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The Anti-Infectives Market Outlook in India to 2015

From Business Insight


India is the second most populous country in the world, after China, with a population of 1.2bn and is predicted to become the most populous country by 2035. The prediction is based on the adoption of the “one child policy” in China which is restricting population growth whilst in India there is no such policy; in addition to, the substantial transformation in Indian demographics including increase in the geriatric population, decrease in child mortality and birth rates. India’s economy is growing at an approximate rate of 8% every year leading to the empowerment of the middle class and a decrease in poverty across the country. However, the growth has primarily been in urban areas. Less than one-third (29%) of India’s population live in urban areas but they account for more than two-thirds of the country’s GDP. To a large extent, the country seems to be well-positioned to handle the healthcare challenges, taking cues from the developed markets and creating new models that integrate different sectors of the society. India’s poor performance in improving healthcare outcomes in the country can in part be associated with a lack of funding from the government for health initiatives. India’s per capita healthcare expenditure is well below international recommendations and compares poorly with other emerging economies such as Brazil, Russia, China, South Korea, Turkey and Mexico. Although, India’s healthcare infrastructure has improved in recent years, it still lacks an adequate number of health centers and health personnel.

The public healthcare system in India is made up of diverse institutions such as primary healthcare centers, dispensaries, tertiary care hospitals, specialist hospitals and medical colleges, among others. This adds up to an extensive system, reaching even remote areas, yet the country’s performance on health indicators remains low. Consequently, private healthcare services have been expanding. Public-private partnerships have also grown, and represent a promising tool for dealing with some of the welfare goals of the state. These partnerships are forged with the objective of improving the quality and efficiency of healthcare delivery whilst maintaining accessibility and availability for all. The success rates of such initiatives have been variable across states thus far, but this trend is set to remain in the country’s healthcare system.

Regulatory regime

India’s federal constitution decentralizes the healthcare system, splitting its areas of operation between the central and the state governments. Therefore, aspects of healthcare that have potentially wider (i.e. national level) ramifications, such as medical education, population control and family welfare, quality control in drugs and, prevention of food adulteration, are handled by the central authorities. Healthcare in India is overseen by the Ministry of Health and Family Welfare (MOHFW), which is responsible for implementing national level programs such as the promotion of indigenous systems of disease treatment and prevention, the control of communicable diseases and the handling of seasonal diseases and epidemics. Besides its family welfare program, the ministry implements various World-Bank-assisted programs for the control of diseases such as HIV/AIDS, tuberculosis, leprosy and malaria. The ministry has three main subordinate departments:

  • The Department of Health and Family Welfare
  • The Department of Ayurvedic, Yoga and Naturopathy, Unani, Siddha and Homoeopathic Medicines (AYUSH)
  • The Department of Health Research.

The main pharmaceutical regulatory laws in India are the Drugs and Cosmetics Act 1940 (DCA) and the Drugs and Cosmetics Rules 1945 (DCR). Other pharmaceutical legislation includes the Drug Prices Control Order 1995 (DPCO), the Drugs Magic Remedies Objectionable Advertisement Act 1954 and the Pharmacy Act 1948. These laws jointly regulate the import, manufacture, distribution and sale of all categories of drugs, including allopathic, Ayurvedic, Siddha, Unani and homeopathy.

The main regulatory body is the Central Drug Standard Control Organization (CDSCO), under the patronage of the Department of Health. The Central Drugs Authority of India (CDAI) is now replacing the CDSCO as the former has failed to keep pace with India’s growing economic profile. The drug controller-general of India (DCGI) is in-charge of approving licenses for drugs. Under the DPCO of 1995, the National Pharmaceutical Pricing Authority (NPPA) reviews and fixes the prices of drugs termed as “Scheduled drugs”. Drugs not under the price control of the NPPA are categorized as “non-scheduled drugs”. The price of these drugs is reviewed by the committee once a month to limit high pricing. Furthermore, to prevent manufacturers from overpricing drugs, the NPPA has now become aggressive about penalizing manufacturers that are deemed to have done this. The Organization for Economic Co-operation and Development (OECD) estimates that 75% of the world’s counterfeit drugs are produced in India. Another problem persisting in the Indian healthcare system is the lack of reporting of adverse events. The WHO has reported this as “alarming” with only 5% of adverse events being registered in the country.

Intellectual property rights

The emergence of domestic generics companies can be traced back to the 1970 Patents Act, which actually came into effect in 1972. Although the Act offered patent protection for drug manufacturing processes (i.e. process patents), it did not provide any protection for the drugs themselves (i.e. product patents). Moreover the process patents lasted only seven years from the date of filing, or five years from the granting of the patent. The Act encouraged the domestic industry to engage in reverse engineering to produce generic versions of innovative drugs, and led to the number of drug manufacturing facilities increasing from 2,257 in 1970 to more than 23,000 in 2005.

India’s Intellectual Property (IP) environment changed in 2005 with the introduction of new and more stringent legislation, which ostensibly fulfilled the requirements of trade-related aspects of intellectual property rights (TRIPS). However, research-based pharmaceutical companies and the governments of developed nations have been fiercely critical of India’s interpretation of TRIPS, and have been campaigning for the imposition of stricter IP controls.

For its part, India has received strong support from NGOs and humanitarian organizations, including Médecins Sans Frontières (MSF), which welcomes the fact that India’s IP policies provide wide access to essential drugs. Against this background, the strongest incentive for India to bring its policies in line with international norms is provided by the lure of potentially lucrative Free Trade Agreements (FTAs) with powerful trading blocs such as the EU. India and EU FTA discussion started in 2007 and is expected to be finalized by mid of 2011. It is believed that European Federation of Pharmaceutical Industry Association (EFPIA) has proposed the granting of six years data exclusivity for its member’s products in India. However, the generics manufacturers in India are not in favor of the addition of data exclusivity as it will prevent them from manufacturing generic versions of products until the expiration of any granted data exclusivity period or they will have to conduct their own clinical trials, which will defy the entire existence of generics as low cost drugs.

Furthermore, in February 2011, India signed a Comprehensive Economic Partnership Agreement (CEPA), with Japan which will offer multiple bilateral benefits to both countries including duty concessions for products across sectors and improved access to the Japanese pharmaceutical market for Indian firms. This will help Indian generics manufacturers to attain a share of the growing generics market in Japan.

Opinions with regard to regulations governing IP in India are extremely polarized, with the research-based industry complaining that current IP protection measures are insufficient, and the generics industry and various consumer groups and NGOs believing that innovative companies are attempting to exploit them to their own unfair advantage.

Research-based industry viewpoint

In 2010, India once again featured on the United States Trade Representative’s (USTR) Priority Watch List, despite an acknowledgement that “India continues to make gradual progress on efforts to improve its legislative, administrative, and enforcement infrastructure for IPR”. The USTR’s concerns are echoed by the Organization of Pharmaceutical Producers of India (OPPI), which is an association of research-based companies operating in India. According to the OPPI, the novelty/inventive step provisions that are contained in the Patents Act are sufficient to prevent evergreening, and so there is no need for the overly strict interpretation of Section 3(d). The OPPI is also concerned at the lack of data protection, and has called for the implementation of a five-year data exclusivity period, which would begin from the date of marketing approval. Other criticisms voiced by the OPPI include the fact that product launches can be delayed via pre-grant opposition to patents, and that the broader compulsory licensing rules included in the 2005 Patents Act could lead to abuse of the system.

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