Drug Price Control in India to Hurt Investment in India: MNCs

The Organisation of Pharmaceutical Producers of India (OPPI), the apex industry body of MNC pharma companies, feels that the Centre’s move to expand the drug price control net coupled with its failure to honour incremental innovation would hinder long-term pharma investments in India. Accordingly, it feels several member companies may review proposed investments in India.

The Centre recently announced its intention to bring all 354 medicines on the National Lists of Essential Medicines under price control. A move which peeved the pharma industry, comprising MNCs and domestic companies alike, especially since price restrictions now apply to only 74 drugs. In parallel, the patent on Novartis’s cancer drug Glivec was denied in India on grounds of incremental innovation in a recent Madras High Court ruling. The ruling is significant as the patent denial to Novartis would apply to every drug patent application linked to incremental innovation in India.

In the backdrop of these developments, OPPI vice-president and Pfizer India managing director Kewal Handa said: “Research investments by MNC pharma firms in India may be the first to be hit. But other areas like sourcing of APIs (active pharmaceutical ingredient) and contract manufacturing from Indian companies may also be eventually reviewed.”
The OPPI member firms include global biggies like Pfizer, Eli Lilly, GlaxoSmithKline, Bristol-Myers Squibb, Sanofi Aventis, AstraZeneca Pharma, Novartis and Novo Nordisk.

In this light Mr Handa declined to identify the pharma MNCs likely to review their India gameplans. It may be mentioned that Novartis chairman & CEO Daniel Vasella had recently said the company would switch hundreds of millions of dollars in planned investments from India in coming years after Glivec was denied patent in India.

“Expanding the net of drug price control and failure to honour intellectual property rights (IPR) on incremental innovation is giving a negative connotation. This will dampen the positive outlook which India commanded in front of the global pharma biggies,” Mr Handa added.

The OPPI feels South Korea and Singapore can overtake India as the next possible destination for pharma R&D. “China could also emerge as a much bigger player for API sourcing. Eventually, these moves may make India uncompetitive in the global arena,” said Mr Handa.

The OPPI and its member firms have been making representation to the government on the issue. “Pharma investors check two things — the IPR regime and pricing attraction of the market. India is likely to loose its attractiveness on both counts. Medicine prices in India are already the lowest in the world,” a senior executive of an MNC pharma company said.

The industry is ready to work jointly with the government on the public-private-partnership route to expand access of medicines in the rural region and to poor patients.

“This can justify the government to not go any further with their plans to increase price control,” said Mr Handa.
Industry analysts feel the central government’s take on IPR and incremental innovations will hinder the huge R&D efforts of domestic pharma firms. “As per estimates, only 30% of new drugs coming in the global market are new chemical entities (NCEs). The rest are based on incremental innovations where Indian firms have an advantage,” said a top executive of an Indian drug company.

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