PHARMACEUTICALS

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SUMMARY
  • India is the 3rd largest Pharmaceuticals industry in the world by volume.
  • The Indian Pharmaceutical industry has contributed significantly to global healthcare by ensuring high quality, affordable and accessible medicines around the world.
  • India remains an attractive destination for generic R&D and manufacturing of pharmaceuticals owing to its strong capabilities across the value chain.1
  • The Pharmaceutical industry in India stood at US$ 38.2 bn in the FY 2018-19. The compound annual growth rate (CAGR) of 15.4% between 2014 and 2018 was seen in the sector.2
  • India exports to more than 200 countries, with the US as the main destination, and pharmaceutical exports stood at US$ 13.94 bn in the fiscal year 2019 (up to December 2018).3
  • There are over 10,500 manufacturing units and 3,000 pharma companies in India. Over 60,000 generic brands exist across 60 therapeutic categories
  • India accounts for 20% of global exports in generics, making it the largest provider of generic medicines globally. Indian vaccines are exported to 150 countries.
  • Driven by the Pharma Vision 2020, the Indian Government has embarked on its journey to becoming a leading country for end-to-end manufacturing and innovation and has sought to incentivise investment into local medicine production to increase self-sufficiency.
  • The Government also aims to augment infrastructure through the 'Make in India' initiative, aims to improve the quality of the workforce and aims to increase funds for innovation. This is all in line with the country's focus to ensure that India is one of the top five pharmaceutical innovation hubs by 2020.4
REASONS TO INVEST
  • India's healthcare market may see a threefold jump in value terms to reach US$ 372 bn by 2022 with rising income, greater health awareness, increased precedence of lifestyle diseases and improved access to insurance.5
  • Ayushman Bharat is National Health Protection Scheme, which will cover over 100 mn poor and vulnerable families (approximately 500 mn beneficiaries) providing coverage up to US$ 7,150 per family per year for secondary and tertiary care hospitalization.6
  • Medical tourism to India is on a rise, primarily due to its expertise in cardiac and orthopaedic procedures, in addition to other specialized areas like neuro-surgeries, cancer treatment and organ transplantation.
  • Drugs worth US$ 130 bn are expected to go off-patent between FY 2017 to FY 2022, presenting a huge market opportunity for Indian manufacturers.
  • With the increasing penetration of chemists, especially in rural India, OTC drugs will be readily available.
  • Pharma companies have increased spending to tap rural markets and develop better infrastructure.
  • In January 2019 the government amended the Indian Patents Act, 1970, exempting newly patented drugs from price controls for five years.7
  • The government is revitalizing the decade-old Jan Aushadhi scheme to provide affordable medicines, by setting up stores to provide cheaper generic drugs and medical devices. By January 2019 it had opened 4,677 stores and plans to open 2,500 more stores by 2020.8
  • India’s cost of production is significantly lower than that of the USA and almost half of that of Europe.
  • Presence of a skilled workforce as well as high managerial and technical competence.
STATISTICS
  • India's pharmaceutical exports stood at US$ 18.5 bn in 2018, up from US$ 16.8 bn in 2017. Exports are expected to grow strongly during 2019-23, predominantly if India secures a free-trade agreement (FTA) with the Eurasian Economic Union or a Regional Comprehensive Economic Partnership in Asia.9
  • Indian pharmaceutical companies account for 30% of the US' generic drug imports with exports to the US and other regulated western markets accounting for over 50% of the country's global medicine exports.10
  • In 2018, generic drugs accounted for 88.3% of prescription drug sales and 75.5% of total sales.
  • In 2018, healthcare spending reached a value of US$ 118 bn. In 2019, it is estimated that healthcare spending will reach a value of US$ 124.6 bn, growing 12.7% from the previous year in local currency terms. By 2023, it is expected that the health expenditure will reach a value of US$ 210.58 bn, representing a CAGR of 12.6% in local terms and 12.3% in US dollar terms.
  • Over the long-term, healthcare spending is expected to reach US$ 398 bn in 2028. By 2028, health expenditure will represent 5.5% of GDP.
  • Government expenditure on healthcare reached US$ 36.4 bn in 2018, accounting for 30.8% of total health spending.11
FDI POLICY
  • 100% FDI has been allowed through automatic route for Greenfield pharmaceuticals projects
  • For Brownfield pharmaceuticals projects, FDI has been allowed up to 74% through automatic route and beyond that through government approval
SECTOR POLICY

Provisions of Budget 2019-20 

  • As per the Union Budget 2019-20, the allocation to the Department of Pharmaceuticals has been US$ 33 mn.12

The National Pharmaceutical Pricing Policy, 2012 (NPPP-2012) notified on 07 December 2012, with the following salient features:

  • The regulation of prices of drugs on the basis of the essentiality of drugs as specified under the National List of Essential Medicines (NLEM) – 2011.
  • The regulation of prices of drugs on the basis of regulating the prices of formulations only.
  • The regulation of prices of drugs on the basis of fixing the ceiling price of formulations through Market-Based Pricing.
  • The provision of exemptions to drugs manufactured through indigenous R&D from price control for five years.
  • A Drug Price Control Order 2013 has been notified in May 2013 to implement the provisions of NPPP-2012.

Umbrella Scheme 

  • The Department of Pharmaceuticals has prepared an Umbrella Scheme namely ‘Scheme for Development of Pharma industry’.
  • The said Umbrella Scheme comprises of the following sub-schemes:
    • Assistance to Bulk Drug Industry for Common Facilitation Centres
    • Assistance to Medical Device Industry for Common Facilitation Centres
    • Assistance to Pharmaceutical Industry (CDP-PS)13

Pharmaceuticals Promotion Development Scheme (PPDS)

  • Under the PPDS, the Department of Pharmaceuticals aims to:
    • Conduct Training/knowledge improvement programs/activities on issues/subjects relevant to the growth of the pharmaceutical industry.
    • Organize Summits, Convention, Exhibitions, Pharmacy week, meetings etc. in India and abroad and produce promotional materials like films, displays etc.
    • Conduct research studies, sector reports etc.
    • Purchase books, quality standards, pharmacopoeias, magazines, directories, software for developing information data banks, developing e-learning modules etc.
    • Give awards to achievers in pharmaceutical industry.14
FINANCIAL SUPPORT

Research & Development

  • Weighted tax deduction of 200% under section 35 (2AB) of the Income Tax Act for both capital and revenue expenditure incurred on scientific research and development. Expenditure on land and buildings are not eligible for deduction.
INVESTMENT OPPORTUNITIES
  • Emerging segments such as Biosimilars and Specialty drugs
  • Contract Research and Manufacturing Services (CRAMS)
FOREIGN INVESTORS
  • Teva Pharmaceuticals (Israel)
  • Nipro Corporation (Japan)
  • Procter & Gamble (USA)
  • Pfizer (USA)
  • Glaxo Smith Kline (UK)
  • Johnson & Johnson (USA)
  • Otsuka Pharmaceutical (Japan)
  • AstraZeneca (Sweden-UK)
KEY ACHIEVEMENTS

‘Pradhan Mantri Bhartiya Janaushadhi Pariyojana’ (PMBJP) December 2018

  • 4504 PMBJP Kendras functional in 35 States/UTs of the country.
  • 800+ medicines and 154 surgical & consumables available in the product basket.
  • 625 medicines and 32 surgical & consumables available in CWH of BPPI for sale.
  • PMBJP guidelines amended to provide incentives to PMBJP Kendras run by private entrepreneurs on the basis of their purchase of medicines (from Distributor/ Central Warehouse/ Regional Warehouse) in a month.
  • Use of point-of-sale software by PMBJP Kendra will not be a mandatory condition for receipt of incentives.

National Institute of Pharmaceutical Education and Research (NIPER): 

  • Directors at NIPER Hyderabad and Hajipur appointed in June 2018 and November 2018 respectively. All NIPERs have regular Directors.
  • Constitution of BoG for other six NIPERs in process.
  • 60% work of construction of NIPER Guwahati campus completed.
  • 50 acres of IDPL land allotted to NIPER Hyderabad.
  • Govt. of West Bengal recently allotted 10 acres of land at Nadia District for NIPER Kolkata.
  • Department decided to accept 12.5 acres of land allotted by State Govt. for NIPER Hajipur.
  • Construction of regular campus approved for NIPER Ahmedabad and Guwahati

Medical Devices Sector:

  • The Department of Pharmaceuticals issued guidelines for implementation of Public Procurement (Preference to Make in India) Order, 2017 related to Medical Devices on 15 June 2018.

Scheme for Development of Pharmaceutical Industry:

  • Central Sector Scheme with a total financial outlay of US$ 67.48 mn.
  • Objective to ensure drug security in the country by increasing the efficiency and competitiveness of the domestic Pharmaceutical industry

‘Affordable & Quality Healthcare for All’ - Availability of Cheaper Medicines 

  • National Pharmaceutical Pricing Authority (NPPA) has fixed retail prices of the 357 new drug under DPCO 2013 in 2018.
  • Cardiac Stents to cost 85% lesser
  • Knee Implants to cost 69% lesser 15
SOURCES
  1. FICCI, Trends & Opportunities for Indian Pharma, http://ficci.in/spdocument/22944/india-pharma-2018-ficci.pdf accessed on 10 June 2019
  2. EY EMIS Report
  3. Asia Pacific Pharmaceuticals, Mergent Report EMIS EY external sources April 2019, accessed on 10 June 2019
  4. India Pharmaceuticals & Healthcare Report - Q2 2019, BMI Research accessed on 10 June 2019
  5. Ministry of Commerce and Industry, https://www.indiaservices.in/medical accessed on 10 June 2019
  6. National Portal of India, https://www.india.gov.in/spotlight/ayushman-bharat-national-health-protection-mission accessed on 10 June 2019
  7. India - Healthcare report: Pharma and biotech, Economic Intelligence Unit (EIU) - Industry Reports (EY EMIS) accessed on 10 June 2019
  8. India - Healthcare report: Pharma and biotech, Economic Intelligence Unit (EIU) - Industry Reports (EY EMIS) accessed on 10 June 2019
  9. India - Healthcare report: Pharma and biotech, Economic Intelligence Unit (EIU) - Industry Reports (EY EMIS) accessed on 10 June 2019
  10. India Pharmaceuticals & Healthcare Report - Q2 2019, BMI Research accessed on 10 June 2019
  11. India Pharmaceuticals & Healthcare Report - Q2 2019, BMI Research accessed on 10 June 2019
  12. Union Budget, Government of India, https://www.indiabudget.gov.in/doc/eb/sbe7.pdf accessed on 10 July 2019
  13. Department of Pharmaceuticals, Annual Report 2017-18, http://pharmaceuticals.gov.in/sites/default/files/Annual%20Report%202017-18.pdf accessed on 10 June 2019
  14. Department of Pharmaceuticals, Annual Report 2017-18, http://pharmaceuticals.gov.in/sites/default/files/Annual%20Report%202017-18.pdf accessed on 10 June 2019
  15. Press Information Bureau, Year End Review 2018: Ministry of Chemicals & Fertilizers (D/o Chemicals & Petrochemicals, Fertilizers and Pharmaceuticals), http://pib.nic.in/newsite/PrintRelease.aspx?relid=187345 accessed on 10 June 2019
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