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Govt policy key to maintaining edge

Govt policy key to maintaining edge
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First Published: Wed, Sep 08 2010. 10 00 PM IST
Updated: Wed, Sep 08 2010. 10 00 PM IST
India’s pharmaceutical industry is at crossroads. Having earned a reputation as pill maker to the world, the industry is now finding itself in a rather unique and not entirely enviable situation, of the world wanting to get a piece of the Indian industry’s action as well. And that too in our own backyard!
While Indian pharmaceutical companies have expanded into overseas markets, the very same competitiveness that got us where we are today will now be put to the test in the local market. We have seen across emerging markets that Big Pharma does not mind making an entry at valuations which were hitherto unheard of to grab a share in these markets. Whether our competitiveness will help industry ride out the emerging paradigm shift in the Indian market is a moot question. What seems almost certain is that for the vast majority of the small players, their very existence is likely to be threatened by the changing industry landscape where our home grown Davids will be pitched against the might of many Goliaths.
Many of the small and medium companies, which make up a big chunk of our industry, lack the financial strength and the expertise which are essential for an organization to leapfrog to the next level. Is there a way that we can still hold our own against the onslaught of the growing presence of global giants? The answer is a definite yes. But this affirmation hinges on the active support and encouragement of the government. The government needs to take a leaf from other countries, such as Japan and the US, which have enabled their industries to grow and become competitive enough to take on global pharmaceutical giants. The Indian government needs to elevate the status of the industry to a focus sector and become the enabler for the industry to flourish. The Japanese government, for instance, recognized this fact a few decades ago when pharma companies there were facing a difficult time competing with multinationals and made sweeping changes that enabled local companies to compete with Big Pharma. As a result, we have a number of Japanese companies that are in the Big Pharma league.
If the government does not make sweeping changes in policy, Indian companies will not be able to match Big Pharma’s resources and will eventually lose their hard-earned competitive edge. I am very sure it’s not very difficult for the government to deliver on this aspect. Look at one area—drug discovery. India has not been able to discover and develop a single molecule for the entire world. On the other hand, we have the best talent pool in the world in terms of pure science graduates who are still chasing the greener pastures of the western world. India needs to put in place a formal structure which will foster innovation.
Also, on the branded generics front, Indian companies are currently best positioned to capture market share in emerging countries.
The Indian industry is a very unique model, where because of severe competition, prices are low compared to even other emerging economies with no compromise on quality. Because of this aspect, we did well on the export front. However, going ahead, the thrust for us in these markets will be to build the business by investing in brand building and focusing on therapeutic areas of our interest. This again is a new direction for Indian companies, but an important step if we have to remain globally competitive
One thing is for sure that Indian companies need to enhance their competitiveness and globalize if they have to sustain and grow. The question is whether it will have to fend for itself or whether the government will finally wake up to the potential of the industry and be an enabler as we prepare ourselves to write a new chapter in the history of the industry.
Glenn Saldanha is CEO and MD, Glenmark Pharmaceuticals Ltd.
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First Published: Wed, Sep 08 2010. 10 00 PM IST