Fix quality issues, the rest will fall in place

As Union Budget 2023 was Finance Minister Nirmala Sitharaman’s last full ‘parting shot’ budget before the general elections next year, the life sciences industry hoped that many of their long-standing demands would get addressed.

Comparing the pharma sector’s laundry list of expectations to the announcements made, the industry’s recommendation for R&D-related support seems to have been met. But while the industry has lauded the announcements on R&D (https://www.expresspharma.in/union-budget-2023-industry-lauds-focus-on-rd/) the mood is cautious optimism, as leaders await the fine print.

At best, the proposal to set up a new programme to promote research and innovation through centres of excellence, extending collaboration with the ICMR laboratories, encouraging investment in R&D, signal that the government understands the importance of supporting an ecosystem for the further evolution of India’s pharma sector beyond the pharmacy of the world. Pharma R&D in India so far has focused on the D, can we shift focus to the R? Maybe it is an attempt to position India as an attractive global pharma research hub, not just as a global manufacturing hub.

But much more will have to be done for this transition to happen. Will this announcement lead to a Research Linked Incentive (RLI) scheme? The fact that there was not much relief provided on the demand to increase tax deductions on R&D spends, is discouraging, underlining the fact that the path to R&D remains narrow and needs deep pockets. If the government can work on making the R&D policy more transparent, we could see investments in pharma R&D flow into India.

The rationale for an RLI is that without a strong research core, the existing Production Linked Incentive (PLI) programme will miss the opportunity to add long-term value to the sector. Many pharma companies are already cutting back on research spends in real terms, discouraged by the slow pace and lack of results. Some comfort comes with the recent Q3FY23 results of pharma companies in India, with domestic formulations remaining a bright spot, with a double-digit year or year growth potential, despite low-to-nil COVID-related revenues this quarter. However, the United States (US) revenues continue to disappoint, with flat growth.

But more importantly, quality concerns continue to dog the sector. Be it data integrity-related 483s from the US Food and Drug Administration (USFDA), Nepal’s drug regulator alleging non-compliance to WHO norms or WHO alerts on cough syrups with deadly ingredients. Non-resolution of such regulatory raps, as well as volatile prices of inputs and increasing price control, remain the key risk factors for India’s pharma sector.

Let us hope that the new infrastructure being built is future-ready, with investments in greener technologies/ techniques/ingredients. While pharma honchos have no control over prices of raw materials (except to put in place more resilient procurement practices) and price caps (besides sending representations to policymakers), they can definitely influence stricter enforcement of compliance to GMP norms, data integrity practices, etc. at all their premises. Training of employees to comply with evolving global guidelines should be the overall goal for 2023.

Can policymakers link budgetary allocations to better quality compliance, with stricter oversight? This would serve multiple purposes. Firstly, patients would be assured of safer medicines at affordable costs, with minimal environmental impact. And, secondly, higher quality standards at affordable prices would serve as a formidable competitive advantage and set the bar higher for any future contenders for India’s ‘Pharmacy to the World title. Can we see policymakers and industry leaders double down to this task in 2023?