Entrepreneurial Challenges in Indian Pharmaceutical Sector (2)
1. Entrepreneurial Challenges in
Indian Pharmaceutical Sector
Presented by:
Ms. Disha Manik
Ms. Abhilasha Singh
H. & G. H. Mansukhani Institute of Management
3. Entrepreneurship is a process of
creating something different, with
value, by devoting necessary time
and effort, by assuming the
accompanying financial,
psychological, and social risks, and
receiving the resulting rewards of
monetary and personal satisfaction
(Bowen and Hisrich, 1986).
4. 4
An Entrepreneur…
…is an innovator who combines technical
innovations and financial finesses.
…plays an important role in producing
competitive products, processes, and
services.
…generates new employment.
…develops local and regional areas.
5. Many entrepreneurial ventures start with a
dream, but it takes more than just a dream
for them to grow into successful These
ventures take time, effort, and energy and
a host of other challenges…
8. Pharmaceutical market in India is
ranked 3rd globally in terms of
volume and 13th in terms of value,
accounting for about 10% of the
world's production by volume.
9. There are approximately 250
large units and about 8000 Small
Scale Units, which form the core
of the pharmaceutical industry in
India (including 5 Central Public
Sector Units).
13. Effects of new product patent
Regulatory reforms
Quality management
Conformance to global standards
Pricing Issues
R & D Spending
Information Technology
15. • The Patents Amendment Act, 2005, introduced
"Product Patent" in India.
• The product patent was granted for the new
product for a period of twenty years.
• Earlier due to absence of product patent, only
process patents were granted for a new process of
manufacturing an already known product or for
manufacturing a new product.
• This has helped Indian pharmaceutical industry to
develop generic versions of the new medical drugs
without having fear of infringement of patent.
16. But now, product patents regime means,
that Indian generic drugs manufacturers
can no longer manufacture drugs by
reverse engineering till the time patent is in
force.
Thus, earlier the Indian pharmaceutical
industries produced generic drugs on mass
level by using the process of reverse
engineering.
Due to the low per capita income the Indian
people may not be able to afford the
escalated costs of new entrant drugs
developed by the Pharmaceutical giants.
This also threatens the supply of generic
drugs to the heavily dependent countries
along with the domestic market. Thus, this
could effect the profitability of the
companies.
18. 1
• MIDC
2
• Maharashtra Pollution
Control Board
(MPCB),
3
• MSEB
4
• FDA
5
• CIDCO/ Drug
Controller General
(India) (DCGI),
6
• Excise-State and
Central
A) Any entrepreneur, on a monthly/yearly basis, has
deal with government/non government agencies like
7
• Sales tax
8
• Customs and port
9
• Local political partie
10
• Transportation local
body
11
• Income tax
19. On an average, even if one department takes one
week’s time for settling any issue, around 20 weeks
out of 52 weeks a year are spent by an entrepreneur
20. (B) SEZ vs. Non-SEZ
Normally the
process of
setting up a
plant is simpler
in SEZ but very
difficult in non-
SEZ.
Difficulties are
faced in getting
no-objection
certificates
(NOCs) and
other clearances
from the
Pollution Control
Board for units
and other
related activities
in non-SEZ
zones.
Even getting
environment
clearance from
the Ministry of
Environment
and Forest is a
challenge.
Permissions are
required for
adequate water
and electricity
supply as well.
Getting FDA
licenses are too
difficult in such
non-SEZs
22. “We are taking swift action to
prevent substandard quality
products from reaching US
consumers”
- US FDA
23. All the four plants of Ranbaxy have been
banned by FDA.
Toansa
Paonta
Sahib
Dewas Mohali
24. Karkhadi and Halol unit of Sunpharma
banned for not adopting good
manufacturing practices and for some
data integrity issues.
25. Pricing Issues
• To ensure that vital drugs are available
at affordable prices, the Government
exercises control over the prices of
certain drugs it defines as ‘essential’.
• The Drug Pricing Policy 2013 provides
the framework through which ceiling
prices for these essential drugs are
worked out.
• These price limits are given effect by
passing the order referred to as the
DPCO.
26. • Under the earlier avatar of the
DPCO (1995), 74 drugs were
subject to price control.
• In the 2013 version, the number of
drugs under the price control was
expanded five-fold to 348.
• Thus, this gives less scope to the
companies to invest in R&D.
27. R & D Spending
Indian
manufacturer
s cannot
fulfill their
ambitions to
become
players on
the world
stage unless
they make
significant
increases to
their R&D
expenditures
at 2 percent
of sales.
These are
currently far
below the
global level
of 10 to 20
percent.
To promote
R&D in SMEs,
the
government
needs to
come up with
incentives
and
promotion
programmes.
At present,
the
government
is providing
tax deduction
to promote
R&D, but
according to
industry
experts, this
is not
sufficient.
28. Information TechnologyInformationTechnology
One of the main
challenges
faced by
pharma
companies is
the
implementation
of Information
Technology (IT)
tools at an
affordable cost.
InformationTechnology
Software tools
would help
SMEs in
computer-aided
drug designing.
InformationTechnology
But most
players continue
to under-invest
in IT systems
and good
accounting
practices due to
its high cost.
29. Other Challenges..
Unwarranted political interference and gundaraj at the
local level
The Ministry of Labor takes care of labor welfare.
There is no entrepreneur welfare programme.
Increasing competition from other low cost nations
Little or no global exposure
