S. V. Veerramani, President, Indian Drug Manufacturers' Association |

Having more USFDA approved manufacturing facilities than any other country in the world is not all rosy. It simply means Indian companies are under constant scrutiny of the American federal agency. In order to figure out how the industry is trying to deal with the issue, The Dollar Business caught up with S. V. Veerramani, President, Indian Drug Manufacturers’ Association (IDMA)

Interview by Satyapal Menon | The Dollar Business

TDB: Indian pharmaceutical companies and their products are being subjected to increased inspections and audits by USFDA. Does it indicate declining confidence in Indian pharma?

S. V. Veerramani (SVV): US is procuring sizeable quantities of generic drugs from India because of their good quality and affordable prices. In fact, around 29% of India’s total pharmaceutical exports are done to US. So, it’s but natural that US will like to protect the interest of its consumers by increasing audits and inspections of Indian pharmaceutical companies. This, in no way, indicates any decline in confidence levels.

TDB: How are Indian pharma companies trying to address the concerns of USFDA?

SVV: Indian pharmaceutical companies have stepped up their audits and filled up gaps, if any, to satisfy the requirements of USFDA.

TDB: According to few industry observers, TRIPS and WTO compliance has only resulted in MNC domination of the Indian pharmaceutical market. Do you think these observations are valid and justified?

SVV: Having become a signatory to the TRIPS agreement, India has signaled the acceptance of product patents. As of now, this hasn’t led to any major MNC domination of the pharma sector. But the sales of patented drugs are likely to go up from the current 2% to about 5-10% in the next 10 years. This can result in MNC domination with respect to patented products.

TDB: A majority of approved product patents belong to MNCs? How do you view this trend?

SVV: It is true that a majority of product patents have been filed/submitted by MNCs. So, it is important that Indian companies also file more patent applications for products and processes and not lose the opportunity.

TDB: Not many Indian pharma companies are taking advantage of the compulsory licensing clause in TRIPS. To what do you attribute this poor response from domestic companies?

SVV: So far, the compulsory licensing clause has been used only once by the Government of India. While considering compulsory licensing, India is careful to avoid giving an impression that it is not adequately safeguarding patents. The government also feels that frequent use of compulsory licensing can  bring-in different types of impediments from USTR (United States Trade Representative) and other international lobbies.

TDB: Could you elucidate the impact of anti-dumping duties imposed by both China and India against each other on the Indian pharma industry? Are there any remedies to solve these issues?

SVV: Imposing of anti-dumping duties can be selectively used to protect certain products. But frequent use of the same is not likely to solve issues. The only way forward for India is to encourage the active pharmaceutical ingredients (API) sector in a big way and step up its production, thereby reducing dependence on China.

TDB: The government has recently given a nod to the continuance of 100% FDI through automatic route in case of greenfield venture and 100% FDI in brownfield venture, subject to FIPB approval. What has been the impact of this policy on the domestic pharma industry?

SVV: As of now, there is no major impact, except for a few M&As. But as time progresses, the 100% FDI policy can lead to increased investments in the Indian pharma sector.

TDB: There is a view that MNCs prefer brownfield projects, instead of greenfield ventures, with a view to take-over the markets of existing companies, monopolise the markets and control pricing. Apart from this, despite the involvement and investments of MNCs in the Indian pharma sector, there does not seem to be any significant progress in R&D spend and drug discovery initiatives. Where do you stand on this?

SVV: The concerns are well justified. It is important that greenfield ventures, which can stimulate R&D and new products, are entered into. Takeovers of existing companies by MNCs can only increase their market share, which can go against the interest of Indian companies.

TDB:  Do you think there is a need to improvise on existing government policies and/or introduce new policies to give a boost to the Indian generic segment?

SVV: Government of India can provide more encouragement by upgrading the large number of pharma SMEs, thereby motivating them to become exporters of generics. Further, encouragement by way of subsidies and incentives can be given to Indian pharma exporters so that they can step up their exports.  Regulatory approvals should be speeded up. Procedures should also be simplified at customs and port levels, so that export consignments can move faster.