India has an established domestic pharmaceutical industry, with a strong network of 3,000 drug companies and about 10,500 manufacturing units which provides us immense opportunities in many different areas including export, contract manufacturing, outsourced clinical trials and innovative research and development. We have played a key role in driving better health outcomes across the world through affordable and high-quality medicines. It has a strong presence in the global generic pharmaceutical manufacturing and supplies 20% of global generic drugs and is a preferred location for generic drug production. At present, Indian companies supply over 80 percent of the anti-retro-viral drugs used globally to combat AIDS (Acquired Immuno Deficiency Syndrome). Government initiatives such as Make in India, Start-up India, the National Health Policy and National IPR policy, which are expected to contribute positively in building an environment that encourages the development of local R&D and in attracting global investment for innovation.
Despite its size and potential, India currently lags other countries in aspects such as innovation capacity and research output. Between 2002 and 2012, the number of patent filings from India was almost negligible as compared to more than 5,00,000 in the US, and more than 2.3 million across the world. It needs to realize its true potential to develop a strong, research based pharmaceutical industry that thrives on innovation and new drug discovery. However, India does not have a strong track record of innovation.
Limited government supported research ecosystem has contributed to the slow growth in innovation space. For example, government policies such as reversing the weighted deduction of erstwhile 200% on spend on R&D, which ends in 2021, has an adverse impact on innovation. There are limited incentives in terms of tax benefits on R&D expenditure in India as against those provided by countries such as China and Singapore. Clinical trial approvals in India are subject to stringent regulatory norms. The new drugs and clinical trials rule notified by the Ministry of Health and Family Welfare (MHFW) on 25th March 2019, aims to promote clinical research in country. It will change the regulatory landscape for approval of new drugs and conduct of clinical trials in the country. Both stringent approval for clinical trial and patient recruitment had a severe impact on the pharmaceutical industry in the past few years. This is expected to continue until more refinements are made to cover loopholes in regulation to make India a trial and patient friendly global destination.
Multiple gaps in Indian ecosystem have been identified in comparison to established pharmaceutical innovative leaders – the US, UK and Japan and with countries that have recently moved up the innovation ladder – South Korea, China and Singapore. India invests just 0.9% of its GDP towards overall research and development compared to an investment of 1.6% in the UK, 1.9% in China, 2.8% in the US and 3.3% and 4% in Japan and South Korea respectively. Key concerns for this low contribution are availability of funding and overall investment. We need to revamp some of our processes like simplification and adoption of single window regulatory review and approval process practiced in many developed markets including US and Europe instead of multiple reviews by different bodies at multiple stages.
CRAMS – Building on the opportunity
The rising costs and regulatory pressure in developed markets are key drivers for many global pharmaceutical companies to reduce their internal capacities in research and development (R&D), and manufacturing, and turn to contract manufacturing and research services (CRAMS), and outsourcing of research and clinical trials to developing countries.
India’s CRAM sector is globally recognized for its high-end research services and is one of the fastest growing segments of the country’s pharmaceutical industry. Besides India is the only country in the world that has the highest number of USFDA-approved plants for generic drug manufacturing outside the US.
India with its large patient population and genetic pool, and home to some of the best hospitals and English-speaking physicians and scientists in the word, is fast emerging as a preferred destination for seeking efficiencies of cost and time for clinical trials.
The country’s CRAM industry offers a significant cost-quality proposition, with potential savings of about 30-40 percent compared to western markets such as the US and Europe.
We can utilize these opportunities fully by developing regulatory and infrastructure capacity to make India more attractive as a destination for these services.
Innovation – Taking India to the Next level
India has the best scientific minds in the world that have the potential to steer us towards the next level – innovation in the pharmaceutical industry.
We need to enable our regulations to reward and acknowledge innovation and good science. We need special and abridged pathways for development of products for unmet needs in the country like for multi-drug resistant infections and cancers. Products classified for review and approval under such pathways should get the benefit of extended patent life as an incentive for the developers.
Countries like Australia and Japan have developed Smart Regulations for helping Research. Smart regulatory systems strive to enable positive changes in innovation strategies and adequately discriminate among products on the basis of socially and economically relevant criteria. New regulatory framework designed for safe and effective regenerative medicine has been implemented in Japan recently. Systems to promote research and development and reimbursement schemes of regenerative medicine products are included. These changes are expected to accelerate clinical application and commercialization of regenerative innovative medicine. Since regulatory initiatives can have a transformative impact on innovation, smart regulations are crucial when designing or redesigning regulatory systems for novel therapies that have no current established route to market like stem cells.
Lastly but not the least, drug development is very expensive, and many countries provide incentives to industry by supporting development costs through different mechanisms. We need to look at different ways how the government can support the industry to promote innovation in pharmaceutical research and development.
Steps to be taken to ensure favourable innovation ecosystem
1. Infrastructure: Strengthen R&D centers and biotech clusters byestablishing single body accountable for performance of public R&D centers and facilitate better tech transfer infrastructure and collaboration among academia, research centers and industry. Developing specific courses in clinical trials to boost the clinical trial infrastructure, improved infrastructure in hospital and increased public investment.
2. Financing: Various financial schemes can be implemented to encourageand support an increase in pharmaceutical R&D such as subsidies for start-ups focussing on R&D, increased limits for grants/loans and tax incentives, among others and adopting healthcare financial policies for primary healthcare.
3. Human resources: Introducing new national training programs (expendedaccess to grants and scholarships) to improve education and skills level of the workforce Lucrative incentive policies to attract and retain scientific talent.
4. Legal and Regulatory Framework: To establish specialized intellectualproperty courts to develop effective and adequate intellectual property rights (IPR) laws and policies. Streamlining administrative process to file patents and removing barriers to patentability. Streamline the regulatory framework and expedite the development and launch of new products that are benchmarked with internationally available practices and increase resources for the regulatory agencies. R&D investments are 10-20 times higher in biosimilars than for generic products; regulatory approvals can cause inordinate delays and cost overruns. Initiatives like reducing the number of agencies involved or stipulating a maximum time-limit for approvals (currently over two to three years) and simplifying the required documentation and modes of submission, can facilitate growth.
5. Creation of Independent Ministry for Pharmaceuticals: Governmentcould setup a dedicated Union ministry of pharmaceuticals to protect and promote industry’s interest. This will help to simplify the policy process and expedite investment approvals.
Indian pharmaceutical industry has contributed significantly to the global generic market by delivering high quality products at affordable cost. India needs to take bold strategic moves into unchartered geographies, products and technologies to reclaim its position as a world class provider of affordable high-quality drugs. Government support in form of investments, policy support and regulatory interventions is key to drive innovation led growth.
The author is Past President, FICCI and Founder Chairman, Wockhardt Limited