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.