India can become the ‘Pharmacy of the World’ if the pharma sector’s potential can be utilised through a shift in policy decisions and big investment
India's progress in the medicine and pharmaceutical sector has again come to limelight after the outbreak of the Coronavirus pandemic when 'quinine' suddenly became a much sought after drug all over the world including the USA and several countries of Europe. India emerged as a major supplier of this drug. This rekindled her hope to emerge as the pharmacy leader of the world. The breakthrough in making two vaccines for COVID-19 further strengthened India's position as a major supplier of vaccines to control the pandemic that has caused unprecedented devastation to the health and economy of the world. Reports suggest that seven other vaccines are in the pipeline.
The circumstances that have placed the country in the centre of medicine and pharmaceuticals of the world, need to be handled even more carefully so that India gets the maximum advantage in line with its traditional values of 'Vasudhaiva Kutumbakam' (the whole world is a family). If the ruling establishment does this with required dexterity and wisdom, India can now become the pharmacy of the world without further delay.
India has been nursing a hope of emerging as a leader in pharmacy for quite some time. Even before the BJP Government came to power in 2014, the country was almost self-sufficient in case of formulations. Imports were being made on quality and economic considerations and not necessarily due to non-availability of domestic sources. The value of Imports of medicine and pharmaceutical products in 2013-14 was 17,944 crore while that of exports was 6,90,236 crore.
The present Government had an advantage in this respect but could not fully explore it in the last seven years of its governance. The pharmaceutical sector was contributing around only 1.72 per cent of the GDP in 2019-20 even though the Indian pharmaceutical industry was the third-largest in the world in terms of volume and 10th largest in terms of value. The total size of the industry including drugs and medical devices was around USD 43 billion. It had a growth rate of 7-8 per cent in the drug sector and 15-16 per cent in the medical device sector. Total exports were to the tune of USD 20 billion of which drugs constituted around 90 per cent. The imports amounted to around Rs 72,800 crore of which medical devices constituted around 52 per cent.
How closer we have come to realise our dream can further be imagined by the fact that India has become the largest provider of generic drugs globally. Access to affordable HIV treatment in India is one of the greatest success stories in the medicine world. India is also one of the biggest suppliers of low-cost vaccines in the world besides the newly introduced COVID-19 vaccines. It is because of the low price and high quality that Indian medicines are preferred worldwide.
The only thing of great concern is that the Government has been very slow in exploring the full potential of the development after it came to power. For example, during five years between 2010-11 to 2014-15, the pharmacy trade of the country registered around 50 per cent growth from USD 10.23 billion to USD 15.13 billion. However, it grew only to USD 18.75 billion in 2018-19 and stood at USD 20.72 billion in 2019-20. Total drugs and pharmaceuticals export from April 2020 to November 2020 was USD 15.87 billion, in which almost USD 2 billion was contributed in the month of November.
Though India is expected to rank among the top three pharmaceutical markets in terms of incremental growth in 2020, it fails to realise its full potential. It is true that India is the largest supplier of generic medicines globally — accounting for 20-22 per cent of the global export in volume. It could have done better as the ground for it was already prepared by the earlier governments. It is unsatisfactory that India could export bulk drugs and drug intermediaries of only USD 3.89 billion in 2019-20, and USD 2.52 billion in 2020-21 by October 2020. Though it was in an advantageous position due to its lowest manufacturing cost in the world — lower than the USA and almost half of Europe. The Indian pharmaceutical industry is growing at only 15 per cent for the last five years which is less than the expected growth rate at CAGR 22.4 per cent to touch USD 55 billion by 2020. It is despite the significant growth opportunities that were before the Government.
The reasons behind the below par performance are not too difficult to ascertain. We need a longer-term stable policy environment for the pharmaceutical sector. It has already been noted by the WTO and other organisations that frequent changes in policy and tariff make trade uncertainties. India must also ensure the world-class quality of drugs — both for domestic consumption and exports. It should also create an environment for research and development to produce innovator drugs.
Pharmaceutical is among the top eight sectors of India in attracting FDI. After the abolition of the Foreign Investment Promotion Board in 2017, the Government has introduced a new system by putting some on the automatic route and some are being processed. However, only 25 FDI proposals worth Rs 2,496 crore could be approved by March 2020. The Government must look into the matter to find out the reasons for such a small FDI inflow in this sector despite a great potential — especially when FDI inflow in this sector is registering significant decline since 2014-15.
Indian pharma sector and exports may grow faster, but only if the Government takes the right decision at the right time. The Government needs to put on hold its rash decisions and policy experiments for some time and remove all impediments to make India the Pharmacy of the World in the real sense of the term without further delay. Ensuring growth and development of the Indian pharmacy Industry is thus imperative, and the Government must come out with big investment plans to promote its growth, innovation, and R&D.
Views expressed are personal