New drug policy, regulations slowing down pharma growth

Hit by the new drug pricing policy and regulatory interventions, growth rate of the Rs 72,069-crore Indian pharmaceutical market has slowed down to 9.8 per cent in 2013 as compared to 16.6 per cent in 2012, says a report.

The pharma industry is also witnessing challenges like delays in clinical trial approvals, uncertainties over the FDI policy, a uniform code for sales and marketing practices and compulsory licensing, according to the report by CII-PwC.

"Though the market value has seen an increase, the sector overall has experienced a slowdown with its growth going down to 9.8 per cent from 16.6 per cent in 2012," the report titled -- India Pharma Inc: Changing Landscape of Indian Pharma Industry said.

Explaining the reasons for the slowdown, the report said: "This slowdown can be attributed to the new drug pricing policy and the regulatory interventions over the last year."

The implementation of the National Pharmaceutical Pricing Policy 2012 by the government has resulted in margins erosion from 20 per cent and 10 per cent to 16 per cent and 8 percent for retailers and stockists, respectively.

"This decrease in the stockist margins led to a significant uncertainty among many stockists regarding the feasibility of staying in business due to lower profitability post the margin reduction," it said.

Under the new drug pricing policy, the government had put 348 drugs in the national list of essential medicines under price control as against 74 bulk drugs earlier.

The report also said that the Indian companies would have to raise their compliance to USFDA regulations as they drive their major share of exports from the US market.

Recently, various home-grown pharma companies including Ranbaxy Laboratories and Wockhardt have been pulled up by the US health regulator for non-adherence to manufacturing norms.

"The sector is currently experiencing slow growth. Henceforth, both the Indian and foreign companies operating in India will have to device suitable strategies in order to be in the top 10 global markets by 2020," Chairman CII Pharma Summit 2013 Rajiv Modi said.

PwC India Leader - pharma and life sciences – Sujay Shetty said the economic environment in India is tougher now than ever before.

"While pharma companies focus their attention on measures to combat the growth slowdown, they will need to work with the government and other stakeholders to discuss and resolve regulatory challenges," he added.

Resolving the impasse with clinical trials is critical both for patients and India's ambition to innovate, he added.