What is the issue?
The Indian pharmaceutical industry is facing challenges in both domestic as well as in international markets.
What is the model of Indian Pharma industries?
- India is the third largest supplier of the world’s requirement of medicine.
- It capitalised on a strong domestic base in India through rapid product introductions, a kind regulatory and intellectual property system.
- Indian pharma companies chose pockets in Africa, Asia and the Middle East as natural expansion outposts.
What are the challenges in Indian pharma trade?
- Domestic-Indian patients are paying high prices for drugs, due to fragmentation of distribution channels.
- The drug regulatory laws are not implemented in identical fashion across every state and city of the country.
- There are many ill-trained chemist all over the nation.
- International- US Supply channel consolidationhas led to 90 per cent of the buying power concentration in three big companies, hindering trade of Indian companies.
- The Food and Drug Administration along with increased scrutiny has been approving the backlog of drugs aggressively, leading to hyper-competition.
- Buyers have tightened the screws and are increasingly vigilant about even legitimate price increases.
- The combined effect has wiped out nearly 40 per cent of the core industry’s market cap, destruction of over Rs 5 lakh crore.
How the challenges can be addressed?
- The national regulator can engage to re-skill and train employees and hold them accountable to one common national standard.
- Beyond the core generics drugs companies should invest in diversified portfolio such as vaccines, animal health.
- The Indian pharma industry should focus on capital allocation choices and capability building.
- Three simple things innovation, calibrated diversification and consolidation must be carried out.
- The industry needs to diversify the geography risk beyond the US and India, invest in innovation beyond traditional generics and acquire more global scale.
- India does not need more than 500 companies to have a reasonably competitive market, remaining should merge and acquire global scale.
Source: Business Standard
