Analysing the Trade Aspects of Indian Pharmaceutical Industry

Presented by: Sushant Mishra sushant_mishra1@yahoo.com

The Indian pharmaceutical industry is a success story providing employment for millions and ensuring that essential drugs at affordable prices are available to the vast population of this sub-continent. - Richard Gerster

Introduction

Indian Pharmaceutical Evolution

Phase $ Phase I$ Phase III Development Phase Phase II Phase I "arl( )ears Government Control Indian Patent Act 1970 Process development Production in!rastructure creation Gro%th Phase Innovation and &esearch

'e% IP la% &apid e#pansion o! Discover( domestic mar et &esearch International Convergence mar et development &esearch orientation

*ar et share domination b( Drug prices "#port capped !oreign initiatives companies Local companies begin to ma e an &elative impact absence o! organi+ed Indian companies

1970

1980

1990

2000

2010

Global Pharmaceutical Market

Estimated at $700 bn in 2007 Gro th !ate " #$ %&G! E'(ected to !each ) $*+7 bn in 2012 Generic ,ru-s ) $*2 bn Generic ,ru- Mar.et
Gro th !ate " 11$ %&G! $1// bn by 2012

Indian Pharmaceutical Industry

0ndian com(anies and subsidiaries o1 M2%s 0ndian com(anies manu1acture
Generic ,ru-s 0ntermediaries 3u4. dru-s or &P0s

Meets */$ o1 domestic medica4 needs 5ther areas o1 recent 1ocus inc4ude:
,ru- ,isco6ery and ,e6e4o(ment %ontract !esearch %ontract Manu1acturin-

MAR ET !"ARE # M$%s vs& '(ME!TI% %(MPA$IE!

The Indian Pharmaceutical Industry

!an.ed 7th by Production 8o4ume !an.ed 1+th by ,omestic %onsum(tion 8a4ue Gro th e'(ectation 1rom $1+ bn in 2007 to $+7 bn in 2012

Gro)th Pro*ections

Gro th at 9$ (.a. ti44 201/ to :ust under E;! 20 bn <or4d Gro th !ate " #$ and Germany=s " /$ Sti44 0ndia=s share in <or4d=s Mar.et in 201/ " >ust o6er 2$

'rug !ales Gro)th

+actors for Immense Gro)th Potential

0ncreasin- hea4th consciousness o1 (eo(4e &11ordabi4ity due to risin- incomes o1 e'(andinmidd4e c4ass ?ea4th insurance 1aci4ities @ar-e number o1 untreated and under)treated medica4 conditions 2e er and better medicines

M('E, T( %APT-RE (-T!(-R%I$G (PP(RT-$IT.

Gro)th Rate %omparision

%II # Interlink !tudy

&s (er %00 ) 0nter4in. studyA the 1o44o in- 1actors i44 contribute to incrementa4 -ro th rate o1 the 0ndian (harma mar.et in 201/: Midd4e %4ass) 2$ Pricin-) 1$ !ura4 Mar.ets)2$ Mar.etin- E11iciencies )1$ ?ea4th 0nsurance) 0.17$ 3rands "0./$

2. +. 7. /. #. 7.

Market !hare in /001

Market !hare in 2331

India4s %omparison to the 5orld

;S (harma sa4es ) 17 times o1 0ndia >a(an " / times Germany " 7 times <estern 0ndustria4 %ountries " Per ca(ita Pharma Sa4es " E;! 700 (a " 70 times o1 0ndia %hina=s Sa4es " E;! +# bn ) 7 times o1 0ndia BoreaCs Sa4es " E;! 17 bn

"#port ,cenario

Global Pharma E6port 723389

P"ARMA E:P(RT I$ 2338
+0 2/ -! ; 7in bn9 20 1/ 10 / 0 3e4 Ger ;S ;B S it Fra 0re4a 0ta4y 2et S e 0ndi

;S D$ 02 32E 2#.2 27./ 20./ 20 1*./ 19.7 1/.9 10.# 9.11 #.92 2.17

E6port 'ata
E:P(RT 7Rs& in %rores9
+0000 20000 10000 0

1**9) 1***) 2000) 2001)2002) 200+) 2007) 200/) 200#)

EGP5!H D!s. in #2/# 72+0 97/7 *7/1 1292# 1/21+ 179/9 22/7* 27*72 %roresE

Gro)th in E6ports
E'(ort Gro th " 22$ in 200# " H ice o1 G4oba4 a6era-e E'(ort !atio " +2$ in 200#

E6port !urplus

E'(ort Sur(4us has risen 1rom E;! +70 mn in 1**# to around 1*00 mn in 200#

Ma*or E6porting 'estinations

0ndia E'(orts to o6er 200 countries Primary mar.ets ) ;SA !ussiaA ;B and %hina

Ma*or %ompetitors
>a(an D $+.71bnE %hina D $+.12 bnE &ustria D $2.** bnE %anada D $2./0 bnE India 7 ;2&/< bn9 &ustra4ia D$ 1./7 bnE Me'ico D$ 1.+7 bnE Hhai4and Ma4aysia

T(P /3 %(MPA$IE! =A!E' ($ E:P(RT!

RA$ 1 2 + 7 / # 7 9 * 10 $AME (+ %(MPA$. !&23&GI %0P@& ,!.!E,,I=S &;!5302,5 @;P02 5!%?0, %?EM0%&@S J P?&!M&%E;H0%&@S P&2&%E& 305HE% @H,. &H;@ @H,. 0P%& @&35!&H5!0ES M&H!0G @&35!&H5!0ES @H,. E:P(RT 7MAR%" 319 I$ R!&M$ 27071 1/1+# 11*#7 91#+ 7#11 #210 717# 717/ 70#2 +*#0

Indian companies seeking overseas markets

&--ressi6e Gro th Strate-ies
For bui4din- a -4oba4 sca4e " !anba'y aims to be one o1 the Ho( / For mar.et entry " acKuirin- 4oca4 co or settin- u( subsidiaries

!ecent MJ& acti6ity " siLe o1 dea4s -ro in !anba'y -oin- a1ter acKuisitions in ;S J Euro(e
&cKuired + com(anies in Euro(e in MarchM&(ri4 200# Hera(ia D!omaniaE 1or ;S$ +27 mi44ion !aisin- 1./ bi44ion to 1und 1urther acKuisitions

,r. !eddy=s
&cKuired 3eta(harm DGermanyE 1or ;S$ /70 mi44ion in March 200#

Matri' Dno (art o1 My4anE

&cKuired ,oc(harma D3e4-iumE 1or ;S$ 2#+ mi44ion in 200/.

IMP(RT!
Its imports consist almost entirely of life-saving drugs and new generations of formulations that are under patent protection by innovator companies These include mainly:
Anti-cancer Cardiovascular Anti-hypertension drugs

Life saving drugs can be imported into India duty free ther pharmaceutical imports - base duty rate ! "#$ %ffective duty rate - &'()$ in *##* +nited ,tates ! duty ! #$

 Indias leading import suppliers:

,wit-erland .)$/ 0ermany .' $/ +, .1$/ 2rance ."$/

IMP(RT 'ATA - /000 to 233>

Import by %ountry 738-3>9

-.P and Government Initiatives

GE$ERA, PR(?I!I($!
E'(orts and 0m(orts sha44 be 1reeA e'ce(t here re-u4ated by FHPN 1ree un4ess re-u4ated or any other 4a in 1orce. &44 im(orted -oods sha44 a4so be sub:ect to domestic @a sA !u4esA 5rdersA !e-u4ationsA technica4 s(eci1icationsA en6ironmenta4 and sa1ety norms as a((4icab4e to domestica44y (roduced -oods &ny -oodsA e'(ort or im(ort o1 hich is restricted under 0H%D?SE may be e'(orted or im(orted on4y in accordance ith an &uthoriLation or in terms o1 a (ub4ic notice issued in this re-ard.

PR(M(TI($A, MEA!-RE!
%entra4 Go6ernment aims to encoura-e manu1acturers and e'(orters and Oua4ity to attain internationa44y acce(ted standards o1 Kua4ity 1or their (roducts. %entra4 Go6ernment i44 assist in moderniLation an u( -radation o1 test houses and 4aboratories to brin- them at (ar ith internationa4 standards. E'(orters are e4i-ib4e 1or SH&H;S %&HEG5!I

& Status ?o4der sha44 be e4i-ib4e 1or 1o44o in- 1aci4ities: iE &uthoriLation and %ustoms c4earances 1or both im(orts and e'(orts on se41)dec4aration basis iiE Fi'ation o1 0n(ut)5ut(ut norms on (riority ithin #0 days iiiE 100$ retention o1 1orei-n e'chan-e in EEF% account i6E Enhancement in norma4 re(atriation (eriod 1rom 190 days to +#0 daysN

EP%G
;nder this scheme the e'(orter is a44o ed to im(ort ca(ita4 -oods use durin- Pre " (roductionA Production and Post " (roduction sta-e a-ainst (ayment o1 /$ customs duty sub:ect to 1u41i44ment o1 e'(ort ob4i-ation Hhe e'(ort ob4i-ation is 9 times the duty sa6ed Hhe e'(ort ob4i-ation is # times in case o1 SS0s and a-ro units en-a-ed in e'(orts Hhe (eriod 1or 1u41i44ment o1 e'(ort ob4i-ation is 9 years Hhe (eriod 1or 1u41i44ment o1 e'(ort ob4i-ation is 12 years hen:
EP%G authoriLation P 100 crores @ocated in &-ri e'(ort Lone ;nit under re6i6a4 (4an o1 30F! ;nit is a cotta-e or tiny sector unit

'uty E6emption !cheme

Hhe e'(ort enter(rise is a44o ed to ma.e duty 1ree im(ort o1 in(uts hich are direct4y used in the e'(ort (roduct at the (re)shi(ment sta-e Hhe detai4s o1 the in(uts are -i6en in the ?andboo. o1 Procedures D8o4. 00E in the 1orm o1 Standard 0n(ut)5ut(ut norms DS052E

'uty Remission !cheme 7'EP=9

Hhis scheme o11ers the 1aci4ity 1or duty 1ree im(ort o1 in(uts at the (ost shi(ment sta-e under 'uty Entitlement Passbook !cheme 0t is 6a4id 1or 27 months 1rom the date o1 issuance Hhis 1aci4ity is (ro6ided by ay o1 -rant o1 im(ort duty credit a-ainst the e'(ort (roduct ,EP3 has been e'tended ti44 +1st ,ecember o1 200*

(ther Provisions
0m(ort o1 3ona1ide Hrade Sam(4es is a44o ed ithout 4imit e'ce(t in case o1 6e-etab4e seedsA bees and ne dru-s E'(ort o1 3ona1ide trade and technica4 sam(4es o1 1ree4y e'(ortab4e item is a44o ed ithout any 4imit Hhe e'(orter is a44o ed to re(4ace dama-ed or de1ecti6e -ood 1ree o1 char-e E'(orter is a44o ed to im(ort dama-ed -oods 1or re(air and 4ater e'(ort them bac. ithout any 4icense based c4earance Hhe e'(orter is a44o ed to trade -oods 1rom another country to a third country ithout 4icense Di1 item is non restrictedE Pri6ate bonded <arehouses 1or E'(ort and 0m(ort

Pharmaceutical E6port Promotion %ouncil 7Pharmae6cil9

(b*ectives Hhe ob:ecti6es o1 the %ounci4 DPharme'ci4E are to e'tend a44 assistance to the (harmaceutica4 industry in 0ndia to e'(4ore their o((ortunities. Ser6ices E'tended inc4ude: DaE Hrade EnKuiries recei6ed 1rom 1orei-n Embassies M3uyers DbE Mar.et ,e6e4o(ment assistance as (ro6ided by Ministry o1 %ommerce 1or business tours to 1orei-n countries. DcE &rran-e one to one 3uyerMSe44er Meets in 0ndiaM&broad. DdE &rran-e E'hibitions in 0ndia and &broad 1or mar.et (romotion. DeE &ssist in !e-u4atory matters ith domestic and Forei-n Go6ernment a-encies. D1E Pro6ide 1inancia4 assistance 1or Product !e-istration char-esA !esearch and ,e6e4o(mentA Product sho casin- etc. as (er ru4es. D-E &rran-e %on1erencesMSeminars in domestic and 1orei-n countries ) 1or mar.et and technica4 u()-radation o1 in1ormation

5orking Groups and @oint 5orking Groups

India-E- @oint 5orking Group Setu( in 200# %o)%hairmanshi( o1 >oint Secretary DPharmaE ,.G. Enter(rises ) counter(art 1rom the E; side. Hhe 1irst meetin- ) 19th >u4y 200# at 3russe4s ) the Herms o1 !e1erence 1or the ><G as 1ina4iLed. 0ts 2nd meetin- as he4d on +0th and +1st May 2007 at 2e ,e4hi

5orking Groups and @oint 5orking Groups

Indo Tunisia @oint 5orking Group %onstituted since 2007 Hhree meetin-s ha6e since been he4d. Hhe Hunisian Go6ernment has -i6en (ermission to / 0ndian %om(anies 1or re-isterin- their (roducts in Hunisia

5orking Groups and @oint 5orking Groups

!ub Group on Pharmaceuticals under the aegis of Indo-Russian 5orking Group on Trade and Economic %ooperation 7IR5GTE%9 Pro6ides in(uts to 0!<GHE%. Hhe issues discussed ere 6arious areas o1 coo(eration 4i.e: Promotion o1 Hrade and e'(orts o1 (harmaceutica4s to these countries >oint 8enture %oo(eration in manu1acture as e44 as !J, !e-u4atory coo(eration ?!, and HraininE'hibitions and Hrade Fairs.

5orking Groups and @oint 5orking Groups

!ub Group on Pharmaceuticals and Medical 'evices ?i-h Hechno4o-y %oo(eration Grou( D?H%GE on 3iotechno4o-y and @i1e Sciences <or.in- Grou( has recent4y been au-mented by t o sub-rou(s co6erin- 3iotechno4o-yA Pharmaceutica4s J Medica4 ,e6ices. Hhe noda4 (oint on the ;.S side is Mr. >e11rey GrenA ,irector o1 the %ommerce ,e(artment D511ice o1 ?ea4th J %onsumer GoodsE. >oint Secretary DPharmaEA 1rom this ,e(artment has been nominated as the 2oda4 511icer 1or the Sub)Grou( on Pharmaceutica4s and Medica4 ,e6ices. Hhe a4ternate o11icer i44 be the concerned ,e(uty Secretary DPharmaE in this ,e(artment. Hhe 4ast meetin- o1 this -rou( as he4d on 1+th ,ec. 2007.

5orking Groups and @oint 5orking Groups

5orking Group on 'rugs and Pharmaceuticals %hairmanshi( o1 Secretary D%JP%E Hhe ,e(artment o1 %JP% constituted three Sub Grou(s 1or di11erent Herms o1 !e1erence DH5!E o1 <or.in- Grou(. !e(ort o1 the <or.in- Grou( on ,ru-s and Pharmaceutica4s 1or the e4e6enth 1i6e)year (4an D2007)12E has a4ready been submitted to the Steerin- %ommitteeA P4annin- %ommission on 1st ,ecember 200#.

Some o1 the im(ortant measures 1or the e41are o1 common man and ensurin- -ro th o1 the domestic ,ru-s and Pharmaceutica4s 0ndustry as en6isa-ed in the !e(ort inc4ude: ) 0. %reation o1 / ne 20PE! 4i.e institutions to -enerate reKuisite ?! in this 1ie4d. 00. 0nterest subsidy to Pharma 0ndustry 1or Schedu4e M com(4iance. 000. Settin- u( 10 Pharma Par.s to (ro6ide -4oba4 en6ironment to the Pharma industry. 08. %reation o1 ,istrict ,ru- 3an.s 1or 3P@ 1ami4ies. 8. Pro6ision 1or Price and a6ai4abi4ity o1 %ancer medicines Fund. 80. Measures 1or Pharma PS;s e41are inc4udin- re6i6a4 o1 sic. PS;s. 800. Stren-thenin- and u( -radation o1 in1rastructure at 2PP& and 20PE! and Pharme'ci4.

Pharmaceutical E6port Promotion %ell

5b:ecti6e ) 3oostin- (harmaceutica4 e'(orts and to act as a noda4 center 1or a44 KueriesMissues re-ardin- (harmaceutica4 e'(orts. Hhe %e44 co44ects statistica4 data on e'(ort and im(ort o1 (harmaceutica4s in the country and (ro6ides commercia44y use1u4 in1ormation 1or de6e4o(in- and increasin- dru-s and (harmaceutica4 e'(orts. 0t is actin- as noda4 center 1or a44 Kueries and issues re-ardinPharma e'(orts. Hhe %e44 a4so underta.es (romotiona4 acti6ities 1or acce4eration o1 (harmaceutica4 e'(orts and considers su--estions 1or modi1ications in EG0M P5@0%I 1rom the industry. Hhe %e44 has a4so been entrusted ith the or-aniLation o1 seminars and or.sho(s on standardsA Kua4ity contro4 reKuirements o1 im(ortant countries so as to (re(are the domestic com(anies 1or e'(ortin- their (roducts. ,atabase on the status o1 (harmaceutica4 industry in many countries is a6ai4ab4e in the ce44 1or the bene1it o1 0ndian e'(orters. E6ents ) G%% &1rica and @atin &merica meets at ?yderabad and %0S meetin- in Mumbai ere or-aniLed.

,iberalisation 100$ F,0 a44o ed 0ndustria4 @icensin- ) abo4ished

=TPs in India
@uc.no 3iotech Par.A ;P 0%0%0 3iotech Par.A &P &uran-abad 3iotech Par.A M&?

Incentives to =TP
/& Ta6ation on biotechnology products 2e biotechno4o-y units i44 not be ta'ed 1or the 1irst 1i6e years. 2& +iscal incentives &44 in(uts as e44 as ca(ita4 -oodsA inc4udin- ca(ti6e -eneration setsA durin- the im(4ementation sta-e i44 be e'em(ted 1rom the (ayment o1 entry ta'A hich can be u( to 7 years or durin- the construction (eriod hiche6er is ear4ier. 8& %aptive generation %a(ti6e -eneration sets to be insta44ed by biotech)industry i44 be e4i-ib4e 1or e'em(tion o1 e4ectricity ta' 1or a (eriod o1 se6en years. A& Pollution control 3iotechno4o-y units must 1u41i44 the reKuired norms re-ardin- (o44ution contro4 de(endin- on its s(eci1ic nature. Hhe State Po44ution %ontro4 3oard i44 act as a 1aci4itator in -uidin- these units to con1orm to the re4e6ant ru4es and re-u4ations. 0t i44 a4so act as a sin-4e indo a-ency to co)ordinate the a((ro6a4 (rocess.

Incentives to =TP
>& -ninterrupted po)er Hhese industries i44 be -i6en to( (riority in sanction and ser6icin- o1 (o er. 3iotechno4o-y com(anies i44 be treated as industria4 and not as commercia4 consumer and accordin-4y e4ectricity tari11 i44 be 4e6ied on such com(anies. 1& Rela6ation in Bonal regulations For re-istered 3iotechno4o-y units ithin dec4ared 3iotechno4o-y Par.M0ndustries areaA re4a'ation o1 F&! to the e'tent o1 /0$ o1 the (re6ai4in- norms sha44 be -i6en.

Incentives to =TP
7& !implified labour la)s Hhe 4abour 4a s i44 be sim(4i1ied so as to enab4e em(4oyment o1 omen durin- the e6enin- hours. 9& %oncession for creating employment E'(ansionA di6ersi1ication and moderniLation o1 e'istin- sma44 sca4e industries ou4d -et a concession on re-istration char-es.

Incentives to =TP
The follo)ing consessions )ill be offered to the biotechnology parkC E'em(tion on (ayment o1 entry ta' on machineryMeKui(mentMca(ita4 -oods and construction materia4sA 1or a (eriod o1 7 years or ti44 the date o1 com(4etion o1 the (ro:ectA hiche6er is ear4ier on the condition that each in6oice shou4d not be 4ess than !s.2/ 4a.hs or !s. 10.00 4a.hs in case o1 construction materia4s. ;( to /0$ e'em(tion 1rom the (ayment o1 stam( duty and re-istration char-es. 0n case o1 1irst 4ease as e44 as subseKuent 4ease to biotechno4o-y com(aniesA concessions i44 be a6ai4ab4e 1or biotechno4o-y (ar.s certi1ied by the ,e(artment o1 Science J Hechno4o-y.

!pecial Initiatives
Hhe e'cise duty has been reduced 1rom 1#$ to 9$ in 2009 0ncreased out4ay 1or ?08 treatment 20 more 3iotech Par.s to be set u( 0ncenti6es under consideration
+0A000 crore re4ie1 (ac.a-e to he4( the (harma sector 0ncreased Grace (eriod o1 u(to 2/ days 1or Forei-n E'chan-e Payments !educed 0nterest !ates under ,EP3

Duality %ertifications and Practices

<?5 %erti1ication ;S Food and ,ru- &dministration DF,&E Euro(ean ,irectorate 1or the Oua4ity o1 Medicines DE,OME ;SP D;S Pharmaco(eiaE GMP DGood Manu1acturin- PracticesE G@P DGood @ab PracticesE ?&%%P D?aLard &na4ysis and %ritica4 %ontro4 PointE ,%G0 &((ro6a4 and !e-istration %H!0 D%4inica4 Hria4s !e-istry in 0ndiaE 0P%% D0nter-o6ernmenta4 Pane4 on %4imate %han-eE

TRIP! Impact Post 233>

Product Patent !e-ime Process Patents ) abo4ished 0P! 1or 20 years instead o1 17 years Phase -a( in %4inica4 Hria4s abo4ished

RE%(MME$'ATI($!
%3tension of deduction of 4&#$ of 567 e3penses: This would encourage more and more companies to invest in R&D. To rationali-e 7rug 8rice Control rder .78C /( The ob9ective of the price control was to ensure adequate availability of quality medicines at affordable prices. An academic !industrial relationship can be further e3plored: on the lines of US model, where the universities are the sites of innovation and the industry commerciali es the product. !roperty Rights "#!R$ and get a share of the profits. %cademic institutions will then become the engines of entrepreneurship. Income ta3 e3emptions should be given on clinical trials and contract research done outside the company and abroad: &his is because #ndia is seen as an emerging center for outsourcing of clinical trials for the !harmaceutical '()s.

%($T'E
The problem of spurious drugs has to be tac;led( 'ost of the cases relating to spurious drugs remain undecided for years. *ence there is a strong need for setting up separate courts for speedy trials of such offences. +ach state should set up accredited testing laboratories that are well equipped and adequately staffed. &he staff should be trained well for drawing samples for test and monitoring the quality of drugs and cosmetics moving in the State.

,E?ERAGI$G TRA'ITI($A, $(5 "(5

India should e3ploit its ;now-how in herbal medicines Since these medicines do not come under the purview of the &R#!S regime and the research in new chemical entities involves millions of dollars of investment, the #ndian companies should engage in R&D in herbal medicine &he companies should try to e,ploit the #ndian traditional -nowledge in ayurveda and herbal cures and file as many patents for herbal medicine as they can .or this the government should set up R&D laboratories underta-ing research e,clusively in the area of herbal medicines and support the companies in their research and patent filing
The government should encourage setting up of +,27A-compliant plants by providing ta3 holidays for a specified period so that the #ndian companies can e,ploit the opportunity arising out of patented drugs and ta-e up mar-eting of generics in the developed countries li-e US%

India is poised to revolutionise biotechnolog( /ust as it did the I. industr(0 1.he "conomic .imes