Pharmaceutical Industry

Context (TH): Recent government decisions that prioritize imports over local production could undermine India’s domestic pharmaceutical sector and potentially result in increased drug prices. Ensuring the availability of affordable medications is vital in India, where out-of-pocket health expenditures made up nearly 47.1% of total spending in 2021.

Current Scenario

• India, often referred to as the “pharmacy of the world,” supplies over 50% of the world’s vaccines, 40% of generic drugs to the US, and 25% of medications to the UK, with a market value of approximately US$ 50 billion.
• The country ranks third globally in pharmaceutical production by volume and 14th by value, contributing 1.72% to its GDP.
• The domestic pharmaceutical industry comprises around 3,000 drug companies and 10,500 manufacturing units, and holds 8% of the global market for Active Pharmaceutical Ingredients (APIs).
• The government permits 100% Foreign Direct Investment (FDI) in greenfield projects and 74% in brownfield projects.

Government Initiatives

• Budget Allocations:
  • FY25: Rs. 1,000 crore allocated for bulk drug parks and Rs. 1,300 crore for industry development.
  • FY24: Funding for the Jan Aushadhi scheme increased to Rs. 284.5 crore.
• National Medical Devices Policy, 2023: Aims to enhance growth in terms of access, affordability, and innovation.
• Ayushman Bharat Digital Mission: Focuses on improving digital health records.

Challenges

• Patent Barriers: Current patent protections restrict Indian companies from manufacturing affordable generics or biosimilars of new medicines, limiting access to essential drugs.
• Regulatory Hurdles: Outdated and resource-heavy guidelines for biosimilar approval in India create challenges for local producers, in contrast to more efficient practices in the U.S. and EU. A biosimilar is a biological product that is highly similar to an already approved reference product, ensuring safety, purity, and potency.
• 2024-25 Budget: Suggests removing a 10-12% customs duty on AstraZeneca’s cancer medications, which may not significantly reduce prices or improve accessibility.
• Department of Expenditure (DoE) Order: The authorization of global tenders for 120 medicines, including crucial anti-diabetes and anti-cancer drugs, could increase foreign market control.
• Price Regulation vs. Local Production: The Drugs Price Control Order, 2013, regulates prices, but encouraging local production is a more effective strategy for ensuring affordable access to essential medicines.

Way Forward

• Utilize Compulsory Licenses: Implement compulsory licenses to enhance local production and make medicines more affordable, especially in times of pandemics or for treating critical illnesses.
• Streamline Biosimilar Approval: Revise guidelines to match global standards (as seen in the EU) to make it easier for domestic producers to enter the market.
• Align Policies: Adapt policies to bolster domestic pharmaceutical growth, decrease dependence on imports, and ensure the availability of affordable medications.
• Enforce Section 83 of the Patents Act: To guarantee that patents support local production and maintain affordable pricing.
• Use Government Licenses: Apply Section 100 of the Patents Act to grant licenses for the production of generic versions of patented drugs to serve public health needs.