the centre will now only invest Rs 600 crores to set up common effluent treatment plants in three bulk drug parks. While this measure is welcome and will benefit the members of these parks, industry experts are disappointed at the seemingly stingy treatment. But, given that there are many SEZs which have not taken off and are laying vacant, with rumours that companies’ used the SEZ scheme to simply acquire the land, maybe central authorities are playing the wait and watch game. Clearly, funds will be released only to deserving bulk drug parks, ones which seem to have the best chances of success. And this success will have to come from a major push by each state. When you consider this as a strategy, it seems logical to incentivise fund disbursement against demonstrated performance as well as create a competitive environment between state governments. Let’s hope the gambit pays off.
While the marque companies of the Indian pharma sector, straddle continents, there are players like Advanced Enzymes Technologies’ CL Rathi who are climbing the value chain. With a super successful IPO under his belt, Rathi’s focus on an unglamourous segment like industrial enzymes has been slow and steady. There are many promoters like him who are the backbone of the Indian pharma sector and we hope his success will enthuse them to stick to their competencies rather than throw in the towel when faced with competition from cheaper imports. Rathi has proved that a sound strategy to focus on products with a high entry barrier and increasing this with more investment in R&D will put miles between him and his competitors. (See story, Breaking the mould, pages 16-21, in the Express Pharma September 16-30, 2016 issue)
Looking ahead, the Indian pharma sector cannot expect the same growth rates of the past. A recent ICRA report predicts that the growth trajectory for the Indian pharma industry will be moderate on the back of slowing growth from the US given the relatively moderate proportion of large size drugs going off patent, increased competition, generic adoption reaching saturation levels, regulatory overhang along with base effect catching up.
Within the domestic market, the price regulator, the National Pharmaceutical Pricing Authority (NPPA) is scheduled to meet on September 14, to add more medicines to the National List of Essential Medicines (NLEM) 2015. With more medicines coming under price control, pharma companies in India would naturally look for greener pastures. While pharma companies might feel betrayed by successive policy makers for cutting their margins, they would do well to bring the patient back in focus and look for ways to become more sustainable.
Viveka Roychowdhury
Editor