Syllabus
GS Paper 3 – Awareness in the fields of IT, Space, Computers, robotics, nano-technology, bio-technology and issues relating to intellectual property rights.
Context
Reliance on imports could have a chilling effect on the pharmaceutical industry, weakening its ability to remain relevant.
Source
The Indian Express| Editorial dated 22nd August 2024
Imports weaken Indian pharma
The Indian pharmaceutical industry is a significant player on the global stage, renowned for its extensive production capabilities and vital role in providing affordable medicines worldwide. As the largest supplier of generic drugs and a leading producer of vaccines, India holds a critical position in the global healthcare landscape. Despite its achievements, the industry faces challenges such as regulatory hurdles, patent-related issues, and dependence on imports for raw materials.
Indian Pharmaceutical Industry
- Global Leader in Vaccines: India is a major global supplier of vaccines, providing approximately 60% of the world’s vaccines.
- Generic Medicine Global Market Share: India is the largest provider of generic medicines globally.
- The country holds a significant 20% share of the global generic medicines supply by volume.
- Market Rank by Volume: India ranks as the third largest pharmaceutical market globally in terms of volume.
- Market Rank by Value: The country is the 14th largest pharmaceutical market in terms of value.
- Contribution to GDP: The pharmaceutical industry contributes about 1.72% to India’s Gross Domestic Product (GDP).
Indian Pharma Industry: Strengths
- Vaccine Production Hub:
- India produces 60% of the world’s vaccines, earning it the title of the largest vaccine manufacturer globally.
- The country’s capacity for large-scale, low-cost vaccine production is crucial in combating global health crises.
- Skilled Workforce:
- India boasts a highly skilled and cost-effective workforce, which includes a large pool of scientists and engineers with expertise in pharmaceutical production and innovation, enhancing the industry’s competitiveness.
- Innovation in Biotechnology:
- India is among the top 12 biotechnology destinations worldwide and the third largest in Asia-Pacific, reflecting its growing capacity for innovation in biopharmaceuticals and biosimilars.
Biosimilars are biologic medicines that are highly similar to an existing, approved biologic product (the reference product) with no significant differences in terms of safety, efficacy, and quality.
Indian Pharma Industry: Weaknesses
- Quality Control Issues:
- Despite its global standing, the Indian pharmaceutical industry has faced criticism for quality control issues, particularly in the production of generic medicines, which can harm the industry’s reputation and market access, especially in regulated markets like the USA.
- Fragmented Regulatory Framework:
- India’s drug regulatory system is fragmented, with 36 regional drug regulators, leading to inconsistent enforcement of standards and quality.
- This can result in regulatory inefficiencies and create barriers to uniform quality control across the country.
- Limited Investment in R&D:
- Compared to global standards, investment in research and development (R&D) in the Indian pharmaceutical industry is relatively low.
- This limits the industry’s ability to innovate and compete in the global market for new drug discoveries.
- Dependence on Generic Markets:
- The Indian pharmaceutical industry is heavily reliant on the generic drug market, which, while profitable, leaves it vulnerable to pricing pressures, regulatory changes, and competition from other low-cost producers.
Indian Pharma Industry: Import Dependency
- Reliance on Active Pharmaceutical Ingredients (APIs):
- The Indian pharmaceutical industry is heavily dependent on imports for Active Pharmaceutical Ingredients (APIs), with over 60% of these raw materials coming from countries like China.
- This dependency makes the industry vulnerable to global supply chain disruptions.
- Limited Domestic API Production:
- Domestic production of APIs is limited due to higher production costs and lack of sufficient incentives.
- This has resulted in a significant import bill and increased vulnerability to international market fluctuations.
- Impact of Supply Chain Disruptions:
- Any disruption in the global supply chain, such as during the COVID-19 pandemic, can lead to shortages and price hikes, affecting the availability of essential medicines in the domestic market.
- Vulnerabilities Due to Trade Policies:
- India’s dependence on imports for critical drug components exposes it to risks from international trade policies, tariffs, and geopolitical tensions, which can adversely affect the availability and pricing of medicines.
Indian Pharma Industry: Way Forward
- Enhance Domestic API Production:
- Strengthening domestic API manufacturing capabilities through government incentives and subsidies is crucial.
- Initiatives like the Production Linked Incentive (PLI) Scheme and the Promotion of Bulk Drug Parks can reduce import dependency and boost self-reliance.
- Increase Investment in R&D:
- Encouraging higher investment in R&D through tax incentives, public-private partnerships, and international collaborations can drive innovation and help the Indian pharmaceutical industry move up the value chain in drug development.
- Regulatory Reforms:
- Streamlining the regulatory framework by consolidating regional drug regulators into a single central authority can enhance compliance, reduce the risk of regulatory capture, and ensure uniform quality standards across the industry.
- Sustainable Manufacturing Practices:
- Emphasizing sustainable and eco-friendly manufacturing practices can not only reduce costs but also enhance the global competitiveness of Indian pharmaceutical products by appealing to environmentally conscious consumers.
- Leveraging Patent Laws for Public Health:
- The government should proactively use provisions under the Patents Act, such as compulsory licensing and government-use licenses, to ensure that essential medicines are affordable and accessible, while also promoting local production.
- Update Biosimilar Guidelines:
- Modernizing biosimilar approval guidelines to align with international standards, reducing unnecessary clinical trials, and eliminating outdated regulatory requirements can lower costs and accelerate the entry of biosimilars into the market.
Conclusion
To ensure the affordability of medicines and strengthen the domestic pharmaceutical industry, the government needs to reassess these decisions and align its policies with the growth of local production capabilities. Proactive use of the Patents Act and updated regulatory guidelines will be crucial in maintaining a competitive and self-reliant pharmaceutical sector in India.
Related PYQ
How is the Government of India protecting traditional knowledge of medicine from patenting by pharmaceutical companies? [ UPSC Civil Services Exam – Mains 2019]
Practice Question
Discuss the current status of the Indian pharmaceutical industry. Analyze the major challenges faced by the industry? [150 words]