The pharma industries of India and China are competing for a position at the head of the global market. While India retains its position as a world leader in generic medicine production, China has increased its investment in research and development, signalling an interest in overtaking competitors.
Indian companies have been producing hundreds of generic medicines and their formulations of standard quality by using innovative engineering, chemical techniques. With China easing regulations in the pharma sector, many Indian players are now showing interest in foraying into that market, says Pharmexcil Chairman Dinesh Dua. Pointing out that the pharma market in China is pegged at a whopping $122 billion, Dua said this is the right time to enter as the cost of medication in China is six to seven times higher than India.
On the other hand, Reports also says, ‘Not a single Indian pharma company has been able to invent a single significant new drug in the last 70 years’, Indian pharma firms received 34% of FDA warnings last year. In order to quantify the inventorship associated with Indian Pharma Industry, reports have been published which studied the US patents assigned to non-Indian companies, with inventors based in India. Out of the 4094 patents in all disciplines, only 20 were relevant, an insignificant number. If creative skills in the drug discovery process are not being honed, the prospects of original drug discovery in India are poor. This should be a matter of concern to the Indian government and others concerned with the price of future drugs.
According to the Indian Pharmaceutical Alliance (IPA), there are several challenges to the exponential growth Indian pharma could achieve. For one, an environment conducive to long-term investment decisions in the pharmaceutical industry has yet to be established. Other key challenges include lack of innovation, less access to skilled workers and stricter guidelines in quality compliance in international markets. The IPA reports there are about 29 skilled workers available for every 10,000 people in India, in comparison to China, where there would be about 41. India levies an extremely low registration fee of USD 1,000 per product for Chinese pharmaceutical companies, whereas China imposes an exorbitant fee of USD 145,960 for registering a product.
Indian drug companies are looking to local makers of so-called active pharmaceutical ingredients (API) or trying to make them in-house in a bid to end their reliance on China as ties between the two countries soured. Though India is known as the pharmacy of the world for its massive production capacities of both generic drugs and vaccines,
China accounted for half of its API needs in 2019 from nearly nothing three decades ago, industry data shows. China’s industrial policy aiming to make the country dominant in global high-tech manufacturing, biomedicine is a key strategic goal. A laser-sharp focus on expanding their burgeoning pharma market will provide China with a distinct edge in drug development compared with India.
China has increased prices of key starting materials (KSM) by 10-20%, leaving those of basic raw materials largely unchanged. Both KSM and APIs are imported in India for making life-saving antibiotics, steroids, and other medicines. While increased prices will put cost pressure on the domestic industry over the next few months, more importantly, it has sparked speculation that this could be a potential ploy by China to scupper efforts of India’s drug industry to be self-reliant, or ‘Atmanirbhar’. Any increase in prices of imported KSMs will discourage indigenous API production in the country, making units unviable and APIs less competitive against Chinese products globally. At present, India is dependent on China for KSMs and APIs, with 70-80% of basic raw materials imported for making medicines.
For certain life-saving antibiotics like cephalosporins, azithromycin, and penicillin, the dependence on Chinese imports is as high as 90%. To boost indigenous manufacturing and self-reliance, the government announced an incentive scheme to manufacture 50-odd crucial APIs, where import dependence is high. Indian Drug Manufacturers’ Association president Mahesh Doshi said, “Cost pressure will be there (on API manufacturers) due to the increase in prices of imported KSM.”
Earlier, not many players were keen on the Chinese market as product approvals would take anywhere between four to five years, but now with the new relaxed regulatory regime, approvals are expected to come within a year’s time for players who have FDA and EU approved units.
Dua said, entering into JV with local players is the best way to make further inroads into China and many Indian companies have already begun exploring this option earlier this month. While Pharmexcil is betting big on this opportunity and is collaborating with Chinese trade and industry bodies to help Indian players boost their trade in that country, PV Appaji, Director General Emeritus, Pharmexcil, said the window of opportunity for the Indian pharma players is very narrow as it is only a matter of time before China overcomes its domestic issues and starts manufacturing cost competitive generic drugs.
Old statistics of Pharmaceutical Manufacturing, which projected significant increase in ranks for India from 11th to 5th in the global manufacturing competitiveness rankings from 2016 to 2020, while China moving down one place from 1st to 2nd. So, both countries have their own edges over each other, right direction from government and innovation from manufacturers will lead them in time to come.
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(Author of the article is Nikhil Nadarkhani, a pharmaceutical brand management & marketing professional. The views expressed in the article are solely those of the author in his private capacity)