Background:

• India is a major exporter of Pharmaceuticals, with over 200 countries served by Indian pharma exports. 
• India supplies over 50% of Africa’s requirement for generics, ~40% of generic demand in the US and ~25% of all medicine in the UK. The pharmaceutical industry in India is currently valued at $50 Bn.
• India also accounts for ~60% of global vaccine demand, and is a leading supplier of DPT, BCG and Measles vaccines. 70% of WHO’s vaccines (as per the essential Immunisation schedule) are sourced from India. 
• The pharmaceutical industry in India is expected to reach $65 Bn by 2024 and to $130 Bn by 2030.
• In August 2024, the Government initiated two new measures which could affect the domestic industry.
• The first was a Department of Expenditure (DoE) order permitting the Ministry of Health to procure 120 medicines through global tenders to supply Union government schemes. 
  • This list includes several top-selling anti-diabetes medicines and anti-cancer drugs. 
  • Currently, the companies selling these medicines enjoy a market monopoly in India, largely due to patent protection, regulatory barriers, or both. 
  • Moreover, for over 40 of these 120 medicines, the DoE order specifies a specific brand to be procured, implying that monopoly control of foreign companies would be enhanced. 
• Secondly, the 2024-25 Union Budget proposed removing the 10-12% customs duty on three cancer medicines marketed by AstraZeneca, ostensibly to reduce their prices. 
  • Given that some of these medicines are priced extremely high, the proposed import duty reduction would contribute little towards making them affordable.
• These measures have the ability to increase the imports of medicines into India and can affect the local pharma industry.

Issues for Domestic Pharma Industry due to Imports:

• • Disincentivizing Domestic Production: Importing pharmaceuticals through global tenders and duty waivers can discourage local manufacturers, making the country more dependent on imports and weakening the domestic industry’s competitiveness.
  • Reinforcement of Monopolies: Importing patented medicines, often from foreign companies with monopoly control due to patents and regulatory barriers, strengthens their hold over the Indian market. This restricts the development of affordable alternatives by Indian companies.
  • Barrier from Patents: The patent protection system in India limits local companies’ ability to produce generic versions of life-saving medicines. This reliance on patented imports increases healthcare costs, reducing access to affordable medicines.
  • Regulatory Barriers for Biosimilars: Indian regulatory guidelines for approving biosimilars are outdated and more stringent compared to countries like the USA  and the EU. Rules, such as mandatory animal and clinical trials, delay the entry of affordable alternatives from domestic producers.
  • Failure to Utilise Compulsory Licensing: Despite high drug prices, India’s Patent Office rarely issues compulsory licences (CL) for affordable local production, even when medicine is not available at reasonably affordable prices. 

• If a patented medicine is “not available to the public at a reasonably affordable price,” compulsory licences (CL) can be granted to any company willing to make the product in India. 

• Government Policies Favouring Imports: Government decisions, like permitting the procurement of critical medicines through global tenders and duty waivers, conflict with the intent of domestic production policies, as laid out in India’s Patents Act, undermining local industry growth.

Conclusion:

• India’s dependence on pharmaceutical imports and policies favouring foreign companies undermine domestic production and affordable access to medicines. 
• To safeguard public health, the government must prioritise local manufacturing, reform biosimilar regulations, and fully utilise provisions like compulsory licensing to reduce healthcare costs.