Hit by impediments, the pharma industry experienced limited reach to customers after March 2020 onwards. Yet meeting high expectations to operate and supply drugs in India and globally, Indian companies have displayed tremendous resilience by supplying drugs to over 150 countries besides meeting all domestic demands.

Against such a backdrop, the latest position paper, 'Indian Pharmaceutical Industry 2021: future is now’ released jointly by EY and FICCI  reassess the Indian pharmaceutical industry’s positioning in the world order. In the light of global changes and keeping India’s realities and advantages in mind, this paper aims to revisit Indian pharma’s strategy in order to become a preferred global supplier of innovative medicines in the post-pandemic world. It defines India’s ambition by 2030 and identifies a set of imperatives for all stakeholders to realize this ambition. 

The paper expects the Indian pharma industry to grow at a compounded annual growth rate (CAGR) of ~12% to reach US$130 bn by 2030 from US$41.7 bn in 2020. Though the pharmaceutical industry has grown at a CAGR of approx. 13% over the two decades, in the last decade, the CAGR has been ~ 8.5% and it has currently been ~6.2% over the past five years. It has achieved significant growth in both domestic and global markets during the past five decades. From contributing just 5% of the medicine consumption in 1969 (95% share with the global pharma), the share of “Made in India” medicines in the Indian pharma market is now a robust 80% in 2020.

The pharma sector has been contributing significantly to India’s economic growth as one of the top 10 sectors in reducing the trade deficit and attracting Foreign Direct Investment (FDI). The drugs and pharmaceuticals sector attracted cumulative FDI inflow worth US$16.54 billion between April 2000 and June 2020. It is of prime importance also due to the trade surplus. The pharma industry in India contributes more than 20% by the volume of the global generics market and 62% of the global demand for vaccines.

Significant vaccine capacity ramp-up has been achieved over the year to augment vaccine administration within India and other countries that are dependent on India for supplies. The Indian pharma industry has grown at a compounded growth rate of (CAGR) of ~11% in the domestic market and ~16% in exports over the last two decades. While the domestic market has grown at a similar pace to the gross domestic product (GDP), the overall growth has been driven by the industry’s leadership in supplying generic formulations to markets across the globe.

Refocus, relaunch and reemerge

In order to attain self-sufficiency and be the real pharmacy of the world, the paper suggests refocusing on the next set of avenues to feed the growth engine of industry, which is of strategic as well as economic significance.

As per the report, opportunities that have emerged to accelerate the growth of the Indian pharmaceutical and healthcare industry include - innovation-led research and development, healthcare delivery (R&D), manufacturing and supply chain, and market access.

With respect to accelerating research and innovation, it emphasizes the need to move up India’s share of the trade-in value. To meet this objective, it advises setting up an overarching regulatory body and a central body to streamline research infrastructure and financing from all government bodies, to explore new models for financing R&D to increase private investments and also make available funds for high risk and long-term projects, improve industry-academia collaboration and establish a strong innovation ecosystem.

For achieving equitable and sustainable healthcare, the increased acceptability of digital technologies has the potential to improve healthcare delivery. This explores the progress towards the achievement of universal healthcare access, establishing efficient processes like the use of Aadhar Card to identify and simplify the delivery based on healthcare coverage category. Enabling teleconsulting and focusing on preventive healthcare are some other areas for consideration with the role of the industry, government, healthcare sector, and insurers carved out.

In the context of strengthening the manufacturing and supply base in domestic and global markets, EY-FICCI's paper calls for initiatives to develop capabilities in APIs and enable the manufacturing of complex generics. “Ease of doing business is a critical enabler to set up world-class manufacturing facilities. The attractiveness of the manufacturing sector too needs to be enhanced in order to attract the best talent in India and abroad. Given the growth ambitions, it is vital to encourage and set up pharma machine manufacturing facilities in India to lower fixed costs, enable savings in forex and reduce time to set up additional facilities. There is also a need to bolster the logistics infrastructure for connecting the key pharma hubs in the country in order to facilitate the quick and cost-efficient movement of goods including cold chain facilities.”

The market access to prescription drugs needs to improve in the country, suggests the paper. It calls for the adoption of various global best practices in drug pricing and procurement models that can be contextualized for developing geographies. It also bates for the digital marketing of pharma products.