POST COVID-19: Challenges and Opportunities for the Indian Pharmaceutical Industry

As Bill Gates had correctly predicted in 2015, the greatest threat to humanity was not nuclear missiles, but microbes.

At the time of this writing, according to the John Hopkins COVID-19 Dashboard, globally, there have been over 8.3million total confirmed cases and over 450,000 deaths due to the COVID-19 pandemic. This has resulted in a global health and economic crisis. Will the healthcare and pharmaceutical industry be the world’s saving grace in this current crisis or maybe many more such scenarios to come?

In meeting the global health challenge, the role of the pharmaceutical industry is of prime importance. With the current state of affairs, it’s a harsh reminder of what’s at stake and its responsibility. Even though 188 countries in the world continue to battle COVID-19, the more critical question is of the post-COVID-19 pandemic economic resurgence. Despite all the bad news, the Indian Pharmaceutical Industry needs to see the current Covid-19 crisis as an opportunity. In my experience of working with the Industry, this is the most opportune time for the pharmaceutical industry and the Indian government to implement the Katoch Committee recommendations and implement many of the suggested incentives to position India as the global pharmaceutical hub.

Indian Pharmaceuticals: A USD 55 billion market by 2020 and growing

India is a prominent and rapidly growing presence in global pharmaceuticals. Globally, the Indian pharmaceutical industry is the largest provider of generic medicines and ranks 3rd worldwide for production by volume and 13th by value; thereby, accounting for around 10% of the world’s production by volume and 1.5% by value. According to the Department of Pharmaceuticals (DoP), India is the source of 60,000 generic brands and home to 3,000 pharma companies with a strong network of over 10,500 manufacturing facilities. The DoP aims to make the country a hub for end-to-end drug discovery under its ‘Pharma Vision 2020’

As indicated in a 2015 McKinsey report, the Indian pharmaceutical market will grow from a market size of USD 12.6 billion in 2009 to USD 55 billion by 2020, with the potential to reach USD 70 billion in an aggressive growth scenario. It was last valued at USD 40.2 billion by the National Investment Promotion and Facilitation Agency(Invest India) in 2019. 

Some of the factors fueling this potential include:

• Government Support in Innovation and R&D: To develop new complex generic drugs, supplemented by the New Drugs and Clinical Trial Rules, 2019 and the Atal Innovation Mission (a Government of India initiative with the objectives of entrepreneurship and innovation promotion via mentorship, competition, etc.) 
• Infrastructure development: India has the highest number of US-FDA compliant plants outside the US 
• Strong drug manufacturing expertise and low cost: The cost of manufacturing in India is approximately 33% lower than that of the US
• Strong domestic demand: Launch of the National Health Protection Scheme, the largest government-funded healthcare program globally, as well as an economic growth-driven increase in healthcare spending 

Pharmaceutical Market Challenges and the COVID-19 Impact 

In a pessimistic scenario characterized by regulatory controls and economic slowdown, the market will be depressed and is not expected to reach its potential. The following challenges stand out

• Rising number of US FDA inspections. The number of inspections is at an all-time high. This comes as no surprise considering India has the most USFDA approved sites
• Government Control on Drug pricing: This is directly impacting the confidence levels of companies to invest respectable amounts in R&D
• Fake Products: Yes, these headlines do create a wrong perception globally especially when India is aspiring to be a superpower in this space
• India’s significant dependence on Chinese Active Pharmaceutical Ingredients(API): According to Bloomberg, 70% of India’s imports of APIs come from China, totalling $2.4 billion of India’s $3.56 billion in import spending for those products each year

The impact of the COVID-19 pandemic and the lockdown it triggered is both tangible and intangible. But there is still no clarity on the deeper impact that it will have on India’s healthcare manufacturing and the global supply chain. The rising prices of key ingredients are initial indicators. The prices for vitamins and penicillin are double or triple the price. Similarly, the cost of paracetamol has gone up. If the pandemic continues then stockpiles of pharmaceuticals, APIs, and other chemicals may decrease, resulting in shortages. 

Made-in-India drugs supplied to developed economies are known for their safety and quality. In recent years, India has seen increasing competition from China, which it has been able to leverage due to its inherent cost advantage, manufacturing intermediates and APIs at a cost much lower than those in India.

Prime Minister Narendra Modi in his recent public address emphasized the need to strengthen ‘Make in India’ movement and urged “Indians should become vocal for local products”. Fortunately, we are already starting to see this Government walking the talk. In response to the COVID-19 crisis, India’s Union Cabinet has approved an investment package worth $1.3 billion to boost the country’s pharma and API production and cut dependence on China. This is a major step in the creation of a self-sufficient healthcare ecosystem in the country. 

In a time of economic regression and global health fears due to Covid-19, the reputations of pharmaceutical companies are on the line and their impact on the fight against the virus will not be easily forgotten. Regulatory agencies and pharmaceutical companies are rethinking their regulatory approval and drug development strategies. India’s leading drug companies have had their manufacturing facilities cleared in the last few weeks by the US Food and Drug Administration (USFDA), a decision that comes at a time when supply-chain disruptions due to the Covid-19 pandemic are causing drug shortages across the world. 

Owning the Narrative

As countries look to give their economies a much-needed stimulus in the aftermath of the COVID-19 outbreak, there is a huge opportunity for the Indian pharmaceutical industry to further stimulate its economic potential. 

If there ever was a time to highlight a statement it is now ‘Improved health status of a nation’s citizens results in economic growth’. In 1969, Indian pharmaceuticals had a 5 per cent share of the market in India, and global pharma had a 95 per cent share. By 2020, it was the reverse, with Indian pharma having an almost 85 per cent share and global, 15 per cent. Indian firms have been successful. The Indian pharmaceutical industry, with its access to economic impact, resources, networks, and expertise, is in a strong position - and has a responsibility - to drive positive economic, social change. If India is to address this opportunity, the industry will need further export incentives and policies to further encourage ‘Innovate in India’, ‘Make in India’ and ‘Buy in India’

E.g.; Japan to Fund Firms to Shift Production Out of China; 

The success of the pharmaceutical sector can then be replicated across many other sectors in rebuilding the Indian economy after the COVID-19 threat has passed.

About Affygility Solutions

Affygility Solutions is a leading American multinational EHS company headquartered in Broomfield, Colorado, that services to the biotechnology, pharmaceutical, and medical device industries. The company’s key services include determination of health-based exposure limits, potent compound safety, industrial hygiene, occupational toxicology and safety, containment validation, EHS auditing/compliance/on-site services, and more. Affygility Solutions provides these services to small, mid-size and large companies throughout the United States, Canada, Europe and Asia Pacific region. 

About Rahul Soliwal

Rahul Soliwal is the Regional Business Development Manager with Affygility Solutions for the IMEA region (India, Middle East and Africa). Prior to joining the Affygility Solutions team, Rahul in his career has had the privilege of working in different regions (Singapore, India and Dubai) where he helped launch several B2B platforms for the Life-science and Technology Sector.

Rahul earned a Bachelor of Engineering degree in Biotechnology at the Visvesvaraya Technological University. You can reach him on LinkedIn here; https://www.linkedin.com/in/rahul-soliwal-7b192157/