What should be the strategies pharma companies in India should adopt to be successful, given the global economic realities as well as new regulations in India and globally?
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Rajiv Malik
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As a starting point, it’s worth noting that the Indian pharmaceutical sector is very diverse. There are domestic companies, some of which operate solely in India and some of which operate globally. There are multinational firms that operate and invest in India in a variety of ways; some, for instance, focus predominantly on developing speciality products, while others are more focused on generics. Each company’s strategic priorities differ.
As such, the effect of evolving domestic regulations and global economic conditions on these companies can vary substantially. This is why it is so important for policy makers to carefully consider the impact of their decisions and make sure that regulations truly serve the purpose for which they are intended: to fuel the nation’s economic growth and create confidence – through transparency and stability – in its future; enhance its research and development (R&D) capabilities; elevate its manufacturing quality standards; and provide its people with access to high quality medicine.
As a case in point, Mylan is a multinational firm that operates and invests in India. Although, we are headquartered in the US, more than half of our 20,000-strong workforce is based in India. Our mission is to provide seven billion people – including India’s – with access to high quality medicine. Our significant R&D presence and manufacturing base in the nation is helping us fulfill this ambition. And, unlike many companies that hesitate to invest in R&D in India because of concerns around intellectual property protections and other issues, Mylan continues to increase its investment significantly. Mylan has spent approximately `350-400 crores annually on R&D over the last several years and we look forward to continue ramping up our R&D spend. Indeed, India is one of Mylan’s primary R&D hubs, and we have more than tripled the number of scientists we employ here over the last several years.
Mylan has grown organically in India and through acquisitions. Both avenues have resulted in additional job growth and investment in the region. In addition, we have formed strategic collaborations with domestic Indian companies, such as Biocon, Natco Pharma and Famy Care. These arrangements are creating growth opportunities not only for Mylan, but for our partners as well. We also have been investing over the last few years in greenfield and brownfield projects to expand our operating footprint. Today, our operations include eight active pharmaceutical ingredient units, including one greenfield site under expansion; two finished dose form units that make oral solid dosage forms, one oncology injectables plant, and one injectables pilot plant for R&D.
Importantly, our long-standing reputation for quality is reflected in our application of one global standard across all of our facilities and products, regardless of market. That means that our facilities in India are world class, whether they make products for export or the domestic market.
This commitment to quality also translates to an investment in our 10,000 person workforce in India. We provide rigorous training in global quality standards and cultivate a culture of ‘doing what is right, not what it easy.’ Our workforce takes enormous pride in delivering high quality products in every market in which we operate. This quality culture is necessary for India to continue to thrive on a global scale and overcome the quality concerns that have become increasingly prevalent in recent years. We believe our relentless commitment to quality, and our willingness to invest in the training, technology, equipment and other resources required for high quality operations, will raise the bar for quality across the industry. This investment is invaluable.
The scale of our operations and our focus on quality are directly benefiting patients in India by making sure they have access to safe, effective and affordable medication. We currently offer antiretroviral (ARV) products for the treatment of HIV/AIDS and a women’s health portfolio. We expect to launch additional portfolios in oncology and critical care.
Further, our commitment to making a difference in people’s lives is evident in the results we’re achieving in various therapeutic categories. Our ARV portfolio is a great example. Today, approximately 40 per cent of patients being treated for HIV/AIDS in the developing world rely on a Mylan product. That penetration reflects in part our significant role in reducing massively the annual cost of second-line therapies, from approximately $15,000 to around $150 today. That penetration is also due to our leadership in providing important innovations to these medicines. For instance, we have introduced combination products that reduce pill burden, formulations for paediatric use and heat-stable products that can be distributed in climates where refrigeration is not widely available, such as in parts of India. And we have delivered these innovations at affordable prices. No wonder Mylan is one of the leading ARV suppliers to India’s National AIDS Control Organization (NACO) and that in 2012 our company won the Pharmexcil award in the Gold category for Formulations as well as its Innovation award on patents.
Mylan wants to continue to grow in India because we believe passionately in the quality of its workforce and in our ability to meet the nation’s growing need for high quality, affordable medicine.
Therefore, we are watching closely the evolution of India’s foreign direct investment (FDI) policy.
We expect that the current rethinking of FDI policy could cause significant uncertainty and create an environment that discourages investment – both within the pharma sector and beyond it. Policies that restrict freedom of trade and investment, entry or exit, are of concern to all companies, domestic or foreign. In fact, we believe that many are holding back on investing in India for this very reason and not because of the global economic slowdown.
Further, a cap on FDI would limit competition as well as slow down the growth of the Indian generic industry. It would be a move contrary to the Government’s goal of enhancing access to medicines. It also would discourage domestic companies from advancing research and development, investing capital in their businesses and growing their workforce.
Certainly, unfavourable developments in FDI policy could force us to reconsider our investment plans for India, delay greenfield developments indefinitely, or postpone expansion plans for capital and/or technology.
Sound FDI policies foster competition and collaboration, create jobs, and provide access to high-tech equipment and processes. One can distinguish between FDI flow that supports, and commits to grow the manufacturing base and R&D for innovations, versus marketing networks and promotional activities. Conducive and stable policy environments foster R&D as this requires large investments. Liberal FDI policy stimulates increased transfer of technology and R&D.
Domestic opposition to FDI by pharma firms often is based on unfounded fears and the general perception that foreign players will increase prices and/or curtail supply of drugs to the domestic market. The diversity, scale and competitiveness of the industry in India make this highly unlikely. Further, India has many policies and regulations in place to help monitor pharma companies, prevent abusive pricing and ensure drug availability – and all market participants must adhere to them.
It is in India’s best interest to foster FDI policies that are stable, predictable and transparent – and that apply to all industries, including pharma products. Any reduction in the FDI cap in the pharma sector will cause alarm among all foreign investors, adversely affect the growth of the Indian pharma industry and the prospects for the nation’s healthcare sector overall. Further, such a cap would create a ripple effect of uncertainty across all industries, as companies in every sector around the world question the stability of our regulatory regime and question the wisdom of doing business in a country with constantly shifting policies. No company contemplating significant investments can afford to continually look over its shoulder and wonder whether the next policy change could render that investment worthless.
