For a country that has followed Ayurveda and other traditional forms of medicinal treatment, probably since its inception,India is home to the third largest pharmaceutical industry in the world. This is surprising because most of the Indian villages still lack access to basic drugs and resort to traditional medicine. But this large industry can be attributed toIndia’s population that is becoming increasingly urbanized.
In 2010, McKinsey and Company released a report, which stated that the Indian pharmaceutical industry was set to quadruple by 2020, that is, to grow to a $55 billion industry. The report went on to say that if growth was pursued aggressively, it could reach $70 billion by 2020.
Since 2005, the metropolitan and tier-1 markets have accounted for 60 percent of this growth, and have been growing at the rate of about 15-20 percent annually. Their growth can be attributed to increased urbanization and the expansion of medical infrastructure. The rural markets are also expected to boost, while the tier-2 markets are expected to decline slightly.
The industry provides huge employment opportunities, as all the pharmaceutical companies operating inIndia, including multinational companies, employ Indians almost in all ranks. In the global scenario,Indiaholds a modest one-to-two percent share, but, this too, is poised to grow steadily.
Challenges in this industry include lack of funds and in light of the rising recession, the finance ministry has recently opened up the industry for foreign investment. Finance Minister P. Chidambaram approved of nearly $433.5 billion dollar worth proposals. The move was done to increase the investor’s confidence asIndiais growing at its slowest pace since the 2008 sub-prime crisis. Unclear government policies and anxiety over the possible increase in prices had delayed his move for a couple of months.
While this move is an important one, the Wall Street Journal, in the first week of September, reported that the Indian government was planning to widen the scope of price control on pharmaceuticals, which would extend price restrictions not only to generic medicines, but also patented drugs.
Patenting is quite a large problem inIndia, asIndiarecognizes the need to provide the public with cheaper medicines but other countries, like theUnited Statesand theUnited Kingdom, see it as a gross violation of intellectual property rights. But while providing accessible and affordable medicine is one thing, secondary patenting is another problem altogether. The pending Novartis case in the Supreme Court is one such example, in which we hope that the Supreme Court does not back down from its stance.
India’s brand image as a source of safe, affordable goods is vital in the global scenario. It is the third largest in terms of volume, and the 14th largest, according to value. The market, as a whole has evolved from the age of questionable drugs and regulations that never seemed enough. Although now, it is said that the lack of R&D (Research and Development) and the idea of “evergreening” limits the market, we can hope that the FDI provides the competition and impetus that is required as this is one industry that is going to be one of the most prominent over the next few years.