There is general feeling in the country that the Indian pharma industry is doing extremely well. This is certainly true, particularly in the Indian context.
It is also a fact that several large multi national pharma companies in the world have taken note of the progress of a few Indian pharma units and are recognising their capabilities and track records.
Even under such circumstances, there is some sort of apprehension amongst the Indian pharma industry as to whether it would be able to sustain the past growth level in the coming years, in the light of the impending patent regulations and the liberalised global trade.
A clear analysis of the performance of the Indian pharma industry would readily indicate the fact that while a few number of organisations such as Ranbaxy, Dr.Reddys, Orchid, Lupin and others have done extremely well, there have also been a large number of pharma organisations in the medium and small scale sectors, who have failed in the past.
If one would look into total number of pharmaceutical units (both bulk drug and formulations) that have been set up in India since independence, it would become clear that atleast 40% of the units have closed and withered away. Obviously, this implies that everything about Indian pharma industry are not so rosy and promising as projected.
While we recognise the success, we should also investigate the cause for such failures.
It is generally said that the success of the Indian pharma industries are only due to it's capability in reverse engineering. Such views are uncharitable, as the success of Indian pharma sector have not been due to reasons as simple as that only.
Indian pharma industry deserves far more credit and praise for its achievements. It has been able to introduce and practice appropriate marketing strategies both in the Indian and global market, even in the face of severe competition from well established multi national companies. By and large, it enjoys excellent credibility and faith among consumers, particularly in India. Over and above that, it has also practiced reasonable level of fairness in price fixing and have exhibited responsible corporate behaviour.
It is well recognised fact in future, the fate and progress of the pharma industries in any part of the world would be largely guided by the R&D capabilities and introduction of new molecules appropriate to the requirements of different regions. This calls for extensive and high level of Research and Development capabilities amongst the pharma industries.
The question is as to what extent the Indian units have developed such capabilities.
In the past, most of the turn over and profits for Indian pharma units have come from the formulation sector and not from the bulk drug sector. Even the export break through of the Indian units have been largely in the formulation sector.
We all know that the formulation sector is not that R&D intensive to the level of bulk drug sector. A number of Indian formulation units themselves have been importing bulk drug for formulation and finished products. This formulation capability by itself would not be adequate to forge ahead in the future.
The development and introduction of new bulk drug takes any where between 6 to 10 years and cost millions of dollars. The success rate in development of new molecules have been low and it is said that hardly one or two research exercises are successful out of around 100 attempts.
Further, there are number of cases in the recent years, where the drugs which have already been well introduced in the market have to be withdrawn due to pressures from alert public and environmentalists.
Obviously, all such aspects indicate that Research and Development work in pharma sector is not only multi million dollar exercise but it is also a calculated risk. One would wonder as to whether Indian pharma units have necessary turn over and financial muscle to face such risks in the pharma sector in the coming years.
It appears that in the coming years, the Indian pharma industry would find it difficult to maintain its market share as bulk drug manufacturer in the global context. They could find it difficult even to maintain market share in the Indian bulk drug market in the face of competition from multi national companies operating all over the world.
In this scenario, it would be appropriate for the Indian pharma sector to introspect as to whether it should focus more in functions relating to service sector in the pharma industry instead of manufacturing activity.
The service sector such as data base management, bio-informatics, clinical trials, testing and analysis, custom synthesis, contract research etc. are of tremendous importance and have promising future.
With army of technologists and scientists around the country and reasonable capability level, Indian pharma sector would emerge even stronger in the global sphere, if it could concentrate in service functions, of which contract research and custom synthesis could play a major part.
Obviously, there are both adequacies and inadequacies in the Indian pharma sector. Perhaps, we should look into inadequacies with greater attention and try to over come the constraints.
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