Bureaucracy is impeding India's growth in pharma, says report

Strong commercial opportunities suffering because of government policy, according to latest Business Monitor report

India's large population and substantial unmet medical needs make it a market with strong commercial opportunities, but the government is impeding the development of its pharmaceutical sector, mainly due to extensive bureaucracy and poor policy planning. These are the findings on India’s pharmaceuticals and healthcare sector published by Business Monitor in its new India Pharmaceuticals & Healthcare Report.

Some of the issues affecting various subsectors in the industry include the regulation of clinical trials, pricing of patented and essential drugs, generally low government involvement in healthcare and foreign direct investments.

For example, in December 2013, the Indian government decided to dissolve an inter-ministerial panel that was created to reduce patented drug prices. The panel was formed in 2007 and involved seven members from the Department of Pharmaceuticals (DoP), the National Pharmaceutical Pricing Authority (NPPA), the National Institute of Pharmaceutical Education and Research, the Pharmaceutical Export Promotion Council of India, and the Drug Controller General of India.

Another significant event highlighted in the report is that in November last year, the US-based not-for-profit public service organisation, the Initiative for Medicines, Access & Knowledge (I-MAK), filed a pre-grant opposition aiming to prevent Gilead Sciences/Pharmasset (acquired by Gilead in 2012) from gaining a patent in India for sofosbuvir, used in the treatment of hepatitis C (HCV), and which is expected to come to market soon. The move has been welcomed by Médecins Sans Frontières (MSF); the organisation claimed that Gilead is expected to charge US$80,000 for one treatment course of the drug in the US. Even if offered at a fraction of this price in developing countries, MSF argued, the drug will still be priced out of reach.

Meanwhile, in September 2013, the US Food and Drug Administration issued an import alert on products manufactured at Ranbaxy's Mohali plant in India until the company complies with US current GMP standards. The agency had identified 'significant cGMP violations' at the facility during inspections in September and December 2012, including the firm's failure to 'adequately investigate manufacturing problems'. During the inspections, the US FDA found a black fibre in a tablet that could be a human hair. In the same press release, the agency restated that Ranbaxy's facilities at Panota Sahib and Dewas 'have been on FDA import alert since 2008'.

India's GDP growth accelerated to 4.8% year-on-year in the second quarter of 2013/14 (July-September), compared with 4.4% in the previous quarter. But Business Monitor warns that the continued lack of dynamism in investment activity remains a key sticking point. 'We may have to wait until generall elections and monetary easing take place in mid-2014 before seeing a major improvement in investment conditions and, by extension, a sustainable economic recovery,' the market information provider says.

In terms of India's investment appeal, Business Monitor believes there is a lot riding on the general elections scheduled for April-May 2014, but the outcome remains difficult to predict with much conviction. While India's 60-year-old democracy has withstood the test of poverty, the coming decade will show whether it can stand the test of rising prosperity, the company says.

Against a backdrop of economic growth, India's government will need to work even harder to combat poverty and inequality; invest in education and infrastructure; and clamp down on corruption in order to satisfy an increasingly cognisant electorate. Meanwhile, icy relations with neighbouring Pakistan and growing competition with China will continue to dominate India's international agenda.

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