Indian Pharma Industry legacy from 24 million-52 billion USD

Writer: Mohammad Shahbaz Alam I Editor: Abid Ali Khan

In 1947, at the time of independence, the Indian pharmaceutical sector had a value of USD 24.03 million. Western MNCs dominated the Indian pharma market, controlling between 80 and 90 percent of the market primarily through importation. Foreign companies held about 99 percent of all pharmaceutical products under patent in India at that time, and domestic Indian drug prices ranked among the highest in the world.

To survive against many odds, the Indian Government took the first step in 1949 by examining patent laws in the country to prevent the misuse or abuse of patent rights in India and suggested amendments to the Patents & Designs Act, 1911. The Indian Government also observed that the Patents Act should contain a clear indication to ensure that food, medicine, surgical, and curative devices are made available to the public at the cheapest price while giving reasonable compensation to the patentee.

In 1954, the Pharmaceutical Inquiry Report Committee was created and recommended that foreign firms operating in India must establish manufacturing units. The committee also recommended reducing import duties on raw materials, encouraging new units in government or private sectors, easing license processes for small-scale units, and implementing a system for fair trade prices under the Drug Controller (India). Following these recommendations, the Government of India set up Hindustan Antibiotics Ltd in Pimpri in 1956 and two plants of Indian Drugs and Pharmaceutical Ltd in 1961 in Hyderabad and Rishikesh.

The first patent Act of Independent India came into existence in 1970. In 1978-79, the number of patent applications filed in India fell to 1010 from 4200. However, the number of domestic firms entering generic drug manufacturing increased, ensuring that medicine prices effectively remained low and affordable.

In 1975, there were 116 units in the organized sector registered or licensed under the industries, and more than 2500 small-scale units were operating. The organized sector had 25 units with foreign equity exceeding 50% and 26 units with foreign equity of 50% or less. The industry expanded its manufacturing activity, with a total turnover of about USD 89.39 million for bulk drugs and USD 441 million for formulations in 1973. However, even with significant turnover, only 20% of the Indian population had access to modern medicines at that time.

In 1901, Achariya P. C. Ray established the Bengal Chemicals and Pharmaceutical Works (BCPW), a production unit for simple medical formulations from plant and animal tissues. BCPW was followed by Alembic Chemical Works (1907) and Bengal Immunity (1919). Over the next few decades, various small-scale and large-scale domestic production units were established, such as Indo Pharma, Unichem, Chem Pharma, Chemical Industries, and Pharmaceutical Industries (CIPLA), Calcutta Chemicals, Zandu Pharmaceutical Works, and more. The domestic industry shifted its production from aspirin and quinine salts to synthetic drugs, chemotherapeutics, alkaloids, highlighting the progress of domestic pharmaceutical firms and research institutions toward self-reliance and self-sufficiency to meet the growing demand for affordable drugs.

The market share of foreign MNCs continuously declined after India adopted the process patent. In 1980, the market share of foreign MNCs declined to 50%, and by 2004, it further declined to 23% in comparison to domestic pharmaceutical industries. Subsequently, most foreign pharmaceutical manufacturers abandoned the Indian market due to the absence of legal mechanisms to protect their patented products. As a result, the share of the domestic Indian market held by foreign drug manufacturers declined to less than 20 percent in 2005. Local firms filled the void, and by 1990, India was self-sufficient in the production of formulations and nearly self-sufficient in the production of bulk drugs.

In 1991, India launched massive economic reforms, stepping into the era of globalization, which marked the end of the ‘License-Raj.’ Due to low entry barriers and low capital requirements, the number of domestic pharmaceutical firms in the formal and informal sectors expanded from 2,257 in 1970 to more than 20,000 in 2005. When India joined the WTO in 1995, its pharmaceutical exports grew from less than USD 600 million to USD 3.7 billion by 2005, accounting for more than 61 percent of industry turnover. After 2005, many MNCs turned to contract manufacturing and research services (CRAMS), co-marketing alliances, outsourcing research, and clinical trials to reduce costs, increase development capacity, and trim the ‘time to market’ for new drugs. India became the principal destination for global pharmaceutical companies across the pharmaceutical value chain.

In 2009, India had more than 120 US Food and Drug Administration (FDA)-approved plants and approximately 84 UK Medicines and Healthcare products Regulatory Agency (MHRA)-approved plants, capable of manufacturing products with exceptional quality standards.

The Department of Pharmaceuticals was formed on July 2, 2008, under the Ministry of Chemicals and Fertilizers to focus on the development of the pharmaceutical sector in the country and regulate various activities related to the pricing and availability of medicines at affordable prices, R&D, the protection of intellectual property (IP) rights, and international commitments related to the pharmaceutical sector.

During 2010, India’s pharmaceutical industry was the third largest in the world in terms of volume and stood 14th in terms of value. The total turnover of India’s pharmaceuticals industry between September 2008 and September 2009 was USD 21.04 billion, with the domestic market worth USD 12.26 billion.

The Jan Aushadhi Scheme, launched by the Department of Pharmaceuticals, Ministry of Chemicals & Fertilizers, Government of India in November 2008, has seen 8675 pharmacies functional across the country as of January 31, 2022. The government aims to open 10,500 pharmacies in the country by 2025. Noteworthy, Zota Healthcare pioneered the introduction of 3 generic pharmacies in Surat, Gujarat, in 2006. After facing pressure from the local pharmacy association to shut down, they introduced the Davaindia generic pharmacy chain. Davaindia now aims to open more than 10,000 pharmacies by 2025 and enter the global market.

The Food Safety and Standards Authority of India (FSSAI) was established on September 5, 2008, under the Food Safety and Standards Act, 2006, which became operational in 2006. FSSAI is responsible for laying down science-based standards for food products and regulating their manufacture, storage, distribution, sale, and import to ensure the availability of safe and wholesome food for human consumption. The India nutraceuticals market has experienced significant growth, reaching a valuation of USD 5.4 billion in 2022 and is projected to maintain a strong CAGR of 11.77% until 2028.

The ongoing pandemic has played a crucial role in driving this growth, with consumers focusing on preventive healthcare and immunity-boosting supplements. This shift in consumer behavior has influenced the market in India.

AYUSH stands for Ayurveda, Yoga and Naturopathy, Unani, Siddha, and Homeopathy, which are the six Indian systems of medicine prevalent and practiced in India and some neighboring Asian countries, with some exceptions in developed countries. In 1955, the Union Government of India established a separate department, the Department of Indian System of Medicine and Homoeopathy (ISM&H), for the development of these systems. This department was renamed in November 2003 as the Department of Ayurveda, Yoga, Naturopathy, Unani, Siddha, and Homoeopathy (Ayush) for the same purpose. On November 9, 2014, the Ministry of Ayush was formed by the Government of India with a vision of reviving the profound knowledge of traditional Indian systems of medicine and ensuring the optimal development and propagation of the Ayush systems of healthcare.

India is the second-largest exporter of medicinal herbs in the world, with a total of 6,600 medicinal plants. India and China together produce up to 70% of the demand for herbal medicine worldwide. India introduced Panchakarma therapy over 5000 years ago for body detoxification and rejuvenation, with no competitors in the world. In recent times, India has achieved significant milestones in space exploration and healthcare. India alone provides 80% of HIV drugs, 70% of vaccines, and 20% of medicine to the world at more affordable prices compared to developed countries. India is also the only country with more than 858 USFDA approved plants.

Akums Drugs & Pharmaceuticals Ltd is the only pharmaceutical manufacturer in the world that produces 3.8% of the world’s demand and 18% of India’s alone. Established in 2005 in Haridwar, Akums quickly became one of the largest manufacturers in the world. India requires a Pharma Policy and Pharma export policy along with a Ministry of Pharmaceuticals to support its growth in the pharmaceutical sector.