From Ground Level Up: Evolution of the Indian Pharma Sector

The Indian Pharma Sector has been making headlines for all the right reasons lately. India has quite literally become “The pharmacy of the world”. It dominates the vaccine and generic pharma sectors, even increasingly so during the pandemic. Key elements of the global pharma supply chain are in India. It is the 3^rd largest producer of pharmaceuticals. The Indian Pharma Sector is worth upwards of 41 billion US dollars and it is expected to grow at exponential rates in years to come. The fact that Indian Pharma will seemingly hegemonize the global markets is the writing on the wall. It already exports pharmaceutical products worth 24 billion US dollars. But not long back, India almost imported more than 90% of its pharmaceutical products.

Pharma giants and MNCs had established a monopoly over India by keeping the prices high, which limited the reach of even the most basic medicines and non-prescription drugs to the common people. That was until 1970 when the government introduced ‘The Patents Act, 1970’ which excluded basic chemicals like pharmaceuticals and agrochemicals from the category of patentable intellectual property, which effectively meant that any company within the borders of India could now mass-produce pharmaceuticals without having to pay royalties to the companies that discovered it. It faced backlash from the International community, but India justified the law under the Right to Life argument. The law stated that any molecule which is formed due to a chemical reaction is not patentable in India as it is not an invention but merely an admixture of already existing components. Although it was made crystal clear that even though the chemical compound itself cannot be patented, the process by which it was produced was indeed patentable. This gave the initiative to a lot of smaller Indian pharma companies in India to master the process of reverse engineering drugs invented elsewhere and develop novel methods of producing the same drugs in India. Since these smaller Indian companies did not have the budget to have their own Research and Development departments, the government supported these companies by providing research assistance from its own institutions, the most notable of them being Central Drug Research Institute in Lucknow and National Chemical Laboratory in Pune. As time progressed and the economy grew, these smaller Indian companies with their experience in drug design and manufacturing reached new heights.

The stepping stone of the Indian Pharma Industry was laid by Acharya Prafulla Chandra Ray, undoubtedly one of India’s greatest chemists. In 1892, he started the Bengal Chemical Works with an initial investment of ₹700 from a rented house in Calcutta. The company started off with producing herbal drugs but soon enough production of generic drugs also started. Seeing the need to institutionalize the company, Bengal Chemical Works was made into the Bengal Chemicals and Pharmaceutical Works Ltd. Business was expanded in the coming years by setting up manufacturing units at Panihati, Mumbai and Kanpur. After the death of Acharya Ray, the company began to take heavy losses for many years. The company was taken over by the government by 1970, but it already bled a lot of public money. Although with the rise of the Indian Pharma Sector in the years to come, even this almost dead PSU saw a recovery, registering profit for the first time in many decades in 2016.

Cipla is another of the older pharmaceutical brands in India. Setup in 1935 by Dr. Khwaja Abdul Hamied with an aim to make India self-sufficient in the healthcare sector. Cipla made a fortune selling life-saving drugs in India while expensive imported drugs were in short supply during the second world war. By ramping up production, they also became a major supplier of pharmaceutical products to the British Empire fighting a bloody war against the axis powers. After independence, they focused on bulk drug production to sufficiently cater to the ever-growing needs of a fast-growing nation. After the death of Dr. Khwaja Abdul Hamied, his son Dr. Yusuf Khwaja Hamied (an esteemed alumnus of St. Xavier’s College, Mumbai) took over the company. Under his leadership, Cipla became one of the front runners in support of the new patents law of 1970 which allowed them to make lifesaving drugs available to all Indians at an affordable price. They also pioneered Inhalation therapy by mass-producing Metered-Dose Inhaler to the extent that today, Cipla is the world’s largest producer of inhaled medication and devices. By the end of the millennium, Cipla had well entrenched itself in the international markets. They revolutionized HIV treatment by introducing antiretrovirals at almost 1/40^th the market price. Cipla has made a name for itself globally for making quick lifesaving drugs and medical equipment at extremely affordable prices.

While the science of allopathic medicines was new to India, other branches of natural medicines had been practiced since time immemorial. Ayurveda, Unani, Siddha and many other disciplines of natural medicine had been popular in India long before the British landed on its shores. Companies like Dabur, Hamdard and Baidyanath have been catering to the large domestic market of these natural forms of medication. Patanjali, although a latecomer in the market, only established in 2006 broke the glass ceiling by leaving behind all the existing competitors in quick succession. By 2019, it had a net worth of approximately 5 billion US dollars. But the real success story of the Indian Pharma sector was neither written by the old existing brands nor the natural medicine companies, the success story of the Indian Pharma sector is the success story of smaller Indian Pharma companies set up around the 1970s and 80s.

One such company is Dr. Reddy’s Laboratories founded by Dr. Kallam Anji Reddy, a chemist by profession and an entrepreneur at heart. He worked for 6 years in a government-owned pharma company IDPL i.e., Indian Drugs and Pharmaceuticals Ltd. where he gained valuable industry experience while harboring his own entrepreneurial ambitions. In 1973, Dr. KA Reddy resigned from IDPL to start his own venture. He set up two bulk drug manufacturing ventures in the course of the next 10 years. In 1984 in collaboration with two other entrepreneurs he set up Dr. Reddy’s Laboratories. From its inception days, Dr. Reddy’s Laboratories have been exporting pharmaceutical products across the globe. They have innumerable collaborations with foreign pharma companies and bring a lot of FDI (Foreign Direct Investment) to India. The most recent being the collaboration with Russian Pharma companies to produce the Sputnik V Covid-19 vaccine locally in India. When it started in 1984, it produced generic pharma essentially reverse-engineered drugs already made by foreign pharma companies but by 2012, Dr. Reddy’s Laboratories already had a robust research and development wing which was capable of creating novel drugs of their own, like Grafeel and Reditux which are essential in treating patients diagnosed with cancer. Today, Dr. Reddy’s Laboratories is worth upwards of 2 billion US dollars. And Dr. Reddy’s Laboratories is just one such name; SUN Pharma, Zydus Cadila, Divi’s Laboratories, Biocon, Lupin, Aurobindo Pharma, Intas, Bharat Biotech the list of Indian Pharma success stories goes on.

Of course, no mention of Indian Pharma would be complete without mentioning the Serum Institute of India, set up by Dr. Cyrus Poonawala with the goal of ending the monopoly of foreign pharma brands in the immune-biologicals (vaccine and immunity-related pharma) sector in India. Serum Institute of India produced innumerable lifesaving biologicals like the Tetanus Antitoxin, Anti-snake venom serum, vaccines for Pertussis, Measles, Hepatitis, Rubella and many more diseases. It is a global brand with its product saving lives in around 170 countries. It is estimated that out of every 100 children vaccinated on the entire planet, 65 of them have at least received one vaccine manufactured by the Serum Institute of India. It is the world's largest vaccine manufacturer and manufactures the AstraZeneca-Covishield Covid-19 vaccine, which is essentially the same vaccine with different labels used in different parts of the world. The net worth of the Serum Institute of India has been quoted to be around a staggering 14 billion US dollars.

The Pharma Sector in India has come a long way and it shows no signs of slowing down anytime soon. The Indian Pharma Sector is projected to reach a net worth of 65 billion US dollars by 2024 and 130 billion US dollars by 2030. In simple terms, in less than a decade, the Indian Pharma Sector is projected to triple its net worth, growing at approximately 10-12% per annum. From essentially being an efficient license manufacturer, India is moving towards establishing its own robust infrastructure and institutions for the research and development of novel pharmaceuticals and the rapid increase in capital in the coming years would only fuel the rise of indigenous pharmaceuticals. The growth of the Indian Pharma Sector has not created any ruthless Pharma Barons who skyrocket the prices of essential drugs, as had existed in the past. Quite to the contrary, it has made lifesaving drugs and pharmaceutical equipment accessible to the poorest of the poor, not just in India but across the globe. It would not be unfair to say if the healing touch of modern pharmaceutical sciences has reached, even the remotest parts of the untouched underdeveloped countries; a huge credit goes to each of the 600 thousand workers and scientists who form the backbone of the Indian Pharma Sector.

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