Challenges faced by Indian Pharmaceutical Companies

Competition from China

Indian pharmaceutical companies are facing a major competition from China which occupies the 7^th position in the pharmaceutical world. China’s export is growing at a rate of 20% per annum and is expected to become the fifth largest pharmaceutical industry by 2010. Some of the factors where China has an upper hand when compared to Indian companies include:

• Lower electricity costs
• Lower labour charges (40% lesser than India)
• Company friendly labour policies
• Implementation of clear intellectual property laws and data exclusivity rules
• R&D institutions are independent of government funding
• Tax benefits and friendly import rules

Some of the threats that can hamper the growth of the Indian pharmaceutical industry include:

• Lack of enabling regulatory requirement
• Unrealistic ceilings on product prices and profitability
• MRP based excise duty regime threatens the existence of many small scale pharma units

Infrastructure bottlenecks

The competiveness of the Indian pharmaceutical industry is being eroded by the bottlenecks in the infrastructure developments. The rapidly growing economy has placed huge demands on power, road and transportation system which India has not been able to meet. The World Bank has estimated that India needs to invest an additional 3-4 percent of GDP on infrastructure in order to sustain its growing demands to a certain extent. Roles of the government and private sectors are important in the development of the country along with suitable changes in the present policies.

Strengths of India in global pharmaceutical market

Indian pharmaceutical market is growing both domestically and globally. The factors such as doubling of the disposable income and number of middle class households, expanding medical infrastructure, increased penetration of health insurances, rise in the prevalence of chronic disorders, adoption of product patents, and aggressive marketing are being considered to play a key role in the growth of pharmaceutical companies in the domestic level.

Some of the key strengths that would boost India’s presence in the global pharmaceutical market have been listed below:

• Strong base of manufacturing
• World-class products at competitive costs
• Good network of laboratories
• Growing research and development (R&D) infrastructure
• Highly trained pool of scientists and professionals
• Strong network of marketing and distribution
• Strong skill in process development
• Potential ground for conducting clinical trials
• Fast expanding healthcare industry
• Rich biodiversity
• Growing biotechnology industry
• Approvals of Highest Quality from regulatory bodies like USFDA, EDQM, MHRA
• Very strong in alternative systems of medicine such as Ayurveda, Homoepathy, Unani, Siddha and Herbal medicines
•  An excellent centre for clinical trials.

In the face of expiring patents, the rising cost of research and development and increased pressure on pricing, most major pharmaceutical companies outside India are seeking alternatives to enhance their productivity, cut their production costs and hasten the development of drugs in the pipeline. India is fast emerging as a new hub for pharmaceutical development with its key strengths helping it to overcome majority of the obstacles.