How India needs to play the pharma game

India has proudly held on to its unique position as the “pharmacy of the world” with the numbers that it commands on the global stage. However, as the regulatory landscape evolves pharma companies need to transition from volume play to value play. How exactly can they navigate this transition to unlock sustainable growth and profitability? What R&D strategies and investments need to be in focus for the future? What is the role that Indian pharma companies can play in the emerging global healthcare ecosystem? These are some of the questions that an eminent panel of industry leaders and experts comprising Tapan H. Sanghvi, MD, U S Pharma (I) Pvt. Ltd.,

Manoj Saxena, MD, Bayer Zydus Pharma and Country Division,

Suresh Pattathil, President - OPPI and General Manager, AbbVie India, Vijay Chawla, Partner & Head – Life Sciences, KPMG in India, Achin Gupta, CEO, One India business at Cipla, Yugal Sikri, MD, RPG Life Sciences and Maharukh Rustomjee, Chief Scientist Founder & Managing Partner, Amaterasu Lifesciences LLP, discussed at the KPMG CNBC TV 18 panel discussion on Transforming Dilemmas into Decision-Making.

For Indian pharma companies there’s big opportunity in the global pharmaceutical market, which is currently estimated at about $1.5 trillion. Indian companies can tap these emerging opportunities, as a number of products get off patent and biosimilars come into play. Vijay says, “…in the next five years or so, the number of products that get off patent is close to about 200 billion dollars for annual, that's the sales, and with biosimilars coming, I think there's an estimate that by 2027, it should be about 70 billion dollars”. He also sheds light on the resources that India can leverage, for example, its R&D ecosystem with its global alliances and big investors stepping into the picture to partner with premier institutions. “If you look at just the ecosystem that India has on the R&D side, on the alliance side, I think there's a big play that is available today.” In terms of leverages, the schemes the government has announced, the Rs 15,000 crore outlay but utilization at only about two hundred odd crores, all these factors Indian players can tap to move from volume to value play.

At this juncture, it is critical priority for pharma players to create better offerings for patients through differentiated products and more advanced offerings in order to unlock growth, profitability and sustainability. “We need to create better offerings for the patients. I would say the biggest lever for that is creating differential products including more advanced offerings and that can be on various fronts. One of them is delivery technology,” says Achin. Giving an example he adds, “We focus on respiratory, where we have orals and trying to move people onto inhalation…. within inhalation, we have more sophisticated devices focus.” There are other avenues like new and complex treatments and therapies, which are becoming more accessible and affordable with improving income levels and insurance cover. These are the kinds of initiatives that pharma companies can take to move up the value chain. The second important thing is to have more patient centricity that can be manifested by saying that “instead of a pill provider can I now participate in the journey of the patient…,” he elaborates.

For pharma companies it is important to keep an eye on the emerging trends. “If you can pick the right trends, you create the right consumer insights… end up creating brands which translate into value,” says Achin. He points out digital and technology related interventions that Indian pharma companies can work to their advantage. These can lead to deeper market penetration and widening footprints. Volume needs to come with sustainability and for this to happen pharma companies need to look at how technology can help them achieve it. For example, “how do you engage patients digitally, or how do you improve automation at the facilities,” Achin elucidates his point. All this is ultimately in sync with the goal of sustaining volume, but alongside volume, companies must create more value on top and more sticky business on top so that they create the ability to invest further.

Talking about the transformations that can create a much more conducive environment for fostering innovation, Suresh says, that the industry has moved from simple chemical entities to more targeted therapies for patients and the question now is about the access to those therapies in India. “The key to this will be how Ayushman Bharat, for example, evolves from simple medical and surgical treatments to more innovative drug treatments as it moves along, he adds. Pointing to the big missing middle not covered by any schemes, he says how the healthcare system evolves in the future will dictate the access to innovative therapies for all the patients who require it. “If you look at the whole access story, you have a 50% of the people covered by the Ayushman Bharat. You have another top 5 to 10% covered by the public sector organizations, like CGHS, or they could even pay for the therapies. But then, you have a big missing middle.” Giving the example of Glaucoma, he explains that a big driver for the Indian pharma market will be diagnosis and origination of patients. There are eight million patients of Glaucoma but only two million are getting treatment. The remaining six million are unaware that they are suffering from the disease. This is true for many diseases, and this will be a big driver for the growth of Indian markets. In terms of innovative drugs, “there needs to be more evolution of the world pharma healthcare system in India which will provide access to those innovative therapies to patients.”

Throwing light on R&D, investments, challenges and risks, Manoj says, “We all know pharma research is a risky affair. It costs more than two billion dollars to find a new treatment and the treatments are life changing.” For companies wishing to walk the path of innovation and trying to create value at a global scale there can be many challenges. The improving life expectancy in India is partly because of the innovative distance that pharma sector has traversed. With the changing demographics of the country with more ageing population, a lot of resources will go into oncology, cardiovascular drugs, and also newer ways of treating diseases. “We are looking at personalized therapies,” he adds. India is playing a critical role in this and virtually for every global clinical trial “we are enrolling patients.” Manoj says this is important because when those therapies are launched in India, we “have to look at the nuances for Indian patients.”

What really needs to be done to make India, a global value creator? What sort of government support is required, what is the biggest challenge for an industry player?

Maharukh enlightens: India hopes to become a ten trillion economy soon and to achieve that goal “we need to have innovations in all spheres and in pharma specifically we need a lot of research because we need to solve our problems ourselves.” The set of problems that the country faces are unique, “which we can’t keep on looking at others to solve.”

Driving home the importance of developing India’s human capital Maharukh says, the spending in research unfortunately is driven by the government, which goes to all government laboratories. Although there is a lot of research happening in these labs, they need to come out of labs and reach markets. The premier institutes of higher education, which are less than one percent, conduct research and also corner a large part of the government funding. In more than 90 to 95 percent institutions research is not taught which leads to a deficit in manpower for research. “We need to develop human capital and the new education policy is thinking in that direction. The new research policy passed recently will drive this,” Maharukh adds.

We also need to create the infrastructure, the culture and the ecosystem that retains talent else it results in brain drain. “Unless we have that research ecosystem…we cannot maintain our talent,” says Maharukh and emphasizes the importance of collaboration between industry, academia and pharmaceutical start-ups as “it is going to build it (the ecosystem) and bring the solutions for our country and also add values so that we can innovate for India and innovate for the world”. Maharukh suggests an ‘Innovate in India’ initiative just like ‘Make in India.’ There is a need for research-linked incentive schemes, supportive policies, and regulators as enablers to help companies that are into innovation. “Intellectual property protection is not at the level that gives confidence to people to invest in research in India,” says Maharukh, adding these are critical factors for pharma companies to build value.

The “vibrant” Indian start-up ecosystem has big advantages, for example, start-ups can apply for accelerated patent grant or for some research funding. Things are definitely, moving in the right direction for them, but “we really need to build the research human capital and the infrastructure,” Maharukh adds.

Yugal is confident that every pharma company, big or small can contribute to volume to value game. For a small or mid-sized company, the way to contribute to the volume to value movement could simply lie in identifying certain niche areas and adding value to it in such a way that “we are not only strong in domestic business, but we are also strong in global business.”

On Indian pharma companies’ ability to embrace customer-centricity, he says, “…patient centricity scope exists across the treatment journey – starts from awareness, diagnosis, treatment, and prevention – at each stage there is scope for us to bring patient awareness.” By talking about the disease, and the effects of it, “you are making the patient much more enlightened about the disease, and he gets many queries answered…” The second important thing is diagnosis and lots of positive things are happening in disease detection camps. Giving the example of Arogya Parivar initiative, he calls it an excellent initiative for patient centricity, where you have a set of people who are working on increasing awareness, diagnosis level access to the doctor, and on the other end, there is another section of the company working on making affordable medicines to the same segment of people. This is a perfect example of patient centricity to rural population, which is 67% of the country, but is responsible for only 22% of the sales in the country. “They are the people who need access.”

The third important aspect is treatment. “How do we talk about adherence?” There are wide variety of ways to do this, and smaller innovations can bring a lot of patient compliance or patient adherence for chronic disease management. “The entire patient continuum if we pick up, we get lots of impactful interventions which can help us to bring the concept of patient centricity in the operations that we do,” Yugal explains.

Sharing his views on how Indian pharma companies are unlocking sustainable growth and profitability using technology, Tapan says, “Indian pharma has overwhelmingly accepted and embraced technology, right from the word go. This has helped companies to shorten the whole process cycle and improve operational efficiencies” leading to learnings about differentiated data sets, which in turn have improved analysis “resulting in better margins, better profitability, and better turnaround.”

Talking about AI in the pharma sector, Tapan adds, “These are now being used primarily for accelerated drug discovery.” These new technologies are helping companies shorten the process cycle, from getting a product synthesized to getting a product manufactured, whether it is for trials or for mass production. “AI is helping companies across the spectrum from API manufacturers to formulation manufacturers. And this is going to be a very exciting space to watch out for in the future,” he shares.

On the need for collaboration across industry, academia, and government to shorten the journey from lab to market for pharma products, Manoj comments that technology is already playing its role in R&D and also in the entire journey of a product from pre-clinical to clinical trials to market. For innovation to thrive you need an ecosystem and for that ecosystem “you need industry-academia collaboration in India.” There is a need to look at how pharma companies can bring in collaborations and partnerships. What are the incentives? India also needs to look at the access models because some of these pathbreaking therapies require significant investments. Hence, there is a need to look at this and find the answer to “how do you go to market,” which would help innovation to thrive.

It is the collaboration of academia, companies and investors which makes innovation happen. “The journey from the lab to the market is a long one,” says Suresh. The first step is to start with some great initial basic research happening in government labs or other labs, which can be picked up by investors, private equity players, start-ups, or by big pharma who take it forward from there to clinical trials, phase one, two, three and finally at the end of the journey…almost $2.6 billion is what somebody spends for a drug to reach a stage where it is commercialized in the marketplace. “You need to have risk capital, you need to have a great idea for the target, the disease, and the type, which you are going after, and you need to have somebody to take it from the lab to the market. “If you have all these three things happening, then we have people in the next 10 years; have targeted therapies homegrown in India and hitting the global markets, which will definitely drive it from the volume where we are to a value market. If you really look at it, while we are the pharmacy of the world, we are playing in only five percent of the 1.5 trillion global market.”

Vijay emphasises the importance of quality which is taken for granted. Providing a glimpse into the stringent quality requirements in the pharma industry, he says, “In terms of just the USFDA approved sites outside of the US, the largest is in India which is about 665. The number of inspections by USFDA increased by more than 100% just in FY22 compared to twenty-one.” The inspection reports point to many challenges, for example, in drugs and biologics, the number of inspections went up eight times last year. “…the number of 483s that were issued were over about 450…warning letters again about 42 based on site inspections”. Its “not a good story to tell.” That these warnings have come despite the time, effort and money that companies have spent on quality, is self-revealing. “Technology is the answer to it,” Suresh says while pointing to the absence of quality culture in the industry. “If you look at these inspection reports, one common thread that comes out very clearly is the quality culture. We need to build the culture of quality in India and that is very critical. And that combined with technology is something that we can achieve,” he concludes.

With digital technology available, it has become easier to make sure where the issues lie in the manufacturing system. “The solutions which are available, to my mind, are not that expensive,” Yugal asserts adding, small and mid-size players also can afford them. For small companies, “The only way to grow is to consider global as their territory rather than India only as their territory. So, if they want to expand, I think you have got to be quality driven, and you must inbuild quality systems in your manufacturing.” Quality is not an option, and we must take it as a lever or driver for business expansion, he emphasizes.

Quality and compliance are non-negotiable in global pharma as every ingredient used in the products is globally dictated and validated, remarks Suresh. He however emphasizes the need for “a lot of quality orientation training for the MSME sector.” As regards big pharma companies, they have to a large extent quality management systems and digitalization in place. He suggests handholding of MSME sector by large pharma players to see “how we can bring about the learnings from the large pharma to the smaller manufacturing units” along with processes and systems for quality control. “Quality orientation in small manufacturers will go a long way” in ensuring self-regulation. “Self-regulatory body will be a good step in the right direction in terms of making people conscious that quality is non-negotiable,” he says.

Achin seconds Yugal adding, there’s knowledge transfer from big to small companies, which is part of the process. He feels a “little bit more regulation, whether it is self-regulation or through inspections, or through knowledge transfer, is necessary.” This would help Indian pharma keep raising the bar on quality as a country. “This is not a debatable topic. It is something that simply has to be done,” he adds emphatically.

Many companies are taking up measures to boost productivity by undertaking enhanced market research, improving product availability, optimizing supply chain, etc. Giving insights into how Indian companies are doing this, Tapan says, they have always asked their partners to step into the rural areas and towns and speak to the doctors there. The purpose is to make them understand nuances of the product and the therapy areas where they will be useful for the patients; figure out through the post marketing exercise what they have actually been conveying to patients and how effective the strategy has been as a way of breakthrough into that particular market. “This is one thing that we've done as a company,” he explains.

As regards the robustness of India’s pharma supply chain, Manoj says “Covid proved that pharma industry works beautifully with the supply chain network in the country to make sure that every single patient who needed our drugs, got it.” The distribution network in India is pretty good and technology is definitely helping pharma sector become more efficient. The ability to look digitally into inventories and logistics has brought in immense efficiencies into the entire supply chain system.

As regards the pharma start-up sector, “There's a lot of knowledge in the start-up ecosystem,” says Maharukh. There is also a lot of collaboration in the start-up space with academic institutes. Academia gets to learn from start-ups how to do research in such a way that it can be commercialized. “We have a win-win situation, and we can work on a lot of these unmet needs which we identify together,” adds Maharukh. However, what they do need is more support from the regulator. “There is a lot of advice, but I think if it is available to the start-ups where they are in the ecosystem, it will be very, very helpful,” she emphasizes. Developing human capital is critical and skill sets of quality are needed, as quality is driven by the people. “Part of research is driven in the minds of our scientists, and they need to be able to think in that direction so that they can do research on an unmet need and come up with a solution, which can be commercialized. Unless it can be commercialized, we cannot add value,” Maharukh emphasizes.

Discussing the people challenge in taking the pharma industry from being a volume to a value player, Yugal says, “Human capital is the most important factor when you approach any project.” It is equally critical to build this resources system within the organization as also across the ecosystem. It is all about being open, as knowledge can only grow when you share it. Achin emphasises the importance of skilling as pharma is a science-based sector.

Summarizing the takeaways Vijay says, first, if Indian players could look at using collaboration and the ecosystem as an important step, second the availability of risk capital and third patient-centricity, availability of data, digitally making sure that this data is available for players – that's going to be very critical. All these will be key to how Indian pharma plays out on the global stage.

To add to these, innovation, collaboration, and investments are some of the crucial ingredients that can make India rise up the value chain in the global pharma industry.