Revolutionary Effect of Generics in Healthcare Industry

Revolutionary Effect of Generics in Healthcare Industry

Generics Revolutionizing the Indian Healthcare Industry:

The Indian pharma industry traces back its origin to 1903 when Bengal Chemical and Pharmaceutical Works was initiated in Calcutta by Professor P.C. Roy Pre?independent India largely remained dependent on other countries for medicines. The major suppliers were UK, France, and Germany. The new government post-independence focused on self-dependence and emphasized on industrialization that also included pharmaceuticals. As a result Hindustan Antibiotics Ltd. (HAL) came into existence in 1954, and following it was Indian Drugs and Pharmaceuticals Ltd. (IDPL) in 1961.

The IDPL program proved India to be capable of producing drugs at very reasonable prices and also helped in developing human and physical capital, and in establishing a network of research institutes. In spite of these facts, till 1970s the pharma industry in India was dominated by multinational companies (MNCs), which continued minimum physical operations in India.

In 1970s, the Indian Patents Act led to the revolutionary growth of the Indian pharma industry. The patent act recognized patent on process but not on the products, which enabled the local firms to reverse-engineer the drugs produced elsewhere and make cheaper versions of the drugs. Over the next thirty years, the industry grew from a handful MNCs to 16,000 licensed pharmaceutical companies.

Majority of the pharma companies in India are in the production of generics. Irrespective of their size these firms are able to produce all essential drugs at very affordable prices, which act as a saving grace for the price sensitive Indian consumers, who prefer generics over the highly prized brands.

Due to large demand of generics in the global market, Indian firms are focusing on the research and development of generics. These firms have become more advanced in their management strategy, and are focused on developing all the state-of-art advanced plant facilities. Such reforms have helped India to become one of the major producers of generics in the world. Driven by such capabilities, India is regarded as an “innovative developing country” with significant capacity to carry out health innovation.

Indian pharmaceutical sector currently produces 22% of the world generics market. With more than 100 U.S. Food and Drug Administration (FDA) approved plants outside U.S., Indian firms account for the highest number of Drug Master File (DMF) applications and Abbreviated New Drug Applications (ANDA) approved by FDA.

The low cost of production in India is an advantage over its competitors like China and Israel. According to the forecast by Deloitte, the generic industry’s growth will touch $16 billion in 2015. A global innovation survey done by the Economist Intelligence Unit in September 2004, coined India as an R&D “hotspot”, where companies have the latest scientific and technical expertise networks with an urge for innovation, good tie-ups with academic research facilities, and the ease of commercialization.

Many drugs go off patent every year and face strong competition from their generic versions. Generic drugs are equally effective as their brand counterparts and to prove their efficacy they also require clinical research. Contract research organizations (CROs) in India have increasingly become the preferred location due to huge cost-savings, world?class production skills and a highly skilled workforce. The Indian CRO industry is currently one of the highest ranked in the world and is estimated to grow by 20% by 2012. India’s rich scientific talent pool – with English speaking workforce, scientists, engineers, chemical engineers, and PhDs – is the strongest asset for this knowledge-led industry. According to Organisation of Pharmaceutical Producers of India (OPPI), the industry provides the highest intellectual capital per dollar worldwide.

Compliance to regulatory guidelines, cost-efficiency, short timeframe, and return on investment (ROI) are the major factors which play a decisive role for the Indian CROs operating in the highly competitive generic drugs market. State-of-the-art instrumentation and software infrastructure help these CROs overcome these challenges, and gain a competitive advantage.

The CROs are also responsible for producing the reports of the bioequivalence studies for the generics. These reports are submitted to the FDA for the approval of the new drug entities, hence should comply with the requirements of FDA. According to the US Hatch?Waxman Act, the first generic manufacturer who submits an ANDA that can challenge the validity of the brand drug patent can avail 180 days marketing exclusivity. To stay ahead in the competitive generics market, many firms take the advantage of this marketing exclusivity period.

In January 2005, the Indian Patent Act was revised thereby recognizing patent on the pharmaceutical products as well. Since then the research and development firms in India are moving their focus from reverse-engineering to the development of novel drug delivery systems and products. However, India still holds a strong position in the world generics market.

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