Pharmaceutical sector is an important industry of any modern day economic power. Pharmaceutical industry in India has a very humble past. After independence, development of pharmaceutical industry was one of the top agenda of government along with steel and manufacturing industry. The market was protected against competition for a long period of time by giving incentives to small firms, license-raj etc. Today the Indian pharmaceutical industry is the front-runner science-based industries in the country. Today the industry boasts of wide ranging capabilities in the complex field of drug manufacture and technology. The sector is pegged to be worth US$ 7.3 billion. The annual growth rate is estimated to be around 13%. Reports suggest that the domestic retail market would be worth around US$ 12 billion by 2012. Indian pharmaceutical industry ranks 4th in terms of volume globally and 13th in terms of value. It has 8% share in global sales & 20%-24% share in production of generic drugs. The domestic players satisfy almost all of the country’s demand for formulations and bulk drugs. Indian firms aren’t limited to domestic market; they are now competing head on with multi national players in international arena. For many firms, exports constitute 60%-70% of the total revenue earned. Reasons for this strong growth are low cost of manufacturing, low cost of R&D, innovative scientific manpower etc. The total pharmaceutical exports in 2007-08 clocked US$ 6.68 billion against US$ 5.73 billion in 2006-07 recording a growth rate of 16 per cent.
India is poised to be one of the fastest growing pharmaceutical markets in the world. This has led to entry of many major companies in the Indian market and a huge amount of FDI inflow.
Evolution of the Indian Pharmaceutical Industry
The Indian regulatory system made several arrangements to protect the domestic pharmaceutical industry from foreign competition in its nascent phase. One of them was recognition of only process patents. This built a sound and strong base for strong and competitive domestic market but deterred entry of foreign players. The life of Indian pharmaceutical industry can be broadly divided into two phases, namely Pre-Patent regime and Post-Patent regime respectively. Lets take a look at both of them in detail: Pre-Patent Regime:
This period can be segmented into various time periods for better understanding: 1947-1970
During this period country was trying to stand on its feet after gaining independence. The pharmaceutical industry had to be built from scratch. Though several domestic players had sprung up in market but their impact on market was limited. The reason was their inability to compete with MNC players who had better access to resources, better technical know how and access to larger amount of funds. These foreign players imported formulations and sold them in India. They were neither contributing to pharmaceutical industries nor to the manufacturing industries in India. People had low spending and restricted access to healthcare facilities because of low levels of income. The government had realized that dependence on imported drugs had to be reduced so that essential drugs could be made available to public at cheap prices. For this country needed to build indigenous drug production capabilities. To fulfill this objective Hindustan Antibiotics Limited (HAL) and Indian Drugs & Pharmaceutical Limited (IDPL) were setup in 1954 and 1961 respectively. These companies soon established themselves as major producers of critical drugs, which, were being imported at that time. 1970-1979
The MNCs continued to dominate the domestic market in spite of steps taken by government. Government introduced two legislations in 1970 to accelerate the process of self-reliance and indigenization. These were Indian Patent Act and Drug Price Control Order (DPCO). These two regulations provided the launch pad for the Indian pharmaceutical industry to take off...