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By Nikkhil K Masurkar
India is the largest provider of generic drugs all over the world and the Indian pharmaceutical industry is expected to grow to US$100 billion by 2025. Yet, accessibility to medicine remains a distant dream for many in the country. Though India has the cheapest drug prices in the world, the strict price control policies put in place by the government don’t allow manufacturers to boost indigenous research and neither does it allow universal accessibility.
Also, the overproduction of local drug formulations often fails to meet the global standards which in turn makes it difficult for exporters procuring from third-party manufacturers to explore newer markets. These bottlenecks coupled with a poor regulatory regime and lack of drug inspectors pose serious threats to the Indian pharmaceutical industry to make affordable medicines accessible to all.
Indigenous Research and Quality Assurance Holds the Key
According to findings by the World Health Organisation, near to 40 percent of essential medicines in India with the lowest maximum retail price are significantly costlier than the estimated production costs. The high pricing of the drugs along with poorly laid out policies makes accessibility to essential drugs prohibitive for vast sections of society. Like for example, ‘innovative’ medicines by foreign companies were exempted from price control for 5 years to increase access to drugs for Indians. But in reality how many people can afford such expensive drugs?
The eagerness to exempt foreign companies from price control, in fact, surges from the lack of indigenous research. Every 1 out of 13 cancer patients in the world is an Indian, but so far India has only been able to introduce seven new cancer drugs. Compared to that, more than 50 breakthrough therapies have already become available in different countries. While patent on foreign products is what Indian companies look forward to, but even then, the price of generic drugs based on the market-based module tends to be quite high. Affordable drugs are necessary no doubt, however, what is most important is to boost indigenous research.
The poor regulatory structure where the regulation is split between the central government and state authorities has also led to pervasive problems in the Indian drug market. Acute shortage of drug inspectors in all states along with lack of proper infrastructure for quality checks in several states affect every stage of the production process compromising the drug quality.
Mitigating the Challenges
Indian vaccine manufacturers have emerged as significant players in the global market especially after the introduction of Covishield and Covaxin for the coronavirus. The industry is also able to produce new and more complex vaccines such as the Haemophilius influenzae Type B, meningitis, pneumococcal conjugate vaccines, rotavirus vaccines, and influenza A (H1N1) vaccines. Effective implementation of policies and supportive interventions from the government can help cushion the risks taken by the industry to further expand indigenous research on medicines.
Also, there is a need to invest phenomenally high in API manufacturing to reduce the dependency on Chinese APIs (Active Pharmaceutical Ingredients). To gain a competitive advantage in this space, India must invest in developing or acquiring the desired set of capabilities including R&D and manufacturing.
From the quality point of view, the government needs to upgrade quality systems, infrastructure and enhance capabilities to maintain India’s image of a reliable, high-quality supplier. Industry players will need to adopt a holistic approach to fundamentally transform their quality systems across all dimensions. This approach will help players to drive sustainable improvement in quality standards, by not only strengthening core processes but also by improving quality-related capabilities, mindsets, and performance management systems across the organisation to institutionalise the improvement.
Other than that, the regulatory structure requires to be modified to facilitate better coordination and cooperation between state FDAs. Centralising the licensing system can reduce the number of substandard drugs in the market and hold all states accountable for licensing approvals.Also, there is a dire need to set up standards for inspections as well as provide resources and training to drug inspectors at the local level.
For a robust growth rate and sustainable market, innovative business models go a long way in balancing the local manufacturing costs and drug price controls. Greater spending on healthcare and effective implementation of well-laid policies can make India truly atmanirbhar in this segment.
(The author is Executive Director, ENTOD. Views expressed are personal and do not reflect the official position or policy of the Financial Express Online.)