CHALLENGES FACED BY

PHARMACEUTICAL INDUSTRY
1. High expenditure limiting access to medicines:
While India is making reasonably rapid strides in its economic growth, the
country is increasingly facing constraints in providing healthcare benefits
to a vast majority of its population with ballooning Out of Pocket (OoP)
expenditure of around 74 percent and 72 percent of which is the cost of
medicines. The key reasons are
Low public spending on healthcare at around just 1.1 percent of the
GDP
Fragile healthcare infrastructure
Very low penetration of health insurance system for all strata of
society
Poor healthcare delivery system
Absence of Universal Health Coverage
2. Pressure to make drug prices more affordable:
Pharmaceutical companies in India has been constrained to live with
continuing focus of the government and also of the civil society on
reasonably affordable medicines irrespective of the fact whether they are
generic or patented. The Department of Pharmaceuticals has reportedly
started comparing Indian drug prices with their international equivalents in
terms of the purchasing power parity and per capita income and not
just their prevailing prices in various developed markets converted into
rupees. With such comparisons the government has already started
voicing that prices of medicines in India are not the cheapest but on the
contrary one of the costliest in the world. Thus, one of the critical
challenges of the Indian Pharmaceutical Industry continues to be
delivering affordable medicines for a large section of the population of the
country, as expected by the government.
3. Inadequate penetration of current health insurance schemes:
Health insurance coverage is still very low in India as compared to, among
many other countries, Brazil and South Africa and at-par with our
neighboring island state Sri Lanka. Moreover, currently health insurance
schemes only cover expenses towards hospitalization. Ideally, medical
insurance schemes in India should also cover domiciliary or in-patient
treatment costs and perhaps loss of income too, if India wants to bring
down the OoP expenditure for its population or at least till such time the
ambitious Universal Health Coverage project gets translated into reality.
4. Pricing of Patented Drugs:
Innovative pharmaceutical products patented in India are expected to
facilitate access to latest modern medicines to the countrys population to
meet their unmet needs, if available at a reasonably affordable price. To
respond to this important need of the patients, many innovator companies

like, Merck, GlaxoSmithKline (GSK) have already announced a differential

pricing mechanism for their patented medicines in India. It appears rather
impractical to envisage that routine grant of compulsory license by the
Indian Patent Office will be able to resolve the critical issue of improving
access to patented medicines on a long term basis . Such decisions may
be taken only after exhausting all other access improvement measures.
5. Fostering innovation and Intellectual Property Rights (IPR):
From the perspective of the global innovator companies across the world,
lack of a robust innovation friendly ecosystem in India is still a major
challenge. However, home grown companies feel otherwise. This is mainly
because, before enactment of the Indian Patents Act (amended) 2005, it
was widely reported that mainly for the interest of Public Health and
probably also to ensure that the growth of the domestic pharmaceutical
industry does not get very adversely impacted, the Parliament of India
ensured inclusion of a number of safeguards including checks on evergreening of pharmaceutical patents and broader provisions for the grant
of Compulsory License in the statute.
6. Counterfeit Medicines:
India still needs to generate enough credible data to convince itself and
then to establish that counterfeit drugs are posing a growing menace to
the humanity. All stakeholders should join hands to address this public
health issue, leaving aside petty commercial interests, be it generic
pharmaceutical companies of India or research based pharmaceutical
players across the world. The other side of the coin is that counterfeit
versions of high value and/or high volume brands of the pharmaceutical
companies in India are adversely affecting their business performance
posing another major challenge.
7. Talent Pool:
Access to healthcare comprises not just medicines but more importantly
healthcare infrastructure like, doctors, paramedics, diagnostics, healthcare
centers and hospitals. In India the demand for these services has
outstripped supply. Other key challenge faced by the pharmaceutical
industry in this area is dearth of industry-specific employable work force in
important areas like, R&D, clinical research, pre-clinical and clinical
studies, manufacturing, quality assurance, besides sales and marketing.
8. Requirement of Stringent Regulatory Practices:
In the increasingly globalized economy, strict conformance to high
regulatory standards like, Good Manufacturing Practices (GMP), Good
Clinical Practices (GCP) and Good Laboratory Practices (GLP) pose another
major challenge for the pharmaceutical industry in India.
Those pharmaceutical companies who are involved in manufacturing and
export of drugs and pharmaceuticals are required to meet standards set
up not only by the Drug Controller General of India (DCGI) and/or the State
Drug controllers, but also of the regulatory authorities of the respective
countries, where their products will be exported.