Imports of drugs and pharmaceuticals are regulated through EXIM Policy and presently all items except those requiring clearance under The Narcotics and Psychotropic Substances Act, 1985 are allowed under OGL.

The value of pharmaceutical output grew more than tenfold from Rs. 5,000 crore in 1990 to over 65,000 crore in 2006-07. India is now recognized as one of the leading global players in pharmaceuticals. Europe accounts for the highest share of Indian pharma exports followed by North America and Asia . The policy initiatives taken by the Government of late have led to quantitative and qualitative improvements in the R&D activities of the industry. The National Pharmaceutical Policy, aimed at ensuring availability of lifesaving drugs at reasonable prices, is being finalized. Taking stock of the imperative requirement for skilled manpower, the Government has decided to set up six new National Institutes of Pharmaceutical Education and Research (NIPERs) in different regions of the country. As a new initiative in the pharmaceutical sector, the First Pharmaceutical Census of India (FPCI) was launched during 2007-08 to obtain a robust database for the sector.

The first comprehensive Drug Policy of 1978 and thereafter the Drug Policy of 1986 together with the application of process patent under the Patent Act of 1970 successfully paved the way for development of indigenous pharmaceutical industry which went into the production of generic drugs in a big way. During the period from 1978 to 1990 indigenous industry acquired a respectable status in terms of product range and market share. R&D was confined to process development/innovation of existing molecules.

Following are some of the important developments that have taken place in pharmaceutical sector during the last fifteen years:

Industrial licensing for all kinds of drugs has been abolished (it has recently been done for the last remaining bulk drugs produced by the use of recombinant DNA technology, bulk drugs requiring in-vivo use of nucleic acids and specific cell-tissue targeted formulations). However the need for obtaining manufacturing licence under Drugs and Cosmetics Act,1940 continues for all units whether organized or small scale. The State Drug Controllers are authorized to issue such licences in most cases.

FDI up to 100% is permitted, subject to stipulations laid down from time to time in the Industrial Policy, through the automatic route in the case of all bulk drugs cleared by the Drug Controller General ( India ), all their intermediates and formulations. Recently bulk drugs produced by the use of recombinant DNA technology, bulk drugs requiring in-vivo use of nucleic acids as the active principles and special cell/tissue targeted formulations have also been allowed this facility.

Automatic approval for Foreign Technology Agreement (FTA) is already available in the case of all the bulk drugs cleared by Drug Controller General (India) , all their intermediates and formulations, except bulk drugs produced by the use of recombinant DNA technology, bulk drugs requiring in-vivo use of nucleic acids as the active principles, and specific cell/tissue targeted formulations.

Imports of drugs and pharmaceuticals are regulated through EXIM Policy  and presently all items except those requiring clearance under The Narcotics and Psychotropic Substances Act, 1985 are allowed under OGL. Further, a centralized system of registration has been introduced under the Drugs & Cosmetics Act and Rules made there under, administered by Ministry of Health and Family Welfare. These arrangements may continue to regulate imports of Drugs and Pharmaceuticals.

Exports are permitted in accordance with the EXIM Policy and relevant procedures/rules formulated for the purpose by the Directorate General of Foreign Trade. Exports are also subject to laws prevalent in importing countries. Also, the exporters are allowed imports of inputs on duty-free basis for export production. The industry has shown commendable export performance, the trade balance being positive. Over the last few years the compounded annual growth rate in exports has been 22.7 percent.

Product patent in pharmaceuticals has been introduced in the country with effect from 1st January, 2005 by amending the Patents Act, 1970 in conformity with the TRIPS agreement. The physical infrastructure in the four patent offices in the country (Kolkata, Delhi , Chennai and Mumbai) has been substantially strengthened and computerization has been introduced. Steps are now being taken to further augment and improve the software and human resources in these offices to enable them to deal with the new responsibilities.

The revised Schedule M of the Drugs and Cosmetics Act, 1940 related to Good Manufacturing Practices (GMP) has come into effect from 1^st July 2005.This would in the long run strengthen the pharma industries as a producer of quality medicines.

Clinical Trials are essential for drug development . Schedule Y of the Drugs and Cosmetics Rules,1945 has been amended to allow for multicentric concurrent clinical trials in India . Under these rules clinical trials have been defined and it has been made mandatory to take approval for conducting any type of clinical trials in the country. Also Good Clinical Practices (GCP) guidelines have been published and made mandatory. It also addresses the protection of study subjects (patients/volunteers) and integration and quality of data .

The industry’s growth rate is likely to touch 19 per cent from the current 13 per cent, according to a projection released by the Confederation of Indian Industries (CII), on September 1^st, 2008. The incremental growth of 6.6 per cent will be bolstered by factors like a growing middle class (contributing 2 per cent of the incremental growth), pricing of the pharma products (1 per cent), untapped rural markets (2 per cent), and marketing efficiencies (1 per cent).

According to a McKinsey study, the Indian pharmaceutical industry is projected to grow to US$ 25 billion by 2010 whereas the domestic market is likely to more than triple to US$ 20 billion by 2015 from the
current US$ 6 billion to become one of the leading pharmaceutical markets in the next decade.

The latest information provided by IBEF on the pharma industry says that as per a study titled, ‘The globalization of innovation: Pharmaceuticals, Can India and China cure the Global Pharmaceutical Market’, by US-based Ewing Marion Kauffman Foundation, increasing R&D initiatives in the pharmaceutical sector has made India a more mature place for drug discovery activities compared to China.  IBEF report on the Indian pharma sector quote the report and stated that compared to China, Indian companies are playing an important role in early drug discovery processes due to their substantial experience in the field of generic drugs. The study also holds India as a more established venue for chemistry and drug discovery developments than China. 

According to a research report, ‘Booming Pharma Sector in India’, released in August 2008 by RNCOS (an industry research firm), India has been portrayed as an emerging destination of drug formulation research and exports. As per the report India exported drugs worth US$ 7.2 billion in 2007-08 and the US and Europe were the biggest export destinations for Indian generic manufacturers, followed by emerging markets like Central and Eastern Europe, Latin America and Africa. As per the report the  Indian pharmaceutical exports is expected to grow at a CAGR of 18.5 per cent between 2007-08 and 2011-12. India’s pharmaceuticals market is expected to grow by about 15 per cent in the current fiscal year 2008-09, keeping pace with Brazil, China, Russia, South Korea and Mexico, says a recent study by global industry consulting firm IMS.  According to the study, India’s medicine manufacturers will have some reason to cheer, with expensive patented medicine falling out of favour and governments leaning towards cheaper medicines, where Indian companies have a price and quality edge over their competitors in other countries.

The Government has put in place a new patent regime from the year 2005  keeping in line with the WTO commitments. India is among the few developing economies to have brought in amendments to the existing patent law.

The bill, which was passed by the Lok Sabha in the year 2005, allows patenting of products in areas of food, drugs and chemicals which were not covered earlier. The India Patents Act of 1970 provided patenting of all processes and  products in all areas excepting food, drugs and chemicals.  Introduction of product patents in these three crucial areas indicates the sign of confidence and maturity of Indian industry particularly the emerging pharmaceutical industry. In fact, the new patent regime will help Indian pharma industry which has made large investments in drug research. It gives a chance to drug development by frontline companies with adequate safeguards to protect the interests of society.

The in-built safeguard in the new regime is that it has the provision of compulsory licensing to ensure that drugs are available at affordable prices. As it is the impact on drug prices would be minimal as 97 per cent of the drugs are off patent. Only three per cent of drugs are covered under the patent regime and almost all of them have alternatives. In fact, price rise and patents have no correlation. There are only 350 essential drugs and none of them is a patented drug. Also, the new regime is prospective and the drug price control order would continue.

In 1995 when the World Trade Organization came into being, it was decided that all member countries including India would allow protection of intellectual property rights under an agreement called TRIPS (Trade-Related Intellectual Property Rights). This agreement gave ten years’ time until January 1^st, 2005 to the developing countries to bring in necessary changes to the patent regime to allow product patent so that intellectual property rights particularly in food, pharmaceuticals and chemicals could be protected. India has an enviable record of fully adhering to its international obligation. Apart from meeting the WTO obligations, India has brought in the new regime as there is an economic rationale. It enables pioneering firms lead time to recoup sunk cost on research and development.

As prices of drugs are also determined by the cost effectiveness of domestic production, it is imperative to impart a technological and productivity thrust to the Indian Pharmaceutical Industry which would also enable it to harness export opportunities. The objective of ensuring abundant availability of medicines at reasonable prices, will be best served by promoting competition and economic scales of production and also by removing unnecessary barriers to growth.