Twin challenges for Indian pharma-boosting drug discovery and localising API production

India is often referred to as the ‘pharmacy of the world’; not without reason. The third largest pharmaceutical market in the world by volume, India supplies a bulk of generic drugs globally not just to under-developed countries but also to the US and UK. Notably, India supplies almost 40% of the total American generic drug demand and addresses as much as 25% of the total drug demand in the UK. India’s pharmaceutical sector also fuflfils over half of the total global demand for vaccines.

However, despite having a robust network of pharma companies and drug manufacturing facilities along with a large pool of scientists and researchers, India remains a laggard in the area of discovery of new drug molecules. A research paper published in the CHEMMEDCHEM journal in 2017 estimated that since the 1990s when Indian pharma companies started their own R&D efforts, they had been able to zero in on over 200 preclinical? and clinical?stage development compounds. However, just a handful of these could make it to the market. This tells us that despite a large pool of scientists and biotechnologists, India’s pharma sector has been unable to crack the drug discovery puzzle. Drug discovery is a long term commitment and Indian companies have traditionally been low investors in R&D due to the high risk and high costs involved. At the same time, paucity of strong industry academia ties also acts as a hurdle to the realization of India’s true scientific potential in drug discovery.

A bulk of new drugs in the global market emanate from the US and European countries. In recent years, neighbouring China too has marked the beginning of a new phase of pharma innovation. In 2018, China is estimated to have contributed to over 10% of the new drug launches in the world along with 7.8% of the drug innovation pipeline. India’s pharma sector needs to reinvent itself and move forward from its long standing dependence on export of generics towards enabling the industry become an end-to-end drug manufacturer. This includes a parallel thrust on localising a bulk of API manufacturing. Boosting new drug discovery requires multi-dimensional efforts on the part of both the government and the industry. What we need is a comprehensive infrastructure and regulatory framework that supports innovation and aligns our practices with international standards.

Government’s latest R&D thrust
The Government has in recent times has shown the inclination to address this glaring gap by launching a dedicated policy plan to address the R&D deficit in pharma sector. A series of reports last year had suggested that the Department of Pharmaceuticals was planning to create a separate department for R&D and was looking at having a dedicated R&D head in place to push for discovery of commercially viable new molecules.

This policy push when comes to fruition will definitely help channelize the scattered innovation efforts and give them better direction. Unfortunately, the COVID 19 outbreak seem to have relegated this agenda to the back burner for the time being, as India’s pharma sector works overtime to address the needs arising out of the pandemic.

Covid-19 and API shortage
The Covid outbreak in China and the resultant disruption of trade supplies from that country threw light on our excessive dependence on Beijing for Active Pharmaceutical Ingredients (API) and Key Starting Materials (KSMs). With up to two thirds of the total imports of bulk drugs or drug intermediaries being imported from China, any supply shock can literally put a halt on drug production in India and create huge shortages. The Government’s production linked incentive (PLI) scheme focusing on APIs and the API Parks scheme to boost competitiveness of India’s indigenous manufacturing are a step in the right direction. However, the industry faces the challenge of escalating costs if it tries to scale up the local production of APIs, KSMs and solvents. Escalating costs are a challenge to profitable production and private sector might not be wholesomely game for it. It is important therefore that the Government helps finance of subsidize production for the next few years either through public laboratories or through public private partnerships.

Challenges to indigenous drug discovery and way ahead
Inadequate intellectual property protection, long delays in getting approvals for clinical trials and low venture capital interest in biotech firms makes the business environment challenging for Indian pharma companies and startups. At the same time challenges of low R&D investment and skill shortage are glaring enough.

The Indian Patents Act of 1970 which enabled Indian pharma sector acquire process patents helped create one of the world’s largest generic manufacturing industry. However, it also in a way failed to incentivise new molecule discovery and led to a gap in research and innovation skills in the Indian industry. At the same time, India’s education system which its minimal focus on applied science has failed to create enough skilled manpower to feed the growing innovation needs of the industry. High cost of development of new drugs is another factor that makes investing big drug discovery a risky proposition. In 2018, an analytical report by Deloitte found that since 2010 the cost of developing a new drug had almost doubled and average return on R&D fallen significantly. According to the report, the average cost of bringing a new drug to market stood at USD 2.18 billion in 2018 as compared to USD 1.19 billion in 2010. Evidently, India’s investment on R&D remains abysmally low as compared to western countries which account for a bulk of new molecule discoveries. We do not just need to scale up investments in R&D but also need to incentivise entrepreneurship in biotechnology.

Untrained human resource and lack of industry readiness among Science graduates needs to be bridged by creating close industry academia ties, making pedagogy more relevant to the industry and boosting the system of academic research for students.

The pharma industry itself needs to diversify its research focus to cover a wide variety of diseases including neglected tropical diseases and non-communicable diseases.