Challenges in Pharma trade

What is the issue?

The Indian pharmaceutical industry is facing challenges in both domestic as well as in international markets.

What is the model of Indian Pharma industries?

• India is the third largest supplier of the world’s requirement of medicine.
• It capitalised on a strong domestic base in India through rapid product introductions, a kind regulatory and intellectual property system.
• Indian pharma companies chose pockets in Africa, Asia and the Middle East as natural expansion outposts.

What are the challenges in Indian pharma trade?

• Domestic-Indian patients are paying high prices for drugs, due to fragmentation of distribution channels.
• The drug regulatory laws are not implemented in identical fashion across every state and city of the country.
• There are many ill-trained chemist all over the nation.
• International- US Supply channel consolidationhas led to 90 per cent of the buying power concentration in three big companies, hindering trade of Indian companies.
• The Food and Drug Administration along with increased scrutiny has been approving the backlog of drugs aggressively, leading to hyper-competition.
• Buyers have tightened the screws and are increasingly vigilant about even legitimate price increases.
• The combined effect has wiped out nearly 40 per cent of the core industry’s market cap, destruction of over Rs 5 lakh crore.

How the challenges can be addressed?

• The national regulator can engage to re-skill and train employees and hold them accountable to one common national standard.
• Beyond the core generics drugs companies should invest in diversified portfolio such as vaccines, animal health.
• The Indian pharma industry should focus on capital allocation choices and capability building.
• Three simple things innovation, calibrated diversification and consolidation must be carried out.
• The industry needs to diversify the geography risk beyond the US and India, invest in innovation beyond traditional generics and acquire more global scale.

• India does not need more than 500 companies to have a reasonably competitive market, remaining should merge and acquire global scale.

Source: Business Standard