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Rising API prices, lack of pharma parks & failure to restore R&D incentives cast shadow on Indian pharma
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Nandita Vijay, Bengaluru
April 05 , 2021
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Rising prices of active pharmaceutical ingredients (APIs), delay in rolling out pharma parks to gain from the productivity linked incentive (PLI) schemes and failure to restore the weighted tax deduction for in-house R&D activities to 200 per cent have left Indian pharma in the lurch.
This, even as India is the pharmacy to the world, holding over 30% global market share in volume with exports worth US$ 25 billion to 206 countries and is the largest global vaccine manufacturer, said Dr Dinesh Dua, former chairman, CII Committee of Lifesciences & Biotech, Northern Region.
“Prices of APIs have gone through the roof. China raised prices by 40 to 100 per cent in retaliation to our PLI schemes. They have created cartels & all API, intermediates & KSM prices are increasing by the day, leading to a crisis, particularly for the NLEMs (National List of Essential Medicines) and those under NPPA/DPCO. Consequently, there would be drug shortages as no company can sustain losses for long,” noted Dr Dua.
While this situation could be manageable in the near term, the industry could face losses in the long run. In such a scenario, pharma businesses could become unsustainable and unviable, Dr Dua told Pharmabiz.
Another issue is that industry could not benefit from the announcement of PLI schemes since no decision was taken on pharma parks which reduce production cost by as much as 15-20% since companies can avoid investing in ETPs (effluent treatment plants), laboratories and other supply chain infrastructure, he added.
In the wake of the changing patterns of lockdowns affecting normal industrial outputs, Desai noted that Indian pharma had no structured plan to take care of such exigencies. Paucity of multi skill development and absence of digitization, particularly by SMEs, affects operational efficiency, making it difficult to meet business emergencies.
Highlighting the issues in pharma production facilities during the pandemic, Kaushik Desai, pharma consultant pointed out that typical fears of reporting to work led to disruption in manufacturing lines. Further, supply chain issues for raw materials and ancillary supplies also resulted in uncertainties.
“Moreover, communication transmission and data reception with weak network infrastructure also mar day-to-day connectivity. However, despite challenges, the industry is trying its best to supply medicines and the pandemic has been a learning experience to re-strategize operations,” said Desai.
According to Dua, another pain point for the industry is delay in providing 200% weighted tax deduction for R&D. Countries like the US, UK, EU, Japan, Korea, Singapore, Thailand and Malaysia give huge incentives for innovation. For Indian pharma, lack of incentive deters investment. Instead, companies will set up research centres in Singapore or Dubai, which offer income tax and other benefits.
MSMEs, which constitute over 50 per cent of the total volume of pharmaceutical production, need training and skilling to match global cGMP standards. Adherence to Schedule M and upgrading production units and processes at a faster pace are imperative, said Dr Dua.
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