The theme of our 2021 budget is an unabashed focus on growth. Do what it takes to grow the economy. The guiding principles in the budget are 1) Invest in assets for the future and 2) create jobs.
For the pharma industry, it is indeed a reassuring budget with more than doubling the outlay to Rs 223,846 crore, including an allocation of Rs 35,400 crore towards COVID-19 vaccinations.
COVID-19 tailwinds position the industry well to double down on the Government’s growth agenda – in a way that fits the government’s guiding principles. However, the Government must execute on the budget in a way that channels its investments in following 5 areas:
- Boost Demand: International and Domestic
Despite more than 50% contribution coming from International exports in a $41Bn industry and India accounting for a major share in the worldwide Generics market, there is tremendous headroom for tripling or quadrupling the size of the industry in next decade.
India is well-positioned to do incremental product portfolio innovations that drive value for the international market. These innovations include Supra-generics, Bio-similars, Injectables, Vaccines etc on the formulation side and both Chemical and fermentation-based products on the API side.
While the US market will continue to be a major contributor, the Government should also do all it can to facilitate business in growth-oriented sustainable geographies in Asia and Latin America.
Enable Domestic Demand
PM’s AtmaNirbharSwasth Bharat Yojana plans to invest Rs 64,180 crore over six years to develop primary, secondary, and tertiary healthcare systems and focus on detection and cure of new diseases. It is great to see a focus on diagnostic labs (public and private), health and wellness centres (rural and urban), acute care facilities and public health institutions like National Centre for Disease Control. What’s needed is a real quantum jump in investment from current ~1% of GDP to 2.5% of GDP to scale this healthcare infrastructure. The expansion of PMJAY/Ayushman Bharat to cover India’s middle class will significantly boost domestic demand.
- Become the world’s preferred pharmaceuticals supplier be it APIs, Bio-Similars, Value-add generics, injectables or topicals
The pandemic made the world realise its dependence on China for APIs. The world is witnessing India’s prowess in manufacturing through Covid-19 related medicines and Vaccinations. Post Covid-19, as companies attempt to de-risk their supply chain, India has the potential to serve this emerging need. The government must partner with the industry to provide all possible support to make the Pharma industry the role model for its “Make in India” initiative.
What’s needed is a comprehensive, all-out approach to accelerate export much the same way as China did to grab API opportunity globally. Initiatives can include a single-window system of approvals, deemed approvals, availability of land, power, water, technology, skilled manpower, finance, supply chain, incentives to create a solid manufacturing base — all to ensure “Ease of doing business”.
The government needs to take audacious steps to cover the lost ground quickly. Just to illustrate, the Government announced strict conditionalities in the recent PLI scheme for APIs that attracted only 215 applications from 83 bulk drug manufaturers. The next phases of the Schemes should have fewer riders, longer periods of incentives and an availability to have gains at scale.
- Support and Push R&D
Pharma R&D is time, money, resource and risk intensive. Given the current size of the industry, it’s difficult to compete in this space independent of government support. Globally too, R&D has been a collaborative affair between Government, Academia and Industry. It needs a lot of enablers such as liberal government grants, lucrative tax benefits and seamless industry academia partnership. Currently, R&D investments are 100 per cent tax-deductible which can be increased to 150-200 per cent for novel drug discovery as well as the development of value-added supra-generics.
- Develop Workforce
The Government should in-build a pre-requisite of an essential, productive and well-monitored industry-academia linkage in universities. The courses/curriculum must correspond to the industry’s needs and incorporate all theoretical and practical considerations of the latest Industry 4.0 framework in its curriculum. The Life Sciences Sector Skill Development Council (LSSSDC) or a more elaborate and empowered body can play a vital role. Key is intensive skill development in state-of-art and contemporary technological, scientific or cGMP areas in Manufacturing, Quality Assurance, R&D, Regulatory and Project management enabled by the seamless collaboration between Industry, Government and Academia. This will further accelerate job creation in an industry which is already a large contributor to high skill jobs.
- Scale Digital
The rural economy constitutes ~46% of national income. A physical and digital model unlocks opportunities for inclusive growth.
An effective way to provide healthcare services to the rural market is through telemedicine. COVID-19 has accelerated the adoption of telemedicine platforms like e-Sanjeevani (Government-run), Navia Life Care and Practo (private-run). A strong intentional policy can enable telemedicine to achieve scale in India.
For example, the ambitious National Digital Health Mission announced by the government can be pushed across states with speed and rigour. It aims to create a national digital health ecosystem that supports universal health coverage in an efficient, accessible, inclusive, affordable, timely and safe manner and also provide a wide range of data, information and infrastructure services linking doctors, Electronic Medical and Personal Health records and Health facilities like Labs, Pharmacies and Citizens.
The industry has risen to the enormous challenge that COVID-19 presented. It has the potential to build on this momentum and become the role model industry for our country – one that delivers on our Government’s bold vision of Growth, Job Creation and Make in India.
About the Author:
Yugal Sikri has spent 40+ years at senior leadership roles in the Indian Pharmaceutical industry including at GSK, Pfizer, Novartis and Ranbaxy. He is currently the Managing Director at RPG Life Sciences and an Independent Director at NMIMS-Atal Incubation Center.