 "pharma, medicine, drugs")
The Indian pharmaceutical industry is among the largest in the world. It is the largest producer of vaccines and the largest manufacturer and exporter, by volume, of generic drugs. According to a recent report by Asian Lite, India accounts for 13 per cent of the global pharma market.
Lately, however, the industry has been in the news for a spat between the Centre and the Indian Medical Association (IMA).
Earlier this year, the Centre's National Medical Commission (NMC), in its "regulations relating to the professional conduct of registered medical practitioners", stated that all doctors must prescribe generic drugs, failing which they will be penalised and even their licence to practise may be suspended for a period.
The IMA opposed this move and said that if the Centre wants to promote generic drugs, why is it even giving licenses to branded medicines?
But what are these generic drugs? And how did India manage to get the much-coveted tag of the "pharmacy of the world"? Let us understand.
What are generic drugs?
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A generic drug is a medication that is created to be the same as an already existing brand-name drug in dosage form, safety, strength, route of administration, quality, performance characteristics, and intended use.
This means that a generic medicine works in the same way and provides the same clinical benefit as the brand-name medicine.
Simply, you can take a generic medicine as an equal substitute for its branded counterpart. India, notably, is the world's largest maker and exporter of generic drugs.
Post-independence pharma industry
At the time of India's independence in 1947, India's pharma industry was largely controlled by foreign companies. Around 90 per cent of the market was controlled by US and European companies.
In the early 1960s, the Indian government started encouraging the growth of domestic companies in the pharma sector. However, it was not until 1970 that the aim was achieved.
Patent Act, 1970- A watershed moment
In 1970, the Indira Gandhi government enacted an act that barred medical products from being patented in the country. The Patent Act, 1970, did not allow the products to be patented but the process.
It also allowed the Indian Patents office to force patent holders to license them to other players at a lower rate if the patent was not being used for social benefit.
This was the watershed moment for Indian industry. The companies understood that they could manufacture drugs in India without violating the patents of their branded counterparts if they chose a different process for it.
According to Asianometry, reverse engineering was then used to mass-produce drugs in India.
In this, the companies studied the final medicine and deduced the process and the ingredients to make it. Then, the same ingredients were used but with a minor tweak in the original process. They made the same drug, but with a different process, escaping the patent violations.
Between 1970 and 1980, the number of firms in the Indian pharma sector more than doubled. Gradually, the period between original innovation and India's generic production was also reduced.
For example, Ibuprofen came out in 1967. Its Indian generic drug was made in 1973. But when in 1986, Ciprofloxacin was introduced in the global market, India made its version of it in just three years.
According to reports, by 2006, Indian companies met the needs of 95 per cent of the domestic drug market.
However, there were some drawbacks to the whole exercise. Indian companies earned low margins on their products and thus could not spare much money for research & development. This changed with another agreement that the Indian government signed in 1995.
1995 TRIPS Agreement
On January 1, 1995, India became a party to the Trade-Related Aspects Of Intellectual Property Rights or the TRIPS Agreement. It was focused on fostering innovation.
Under the act, the government of India was mandated to recognise product patents and even grant exclusive marketing rights to a few new products.
The government was also given time till 2005 to prepare its drug industry for the changes.
It was met with widespread criticism from the companies but, in hindsight, has proven to be a boon for them.
After the agreement was signed, the companies started investing more in R&D and entered the business of drug discovery rather than just reproducing generic drugs. The companies that led this change were Dr Reddy's, Ranbaxy and Wockhardt.
Government support
The effort was also supported by the government, which came out with several amendments to the Patent Act and started promoting research in institutes and, for example, setting up a National Task Force to work with the biotech industry to revise the curriculum for undergraduate and graduate study in life sciences and biotechnology.
Later, in 2021, the Centre came up with a Rs 15,000 crore Production-linked Incentive (PLI) Scheme for Pharmaceuticals. According to the government, it is aimed at reducing import dependence, benefiting domestic manufacturers and boosting innovation.
Currently, Sun Pharma, Serum Institute of India, Divi's Labs, Dr Reddy's and Cipla are some of the biggest pharma companies in India.
IMA vs Centre
The IMA has demanded deferring the implementation of the NMC regulations, stating the biggest impediment to such medicines is the uncertainty about their quality. The IMA stated that less than 0.1 per cent of the drugs manufactured in India are tested for quality.
Moreover, if doctors are not allowed to prescribe branded drugs, then why should such drugs be licensed at all, given that modern medicines can be dispensed only on the prescription of doctors of this system, IMA said.
IMA has also asked the Centre to have a "one drug, one quality, one price" system where all brands should be either sold at the same price, which should be controlled or banned and only generic medicines allowed while ensuring the highest quality of these drugs.
