Target: A $120 Billion Industry
By Dilip Shanghvi Managing Director, Sun Pharma
In a virtual international conference last year, Prime Minister Narendra Modi hailed India’s pharmaceutical industry as an asset not just for India but the entire world. From manufacturing generics to highly complex formulations to biosimilars and specialty medicines, the nation’s pharmaceutical industry has come a long way. Today, it is regarded as the ‘Pharmacy of the World.’ In terms of volume, it is ranked the thirdlargest globally, accounting for 60 per cent of global vaccine production. India is the largest provider of generic drugs and hosts the highest number of USFDAapproved plants outside the US.
Since the outbreak of Covid-19, the Indian pharmaceutical industry has played a leading role in providing highquality, affordable medicines globally. With the world in a lockdown, it faced serious challenges such as supply of active pharmaceutical ingredients (APIs), movement of medicines, etc, but ensured that there was minimal disruption in supply of essential medicines. This speaks volumes about the contribution of the industry to the world economy.
INDIAN PHARMA – VISION 2030
Even though, over the last few years, the Indian pharmaceutical industry has shown stable growth of 7-10 per cent, there are several opportunities ahead of us. At the current CAGR, the industry can grow from $40 billion to $80-90 billion in revenues by 2030. However, if it sets bold aspirations to grow at 11-12 per cent CAGR, it can reach $120-130 billion during the same period. To achieve this vision, it is imperative that we identify the key levers of growth.
LEVERS OF GROWTH
Universal Health Care: The Indian government has committed to increasing the public healthcare spending as a percentage of GDP from the existing 1.15 per cent to 2.5 per cent by 2025. This is a right move towards achieving universal healthcare. The government has already laid a strong foundation by announcing the Ayushman Bharat Yojana. It is important that the industry participates in the government’s vision of providing universal healthcare. Ayushman
Bharat Yojana, the most ambitious healthcare programme in the world which will cover about 50 crore citizens, is an opportunity for the industry to help India’s underserved masses with high-quality, affordable drugs.
Life Sciences Innovation Hub: We should aspire to build a strong innovation pipeline with focus on new molecular entities, incremental innovations, biologics, gene therapies and specialty drugs. We have got early successes in development of next-generation product classes, but there is a long way to go. What we need is a research ecosystem, and that will make India a life sciences innovation hub. A made-in-India researched drug can be made available at a lower cost. It will improve access to innovative medicines, helping the stretched healthcare systems globally.
Leadership in Generics: India should aspire to become the world’s largest and most reliable drug supplier by volume. I believe our Indian pharmaceutical industry can play a much bigger role in supplying high-quality generic medicines to the world. In the last decade, America has saved nearly $2.2 trillion due to generics, and this opportunity is available to all countries. We should adopt a two-pronged strategy: establish a leadership position in the US generics space and develop a strong presence in traditionally underpenetrated markets such as Japan, China, Africa and Latin America. As per estimates, branded molecules with cumulative global sales of over $251 billion are expected to go off-patent between 2018 and 2024. This is a big opportunity for the industry; it can benefit substantially from the patent cliff.
Contribution to the Indian Economy: The Indian pharmaceutical industry can contribute substantially to the growth of the nation’s economy. The industry generates $13 billion in foreign exchange, which can go up to $3040 billion by 2030 if there is a proper policy framework and meticulous execution. The industry can create one to two million additional jobs for the country in the same period, boosting consumption in the local economy.
CHALLENGES & OPPORTUNITIES
If the industry has to achieve its Vision 2030, it has to navigate certain challenges. To start with, it needs a stable pricing policy and supportive regulatory environment to encourage investments and innovation in the country. High dependence on imports for APIs should come down. We should focus on API manufacturing through plug-and-play infrastructure support in dedicated zones. The government’s Production Linked Incentive Scheme to boost domestic manufacturing capacity of pharmaceutical products is a good step in this direction.
Our prime minister has, on several occasions, expressed a strong desire for Indian pharmaceutical companies to invest in innovation and further streamline the regulatory processes. The government needs to play a big role to make India a life sciences innovation hub. What we need is a research ecosystem that is supported through competitive tax breaks on R&D investments, technology transfers, etc, as well as regulatory interventions/simplification. It will allow Indian pharmaceutical companies to invest in the development of new molecules, dosage forms and drug delivery systems that will give it an edge for sustainable growth.
As per IQVIA, the global pharmaceutical market in 2020 was estimated at $1.27 lakh crore, with more than 60 per cent coming from innovative medicines. Indian pharmaceutical companies which have capabilities, size and scale should aspire to get a bigger share of the innovative medicines market by investing in cutting-edge research.
There is another important factor that will spur innovation in the industry -- collaboration. How the pharmaceutical industry has collaborated to respond to Covid-19 is a case in point. I strongly believe that collaboration between pharmaceutical companies, academic/research institutes and the government is the way forward. The government can intervene by helping set up and operationalise industry-wide ‘at scale’ capability building programmes to create a skilled talent pool that can be readily absorbed into the workforce.
To protect and promote the industry’s interests, the government could also set up an independent Ministry of Pharmaceuticals and consolidate the current set of regulators, CDSCO and NPPA. This will accelerate the development of the sector and facilitate faster decision-making.
As the industry expands globally, we need continuous investment in enhancing quality standards to keep our promise of becoming a ‘high quality reliable’ supplier of medicines. On this front, capability building with regulators like the USFDA and other drug authorities will help us better understand global expectations and implement best practices.
ACHIEVING EQUITABLE HEALTHCARE
I believe that the Indian pharmaceutical industry is ready for the big leap in the coming years, and we have a clear road map to achieve it. For a developing country like India, equitable and sustainable healthcare is of utmost importance. While the overall growth for the industry is required, the same needs to be visible in improvement in accessibility, reduced disease burden and better healthcare delivery that translates into overall good health for the citizens. For this, the private sector needs to work with the government to ensure that the quality of lifestyle is improved in a sustainable way.