Introduction
After decades of slow growth, India’s economy is now advancing rapidly. From 1996 to 2006 its GDP grew at an average rate of 7% yearly, and this growth figure increased to 10% in 2006. It is expected to keep growing at 7% or higher over the next five years. With the fourth-largest economy in the world (as measured by purchasing power parity), India is finally coming into its own as a major world economy.
Total medical spending in India is growing quickly, driven by better-off Indians willing to pay privately for modern care from private hospitals. This increased spending creates many opportunities for foreign pharmaceutical companies. India’s $9 billion pharmaceutical market saw 10% growth in 2006, and double-digit growth is predicted to continue through 2012. In addition, the country’s low labor costs, large existing pharmaceutical manufacturing base, and sizable patient population make it an excellent location for Western companies to do contract manufacturing, clinical research, and R&D.
Demand
India’s population, the second largest in the world, should not be described as one big pharmaceutical market. Most of its 1.1 billion citizens are rural or low-income and lack even basic access to Western medicines. The market, rather, is to be found in India’s growing middle and upper classes in urban areas such as Mumbai, Kolkata, New Delhi, and Bangalore. If being in the middle class is measured by earning at least $1,000 per year, there may be as many as 100 million potential customers in India’s major cities.
India is now going through a public health transition typical of rapidly developing countries. Once, ailments such infectious diseases, malnutrition, and gastrointestinal disorders were the predominant diseases requiring treatment. Today, though, with rising incomes, more and more Indians are able to drink, smoke, and lead more sedentary lives. As a result, “lifestyle” diseases such as cancer and cardiovascular disease are receiving more attention. Cases of cardiovascular disease, for example, are predicted to increase from 29 million in 2000 to 64 million in 2015, rising to 34% of all deaths.
Currently, the dominant drug types on the Indian market are still anti-infective and gastrointestinal. However, greatest growth is predicted in coming years for cardiovascular, oncological, diabetes, and psychiatric drugs. Since Western companies have many new and innovative drugs in these types, which may not be available generically in India, they are prime areas of opportunity.
Healthcare providers
In theory, much healthcare is available for free in India. There is a large network of over 160,000 public hospitals, clinics, and health centers at the national, state, and local level. However, in practice, these providers are barely acceptable. Public facilities are overcrowded and poorly staffed and funded. Although services are supposed to be free, patients must often pay for supplies like bedsheets, bandages, and drugs. Bribes can also be necessary to get faster treatment. Almost always, when patients have the freedom to choose, they will opt for private hospitals over public.
For-profit private hospital chains, such as Apollo, Max, and Fortis, have flourished in India over the past two decades. Serving both well-off Indians and medical tourists from the West, they tend to offer much higher standards of treatment with better staff, training, and equipment. Their fees, while low by Western standards, are significant to Indian incomes. In total, the majority of medical costs in India are paid for privately and out-of-pocket. It is private spending, not public, which is the basis of future growth.
Industry
The Indian pharmaceutical industry has historically been characterized by a large number of small factories. There are over 10,000 pharmaceutical plants, and only about 300 are large or medium-sized. However, parts of the pharmaceutical manufacturing sector have developed to become more competitive in foreign markets. The Indian API industry had sales of about $2 billion in 2005, making it the third largest producer in the world. Over 90 Indian factories now have FDA approval. Global pharmaceutical companies such as GlaxoSmithKline, Sanofi-Aventis, Pfizer, and Abbott also have their own manufacturing facilities in India, making use of low local labor costs.
Despite the traditional focus on generics, original R&D is becoming a more practical option in India. This is partly due to the abundance of trained scientists in the country. For example, the Indian company Torrent Pharmaceuticals drew attention in 2004 when it licensed a new cardiovascular compound to Novartis. Large Indian firms are also players in R&D: GlaxoSmithKline has a wide-ranging drug discovery and development alliance with Ranbaxy.
Finally, India’s low costs, availability of talent, and large population have made it a major site for international clinical trials. In 2002, the total clinical trial market in India was about $20 million; by 2005, this figure had risen to nearly $100 million. India is home to over 100 CROs, as well as many clinical testing sites of foreign pharmaceutical companies.
Regulatory structure
India has a federal form of government, and the medical regulatory structure is divided between national and state authorities. The principal national drug authority in New Delhi is the Central Drug Standards Control Organization (CDSCO). CDSCO is often referred to as the DCGI, which stands for Drug Controller General India, the title of its head official. There are also 35 state-level Food and Drug Administrations, one for each of India’s states and territories.
The DCGI registers all imported drugs, new drugs, and drugs in selected categories. It also has responsibility for clinical trials and quality standards. The state FDAs register all other products, accredit manufacturing plants, and conduct the bulk of quality monitoring and inspections. The Indian cabinet has approved a plan that would bring all drugs under a new Central Drugs Authority, modeled on the US FDA. This may be approved by Parliament in a legislative session during the summer of 2007, but if so it will be phased in over time.
The DCGI has a shortage of reviewers, often relying on outside experts to provide opinions. To pursue regulatory approvals effectively, a company must use a regulatory professional with significant experience in applications for foreign companies. This professional must also be in a position to spend a significant amount of time in New Delhi (where the DCGI is located) following up on applications.
Most of India’s pharmaceutical product policy is governed by the Drugs and Cosmetics Act (DCA). The DCA was first enacted in 1940 and has been amended many times since then.
New drug registration
Drugs count as “new drugs” in India if they fall into one of the following categories: (1) drugs never marketed in India; (2) drugs with new therapeutic purposes or dosages that have not been marketed in India; (3) new fixed-dose combinations of two or more drugs; and (4) any drug which was first approved in India less than 4 years ago, unless it is included in the Indian Pharmacopoeia. Also, all vaccines are treated as new drugs, unless notified otherwise by the DCGI.
New drug registration is applied for officially in Form 44. The required attachments to the form vary depending on the type of new drug. All submissions require basic dosage and indication information, test specifications of active and inactive ingredients, listing of any applicable patents, and the raw material manufacturer.
Finished drugs with new active ingredients that have never been marketed in India require full pre-clinical and clinical testing information. These fall into the following categories: chemical and pharmaceutical information; animal pharmacology; animal toxicology; human clinical data from phases I, II, and III; bioavailability and bioequivalence; and other special studies as appropriate. Besides information on safety and efficacy, the DCA also requires comprehensive information on the marketing status of the drug in other countries. Information must be provided for any countries where the drug has marketing approval, investigational new drug approval, or has been withdrawn or rejected. Prescription information, samples and testing protocols, and the proposed product monograph, labels, and cartons, must also be submitted.
It is possible to relax some of the requirements on a case-by-case basis, especially in the category of animal toxicology. This relaxation can be requested if a drug has been marketed for several years in other countries and its safety has been well-demonstrated. However, tests for animal pharmacology and animal toxicology are defined very closely in Schedule Y of the DCA, all the way down to the species and exact numbers of animals to be used in each test.
New fixed-dose combinations, new dosages and indications, new bulk drugs, and anything which was first approved less than 4 years previously, have significantly fewer requirements in the new drug process. They all require chemical and pharmaceutical information, including stability studies and testing specifications, as well as package inserts and labels. Anything taken orally requires bioavailability, bioequivalence, and comparative dissolution data. Anything taken by intravenous infusion or injection requires sub-acute animal toxicity data. New indications, dosages, or fixed-dose combinations require therapeutic justification that satisfies the DCGI of their safety, which can vary case by case and requires consultation and coordination.
New drug registration has a fee of 50,000 rupees, or about $1,200. There is no fixed time frame in which the application has to be reviewed, but a typical range is about 12-18 months.
Clinical trial approval
Clinical trials are also applied for in Form 44, the same form used for new drug approval. Much of the same information as for new drug approval must be included, with the exception of reports on clinical trials that are still in the future. The Investigator’s Brochure, study objectives and rationale, case record forms, informed consent documents, list of study locations, sponsor authorization letter, etc. must also be attached.
However, in late 2006, the government clarified additional information that should be submitted in the case of simultaneous global trials. Besides normal Form 44 information, this includes a list of all worldwide trial sites and numbers of subjects at each site, all serious adverse events reported from other sites, and the status of the trials at other sites.
Phase III clinical testing generally must be conducted in India to receive new drug approval. This can only be waived in occasional cases, typically when the government is interested in a product for public health reasons and there is ample foreign data.
A previous rule was that for drugs discovered in foreign countries, Phase I trials could not be conducted in India unless they were supplementary to Phase I trials which had been completed elsewhere. However, the new rules in late 2006 also allowed first-time Phase I trials in India as long as they are conducted simultaneously to other foreign Phase I trials.
Import drug registration
All drugs to be imported in India require their own import registration. This is independent from new drug registration. New drugs to be imported into India must first be registered as new drugs under Form 44 and then as imported drugs under Form 40.
The contents of Form 40 are fairly routine, but are still substantial. There is some overlap with the new drug application contents. Since clinical testing results are fully provided in new drug applications, they need only be summarized for form 40. However, information on regulatory status in other countries, GMP certification of the manufacturer, and items such as stability data, manufacturing methods, toxicity tests, bioavailability and bioequivalence, batch testing certificates, and inserts and labels must be included in full.
The process of receiving import registration can take up to a year, and it must be done after new drug registration. Once you have import registration for a drug, you can apply for a simple import license, which is needed to actually let the drug in through customs.
Manufacturing
Most manufacturing is licensed by state FDAs, but new drugs, blood products, sera, and vaccines require approval from the DCGI. Manufacturing permission is fairly simple compared to new drug approval. Besides basic information on the site, information must be furnished that the drug is being made to therapeutically justified specifications, and has new drug approval if appropriate. A GMP standard has also been recently implemented, under the name of “Schedule M.” This may drive out many smaller drug manufacturers as it is enforced more strictly.
Intellectual property issues
Since 1970, in an effort to develop the local pharmaceutical industry, India’s patent laws were changed to allow pharmaceutical processes to be patented, but not pharmaceutical substances. This made it completely legal to copy patented drugs, as long as they were made by a slightly different method. This led to the rapid development of small-scale bulk drug and formulation manufacturers in India. As a result, it became extremely difficult for Western pharmaceutical drug companies to succeed there.
However, when India joined the World Trade Organization in 1995, it committed itself to remedying its patent system to comply with international norms within ten years. In 1999, a provisional system allowing marketing exclusivity was created, and finally, in 2005, the patent laws were amended to allow product patents also.
Intellectual property rights are still comparatively weak in India, making it difficult to enforce patent protections. However, it is widely believed that a corner has been turned. India’s large domestic companies such as Nicholas Paramal, Ranbaxy, and Dr Reddy’s Laboratories are increasing their research and development budgets in order to compete under the new patent regime. Global pharmaceutical firms have also been using the judicial system to prosecute infringers. The patent change has helped build confidence among Western companies that India is now worth the effort. For example, Bristol-Myers Squibb and Merck, which had terminated some of their Indian presence in the 1990’s, returned in 2004 and 2005 respectively, citing the improved business and IP environment.
However, the new patent regime does not apply retroactively. Drugs discovered before 1995, even if patented elsewhere, are still copyable. Also, the new system only allows for the patenting of drugs discovered after 2005, when the system was implemented. New indications for drugs are not patentable, and neither are new chemical forms of existing substances unless they increase efficacy. This is why, if foreign pharmaceutical companies want to enter the Indian market with proprietary drugs, they should focus on bringing new drugs into India. These are the drugs that can be patented locally, brought first to market, and hopefully protected in court.
Conclusion
With a nontransparent regulatory system, fragmented geographic markets, and much local competition, India is not a place where easy success can be expected. However, its burgeoning economy, greater market openness, and the improved patent regime have altered the playing field. The potential of India for R&D, manufacturing, and sales now outweighs its drawbacks in many cases.
Although India’s business environment has improved greatly over the past decade, it is still a very complex country to operate in, and many obstacles can appear along the way. Due diligence and careful selection of regulatory professionals and business partners is essential to succeed there.
| Country | Market Size (US$) |
| Japan | $55 billion |
| China | $20 billion |
| India | $8.8 billion |
| Korea | $6.3 billion |
| Taiwan | $2.5 billion |
| Hong Kong | $1.5 billion |
| Thailand | $1.5 billion |
| Singapore | $400 million |
| Indonesia | $350 million |
| Philippines | $300 milllion |
| Malaysia | $210 million |
Data compiled by Pacific Bridge Medical