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Call the doctor

The Indian pharmaceutical industry and the domestic drug market face three major issues; quality and innovation, allegations by MNCs that their patents are being violated by Indian companies; Price controls by the government. Himani Chandna Gurtoo reports.

business Updated: Aug 09, 2013 02:18 IST
Himani Chandna Gurtoo

The Indian pharmaceutical industry and the domestic drug market face three major issues:

* Quality and innovation (or lack of it) by Indian drug companies;

* Allegations by MNCs that their patents are being violated by Indian drug companies; and

* Price controls by the government, which affects both Indian and multinational companies.

The stated goal of the Indian government is to make medicines available to its poorest citizens at affordable prices.

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Responding to this mandate, Indian drug companies such as Dr Reddy's Laboratories, Sun Pharmaceutical Industries, Cipla, Ranbaxy (now owned by Japanese MNC Daiichi Sankyo) and others have, for decades, made generic versions of drugs (whose patents have expired) developed by western MNCs and sold them at a fraction of the prices charged by the latter. This has resulted in Indian companies winning large market shares from their western rivals in several Third World countries.

Western Big Pharma has often alleged that Indian companies are violating their patents. But in most such cases, it has been found that western drug firms were "evergreening" their drugs.

Evergreening is drug industry parlance for the practice of tweaking drug formulas to extend patents beyond the legally permissible 20 years.

But despite its success, the Indian pharma industry has suffered an image crisis in recent years. A Pew survey in 2010 found that 50% of Americans distrusted Indian drugs (70% didn't trust Chinese drugs).

There have been whispers that recent cases of fines against Indian companies were a case of Big Pharma hitting back. Opinion is divided on this, but experts say Indian drug firms have to pay more attention to quality.

"FDA audits will happen but we need to pass those audits," said Hitesh Sharma, national leader, life sciences, Ernst & Young. "We need a robust mechanism to make sure these fallacies should not recur and if they happen ever, we must find ways to deal with them."

There have been allegations that the government's policy of fixing prices of certain drugs is opaque. Then, in India, patent infringement cases can take up to 15 years to conclude.

These create uncertainty among patent holders and other stakeholders. The pharma industry wants a more transparent, predictable system in place. "The way forward is to ensure patent laws are speedily implemented in India and pricing policy is made more pragmatic. We can look at cross subsidies instead of bringing prices to the lowest common denominator," said Ranjit Shahani, vice chairman, Novartis India, and president, organisation of pharmaceutical producers of India.

Also, Indian drug firms have to invest more on research to develop new patented medicines.