The balance between protection and promotion in India

18 Jul 2013 Mark Hollis

Having previously, (in)famously, adopted stringent policies against the global brand drugs industry, Indian government pharmaceutical policy is beginning to target domestic pharmaceutical companies, suggesting that the Indian government is in the throes of a campaign against the pharmaceutical industry as a whole. But is this truly the direction of government policy? And perhaps more importantly, if it is the case that the government is turning its back on pharma, why is the government placing its relationship with the industry in peril?

Many of the headlines, at least in the last few weeks, have highlighted concerns over the role of Foreign Direct Investment (FDI) in the country. The Indian government policy appears divided between the protectionist elements of the Department of Industrial Policy & Promotion (DIPP) and the slightly more relaxed Foreign Investment Promotion Board (FIPB). At stake, for some, is a fear that control of vaccine and essential medicine production for the Indian market will find its way into the hands of international pharmaceutical companies who some believe may not be as cost conscious as perhaps a solely domestic producer. On the other side is the much needed investment required to really drive the Indian pharmaceutical market into the innovative pharma space in a big way. These divisions threaten to derail excitement in the Indian market, especially if the government moves to tighten restrictions on FDI, as some believe the government may do.

New Pricing Policy
If the industry wasn't already hot under the collar over FDI policy, the government's new pricing policy has certainly ruffled some feathers amongst domestic generic manufacturers. Indeed when the government initally laid out its initial drug pricing policy it was widely conceded by the industry that measures to reduce was needed inorder to improve access. However with the government driving prices lower than expected, the pharma industry has been quick to condemn the measures. With lower prices, adding to concerns over already strong competition in the market, many companies may wonder if marketing some products is worth it.

Clinical Trials
Meanwhile, in the innovative pharma space there have also been warnings that the Indian clinical trial industry has nearly ground to a halt following the seeming inability of the Health Ministry to establish guidelines in the wake of the Supreme Court's handing it overall control of clinical trials. With the Health Minister concerned over the potential public relations ramifications should a patient die on a health minister sanctioned clinical trial, few trials have been approved. This has paralyzed the once booming clinical trial industry and driven many Indian drug developers to seek out alternative low cost destinations. There is perhaps light at the end of the tunnel with the Health Minister due to present new clinical trial guidelines before the Supreme Court on July 26th. These measures will hopefully galvanize the industry. Even if clinical trial approvals can go ahead, with continued fear being driven by the introduction of arbitrary compensation payments and increased beaureaucratic hurdles drug developers may be recalcitrant to base trials India again.

And Finally…
The Indian healthcare system may be characterized by phenomenal growth, but with the increasing regulatory hurdles affecting all components of the industry there may well come a point when many companies are forced to consider if the balance has tipped away from profitability, thus prompting even domestic generic companies to consider their positioning in the market. It is therefore crucial for the Indian government to carefully consider the impact of policies rather than rush into policy decision that may detract from the attractiveness of the market. After all, ensuring continued investment will be the key driver to continued access to world class medicines for Indian patients.

Learn how IHS healthcare solutions can help you identify trends in the Indian and other markets by attending our IHS APAC Summit at the Taj Palace Hotel, New Delhi, 25 July 2013. Visit the website to register your attendance at this event.

Posted 18 July 2013


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