The Indian Pharmaceutical Industry: A Journey Through History and Its Emergence as a Pharmacy of the World

The Indian pharmaceutical industry has had an incredible journey, starting with the establishment of Bengal Chemicals & Pharmaceuticals Limited (BCPL) in 1901 in Calcutta (now Kolkata), West Bengal, by Acharya Prafulla Chandra Ray with a capital of Rs 200,000 (roughly $2300). Today, the industry is valued at $55 billion, with over 3000 companies and 10,500 manufacturing units.

 

The factory of Bengal Chemicals & Pharmaceuticals Limited (BCPL)

 

The Indian pharmaceutical industry is predicted to reach $130 billion by 2030 and $450 billion by 2047 based on its current growth trajectory.

Since its modest beginnings in 1901, the Indian pharmaceutical industry has grown to become a significant exporter of pharmaceuticals, with over 200 countries currently receiving Indian exports. 

More than half of Africa's generic medication needs are met by India, with the United States accounting for 40% of generic demand and the United Kingdom for roughly 25% of all medicine needs. In addition to generics, India is a global leader in vaccine supply, meeting roughly 60% of global demand for DPT, BCG, and measles vaccines. India provides the World Health Organization (WHO) with about 70% of its vaccine needs.

At the moment, the pharmaceutical sector in India ranks third globally in terms of volume and fourteenth globally in terms of value.

As Prime Minister Sh. Narendra Modi correctly stated: “It is because of the efforts of the pharma industry that today India is identified as ‘pharmacy of the world’.”

During the COVID-19 pandemic, the Indian pharmaceutical industry did remarkably well, making a lasting impression on the global stage. Even during a nationwide lockdown, the industry ensured a steady supply of vaccines and medications. The industry played a key role in delivering over 290 million doses of vaccine to over 100 countries and vaccinating 2.2 billion Indians through the "Vaccine Maitri" campaign. Furthermore, the industry worked hard to develop COVID-19 drugs, test kits, and treatments, earning it the title of "Pharmacy of the World" with good reason.

A tough journey:

The Indian Patents and Design Act, 1911, which recognized both product and process patents, served as the foundation for the patent regime prior to 1970, so the road to this expansion was not an easy one. There were relatively few domestic companies during this time, and foreign companies dominated the market.

New suggestions and changes to the 1911 Act were established by the Government's Patents Act of 1970. The patenting regime was limited to manufacturing since the new Patents Act only recognized process patents and not product patents. Additionally, it made it possible for domestic pharmaceutical companies to reverse engineer drug manufacturing without having to pay royalties to the original patent holders. As a result, there were three-quarters fewer patents awarded between 1970–1971 and 1980–1981. In addition, the 1979 Drug Price Control Order placed a cap on pharmaceutical companies' total earnings. The number of domestic pharmaceutical companies increased dramatically during this time, from 2,000 in 1970 to 24,000 in 1995, which led to a boom in the generic drug market. Additionally, it caused a significant exodus of foreign pharmaceutical companies.

Since many Indian pharmaceutical companies entered the export market between 1995 and 2005, the experience they gained from concentrating on generic drug manufacturing allowed them to increase their capacities and reach a global audience. India's economic liberalization in 1991, which allowed for globalization and privatization, contributed to the acceleration of the growth of pharmaceutical exports during this time.

The process patenting system was eliminated and product patents were introduced by the 2005 Patents (Amendment) Act. This encouraged international pharmaceutical companies to return to India by preventing Indian pharmaceutical companies from manufacturing generic versions of these medications while they were still protected by patents. In order to compete with their international counterparts, Indian pharmaceutical companies began to increase their research and development (R&D) expenditures in this post-process patent paradigm. Some of these companies developed their own novel compounds, while others formed R&D joint ventures with foreign pharmaceutical companies.

 

In addition to the aforementioned, the industry has encountered numerous obstacles, including: 

 

• Pricing pressure: Over the past few years, the prices of generic medications have significantly decreased due to the sharp increase in businesses in other nations producing rival generic medications. 
• Problems with regulatory compliance: In recent years, regulators have brought attention to problems with quality control and manufacturing slippages, as 50% of India's exports go to highly regulated markets. 

Since 2015, the FDA's warning letter volume has increased by more than 200 percent. 

• Domestic tax system: The Goods and Services Tax (GST), which went into effect in July 2017, increased manufacturing costs, caused inventory to move slowly, and reduced profit margins. As a result, the industry expanded by just 5.5% in 2017 before rebounding to 9.4% in 2018.
• Decrease in product launches: India introduced 3,505 new pharmaceutical products in 2011, but by 2018, that number had dropped to 3,150 products, a 10% decrease, mostly as a result of a ban on fixed dose combination (FDC) medications. Due to price controls by the Indian National Pharmaceutical Pricing Authority (NPPA) and competition, there was also a decrease in the introduction of new acute therapy products.
• Domestic price regulations: The 2012 revision to the NPPA's drug pricing mechanism determines a drug's maximum price by averaging the prices of all brands with a market share of more than 1% in that category. More than 1,000 medications were price-capped by the NPPA by March 2019, and businesses reduced their output of medications that were subject to these price caps.
• Growing API costs: The price of formulated medications rises in direct proportion to the cost of APIs. Depending on the active ingredient, the cost of APIs imported from China and other nations has increased by 15–80% in recent years. Pharma profit margins are being adversely affected by the rising costs of API imports.

 

Notwithstanding all the difficulties, the sector has experienced a tremendous metamorphosis, becoming a vibrant force propelling global healthcare innovations. Cost competitiveness, which is fuelled by elements like reduced labour costs, economies of scale, and effective manufacturing techniques, benefits the sector. Indian pharmaceutical companies are able to offer competitively priced products both domestically and internationally thanks to this cost advantage. The Indian pharmaceutical industry's vast size and diversity provide resilience and adaptability to supply chain demands, allowing it to successfully navigate through market fluctuations and meet a variety of needs.

 

From being mostly domestic players, Indian companies have evolved into significant contributors to the global pharmaceutical market. This has been accomplished by implementing creative strategies, pursuing strategic initiatives, and being resolute in producing high-quality goods. By utilizing technology breakthroughs, forming strategic alliances, and navigating intricate regulatory requirements, Indian pharmaceutical companies have cemented their position on the international stage. Because of its adaptability and resilience, the Indian pharmaceutical industry has been on an upward trajectory despite strict regulations and fierce competition.

 

All things considered, India's pharmaceutical sector has enormous growth potential, particularly in the areas of innovation, research, early detection, and cutting-edge technologies like robotics-assisted surgery. The Indian pharmaceutical sector can continue to be a key player in determining the direction of healthcare delivery both at home and abroad by utilizing its advantages, adopting new technologies, and encouraging cooperation.

 

In essence, India is positioned as a "pharmacy to the world" with significant growth potential in the healthcare sector, making it a promising career choice for those looking to contribute to accessible medicine production on a large scale. These factors, along with its global reach, strong focus on affordable generic drug manufacturing, significant research and development opportunities, skilled workforce, and cost-effective production model, make joining the Indian pharmaceutical industry appealing.

 

Stay tuned and continue to follow for my next blog, which will provide updates on the various courses offered in India that can be taken to pursue a career in the pharmaceutical industry.