Indian pharma can develop drugs very cheaply, says CII

The Indian pharmaceutical sector has the potential to develop new drugs at the cost of $100 million as compared with $1 billion globally, according to a Confederation of Indian Industry (CII) study on drugs and pharmaceuticals.

India Inc is making big investments in the basic research and development and this teamed with intellectual capital and low-cost advantage will lead to development of more drugs. This will help India capture another $1 million in exports, the study said.

Highlighting that the pharmaceutical sector was already growing at a rate of 35 per cent, the CII study said clinical trials in India are extremely investor-friendly, costing around $25 million while the same in the US are in the range of $300-350 million.

The study added that with a wide spectrum of diseases, India offers a wide patient resource for clinical trials. Also, Indian companies can offer custom synthesis services at 30 to 50 per cent cost savings, compared to global companies.

India, which enjoys the largest number of US Food and Drug Administration (USFDA)-approved plants outside the US, is favourable for investigational new drug stage at around $10-15 million in India, while the same in the US costs between $100-150 million, the study said.

However, the study blamed India's 30-year-old price-control mechanism for discouraging pharmaceutical companies from venturing in the manufacture of essential drugs like for tuberculosis and malaria.

"Since all essential drugs are covered under price control, the prices are not remunerative and has resulted in not enough companies making such drugs. Research is a high-risk investment and requires large funding," the study added.

The study points out that during the last decade, drug price increases have always lagged behind the increases in wholesale price index.

In 2002 and 2003, drug prices fell by 0.2 per cent and 0.3 per cent, respectively, as compared to the wholesale price index increase of 3.4 and 5.4 per cent, respectively.

This implies that competition is the best solution for providing affordable medicines, the study said.

According to the study, the cost to deliver to the rural areas are more and when fixing prices, these costs are not taken into account, which discourages companies in investing in the rural sector.

The study says the governments must initiate liberalisation in the pharmaceutical industry and relax the rigours of price control.

With the introduction of the new patent law from January 2005, the Indian pharmaceutical industry will have to invest in research to make its presence felt as a global player, the study added.