What's wrong with India's pharma industry?
By Binu Paul, SiliconIndia   |   Wednesday, 30 March 2011, 14:03 IST   |    2 Comments
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What's wrong with India's pharma industry?
Bangalore: When is the last time we heard about a new drug discovery in the Indian pharma industry? Being the world's second-largest market by volume, the Indian pharmaceutical industry is likely to lead the manufacturing sector of India in a few years' time. With the introduction of the Patents Act in 1970 by which the composition patents from food and drugs were removed, the multinational companies streamed out of the market due to lack of patent protection and the Indian firms flourished from then on. However, there are certain grave concerns that pull back the growth momentum of the industry. Despite the fact that a huge proportion of the world's active pharmaceutical ingredients (API) come from India, the Indian pharmaceutical industry has been haunted by a culture of compliance problems, fraud and endangering patient's lives. Professionalism and ethics have taken a backseat in the growing industry of late. Inadequate regulation and large quantities of spurious drugs have been a problem for the industry for long. One of the main inadequacy of the Indian pharma industry is the lack of Research and Development support. An underdeveloped new molecule discovery program has been noted as its primary weakness. Even the market leaders such as Ranbaxy and Dr. Reddy's Laboratories spent only 5-10 percent of their revenues on R&D whereas the western pharmaceuticals like Pfizer sets a research budget greater than the combined revenues of the entire Indian pharmaceutical industry. The country also lacks way behind in qualified molecular biologists when compared to the western industry. Due to the disconnect between curriculum and industry, pharmas in India also lack the academic collaboration that is crucial to drug development in the West. Biotech plays a big role and acts as pharma's little sister in India. The Indian biotech market is dominated by biopharmaceuticals; 75 percent of 2004-5 revenues came from biopharmaceuticals, which saw 30% growth last year. Inadequate funding for the biotech sector poses a major challenge for the startups in India. The major sources of funds are the government grants and venture capital for the industry. While government grants are difficult to secure, the venture capitalists hesitate to invest due to the expensive and uncertain character of the industry in India. As in many other industries, the Indian pharmaceutical industry too is witnessing a reverse brain drain of late, and the industry should move forward with the knowledge and experience of these foreign-trained scientists and with the abundance young talents within the country. As the government of India encourages greater Foreign Direct Investment in this sector, analysts feel the growth of the industry will be in at par with the IT industry in India.

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