Indian Pharma's sector is losing sheen as prize manufacture

A serious malady afflicts the Indian pharmaceutical sector. Export growth is virtually flat at $16.8 billion and, in fact, has declined a wee bit last fiscal. For the high-growth potential pharma industry, which earns 50 per cent of its revenue from exports, the deceleration points to a severe problem at hand. Paucity of blockbuster drugs going off patent and blockage in distribution channels might explain, in part, at least, the drop in exports. But the primary reason is domestic, as pointed out by the recent V M Katoch committee.

Figures suggest that more than 75 per cent of bulk drugs — active pharmaceutical ingredients (API) — are sourced from China, along with such advanced intermediates like antibiotics (penicillins), analgesics (paracetamol) and supplements (vitamin C).

The absence, for the most part, of basic research into developing new molecules is a well-recognised problem of the Indian pharma industry. The heavy reliance on Chinese bulk drugs does compromise quality, and which is compounded by lax domestic regulatory standards for drug makers.

Last year, for instance, a report by Dinesh Thakur, the Ranbaxy whistle-blower and health activist, pointed out glaring anomalies in our oversight system for drug quality, which need to be rectified without delay. We have a hugely fragmented pharma regulatory system, with as many as 36 state and Union territory licensing authorities, and the standards for testing drug samples even at the Centre seem “vague” and “non-transparent”.

An earlier CII study showed that from 2004 to 2013, API imports went up from $800 million to $3.4 billion, at a compound annual growth rate of 18 per cent. The Katoch committee called for the revival of public sector bulk drug makers, and development of pharma clusters and attendant tax and duty incentives.

The excessive dependence on bulk drug imports clearly makes no sense. We need a forwardlooking policy on bulk drugs, including safeguard duties if necessary. India can be the pharmacy of the world, but merely specialising in formulations and importing API and intermediates is plain unhealthy.

This piece appeared as an editorial opinion in the print edition of The Economic Times.

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