Indian Pharmaceutical Market

Transcription

1 Indian Pharmaceutical Market 1

2 New regulatory and drug pricing policies are negatively impacting growth in the Indian pharmaceutical sector, but opportunities remain Recent changes to regulatory and pricing policies are having a negative impact on both domestic and multinational pharmaceutical companies operating in India. Some estimates indicate that Indian pharmaceutical industry growth in FY was 9.8%, down from 16.6% in the previous year (Business Standard, 2013). The main reasons for this slowdown within the Indian pharmaceutical industry include new regulatory policies for clinical trials, restrictions on foreign direct investment in the pharmaceutical sector, compulsory licensing, and poor patent and data protection. Apart from these regulatory issues, the implementation of the National Pharmaceutical Pricing Policy 2012 by the government in July 2013 is also contributing to the poor performance of the pharmaceutical industry in India. Tighter regulations have resulted in a sharp decrease in the number of clinical trials conducted in India Amendments to clinical trial regulations were introduced in India by the Ministry of Health and Family Welfare in the Drugs and Cosmetics (Third Amendment) Rules 2013 in February 2013 to improve patient safety and to make clinical trial sponsors more accountable for any adverse effects caused by their new drugs. The changes outline procedures for reporting serious adverse events including deaths during clinical trials and the payment of compensation to patients, and have created difficulties for researchers wishing to conduct such trials in India. Furthermore, the government has recently formed a three tier examination system for clinical trials comprising of a new drugs advisory committee, a technical committee, and an apex committee to examine trial applications. This means that 162 clinical trials that had been approved by the Drug Controller General of India will now be evaluated via the three tier system prior to commencement (Shukla, 2013). These changes are adding to the confusion and delay in the clinical trials approval process, forcing many multinational pharmaceutical companies to stop their clinical trials in India and to move them to other locations. With the changes to the clinical trial regulations and uncertainty over how they will be implemented, expects there will be a decrease in the number of clinical trials that will be conducted in the country. Inadequate intellectual property protection continues to plague the Indian pharma market Despite improvements to patent legislation, issues regarding evergreening mean that reformulated, follow on brands may not necessarily receive patent protection in India a situation that is detrimental 2

3 to branded players, but provides a significant opportunity for domestic generics manufacturers. Several different product patent applications for patented drugs manufactured by multinational pharma companies have been denied patent protection in India in the last few years, including Tykerb (lapatinib; GlaxoSmithKline), Glivec (imatinib; Novartis), Pegasys (peginterferon alfa; Roche), and Iressa (gefitinib; AstraZeneca). Such patent rejections will undoubtedly lower confidence in the Indian market as such occurrences are no longer seen as isolated events. This indicates that certain drug classes, such as those that are viewed as expensive life saving drugs (including cancer and HIV medication), may be more difficult to patent in India as the legal system is more likely to apply its discretion in the interpretation of the law and prevent those drugs from being patented. This could have a significant impact on pharmaceutical companies choice of products to be marketed in India. Compulsory licensing of patented drugs further adds to the challenges faced by innovator pharma companies in India The use of compulsory licenses for patented drugs is further contributing to the loss of faith in the Indian patent system among Western manufacturers. Recently, the first compulsory license was granted in India for Bayer s cancer drug Nexavar (sorafenib) to the Indian generics manufacturer Natco. Subsequently, a panel was appointed by the government to look into the issues related to compulsory licensing of other cancer drugs including trastuzumab, ixabepilone, and dasatinib, and whether cheaper versions of these drugs can be launched (Rajagopal, 2013). It seems likely that the second drug to be subject to compulsory licensing in India will be Bristol Myers Squibb's anti cancer drug Sprycel (dasatinib). Expanded pricing controls have led to issues in the supply of essential medicines The National Pharmaceutical Pricing Policy (NPPP), announced towards the end of 2012, has made drug pricing in India more challenging. Under the NPPP 2012 and the resulting Drug Price Control Order (DPCO) 2013, pricing control has been expanded to 348 drugs from a previous group of only 74 (DPCO, 2013). The NPPP has also eroded retailers' and wholesalers' margins from 20% and 10% to 16% and 8% respectively, resulting in a stand off between the pharmaceutical companies and the trade channels. Both of these issues have contributed to the shortfall in essential medicines across the country as well as the slow growth of the sector. In addition, the prices of non scheduled medicines (drugs that do not fall under the price control) are monitored for increases. There is a 10% ceiling on annual price increases of such drugs, and the National Pharmaceutical Pricing Authority reserves the right to take corrective measures (including price fixing) for these products. The Department of Pharmaceuticals is considering price negotiations for patented drugs The Indian government is currently considering introducing price negotiations for patented drugs, which if adopted would have a negative impact on multinational companies by driving down prices in the country. On the other hand, under the DPCO 2013 patented drugs developed by Indian companies are 3

4 exempt from pricing controls for five years from approval, in a move designed to stimulate indigenous R&D activities. However, together with recent decisions to overturn patents on multinationals' products, this is seen as a protectionist policy. A report on the proposed price negotiations for patented drugs was published by the Department of Pharmaceuticals and was open for public consultation until May Under this proposal a panel would be set up to negotiate the prices of patented products for government procurement in India, and the report also recommended a pricing formula that would take into account the per capita income of India. Moreover, it was suggested that the price setting and negotiation process would also consider the prices paid by the governments of the UK, Canada, France, Australia, and New Zealand, which would be used as a reference. If implemented, this could result in prices being slashed by two thirds (Ahmed, 2013). Discussions with various stakeholders are ongoing in preparation for the draft of the formal regulations that will be presented before the parliament for approval. It is anticipated that anti cancer and HIV medicines will be the most likely targets of such price measures; however, given that India is facing general elections in 2014, it is not clear how quickly this issue will be decided upon. Reimbursement for medicines is scarce, with out of pocket payments a major burden for patients, but insurance coverage is increasing Although all Indian citizens have the right to healthcare, in reality the public healthcare system is inadequate and the majority of healthcare is provided through the private sector. Individuals lacking health insurance are obliged to pay out of pocket for treatment received in private healthcare facilities; however, only about 25% of India's population has any kind of health insurance, such as community, employers', or social insurance. Moreover, the existing health insurance schemes usually only cover inpatient hospitalization expenses, while outpatient treatment costs, which form a significant percentage of clinic/hospital visits by patients, are not covered. A large component of the out of pocket expenses incurred by patients in India is for outpatient care and the purchase of medicines. Plans to expand access to cheap generic medicines may harm branded generics manufacturers Plans have recently been announced that if implemented would see expanded access to essential generic medicines through government run hospitals and clinics (Indiarealtime, 2013). The plans follow similar schemes already in place in some states such as Kerala, Tamil Nadu, and Rajasthan and involve the provision of free generic medicines to all of those treated in public healthcare facilities. The implementation of one such program in Rajasthan is reported to have resulted in an increase in outpatient visits of 60%, with a 30% increase in inpatient admissions (Ebrahim, 2012). However, the scheme is thought to have limited the prescribing options for physicians, who have found themselves limited to the essential drugs list, and as such the use of branded generics may decline. Opportunities for multinationals remain despite challenges 4

5 Although the new regulatory policy changes and pricing and reimbursement situation are impeding the growth of the pharma industry, it is possible for domestic as well as multinational companies to devise appropriate strategies to negate a large part of this impact in the medium to long term as the government is increasing its overall healthcare expenditure and new opportunities are opening up for the industry as India still remains an underpenetrated market. For instance, the government is investing in improving access to healthcare for the poor in rural as well as urban areas through its National Health Mission schemes. The government has also invested significantly in improving tertiary healthcare access in the country by building new healthcare infrastructure and through upgrading existing public sector hospitals. Furthermore, insurance coverage is also rapidly expanding in India, with an increase in private sector health insurance penetration as well as large scale government sponsored health insurance schemes targeted at those living below the poverty line, enabling them to access healthcare facilities in the private sector. As a result, expects increased access to both generic and branded medicines in India. While urban centers will remain the most attractive locations for multinational pharma companies, a presence in rural regions will also be advantageous going forward. Bibliography Ahmed R (2013) India Plans Price Controls for Patented Drugs. Available from: [Accessed 14 November 2013]. Business Standard (2013) New drug policy, regulations slowing down pharma growth: Report. Available from: standard.com/article/economy policy/new drug policy regulations slowingdown pharma growth report _1.html [Accessed 20 November 2013]. DPCO (2013) Drug Price Control Order Available from: [Accessed 15 November 2013]. Ebrahim Z (2012) India Poised to Supply Free Drugs to 1.2 Billion People. Available from: poised to supply free drugs to 1 2 billion people/ [Accessed 15 November 2013]. Indiarealtime (2013) India s Plan To Distribute Free Medicines Raises Questions. Available from: plan to distribute free medicines raisesquestions/ [Accessed 15 November 2013]. Rajagopal D (2013) Compulsory licence likely for three cancer drugs. Available from: /news/ _1_compulsory licenceindian patent act patent controller [Accessed 23 October 2013]. Shukla S (2013) India's amended trials regulations spark research exodus. Available from: (13) /fulltext [Accessed 24 October 2013]. 5