India: An Emerging Knowledge Superpower - Pharmaceutical Executive


India: An Emerging Knowledge Superpower

Pharmaceutical Executive

International compliance

In 2005, India took another step into intellectual-property protection by recognizing full product patents on pharmaceuticals. As India is a signatory of the WTO and the Trade Related Aspects of Intellectual Property agreement (TRIPS), the country's patent law has been made TRIPS compliant by fulfilling various commitments required. Pharmaceutical patents were introduced on April 1, 2005, with the amendment of the 1970 Act. These patented drugs would be subject to mandatory price negotiation before being granted marketing approval.

The law caused an outcry by public-health activists, who worry about its effect on drug affordability—not just in India, but also in even poorer countries that rely on Indian drug makers for their medicine. Dr. Dua is aware of these risks but remains optimistic regarding the side effects of the new legislation: "This is something that in the long term will be beneficial to everyone," he says. "There will be time for people to readjust, but the industry as a whole will grow faster than it was for two reasons: New markets will open to India, because we are internationally compliant; and the country will benefit because several nations will be attracted by cost advantages in setting up physical facilities."

Companies from the West are indeed already in the process of setting up R&D centers in India. Multi-National Corporations (MNCs) were so far not well positioned in the country. Quite a few of them even left in the 1990s when patents were not respected in the country. Today, with the New Amendment in the Patent Law, as well as with the fully integration of India into TRIPS, some MNCs are coming back. The leading MNC companies in the country are GlaxoSmithKline, Novartis, Sanofi, and Pfizer.

There is an inducement to relocate the research work here; this will be followed by relocation of manufacturing. Once that happens, the capabilities of the local producers will become much larger than they were before, and will bring in more revenue for the country.

Leading at Home, Aiming Globally
The success of the Indian pharmaceutical industry has undoubtedly been fuelled by the financial sector, just as Eximbank has been helping to promote Indian foreign trade for 25 years. It also functions as the principal financial institution in the country. "There has to be an APEX bank," says Sridhar, the former Executive Director of the Export-Import Bank of India. "Not only to finance, but also to play a developmental role in a particular sector like for instance pharmaceuticals."

Eximbank's first triumph during the economic reforms was in information technology. India has since become synonymous with IT. "To the pharmaceutical industry, we pioneered the concept of strategic export marketing in India because we said that marketing is different from selling," Sridhar recalls. "Whatever you produce you try to sell, but with marketing, you produce what the customer wants. As far as pharmaceutical companies are concerned, we provide them with the whole range of products that we have on offer."

Sridhar also shares the vision of India as an emerging knowledge superpower: "The pharmaceutical industry is a knowledge industry. The reason that the big players are doing well abroad is because they have the knowledge that is required. Our strength is that we provide first rate knowledge very cheaply."

The challenge of accessibility

For all its promise, some important challenges remain ahead in India. The main concerns of the Indian pharmaceutical industry are accessibility and affordability of drugs, despite that the country is one of the major producers in the world. Despite having one of the lowest prices in medicines, access remains a great problem—only 35 percent of the population has access to drugs.


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Source: Pharmaceutical Executive,
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