The US has once again pulled up India for ‘inadequate IP enforcement’. India is one of seven countries to remain on the Priority Watch List of the annual “Special 301 Report” recently released by the US Trade Representative (USTR). The other six countries on the Priority Watch List are Argentina, Chile, China, Indonesia, Russia, and Venezuela. The report warns that these countries will be ‘the subject of particularly intense bilateral engagement during the coming year’.
The report concedes that while ‘there has been progress under the US-India Trade Policy Forum in addressing certain issues with trademark infringement investigations and pregrant opposition proceedings, numerous long-standing concerns remain. These include inadequate IP enforcement, including high rates of online piracy, an extensive trademark opposition backlog, and insufficient legal means to protect trade secrets.’ As per the report, among other things, India still needs to fully implement the WIPO Internet Treaties and to ensure that copyright statutory licenses do not extend to interactive transmissions.
The importance of the US market for India can be gauged by a report commissioned by the Department of Pharmaceuticals, according to which, as many as 24 blockbuster brands worth more than $250 billion (Rs 20.75 lakh crore) in annual sales have lost or will lose patent exclusivity in the US during this decade. India’s generics manufacturers are gearing up to grab a piece of this pie. Indeed about half (seven) of the world’s top 15 generics companies are Indian.
But it won’t be a cakewalk for these seven major generic companies (Sun Pharma, Dr Reddy’s Laboratories, Lupin, Cipla, Aurobindo Pharma, Zydus Cadila and Torrent Pharma), as global competition is intense. Drug prices crash post-patent loss, due to this competition, which is good for patients but leaves drug makers struggling with thin profit margins. Adverse reports on India’s good manufacturing practices, rumoured to be part of a campaign to discredit the sector, need to be addressed before they further impact the country’s reputation as a source of quality, safe affordable medicines.
The report goes on to advise that India’s pharma companies should invest more in developing capabilities to make generic copies of biologics (biogenerics), as more biologics are set to lose exclusivity in the period up to 2030. India’s traditional strength lies in small molecule chemical-based drugs which is why not too many companies focus on biologics. Biogenerics comes with higher risks, as the manufacturing process and technologies are more complex. The DoP report also points out that biogenerics need different approaches to deal with IP challenges.
In fact, another recent report must serve as a wake-up call for policymakers, led by the future Prime Minister, who need to make major course corrections to ensure that India’s pharma sector recovers lost ground.
Penned as an open letter to the PM and ‘an earnest request to the powers that be to correct course and set India on its path to be a powerhouse for innovation’, authors Nithya Balasubramanian, Director-Healthcare, Sanford Bernstein and Parth Shah, Equity Research Associate from the firm’s healthcare team, contend that in healthcare, India is ‘resting on past laurels’. The report cautions that ‘from being the “Pharmacy of the World” and the “vaccine workshop of the world”, India is slowly but surely ceding ground to its Asian peers in biopharma innovation and manufacturing.
The 17-page report acknowledges that ten of the top 20 generic companies in the US are Indian, and Indian companies command over 40 per cent Gx prescription shares. There is also a nod to India’s vaccine dominance which came to prominence during the global COVID pandemic.
However, the authors mince no words when they point out that India is ‘ceding ground to Asian peers’, pointing out multiple areas where India lags behind Asian peers.
On the manufacturing front, the authors give examples of Chinese (Wuxi Biologics, Innovent, Beigene, etc) and Korean companies (Samsung Biologics, Celltrion, etc) which have invested in biomanufacturing capacities, leaving India far behind.
The authors believe that in biopharma innovation, China has emerged as a global biotech hub (~25 per cent of the global pipeline) with strong domestic talent and significant funding flowing in from investors and Big Pharma in the form of M&A and licensing. South Korea is also catching up with more biotech startups reaching global markets with their first drugs in the recent past.
Innovation, the authors claim, has been ‘the orphan child’ in India, as the country is not mentioned in the Healthcare Innovation index and does not feature in the top 10 patent publications in any health-related field.
Another fact is that among all the drugs under development, less than two per cent would be developed in India. And the reason is clear when you consider that for pharma companies the economics unfortunately don’t work today, as ‘spending millions on clinical trials with no pricing power is not a business they want to be in.’ A fact underlined by the largest pharma co in India chose not to market their marquee innovative asset in India so far, pointed out the authors.
Suggesting the ‘pathway to a powerhouse for innovation’ the authors recommend that ‘India needs to create a domestic market where innovative drugs can hope to command the right price and enjoy profits.’
Other suggestions include government-provided insurance coverage for novel drugs, investing in core research talent, attracting quality talent back to India, easing the availability of funding for biotechs, and harmonising regulatory standards for manufacturing and clinical trials. They recommend that ‘PLI schemes and other manufacturing sops need to be extended to more capital intensive bio manufacturing to level the playing field at least initially with Asian peers.’
As we vote in our next set of policymakers, these suggestions, and many more, underline the fact that while the pharma sector in India has come a long way, ‘there are still promises to keep’ and ‘miles to go …’
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