Pharmaceutical Industry
Development of global pharmaceutical industry is spectacular. Big industries has developed to such extent that they surpass many medium scale countries annual budget and thus have amassed enormous economic power to influence political decisions in may instances. The total value of global pharmaceutical production in 1999 was just over 320 billion US dollars. This corresponded to 1.12% of global gross domestic product (GDP). Table 1.1 shows trends in global production for the period 1985–1999. The average annual growth rate of pharmaceutical production over this period was just under 10.5% at current prices, in comparison with an average annual growth rate of global gross national product (GNP) of under 7.5%. The value of manufactured pharmaceuticals has thus grown substantially faster than the total value of goods and services. When these figures are converted into constant prices to adjust for inflation, the rate at which pharmaceutical production has outstripped GDP growth increases substantially. The average real growth rate of GDP was 3.6% per annum and the average real growth rate of pharmaceutical production was 14.9% per annum.

Estimated global value of pharmaceutical production 1985 - 1999  in current and constant US $ billion 

Year	1985	1990	1999
Pharmaceutical production current prices	82,1	175,9	327,2
Global GNP current prices	10,766	22,299	29,232
Pharmaceutical production constant [1995] prices	46,2	140,2	370,1
Global GNP constant [1995] prices	20,302	24,555	33,672

 Source: WHO estimates from database of UNIDO, OECD health data, World Development Indicators, 1987, 1992, 2001, International Financial Statistics Yearbook, 2002

Production and marketing of medicines are not very easy. Out of 197 countries, 43 countries can produce medicines with various level of capability. India is ranked in the second group in the list. It is capable to produce nearly all essential medicines, has research and innovative capability, required infrastructure and also acquired export market. It accounts for 1% of the world’s production by value but by 8% by volume. The country ranks thirteenth in the world production by value but ranks fourth in the volume of pharmaceuticals produced. Yet the global market is dominated by top ten pharmaceutical companies of the industrially developed countries

Brief status of global pharmaceutical production capability 

Sophisticated pharmaceutical industry and research base	11 countries
Innovative capabilities	18 countries
Reproductive capabilities - active ingredients and finished products	14 countries
Reproductive capabilities - finished products from imported ingredients	92 countries
No pharmaceutical industry	62 countries

This figure shows the share of total pharmaceutical production in each of the top five producing countries from 1985 to 1999. The combined share of these countries fell from 78% of total pharmaceutical production in 1985 to about 67% in 1999 while both Switzerland and Italy increased their output to about 4.5% each just behind  Germany and the UK and just outside the top five. Since 1985, the top medicines producing countries have accounted for 84% - 88% of world production. The USA remains the biggest single producer [by value] accounting for almost one third of total production and Japan the second biggest. Together, these two countries produced 57% of the world’s pharmaceuticals in 1985 and 47% in 1999. The USA lost some of its market share and Germany between 1985 and a990. During the period 1985 to 1999, the market share of the UK was 6% - 7%, while that of France remained at 7% - 8%.  

Pharmaceutical market in India has developed from Rs.10 Crores in 1948 to Rs. 30,000 Crores in 2007. Indian national companies have successfully competed the multination companies in capturing 74% of the domestic medicine market. The industry has also been successful in generating export market by selling medicines at cheaper price. India is known as the pharmacy of the third world countries. 

 

      Value of Export and Import [US$ million]

Year	Total Export	Total Import
1990-91	536.6	336.6
1991-92	613.7	329.9
1992-93	486.2	371.1
1993-94	567.9	459.1
1994-95	694.0	486.3
1995-96	698.7	558.1
1996-97	1152.1	664.2
1997-98	1458.1	729.5
1998-99	1462.3	724.3
1999-00	1668.5	346.6
2000-01	1910.9	444.9
2001-02	2196.6	541.2
2002-03	2464.1	227.8
2003-04	3177.3	686.7

 Source: IDMA Annual Publications

Despite such development in pharmaceutical production an estimated 499-649 million people (50% to 65% of the population) do not have regular access to essential medicines. [World Medicines Situation-2004, WHO ]

 

Medicine Policy:

First comprehensive drug policy in India was prepared in 1978 following recommendations of the Committee on Drugs and Chemicals (Hathi Committee) in 1975. The policy considered preferential measures for development of public Sector and national sector industries. It envisaged control of prices which resulted to Drug Prices Control Order, 1979 keeping 378 medicines in the control basket. The policy had compelled multinational companies to establish production units. Medicine prices showed significant downward price trends.

The policy was successively diluted by the government under threats and pressures by a section of the industry. Public sectors were neglected resulting closure of most of them and regulatory control on import, prices and quality of medicines dwindled to shamefully low level. One can now say that all these control are only notional. Medicines come under six ministries of which two miniseries are prime- Ministry of Chemicals and Fertilisers and Ministry of Health and Family Welfare. There was several changes in the medicine policy of the country, latest of which is Pharmaceutical Policy-2002. this policy does not spell much but vouches for total liberalization of all restrictions. The UPA Govt, following its election manifesto that it will provide medicines at affordable price, revival of public sectors, etc. took certain measures. It has invested sizable fund to some public sector medicine companies. It has also decided to revive largest private sector company Indian Drugs and Pharmaceuticals Limited. [See Draft Policy]

This Govt. has also prepared a draft Pharmaceutical policy and kept it in the website from 2006 but the industry lobby was successful to stall the policy formulation and now the draft lies in the shelves of a Cabinet Committee chaired by the Agriculture Minister!

Drug Prices:

Most serious concern has been observed in the area of medicine prices in India. In fact the 2002 policy openly vouched for total abolition of price control it decided to keep price control on 20 medicines only against which a public interest litigation when reached to the Supreme Court of the country, the court upheld the claim that all medicines given in the National List of Essential Medicines should be put under price control.  Policy draft of 2006 also agreed to follow the order, but the industry started to play all kind of tricks to stall such decision. [Drug Price Control Order]. A brief description of the present situation is as follows. 

It is observed that the price control on medicine existed form 1966 under Drug Prices (Display and Control) Order which did not allow more than 150 percent profit margin on ex-factory cost of all medicines. This has been gradually diluted to control 100 per cent profit margin only on 74 medicines. While nearly 600 active components of various medicines are used in the market this paltry 74 medicines prices control is simply notional. Whatever control remains on medicine prices are now being found to be freely flouted by the industry which are not beyond the knowledge of the Govt. It is agonizingly observed that medicine prices are escalating rapidly very high every year. Following are some instances

Rise of prices of medicines

Drug	Th. Group	Strength & Pack	Price in  1998 In Rs.	Price in  2007 In Rs.	Increase in 9 years %
Imodium	Antidiarrhoeal	2mg/10's	3.53	26.12	639.94
Avomine	Anti emetic	10's	7.56	23.50	210.85
Rcinex-Z	Anti-TB	10's	7.78	51.85	566.45
Becozyme C Forte	B-Complex	10's	2.73	7.46	173.26
Tixylix	Cough Syrup	60ml	9.27	35.09	278.53
Benadryl	Cough Syrup	100ml	17.80	34.74	95.17
Corex	Cough Syrup	50ml	16.74	29.60	76.82
Phensydil Cough Syrup	Cough Syrup	100ml	20.50	49.33	140.63
Human Actrapid	Insulin	10ml	176.80	506.15	186.28
Euglucon	Antidiabetic	5mg/10	3.90	8.80	125.64
Ovral-L	Oral Contraceptive	21 Tab	14.20	61.95	336.27
Ovral-G	Oral Contraceptive	20 Tab	23.40	65.25	178.85
Nise	Pain Killer	10's	19.50	32.00	64.10
Enam	Cardiovascular	2.5mg/10's	8.11	17.33	113.69
Cyclopam