India as the Global Pharmacy Hub: Low Cost or High-Value Healthcare?

As per recent media reports, fifty companies manufacturing cough syrup have not been able to meet quality parameters during an investigation by the Central Drugs Standard Control Organisation (CDSCO). We recall the unfortunate event of 140 deaths involving children in various countries after consuming Indian-exported drugs. This incident is a cause for significant concern for […]


As per recent media reports, fifty companies manufacturing cough syrup have not been able to meet quality parameters during an investigation by the Central Drugs Standard Control Organisation (CDSCO). We recall the unfortunate event of 140 deaths involving children in various countries after consuming Indian-exported drugs. This incident is a cause for significant concern for the safety of domestic and international patients and raises serious questions about India’s reputation as a global pharma hub.
We have an opportunity to fix our pharmaceutical sector and move its reputation from a low-cost manufacturer to a high-value producer, making India a true innovation destination. The government of India has recently released the Approach Paper on National Pharmaceutical Policy, 2023 (NPP 2023) which is a vision document to address the country’s healthcare aspirations. It provides a roadmap for maintaining India’s global leadership in manufacturing quality pharmaceuticals and establishing the country as a powerhouse for medical devices.
While the attention to manufacturing, research and development, and regulatory harmonization is a commendable start, the policy seems to be missing a comprehensive view encompassing the pharma supply chain. For example, the role of hospitals, clinics and primary healthcare centres has not been addressed in the proposed policy. These stakeholders are an important link between the pharmaceutical industry, regulators and patients. This component of the value chain also defines the success of India’s Ayushman Bharat initiative.
The other gap we see is regulatory capacity building. India lacks adequate regulatory manpower to oversee the flow of pharma products through the entire supply chain and ensure the highest quality standards for Indian and global customers. India has over 800,000 retail outlets, over fifty e-pharmacies, 10,500 pharma plants, not to mention the 47 ports and airports handling international cargo. We lack adequate regulatory manpower to ensure that the inflow and outflow of these products don’t compromise on product safety and quality.
The other important area being missed is the price control regime governed by the Drug (Price Control) Order, 2013 (DPCO). DPCO impacts the sustained availability and accessibility of quality drugs. There is an urgent need to bring reform to these regulations.
There is tremendous scope for greater investment in healthcare and pharma research, development, and innovation by the industry. We know that the process of developing newer products, formulations and delivery mechanisms comes with a significant cost that needs to be recovered through incremental pricing. This becomes challenging, particularly for scheduled drugs that are subject to inflexible price control rules. At this time, the National Pharmaceutical Pricing Authority’s (NPPA) evaluation committee views every proposal to exclude a drug from price control with suspicion which is a disincentive for investing in innovation.
To encourage disruptive innovation, a specific and dedicated regulatory pathway enabling the consideration of a faster approval process for new drugs is needed. The government must also consider taking innovative products out of the price control regime for a specified time to reward the innovator adequately.
Other critical areas include active pharmaceutical ingredient (API) and key starting material (KSM) manufacturing in India. Reducing dependence on imports from China is important. However, any investment in manufacturing and/or R&D by domestic or multinational companies requires predictability in pricing policy and a stable regulatory regime. During one of my conversations, then Pharma Secretary S Aparna asked me for one big reform to mobilize the investments in the pharma sector. My response was – regulatory predictability and a stable pricing policy. India’s pharma/medical device pricing policy is based on essentiality. The price control process is perpetual now as opposed to once in five years as before. Any investment in manufacturing or research is made with an economic return objective. Lack of certainty around policy makes it difficult for the industry to assess the risk-return for new investments reliably. Reforms to pricing policies can help encourage the expansion of new investments. Stronger dispute resolution and arbitration mechanisms can further encourage foreign investors to come in through the foreign direct investment (FDI) route or enter joint ventures with Indian companies.
Regulatory harmonization is one more important area. Today, the healthcare industry is not confined by national boundaries. The majority of our pharma products is exported around the world while global medical devices meet a significant part of our growing domestic needs. We attract patients from all over the world to our state-of-the-art hospitals for treatment. We expect that global exporters should meet Indian standards and our standards should be respected by them. While this sounds fair, it is unrealistic and impractical. The industry will also welcome better coordination between CDSCO, the Drugs Controller General of India (DCGI), the Ministry of Electronics and Information Technology (MeitY), the Department of Animal Husbandry and Dairying (DAHD) and the Bureau of Indian Standards (BIS).
The recognition of global standards is fundamental to the manufacturer as validations are conducted per ISO and IEC standards. Indian standards can safely be aligned with the USA, EU, Japan or Singapore. Global standards should remain applicable to international manufacturers. Any additional standards over and above those can be defined through a robust consultative process. It will help faster introduction of new products and cutting-edge technology. It will also increase the competitiveness of our domestic industry. In addition, there are many benefits of using the Unique Device Identifier (UDI) system for medical devices. Since India has a significant import dependence on medical devices and aspires to be a global exporter, UDI is very helpful in making the traceability of devices more efficient, allowing easier recall of devices, combating counterfeiting, and improving patient safety.
Infrastructure enhancement and strengthening logistics is another much-needed reform. Establishing a cold chain specifically for vaccines and biopharma products will help India cater to remote areas and be a major global player in these products. All pharma products need to be stored and transported under specific temperature conditions. These are important for maintaining the drug’s efficacy during its shelf life. There is also a need to develop and enforce guidelines for transport and warehousing companies to maintain the quality of the drugs for both domestic and global markets. This can form the basis of a certification regime for transport/warehousing companies.The low-cost producer tag does not help us to move up the value chain. Pharma policy must set the direction for future regulations to support the country’s needs for years to come.
Rakesh K Chitkara runs public policy practice for India and the UAE and has decades of leadership experience with large multinational corporations in South Asia.