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Pharma industry has seen growth; challenges impacted MSMEs in 2021

Gireesh Babu, New Delhi
Saturday, January 8, 2022, 08:00 Hrs  [IST]

The Indian pharma industry has seen several developments during the year 2021 like two of its own Covid-19 vaccines, world’s first DNA-based vaccine, an increasing influence of digital technologies from diagnostics to treatment and beyond, successful initiation of the production linked incentive (PLI) schemes for pharmaceutical industry and medical devices and a new Drugs, Cosmetics and Medical Devices Bill in the making.

The year started with the drug regulator issuing emergency use approval to Covishield and Covaxin, the Covid-19 vaccines. Despite teething issues in terms of manufacturing and supply chain challenges, demand supply gap and others, the country managed to successfully administer it among the population in a phased manner.

 “It was a good year for the pharma sector. With the pandemic, there was a lot of demand for drugs. Globally also we saw innovations in terms of mRNA vaccines, which was a big moment. In India also we have seen homegrown vaccines like Covaxin, which has been a big development,” said Sujay Shetty, global health industries advisory leader, partner, PwC India.

“There has been a lot of money flowing into the sector as well, in terms of financiers, venture capital, private equity etc,” he added. The challenges during the year for the industry have been in terms of rising input prices, the supply chain disruption, rising API prices in India etc. The price erosion in the US also continues to be a source of concern. The delay in US FDA inspections is also a big source of concern for many of the Indian companies. The MSMEs have had the brunt of some of the supply chain, rising input cost issues.

In terms of positive developments, there has been support for the industry from the government with the two PLI schemes. During the year, the PLI 2.0 was announced for the domestic pharmaceutical industry with a financial outlay of Rs. 15,000 crore and a total of 55 applicants were selected for the process. PLI scheme for domestic manufacturing of medical devices also witnessed 21 applicants committing an investment of over Rs. 1,000 crore during the year. However, the PLI 1.0 still has not experienced the traction which it was envisaged to have owing to challenges in winning the fermentation process challenges.

The government has also been vocal about its plans to ease the regulatory bottlenecks. The government has initiated works for a new Drugs, Cosmetics and Medical Devices Bill by appointing an eight-member committee to frame the Bill. It has also announced various initiatives including passing the National Institute of Pharmaceutical Education and Research (Amendment) Act, 2021, among others. It has also been moving most of its day-to-day activities related to the industry to digital during the year.

The Department of Pharmaceuticals (DoP) has also initiated efforts to rope in experts to help it form policies and boost innovation. Patent regulation was also amended to bring in more focus on academy-driven innovation with the support of industry. Discussions in the lines of designing a Bayh-Dole like policy to encourage academic discoveries move into the commercial landscape were also initiated during the year. The launch of the new National List of Essential Medicine, 2021, added 39 molecules into the Drug (Prices Control) Order, including anti-cancer, anti-diabetes and antiretroviral drugs. It has also deleted 16 drugs from the NLEM 2015, including erythromycin and a combination of lamivudine.

India, which was not producing PPE Kits, ventilators, etc. prior to Corona pandemic has started producing the same during the year and even catering to world markets and became self-reliant. Government has started vaccination drive in January, 2021 and indigenously developed Covaxin vaccine in its fight against Covid pandemic. As on date more than 143 crore Covid doses have already been administered in India. This has not only saved the lives of people but also set momentum for early recovery of the economy.

Government issued Press Note 2(2021) dated 14.06.2021 to raise the permissible FDI limit from 49% to 74% in Insurance Companies under the automatic route and allow foreign ownership and control with safeguards. This will facilitate an increased flow of long-term capital, global technology, processes and international best practices, which will support the growth of India’s insurance sector.

Generally there is a thinking in the government that it should help the industry to grow more, and to innovate more. From the start of the pandemic, the government has been especially mindful of pharma and has been promoting the sector. The regulatory environment is expected to continue as friendly, said an industry expert.

The major trend during the year 2021 in a global perspective was the emphasis on innovation. “Globally innovation continues to shape the industry in diagnostics, vaccines. Across the world, mRNA would be an interesting platform and we should see more product innovation in that platform going forward. In the diagnostics area also, there are a lot of digital health startups and health tech startups we are seeing. Innovation in these areas are one of the big things to watch out for in the coming year,” said Shetty.

“I think 2022 will be a good year for Pharma because all of the underlying trends have gone away. There is a lot of work going on digitally in various parts of the value chain, there is a lot of innovation that is going on. Covid-19 is still here, so the themes like vaccines, money flowing into the sector etc. will remain strong in the new year. It will be a very favourable year for the industry as such,” he said.

The challenges with supply chain, APIs and others the industry witnessed in 2021, especially for the MSMEs, will continue to remain for the near future. But overall for the industry the demand side is expected to be strong.


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