India is the third largest manufacturer of pharmaceutical products in terms of volume and it is growing steadily. The market has seen the entry of many foreign players as well as rise of many domestic manufacturers. After the formation of the new government under Mr.Narendra Modi, the sector has been given a major boost. The government is trying to implement policies like ‘Make in India’ and ‘Swach Bharat Abhiyaan’. So with plans to make India a superpower and improve the market, the Government is on the right track.

So what does this mean for the pharma sector?

This for the pharma sector is a very positive sign but there are certain speed breakers on the road for the companies. The challenges faced by the companies are :

  1. Compliance issues and good manufacturing practices :

  • This has somehow always been a problem for the companies. The ongoing rumor is that the United States Food and Drug Administration is trying to block the growth of the companies.

Why is the approval of USFDA important ?

  • The approval of USFDA is important because the largest consumer of pharma products is the USA and India is a major exporter. The opinion of the USFDA is considered to be the standard in the sector as well.
  • The companies are trying to improve their standards and this issue can be solved by having officials who are more stringent and inspections on a regular basis can be done

  1.  Highly fragmented industry :

  • The Indian pharma industry is highly fragmented. The market is overloaded with generic manufacturers.

Why is this a problem?

This is a cause for concern because high fragmentation causes instability, volatility and uncertainty. This is certainly not a good omen for the pharma sector.

Pharmaceutical companies can review their strategies to survive in a volatile environment.

Some of the actions that can be taken by the companies are they can periodically review their product portfolio and build more customer centric products.

The companies need to build their organisation in such a way that will enable better operational ability and agility.

  1. Low margin of profits due to government pricing policies – Drug Price Control Order

The main issue raised by most of the pharma companies is that the profits which they earn are basically peanuts and this income is not sufficient enough. The companies sight that the reforms of the Government for the essential medicines has caused them to lower the price of drugs.This has been done by the Government for the betterment of the public. So the Government has to think of a way to promote the pharma companies as well. Funding for the pharma companies might be a way to move forward.

  1. Low input for research and development due to pricing norms

The above mentioned challenge directly affects the R&D of the companies.

Why?

Simple enough answer, the lower the profits for the companies, the lower the investments. So the companies sight that due to the low income they are not able to develop products the way they want.

  1. Stronger IP regulations

  • IP regulation has always been a thorn in the skin for the companies, especially the foreign companies. The companies strongly feel that the rules have to be amended and the so-called victim of the lax regulations have been the foreign entrants.
  • The solution to this answer might be provided by the IPR Think Tank formed by the Government to draft a stronger national IP policies.