Research Analyst APAC Healthcare Frost & Sullivan Singapore.
Alliances and partnerships will be very important because of two reasons. 1) The Indian market has already entered into the patent era and 2) Indian companies still have very lean product pipeline as of now. Developing a product pipeline is being considered seriously and will be an essential factor for the growth of the Indian pharma market. Strategic alliances in terms of co-marketing and co-promotion will be an important issue for those who would like to promote their products in Indian markets. Similarly, partnerships with Indian companies as well as multinationals which are happening at different levels-at equity level, market level, manufacturing level and R&D level-will be very useful for the growth of the pharma market in India.
India needs to have a centralised drug regulation authority. It is essential because a lot of products such as combinations or fixed dosage combinations are being sold in India which are permitted by state drug authorities. Whether they are rational or irrational drug combinations is a separate issue, but if there is a centralised drug regulatory authority, there will not be many deviations in the law itself. This will also help the harmonisation of all the existing regulatory authorities or bodies.
There will be an accountability on the part of Government to monitor fixed-dose combinations, single ingredients, rational and irrational drug combinations. All those issues which are important can be taken care of. Similarly, there is the big issue of counterfeit medicines today. And these counterfeit medicines are medicines which are manufactured on valid or invalid licenses. Obviously all these issues can be curtailed or streamlined by a centralised drug authority. This is a not a practice issue, but a structural issue and the government has been taking steps in this direction. For example, fixed dose combinations and irrational drug combinations have been banned now.
Yes, there are hurdles that India could face going forward. First, the quality standards or measurements that international companies look at in terms of investing in countries such as India. The quality of R&D, clinical trials, etc., in India should give confidence to the investors that the processes are stronger, quality is right and is of international standards. Second, the time consumed for setting up industries or investment is also of vital importance. The investors should not be involved or engulfed in red-tapism or time consuming procedures. And third, cost factor. India is still economical and provides the cost advantage for conducting clinical trials but if that is lost then it would become a major hurdle.
In addition, there could be hurdles from the regulatory authorities, government policies etc. Beside all these issues, there is a big gap between the potential India has and the actualisation of that potential. For example, there are 35 million diabetic cases in India. As per reports from market researchers, the number of patients treated are just around one million. This means 34 million diabetic patients are not being treated. Given the population of India, there could be more than 35 million diabetic patients as India is likely to be considered as a diabetics capital of the world. If this type of a market mismatch exists, investors might be misled into thinking that their investments may not give expected ROI.
The Indian health and education ministry is trying its best to address these challenges. Some more thoughts could be introduced in the forthcoming budget. More important is the issue of the education system for the healthcare and pharma sectors. There is a big gap between qualified personnel for clinical trials and the actual requirement. India is trying to revamp the syllabus of its pharmacy colleges, because there is a huge gap between the skill set, knowledge and attitude needed by the industry and what is currently available. While attitude can change with opportunities, infrastructure needs to be improved in institutions like the pharmacy colleges, etc. to really train and develop human resources for the industry. Overall, it is an issue of investment and it is an issue of education. If these things are taken care of, India will be comfortably placed to garner a bigger share of the clinical trials market worldwide.
The Indian companies are faring well on the ethics front. There aren't many issues regarding ethics in clinical trials because, it is partly being monitored by the Drug Controller General of India (DGCI), in terms of policies on the number of patients, multi-centre or single centre trials among other such things. Ethics part has been properly handled with the government's timely interventions at appropriate phases.
Yes, and it is not because of only cost advantage but the intelligence India has. What needs to be looked at is
If they are studied properly, India can very well get the sustainable advantage as it will have more numbers. Recruiting 300 patients in India is not a difficult task. The speed will improve, patients will come and regulatory bodies will get proper attention and also relationships with proper doctors and other clinical trial staff will improve. Hence, India could be a very good outsourcing hub for clinical trials for the entire world.
In terms of partnerships, there are very good chances-a number of companies are likely to come to India. India has created that hype-now we can use the word hype. Today every country is looking at India and everybody sees India as a very big opportunity. So partnering with India will definitely happen. In terms of innovation, it will be at the co-development level where lot of innovations will take place in collaborations like co-development, co-assistance, co-marketing, co-selling, co-promotion, etc. There is a lot to be done because, still people are worried about taking the responsibility of hiring and training manpower. Everyone would like to get into more innovation partnerships in India and that will happen.
Yes. But there is a mindset issue. It is the not issue of economics but the identity which Indian companies try to keep intact. For example, in Indore, we have nearly six or seven companies which are operating in formulations. Each one of them has around 300 to 400 people and is worth not more than Rs. 25 crores. Merged together they will perhaps become a Rs.150 crore company and may not require the 1800 (300 x 6) people. Given the economies of scale that will follow will they be able to come together? The answer is perhaps NO.
Indian companies are very innovative in marketing and sales. The market dynamics in India are different. However, after the product patents replacing the process patents, the Indian pharma industry needs to be innovative as there is intense competition now. Innovation is often considered only in terms of R&D which is new product or product-specific innovation. But, innovation can be classified in two different ways, operational innovation and R&D innovation. The operational innovation includes marketing, sales etc. and India is far ahead in this type of innovation. In the second type, as everybody is aware, investment in R&D is very low in India. This is due to price control, lack of brands (as India is more into generics) and Indian pricing of generics which is around one-tenth of the branded drugs. Hence, by selling generic drugs in India, companies cannot possibly get enough revenues to invest in R&D as other multinational competitors have. If a national company is not able to invest in R&D, how will it be innovative enough to really give more and more new products?
In spite of having numerous limitations or constraints such as monetary conditions or investment conditions, the Indian pharma companies are still innovative. Yes, perhaps if we look at innovation as creation of new products, India hasn't got many patents so far. But it is in the anvil. India is just two years old in the patent regime. India might need to have a re-look at it. Another aspect is that most multinationals think that their value chain originates from R&D and then moves to the patients. Now the time has come where the thinking and proposition might change. This value chain will be reversed and hence it may start with the patients and end in customised R&D. It has to start with the disease of the patients, then facilitation and at the end of the chain comes the product.
It will be no longer enough that a good product will generate huge revenues. The value chain and the migration which started from R&D for everybody is likely to go wrong if it remains that way. We need to really look at the vision; it should start with the patient, to hospitals with facilities, then diagnostics and finally the product and treatment. All said and done, there still is a big gap today which is a big hurdle.
R B Smarta is the Founder and Managing Director of Interlink Marketing Consultancy Pvt Ltd. Through Interlink he has added value to corporate brands, therapeutic brands, fast moving healthcare brands, in-organic and organic growth of corporates and sales & marketing ROI of corporates. He is also a member of CII Drugs and Pharma National Committee for the Year 2007-08. He is currently working on Business Models, Business Strategy, Emerging Markets and Global Business Opportunities for Pharma, Healthcare Industries.