International Journal of History

and Research (IJHR)

ISSN (P): 2249–6963; ISSN (E): 2249–8079
Vol. 12, Issue 1, Jun 2022, 77–88
© TJPRC Pvt. Ltd.

PHARMACEUTICAL INDUSTRY IN INDIA: HISTORICAL PERSPECTIVES,

RECENT ISSUES AND FUTURE TRENDS

MALIKA BASU (GHOSH)

Assistant Professor in History, Kalna College, University of Burdwan, West Bengal
ABSTRACT

Since the colonial period, the issue of the pharmaceutical industry was an important area of concern. The Indian
pharmaceutical sector has grown steadily over the last three decades to become a profitable, high-tech enterprise. It has
been impacted by a variety of institutional and regulatory challenges since its establishment, including patents, foreign
exchange legislation, pricing controls, industrial licensing, and research and development.

With this context in mind, the purpose of this article is to investigate a problem that has impacted the Indian
pharmaceutical business and how the situation is changing. The goal will be emphasised for the following reasons: I The
impact of intellectual property rights on India's pharmaceutical sector (ii) understanding integration and acquisition in
the Indian medical field (iii) what will be the future research and development in Indian medicine and finally (iv)
understanding trends futures of the Indian pharmaceutical industry in this era of globalization.

Original Article
Research shows that the emergence of co-operative policy and technological changes in public policy principles
has influenced the choice of technologies and trends of Indian pharmaceutical companies over time which has contributed
to the growth and evolution of this industry in India on a large scale.

KEYWORDS: Pharmaceutical, Industry, Intellectual Property Rights, Foreign Investment & Globalisation

Received: Jan 11, 2022; Accepted: Feb 01, 2022; Published: Mar 26, 2022; Paper Id.: IJHRJUN202210

INTRODUCTION

During the colonial era, in western drugs, the people of the country relied heavily on foreign purchases. At that
time, drug production was at an alarming level (Singh, 2011). There was an error in the drug trade. Both the hot
weather and the wrong storage system were major drug storage problems. As a result of these conditions,
substandard drugs continued to be sold on the market. The whole situation was very disappointing. The situation
was evident at the government level. In March 1927, the State Council commended the General Council of
Councils to urge all Provincial Governments to take action regarding drug abuse. Other than that, to make a law to
stop the production and sale of drugs, but no results emerged from that action. On the other hand, after World War
I, traditional medicine faced a decent colonial empire. Although some efforts are being made to improve the
chemical industry in India. The strategies are also designed by the Indian Munitions Board, but nothing is being
done to help the production of home remedies. In such a scenario, in the face of inequality, the Indian Chemical
Industry demanded tax protection in 1929. The Tax Board was established and overseen by Mr. Padamji P Ginwala.
The board recommended that the government be careful when making chemicals. But the Medical Sector remained
insecure. As a result, before World War II, India relied heavily on foreign trade. During this time, in the field of
Pharmaceuticals, Britain was facing stiff competition from Germany. To address this, the Indian and British
governments agreed at the 1932 Regional Economic Summit in Ottawa. This agreement provided for exchange

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78 Malika Basu (Ghosh)

rates in Britain for key categories of goods including drugs and drugs (Singh, 2011).

Prior to coming to the Drug Act or the Inquiry Committee, a brief reference to some of the things that endanger
the health of the community was illegal. There has been an uncontrolled and unlimited publication of drug and drug
advertisements as well as prescription drugs. Counterfeit and counterfeit drugs proliferated with the support of advertising
agencies. All of these issues had a direct impact on public health. In March 1929, local governments applied for the
formation of a sub-committee for this purpose. Finally, the Government of India issued Declaration No. 1637 dated 11
August 1930, he appointed a committee (Drug Research Committee) under the leadership of Lieut-Col. R.N. Chopra,
looking at the problem of adultery and drug addiction. This was a really long campaign for traditional and international
drug companies. In other words, the most important event in the early twentieth century was the establishment of the Drug
Research Committee in 1930. In a government resolution of August 1930, we had given the Committee the power to
summon members where necessary. This arrangement has enabled the Committee to seek the assistance of specialized
professionals with experience in local experience and problem-solving experience. The work of the Committee was very
well organized. As a result, a number of comments and discussions appeared in professional newspapers regarding drug
abuse and drug trafficking. The Committee Report was taken by the Chairperson to Delhi and forwarded to the
Government of India on Tuesday 31 March 1931. The report was published on December 1, 1931. It was recommended
that the Drug and Pharmacy Control Act be enacted. The Committee recommended that all copyrighted goods and goods
with ‘confidential formula’, manufactured in India or imported, require registration on the patents of the Canadian Patent
and Proprietary Medicine Act. With regard to traditional medicine, it was recognized that a single or combination drug
should be administered. The administration of these drugs should be different from that of drugs and western
arrangements. Recommendations are made for the promotion and development of the drug industry in the country. The
import duty on manufactured drugs should be increased by 5%. The construction of Government Depot Pharmacies should
be gradually reduced and thus available goods from local manufacturers as much as possible. It was also recommended
that steps be taken to integrate Indian Pharmacopoeia without delay. Overall, the Report was received with great respect.
Important features of the recommendations were published in several journals in the country and abroad. At the
government level, the app went very slowly but eventually many of the Committee's recommendations came into effect.

In fact, in India, there was no law that could directly prohibit drug abuse or ensure compliance with proper
standards of hygiene and power. However, certain provisions of the Indian Penal Code, the Indian Trademarks Act, 1889,
and the Maritime Code of Conduct, 1878, had an effect on it. Deliberate adultery, illegal drug trafficking, quality or
consumer demand, can be punished under certain sections of the Indian Penal Code. The Opium Act, 1878, Poisons Act,
1919, and the Dangerous Drugs Act, 1930, regulated the production, importation and sale of certain drugs, but they did not
have a direct effect on adultery or power standards. Basically, these actions were designed to meet the tax and property
requirements and to prevent the illegal use of certain dangerous drugs. An indication of a visit to India in the winter of
1936-37 may be suggested by Dr. G.C. Anderson, Secretary of the British Medical Association. Upon his return, he
reported the condition of the medical profession to the BMA (British Medical Association). He also reported on drug and
drug control. He pointed out that the medical profession in India was disrupted because, there were no organized or
independent specialists.

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Pharmaceutical Industry in India: Historical Perspectives, Recent Issues and Future Trends 79

1.1 PHARMACEUTICAL INDUSTRY IN THE POST-INDEPENDENCE PERIOD

After gaining independence in 1947, the Government of India stated that it had a special interest in government and the
progress of the drug industry. At that time, the drug industry was in its infancy. The total production of drugs in our
country was estimated at Rs. 10 million. Multinational corporations (MNCs) exploited the drug market in our country by
using the colonial Patents and Designs Act of 1911. They were too preoccupied with purchasing drugs in their home
nation. Even ten years after independence, these multinational corporations controlled 99 percent of India's nearly 1700
pharmaceuticals and patents. However, major multinational corporations (MNCs) never come forward with investment or
technical aid to set up drug manufacturing units in India. Under the Department of Chemicals and Fertilizers, five
medication manufacturing units have been constructed. Indian Drugs and Pharmaceuticals Limited (IDPL), Hindustan
Antibiotics Limited (HAL), Bengal Immunity Limited (BIL), Bengal Chemical and Pharmaceutical Limited (BCPL), and
Smith Stanistreet Pharmaceutical Limited were the companies in question (SSPL). These institutes are responsible for
India's ability to obtain pharmaceuticals and medicines at very inexpensive costs. At the end of the colonial fag, drug laws
began to change. However, their use really started in free India. In independent India, the Drug Investigation Committee
has recommended a pharmacy regulation law. To regulate the work of the pharmacy, the Bill was released at the end of
1945 and was officially introduced to the Legislature in January 1946. Finally, the Pharmacy Bill was approved by the
Governor-General on 4 March 1948. This is a red-letter day in the history of Pharmacy in India. However, the publication
of India's first official Pharmacopoeia in 1868 was a milestone. On the other hand, in gaining the independence of the
country, the long-awaited day came on November 23, 1948. The Ministry of Public Health of India formed a committee of
Indian Pharmacopoeia. Early in 1956, Pharmacopoeia of India (The Indian Pharmacopoeia), 1955, appeared. The next
milestone was the unification of the Indian Pharmacopoeia, 1955. The supplement was prepared in 1960. Pharmacopoeia
was revised and the 'Second Edition' of Pharmacopoeia of India appeared in 1966. Gradually Pharmacopoeia was revised
and updated. Even in 2007, Indian Pharmacopoeia was organized by the Indian Pharmacopoeia Commission. Several
reviews and updates on testing methods, reference data, dosage forms, vaccines, blood and brightly related products,
biotechnology products etc.

In the early 1950s, there were seventy-five large doses and one thousand five hundred and sixty-eight measures of
medical anxiety. There were state-owned factories (11), large corporations under foreign control (28) and large
corporations under Indian rule (54). In 1951, the Industrial Act was enacted which gave the Central Government the power
to regulate industries (development and control) including the Medical industry. In 1953, the Government of India
established a Medical Research Committee under the chairmanship of Major General SL Bhatia to conduct an in-depth
investigation into the scope and development of the pharmaceutical industry, basic equipment and packaging industry,
suspension, quality control and management, research work, distribution and marketing, technical training etc. to develop
the entire pharmaceutical industry. In order for the pharmaceutical industry to thrive rapidly, it was suggested that each
production concern should try to produce as much chemical and chemical products as possible at that time. There may be
reference to the Drugs and Magic Remedies Act 1954 (objectionable advertisements) (Drugs and Magic Remedies, 1986).
The law has made provisions to regulate drug advertising in certain circumstances, to prohibit advertising for certain
purposes of suspected magical remedies and to deal with related matters. The laws under this Act were published in 1955.

In 1955, the Pharmaceutical Inquiry Committee, formed the Development Council for Drugs and Pharmaceuticals
in terms of the Industrial Act, 1951. It was felt that the country should be free from foreign exploitation and cheap

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80 Malika Basu (Ghosh)

medicines should be given to the people. In 1956, the Russian delegation visited India and made recommendations for the
development of the pharmaceutical and other industries. Over time, various companies gradually joined the drug
manufacturers. In 1960, there were about 2,800 large, medium and small producers. India has met the full requirements for
the manufacture and packaging of imported or semi-finished drugs. A report (1959) by Judge Rajagopala Ayyangar (1959)
on the review of the Copyright Act may also be noted. In line with Justice Ayyangar's views on the pharmaceutical
industry, the Mudaliar Committee (1951-61), recommended that copyright should be a process and not a product. Patent
application should be reduced to between five and ten years, although the extension has not been granted as usual. The
Mudaliar Committee also recommended that shops and depots be modernized, expanded and operated as state-owned
enterprises for the production and supply of drugs, not only to meet the needs of community development, but also to
security services. It can be said that the Indian Pharmaceutical Delegation traveled to Russia and other Eastern European
Countries in 1956. In line with the recommendations of the Council on Drug and Drug Development, in 1963, Indian
Pharmaceutical Delegation visited several drug laboratories in Italy, Switzerland, West Germany, the United Kingdom, the
United States of America and Japan. The Indian team identified basic and intermediate drugs, experimental plants,
pharmaceutical processing, product development laboratories, modern contraceptive methods, basic and applied research,
quality control, drug patents, drug prices and exports. The visit provided adequate information and expert advice to the
Government of India which assisted him in making policy decisions regarding drug production and related matters.
Another important development was the patent law. In British India, the First Copyright Act was passed in 1856. After
independence, the situation changed with the promulgation of the Copyright Act of 1970. The law provided for a process
patent only to be provided with chemicals. Medicines and food with a protection period of five to seven years and a Right
License after three years of patenting. This legislation has been a huge success in the national field of the pharmaceutical
industry.

In the 1970s, the Indian government took a number of policy steps to attain independence in the pharmaceutical
industry. The first move was to update colonial patent legislation and renounce the pharmaceutical product's patent
protection. As a result, the Patents Act of 1970 limited patent protection to medical inventions. As a result, Indian
companies will be allowed to create new pharmaceuticals that have been approved for use on the worldwide market but
were previously unavailable to India's needy patients. This has allowed for the production and sale of novel
pharmaceuticals at affordable prices. Second, the government enacted legislation restricting foreign ownership, prohibiting
foreign corporations from owning more than 50% of the company. Third, the government imposed direct price limits on all
347 medication formulations. Fourth, international pharmaceutical companies (MNCs) are forced to start producing both
synthetic drugs and bulk drugs in India (Abrol, Prajapati and Singh, 2011). Fifth, mass production of public sector drugs
has encouraged small and medium enterprises (SMEs) to begin production.

In February 1974, the Government of India appointed a Drug Committee under the leadership of Jaisukhlal Hathi.
The Committee conducted an in-depth study of the industry and related factors. The report was first released in April 1975.
The Committee noted that the public sector has achieved full production of high energy, especially in synthetic drugs. The
drug industry was full of external units that set the pattern for the industry. The Committee commended the establishment
of the National Drug Authority (NDA) to facilitate the implementation and achievement of the basic objectives and to
distribute the essential drugs to as many economic people as possible. However, comprehensive recommendations focus on
drug industry development, bulk drug production facilities, technology development and flow, drug and drug prices,
quality control, essential drug supply measures and common home remedies for the general population, especially in rural

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Pharmaceutical Industry in India: Historical Perspectives, Recent Issues and Future Trends 81

areas. Undoubtedly, the Report of the Hathi Committee (1975) was an important milestone in the development of the
Indian pharmaceutical industry. The period 1971-95, was crucial in strengthening the foundation of the drug industry. In
January 1995, India became a founding member of the World Trade Organization (WTO) and complied with the
requirements of the WTO intellectual property agreement, Trade Related Aspects of Intellectual Property Rights (TRIPS).
In order to meet the basic requirements of TRIPS, the Copyright Act was amended in 1999. In 2002, India enacted its
patent law to grant TRIPS a 20-year patent on all inventions, which must be applied to patents at the end of the transition
period. An important step in India’s implementation of its TRIPS commitment must be covered by the Patent Act 2005 in
order to provide product ownership. With the advent of the patent regime from January 2005, the Indian Pharmaceutical
Industry was at high risk for opportunities and risks. This has enabled local pharmaceutical companies to pursue various
business strategies and R&D (research and development) forward aimed at achieving long-term sustainable growth under
the new regime. There is the emergence of a new industrial structure due to the gradual integration of Indian factories with
the international pharmaceutical industry, the increasing exchange of new pharmaceutical methods worldwide and job
creation opportunities (Abrol, 2005).

All of these governmental actions have combined to make India not only self-sufficient but also a general
producer of generic medications over the last two decades. In terms of production capacity, India's pharmaceutical industry
is now rated third (10 percent of the global share). Profits increased from $ 0.3 billion in 1980 to around $ 21.73 billion in
2009-10. There are around 5,000 small, medium, and major producers in the business. In several worldwide medical
systems, India's pharmaceutical industry plays a critical role in providing pharmaceuticals. The Global Fund to Fight
AIDS, Tuberculosis, and Malaria and the US President's Emergency Plan for AIDS Relief (PEPFAR), for example, both
acquire a significant portion of their drugs from Indian manufacturers. While the Indian pharmaceutical sector grew rapidly
from 1991 to the first half of the 2000s, its adequacy and competitiveness in the generic pharmaceutical market are now
under threat. The Indian pharmaceutical sector faces numerous obstacles from both internal and external sources. The most
significant concern is multinational corporations' (MNCs) expanding dominance of the Indian pharmaceutical industry and
marketplaces, as well as their harsh exploitation and abuse of copyright products afforded under the current Indian patent
system (Chaudhuri, 2005). The Indian government's two policy moves may be viewed as pivotal in the formation of the
industry's current predicament. The first was a shift in government policy toward foreign investment, and the second was a
significant shift in state intellectual property policy to meet with WTO responsibilities. Both of these measures, taken
together, are currently setting the globe on a course to ruin.

1.2 FOREIGN ACQUISITIONS AND STRATEGIC ALLIANCES

The pharmaceutical business in India was opened to foreign investment (FDI) in 2001. As a result, the 'automatic way'
(i.e., without prior approval) was used to allow 100 percent FDI in medication production. The FDI policy made no
distinction between new and existing institutional investments (Bhaumik, Beena, Bhandari and Gokran, 2003). However,
over the last twelve years, multinational corporations have made little effort to invest in new ventures in India, preferring
instead to focus on current interests, such as the acquisition of Indian firms. At the same time, MNCs and Indian
pharmaceutical businesses have formed a number of strategic alliances. These strategic partnerships are most commonly
seen in the domains of research and development (R&D), marketing, and contract manufacturing. The field of contract
production is the main form in these three periods. In the light of shifting global pharmaceutical market dynamics, MNC
acquisitions and strategic alliances should be understood and assessed. However, in order to fully benefit from such

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82 Malika Basu (Ghosh)

seizures and international bindings, it is vital to take into account the extensive modifications made by the Indian
government to the country's intellectual property laws.

1.3 PRODUCT PATENT PROTECTION

To comply with the obligations of the WTO Convention on Trade-Related Intellectual Property Rights (TRIPS)
Agreement, India re-launched the product patent system in 2005. This takes the place of one of the most important policy
tools for the growth of the Indian pharmaceutical industry. Prior to 2005, the Indian medical industry was able to introduce
new pharmaceuticals to the Indian and international markets in a short period of time for a fraction of the startup cost due
to the lack of patent protection. In addition, competition among Indian pharmaceutical producers arose as a result of
product patents and the introduction of identical medicines to the market by a number of enterprises. The competition
resulted in the availability of medications at cheaper prices, which coincided with the price regulation of critical medicines
until the mid-1990s. Because NCEs generally come with product patent protection, the reintroduction of a product patent
restricts Indian pharmaceutical companies' ability to release standard versions of new chemical companies (NCEs) in a
timely manner.

Professor Sudip Chaudhuri of the Indian Institute of Management (IIM, JOKA, Kolkata) recently published a
study that shows how MNCs are increasingly controlling the Indian medical industry. According to a study, India has
eighty NCEs and new biological organisations (NBEs) between 1995 and 2010. MNCs sell ninety-two of the eighty new
medications to India and control the market for the other thirty-four. Thirty-four of these medications are used to treat
cancer (11), heart (7), anti-infectives (5), analgesics (3), nerves (4), anti-diabetes (3), and ophthalmology (3). (1). Professor
Chaudhuri also thought about direct price regulation for patented pharmaceuticals. 'Price control is not forbidden under
TRIPS or any other WTO agreement,' he claims. The 2006 Draft National Pharmaceuticals Policy (page 15) suggested
mandatory pricing discussions before patenting the market and underlined the value of research experiences from Canada,
Australia, France, and other nations with a good system. When comparing pricing restrictions to compulsory licensing,
Chaudhuri claims that price controls "make medications more inexpensive when done correctly but do not allow
mainstream corporations any space." However, MNC acquisitions of Indian pharmaceutical companies and strategic
alliances pose the greatest danger to the future usage of CL (compulsory licences). This could eliminate opportunities to
exploit the Indian Patents Act's flexibility to assure access to medicines. Due to MNCs' dominance of the Indian
pharmaceutical business as a result of acquisitions and strategic alliances, variables such as forced licensing will be used
less frequently (Chaudhuri, 2011).

The pharmaceutical sector is undergoing significant changes around the world. The 'blockbuster drug model,' as
used by drug MNCs, is currently under fire. The field of research and development is parched, and the number of NCEs
has plummeted. Patents on existing compounds are also projected to expire, putting MNCs at a disadvantage. In reality, in
the not-too-distant future, practically all blockbuster pharmaceuticals for drug MNCs will be copyrighted. In addition,
mainstream Indian firms began challenging blockbuster patents. As a result, the worldwide generic market is quickly
expanding, particularly in regulated areas. Another significant issue for the business is that, as a result of the global
financial crisis, industrialised countries have begun to cut social security spending as part of their fiscal austerity measures.
This is expected to affect out-of-pocket drug purchases as well as public drug purchases. MNCs have used a range of ways
to address these issues, one of which is controlling the generic medication industry. In this perspective, the acquisition and
partnership of strategies with ordinary businesses should be understood. In India, issues such as drug misuse and excessive

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Pharmaceutical Industry in India: Historical Perspectives, Recent Issues and Future Trends 83

medicine pricing have spurred controversy and discussion among policymakers and analysts. Another source of concern
was a legislative health committee, which noted in a July 2010 report on the acquisition of Indian pharmaceutical
companies: 'These developments may result in MNCs acquiring market strength and essential medications becoming more
expensive.' The Committee would like to express its gratitude to the Department of Health and Family Welfare for working
quickly with the Department of Chemicals and Fertilizers to develop policy solutions to keep Indian drug companies in
Indian hands.' As a result, the Departments of Health and Trade and Industry were opposed to such acquisitions. In a report
released in October, the High Level Experts Group on International Health Management in India stated unequivocally that
"we also need to revise India's FDI rules to amend the current rules for the automatic route of 100% foreign players in the
Indian industry to -49 percent, in order to maintain India's leading pharmaceutical companies and our independence in drug
production." Many community-based organisations, such as the All-India Drug Action Network, the Center for Trade and
Development, and the Delhi Science Forum, have expressed similar concerns. The issue is currently being examined in
depth by the parliamentary trade committee.

In response to these concerns, the Prime Minister hosted a high-level conference in October that adopted the
recommendations of the Arun Maira Committee created to explore the policy response to the FDI issue in the Indian
medical industry, with minor changes. This judgement modifies the present policy, which allows for 100 percent FDI in
the sector via the default route, and differentiates between new and existing investments. Existing investments will also be
referred to the External Investment Promotion Board on a six-month interim basis. The Competition Commission of India
(CCI), which oversees mergers and acquisitions, is also in charge of such deals. A six-month transition period is also given
for amending the Competition Act and Rules so that the CCI can work properly. This demonstrates that the government
has decided to only use competition law to address concerns about MNCs acquiring Indian generic enterprises. As a result,
the Commission is concentrating its efforts on resolving the problem from a competitive standpoint. However, one
significant problem in the competitive legal system is that the Commission's decisions will not be challenged by the courts
and will not be overturned. As a result, the government must implement a policy-based strategy as well as suitable
measures to address the policy concerns raised by the acquisition of Indian pharmaceutical businesses.

As a result, any improvements affecting the Indian pharmaceutical industry could help underdeveloped countries
expand their medical reach. The patent system has taken away Indian pharmaceutical businesses' previously unrestricted
ability to introduce generic medications. Only TRIPS modifications incorporated in India's Copyright Act allow standard
versions of copyrighted pharmaceuticals to be made. However, these scenarios are only used by a few Indian
pharmaceutical companies to introduce conventional versions of NCEs. To make the best use of these conditions, legal
provisions should be carefully crafted. Furthermore, through policy tools and capacity building, the government should
encourage the use of this flexibility. Importantly, there is a need to address MNCs' increasing regulation of the Indian
pharmaceutical sector, which poses a substantial risk to TRIPS flexibility and could jeopardise access to pharmaceuticals.
The Indian government's policy response to these concerns has so far fallen short of expectations, particularly when it
comes to procurement and strategic relationships. The urgent need to devise regulatory solutions at several levels to avoid
direct and indirect acquisitions of ordinary domestic enterprises, with the goal of keeping the generic industry in operation
and raising the price chain. Access to inexpensive medicines must constantly be preserved as a result of this (Pradhan,
2006).

In the pharmaceutical industry, the Indian market offers enormous growth potential. Companies would need to

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84 Malika Basu (Ghosh)

rethink how they do business if the industry is to achieve a robust growth rate of 15-20 percent by 2020. Co-operatives and
partnerships will help pharmaceutical firms flourish in a healthy way. They'll keep working to improve efficiency and
production. They will, however, need to apply new business models and come up with new ideas to serve their growing
clients faster and better in order to satisfy the demands of a changing business climate. By removing financial and physical
barriers to getting health care in India, advancements in the health insurance sector, medical technology, and mobile
phones could help the pharmaceutical industry thrive. Overall, the pharmaceutical industry must carefully assess the many
regulatory actions. In the years ahead, it will be fascinating to witness how corporations adapt to the regulatory framework
as they seek to capitalise on the prospects given by the Indian market. As emerging markets become more important, and
India's role as a bridge between them grows, both local and medical MNCs will need to alter their business models,
organisations, and procedures, as well as develop customised strategies (Saberwal, 2009). The pharmaceutical business, on
the other hand, will have to compete in the worldwide marketplace. The main focus should be on research, drug
development and development. Industry, authorities and institutions must understand the challenges and needs of the
market to develop skilled, management and business personnel. Pharmaceutical industries will need to risk and strengthen
their organization by focusing on bringing in talents and skills from outside the industry rather than traditional methods
that focus on developing talent in internal departments to focus more on achieving industrial goals.

1.4 INTELLECTUAL PROPERTY RIGHTS AND INDIAN PHARMACEUTICAL INDUSTRY

Intellectual Property Rights (IPR) in the pharmaceutical business have become a contentious topic around the world.
Previously, IPR conflicts were frequently between high-priced pharmaceutical firms and low-priced generic
pharmaceutical companies. India was not immune to the IPR dispute, and due to the high number of poor people in need of
basic health care, the Indian government first refused to offer stronger IPR protection. However, over time, Indian
authorities have become more aware of the necessity for and relevance of IPR protection for the sector's long-term success.
The Patents Act of India, passed in 1970, includes laws relating to patents for the manufacture of pharmaceuticals, among
other things. The passing of the Copyright Act (Amendment), 2005, which brought India's copyright rules into compliance
with TRIPs, was a significant reform in copyright laws.

Prior to the 2005 amendment, only procedures may be patented; no final product could be patented. As a result, if
a company wants to create the same product but using a different process, it won't be breaking India's copyright
regulations. Various companies, particularly renowned manufacturers, have expressed concern about the regulation
because it did not fully safeguard their production and permitted others to build the same product, which could be protected
under copyright elsewhere. Product and method patents have been approved for a term of 20 years, as amended by the
2005 amendment, and additional provisions have been implemented to avoid patent persistence. The 2005 modification
was regarded as a significant shift in India's defence structure. However, copyright issues are common in India, and have
recently been exacerbated by mandatory authorization. Although India's copyright protection has improved dramatically,
recent challenges such as compulsory licensing (CLS) techniques have sparked debate. CLS can be awarded under the
Indian Copyright Act if, for example, adequate public standards surrounding patent institutions are not reached,
copyrighted inventions are not publicly available at a reasonable price, and patented inventions are not done on the Indian
subcontinent.

CL distribution conditions, in the context of a pharmacy, are meant to prevent a situation in which public health is
discriminated against by only receiving a patented product. The Supreme Court of India has dismissed Nacto Pharma's

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Pharmaceutical Industry in India: Historical Perspectives, Recent Issues and Future Trends 85

motion for Special Restrictions CL. The case of Nacto Bayer was the first against CL, and Nacto was awarded a CL drif of
Bayer's Patent Nexavar since all of the conditions for granting CL under the Copyright (Indian) Act, 1970 were met.
Although CLs are regarded as a necessary evil in developing countries, they are a source of concern in the industry due to
the financial losses they frequently inflict. In a recent Copyright Order, it was stated that issuing CL should be the last
choice and that efforts should be made first to secure a voluntary license. This order gives the industry some relief, as it
underlines the legal position that a patent holder's patent will not be infringed upon if he does not meet the CL grant
conditions under the Copyright Act of 1970. While short-term decisions that benefit society are appealing, such decisions
should not upset the pharmaceutical business as a whole. There is a pressing need to strike a cautious balance between
community and industry interests.

1.5 MERGERS AND ACQUISITIONS IN INDIAN PHARMACEUTICAL SPHERE: GENERAL

OUTLOOK TOWARDS FOREIGN INVESTMENTS

India's population is large, and it has limited access to inexpensive health care. In this regard, assuring I continuous
availability and supply of medications (ii) continued critical medicines (iii) enhanced supply of medicines over time are
some of the primary issues in approving foreign investment in the Indian pharmaceutical business. As a result, a policy that
authorises foreign investment in the Indian medical sector must strike a balance between addressing people's demands and
the industry's major needs. Currently, up to 100 percent FDI is permitted for brownfield investment with previous approval
from the Foreign Investment Promotion Board (FIPB), and up to 100 percent FDI is approved in excess of FIPB prior
clearance for green investment. The pharmaceutical business in India has one of the highest levels of foreign direct
investment (FDI). The question of whether such investments have benefited the Indian pharmaceutical business has been
disputed. Certain parts of the government have recently called for a complete ban on foreign investment. Although more
access to capital is necessary for any industry to thrive, in the medical field, increased investment should be accompanied
by increased technology transfer and increased productivity. FDI accompanied with such escorts could help India achieve
long-term prosperity and protect world-class institutions. FDI-driven growth is critical, and it should act as a catalyst for
the creation of a world-class pharmaceutical industry that serves the majority of the country's needs.

1.6 RESEARCH AND DEVELOPMENT DESTINATION

During the 1990s, the Indian government's private labour and trade policy provided R&D incentives in the medical
industry. New products were removed from pricing constraints, a variety of financial systems were made available to R&D
enterprises, technical cooperation was put through an automated approval process, and patents on products and processes
were awarded for a 20-year period. Only with new technologies has this incentive resulted in a significant increase in
productivity. Owing to its faulty engineering industry, India was traditionally known as the world's capital; however, this is
changing, and Indian firms have begun to research and establish pharmaceuticals. Since 1985, more than 870 international
businesses have opened R&D offices in India, with Texas Instruments being the first. The following are the primary
reasons why R&D in India is considered profitable:

Cost-effectiveness: In India, the cost of establishing world-class R&D services is a fraction of what it costs in the
West. The entire cost of R&D is around one-eighth of what it is in the West, and the cost of clinical trials is about one-
tenth. Intelligence: A wide collection of English-speaking technical capabilities, as well as highly developed R&D skills, is
offered at a moderate cost. Pre-established R&D Centers: Pre-established R&D Centers are simple to utilise and

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86 Malika Basu (Ghosh)

inexpensive. Growing biotechnology industry: India's biotechnology industry has experienced rapid growth and now
includes world-class businesses. Market access: India is one of the world's fastest expanding economies. Companies may
engage in this new and growing industry by investing in R&D in India. Domestic Income Growth: India's increasing
middle class is a promising drug market. The market for non-essential pharmaceuticals will rise substantially as a result of
the increase in revenue available. Government Grants: Since India's independence, the Indian government has provided
numerous incentives for R&D in the country; including Biodiversity: Some drugs aimed at the Indian market require some
type of research and development as well as clinical testing. India's genetic diversity provides a wide range of R&D and
clinical trials opportunities. Pharmaceutical R&D is predicted to increase rapidly in India in the near future, and with the
country's growing economy and pharmaceutical sector, the introduction of new products is gaining new economic
relevance in the industry.

1.7 CONCLUSIONS

India's medical industry has come a long way in terms of infrastructure development as well as technical and R&D
capabilities. The business is facing new problems as the Indian pharmaceutical sector becomes more integrated with the
global market. Other long-standing issues include intellectual property rights (IPR) and market pricing issues. The trend of
increasing foreign interest in the sector and increasing R&D expenditure is projected to continue. The pharmaceutical
business in India may confront new assets and challenges as a result of increased electricity and a growing consumer
segment, but it is predicted to grow consistently and remain an attractive investment destination. Overall, the
pharmaceutical industry must carefully assess the many regulatory actions. In the next years, it will be fascinating to
witness how corporations adapt to the regulatory environment as they strive to take advantage of the opportunities given by
the Indian market. Both local and NN pharmacists will need to alter their business models, organisations, and processes, as
well as build specific strategies, as emerging markets become increasingly essential and India's position between these
markets develops tremendously. The pharmaceutical business, on the other hand, will have to compete in the worldwide
marketplace. Focused should be given on research and drug development. Industry, authorities and institutions must
understand the challenges and needs of the market to develop the skills, managers and employees of the business. The
pharmaceutical industry will need to take risks and strengthen their organization by focusing on bringing in talents and
skills outside the industry rather than the traditional methods focused on developing talent in internal departments to focus
more on achieving industrial goals. Finally, it can be said that India is slowly entering the world markets and competing
with international quality standards and prices. While R&D is an important factor in ensuring competitiveness in the
international arena, the future of the Indian pharmaceutical industry depends on patent protection.

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