Q2. Discuss the Macro environment of a pharmaceutial company?

Ans: India has become an attractive destination for R&D, with opportunities emer ging in this new market post- WTO (World Trade Organization) accession. Indias in dustrial development has accelerated and its pharmaceutical industry has become one of the most successful. Driving factors attracting international investment include: 1WTO accession 2 low labor costs 3 tax incentives from the Chinese government 4 R&D collaboration opportunities. The Chinese pharmaceutical market is split almost equally between chemical and b iotechnology products at 70%, and TCM (traditional Chinese medicine) products at 30%. The Chinese gove rnment has changed the face of the industry dramatically by: implementing WTO guidelines and protection for intellectual property rights shifting authority from the Ministry of Foreign Trade to the State Food and Dr ug Administration (SFDA). The SFDA has imposed higher drug registration requirem ents for imported as well as locally manufactured products and promoted general compliance with the Chinese Good Manufacturing Practice (GMP) standards for dome stically produced products. A number of domestic players could not withstand thi s pressure from the governmentmany of them closed their businesses whilst others looked to upgrade their technologies through tie-ups with foreign companies. The total value of the market in India was US$12.8 billion in 2005. A ntibiotics have slowly decreased in sales; however, they still represent one-third of the whole market. This is a la rge market share compared with the other therapeutic classes. The three top therapeutic classes (antibioti cs, circulatory and alimentary tract) represent around 60% of the whole market. Indias TCM industry possesses great potential. The key issue is how to inspire this, which requires government attention and enterprise efforts. On on e hand, the government must provide support with its policies; on the other hand, the government should strengthen its recommendations on Chinese medicine plantin g. India possesses 12,807 kinds of medicinal materials from natural sources out of which, 11,146 are of plant origin, 1,581 are from animals, and 80 are from minerals, including more than 5,000 clinically validated folk medicines.Compared with the big global players, domestic vaccine producers have small-scale production, are backward in production technology and have high oper ation costs. In India, clinical trials can be conducted at a much lower cost than in the West. India has a pool of highly educated doctors who are keen to pa rticipate in clinical trials. Although India is beginning to accept foreign clinical data, almost all new drugs entering the country must conduct domestic t esting in some

form. At present, Class I, II and III drugs must undergo phase I, II and III tri als, although some Class III products are exempt from phase I trials. The major forces attracting foreign investors to India are: quality of the clinical data reasonable costs ability to select patients rapidly. Despite the huge growth potential, commercial health insurance still plays a minor role in the local market, covering only a meager 10% of local residents h insurance divides into two types in India: Rural Health Protection System. Urban Health Protection System Government Insurance Schemecovers government employees Labor Insurance Schemecovers enterprise employees. In India, only 15% of the population has health insurance. Most of the rur al population is not covered. The Chinese R&D investment approach has been shifting from technological allianc es towards international mergers and acquisitions. Overseas companies in India have established 700 R&D centers. Pharmaceutical regulation in India is based ar ound the Drug Administration Law. The government first implemented this law in 1984, with the last major amendments taking place in 2001. In this emergi ng market, intellectual property protection is a big challenge. When India became a member of the WTO in 2001, it promised to uphold the Trade-Related Aspe cts of Intellectual Property Rights (TRIPS) Accord, which mandates that drugs receive at least 20 years of patent protection. Political and legal reluctance to uphold the patent rights of foreign in vestors is not the only issue. Intellectual theft comes in many forms, including small scale reverse engineering and copying, systematic reverse R&D and reverse engineering, and counterfeiting. The major distribution channel in retail market is the hospitals, with 80% of pharmacy products going to als. Biotechnology globally has experienced rapid growth promises enormous potential for future growth. In India, nies have developed more quickly than the pharmaceutical patients through hospit in recent years and the biotechnology compa companies have.

total medical expenditures. Healt