Pharmaceutical industry in India IAS Target

Pharmaceutical industry in India

21 Sep 2020

Category : Daily Current Affairs

    The pharmaceutical industry in India was valued at US$33 billion in 2017 and generic drugs account for 20 per cent of global exports in terms of volume, making the country the largest provider of generic medicines globally. As per one estimate domestic pharmaceutical market turnover reached Rs 129,015 crore (US$18.12 billion) in 2018, growing 9.4 per cent year-on-year and exports revenue was US$17.28 billion in FY18 and US$19.14 billion in FY19. Recently, Indian government decided to partially lift the ban on the export of hydroxychloroquine (HCQ), a drug that has garnered global interest in the treatment and prevention of Covid-19. The drug drew global attention after US President Donald Trump called it a “game changer”, and proposed its use for Covid-19 cases. India held that it would not ban or restrict supply hydroxychloroquine (HCQ) drugs to the countries and India’s neighbour who were dependent on India pharma industry. India’s decision to allow export of a drug is a welcome step and India would be seen as a globally responsible country in the fight against the CORONA or COVID - 19 and reaffirms India's designation of pharmacy to the world. However, Indian pharma sector faces many issues that it needs to rectify.


    Hydroxychloroquine is used to prevent or treat malaria caused by mosquito bites. The United States Center for Disease Control provides updated guidelines and travel recommendations for the prevention and treatment of malaria in different parts of the world. This medication is also used to treat certain auto-immune diseases (lupus, rheumatoid arthritis). It can reduce skin problems in lupus and prevent swelling/pain in arthritis.
    The Indian Council of Medical Research (ICMR) issued an advisory recommending the use of hydroxychloroquine in asymptomatic healthcare workers treating Covid-19 patients, and also allowed doctors to prescribe it for household contacts of confirmed Covid-19 patients. However, the government has stressed that the drug can only be used in Covid-19 treatment on prescription.

    Side Effects

    Nausea, vomiting, loss of appetite, diarrhea, dizziness, or headache may occur. If any of these effects last or get worse, tell your doctor or pharmacist promptly.


    Many people using this medication do not have serious side effects. Before taking hydroxychloroquine, tell your doctor or pharmacist if you are allergic to it; or to chloroquine; or if you have any other allergies. This product may contain inactive ingredients, which can cause allergic reactions or other problems.

    Pharma Industry in India

    India enjoys an important position in the global pharmaceuticals sector, as India is the largest provider of generic drugs globally. India also known as the Pharmacy to the World.

    The Indian pharmaceutical industry meets:

    Over 50% of global demand for various vaccines
    Around 40% of generic demand in the U.S.
    Around 25% of all medicine in the U.K.
    Over 80% of the antiretroviral drugs used globally to combat AIDS are supplied by Indian pharmaceutical firms.

    • Indian pharmaceuticals market is the world’s third-largest in terms of volume
    • Indian pharmaceuticals market is the thirteenth-largest in terms of value

    India established itself as a global manufacturing and research hub. India has one of the lowest manufacturing costs in the world – lower than that of the U.S. and almost half of the cost in Europe. Pune, Hyderabad, Mumbai, Baddi, Himachal Pradesh, Chennai, Bangalore, Ahmedabad, Vadodara, Ankleshwar and Sikkim Kolkata are the major pharmaceutical hubs of India. The Government started to encourage the growth of drug manufacturing by Indian companies in the early 1960s, and with the Patents Act in 1970. Indian companies carved a niche in both the Indian and world markets with their expertise in reverse-engineering new processes for manufacturing drugs at low costs which became the advantage for industry.

    India dependence on China

    Bulk drugs or APIs are the active raw materials used in medicines to give them their therapeutic effect. In a bid to reduce India’s dependence on China for active pharmaceutical ingredients (APIs), government constituted a high-level task force to study global practices and draw up a plan aimed at boosting domestic production of APIs.
    The specific areas of focus may include:
    • Research and development,
    • Acquisition and commercialization,
    • Development of the industry,
    • Regulatory framework,
    • Potential impact on the industry, investments,
    • Contribution to the economy, exports, integration with value chains etc.

    Over 60% of APIs India sourced from other nations
    Over 80-90% of API for some specific APIs, India source from other countries

    India continues to rely on imports of key starting materials, intermediates and APIs from China, with the share of dependence increasing over time. This potentially exposes us to raw material supply disruptions and pricing volatility as recently India feel during CORONA pandemic. It’s critical time and the government must assure timely action instead of wasting time on constituting committees.

    Spurious Medicine

    Between 2015 and 2017, there were FDA warning letters to Indian pharmaceutical companies citing:
    • serious Data Integrity issues,
    • data deletion,
    • manipulation or fabrication of test results

    According to Outsourcing Pharma in 2012 75% of counterfeit drugs supplied world over had some origins in India, followed by 7% from Egypt and 6% from China. Fake versions of high value and/or high volume brands of the pharmaceutical companies in India are adversely affecting their business performance posing another major challenge. It also creates a negative impact to the end consumer and a huge health hazard.

    Price Capping

    The National Pharmaceutical Pricing Authority raised the ceiling price of essential drugs many times. The price ceiling policy has been in place for more than two decades and India has one of the lowest drug prices in the world. But the out-of-pocket expenditure on healthcare remains high (61 per cent) and many Indians continue to be deprived of access to life-saving drugs. In terms of their relative per capita income, Indian consumers pay more than people in high-income countries. Hence, accessibility and affordability still remain critical challenges in India’s healthcare system.The rationale behind price ceilings is to make drugs cheaper and easily accessible to everyone. This policy is applicable for a specified dosage.
    Drug price control policy has had many unintended consequences:
    • Many pharmaceutical companies have opted to go out of production
    • Substandard and spurious drug manufacturers dominating the pharma market.
    • Trade-off between price and quality
    • Decrease in profit margins of quality manufacturers has led to a reduction in spending in research and development. It has deterred future investments in the pharmaceutical sector.

    Thus, the sale fell for drugs with capped prices, and rose for drugs that didn’t have a price ceiling. Moreover, there has not been much impact on the prices of many life-saving drugs (for example, HIV, cancer, non-communicable diseases) since they have not been on the list.

    Instead of price capping, need for other options

    • Promoting competition among manufacturers, 
    • strictly regulating the quality of drugs,
    • bulk procurement of generic drugs by public institutions for distribution (Tamil Nadu being a good example),
    • increase in public spending on healthcare,
    • tackling information asymmetry by promoting transparency will deliver better outcomes for India’s pharmaceutical industry.

    Indian pharmaceutical Industry is facing pressure from both the government and the civil society to make generic medicines more affordable for a large section of the population of the country. Pharmaceutical companies, including the government ones, see a scope for further reduction of prices for essential medicines in India. However, the emphasis on low price of generic medicine impacts the net profits of pharma companies.


    Medicine spending in India is projected to grow 9-12 per cent over the next five years, leading India to become one of the top 10 countries in terms of medicine spending. India should look up to and invest in biotechnology. India’s biotechnology industry, comprising biopharmaceuticals, bio-services, bio agriculture, bio-industry and bioinformatics is expected to grow at an average rate of around 30% a year and reach $100 billion by 2025. Going forward, better growth in domestic sales would also depend on the ability of companies to align their product portfolio towards chronic therapies for diseases such as such as cardiovascular, anti-diabetes, anti-depressants and anti-cancers that are on the rise. To ensure health security of Indian people, revival of R&D and public sector API manufacturers is necessary and government should promote to invest in R&D. The Indian government has taken many steps to reduce costs and bring down healthcare expenses. Speedy introduction of generic drugs into the market has remained in focus and is expected to benefit the Indian pharmaceutical companies. In addition, the thrust on rural health programmes, lifesaving drugs and preventive vaccines also augurs well for the pharmaceutical companies.

Posted by : IAS Target