Policy initiatives

The Government of India has been keen on supporting the growth of the pharmaceutical and biotech industry. During the beginning of the year, the finance minister announced extension of 200 percentage weighted tax deduction by companies on research and development (R&D) expenses for five years; setting up of $1,000 million (`50 billion) ‘India Opportunities Venture Fund' with Small Industries Development Bank of India (SIDBI) for micro, small, and medium enterprises (MSMEs); 100 percent coverage for national immunization program; and reduction in import duty on some key medical equipment and stents to 2.5 percent.

The government also announced its intention to publish details of every medicine patented in the country on its website. The move was intended to bring in transparency to enable local companies to challenge patent holders and market generic version of high-priced patented drugs.

In October 2011, the government considered launching a universal health insurance scheme in the country. The government plans to partially fund the scheme, which will allow registered citizens to use healthcare facilities in public sector and in private hospitals. The planning commission fixed a goal to increase total public expenditure on health to 2.5 percent of the GDP by end of the 12th five-year plan. The public health expenditure is expected to reach 1.8 percent by the end of the 11th five-year plan.

The government planned to regulate the manufacturing and marketing of imported stents and other medical devices. According to officials from the Drug Control Administration (DCA) and Central Drugs Standard Control Organization (CDSCO), the National Pharmaceutical Pricing Authority (NPPA) is gathering information on stents and other medical devices to prepare a price regulation strategy. Officials said that the government will base its strategy on recommendations and findings from the NPPA. Senior cardiologists and distributors of imported medical devices believe that ‘capitated pricing' mechanisms, used in the US and a few European countries, could become the norm in India.

In the last couple of years, many multinational companies are looking at acquiring the Indian companies to expand their base in the country. This has raised concerns as government feels that this could adversely affect generic drug prices in the country. To safeguard the interests of the local firms and patients at large, the Ministry of Health is keen on creating the foreign direct investment process.

A draft policy on National Pharmaceutical Pricing Policy (NPPP) was prepared and released in 2011. The proposed NPPP focuses on the national list of essential medicines (NLEM), which is periodically revised. This is a move towards fixing prices from the principle of cost-based pricing to a market-based pricing model, for more transparent and fair pricing as well as to increase competition in the marketplace. A huge population, a booming economy, a low-cost generic drug program, and relative political stability will support the growth of the industry. However, industry might see some hurdles such as faltering urbanization, income disparities, insufficient state involvement in healthcare, and a sub-standard intellectual property regime in the country.