6 Critical Risks Facing the Pharmaceutical Industry

Posted by Sravani on February 13th, 2021

It has come as a huge blow for the Pharma sector in India as their sales and profits have been hit by the same. This is a problem compounded by the slow adoption of e- Pharmacological methods of delivery. Recent studies have also shown that there are certain differences in response to treatment in different countries with regard to the use of Captives for therapeutic indications. It is evident that the pharmaceutical companies are aware of this differential nature of response and are working hard on the R&D front in India. One of the major areas that has been focusing attention of the drug developing industries is the use of "Captives" as these offer many advantages over the traditional method of producing drugs.

Recent study shows that the use of "Captives" may be able to bring down the overall cost of producing a drug by up to 40%. However, some disadvantages have also been highlighted. One of the biggest disadvantages is that pharmaceutical manufacturing of a drug will require specific knowledge and expertise in the field of biology. It is not that the pharmaceutical manufacturing industry of India doesn't possess enough resources. On the contrary, the government is providing the necessary support through the grant schemes.

Another setback faced by the Indian pharmaceutical manufacturing industry is the slow adoption of E-Pharmaceutical methods of drug delivery. The delays and the complexities associated with the process of E- Pharmacy have been one of the major reasons why pharmaceutical manufacturing companies have not been able to capitalize on the benefits offered by the captive industry. In fact, the time taken to get a commercial product into the hands of the customers has been one of the biggest reasons cited as the reason for the poor performance of the Indian pharmaceutical industry. It is estimated that it will take another 40 years before the pharmaceutical companies can introduce the products in the market with increased productivity. This is considered to be a major setback faced by the pharmaceutical manufacturing industry of India.

While discussing the points raised by the VIA annual conference, one of the challenges cited by the industry players was the cost of development. According to them, the cost involved in the overall project development and implementation could be anywhere between six to eight thousand dollars per annum. In fact, the entire cost may even exceed nine thousand dollars per annum, if you go by the demands of the customer requirements. If the costs continue to rise at this rate, the gap between developing medicines and commercializing them will widen further, thereby affecting the profitability of the captive industry in India.

Another issue that the conference participants discussed was the excessive regulation imposed on the pharmaceutical manufacturing companies in India by the government. The Government of India has repeatedly taken up issues related to the excessive use of patented resources by the foreign corporations, which have resulted in the situation where the domestic pharmaceutical manufacturing units are struggling to maintain their profitability. According to the VIA Annual Conference, the excessive regulations imposed on the pharmaceutical manufacturing units have resulted in a situation where the captive market for their medicines is getting destroyed. There is a need to look into each and every aspect thoroughly to resolve these issues, which are posing a great threat to the future of the captive industry in India. Some of the reasons cited by the participants for this could be mentioned as below:

* Prescription Drug Costs- Prescription drugs consume a huge chunk of the budget of the health care sector. As a result, the government has been trying to curb the increase in the price of these drugs through various steps. However, there has been a lot of success seen in the generic drugs market in recent years. Hence, the generic drug makers feel that it is a difficult task to bring down the prices of the brand name drugs. However, this can only be concluded if the government allows the companies to manufacture generic drugs containing allopathic ingredients at lower rates than the retail price.

* Brand Name Drugs Not Producing Sales- A major issue that has been raised repeatedly by the VIA Annual Conference is the reason why the brand name drug is not making enough sales to cover the cost of production. The chief answer to this question is that there is no guarantee that a brand name drug will ever make any sales. This implies that the manufacturers may have to develop an effective distribution network internally. Another reason is that the government has not taken steps to help the pharmaceutical industry to sell its products through the retail chains.

* Evaporating Foreign domiciles- One of the key reasons cited by the participants of the VIA Annual Conference is that the domicile of foreign companies in India has started to evaporate. According to the Study, there was a 20% decline in the number of foreign companies investing in Indian captive funds between 2002 and 2007. There has also been a marked increase in the number of foreign investors opting for high yield corporate bonds from India to fund their portfolio. This is a very important trend, as it indicates that risks associated with investing in India have become more manageable. However, the growth rate in India will remain sluggish until the end of the decade.

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