Role of R&D capabilities in fostering India’s Pharma Industry

 

The second wave of  Covid  19 has spread quickly creating a public health catastrophe in India. This   put nation and individuals at great risk for want proper medical care and health  facilities. Therefore, the  challenge we face at present is different in its  nature and scope than we faced last year. There is on ongoing debate about vaccine nationalism and   government’s  failure to bolster its crumbling health care system. However, there are less discussions over state sponsored research and innovation in drug development in India.

India has a fast-growing presence in global pharmaceuticals. Hyderabad and Bengaluru are known for pharmaceuticals with high R& D capabilities and manufacturing. But during the second wave, many condemned  the state  for not  intervening successfully to provide lifesaving drugs to people though we claim India is the pharmacy of the world. And the state  failed miserably to adopt the  role of a risk taker at the time of a crisis.

Often, the role played by the centre and the various state governments are questioned in the current public health crisis. The subtle reaction of the centre suggests that the private players can accumulate their profit through vaccine production. The existing debates over accessibility and affordability of vaccines do not bring a relief to the suffering Indians. How can poor people be expected to vaccinate themselves, as they just do not have bare minimum a day?

Government is  a risk taker when it boosts state sponsored research  for drug development. Unfortunately, the  role of a losing state was evident  when it  obsessed with  the deadweight loss of the producers like Poonawalla. Even though there  was ample time to develop herd immunity from the first wave to the current period, it was not dealt effectively. In the meantime, countries in the Europe and USA  could manage the crisis.

USA is always in the forefront in extending state support  to sponsor innovation in the private sector for a common good. USA proved  state could take a massive scale risk to spur innovation. State played a significant role  in the fields of science and technology, small businesses etc. the invisible hand of the state was there in all radical areas including pharmaceuticals. The Orphan Drug Act  (2013) made it possible to develop drugs for rare diseases.

Orphan drugs

The drug which is used for a rare disease that affects less than 20000 people in a potential market cannot expand production without financial incentives is known as orphan drugs. The above-mentioned act supports the small firms to scale up production and allowing them to become a potential player in pharmaceutical industry. It is not only the small firms benefitted , but also the  giant firms such as Johnson & Johnson, Pfizer and many others was encouraged to use the same. Statistics shows 59 percent of total revenues of biopharmaceutical firms comes from sale of orphan drugs. In critical times, the government of our country can take a deliberate effort of being a subsidizer of drug development and the protector of the people of the state.

 

 

Is India really a global pharmacy hub?

Recent announcement of the prime minister of India had created discussions on India’s ability as a global factory of drug manufacturing. India is by now accounting for 16000 plus pharmaceutical firms including small and large ones. In terms of volume of production India’s pharmaceutical industry is the fourth largest globally but notably in terms of value, India rank at the 13^th position globally.  One reason for this dispersion between volume and value of production are embedded in certain specific characteristics of the pharma firms in India. An interesting observation in this regard is that by and large (though there are exceptions), Indian pharmaceutical firms are generic drug producers where the role of patents in capability accumulation is less compared to the other segments of the industry.  In the last years, more than 76 percent of the  patent applications filed in the Indian patent office are by foreign firms with USA, Japan and Germany accounting for 45 percent. This trend raises doubts over the technological capability of the Indian pharmaceutical sector in fostering the emerging needs.

Public funded innovations with fair risk-reward sharing are essential to boost capability-based drug development. The government has played an active role in the development of pharmaceutical industry in India especially through two remarkable Patent Acts. The Patent Act of 1970 permit pharma companies only for process patents but not product patents. This has encouraged firms especially generic drug producers in manufacture drug molecules cost effectively and efficiently. The Patent (Amendment) Act 2005 re-established the product patent regime after three decades. Now the need of industry lies in increased R&D capability with adequate support via public funding. University/research institutions - firm based collaborations as prevalent in developed countries can be a feasible business model in fostering the future need of the industry.