India Emerges As Top Five Pharmaceuticals Markets Of The World

India’s pharmaceutical industry has grown by leaps and bounds in the last three decades. As a result, it has emerged as world’s third largest producer of drugs in terms of volume. The industry has posted double-digit growth over the last few years, rising to US $36.7 Billion in 2017 and projected to grow to US $55 Billion by 2020, from US $20 billion in 2015.It is quite heartening to note that the pharma sector is out-performing most other sectors in achieving consistently high growth. India is now among the top five pharmaceutical emerging markets of the world.

It is pertinent here to mention that, India’s exports of generic drugs have also been growing at a very impressive rate of 24% per year for the last four years. In 2012-13, India’s pharmaceutical exports stood at $14.7 billion. More than half of it went to highly-regulated western markets. This speaks volumes about the efficiency of the Indian pharma sector in terms of quality and pricing. India’s second largest export market is Africa, followed by Europe, with a growing focus on markets such as Latin America, Australia, Japan. 

The Supply Annual Report of UNICEF (United Nations Children’s Fund) recognized India as the world’s largest supplier of generics. In developing countries, it is rendering yeoman service by facilitating affordable access of poor patients to life-saving medicines. Due to the ability of the Indian pharma companies to produce drugs at economical rates, the cost of HIV/AIDS treatment has gone down to $400 per year from $12,000 – a spectacular contribution to global healthcare.

However, India’s rise as a pharma hub has created a backlash. The western drug companies, whose market share India has eaten into, are up in arms against Indian pharmaceutical companies. The western interests have targeted the particular Indian companies that have spearheaded the country’s export efforts. In the last couple of years, the western pharma giants have left no stones unturned to undermine India’s ascent in this high-tech field.

One accusation that the western companies and their governments have made against India is over infringement of Intellectual Property Rights (IPRs). The U.S., sadly, has led the charge against India. The American companies seethe in anger on seeing India producing and selling critical life-saving medicines at rates well below their selling price. The western opposition has come despite the fact that India’s foray into global medicines market does not violate existing treaty commitments. The American tirade against India’s pharma companies, therefore, requires a robust and principled response from New Delhi.

The American drug lobby’s pressure appears to hijack the economic policy dialogue between the U.S. and India. The celebrated Columbia University Professor , Mr. Arvind Panagariya has spoken about the looming danger from the American drug lobby that has considerable clout over U.S. government policy makers.

In going for production of drugs covered by U.S. patents, the Indian companies have relied on the leeway allowed under the existing Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement. This recourse to the flexibility allowed by the TRIPS agreement by Indian pharma entities has annoyed the American companies most. Now they have gone on an overdrive to pressure the U.S. Trade Representative into designating India as a “priority foreign country” in its 2014 Special 301 Report, due on April 30.

Technically, such an innocuous classification severely impacts India’s reputation. It amounts to India being declared as one among the worst offenders of IPRs. Quite dangerously, this might pave the way for the U.S. government to impose punitive trade sanctions such as withdrawal of tariff preferences for Indian exports.

India must do whatever it can to prevent such a calamity. As a retaliatory measure, India could impose anti-dumping duties or tariff hikes on U.S. imports.

This festering crisis has a long history going back to 1994. At the Uruguay Round of trade talks that year, India tooth and nail opposed the American proposal to clamp severe anti-IPR violation regime to protect its own companies who invest heavily in R&D and innovation. India could not stand up to U.S. pressure, but succeeded in resisting, in a limited way, U.S. attempts to have a 20-year product patent on medicines and chemicals. India managed to win some concessions by having certain flexibilities incorporated in the TRIPS agreement.

In the year 2005, India brought its own domestic laws relating to patent protection. Since then, India has used the flexibilities allowed under the Uruguay Round only on just two occasions. In March 2012, it issued a compulsory licence to an Indian drug manufacturer to produce a cancer drug whose patent was then held by the German company Bayer. Bayer’s price was very high making the drug unaffordable to poor cancer patients in India, Africa and elsewhere. This Indian move infuriated Bayer.

Under another provision of the IPR agreement of Uruguay Round, countries can deny a patent to a drug that involves only incremental innovation over an existing drug. Using this as the basis, in April 2013, the Supreme Court of India upheld the 2006 decision of the Indian patent office pertaining to Novartis. This Swiss multinational company, Novartis, had demanded patent on a drug that involved only incremental innovation. The Supreme Court verdict disallowing patent protection to Novartis caused an international furore.

The possibility of other drug companies located in different countries emulating the bold Indian stand against blind patent protection has riled global pharma giants.

India has many options open. Technically, it has not violated any treaty obligation. Therefore, India can challenge any prospective action by the U.S. by approaching the WTO. WTO’s dispute settlement mechanism has a fair record of impartiality.

One need to keep in mind that India has been implored by its own people and quite a few developed countries to bring healthcare to the top of its development agenda. So, the moral scale tips in favour of India.