India will have to take a leaf out of China to address regulatory and infrastructure challenges so as to enable its pharmaceutical industry to be a global leader, a report by KPMG International has said.
"India needs to look to the achievements of China, where the government's strong commitment pro-industry policies have produced a positive environment that not only offer drug manufacturers a product patent regime but also, and crucially, data protection," the report said, adding that India's continuing failure to do so needed to be urgently rectified.
"There is much to do in terms of addressing further regulatory and infrastructure challenges and the industry will have to work closely and swiftly with the government to address these issues," global head of KPMG's pharmaceuticals practice John Morris said while releasing the report.
Under the current regulatory environment, India still offers no data protection whereas China does, the report said, adding that domestic pricing also remained an issue, which needed to be addressed.
"In fact, drug prices in the Indian domestic market are the lowest in the world. Industry leaders will have to work with government on issues of affordability to point out that price controls are limited in their ability to increase access to new and effective treatments," it said.
The introduction of the product patents regime by India has given an impetus to its fresh challenge for a greater share of the global industry, the report stated.
"With the introduction of the product patent scheme, India now has a major opportunity to claim a seat at the top table of the global pharma industry and it should not let this opportunity pass it by," Morris said.
India is expected to continue to be strong in the generics, the report said, adding that the country was likely to lap up around 30 per cent of the prescription drugs worth $40 billion in the US and $25 billion in Europe, which are due to lose patent protection by 2007-08.
On the R&D front, the report said India's clinical research industry, which is currently worth 100 million dollars is expected to be worth $1 billion by 2008 at its present annual growth rate of around 40 to 50 per cent.
Morris, however, said R&D spending by Indian companies should be ratcheted up significantly and rapidly.
"With protection in place and with foreign investors eagerly eyeing up India's wealth of human resource and its massive domestic market, significant growth opportunities abound for Indian companies," he said.
The report pointed out that the global pharmaceutical market is estimated to represent a 48 billion dollar opportunity for India by 2007 through contract manufacturing of active pharmaceutical ingredients and intermediates; development outsourcing by way of conducting preclinical and clinical trials; and customized chemistry services such as contract research services for compounds pre-launch.
The KPMG report said that India and China together would continue to challenge North America and Europe's traditional domination of the global pharmaceutical contract manufacturing market.
"India and China could potentially account for 35 percent to 40 per cent of the outsourced market share for active pharmaceutical ingredients, finished dosage formulations and intermediates," it said.
As far as exports are concerned, the report said by the year 2010, the industry has the potential to achieve $22.40 billion in formulations, with bulk drug production going up from $1.79 billion to $5.60 billion, as predicted by the draft National Pharmaceuticals Policy for 2006.
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