The year ends with one of the most coveted blockbuster drugs, Pfizer's cholesterol lowering medicine Lipitor, losing its patent-protection in the US – thereby opening the door to less-expensive chemically-similar versions of the drug.
Despite having fought patent battles across geographies for a slice of this $13-billion Lipitor pie, Ranbaxy barely scrambled to the finish line. With quality concerns plaguing two of its India-based plants, Ranbaxy just about managed to leverage the advantage it had to market this drug, in the nick of time. And even then, it had to forge a deal with Israeli drug-maker Teva, further eroding Ranbaxy's advantage on Lipitor.
As curtains down on 2011, it closes on a good year in the domestic market, growing at a steady trot of over 15 per cent. The long pending draft National Pharmaceutical Pricing Policy has seen the light of day. And, a lid has been put on the uncertainty regarding the takeover of domestic drug-makers by foreign companies with the Government routing foreign investments in existing pharma companies through the Competition Commission of India.
Quality concerns
But quality will continue to haunt Indian drug-makers, with the year seeing concerns raised by the United States regulator, for instance, on domestic drug-makers, including Dr Reddy's Laboratories and Lupin.
Quality is the single most important factor that needs the attention of the domestic pharma industry, says Mr Muralidharan Nair, Partner, Ernst & Young. The year ended on a positive note in that exclusivity on the most coveted product (Lipitor) went to an erstwhile Indian company, he observed. But the negative development is the question-mark on quality, he adds, referring to Ranbaxy's close call on Lipitor, and the other instances of quality concerns – be it regarding Aurobindo (in its tie-up with Pfizer), or earlier instances on similar lines with Claris (again in alliance with Pfizer) or Sanofi-Shantha Biotech vaccines, that came under the World Health Organisation's scanner. Besides quality, the Government has outlined its policy guidelines on medicine pricing, but it is in a state of limbo as the increased span of price control has the industry worried. And the market-based pricing (where the reference price is fixed at the average of the top three prices of a particular drug and dosage) has not won support from the socialists either, he adds.
Revolving door
Putting its finger on another key concern for the industry, the Indian Drug Manufacturers' Association's Mr Daara Patel points to the constant change at the helm of key regulatory agencies like the Drug Controller General of India's (DCGI) office or the National Pharmaceutical Pricing Authority (NPPA). The DCGI for instance has an interim-head, while the NPPA's chief has also moved on.
IP issues
But there are positives this year, like the discussion initiated by the Government on compulsory licensing, and the subsequent simplification of procedures, points out Mr D.G. Shah of the Indian Pharmaceutical Alliance, speaking for domestic drug-majors. The process has further reiterated the Government's role of stepping in and garnering supplies for the local populace in the event of a health emergency, he added. Other positives of the year include the distinction made between the greenfield (new) plants and brownfield (existing) operations – regarding foreign direct investment. The acquisition of an existing drug-making operation would now come under Government scrutiny. And besides some discordant notes, the IPA has supported the unveiling of the draft pricing policy.
Revenues from the domestic drug-market and exports have clocked over Rs 52,000 crore, but Mr Shah apprehends challenges in the export market from the interpretation of intellectual property norms. Through the harmonisation of IP laws across countries, for instance, he points out.
Whether it is to do with medicine pricing (the draft policy), intellectual property (on compulsory licensing) or FDI – the Government has taken significant steps this year, says Mr Shah. The forthcoming year will see how the industry handles quality concerns and stringent IP implementation, both domestically as well as overseas, industry representatives aver.