EY FICCI Indian Pharma Report 2021 I Future Is Now

Indian Pharmaceutical
Industry 2021: future

is now
February 2021
Contents
1 2
12 22
Indian pharma Accelerating research
industry: current and innovation
scenario and future
potential
3 4
88 120
Achieving equitable Strengthening
and sustainable manufacturing and supply
healthcare base in domestic and global
markets
5
144
Improving access to
medicines
Foreword
Foreword
The Indian Pharma Industry is poised for a big leap forward in this decade. Health, Science and
Innovation have come into sharp focus as never before. The developments over the past year have
underlined the importance of an innovation ecosystem, a robust infrastructure for production of drugs
and pharmaceuticals and the need to constantly build a huge talent pool of scientists, researchers
and technologists who can be the arrowheads for the future. India has emerged as a pharmacy to the
world, supplying critical drugs and vaccines in the course of this pandemic. To be able to do this more
consistently, we will need to have a greater thrust on innovation, investments in new technologies, take
Pankaj Patel a futuristic view in our approaches and look at new possibilities that can capitalise on our strengths.
Building on the theme of Aatmanirbhar Bharat we need to create visibility on ‘Brand India’ centred on
FICCI Pharmaceuticals
manufacturing and innovation. We will also need to look at global benchmarks of quality and supply
Committee Mentor reliability to increase pharma exports. As we build capabilities for producing innovative drugs and
and Chairman, Zydus complex to manufacture generics, we will be able to access newer global markets. As we do this we will
Cadila need to focus on streamlining our regulatory environment and also look at how we can sustain our cost
competitiveness. Above all, India must look at building next-gen capabilities that will be a differentiator in
the decade ahead. This is a time for the Indian Pharma Industry to move ahead full throttle, invest for the
future and catapult itself into a new horizon of growth and opportunities.
Innovations from the pharma industry in India and globally are driving better health outcomes. The
current focus needs to be on novel and targeted therapies. Scientific advancements along with industry
— academia collaborations will benefit the pharma industry and facilitate its growth. Apart from this,
technology can be a huge enabler across the value chain starting from diagnostics to treatment and drug
delivery. It can help reduce costs, enhance quality of treatment as well as its access. The government has
taken initiatives to reduce regulatory approval time and Ayushman Bharat to make drugs accessible to the
massive population of India. This report gives a preview of advancements that are leading to changes in
Gagan Singh Bedi global healthcare.
FICCI Pharmaceuticals
Committee Chair and
Country President &
MD, Astra Zeneca India
Limited
Access and Innovation have always been the two key driving factors for progress in healthcare, not just
in India but across the world. The COVID-19 pandemic has further underscored the critical importance of
these aspects to secure both the immediate and the long-term health and wellbeing of our citizens. This
report provides a detailed view of the tremendous achievements of the pharmaceuticals sector in India,
while also laying a template of what we must do, collectively as stakeholders, to accelerate this progress.
Important themes of accelerating research and innovation, achieving sustainable and equitable
healthcare, strengthening manufacturing and supply chains are addressed as both success stories and
S Sridhar future imperatives. We take up the need for supporting quality research institutions, upskilling a skilled
Immediate Past Chair, workforce and enhancing collaboration between stakeholders and academia.
FICCI Pharmaceuticals Innovation does not only pertain to bringing novel therapies to market, but to exploring new and
Committee and MD, sophisticated approaches on pricing and funding that take them to patients. We take up the need for India
Pfizer Limited to explore innovative new solutions to sustainably enhance access while ensuring that we maintain a
positive operating environment for R&D investments and risk-taking to thrive.
The renewed focus on leveraging digital technologies to increase awareness, prioritize the needs of the
less economically privileged is heartening. Undoubtedly, global healthcare has taken a drastic turn with its
focus on preventive healthcare and it is a step in the right direction towards a healthier tomorrow!
We hope that this report serves as a thought starter and a guiding document for all stakeholders to
collaborate, envision India’s healthcare future together and bring these goals to life.
The Indian pharmaceutical industry has grown from strength to strength in the last few decades. The
industry has shown tremendous resilience in its ability to serve people in India as well as across the globe,
ensuring accessibility and most importantly affordability of quality medicines.
The pandemic has highlighted the growing complexity of challenges that lie ahead and the need to
strengthen India’s capabilities, over the next decade, to respond to them adequately. EY has collaborated
with FICCI to put together this report, collated insights from a wide array of stakeholders – the Indian
government, pharmaceutical and healthcare industry leaders, functional experts of the pharma industry
Sriram Shrinivasan and experts in the allied sectors — and complemented it with extensive secondary research, leveraging EY
National Health Sciences global research outreach, to give you a holistic view of the entire ecosystem.
Leader Leader – EY India The pandemic has also revealed the importance of Digital in all walks of life. This fits in well with two
sectors that India is strong in — Technology and Pharmaceuticals and the convergence of both these
strengths could make India a leader in the Healthcare of tomorrow.
The unique challenges and the way forward have been discussed under chapters dedicated to the
objectives of accelerating research & innovation, achieving equitable and sustainable healthcare,
strengthening manufacturing and supply chains and improving access to medicines. We must take upon
ourselves a moon-shot target for the pharma industry in India, whereby all stakeholders come together
on one platform and take a pledge of commercialising Indigenous new chemical entity and new biological
entity OR novel drugs (both biological and chemical). This will take unprecedented effort and resources,
however if there is anything positive that has emerged from the COVID-19 pandemic, it is that nothing is
impossible if we bring in right stakeholders on one platform for the larger good of human-kind. Our very
future depends on it.
We hope that this report acts as guiding document for the stakeholders, prompting policy as well as
action, while we set out to bring the envisioned goals to life.
EY remains committed to support all stakeholder of Indian pharmaceutical industry on this journey of
future excellence.
Executive
Executive Summary
The position paper, Indian Pharmaceutical Industry 2021: geographies. The pharma industry will be closely monitored by
future is now, has been written with an objective to reassess governments in all countries in times to come.
the Indian pharmaceutical industry’s positioning in the world
It is imperative that India reevaluates its current role within
order, define India’s ambition by 2030 and identify a set of
the global pharmaceutical industry, explore possibilities
imperatives for all stakeholders to realize this ambition.
to consolidate and strengthen its positioning in light of
The pharmaceutical industry, along with the healthcare sector geopolitical and economic shifts, attain self-sufficiency as a
globally, has been impacted in an unseen way due to the globally competitive pharmaceutical industry with innovation
outbreak of the COVID-19 pandemic leading to material impact as a guiding principle for future growth. This paper addresses
around consumer requirements and preferences accompanied the ambition for the current decade in consultation with
by macroeconomic, structural and microeconomic changes industry veterans across segments, with inputs from the
in the end-to-end value chain. In the midst of the pandemic government, regulators and pertinent industry associations.
and a changed world, the pharmaceutical industry across
From March 2020 onward, the industry has been hit by
the world has responded with agility — from the sequencing
debilitating restrictions and impediments to reach customers
of the novel coronavirus in January to vaccines being
with expectations to operate and supply drugs to those in India
administered to the first recipient in the United Kingdom by
and globally. The pharma industry exceeded expectations in
December 2020, with efficacy levels over 90%, exceeding
responding to this global crisis, supplying drugs to over 150
all expectations of governments and markets across the
countries besides meeting all domestic demands. Significant
world. This innovation has been possible owing to the most
vaccine capacity ramp up has been achieved over the year
extraordinary global efforts: collaboration like never seen
to augment vaccine administration within India and other
before, redeployment of resources and sharing of data on a
countries who are dependent on India for supplies.
real time basis. Barring the pace, which is critical in a public
health emergency (progressing Phase 3 clinical trials with The Indian pharma industry has grown at a compounded
limited adherence to traditionally established safety norms), growth rate of (CAGR) of ~11% in the domestic market and
the blueprint has been developed to fast-track innovation with ~16% in exports over the last two decades. While the domestic
a complete imperviousness to financial stakes. This includes market has grown at a similar pace to the gross domestic
collaboration around resources and data sharing, nimbleness product (GDP), the overall growth has been driven by the
and productivity through adaptation of newer technologies industry’s leadership in supplying generic formulations to
and most importantly balancing risks across stakeholders. markets across the globe.
Healthcare is likely to be on top of the strategic agenda across
Summary
Figure A: India's growth ambition 2030
140
5 3 130
9
120 18
100 2 1
6
10 73
80 34
US$ Bn
17
60
17
42
40
21 57
20
21
-
Current Business Biosimilars/ Universal API/KSM Adult Generics-china, Biosimilars Adult NMEs Ambition
size as usual Novel health Import vaccines Japan, others Vaccines 2030
(2020) (2030E) products coverage substitution
Domestic Exports
In the 2020-2030 period, we expect Indian pharma industry a call to action aimed at industry, academia and government
to grow at a compounded annual growth rate (CAGR) of ~12% have been outlined for actions going forward.
to reach at US$130 bn by 2030 from US$41.7 bn in 2020.
The opportunities that have emerged have been classified into
Though the pharmaceutical industry has grown at a CAGR
four sections in this report: Innovation and R&D, Healthcare
of approx. 13% over the two decades, in the last decade, the
Delivery, Manufacturing & Supply Chain, and Market Access.
CAGR has been ~ 8.5% and it has currently been ~6.2% over
the past five years. On the domestic front, the ambition translates into a growth
rate of 10-11% over the coming decade. Below-average social
In order to attain self-sufficiency and be the real pharmacy of
health indicators and a low proportion of total healthcare
the world, we need to refocus on the next set of avenues to
spend as a proportion of GDP indicate an opportunity to
feed the growth engine of this industry, which is of strategic as
improve healthcare delivery in the country.
well as economic significance.
With estimates that the Indian pharma industry supplies over
Realizing this ambition will need a concentrated effort from
40% of the generics in the biggest pharma market – the US
the key stakeholders of the Indian pharmaceutical industry
and about 25% of the prescription drugs in the UK, along with
– the payers, providers, policymakers, physicians, pharma
catering to over 60% of the global vaccine demand, India is
industry players, academia as well as a plethora of service
one of the leading suppliers of pharmaceuticals in the world.
providers across the logistics and distribution, IT, capital
While the global formulations trade value is about US$652
pools, packaging and other auxiliary industries.
billion (2019), India’s share of exports in the global trade
In order to build a holistic consensus, we reached out to was only about 2.5%. With increased pricing pressure on
industry-wide stakeholders, whose views were sought over the global generics trade as well as increased competition in
countless interactions through a structured questionnaire, India’s established export corridors, the current portfolio of
coupled with secondary analysis and global primary case products is expected to further extend this divide. The global
studies through EY proprietary research. Future opportunities pharmaceutical trade is expected to reach a size of US$1-1.3
and the way forward have been duly ratified through industry trillion by 2030, the ambition is to garner a global share of
and stakeholders’ roundtables. Key considerations to adopt as 6-7% by value to attain a size of ~US$73 billion.
Figure B: Future considerations and way forward
► Manufacturing at scale in cluster wise
approach for both API & formulations
is a must to be globally competitive
and self reliant
► Manufacture more value added
products that boost export revenues
and substitute imports for domestic
demand
► Adopt operational excellence
► Constitute an overarching techniques across the supply chain to
regulatory body, bringing garner the best out of existing
efficiency and effectiveness infrastructure
at governance ► Upgrade the manufacturing facilities
and supply chain infrastructure with
► Explore new models for Strengthening technology, automation and digital
financing R&D to encourage
private investments, funding manufacturing interventions to improve efficiencies
avenues for high risk / long and supply base
term projects
in domestic and
Augment industry-academia
►
collaboration and establish a
global markets
strong research and
innovation ecosystem Accelerating
research and
innovation
Improving
access to
medicines ► Adapt innovative models for improving
affordability as an alternative to price
Achieving capping
equitable and ► Move away from least cost to
sustainable multi-criteria decision making for
► Utilize a unifying system like government procurement
Aadhar for digitization and healthcare
► Provide detailed guidelines to leverage
simplification of healthcare e-pharmacy, in addition to current
► Enable universal access and retail network (traditional distribution
identify new sources of system in India)
financing healthcare in a
time bound manner
► Boost self care and disease
prevention
► One of the key action areas that resonated across all interactions was the need to move up the
value chain to achieve the ambition and consider way forward to discuss the sets of action needed
to be put into place to move up India’s share of trade in value.
Accelerating ► To meet this objective, this section deliberates on set of actions to help the industry move towards
research and this objective including setting up an overarching regulatory body and a Central body to streamline
research infrastructure and financing from all government bodies, exploring new models for
innovation financing R&D to increase private investments and also make available funds for high risk / long
term projects, measures to improve industry-academia collaboration and establish a strong
innovation ecosystem, the role of industry to leverage technology for improving productivity and
efficiency in research to name a few.
► The increased acceptability of digital technologies has the potential to improve healthcare delivery.
This section explores the progress towards achievement of universal healthcare access,
Achieving establishing efficient processes such as the potential use of Aadhar card to identify as well as
equitable and simplify the delivery based on healthcare coverage category. The next steps to creating,
sustainable maintaining and leveraging healthcare data to identify and prioritize focus areas for healthcare
have also been discussed in depth.
healthcare
► Considerations for enabling teleconsulting, focus on preventive healthcare have also been dealt
with, in detail, and the role of the industry, government, healthcare sector and insurers carved out.
► The focus of manufacturing & supply chain initiatives would be to develop capabilities in APIs and
enable manufacture of complex generics, bio-similars, gene & cell therapies etc.
► Ease of doing business is the most important enabler to set up world class manufacturing
facilities
Strengthening ► Attractiveness of manufacturing sector would also need to be enhanced in order to attract the
manufacturing best talent in India and abroad
and supply base ► Given the growth ambitions, it is vital to encourage and setup of Pharmaceutical machine
in domestic and manufacturing facilities in India that would result in lower fixed costs, savings in forex and
reduction in time to set up additional facilities
global markets
► Strong and all round focus on excellence and compliance is a must to facilitate a “Made in India”
phrase that is synonymous with high quality
► Government would need to bolster the logistics infrastructure for connecting the key pharma
hubs in the country in order to facilitate quick and cost efficient movement of goods (including
facilities for cold chain)
► This is the last section that explores the key opportunities that need to be realized in order to
Improving improve the market access of the drugs in the country.
access to ► This section revolves around various global best practices in drug pricing and procurement
medicines models, contextualized for developing geographies.
► Deliberations on digital marketing of pharmaceutical products in India.
12 Indian Pharmaceutical Industry 2021: future is now
01
Chapter
Indian pharma industry:

current scenario and
future potential
Indian Pharmaceutical Industry 2021: future is now 13
Indian pharma industry has In the last few months, In the light of global changes
grown 10 times in the last two COVID-19 has led to significant and keeping India’s realities and
decades driven by its strength in geo-economic and geopolitical advantages in mind, this paper
the global generics space. shifts, with major economies aims to revisit Indian pharma’s
driving self-sufficiency agenda strategy in order to become
and recalibrating their global a preferred global supplier of
business models. innovative medicines in the post-
pandemic world.
Growth from US$4.2b in 2000 The World Economic Outlook Ambition to achieve US$130b
to US$ 41.7b in 2020 . October report projects global
1
by 2030 at a Compounded
growth at nearly -4.4% in 2020, Annual Growth Rate (CAGR) of
which is ~7% below the forecast ~12% from 2020 to 2030 .
1
2
in October 2019 .
¹ EY analysis
² “World Economic Outlook, October 2020: A Long and Difficult Ascent”. Available at: https://www.imf.org/en/Publications/WEO/Issues/2020/09/30/world-economic-
outlook-october-2020
Indian pharma industry landscape

The Indian pharma industry has achieved significant growth in generic pharmaceuticals landscape and is now known as
both domestic and global markets during the past five decades. the “Pharmacy of the world”. The pharma industry in India
From contributing just 5% of the medicine consumption in contributes more than 20% by volume of the global generics
1969 (95% share with the global pharma), the share of “Made market and 62% of the global demand for vaccines². Popularly
in India” medicines in Indian pharma market is now a robust called the “archetype of affordable healthcare,” the industry
80% in 2020¹. More importantly, during the same period, the has significantly contributed towards improving public health
country has also established leading position in the global outcome, both in India and across the globe.
Figure 1: Last two decades of Indian pharma industry

Slowed growth due
to price erosion in
Introduction of the US market
Spike in FDI inflow in
Growth phase post National Pharma
anticipation of product Global slowdown
41% 2005 was driven by Pricing Policy 2012 42
patents getting recognized due to US
generics market and
from Jan 2005 subprime crisis
growth in CRAMs*
35
33
29
Market Size – USD Bn
25
Growth Rate - %
21%
18% 18 18%
15 15%
14% 14% 13%
14% 11 14%
13% 11%
9 8%
6
5 8%
4 6% 6% 4%
6%
2% 1%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Year 2020
Overall 17.4 14.4 10.9 6.2

CAGR (%)
(5-year)
Exports 12.0 12.2 10.5 6.2
Domestic 27.9 17.1 11.4 6.2
Indian domestic market Size Total pharma exports from India Industry growth rate (y-o-y)
*CRAM: Contract Research and Manufacturing

Source: EY analysis
The pharma sector has been contributing significantly to India’s has been generating with pharmaceuticals exports accounting
economic growth as one of the top 10 sectors in reducing trade for US$20.7 billion and imports at US$2.31 billion in FY204.
deficit and attracting the Foreign Direct Investment (FDI). The The industry employs over 2.7 million people either directly or
5 th
drugs and pharmaceuticals sector attracted cumulative FDI indirectly , and ranks third in terms of volume and 14 in terms
6
inflow worth US$16.54 billion between April 2000 and June of value globally .
2020³. It is of prime importance also due to the trade surplus it
¹ A. Sayay, “India can become the pharmacy of the world”, The Hindu BusinessLine, May 2020. Available at:
https://www.thehindubusinessline.com/opinion/india-can-become-the-pharmacy-of-the-world/article31516558.ece
2
“Invest India” website. Available at: https://www.investindia.gov.in/sector/pharmaceuticals
3
“IBEF” website. Available at: https://www.ibef.org/industry/pharmaceutical-india.aspx
4
“Trade Map” website. Available from https://www.trademap.org/
5
“The Indian Pharmaceutical Industry – the way forward” – IPA. Available at:
https://www.ipa-india.org/static-files/pdf/publications/position-papers/2019/ipa-way-forward.pdf
6
“Invest India” website. Available at: https://www.investindia.gov.in/sector/pharmaceuticals
Figure 2: Indian pharma industry
Indian pharma industry

US$41.7b (2020)
Exports (US$20.7b) Domestic market (US$21.0b)
Indian pharma Global pharma

South companies MNCs
US UK Russia Brazil
Africa
US$16.9b US$4.1b
% share of top five
pharma exports
30.4% 3.3% 3.2% 2.5% 2.4%
destinations from
India (2019)
Source: Pharmexcil, available at: https://pharmexcil.com/uploads/tradestatistics/Countrywiseexports201819.pdf, EY analysis
Export market
Indian pharma exports reached US$20.7b in FY20 with
7 Indian pharma manufacturers export nearly half of the pharma
year-on-year growth of 8.4% (exports size was US$19.1b in production, both in terms of volume and value, to the US,
8
2019) . They have grown at a CAGR of 6.2% between 2015 UK, South Africa, Russia and other countries. However, there
and 2020. This was largely driven by exports of generics drugs remains a significant opportunity, largely untapped across
to >200 countries (including both developed and developing Japan, China, Australia, ASEAN countries, Middle East region,
markets). India is the source of 60,000 generic brands across Latin Americas and other African countries. Some of the factors
60 therapeutic categories². The country accounts for 40% impacting lower penetration of these regions are —relatively
of the generics demand in the US and ~25% of all medicines slower paced entry strategy, long negotiations cycle, regulations
in the UK3. India also fulfils about 80% of global demand emphasizing on local manufacturing, volatility in the global
for antiretroviral drugs for Acquired Immune Deficiency prices, patent recognitions, disharmony in drug registration
Syndrome (AIDS), significantly contributing towards increasing process, lack of guidelines on regulation of bio-similars, bio-
accessibility of AIDS treatments3. equivalence studies and delayed market approvals.
In some regions a structured government intervention by way of

Figure 3: Leading global pharma markets (2019, US$ billion) the existing Free Trade Agreements (FTAs) like the South Asian
Free Trade Area (SAFTA), Japan-India Comprehensive Economic
Markets with established Potential export
Partnership Agreement (CEPA), Association of Southeast Asian
export corridor markets
Nations (ASEAN) Trade in goods agreement, can benefit Indian
511.7
pharma companies to leverage such markets with customised

therapeutic offerings. Regions working towards reducing the
healthcare costs and with the upcoming patent cliff opportunity
across formulations both chemical and biologics, could boost
growth, create newer export corridors for Indian companies.
Collaboration play (likes of GAVI for vaccine) with international
147.8
130.1
regulatory bodies like International Council for Harmonisation

95.0
43.7
of Technical Requirements for Pharmaceuticals for Human

24.3
24.2
21.6
Use (ICH) and Pharmaceutical Inspection Convention and

South Africa 2.4
Pharmaceutical Inspection Co-operation Scheme (PIC/S) would

United States
Western Europe
Russia
China
Japan
Latin America
Canada
Australia
also facilitate access to these markets.
Further in the vaccine market, India exports vaccines to

>150 countries. It contributes 40%-70% of the World Health
Organization’s (WHO’s) demand for Diphtheria, Pertussis and
Tetanus (DPT) and Bacillus Calmette–Guérin (BCG) vaccines, and
9
Source: EY analysis 90% of the WHO demand for the measles vaccine .
7
“IBEF” website. Available at: https://www.ibef.org/exports/pharmaceutical-exports-from-india.aspx
8
“IBEF” website. Available at: https://www.ibef.org/industry/pharmaceutical-india.aspx
9
S. Wasnik, “Why India’s booming Pharma companies are finding it tough to get into Argentinean Market”, Financial Express, Feb 2019. Available at:
https://www.financialexpress.com/industry/final-frontier-why-indias-booming-pharma-companies-are-finding-it-tough-to-get-into-argentinean-market/1481377/
11
In addition, with its strong vaccine manufacturing capability Biosimilars and insulin together constitute less than 5% of the
and capacity, India will play a critical role in meeting the total Indian domestic pharmaceutical market. Insulin constitute
demand of COVID-19 vaccines globally. Some of the top global 65% share due to India’s large diabetic population and
companies have already tied up with Indian companies for biosimilars contribute the remaining 35% spread across several
manufacturing the vaccines. The world’s largest vaccine maker, therapy areas. Forty five domestic companies account for 45%
the Serum Institute of India, has an agreement to manufacture of biosimilar and insulin sales in India. Apart from insulin, where
one billion doses of COVID-19 vaccine being developed by 75% of the market share is with multi-national companies
AstraZeneca and Oxford. We expect more such collaborations (MNCs), domestic companies dominate the biosimilars market.
in the near future.
Figure 5: Insulin and biosimilars market in India:
Domestic market split between Indian companies and MNCs (US$m)
The Indian domestic pharmaceutical market size has reached

376.3
US$20.3b in 2019 with y-o-y growth of 9.8% (market size India
of US$18.12b in 2018)3. The anti-infective segment is the 25% MNC
leading indication with ~14% market share of the total domestic
93.0
pharma business and continues to witness double digit growth.
Other segments that are growing in double digit include
diabetes, cardiovascular disease and respiratory. The domestic
10
market has grown at 2.2% during Apr-Sep 2020 compared to
the same period last year despite a sluggish start to the year 76% 52.7
75%
due to the pandemic.
29.9
Figure 4: Therapy-wise split of the pharma market in India 94%
(by value) (MAT* Feb 2020)
90% 13.2 11.3
24% 81% 67%
17% 14%, 9.9%
6% 10% 19% 33%
Insulin
Anti-neoplastics
Blood related
Hormones
Anti-TNF
Others
6%, 9.4% 12%, 11%
7%, 7.8%
11%, 8.1%
7%, 9.6%
Source: EY analysis
7%, 11.5% 10%, 11% In the vitamins and nutrients market, top five categories
9%, 9.1%
constitute ~85% share. Increasing focus on prevention, self
care, health and wellness, and awareness about the importance
Anti-Infectives Cardiac of high immunity is leading to increased consumption of vitamin
Gastro Anti-diabetics and mineral supplements and other nutraceutical products.
Vitamins/Nutrients Respiratory
Pain/Analgesics Derma
Neuro/CNS* Others
x% Market share x% YoY growth
*MAT: Moving annual total; CNS: Central Nervous System

Source: EY analysis
10
EY analysis
11
EY analysis
Figure 6: Vitamins, minerals and nutraceuticals market (US$m)

281
269
223
187 187
75 71
21 12 10 10
2
supplements
B Complex/B12
Calcium
Vitamins +
Minerals
Protein
supplements
Vitamin
A, D, E, K
Anti-oxidants
Infant formulas
Ginseng
Evening
primrose oil
Mineral
supplements
Chinese
medicine
Slimming
preparations
Source: EY analysis
12
Vaccines constitute ~2% of the domestic pharma market — priced the Oxford vaccine the least so far at INR250 (US$3.42)
this includes the consumption under ‘Universal Immunisation per dose for the government and INR1,000 in the private
16
Program (UIP)’ and ‘private retail market’. Indian companies market .
supply the bulk of the UIP demand. MNCs dominate the private
market in terms of value with 63% share driven by higher Figure 7: Domestic private vaccines market (US$m)
priced human papillomavirus, pneumococcal, influenza and
meningococcal vaccines. 295
+6%
As discussed in the exports section above, India’s strength in
vaccine manufacturing is likely to give it an early access to the 232
37%
COVID-19 vaccine. In the Phase I of the vaccination plan, the
Indian government will provide vaccines to about 300 million
45%
people in the first few months of 2021. This includes nearly
30 million health workers, from both government and private
sector, and frontline workers. In the second stage, those
above 50 years of age, and those below 50 years of age with 63%
13
comorbidities or with high risk of infection, will be vaccinated . 55%
Several vaccines are already under clinical trials in India.

Moderna’s vaccine is expected to be priced between INR1,855 2015 2019
14
(US$25) to INR2,755 (US$37) per dose . Russia’s Sputnik V is
expected to cost much less at about INR740 (US$10) per dose Indian companies MNC
15
in the international market . The Serum Institute of India has
Source: EY analysis
12
EY analysis
13
"Explained: Who gets Covid-19 vaccine jabs in first two phases, what's the price", Hindustan Times, January 2021. Available at:
https://www.hindustantimes.com/india-news/explained-who-gets-covid-19-vaccine-jabs-in-first-two-phases-what-s-the-price-101610461674570.html
14
“Moderna to charge Rs 1855-Rs 2755 per dose for COVID-19 vaccine, says CEO”, DNA, Nov 2020. Available at:
https://www.dnaindia.com/world/report-moderna-to-charge-rs-1855-rs-2755-per-dose-for-covid-19-vaccine-says-ceo-2857843
15
Russia's Sputnik V COVID-19 vaccine to cost less than Rs 740 per dose in global markets”, DNA, Nov 2020. Available at: https://www.dnaindia.com/world/report-
russia-s-sputnik-v-covid-19-vaccine-to-cost-less-than-rs-740-per-dose-in-global-markets-2858235
16
"Coronavirus vaccine price: SII CEO reveals how much it will cost", DNA India, January 2021. Available at: https://www.dnaindia.com/india/report-coronavirus-
vaccine-price-sii-ceo-adar-poonawala-reveals-how-much-it-will-cost-oxford-astrazeneca-covid-19-2865835
COVID 19 impact: geo-economic shift and evolving healthcare and life

sciences trends
As per the trends so far, the COVID-19 pandemic is expected down and impact of currency exchange. Additionally, certain
to have far-reaching effects globally. While it is difficult to parts of the value chain, namely research and development
predict with certainty the scale and spread of the Coronavirus (R&D) and the supply chain have been heavily affected.
disease, let alone its impact on international economics, politics
and society, it is possible to systematically identify areas of Macroeconomic and geo-political shifts
potential vulnerability. due to the pandemic
Policy makers are facing unprecedented challenges in financing The COVID-19 pandemic is affecting economies across the
health especially in low- and middle-income settings. Many world. Global GDP is constantly shrinking. The World Economic
health systems are already stretched and underfunded. They Outlook update in October projected global growth at nearly
have been further constrained by the increasing number of -4.4% in 2020, which is 0.6% above its forecast in June 2020
COVID-19 patients demanding care as a result of the pandemic. 17
and 1.3% below its forecast in April 2020 . The increase in
It is difficult to predict how international economies will be growth is because of better-than-anticipated second quarter
affected over the coming months, when a so-called saw- GDP outturns, mostly in advanced economies where activity
toothed recovery is in play. Many geographies are already began to improve sooner than expected after lockdowns were
experiencing the second or third wave of the virus, resulting in scaled back in May and June and led to a strong recovery in the
new lockdowns and restrictions. Different industries have been third quarter.
differently affected by the virus. Consumer-focused industries China is the only country with a comparatively positive outlook
like hospitality and travel sectors have been deeply impacted in 2020 as it started reopening in April 2020. It also continued
as leisure time is spent at home or closer to home. Technology the pace of recovery in the third quarter. Exports recovered in
companies have seen a resurgence given the role 4G and 5G China supported by an early restart of activities and a strong
networks, and devices play in connecting individuals when pickup in external demand for medical equipment and remote
physical distance is a key requirement. Health and life sciences working tools.
companies, meanwhile, remained relatively less affected by the
virus. However, there are now growing signs of sales slowing
Figure 8: World Economic Outlook growth projections (% change)
BRICS countries G7 countries

8.8
8.2
7.2
6.0 5.9
6.1 5.2
4.2
2.8 2.8 4.2 3.1
3.0 2.3
1.9 1.9 2.2 2.0
1.1 1.3 1.2 1.0 1.5 1.5
0.2 0.7 0.6 0.3
-4.1 -4.5 -4.3 -5.3

-5.3 -5.5 -5.2 -6.0
-5.8 -5.8 -5.9 -7.2 -6.5
-5.8 -7.0
-6.6 -8.0
-8.0 -7.8 -9.1
-8.0 -9.8 -9.8
-9.1 -10.6
-10.2
-10.3
-12.5 12.8 -12.8
Brazil Russia India China South United Japan Germany France Italy United Spain
Africa States Kingdom
2019 2020 Apr forecast 2020 Jun forecast 2020 Oct forecast 2021 forecast
17
“World Economic Outlook, October 2020: A Long and Difficult Ascent”. Available at:
https://www.imf.org/en/Publications/WEO/Issues/2020/09/30/world-economic-outlook-october-2020
The April 2020 forecast for India was higher than June international travel, lockdowns, quarantining contacts of
forecast. However, our GDP contracted much more severely affected patients, diagnostic testing, health screening, contact
than expected. As a result, the October report projects tracing and use of surveillance apps. Despite these tactics,
contraction by 10.3% in 2020, before rebounding by 8.8% in the massive influx of COVID-19 patients has outgrown the
2021. healthcare infrastructure and resources in many countries
and the disease is causing extensive loss of life and extreme
A sluggish turnaround is expected to take place in 2020.
human suffering. Even the developed countries are relying
Global growth is projected at 5.2% in 2021, a little lower than in
on makeshift arrangements. For example, use of conference
the June 2020 WEO update.
centers as temporary hospitals in the UK and field hospitals
In addition to health challenges and economic consequences, in Central Park in New York City. Several approaches are
geopolitical issues may also have a far-reaching impact on the also being used to expand the healthcare workforce. Retired
post-COVID-19 world. The US and China bilateral dynamics doctors have been asked to return to work and medical
has continued for more than two years and has only intensified students are being recruited in hospitals.
since COVID-19 started. Many other countries such as India,
In addition to the insufficient healthcare infrastructure and
Vietnam, Malaysia, Indonesia and Japan have experienced
resources, there have been substantial shortages of essential
conflict with China due to respective legacy pending disputes.
equipment (e.g., ICU beds and ventilators), diagnostic tests,
The way the pandemic has been handled has become another medical supplies (masks, sanitizers, including personal
reason for geopolitical conflicts to rise. While China is still being protective equipment, etc.), and even medicines. The shortage
questioned for its initial opacity about the outbreak, the WHO was driven by pace of production not matching the ever-
and several other countries have drawn criticism for gaps in increasing demand, and global supply chain disruption and
their coronavirus response. The handling of the COVID-19 export bans due to the pandemic affecting different parts of
outbreak on a cruise liner led to transmission of the virus in the world over time.
Japan. In Iran, a lax response in the beginning led the country
The pandemic also brought to light inequalities in accessing
to become a COVID-19 hotspot, fueling its spread to the rest
healthcare globally. Poor, minorities and a broad range of
of the Middle East. In the UK, the government took time to
vulnerable population (e.g., migrants, people with chronic
move from the “herd immunity” stance to roll out a national
diseases) have been disproportionately affected by COVID-19.
lockdown strategy. The US has also been criticized for their
This does demonstrate the importance of innovative vital and
complacence.
working health care systems around the world more than ever.
All these macroeconomic and geopolitical shifts indicate that
the post-COVID world may be very different. For India, there is
The COVID-19 pandemic has brought sharp focus on
an opportunity now to develop a strategy that demonstrates
the need for health care reforms to promote universal
how it can work as a trustworthy partner with other countries
access to affordable care and bridge geographic,
to provide safe, effective and affordable medicines.
economic and social divisions.
Focus on equitable and sustainable
healthcare Global disruption in the supply chain
COVID-19 was declared a pandemic on 11 March 2020, There have been concerns around overdependence on China
six weeks after it was first reported from China as a new for active pharmaceutical ingredients (APIs) for quite some
respiratory virus. By then 118,000 cases had already been time now in India as well in the US and Europe. Last year a
identified in 114 countries, and 4,291 people had died. representative of the US Defence Health Agency reiterated the
Within seven weeks, 3,467,321 cases of COVID-19, including national security risks due to increased Chinese dominance of
18
246,979 deaths, were reported in 187 countries . the global API market.
The rapid spread of the virus challenged healthcare systems During the last few months, most countries have experienced
globally. From the US, that spends the world’s largest share disruption in pharma supply chain because of their dependency
on its healthcare system, to the world’s most sophisticated on China for APIs and excipients. While this does not indicate
European healthcare systems, every country is struggling to an end to the global supply chain, countries and companies do
manage and contain its spread. have supply chain resilience as one of the near-term priorities.
COVID-19 has accentuated issues like re-shoring, near-shoring
Several measures have been taken in this regard. Some of
and shortening supply chains.
these include border controls, restrictions on national and
18
D. Singer, "Health policy and technology challenges in responding to the COVID-19 pandemic", Health Policy Technol, June 2020. Available at:
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7191286/
We already see attempts to re-shore and diversify the advanced pharmaceutical manufacturing to help therapeutic
19
pharmaceutical value chain. For example, the US passed development and manufacturing in the US . Sanofi announced
the bill ‘Securing America's Medicine Cabinet Act (SAM-C)’ its plans to create a major leading European company, Euroapi,
in 2020, which expands the United States Food and Drug dedicated to production and marketing of APIs to third
20
Administration’s (USFDA) Emerging Technology Program and parties .
authorizes US$100 million to build Centers of Excellence for
India: preparing to lead in the post-pandemic world

COVID-19 has clearly highlighted the importance of a strong To emerge as a winner in the post-pandemic world, the industry
health care system, the lack of which can put an entire needs to continue building on its strength and at the same
nation’s economy and society at risk. As India continues to time make a giant leap towards innovation. New capabilities
fight COVID-19 and stabilize its economic growth trajectory, need to be introduced across the business functions to bring
it is the right time for the country to apply learnings from efficiencies and to help industry move up the value chain.
the challenges and best practices that emerged during the Government also needs to provide the right enablers and
pandemic. There is a need to swiftly develop the required business environment conducive for growth.
healthcare infrastructure and make it available to the entire
The remaining chapters of the report discuss the opportunities,
population.
challenges and the way forward for the country to achieve the
The Indian pharma industry has been a key contributor in ambition of equitable and sustainable access to healthcare. It
improving the country’s healthcare and economic outcomes. also provides an insight for the industry to achieve the ambition
The pandemic has accelerated several opportunities and of becoming the preferred global supplier of innovative
challenges for the industry. While the growing trust deficit with medicines.
China presents an opportunity for India, there is increasing
competition from other countries, such as Vietnam and
This is an opportunity for the Indian pharma industry
Malaysia. India is also dependent on China for ~two third of its
to consolidate on its advantages and undertake
imports of bulk drugs or drug intermediaries.
fundamental reforms to reignite innovation-led industrial
growth to meet the target of US$130b by 2030.
19
“Menendez, Blackburn Introduce Bipartisan Bill to Increase US Prescription Drug Manufacturing”, March 2020. Available at:
https://www.menendez.senate.gov/newsroom/press/menendez-blackburn-introduce-bipartisan-bill-to-increase-us-prescription-drug-manufacturing
20
“Sanofi to create new industry leading European company to provide active pharmaceutical ingredients (API*)”, company press release, February 2020.
Available at: https://www.sanofi.com/en/media-room/press-releases/2020/2020-02-24-16-03-59
02
Chapter
Accelerating research
and innovation
In order to sustain and build To move up the value chain, To achieve future potential,
on the good work India has India has opportunities in India needs to establish an entire
done in the past, the Indian complex generics, speciality ecosystem of innovation that
pharmaceutical industry needs pharma, biosimilars and novel brings together the academia/
to focus on emerging growth biological drugs, vaccines and research institutions, big
areas to move up the value preventives, and other areas pharma companies and start-
chain. of unmet needs. There is also ups/entrepreneurs, medical
huge potential to establish the institutions/hospitals.
country as the global innovation
hub of the future.
India is the third-largest global Some of the top Indian pharma The ecosystem should be
manufacturer of drugs, but it companies are making significant supported by required enablers
th 1
ranks 14 in terms of value . efforts in all these opportunity in infrastructure, financing,
areas, but a lot more needs to be supporting government policies
done. and regulations.
¹ The Department of Pharmaceuticals’ website. Available at: https://pharmaceuticals.gov.in/pharma-industry-promotion

India has attained leadership in the generic market globally. way of this study, agreed and aligned on the need to reverse
With increasing cost pressures and competitive environment, this ranking to become a formidable player in the global
the Indian industry now needs to consolidate its position as pharma market. This ambition can only be achieved if the
well as continue to focus on future growth by transitioning pharmaceutical sector moves forward with India led innovation
towards value chain augmentation. The Indian pharma industry around new chemical entities (NCEs) and new biological entities
th
ranks third by volume and 14 by value. All stakeholders, by (NBEs)
Opportunities for the Indian pharma industry to move up the value chain
1. Expansion beyond generics: exploring India’s dominant share in the overall ANDA approvals and
first-time ANDA approvals by the USFDA is a good reflection
opportunities in biosimilars and NCEs of the country’s strength in the global generics market. Indian
Indian companies are involved in the following R&D models and companies received over 35% of total ANDA approvals between
2
have developed globally competitive expertise in some areas. 2010 to 2019 (2,046 of the total 5,768 ANDA approvals) ,
with their share of annual ANDA approvals increasing from 34%
Generics in 2010 to over 40% in 2019. Similarly, in the last few years,
R&D in generics has been a traditional focus area for most Indian companies have overtaken US generics firms, receiving
India-based pharma companies. the largest number of first-time ANDA approvals. India’s share
in the first-time ANDA approvals increased from 29% in 2016
3
to 33% in 2019 .
Figure 9: First time ANDA approvals
10
9
4
5
3
5 8
6
8 32 30%
9
6 22 22%
23 32% 19 24%
35 33% 12 40%
32 32%
21 29% 22 28%
12 40%
2016 2017 2018 2019 June 2020
India United States Netherlands Ireland Israel Italy UK

Canada Japan Germany China Switzerland Taiwan France
% India’s share % United State's share
Source: USFDA website, EY analysis
2
“Indian pharma companies secure 336 ANDA approvals from US FDA during 2019”, Pharmabiz, April 2020. Available at:
http://www.pharmabiz.com/NewsDetails.aspx?aid=122237&sid=1#:~:text=In%20the%20year%202019%2C%20Indian,813%20in%20the%20previous%20year
3
USFDA website, EY analysis
The generics market remains lucrative globally. It is driven has attracted several new entrants from India and from other
by increased push in the US to prescribe generics to contain geographies. The rise in competition and consolidation among
healthcare costs. The share of generic drugs in the US’s total distributors in the US over the last few years have resulted in
prescription volume has increased from 72% in 2008 to 90% price erosion for generic drugs. While Indian companies should
in 2017, driven by loss of exclusivity of patented products in continue to maintain their strong position in the global generics
the past decade. Further looming patent expiries will provide a market, they can’t rely on basic generics exclusively to ensure
continuing driver for market growth. Drugs worth US$83b have future growth.
lost patent protection between 2013 to 2017, and another
US$72b worth of small molecule drugs will go off-patent from
4
2018 to 2022 . The growing volume of the generics market
4
“US generics market - evolution of Indian players”, IQVIA, February 2019. Available at:
https://www.iqvia.com/-/media/iqvia/pdfs/india/us-generics-market-evolution-of-indian-players.pdf?_=1611209375085
Complex generics, biosimilars, vaccines such as Dr. Reddy’s, Zydus, Glenmark, Aurobindo, Torrent,
Strides, Lupin, Cipla, Sun, etc. have already started building
Focusing on more complex products represents an emerging 7,8
their pipelines .
model for Indian pharma companies, with the potential to bring
sustained long-term growth for the sector. Biosimilars
Complex generics The global biosimilars market size was reported to be US$11.8
billion in 2020 and is estimated to reach US$35.7 billion by
Complex generics hold great potential to drive future market 9
2025 growing at a CAGR of 24.7% . The industry has come a
growth. They involve more difficult production processes and long way since the first approval of a biosimilar in Europe in
therefore face less competition, compared to simple generics. 2006 (Omnitrope from Sandoz/Novartis – a biosimilar version
Simple generics constitute only ~20% of the total US generics of the human growth hormone somatropin) and in the US in
market by value. Complex generics approvals constituted 2015 (Zarxio from Sandoz/Novartis – a biosimilar version of
5
12% of total USFDA generics in 2018, and 11% of approvals 10
the granulocyte colony-stimulating factor filgrastim) . While
in 2019. The USFDA has started new initiatives to further the initial uptake was slow in both the geographies, increase
facilitate availability of complex generic drug products and to in the number of approvals in the last five years indicates a
assist the generic pharmaceutical industry in identifying the positive trend towards the acceptance of biosimilars. Indeed,
6
most appropriate methodology for developing complex drugs . about 65% of all biosimilars approved in the US gained their
As complex generics are difficult to develop, there is limited approval between 2018 to 2019, while 58% of biosimilars in
11
competition in this space and hence, they offer higher margins. Europe were approved between 2017 to 2019 .
Seeing the big opportunity, some of the top Indian companies
Figure 10: Approval of biosimilars in the US and Europe

18
16
5
6 US
14
Number of biosimilars approved
TNF alpha inhibitors

12
Anti-CD20 mAb
10 Other biologic classes
6
8 7 4
Europe
1
6 TNF alpha inhibitors
2
4 Anti-CD20 mAb
3 5 2
2 2 6 Other biologic classes
5
2 4 4 4 4
2 2 3 2 2
2 2
1 1 1
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
*mAb: monoclonal antibody, TNF: tumor necrosis factor

Source: GaBI reports, EY analysis
5
USFDA website, EY analysis
6
“2019 Office of Generic Drugs Annual Report”, US FDA website, February 2020. Available at: https://www.fda.gov/drugs/generic-drugs/2019-office-generic-
drugs-annual-report
7
“Complex Generic Guidance by US FDA to benefit Indian Pharma Formulators: Ind-Ra”, Express Pharma, June 2019. Available at:
https://www.expresspharma.in/latest-updates/complex-generic-guidance-by-us-fda-to-benefit-indian-pharma-formulators-ind-ra/
8
“Desi companies see big business in competitive generics”, The Times of India, March 2019. Available at: https://timesofindia.indiatimes.com/business/india-
business/desi-cos-see-big-biz-in-competitive-generics/articleshow/68383208.cms
9
“Biosimilars Market by Product, Manufacturing & Indication, Region – Global Forecast to 2025”, ReportLinker, March 2020. Available at:
https://www.reportlinker.com/p04604343/Biosimilars-Market-by-Product-Manufacturing-Application-Global-Forecast-to.html?utm_source=GNW
10
B. Meher et al., “Biosimilars in India; Current Status and Future Perspectives”, J Pharm Bioallied Sci., 2019. Available at:
11
EY analysis
The Indian domestic biosimilars market was reported to have According to a recent report from Biotechnology Industry
generated US$576 million in 2019, achieving a growth of Research Assistance Council (BIRAC), more than 52 Indian
12
~11% over 2018 revenue (US$520 million) . Biosimilars companies collectively now have over 200 biosimilars in
16
can play an important role in expanding the global market pipeline . Despite the largest number of approved biosimilars
share of the Indian pharma sector in terms of value. India has in India, very few Indian companies have been able to penetrate
been leading globally in terms of launching biosimilars in the the US and European markets, which is partially because India’s
domestic market. The first biosimilar in India got an approval regulatory guidelines are not sufficiently aligned with the
in early 2000s for Hepatitis B, although no specific guideline guidelines in these markets. India released its first biosimilar
was available at that time in the country for the development guidelines in 2012, and the revised version was released in
13 17
and marketing of biosimilars . Since then India has made 2016 . The new guidelines have been widely appreciated in
significant advances, and several biosimilars have been the global biopharma community, placing Indian companies
developed and marketed in India. According to a WHO survey, in a better position. However, more can be done in terms of
India had already approved 93 biosimilars (with at least 50 on improving animal testing, raising the number of patients in
the market) by August 2019 compared to 26 in the US and 61 clinical trials, and tightening biosimilar testing requirements. In
14
in the European Union . addition, India will also need to invest in R&D, manufacturing
competency and related technical expertise.
Figure 11: Biosimilars approved by regions (as of Aug 2019)
93 COVID-19 has further increased the demand for monoclonal
antibodies (mAbs, biologics) such as tocilizumab, sarilumab
and itolizumab for testing on COVID-19 patients. These
61 mAbs are believed to prohibit cytokine storm complications.
On similar lines, Zydus Cadila has been exploring the use
of long-acting interferon alpha-2b (a biosimilar version is
already being commercially manufactured by Zydus Cadila
26
21 for treating Hepatitis B and C) for treating COVID-19*.
*Company update, available at: https://zyduscadila.com/public/

1
pdf/pressrelease/Zydus-announces-treatment-with-Interferon-
India Europe United States Brazil China alpha%20.pdf
Source: WHO survey
Biocon, in 2019-20, generated a revenue of INR1,951 crores Vaccines

from biosimilars, which is approximately 30% of its overall As with the generics market, India has established a strong
revenue. This revenue stream recorded ~30% year-over-year presence in the global vaccines market. The country is now the
(yoy) growth. The company aims to generate US$1b (about biggest volume supplier to public market of vaccines, fulfilling
15
INR7,460 crore) from the biosimilars segment alone by FY22 . over 60% of global vaccine requirements .
18
Biocon has entered the US market (in collaboration with Mylan)

with the first biosimilars for Herceptin (Ogivri, biosimilar This has been possible because of an ongoing strategic focus
trastuzumab) and Neulasta (Fulphila, biosimilar pegfilgrastim). on R&D and mass manufacturing capabilities. In addition
It has also established its presence in Europe and Japan. to investing in manufacturing capabilities to develop low-
cost affordable vaccines, companies have also invested in
12
EY analysis
13
B. Meher et al., “Biosimilars in India; Current Status and Future Perspectives”, J Pharm Bioallied Sci., 2019. Available at:
14
H. Kang et al., “The regulatory landscape of biosimilars: WHO efforts and progress made from 2009 to 2019”, Biologicals Volume 65, May 2020. Available at:
https://www.sciencedirect.com/science/article/pii/S1045105620300269?via%3Dihub
15
“Biocon planning to list biosimilar arm over the next 2-3 years”, Mint, July 2020. Available at: https://www.livemint.com/companies/news/biocon-planning-to-
list-biosimilar-arm-over-the-next-2-3-years-11593931649448.html
16
“India: The emerging hub for biologics and biosimilars”, report by BIRAC, November 2019. Available at:
https://birac.nic.in/webcontent/Knowledge_Paper_Clarivate_ABLE_BIO_2019.pdf
17
B. Meher et al., “Biosimilars in India; Current Status and Future Perspectives”, J Pharm Bioallied Sci., 2019. Available at: https://www.ncbi.nlm.nih.gov/pmc/
articles/PMC6394151/
18
“View: Is India ready for Covid vaccine? Here's what the country should do”, The Economic Times, November 2020. Available at:
https://economictimes.indiatimes.com/industry/healthcare/biotech/healthcare/view-is-india-ready-for-covid-vaccine-heres-what-the-country-should-do/article-
show/79434162.cms?from=mdr
incremental innovation in vaccines for some common diseases. New chemical entities (NCEs) and new
These innovations include introducing an oral equivalent for
biological entities (NBEs)
an injectable vaccine to improve compliance, adjusting their
formulation to improve stability, and other tweaks that improve These products are the major focus for leading multinational
existing products. Examples of the process of incremental pharma companies. Indian companies are beginning to
improvement include Bharat Biotech’s typhoid conjugate improve their in-house novel drug development with the aim
19
vaccine and “eco-friendly” recombinant Hepatitis-B vaccine of launching new blockbusters. Developing NCEs and NBEs put
20
(free of cesium chloride and thiomersal) and Serum Institute’s Indian companies in direct competition with global innovators.
21
liquid rotavirus vaccine . Some of the large Indian pharma companies, such as Zydus,
Glenmark, and Sun, as well as clinical research organizations
Government funding and investment in R&D via agencies such
(CROs) and contract development and manufacturing
as the Department of Biotechnology (DBT), the Indian Council
organizations (CDMOs) are already engaged in researching new
of Medical Research (ICMR), and the Ministry of Health and
drugs.
Family Welfare (MoHFW) have also played a critical role in
boosting India’s strength in the vaccines market. The ICMR In 2013, Zydus became the first Indian company to launch
signed a Memorandum of Understanding (MoU) with the an indigenously developed NCE, Lipaglyn (saroglitazar),
International Vaccine Institute (IVI) to collaborate regarding world’s first glitazar treatment for diabetic dyslipidemia or
22
vaccine R&D . hypertriglyceridemia in Type II diabetes, not controlled by
24
statins alone . The drug was recently approved as the first
The next frontier for India is to focus on R&D in new and
drug for the treatment of Non-Cirrhotic and Non-Alcoholic
complex vaccines, and this imperative has become more
Steatohepatitis (NASH) in India (March 2020). Lipaglyn is in
urgent due to COVID-19. Companies such as Zydus Cadila
second phase of development in the US and is expected to get
and Bharat Biotech (in collaboration with the Indian Council of 25
an approval in 2027 .
Medical Research and the National Institute of Virology) have
already embarked on this journey, including a novel vaccine for Biocon was the first company to launch indigenously developed
23
COVID-19 prophylaxis . novel biologics in India. The company launched BIOMab EGFR
for head and neck cancer treatment in 2006, and Alzumab
(itolizumab) for psoriasis treatment in 2013. Both these novel
monoclonal antibodies have been launched in several countries
26
in collaboration with global companies .
Novel drug development promises high returns, but it

also requires high investment of time and resources.
While Indian companies have started the journey, there
is a need to build a strategic approach in order to move
from incremental innovation to becoming a global player
in innovative drugs.
19
Company press release. Available at: https://www.bharatbiotech.com/typbartcv.html
20
Company press release. Available at: https://www.bharatbiotech.com/overview.html
21
“Serum Institute launches new rotavirus vaccine, Rotasiil–Liquid to prevent diarrhoea”, Pharmabiz, January 2020. Available at:
http://www.pharmabiz.com/NewsDetails.aspx?aid=120411&sid=2
22
“ICMR inks deal to promote vaccine development”, The Hindu, August 2017. Available at: https://www.thehindu.com/news/cities/Delhi/icmr-inks-deal-to-
promote-vaccine-development/article19536648.ece
23
ICMR website. Available at: https://vaccine.icmr.org.in/covid-19-vaccine
24
“Zydus Pioneers a Breakthrough With LIPAGLYN, India's First NCE to Reach the Market”, PR Newswire, June 2013. Available at:
https://www.prnewswire.com/news-releases/zydus-pioneers-a-breakthrough-with-lipaglyn-indias-first-nce-to-reach-the-market-210205251.html
25
“Lipaglyn gives Zydus Cadila first mover advantage in lucrative NASH market, says GlobalData”, GlobalData, March 2020. Available at:
https://www.globaldata.com/lipaglyn-gives-zydus-cadila-first-mover-advantage-in-lucrative-nash-market-says-globaldata/
26
“India: The emerging hub for biologics and biosimilars”, report by BIRAC, November 2019. Available at:
https://birac.nic.in/webcontent/Knowledge_Paper_Clarivate_ABLE_BIO_2019.pdf
Figure 12: Cell and gene therapy: assessing current landscape and exploring future potential
• Upward trend in the number of cell and gene therapy (CGT) trials stemming from regulatory clarity and
government support
• Chinese biopharmaceutical companies strengthening CGT manufacturing capabilities in anticipation of
increasing demand
266
• Global MNCs collaborating with domestic companies – Novartis partnered with Cellular Biomedicine
China Group to manufacture Kymriah in China, Merck KGaA collaboration with GenScript to develop and
establish a globally recognized CGT manufacturing service in China
• Several landmark developments with the approval of gene therapy Luxturna and two CAR-T therapies
Active/recruiting CAR-T
(Novartis’s Kymriah and Gilead’s Yescarta)

clinical trials in 2020^
236 • The FDA is expected to receive up to 200 CGT IND applications every year through 2025, and has plans
to set out expedited regulatory pathways, including the regenerative medicine advanced therapy (RMAT)
USA designation and accelerated approval for certain indications
• EU has been behind the US and China in the number of CGT trials
• Efforts are being made to improve timelines for the approval of clinical trials, streamline the approval
59
process for multinational trials, implement a faster approval process for GMO review for gene therapies,
and allocate sufficient resources for the review of clinical trial applications for advanced therapy
Europe medicinal products
• With only 1.4% of the world’s clinical trials being carried out in the country, India has traditionally lagged
behind other countries in terms of early clinical development.
• Entered the CGT space recently. Most CGTs in the early stages
0
• Research Institutions, such as the Indian Institute of Technology (IIT), Bombay and Tata Memorial Center,
Mumbai are developing CAR-T cell technology platforms. Biogen has invested in Immuneel to bring CAR-T
India therapy in India
India can provide solutions for
some critical limitations
Prohibitively high Complex manufacturing Lack of a system to Excessive costs due to

limitations
Current
therapy costs process connect all stakeholders skilled talent requirement
Become the low cost Leverage traditional Leverage its IT and Become the talent
provider/partner of manufacturing Business Service hub for domestic and
Potential
solutions
CGT companies for and engineering expertise to become global manufacturing

low price markets expertise to improve the digital operating requirements
manufacturing process room for CGT
Source: Clinicaltrials.gov, EY analysis

Âs of Jan 2021
2. Establish India as the global innovation hub

Another strategic opportunity for India is to establish itself as a global innovation hub, ultimately making the country the preferred
destination for R&D and manufacturing outsourcing.
Figure 13: R&D and innovation centers of top global life sciences companies*
19 35
35
23 9
15
15
21
*List of companies: AstraZeneca, Bayer, Boehringer Ingelheim, Fresenius, GE Healthcare, GSK, Johnson & Johnson, McKesson, Medtronic, Merck &
Co., Novartis, Pfizer, Roche, Takeda, Teva
Source: Company reports, EY analysis
At present, the R&D sites and innovation centers of most global lower cost, other drivers for companies to outsource R&D
life sciences (LS) companies are concentrated in the US and include increasing R&D costs and falling productivity, a growing
Europe, reflecting the dominance of US and European pharma focus on innovative research in niche /specialty therapy areas,
companies. However, if we compare India with China, India has increasing trial complexity and the need for specialized skills.
only half the number of R&D sites and innovation centers run
Over the years, India has established itself as one of the
by global LS companies. This highlights the scope to enhance
27 preferred destinations for outsourcing research. This has been
India’s acceptance globally in the innovation space .
possible due to the country’s strong process chemistry skills
Contract research opportunity and attractive cost-value proposition. Another advantage is
the large and genetically diverse population base that makes
The global CRO market was valued at US$45 billion in 2019 the country an ideal location for cost-effective clinical research
and is expected to grow at a CAGR of 7.9%, reaching US$59 activities and novel drug trials. While India has made significant
28
billion by 2024 . The demand for CRO services will be driven progress in the R&D field, there is still huge untapped
by big pharma as well as by smaller biotechs. In addition to opportunity.
27
EY analysis
28
EY analysis
Key challenges in achieving research and innovation potential

To seize the above discussed opportunities, the country needs Less than 0.5% of Indian students pursue a PhD or equivalent
to mitigate the following challenges: level of education. As of 2018-19, only 35% of Indian higher
education institutions offered postgraduate programs and just
1. Need for innovation mindset and 2.5% offered PhD programs. India is also behind other countries
related skill augmentation in terms of total number of researchers – according to recent
Brookings India report, India has only 216.2 researchers per 1
Biomedical research encompasses basic research, translational
million population compared to 1,200 in China, 4,300 in the US
research, pre-clinical research and clinical research. All 29
and 7,100 in South Korea .
these areas of research need to be tied together through
collaboration between scientists involved in basic research, Clinical research capabilities are also in a similar condition in
biomedical experts and clinicians. India. A study published in 2016 evaluated the research output
from 579 medical institutions and hospitals in India during
(i) Inadequate training and motivation for 2005-2014 and compared the output with some of the leading
conducting research academic centers globally. The results revealed that only 25
institutions (4.3% of the total evaluated institutions) produced
One of the biggest challenges hindering the growth of R&D in
more than 100 papers a year. These institutions contributed
India is the dearth of talent with requisite training, expertise
over 40% of the country’s total research output, while 57.3%
and skill across the entire research and development life
of the medical colleges did not have a single publication in
cycle in the realm of pharmaceuticals, biotechnology and life
that decade. In comparison, the annual research output of
sciences. There are several reasons for this shortfall. One of
the Massachusetts General Hospital and the Mayo Clinic was
the most important reasons is that the education and academic
4,600 and 3,700 papers respectively. This can be attributed to
institutions are still guided by rote learning instead of practical
several factors broadly categorized into limited infrastructure
innovative thinking and the overall lack of resources dedicated 30
and lack of intent (see figure 14) .
for furthering biomedical research.
In foreign countries, many industry outputs are based on the basic research in academia – this is missing in
India.
R&D head of a leading Indian pharma company
29
“Reviving higher education of India”, Brookings India, November 2019. Available at: https://www.think-asia.org/bitstream/handle/11540/11338/Reviving-Higher-
Education-in-India-email-1.pdf?sequence=1
30
“Medical Research in India: Are We There Yet?”, Delhi Journal of Ophthalmology, October 2017. Available at: https://www.researchgate.net/publication/321463981_
Medical_Research_in_India_Are_We_There_Yet
Figure 14: Reasons for limited clinical R&D in India
Clinicians overburdened Time bound faculty promotions

with patient care in most resulting in little incentive for clinicians
large hospitals to conduct research
Higher regards and

Lack of sophisticated Limited Lack of monetary benefits for
research infrastructure resources motivation clinical specialists
vs. scientists
Paucity of funds for Lack of training curriculum in

biomedical research and conducting systematic research
development and documenting observations
in medical practice
All these issues need to be addressed systematically to improve the quantity, quality, and relevance of medical research in India.
We are facing a big challenge today as the education systems have not trained physicians appropriately on
high end clinical research and collecting observational data.
Chairperson and Managing Director of a leading Indian pharma company
In India there is lack of high-quality basic research in academic institutes, which is so unlike what you see
in the US, Singapore and South Korea. This is because there are no incentives for research – promotions
are based on tenure instead of performance. This is harming the pharma industry. Unlike abroad, where
many of the industry innovations from the drug development research are based on the basic research in the
academia, Indian pharma industry has to start from basic research as they have nothing to tap into as far as
the academic institutes are concerned.
Even in the medical education curriculum, we have some great learning in terms of clinical acumen especially
from public institutions as there are tons of patients, but there is limited focus on medical research.
Chairperson and Managing Director of a leading Indian pharma company
(ii) Need for increased alignment between However, the real issue is not studying abroad. The challenge
is that the majority of these students find jobs overseas and
academic curricula and industry needs
never return to India, resulting in ongoing loss of the country’s
In addition to the already limited availability of talent, there is intellectual capital. By contrast, China contributes to the
also a misalignment between the industry needs and academic largest share of international students in popular study-abroad
curricula in Indian universities – both in terms of the curriculum destinations (including the US and the UK), but about 8 of
and exposure to the real-world needs. As a result, most talent every 10 Chinese students choose to return to China after
33
coming out of the educational institutions is not ready for the graduation . This trend, increasingly pronounced in the past
demands of the pharma industry. 3-4 years, can be attributed to China’s favorable domestic
policies towards returnees and their advantages in the
country’s job market.
(iii) Brain drain
Figure 15: Indians studying in the US (2018-19)
Due to the limited infrastructure and opportunities, students
often seek universities outside India for further studies, Health Other,
professionals, 10%
especially in science and technology fields. In 2018, more than
3.2%
750,000 Indian students were studying abroad and about
31 Physical/life
28% of these students went to the US . India is the second sciences, 5.6%
largest place of origin for international students for the US with
Math/computer
about 18% of all international students in the year 2018-19 Split by fields science, 37.0%
originating from India (China is the top place with 34% of the US Business/Mgmt., of study
international students originating from the country). More than 10.30%

32
70% of Indian students in the US are in STEM fields .
Engineering, 34.2%
31
“More than 750,000 Indian students abroad in 2018”, ICEF Monitor, November 2019. Available at: https://monitor.icef.com/2019/11/more-than-750000-indian-
students-abroad-in-2018/
32
Opendoors website. Available at: https://opendoorsdata.org/annual-release/
33
“Chinese students increasingly return home after studying abroad”, Quartz, July 2018. Available at: https://qz.com/1342525/chinese-students-increasingly-
return-home-after-studying-abroad/
“Part of our growth strategy is to get into advanced research in India, but it is challenging to find the right
talent in this area – starting with expertise in basic research to advanced medical scientific capability.
It is in a way linked to approach of academia in India – the linkage or bridge to pharma industry is not
always there. Also, it is hard to attract people from academia and practice to join industry, and difficult to
attract senior medical talent from outside to India”.
Head of drug development center India, of a leading global pharma company
“We do not have talent in India that has experience for the entire product life cycle - from discovery
candidate, to target developing, getting regulatory approvals, and going to the market”.
President R&D of a leading Indian pharma company
2. Complex regulatory approval process Intellectual property (IP) regime in India

and Intellectual Property Regime (IPR) The India Patents Act 1970 was amended in 1999, 2002 and
In addition to strong talent, the innovation ecosystem in a in 2005 to achieve compliance with Trade-Related Aspects
34
country also requires strong policy and regulatory frameworks. of Intellectual Property Rights (TRIPS) . Since then, several
A strong patent protection incentivizes entrepreneurs to spend amendments have been made to the patent rules over the
35 36
effort, money and resources in long and risky drug discovery years , the recent one being in October 2020 , to encourage
programs. Patents and exclusive rights enable companies to innovation environment in the country and to keep pace with
recover investments and fund future research. At the same the rapid technological advancement. To further boost and
time, simple and agile regulatory processes improve the ease of reward innovation culture in the country, the government
doing business and increase probability of success. declared 2010 to 2020 as the decade of innovation, and also
37
launched initiatives such as Make in India and Start-up India .
India has taken significant steps towards constructing a robust
regulatory and policy framework, however, there are some gaps
that need to be addressed.
34
U. Racherla, “Historical Evolution of India’s Patent Regime and Its Impact on Innovation in the Indian Pharmaceutical Industry”, September 2019. Available at:
https://link.springer.com/chapter/10.1007/978-981-13-8102-7_12
35
Intellectual Property India website. Available at: http://www.ipindia.nic.in/rules-patents.htm
36
“Update: Patent (Amendment) Rules, 2020”, NASSCOM Insights, October 2020. Available at: https://community.nasscom.in/communities/policy-advocacy/update-
patent-amendment-rules-2020.html
37
“India steps up efforts to boost tech transfer and innovation”, September 2020. Available at: https://www.lexology.com/library/detail.aspx?g=784564cc-282d-
4825-a4fa-533de46b5c5f
38
While India has made substantial improvements in the overall 2020 . The increase in the score is reflective of the focused
patent regime, India continues to lag in comparison to effort by the government to support investments in innovation
th
developing and developed geographies. India ranked 40 out of through increasingly robust IP protection and enforcement.
53 countries in the 2020 edition of Global Intellectual Property Since the release of the 2016 National IPR Policy, the country
Index – this is a drop in position compared to 2019, when it has improved its speed in processing patent and trademark
th
ranked 36 out of 50 countries. applications, increased awareness of IP rights among
entrepreneurs, and facilitated registration and enforcement
Of note is that even though India’s overall position dropped, 39
of those rights . To further strengthen India’s position in the
there has been an improvement in the country’s overall score
developing countries, more steps could be taken to ensure
from 36.04% (16.22/45) in 2019 to 38.46% (19.23/50) in
efficient functioning of patent offices, proper enforcement of
40
the IP and faster resolution of any legal issues relating to IP .
Figure 16: Global Intellectual Property Index — India scores
Category Scores Overall score in comparison

Patents
100
90.13
Percentage of overall index score
Membership and Ratification 100

90
of International Treaties 80 Copyrights
70 80
60
50
40
30 60 54.71
System Efficiency 20
10 Trademarks
38.46
40
28.07
Enforcement Design rights 20
Commercialization of Trade Secrets 0

IP Assets India Asia Top 10 Bottom 10
Average Economies’ Economies’
Average Average
India Asia Average Top 10 economies’ average
Source: Global Innovation Policy Center report 2020
Drug regulatory system

Medicinal products globally are subject to stringent regulations India has established a strong regulatory framework, with
to ensure quality, safety and efficacy for the consumers. Every latest revision in 2019, “New Drugs and Clinical Trial Rules,
41
country has its own regulatory authority, which is responsible 2019” (New Rules 2019) . However, there are some gaps
to enforce the rules and issue the guidelines to regulate the in the overall regulatory structure and processes that can be
pharmaceutical sector. addressed.
38
Global IP center India report. Available at: https://www.theglobalipcenter.com/wp-content/uploads/2020/01/India.pdf
39
Public Information Bureau website. Available at: https://pib.gov.in/Pressreleaseshare.aspx?PRID=1557418
40
FICCI report. Available at: http://www.ficci.in/sector/24/Project_docs/IPR-profile.pdf
41
“Highlights of “New Drugs and Clinical Trials Rules 2019”, Indian Society for Clinical Research. Available at:
https://www.iscr.org/wp-content/uploads/2019/05/Summary-of-new-regulation-final-1.pdf
(i) Current drug regulatory set up in India State Drug Regulatory Authorities (SDRAs), on the other
resulting in gap in harmonization hand, functioning under respective state health departments,
are responsible for granting manufacturing, distribution and
In India, the Drugs and Cosmetics Act, 1940 (“D&C, Act”) sales licenses, conducting inspections, sampling and testing
was introduced in 1940 to regulate the manufacture, export, products, monitoring overall quality control of medicinal
42
import, distribution and sale of drugs and cosmetics . The products, investigating violations, and prosecuting non-
overall regulatory supervision is split at the Central and State compliant parties, if required. Due to this structural alignment
levels. of SDRAs to state health departments under the respective
The Central Drugs Standard Control Organization (CDSCO), State List, there has been some disparity in the way the Drug
under the Directorate General of Health Services (DGHS), & Cosmetics Act is interpreted and enforced across states. The
comes under the purview of the Ministry of Health, Family & fact that CDSCO does not have direct authority over SDRAs
Welfare (MoHFW). It is the national regulatory authority and only compounds matters. The existing scenario leads to a
is responsible for granting approvals for clinical trials, new situation where there are gaps in the harmonized application
drug products, and certain categories of medicinal products, of drug regulatory standards across the country. The existing
such as blood and blood products, parenterals (intravenous scenario of drug regulatory setup in India is presented below
fluids), vaccines, sera and other high risk products. CDSCO across the pharma value-chain:
also provides authorization for import and export of medicinal
products.
42
India Code website. Available at: https://www.indiacode.nic.in/handle/123456789/2409?view_type=browse&sam_handle=123456789/1362
Figure 17: Existing scenario of drug regulatory setup in India
Discovery & Development & Manufacturing Drug Drug Pricing Supply-chain Pharmacovigilance
Research Product Registration Promotion
Ministry of Health Ministry of Health Ministry of Chemicals Ministry of Health

Ministry of Science & State Department of
and Family Welfare and Family Welfare & Fertilizers (MoCF) MoHFW SDH and Family Welfare
Technology (MoST) Health (SDH)
(MoHFW) (MoHFW) (MoHFW)
Department of
Central Drugs Standard State Drug Regulatory Central Drugs Standard Department of CDSCO SDRA Indian Pharmacopoeia
Science &
Control Organisation Authorities (SDRAs) Control Organisation Pharmaceuticals (Oversight) Commission (IPC)
Technology (DST)
(CDSCO) (CDSCO)
Department of
Biotechnology • Approval of new • Manufacturing National
drugs & clinical trials Licensing National Pharmaceutical Coordination Centre
(DBT)
• Import Registration • Inspections Pricing Authority (NPPA) – Pharmacovigilance
BIRAC
Department of & Licensing • Regulation Programme of India (NCC-
Scientific & Industrial • License approving of Enforcement PvPI)
Research (DSIR) blood banks, LVPs, • Fixed Dose
vaccines, r-DNA Combination (FDC)
CSIR products & medical Manufacturing
devices Licensing
Ministry of Health
& Family Welfare
• Amendment to D&C • Testing of samples
Act and Rules
(MoHFW)
• Banning of drugs &
Department of Health cosmetics
Research (DHR) State Drug Controllers
• New drug testing (SDCs)
ICMR
• Oversight & market
surveillance over
Ministry of Human & above state
Resource Development
Indian Pharmaceutical Industry 2021: future is now
authority
(MoHRD)
UGC | IISERs | IISc | IITs

Drugs Controller
General of India (DCGI)
Ministry of Chemicals
and Fertilizers (MoCF) The division of responsibilities between CDSCO and SDRAs is a consequence of ‘health’ being a subject matter under the State List. The legislative mandate, and therefore the
NIPERs overall functioning of SDRAs rests with the state. This has led to great disparity in the way the Drug & Cosmetics Act (D&C act) is interpreted and enforced across states.
CSIR: Council for Scientific and Industrial Research | ICMR: Indian Council for Medical Research | BIRAC: Biotechnology Industry Research Assistance Council | UGC: University
Grants Commission
MoHFW departments Departments other than MoHFW (including state departments)
Source: CDSCO website; N. Chowdhury et al., Administrative Structure and Functions of Drug Regulatory Authorities in India – working paper 309, 2015
37
(ii) Extended approval timelines (vi) Scope for further harmonization of Indian
Another aspect of the drug / clinical trial approval process regulatory with other developed and
is that while timelines are specified for various activities, developing geographies
such timelines are not usually met. This is typically owing India is one of the largest exporters of generic medicines in the
to additional documentation requested by the regulatory world, however its regulatory framework does not compare
authority and time taken by the applicant / sponsor to provide well with those of developed countries and other developing
the same. There are no formally defined mechanism(s) in India countries; for example, Brazil.
for pre-submission discussions with the sponsor / stakeholder.
3. Financing constraints and limited

(iii) Gap in interpretation and implementation
of regulations infrastructure
At a cross-sector level, India’s gross expenditure on R&D as
The “New Drugs and Clinical trials rules 2019” were introduced percentage GDP has been around 0.7% (Economic Survey
in India with the aim of promoting clinical research. Along with 2018 report) for the past two decades. While the overall
the rules and regulations, guidance is also being provided in absolute spending has increased, the percentage has remained
the form of FAQ documents by the CDSCO. However, with the constant since GDP has also increased. This is far lower than
regulatory machinery in place on paper, the same needs to be the R&D investment levels witnessed in, for example, Israel
interpreted and implemented effectively on the ground. (4.6%), South Korea (4.5%), Japan (3.2%), Germany (3%) and
even in other BRIC countries with China spending 2.1%, Brazil
43
1.3%, and Russia a little over 1% . Also of note is that the
(iv) Limited expertise in conducting, evaluating government has a dominant contribution in the gross domestic
and inspecting clinical trials expenditure on research and development (GERD) — in 2017-
18, Central Government spent 45.4%, state governments
The conduct of a clinical trial requires expertise across
6.4%, higher education 6.8%, and industry 41.4% (4.6% from
multiple domains, including but not limited to medicine,
public sector industry and 36.8% from private sector industry).
pharmacology / toxicology, statistics, clinical pharmacology
Twelve major scientific agencies accounted for 99.8% of the
/ biopharmaceutics, chemistry and microbiology. There is
R&D expenditure by the Central Government, with 61.4%
an urgent need for competent personnel to evaluate clinical 44
spent on R&D in defense . This clearly highlights the need
trial applications and conduct inspections of sponsor sites,
for increase in not only public spending, but also private
investigator sites and ethics committees, in order to determine
financing that plays a very critical role in driving innovation
compliance with globally accepted good clinical practices laid
in a country. According to the Economic Advisory Council to
down by the International Council of Harmonization (ICH).
the Prime Minister (EAC-PM), India should target to reach R&D
45
expenditure of at least 2% of the GDP by 2022 .
(v) Need for detailed guidelines as industry Especially in the pharma sector, the R&D process is long
endeavors to move up the value chain and risky. The cost of development of a novel drug has been
estimated to be around US$2-3 billion, and the average time
As the world generics market moves towards complex generics 46
for development is about 10 to 12 years . It is challenging
and biosimilars, several companies are building their pipelines even for the largest Indian pharma companies to fund multiple
based on such medicinal products. It is therefore a need of the innovative R&D products independently without funding
hour that the regulatory authority publishes guidance on the support.
most appropriate methodology for the development of such
medicinal products, and presentation of evidence needed to
support the approval.
43
At 0.7% of GDP, India's R&D expenditure in science is less than BRIC nations", Business Today, January 2020. Available at:
https://www.businesstoday.in/current/world/india-gdp-randd-expenditure-in-science-is-less-than-bric-nations/story/390874.html
44
Global Innovation Index 2020, WIPO. Available at: https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2020.pdf
45
“Growth in R&D expenditure to be targeted 2% of GDP by 2022: PM economic panel”, Business Today, July 2019. Available at:
https://www.businesstoday.in/current/economy-politics/growth-in-rd-expenditure-to-be-targeted-2-of-gdp-by-2022-pm-economic-panel/story/367312.html
46
“Tufts Study Finds Big Rise In Cost Of Drug Development”, Chemical and Engineering News, November 2014. Available at:
https://cen.acs.org/articles/92/web/2014/11/Tufts-Study-Finds-Big-Rise.html
Figure 18: R&D expenditure as % of revenue The research potential is further limited by inadequate
(average of 2015-19) grants and funds by the government bodies, especially for
early research projects with start-ups/entrepreneurs and in
academia. The procedure to apply for and receive the grants is
Top 10 global also very complex.
16.5%
pharma companies
Private equity and venture financing, which is critical to push
the projects to next stage of development, is also currently
Top 10 Indian limited in the Indian market due to the long gestation period
7.8%
pharma companies and high-risk nature of the pharma R&D. According to EY
analysis of the VCCEdge data for the past 11 years (2010 to
November 2020), PE/VC investments worth US$192 billion
Source: Company reports, EY analysis were made across all sectors. Top six industries constituted
~70% share of the total PE/VC investments — e-commerce
In the last few years most of the top Indian pharma companies 14% (~US$27 b), infrastructure and real estate/hospitality/
have increased their R&D investments, but investment construction 13% each (~US$25 b), financial services 12%
as a percentage of revenue remains under half of the (US$22 b), technology 9% (US$17 b) and telecommunications
47
investment level recorded by the top ten global companies . 7% (US$12 b). Pharmaceuticals constituted only about 3%
A considerable proportion of this investment also goes into (US$6.2 b) of the total PE/VC investments during the period,
generic drug research, leaving insufficient funds for NCE and ~45% (US$2.7 b) of which was in 2020 (YTD Nov) alone.
NBE research. In addition to the high risk associated with R&D
investments in innovative research, market factors such as
price controls and patent protections also act as deterrents.
Figure 19: PE/VC investments in pharmaceuticals – 2010 to 2020 (YTD Nov)
Total investment 105 14 137 201 635 90 328 183 739 1,046 2,717
(US$ m)
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Buyout Expansion/Growth Capital Start-up/Early Stage
47
EY analysis
A significant share of the PE/VC investments in the for capital pools globally. Covid-19 crisis has exemplified and
pharmaceutical sector has been in the form of growth capital, established the need for collaboration across stakeholder
accounting for 48% of all investments. Start-up investments groups, i.e., peer-to-peer, public-private, start-ups with big
was a meagre US$0.4 billion (6% of the total PE/VC investment pharma as well as capital inflow with certain imperviousness
in the sector), of which about 42% (~US$160m) was in 2020 to the risks. This trend needs to set and collective gain can be
alone with a majority (~US$152m) getting invested in Biocon witnessed in medium to long term if we lay down clear goals
Biologics India Ltd. However, the recent investments in Biocon and objectives and follow through close tracking of initiatives,
Biologics is an indicator of the changing realities in the sector prioritized for the betterment of health across geographies
post COVID -19 where health has come back on the agenda
Top five growth investments (2010 to 2020)
Target Investor (company Amount (US$m) Deal stake % Announcement Date

headquarters)
Carlyle Investment
Piramal Pharma 490 20 Jun-20
Management LLC (US)
ChrysCapital Investment
Mankind Pharma Ltd. Advisors India Pvt. Ltd. 350 10 Apr-18
(India)
KKR India Advisors Pvt. Ltd.
Gland Pharma Ltd. 200 38 Jun-14
(US)
Intas Pharmaceuticals Temasek Holdings Advisors
160 10 Nov-14
Ltd. India Pvt. Ltd. (Singapore)
Intas Pharmaceuticals
ChrysCapital (India) 132 3 Jun-20
Ltd.
Another major trend witnessed in 2018 is the growing the top five buyouts of the analysis period took place in 2020
prominence of buyouts — the 11-year period witnessed buyouts and were made by overseas buyers. We expect buyouts led by
worth US$2.8 billion (46% of the total PE/VC investment in International PE funds to continue, driving synergy and further
the sector), of which 90% was during 2019 and 2020. Four of collaborations among the portfolio businesses.
Top five buyouts (2010 to 2020)
Target Buyer (company Amount (US$m) Deal stake % Announcement Date

headquarter)
Aurobindo Pharma,
Natrol LLC (US Unit - New Mountain Capital (US) 550 100 October 2020
Natrol)
Kyowa Pharmaceutical
Unison Capital Partners IV F
Industry Co. Ltd. 525 100 November 2020
L.P. (US)
(Lupin's Japan unit)
J.B.Chemicals and
KKR & Co. Inc. (US) 496 54 July 2020
Pharmaceuticals Ltd.
Bharat Serums and Advent International Corp.
250 60 November 2019
Vaccines Ltd. (US)
SeQuent Scientific Carlyle Investment
210 74 May 2020
Ltd. Management LLC (US)
Because of financing constraints, some research projects, 4. Limited incentives from the
especially by small start-ups, are abandoned in the early stages
itself as the companies are not able to sustain their operations government
and research efforts beyond the short term. Compared to other developed countries, there are limited R&D
related supporting policies and incentives from the government
To build a strong R&D base, it is critical to increase both private
in India. The weighted deduction on R&D expenses in income
and public expenditure on R&D. Public funding is required to
tax was reduced from 200% to 150% in 2017, and further to
strengthen capabilities in basic research, especially in high risk 48
100% from 1 April 2020 .
and high priority areas. Private funding commitment, especially
from the larger organizations, is critical to convert innovative
ideas to successfully commercialized products.
Impact of COVID-19 recession on global R&D spending:

The impact of the COVID-19 on innovation is highly dependent on recovery scenarios and the business and innovation practices
and policies in place in different geographies. In any scenario, financial resources—both private and public—will be strained.
Countries and corporations alike might find it harder to pursue investments and innovation.
Historically, economic crisis situations have been followed by sustained periods of reduced investment, with the overall impact
varying by sectors and countries – some increasing and others decreasing innovation and related expenditures. A similar
scenario may be expected after COVID-19.
To counteract the effects of the crisis on economies, most governments in high- and middle-income economies are setting up
emergency relief packages. In addition, there is also a strong need to have measures to finance innovation and start-ups. For
example, France has extended its liquidity scheme to start-ups. The Chinese rescue package also includes guaranteed loans for
start-ups. Some European countries have started setting up special funds to support start-ups. India, too, should allocate funds
specifically towards research and innovation to ensure continuity in the ongoing efforts and support new innovations.
Way forward: focusing on research and innovation to achieve growth

ambition
India is the third-largest manufacturer of drugs worldwide in
terms of production volume, accounting for 10% of the global
total. However, India accounts for only 1.5% of the total value
th
of drugs produced worldwide, making it 14 ranked among
49
manufacturing nations . This disconnect between India’s
Even though we are the world’s largest producer
relatively high share of volume and low share of value will only of vaccines and generic drugs by volume, we only
be bridged if India intensifies efforts in innovative R&D. account for a very small fraction of the global value
chain, that says it all. Innovation and R&D are at the
heart of what we need to do going forward, and there
lies our value creation opportunity.
Chairperson and Managing Director of
We have great minds, but we have just been
a leading Indian pharma company
focussing at re-engineering
Senior government official
48
“New incentives and tax benefits can boost R&D ecosystem for new drug development in India”, GlobalData, March 2020. Available at:
https://www.globaldata.com/new-incentives-and-benefits-can-boost-rd-ecosystem-for-new-drug-development-in-india-says-globaldata/
49
Department of Pharmaceuticals website. Available at: https://pharmaceuticals.gov.in/pharma-industry-promotion
Figure 20: Research and innovation enablers
Streamline regulatory process Overarching

• Central overarching body (e.g.
government body for
research and public
28% 28%
USFDA)
funding (e.g. grants) Government • Collaborative
• Faster approval and response innovation
incentives
time (regulatory approval in some 50% • Increased ecosystem
innovator countries, e.g. the US, EU, efficiency in review • Tax rebates
61% Israel, takes 20% to 40% less time and funding of
• Patent box
• Increased
collaboration
than India) innovative solutions
within the
• Simplification • Increased amount industry
• Tech experts in review and approval of funding
committees
• Collaborative approach with sponsor
Talent availability and Focus on start-ups

development • Alignment with national
• Expertise in entire R&D lifecycle & industry focus areas 11%
• Clinical research capability • Access to financing 17% Identify national
56% • Industry academia collaboration 44% (e.g. by incentivizing
VCs, PE and HNIs;
Industry research & innovation
to improve job readiness academia focus areas
under CSR activities) collaboration
• Rotation / exchange programs
• Mentoring to advance 11%
• Hiring global talent research Mindset for real
• Access to incubators
• Preventing brain drain and low cost capabilities innovation (not just
infrastructure imitation)
Government enablers Collaborative innovation ecosystem Mindset shift
*Percentage reflects number of responders referring the enabler; N=18

Source: EY primary research
The Global Innovation Index (GII) ranks world economies Among the countries, Switzerland led the index in 2020, with
according to their innovation capabilities across all sectors. Sweden ranked second and the US third. India ranked 48th in
According to the 2020 report, over 70% of all R&D spending 2020, making it to the top 50 for the first time. The country
falls within four industries/sectors: information and has moved up 9 positions in the last 2 years, driven by the
communication technologies (ICT) hardware and electronic improvement in the innovation outputs (+12). India performs
equipment (23.5%), pharmaceuticals & biotechnology (18.8%), best in knowledge & technology outputs and its weakest
automobiles (15.6%), and software & ICT services (14.4%). R&D performance is in infrastructure. Despite its improved ranking,
spending in the healthcare equipment & services sector is only India is behind several competing countries, such as Singapore
th th rd nd
2% of global annual R&D spending. (ranked 8 ), China (14 ), Malaysia (33 ), Vietnam (42 ), and
th 50
Thailand (44 ) .
50
Global Innovation Index 2020, WIPO. Available at: https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2020.pdf
Figure 21: Global Innovation Index (GII) — India rankings
India’s rankings (2018-2020)* Overview of Indian rankings in the seven GII areas (2020)^
Knowledge and 27
GII Innovation Innovation technology outputs
inputs outputs
Market
31
sophistication
+9 +6 +12 GII 2020 48
Business
55
sophistication
2020 48 57 45
Human capital
60
& research
2019 52 61 51
Institutions 61
2018 57 63 57 Creative 64
outputs
Infrastructure 75
*Note: data availability and changes to the GII model framework influence year-on-year comparisons of the GII rankings ^highest possible
ranking in each pillar is 1.
Source: World Intellectual Property Organization (WIPO), Global Innovation Index 2020
India needs to develop short- and long-term research and the product value chain to developing NCEs and potentially
innovation strategies with specific focus areas (such as personalized medicines such as cell & gene therapies in the
biosimilars, complex APIs and generics, vaccines, and contract coming years. Strengthening India’s research and innovation
research). These focus areas would play to India’s strengths capabilities requires interventions across the dimensions
and align with the nation’s future ambition of moving up discussed in this chapter.
Strengthening India’s research and innovation ecosystem

Research and innovation in pharmaceuticals requires the
collaborative efforts of several stakeholder groups: big
pharma/biopharma companies, start-ups and entrepreneurs
or small pharma/biopharma companies, academic and clinical
researchers. These stakeholder groups’ efforts further
R&D & innovation requires an entire ecosystem of
need to be supported by growth enablers. Key enablers academics, entrepreneurs, policymaking, investors.
include financing, infrastructure and supporting policies and
regulations. R&D head of a leading Indian pharma company
Figure 22: Innovation ecosystem — key stakeholders and enablers
Big pharma /
biopharma
Infrastructure
Start-ups /
rs
entrepreneurs
t a ke h o l d e
Enablers
Financing
Innovation
ecosystem Academia (public
ys
and private research

Ke
institutions and
universities)
Supporting policies
and regulations
Clinical research
institutions and
hospitals
A very good example of such a robust ecosystem is the world’s leading life sciences ecosystem in the Massachusetts (see
figure 23). It is a great illustration of the power of investment in innovation driving collaborative partnerships between
government, academia, hospitals and the private sector.
Figure 23: Massachusetts Life Sciences innovation ecosystem
$4.8 billion in venture capital investment, up from $900 million in 2012

$2.1 billion in funding in 2018; 24 year record for receiving the most NIH funds
18 IPOs in 2018 totalling >US$2.4 billion
Investment of >US$700 m in last 12 years from MLSC* (initiative driven by the state gov) via
grants, loans, tax credits and workforce training and development programs Funding and
Tax incentives: Upto US$750K in matching funds for early-stage life sciences (LS) companies support
(Accelerator loan program); Refundable 10% income tax credit for certified LS companies
31 biotech and life sciences incubators

>30 million square feet of lab space throughout the state
Mass Innovation Labs: provides research scientists access to on-demand lab space
Broad Institute of MIT and Harvard: the institution fosters collaboration between
researchers from MIT, Harvard and Harvard-affiliated hospitals Infrastructure
MassBio Edge (MassBio’s purchasing consortium), pools buying power of its
member companies to purchase goods and services (lab & office supplies, bulk Government driven
gas & compressed gas, etc.) initiatives and
policies
More than 113,000 biopharma and biotech research and

development jobs and more than 30 million square feet of lab
space throughout the state
67 colleges provide life sciences degrees
Most educated workforce in the country: 50% workforce with Talent
college degree vs. 33% average for the US
Collaborative
innovation
ecosystem
430+ biotech companies 122 colleges and universities;
16 (Big Pharma + small biotech home to 5 of the top
firms) NIH-funded hospitals
Economic impact Healthcare impact

>113,000 biopharma and biotech >265 million patients in the US
R&D jobs and US$11.9 billion of treated using therapies developed
total wages generated in 2018 by the companies based in
Massachusetts
*MLSC: Massachusetts Life Sciences Center; NIH: National Institutes of Health;
In this chapter we will look at the role and key focus areas for each stakeholder and consider best practices to establish an
ecosystem with the right enablers.
Key stakeholders involved in research and innovation

1. Academia: setting foundation of strong • Institutions of Eminence: 10 institutions each from the
public and private sector to be selected as Institutions
talent and research base of Eminence, to help them attain world-class standards
Academia provides the foundation for building the entire of teaching and research. Each Public institute (IoE) will
research and innovation pyramid in any country. Academia is be eligible to receive INR 1000 crore during the 5-year
54
the source of most critical resources for innovation: talent and period (2019-2024)
basic research. • Revitalizing of Infrastructure and Systems in Education
Following measures can be considered to strengthen the (RISE): scheme to upgrade the research and academic
academic base. infrastructure to global best standards by 2022. Higher
Education Financing Agency (HEFA) has been tasked to
55
mobilize INR 1,00,000 crores for this initiative
(i) Strengthening higher education system
b) Increase number of public institutions offering
and expanding the talent base postgraduation and PhDs: According to the All India
India's higher education system is the world's third largest Survey on Higher Education (2018-19), only 34.9% of all
in terms of students, next to China and the United States .
51
HEIs have postgraduate programs and just 2.5% of HEIs
However, only three Indian Universities — Indian Institute of have PhD programs. Further, 34.8% of all colleges run a
nd
Technology (IIT) — Bombay (172 position), IIT-Delhi (193
rd
single program and close to 83% of these are privately
position) and Indian Institute of Science (IISc) Bangalore (185
th
managed.
position) — have been included in the top 200 institutes in The government should further invest more in expanding
the Quacquarelli Symonds (QS) World University Rankings India’s postgraduate capacity in public institutions to
2021, but no university could enter the top 100 list. Overall, increase the quantity and quality of talent pool available
compared to last year, 14 institutes slipped in ranking while for high end research activities.
52
four institutes improved .
c) Set up more national and international mobility programs
a) Improve the quality of education and infrastructure to foster collaboration and sharing of perspective:
in higher education institutions (HEIs): Talent with the To achieve higher quality in research, academia and
right skill is the foundation for any country’s growth. government should also work together to launch more
The government has initiated New Education Policy initiatives to collaborate with other countries on high end
to equip students with necessary skills and knowledge research projects. More programs for gaining international
and to eliminate the shortage of manpower in science, exposure, such as internships at foreign research
53
technology, academics and industry . Several initiatives centers/universities or educational exchange programs
have been recently launched to strengthen the country’s can be planned for faculty and students. The Scheme
higher education system and promote a culture of for Promotion of Academic and Research Collaboration
research and innovation within institutions. For example: (SPARC), launched by the Government in August 2018, is
56
• Education Quality Upgradation and Inclusion an initiative along similar lines .
Programme (EQUIP): a five-year plan (2019-2024) Similar mobility programs should also be planned between
to improve the quality and accessibility of higher academia and industry. Faculty or researchers from a
education. The program aims to double the Gross university could work in a corporate for some time, while
Enrolment Ratio (GER) in higher education and position people from the industry could play the role of faculty or
at least 50 Indian institutions among the top-1000
global universities
51
“India's Higher Education Needs a Paradigm Shift”, The Wire, February 2019. Available at: https://thewire.in/education/indias-higher-education-needs-a-paradigm-shift
52
“QS World Ranking 2021: Three Indian universities in top 200”, The Times of India, June 2020. Available at:
https://timesofindia.indiatimes.com/home/education/news/qs-world-ranking-2020-three-indian-universities-in-top-200/articleshow/76295989.cms
53
“India’s New Education Policy 2020: Highlights and opportunities”, British Council, August 2020. Available at:
https://education-services.britishcouncil.org/insights-blog/india’s-new-education-policy-2020-highlights-and-opportunities
54
“Year End Review 2019- Department of Higher Education”, Ministry of Education, Posted by PIB Delhi, January 2020. Available at:
https://pib.gov.in/PressReleasePage.aspx?PRID=1598503
55
“Expansion of Higher Education Financing Agency to fund Revitalising Infrastructure and Systems in Education (RISE) by 2022“, Press Information Bureau,
Government of India, July 2018. Available at: https://www.education.gov.in/sites/upload_files/mhrd/files/PN_HEFA.pdf
56
SPARC website. Available at: https://sparc.iitkgp.ac.in/
conduct research work in the university. This will help in d) Integrate topics on entrepreneurship and innovation
improving the understanding of needs and challenges on mindset in the curricula: The universities can make a
both sides. significant impact in creating entrepreneurial ecosystem
by providing academic programs that equip students with
Rotation programs could also be initiated between
the knowledge and necessary skills to be an entrepreneur.
scientists in public and private institutions.
There can be specific courses for entrepreneurship,
or related topics can be included within the overall
curricula. Alumni of the institutions who are successful
entrepreneurs can also be invited to share their experience
to motivate innovation mindset. Several countries such
as Australia, the United States and United Kingdom
We can have rotational programs from scientists
have specific entrepreneurship education programs and
between public and private sector institutes. This will courses.
encourage cross-learning and improve understanding
In addition, the students and faculty should be motivated
of strengths and opportunities in each of these and incentivized to develop their innovative research
sectors (public, private). This will also increase the ideas. The faculty members engaged in their own
understanding of the needs – the private sector research activities or mentoring their students should
get preference in rewards and promotions. Appropriate
scientists will understand better the healthcare
infrastructure and funding support should also be
needs, and the public sector scientists will gain the provided. Many developed nations encourage and enable
knowledge about actual delivery of innovation to the the Higher Educational Institutions and other research
patients. establishments in setting up entrepreneurial activities,
besides permitting the faculty members to engage in
Bring foreign research scientists in the public sector scientific enterprises (ventures that leverage scientific
research institutes into public sector research research, know-how, inventions, innovations and scientific
57
expertise) .
institutes of India. This will help in transmitting their
knowledge here. Similarly, some of our scientists Establishing technology transfer & business development
cells, and permitting institutions to directly gain
from public sector could be can be sent outside
commercial benefit from IP created within the institute can
be very productive in developing a culture of innovation.
Head of drug development center India, This will be highly beneficial to the overall innovation
of a leading global pharma company ecosystem, as academic institutions are well positioned to
conduct basic research which can then be taken forward
by other stakeholders in the ecosystem.
57
T. Mazzarol and M. Battisti, “The role of universities as catalysts within entrepreneurial ecosystems”, August 2016. Available at:
https://www.researchgate.net/publication/307925580_The_role_of_universities_as_catalysts_within_entrepreneurial_ecosystems
(ii) Developing industry ready talent Industry and academia collaboration initiatives to
According to the India Skills Report 2020, employability or job enhance curriculum and job readiness
readiness in India has remained stagnant for the past three There should be regular interaction between academia and
years at around 46% (overall average employability across all industry to share inputs about evolving industry needs and
sectors). This is partially due to the insufficient infrastructure incorporation in the curricula. In addition, several initiatives can
(including funding) within the educational institutions, outdated be taken by the industry and academia to upskill the students
curricula, and lack of faculty with required experience and and increase their understanding and alignment with the actual
training. Another important factor is the disconnect between job requirements.
58
the academia and the industry . As a result, the students
coming out of educational institutions still lack the industry- • Industry designed training programs as a part of
relevant skills and knowledge required to be job ready. curriculum: companies can help design specific courses
that can be introduced as a part of learning journey in
the institutions. For example, Amazon has launched AWS
There is urgent need for academia, industry and the Academy with the aim to ‘Bridge the Gap Between Academia
government to come together and take initiatives that and Industry’. AWS Academy provides higher education
can improve the job readiness of the students. institutions with a free, ready-to-teach cloud computing
curriculum that equips students with the skills required to
62
get hired .
Government initiatives
• Speaker Sessions, workshops and other platforms of
In the same direction, University Grants Commission (UGC) interaction with students: such sessions can be very useful
issued a Learning Outcome-based Curriculum Framework for the students to understand industry trends, different
(LOCF) in 2018 that aims to specify desired outcomes and then professions and job functions. For example, several colleges
decide the curriculum to obtain these outcomes. The outcomes in the US and other geographies run the following programs:
will be determined in terms of skills, knowledge, understanding,
employability, graduate attributes, attitudes, values, etc., and • Career Discovery Series: the program aims to educate
should be demonstrated by students upon the completion of students on their different career options. The program
59
the course . All HEIs have been guided to adopt and implement includes various career panels constituting of alumni
the LOCF from the academic year 2019-2020 .
60
and community members from various industries. Each
panelist discusses their current position and career path
In another initiative, the Government started the ICT Academy and offers tips and hints for students wanting to get into
in 2009 under the Public-Private-Partnership (PPP) model (in that career field. The panel discussion is followed by a
collaboration with the state governments, leading companies networking session which provides a great opportunity for
from the industry, and National Association of Software students to learn from professionals who have succeeded
Services Companies). This is a not-for-profit society that 63
in their chosen field .
provides platform to train the teachers in higher educational
institutes and enable students get industry ready in the ICT • J
ob Shadow Program: The program allows students to
industry (Information and communications technology). shadow an employer host for one day. The activities
Through its various initiatives, ICT Academy has significantly include observation of daily work, attending meetings/
contributed to Skill India, Digital India, Startup India and Make other activities, touring the facility, and informational
61
in India . interviews, that are beneficial for students to experience
64
the on-ground job activities .
The government can launch similar initiatives that bring
industry and academia together in the pharma sector.
58
India Skills Report 2020. Available at: https://wheebox.com/india-skills-report.htm#
59
“UGC Revises Curriculum Of UG And PG Programmes”, BW Education, September 2019. Available at: http://bweducation.businessworld.in/article/UGC-Revises-
Curriculum-Of-UG-And-PG-Programmes/03-09-2019-175631/
60
UGC website. Available at: https://www.ugc.ac.in/pdfnews/8221712_LOCF_eng.pdf
61
ICT Academy website. Available at: http://www.ictacademy.in/pages/Aboutus.aspx
62
AWS Academy website. Available at: https://aws.amazon.com/training/awsacademy/
63
Career Discovery Series page on the UCI website. Available at: https://career.uci.edu/career-discovery-series/
64
Job Shadow Program page on the UCI website. Available at: https://career.uci.edu/undergraduate/explore-a-career/job-shadow-program/
• Companies can launch skilling and re-skilling initiatives in supporting these areas, as well as the engineering of
collaboration with each other and industry associations to novel therapeutic proteins, vaccines, and nucleic acids.
establish an efficient skilling ecosystem in their sectors. For Postdocs can pursue their training at the company’s
example: Worldwide R&D campuses around the globe. Fellowship
support is offered for up to four years. Pfizer places a
• ‘FutureSkills’ is an initiative by NASSCOM launched in
strong emphasis on publications, attendance at major
2018 in collaboration with the IT-ITeS companies. The
international meetings, and career-building activities.
program aims to skill over 2 million candidates by 2023 on
Pfizer Worldwide R&D’s Annual Postdoc Symposium is
155+ skills, across 70+ jobs, in 10 emerging technologies
a highlight of the training program, bringing together
and 10 non-tech skills. The portal has been designed as a
trainees from all of Pfizer’s R&D locations for scientific
marketplace and content library where global providers
presentations by the trainees, as well as internal and
of content and learning come together to offer learners
external researchers. The program’s core mission is to
information on the latest jobs, the skills needed for those
65 match high-quality trainees with outstanding mentors and
jobs, learning content, assessments and certifications . 67
promising research projects .
• Train the trainer programs can be introduced in collaboration
with the government to increase the understanding of the Similar programs by other global life sciences
faculty about industry and job requirements. For example: companies include – Novartis Institutes for BioMedical
68
Research Postdoctoral Program , The Merck Research
• The Ministry of Skill Development & Entrepreneurship 69
Laboratories Postdoctoral Research Fellows Program ,
(MSDE) launched its ‘Train-the-Trainer’ program in 70
and Regeneron's Postdoctoral Program .
collaboration with IBM in 2019. The program aims to train
over 10,000 faculty members from Industrial Training
Academia and industry collaborations are synergistic
Institutes (ITIs) across India in Artificial Intelligence (AI)-
to each other. The industry benefits from access to
related education over a period of one year (by 2020).
innovative research and talent. Academia benefits by
Similar efforts can be replicated across industries and
66 getting the required funding, infrastructure and mentoring
institutes to widen the reach of such initiatives .
(technical and commercial) support for moving the ideas
• Companies should provide internships/sponsorships/ from research stage towards commercialization.
fellowship to deserving candidates. This can be a mutually
beneficial program where the students benefit by getting Government can also launch initiatives to increase the
on-job experience and the company gets tangible outputs. collaboration between the industry and the academia.
For example: An interesting initiative is the Carnot Institutes launched
by the France Government — refer to the figure 24 for
• Several global companies have postdoctoral research
details.
programs: Pfizer Worldwide Research and Development
sponsors a postdoctoral training program to pursue
research in the areas of disease biology, drug delivery
and mechanisms of action, and computational efforts
65
FutureSkills website. Available at: https://futureskills.nasscom.in/
66
Skill India and IBM come together for nationwide Train-the-Trainer program in Artificial Intelligence. Available at:
https://www.msde.gov.in/sites/default/files/2020-01/IBM-partners-MSDE-for-training-of-trainers-in-AI.pdf
67
Company website. Available at: https://careers.pfizer.com/en/postdoctoral-program
68
Company website. Available at: https://www.novartis.com/our-science/postdoc-program
69
Company website. Available at: https://jobs.merck.com/us/en/postdoctoral-research-fellow-program
70
Company website. Available at: https://www.regeneron.com/postdoctoral-training-program
Figure 24: Academia industry collaboration case study: Carnot Institutes (France)
Origin Objective
Founded in 2006, the Carnot institutes The Carnot initiative was part of a broader
facilitate acceleration of technology transfer effort that began in early 2000s to reform the
and innovation through long-term French innovation system and improve the
collaborative R&D between businesses relationship between the national research base
(including local and international SMEs to and private industry, particularly SMEs.
large corporations) and public research labs.
Aim of the programme is to boost the economic
Sometimes referred to as “Fraunhofer Lite,” impact of R&D projects deployed by Carnot
the Carnot initiative was designed based on Institutes in partnership with businesses in
best practices from Germany’s successful terms of job creation, domestic and export
applied research organization – revenue and competitiveness.
‘Fraunhofer-Gesellschaft’.
Network of
39 Carnot
Institutes
Approach Selection process
Focus is on 10 sectors, including Healthcare & Public applied research organizations are
Sport (pharmaceuticals, health technologies, invited to apply for the designation of “Carnot
sport & wellness). Institutes”. The Carnot Label is granted in an
open selection process to the organizations with
To harness their complementarity and unlock proven, high level R&I competencies in fostering
synergies, the different Institutes are organized innovation with industrial partners.
within an operational network headed by AiCarnot.
The label “Institut Carnot” is awarded for a
“Rendez-vous Carnot” events are conducted each 5-year renewable period. These organizations
year to give businesses of all sizes a chance to are also eligible for additional public funding
meet with big players in the world of R&D to speed that match – Euro for Euro – private funding
up their innovation projects. they raise through research contracts.
Interesting facts
20% of the French public 55% of the R&D funded by 85 spin off companies €798m of partnership contracts
laboratory workforces companies in French public research each year (€500m in R&D contracts directly
financed by companies, €154m of
services, €71m IP income) (2019)
35K research >10K R&D contracts with ~1.2K priority patents filed in
professionals with industry (~5K with SMEs – ISEs); 2018
~10K PhDs volume growth of 85% between €595m of subsidized collaborative
2015-2019 R&D (2019)
Source: The Carnot Network website. Available at: https://www.instituts-carnot.eu/en/carnot-label; 21st Century Manufacturing: The Role of the
Manufacturing Extension Partnership Program, Appendix 5 – The Carnot Initiative in France. Available at: https://www.nap.edu/read/18448/
chapter/16
(iii) Prevent brain drain their native countries in different ways such as participating in
71
training programs, research projects, etc .
Some of the initiatives discussed in the previous sections to
improve the quality of education and the availability of good Let us consider some of the efforts made by some other
job opportunities might reduce the number of Indian students developing countries to bring back talent and convert brain
moving out of the country for higher education. In addition to drain to wisdom gain.
preventing this ongoing “brain drain”, there is a need to launch • China: Though it continues to be the largest source country
specific initiatives to bring back talented Indians to the country. for internationally mobile students, China has also witnessed
These returnees can play a very important role in bringing the return of large numbers of foreign-trained nationals.
new learnings and trainings from developed countries that In addition to the incentives of China’s growing economy,
can increase the overall competitiveness of domestic industry. advanced research facilities, and lucrative job opportunities,
Another approach is ‘brain circulation’ (or ‘brain exchange’), in the government has offered the following initiatives to
which case expatriates contribute their knowledge and skills to encourage return of talent:
71
Dr. D. Zweig, “Returnees, Technology Transfer, and China’s Economic Development”, June 2009. Available at:
http://www.cctr.ust.hk/materials/working_papers/WorkingPaper28-DZ-Returnees_and_Tech_Transfer.pdf
• Chinese national plans for scientific and technological The Chinese talent returning back to the country has
(S&T) development (2006–20), human resources significantly contributed to scientific research, technological
development (2010–20), and education reform and economy, and academic leadership.
development (2010–20) all place emphasis on recruitment
Like China, Taiwan also used a multipronged approach to
of highly skilled returnees. The aim is to encourage 74
bring back expatriates . Similar initiatives as discussed
technology transfer by encouraging academic returnees
above can be adopted by India. A lot of challenges related to
to start their own businesses or join other government/
talent will automatically get resolved once the ecosystem and
private organizations. The government, in return,
infrastructure is in place.
provides special incubators, tax cuts, and access to
permanent residence in desired cities – in 2017 about 350
industrial and science parks constructed exclusively for
72
the foreign-educated housed over 27,000 enterprises .
The country started this initiative in the late 1980s with
the launch of its Torch Plan establishing New High Tech It is the law of osmosis – you create the higher
Development Zones (Xin Gao Jishu Kaifa Qu) in cities
density and the flow will happen. If the things are
around China. But to receive special privileges, projects
have to involve new technology and should be certified by done right, you do not need to attract, people will
local S&T. get attracted. China did this – they put everything in
• Other programs: Start-Up Research Grant Program place and then welcomed all who wanted to come.
enables returnees to start laboratories, buy equipment,
and hire research assistants. Many universities include Director of a leading Indian pharma company
overseas educational background and visiting scholar
experience as key criteria for hiring and promotion, and
holders of overseas PhDs can be made full professors
immediately upon their return. Fellowships from several
Ministries to talented returnees under programs such as
‘Bairen jihua’ (Hundred Talents Program), ‘One Hundred,
One Thousand, and Ten Thousands Program’, etc. —
recipients should have some new idea or technology to
73
win such awards .
72
“Technology Transfer via Intellectual Returnees in China’s Solar Industry”, Peterson Institute for International Economics, October 2017. Available at:
https://www.piie.com/blogs/china-economic-watch/technology-transfer-intellectual-returnees-chinas-solar-industry
73
Y. Ma, S. Pan, “Chinese Returnees from Overseas Study: An Understanding of Brain Gain and Brain Circulation in the Age of Globalization”, Front. Educ. China 2015
Available at: https://link.springer.com/article/10.1007/BF03397067
74
R. Davone, “Diasporas and Development. Available at: http://documents1.worldbank.org/curated/en/676991468332695451/text/393820Diasporas0development
01PUBLIC1.txt
2. Clinical research institutions and (ii) Encouraging active engagement of

hospitals: augmenting clinical research medical students and physicians in clinical
capabilities research
Globally, medical teaching institutions serve as the major hubs In many countries, such as the US and Europe, research is
of biomedical research. The physicians, with their expertise an integral part of the professional growth of physicians.
and the availability of large amount of patient data in the Physicians are actively engaged in industry-sponsored and
institutions, can make a significant difference in the quality of academic research. It is important to encourage a similar
research outcomes. research-oriented environment in the medical education
system in India. Medical institutions in India should include
India can enhance clinical research capabilities by strengthening
formal, structured research training curriculum covering
research training, incentivizing high impact research activities
different dimensions of medical research such as the wet lab,
and allocating appropriate funds. This will motivate more
data science, and clinical research. Training should also be
students to pursue research as a profession and enable them to
provided about research methods, ethics, and approaches to
carry out high quality research activities.
critical appraisal of published research.
(i) Integrating medical research training in Financial and non-financial incentives should be introduced
the curriculum to motivate medical students and physicians to conduct
research projects. Examples of non-financial incentives
The critical first step towards improving clinical research would include publications in peer-reviewed journals and/
activity and quality is to focus on the skill set. India needs to or commercialization of research being used as a criteria for
expand the pool of researchers trained in the fundamentals of prioritizing selection of students for postgraduate degrees, as
clinical research. Several studies have reported that clinical well as recognition and awards via appropriate public forums,
research and clinical trial knowledge are not appropriately among other incentives. Motivation can be further boosted
integrated into the medical undergraduate and postgraduate by ensuring that the topic of research is aligned with the
curriculum in Indian medical colleges. For example, a study physician’s interest, and, ideally, has significant potential to
conducted in 2014 in a medical college-cum-civil hospital in improve health outcomes. Financial incentives would include
Gujarat reported on low awareness of clinical research amongst pay increases, grants for attending conferences, promotions,
75
final year medical students and postdoctoral physicians . and others.
Another survey at a tertiary care teaching hospital in Gujarat
found that resident doctors are not specially trained on clinical Collaboration between medical colleges and established
76
trials (CTs) in their postgraduate curriculum . Similar findings research institutes can go a long way towards enhancing
were reported by other studies conducted in some other states the quantity and quality of research outputs. This can be an
such as Maharashtra and Punjab colleges .
77 effective way to increase competitiveness and acceptability
of India’s research in global peer-reviewed publication. To
A recent survey of doctors from government medical colleges motivate this, special funds can be set up for innovative
in West Bengal suggests that increased emphasis and projects in collaboration.
proper training on clinical research and clinical trials during
graduation and post-graduation encourages more physicians
to participate in clinical research during their medical training
78
and afterwards . Training and experience of research early in
career also helps in informing residents' career decisions and
has been associated with continued professional academic
work.
75
K. Sharma, “Low awareness of clinical research in India amongst final year medical students and physicians: Need for increased emphasis on clinical research in medical
curriculum”, 2014. Available at: https://www.amhsjournal.org/article.asp?issn=2321-4848;year=2014;volume=2;issue=2;spage=234;epage=237;aulast=Sharma
76
Dr. R. Malpure and Dr. C. Dumatar, “Awareness of clinical trial among resident doctors – Survey at a tertiary care teaching hospital in Gujarat”, Indian Journal of
Applied Research, March 2017. Available at: https://www.worldwidejournals.com/indian-journal-of-applied-research-(IJAR)/article/awareness-of-clinical-trial-among-
resident-doctors-survey-at-a-tertiary-care-teaching-hospital-in-gujarat/MTE0NTc=/?is=1&b1=317&k=80
77
S. Gupta et al., “Physician’s participation in clinical research – a questionnaire study”, Journal of Pre-Clinical and Clinical Research, 2019. Available at:
http://www.jpccr.eu/Physician-s-participation-in-clinical-research-a-questionnaire-study,108899,0,2.html
78
S. Choudhury et al., “Knowledge and perception regarding clinical trials among doctors of government medical colleges: A questionnaire-based study”, Perspect Clin
Res, 2016. Available at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4840798/
(iii) Expanding the pool of technically qualified 3. Start-ups: boosting the innovation
clinical researchers momentum
India can consider introducing more dual-degree courses With around 50,000 start-ups, India is today the third-largest
79 85
such as MD–PhD in the United States , and other programs start-up economy, after the US and the UK . However, India
rd
with specific focus on clinical training for physicians, such as ranked 23 (with a score of only 5.7) in the “Startup Ecosystem
National Institute for Health Research (NIHR) Academic Clinical Rankings Report 2020″; the US, for reference, had a score of
Fellowships (ACF) and NIHR Clinical Lectureships (CL) in the 123.2. The Start-up Ecosystem ranking focuses on innovation
UK. ACF posts get access to Masters-level research training to outputs and is derived from the number and quality of start-ups
develop academic skills and spend 25% of their time in research in a country and the business environment. Thirty-eight Indian
80
or educationalist training . The fellowship could lead to a PhD cities were in the list of top 1000 cities for supporting startup
81
(or equivalent), or if applicable a postdoctoral fellowship . ecosystems. Bangalore led the Indian cities with a score of 16.4,
The CL is intended to follow on from the ACF phase, when the followed by New Delhi, Mumbai and Hyderabad – the only four
82 th
trainee is in possession of a relevant PhD/MD . Similarly, a Indian cities among the top 100. Overall, India ranked 6 within
86
program has been launched in Singapore to encourage doctors Asia Pacific countries . There were more than 2,669 biotech
87
under specialty training to pursue a higher degree in research start-ups in India in 2018 .
(either a 3- to 4-year PhD or a 1-year MSc) in order to equip
EY conducted a survey in 2018 with 60 life sciences and health
them with research knowledge and skills that would allow them 88
care start-ups . According to the survey, the start-ups are
to develop translational research as they develop their clinical
83 working across a range of innovative solutions covering the
careers .
entire patient life cycle and product (pharma/biopharma drug)
Another option is to design specific programs that encourage value chain (refer to the figure 25). More than one third of the
physicians (including those in private or academic clinical survey participants identified funding as the biggest challenge,
practice) to engage in clinical research while maintaining an followed by regulatory processes and limited collaboration
active role in clinical practice. Programs along these lines with industry. The survey participants highlighted funding
have been established, for example, by the Clinical Research/ (42% participants), innovation and market potential (38%
Reproductive Scientist Training Program supported by the participants), and government support (23% participants) as the
National Institute of Child Health and Human Development, most critical enablers for growth.
Duke University, and the American Society for Reproductive
84
Medicine . Such programs will help physicians to relate clinical
experience to research and research knowledge to clinical
work and keep them motivated. Efforts should also be made
to address time commitment related challenges faced by Start-ups are coming up with innovative ideas, but
physicians. To manage time effectively between research and
there is limited collaboration with the industry. We
clinical commitments, provision could be made for research
administrative support to handle activities such as institutional think these start-ups can help and for that we need to
agreements, patient approvals, and so on. bring them closer together.
Head of drug development center India,

of a leading global pharma company
79
Association of American Medical Colleges website. Available at: https://students-residents.aamc.org/applying-medical-school/article/considering-combined-degree-
md-phd-md-mba-md-mph/
80
NIHR website. Available at: https://www.nihr.ac.uk/funding/nihr-academic-clinical-fellowships-in-medicine-2021/25719
81
NIHR website. Available at: https://www.nihr.ac.uk/documents/nihr-academic-clinical-fellowships-medical-guidance-for-recruitment-and-appointment-2021/25736
82
NIHR website. Available at: https://www.nihr.ac.uk/documents/2020-nihr-iat-clinical-lectureship-medical-guidance-for-recruitment-and-appointment/24115
83
M. Salto-Tellez et al., “How do we Encourage Clinician Scientists in Singapore?”. Available at:
https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.545.5004&rep=rep1&type=pdf
84
A. Armstrong et al., “Keeping clinicians in clinical research: the Clinical Research/Reproductive Scientist Training Program”, Fertil Steril, 2009. Available at:
https://pubmed.ncbi.nlm.nih.gov/19144332/
85
“With persistent pursuit of innovation, India makes to top 50 in Global Innovative Index 2020’; India Science, Technology and Innovation website. Available at:
https://indiascienceandtechnology.gov.in/listingpage/persistent-pursuit-innovation-india-makes-top-50-global-innovative-index-2020
86
Startup Ecosystem Rankings Report 2020. Available at: https://report.startupblink.com/
87
“India Bioeconomy Report 2020, BIRAC, March 2020. Available at: https://birac.nic.in/webcontent/1594624763_india_bioeconomy_rep.pdf
88
“Life Sciences 4.0: transforming health care in India”, February 2018. Available at:
https://invest-india-revamp-static-files.s3.ap-south-1.amazonaws.com/s3fs-public/2019-03/ey-transforming-health-care-in-india.pdf
Figure 25
Range of innovative solutions developed by the surveyed start-ups
Patient Lifecycle (41) Product Value Chain (21)
Disease management R&D

Remote patient Monitoring Affordable multi-purpose Advanced drug technology Novel antibodies
diagnostic devices platform
Electronic lab notebooks
IoT based medical devices R&D Services
Lab free disease diagnosis
Innovation in cancer High quality / affordable
Patient care platform Medical device research testing materials
Disease treatment Manufacturing

Genetic and molecular diagnostics IoT based personalized Continuous 3D cell culture technology
based personalized medicine surgery platforms manufacturing devices
Technology for large scale
Medical device AI and cloud based surgery Manufacturing services manufacturing
AI based robotic prosthetics devices / platforms
Sales and marketing
Disease diagnosis Multi-channel marketing
Early diagnosis Smart medical device
Supply chain
Wearables
Biomedical sensors based End-to-end Digital networks
Remote disease testing diagnostics Blood supply
traceability and for real-time
chain
Temperature control monitoring
Telemedicine Disease prevention
Solution support
Point of care diagnostics Health and wellness
enabled telemedicine wearables Information systems Customized ERP system
Online portals Customer engagement

Digital networks connecting
Medicine ordering AR / VR / mixed reality tools
healthcare stakeholders
Other areas: social network for doctors, intelligent labor monitoring devices
Size of the boxes is indicative of the total number of start-ups catering to the respective areas
Funding is the key challenge Key sources of funding for Key
21 the start-ups government
initiatives
highlighted
13 12 12 Bootstrapped 26 BIRAC Grants 15
by most of
10 9
8 Government the
25
incubators respondents Start-up India 8
Innovation based were BIRAC
24
competitions grants, DIPP/MSMEW 6
14 Start-up Schemes
Funding
support
Regulatory
processes
Collaborations
Human
resources
Infrastructure/
raw material
Customer trust
Market
access
PE/VC
India, Nidhi Prayas 3
High networth
9 DIP-
individuals
P/MSME
schemes
Source: Analysis is based on a survey conducted by EY in 2018 with the leaders of 60 life sciences and health care start-ups.
BIRAC: Biotechnology Industry Research Assistance Council; DIPP: Department of Industrial Policy & Promotion; MSME: Micro, Small &
Medium Enterprises; PE: Private Equity; VC: Venture Capital
There is a nice start-up environment in the country – but that start-up environment is fragmented and it
fizzles out. Start-ups must adopt a focussed approach by identifying top priorities.
Managing Director, India, of a leading global pharma company
In addition to the need for significantly higher amount of funds The government has taken several initiatives to tackle
and infrastructure, other challenges in drug research include these challenges. The Department of Biotechnology (DBT),
lack of mentoring support due to the requirement of specialized Department of Science & Technology (DST), Council of
skills and deep subject/domain knowledge. The long gestation Science & Industrial Research (CSIR), and Biotechnology
period and high-risk further act as deterrents for entrepreneurs Industry Research Assistance Council (BIRAC) are allocating
and investors. Even after a product is ready, it takes several generous amounts of money into the biotechnology start-up
years to get the required approvals to market the product. ecosystem by providing funds, mentoring, and infrastructure.
Additionally, one wrong step in drug research can take a We will discuss these initiatives in detail in the financing and
start-up back by months or years given the need to re-do the infrastructure sections of this chapter.
research. For investors, another challenge is the inability to
determine potential market value, especially if the idea is new
and in very early stages.
4. Big pharma/biopharma companies: Internal innovation

increasing focus on collaboration-led The R&D spending trend by the top 10 Indian pharma
companies has been stagnant over the last five years (2015-
innovation
2019). In 2019, the cumulative R&D spending by the top 10
The big pharma /biopharma companies play a very important life sciences companies was US$8.17 billion compared to
role not only in drug research and development, but also in US$0.15 billion from the top 10 Indian pharma companies.
realizing the potential of innovation achieved within academia The difference in spending is significant even if we compare
or start-ups, by bringing it to market. The big companies have the R&D intensity (R&D spend as a percentage of operating
the onus to boost R&D by promoting both internal innovation revenues) – the R&D intensity of top 10 global life sciences
(R&D efforts within the organization) and external innovation companies is ~2.5 times that of the top 10 Indian pharma
(R&D projects in partnerships, funding external research companies .
89
projects, etc.).
With the continued focus on generics and biosimilars R&D,
the share of novel innovation in the overall R&D investment is
already small compared to global counterparts. Hence, there
is a need for big companies to reconsider their future portfolio
priorities and invest optimally to achieve ambitious innovations.
Figure 26: R&D spend of Indian vs global pharma companies
20% 10.0
Avg. R&D expenditure (US$ b)
17% 17% 17% 17%

R&D expenditure as % of
8.17
15% 7.52 7.73
operating revenue
15% 7.5 6.98

6.51
10% 5.0
9% 8%
8% 7%
5% 7% 2.5
0.11 0.14 0.17 0.15 0.15

0% 0.0
FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19
Avg. % R&D spend by top 10 global pharma companies Avg. R&D spend by top 10 global pharma companies
Avg. % R&D spend by top 10 Indian pharma companies Avg. R&D spend by top 10 Indian pharma companies
Sources: Annual reports of Indian pharma companies; Capital IQ Company Screening Report for all Global Companies
Top 10 Indian pharma companies: Sun Pharma, Lupin, Cipla, Dr. Reddy’s Laboratories, Glenmark, Aurobindo Pharmaceuticals, Zydus Cadila, Alkem,
Torrent, Divis
Top 10 Global pharma companies: Johnson & Johnson, Abbott, Pfizer, Merck, Novartis, Sanofi, Roche, AstraZeneca, GSK, Bayer
External innovation
Life sciences companies globally are challenged by increasingly in-licensing, investments, or in collaboration with smaller
strained healthcare budgets, patent expiration, increased biopharmaceutical firms and academia. According to EY
regulatory scrutiny, and decreasing R&D productivity. In analysis, only 45% of all USFDA new drug approvals were won
response, Big Pharma has increasingly started to consider by big pharma companies between 2015 to 2019, and of these
sourcing innovation externally through acquisitions/ approvals about 60% were sourced externally.
Only 45% of NME FDA approvals were for Big pharma ~60% of the total approvals received by big pharma
between 2015-2019 were externally sourced in this period
~55% of all approvals were received by smaller (through collaborations and deals with academia
biotechs and biotechs)
89
Company reports, EY analysis
What could be a better proof than the fact that the first two access and support early and late stage innovation externally.
COVID-19 vaccines approved by the USFDA (i.e., vaccines Along with traditional mechanisms such as venture funding
90 92
from Pfizer-BioNTech and Moderna-National Institute of funding, J&J Development Corporation (JJDC) , the company
91
Allergy and Infectious Diseases ) — were conceptualized by has established an ecosystem of 13 incubators (JLABS and
small biotechs. What has easily taken earlier five-six years for JPODS) and 4 innovation centers globally (refer to the figure
a vaccine development, significant first line of defense against 27). These incubators and innovation centers have a no-strings
COVID -19 has been achieved in less than a year owing to attached model, i.e., the start-ups /companies are not required
public private partnership. to share their intellectual property or provide any rights. In
addition to providing money for setting up working labs and
Globally, Big Pharma is collaborating with smaller biotechs and
other business infrastructures, the company also provides
academia via several models. Consider the example of Johnson
entrepreneurs with mentoring support and other resources (for
& Johnson. The company has set up an entire framework to 93
example, access to the company’s compound library) .
Figure 27: J&J external innovation strategy
Interesting facts
Johnson & Johnson Innovation – accessing early innovation
J&J Development JLABS

J&J innovation Incubation and Crowdsourcing
Corporation (JJDC)
>US$169.6b centers – Venture funding
JPODS (virtual
Invested in R&D hubs)
from 1995 till 2020
Partnering offices
at scientific JLINX (Janssen)
US$12.2b hotspots
R&D investment
in 2020, Health & wellness
R&D investment J&J innovation technology
growing over the challenges accelerator
last seven years (Consumer)
Business development efforts for late stage innovation
119 Late stage licensing � Deals with established

Strategic deals and
and acquisition larger pharma companies M&A activities
partnerships
opportunities and mid to large biotech
in 2019*
*Does not include mergers and acquisitions

Source: Company reports
90
“FDA Takes Key Action in Fight Against COVID-19 By Issuing Emergency Use Authorization for First COVID-19 Vaccine” USFDA press announcement, December
2020. Available at: https://www.fda.gov/news-events/press-announcements/fda-takes-key-action-fight-against-covid-19-issuing-emergency-use-authorization-first-
covid-19
91
“FDA Takes Additional Action in Fight Against COVID-19 By Issuing Emergency Use Authorization for Second COVID-19 Vaccine”, USFDA press announcement,
December 2020. Available at: https://www.fda.gov/news-events/press-announcements/fda-takes-additional-action-fight-against-covid-19-issuing-emergency-use-
authorization-second-covid
92
Company website. Available at: https://jnjinnovation.com/jjdc
93
Partnering with Johnson & Johnson, BioWinConnect 22 May, 2019. Available at: https://www.biowin.org/sites/default/files/inline-files/Johnson%26Johnson.pdf
Another way major companies attract entrepreneurs is to Innoventia’ in 2018 to crowdsource and incubate “disruptive”
set up crowdsourcing challenge inviting ideas for innovation ideas globally across the healthcare spectrum. These concepts
in areas where pharma has not historically been strong. ranged across pharma, diagnostics, devices, digital and
Some major Indian pharma companies have also leveraged services. The company incubates, invests, mentors and/or
94
crowdsourcing techniques to access innovative ideas. For partners with the entrepreneurs who devise the winning ideas .
example, Cipla introduced ‘Ideate, Innovate, Incubate with
Enablers for boosting research and innovation and strengthening the

entire ecosystem
Technology: key enabler across the drug R&D life cycle

All top global pharma companies are leveraging technologies such as artificial intelligence, machine learning, cloud computing,
etc. in the drug discovery and research phase to increase productivity and reduce timelines. Clinical development is also
becoming virtual. The use of technology during R&D process has only accelerated due to COVID.
Indian companies should also invest in advanced technologies to establish themselves as the preferred global R&D destination
and manufacturer of innovative drugs.
Figure 28: Role of advanced technologies in making R&D faster and more cost-effective
Augmented Reality and

Virtual Reality
Artificial Intelligence Improve trial participant experience
Enhance molecule analysis
Identify new targets/indications Create new therapeutic modalities
and improve success rates
Select appropriate research sites
Improve clinical trial patient matching Genetics and genomics
and recruitment Identify responders for oncology therapies
Reduce patient drop-outs Develop targeted therapies outside
Predict trial risks, cost and quality oncology
Improve clinical trial design Create individualized therapies
Blockchain
Wearables and sensors
Secure research transfer
Capture real-world data for better Secure health data collection and sharing
trial design Increase efficiency in identity and access
Improve patient adherence management
Help in continuous passive monitoring Improve trial quality and patients’ safety
Leverage digital endpoints in at reduced cost
clinical trials
Cloud and edge computing Today: already in use
Improve data aggregation and storage Tomorrow: evidence of initial use cases
Allow affordable high-throughput and expected to become commonplace
screening in near future
*This list is indicative and not exhaustive

Source: EY analysis
94
“INNOVENTIA by Cipla plans to invest upto $15 million in a disruptive healthcare idea”, The Economic Times, June 2018. Available at:
https://health.economictimes.indiatimes.com/news/industry/innoventia-by-cipla-plans-to-invest-upto-15-million-in-a-disruptive-healthcare-idea/64448089
1. Set up advanced infrastructure Efficient utilization of existing infrastructure

and establishing new infrastructure
Government initiatives
(i) Synergistic collaboration between all
Considering its immense growth potential, biotechnology
government research bodies
has been chosen as one of the champion sectors in Make in
95
India initiative . Funds and infrastructure support has been Different government organizations have launched several
committed under the start-up India initiative. initiatives and set up research institutes to support innovation
in India. However, these organizations are currently under
To provide for specialized facilities required for biopharma
different departments. For example, the Indian Council of
research and innovation, government has established
Medical Research (ICMR) is the apex body in India for the
incubators and parks for start-ups. The Department of
formulation, coordination and promotion of biomedical
Biotechnology (DBT) has set up nine biotechnology parks 99 100
research ; the Department of Biotechnology (DoB) and
and incubators that offer facilities to scientists and small 101
Council of Scientific and Industrial Research (CSIR) are under
and medium sized enterprises (SMEs) for technology
96 the Ministry of Science and Technology; and the Department
incubation, technology demonstration and pilot studies .
of Pharmaceuticals (DoP) is under the Ministry of Chemicals &
The Biotechnology Industry Research Assistance Council 102
Fertilizers (MoC&F) . NIPERs and other pharma public sector
(BIRAC) has supported 50 bio-incubators across the country 103
undertakings (PSUs) are under the DoP , while biotech parks
since 2014 to nurture the ecosystem. It has also set up four 104
are established by the DBT , and over 40 labs come under the
regional centers to foster and facilitate bio-entrepreneurship 105
purview of the CSIR , with a further 30 institutes under the
and mentor bio-entrepreneurs for transforming innovative 106
97 ICMR .
biotech ideas into successful and sustainable ventures . The
Technology Development Board has funded 36 Technology
Business Incubators (TBIs) and Science & Technology
Entrepreneur Parks (STEPs) under Seed Support System for
98
start-ups in Incubators .
More of these incubation centers and parks need to be

“Multiple agencies (e.g. ICMR / DBT / CSIR, etc.)
established with a focus on pharma research and innovation. operate in silos, making central tracking of KPIs
The following measures can be considered to bring in more harder; also, usage of grants is inaccessible and
efficiency in the utilization of existing infrastructure and suboptimal. The government needs to form a central
establishment of new infrastructure.
committee with representatives from all relevant
agencies that gives direction on research focus areas
and encourages collaboration.
R&D head of a leading Indian pharma company
95
Department of Biotechnology website. Available at: http://dbtindia.gov.in/schemes-programmes/translational-industrial-development-programmes/make-india-start-
india
96
Department of Biotechnology website. Available at: http://dbtindia.gov.in/schemes-programmes/translational-industrial-development-programmes/biotech-parks-
incubators
97
BIRAC website. Available at: https://birac.nic.in/mii/Map.php
98
Technology Development Board website. Available at: http://tdb.gov.in/seed-support-scheme/
99
ICMR website. Available at: https://www.icmr.gov.in/aboutus.html
100
Department of Biotechnology website. Available at: http://dbtindia.gov.in/
101
Council of Scientific and Industrial Research website. Available at: https://www.csir.res.in/
102
Department of Pharmaceuticals website. Available at: https://pharmaceuticals.gov.in/
103
Department of Pharmaceuticals website. Available at: https://pharmaceuticals.gov.in/nipers
104
Department of Biotechnology website. Available at: http://dbtindia.gov.in/schemes-programmes/translational-industrial-development-programmes/make-india-start-
india
105
Council of Scientific and Industrial Research website. Available at: https://www.csir.res.in/csir-labs
106
Indian Council of Medical Research website. Available at: https://main.icmr.nic.in/institutes
Figure 29: Research & Development Ecosystem: Singapore
60
Prime Research Innovation and Enterprise Council (RIEC)

Minister’s
Office Scientific Advisory Board (SAB)
National Research Foundation (NRF)
Ministry of Trade & Ministry of Ministry of Other Ministries & Ministry of

Ministries
Industry Education Health Agencies* + NRF Defence
Focus on policies related

Oversees policies Oversees policies
to economically-oriented
related to the institutes related to the
and industry R&D
of higher learning (IHLs) institutes of higher
and provides funding learning (IHLs) and
support for IHLs to provides funding
perform R&D support for IHLs to
perform R&D
R&D Economic Enterprise Agency for Science
Funding Development Singapore Technology & Academic Research
Bodies Board (EDB) Research (A*STAR) Council National Medical Future Systems
Research Council & Technology
Directorate
Provides Grows Performs
funding Singapore economically-
support for companies oriented R&D
companies to through to support
conduct R&D innovation, companies
and building
a vibrant
startup
ecosystem
R&D Multi-national Small & Medium- Research Universities Hospitals Other Government Defence Science
Performers Companies’ Corporate sized Enterprises Institutes Labs Labs
Labs (SMEs)
*Ministry of National Development: Runs the National Innovation Challenge on Land and Liveability | Infocomm Media Development Authority: Co-secretariat for the Smart Systems Strategic Research Programme | Smart
Nation Program Office: Co-secretariat for the Smart Systems Strategic Research Programme | Singapore National Water Agency: Runs the Clean Water Strategic Research Programme | Energy Market Authority: Runs the
Clean Energy Strategic Research Programme
Source: National Research Foundation website

In Singapore, research and development activities are areas of development, capabilities upgradation, innovation,
supported by three main pillars: the Research Innovation transformation, and global growth. Agency for Science
and Enterprise Council (RIEC), the Scientific Advisory Board Technology and Research (A*STAR) is also a statutory board
107
(SAB), and the National Research Foundation (NRF) . under the Ministry of Trade and Industry in Singapore, which
The RIEC develops policies and long-term strategies aimed has several institutes under it carrying out economically-
at transforming Singapore’s capabilities in research and oriented research and development activities to support
technology. The RIEC is chaired by the Prime Minister and is companies. There are other Ministries and Ministry of Defence
supported by the SAB. The policies developed by the RIEC are also which are involved in research activities in other areas and
in turn implemented by the NRF which acts as an overarching defense respectively.
body overseeing all research and development activities
The Agency for Science, Technology and Research (A*STAR)
across various technology sectors and ministries under the
is Singapore’s lead government agency dedicated to advance
government of Singapore.
scientific discovery and technological innovation. The
Pertinent to note is that the REIC is comprised of organization’s horizontal technology centers develop R&D
representatives from the government (across multiple strategies in four key areas: "Urban and Green", "Artificial
ministries), national and international experts from academia Intelligence, Analytics and Informatics", "Health and Medical
and industry. The SAB consists of national and international Technologies", and "Agritech and Aquaculture". These
108
experts across multiple areas of science and technology . centers pull together multi-disciplinary capabilities cutting
The NRF is made up of representatives/bureaucrats from the across an array of A*STAR research institutes and programs
government, national and international experts from academia providing R&D capabilities from end to end, across the value
109
and industry . Consequently, there is a productive alignment chain. Biomedical Research Council (BMRC) and Science and
between Singapore’s national research and development Engineering Research (SERC), along with all the research
aspirations as well as industry requirements, which increases entities under them, come under the ambit of A*STAR. The
possibility of technology commercialization at a later stage. agency also has a commercialization arm, A*Ccelerate
(commercialization and technology transfer). A*Ccelerate,
While academic and medical research are under the purview of
staffed with IP, technology transfer and commercialization
the Ministry of Education and Ministry of Health respectively,
professionals, enables translation of inventions and intellectual
the Ministry of Trade and Commerce focuses on policies
capital into marketable products, processes and services.
related to economically-oriented and industrial research and
A*STAR Graduate Academy (A*GA) offers a comprehensive
development. The Ministry of Trade and Commerce provides
suite of undergraduate, PhD and post-doctoral scholarships.
funding support for multi-national companies and laboratories
The agency also offers collaboration through several models
to conduct research and development through the Economic
— such as ‘many to one strategic partnerships’, ‘one to one
Development Board (EDB). The EDB provides companies
partnerships/projects’, ‘one to many consortia’, ‘many to
information on doing business in Singapore, connectivity
many consortia’. The Joint Planning Hub has representation
to potential business partners, insights into the region, and
from different entities of A*STAR. It is responsible for laying
assistance to increase capacity and build new capabilities, in
down plans and policies for effective implementation of the
certain cases.
undertaken projects. The Research Office lends its support by
Enterprise Singapore is a statutory board under the Ministry of recruiting scientists and researchers, forming a global meld of
Trade and Industry in Singapore, established to support small scientific talent, for the projects under A*STAR.
and medium enterprises in Singapore with their activities in the
107
NRF website. Available at: https://www.nrf.gov.sg/about-nrf/rie-ecosystem
108
Adviser to NRF, Former President of Nanyang Technological University | 2. Director, Max Planck Institute for Polymer Research | 3. Chairman, Cancer Research UK
| 4. Chairman of SAB, Cavendish Professor of Physics, University of Cambridge | 5. President Emeritus, California Institute of Technology | 6. President, Gordon
and Betty Moore Foundation | 7. Chief Scientific Adviser for National Security, UK | 8. Adviser to NRF, Former President of Nanyang Technological University | 9.
Associate Research Director, The Francis Crick Institute | 10. Senior Vice President, Chief Technology Officer (Artificial Intelligence), Hewlett Packard Enterprise
| 11. Former Vice President (Advanced Technologies), GE Global Research Benjamin Peirce Professor of Technology and Public Policy, John A. Paulson School of
Engineering and Applied Sciences and Professor of Physics, Emerita, Harvard University | 12. Emeritus Professor, ETH Zurich | 13. Professor of Computer Science
and Mathematics, The Hong Kong University of Science and Technology
109
NRF website. Available at: https://www.nrf.gov.sg/about-nrf/national-research-foundation-singapore
National level initiatives are facilities and expertise hosted applied research to industrial applications in specific niche
110
and managed by A*STAR but funded nationally or by multiple areas, for example, manufacturing .
public stakeholders and serve specific national needs, for
Overall, the end result is that all economically-oriented and
example, supercomputing, robotics, etc. Joint Institutions are
industrial R&D activities come under a single highly effective
built upon strong public-private partnerships, akin to consortia,
governance structure with two levels of multiple stakeholder
comprising members, ranging from global multinational
participation, ably supported by an advisory board consisting of
corporations (MNCs) to small and medium enterprises (SMEs),
experts across the government bodies, academia and industry.
with an aim to accelerate the transfer of innovation from
110
A*STAR website. Available at: https://www.a-star.edu.sg/
Figure 30: Agency for Science, Technology and Research — Structure
Chief Scientist
Chairman, SERC Advisory Council
Chairman & Board of Directors
Chairman, BMRC Advisory Council Advisors
Chief Executive Officer (CEO) Chief artificial intelligence (AI) Scientists
Chief Innovation Officer
Deputy Chief Executive Research Deputy Chief Executive Corporate & General Counsel
National Level Initiatives Enterprise Division Biomedical Research Council Science & Engineering A*Star Graduate Corporate
(BMRC) Research Council (SERC) Academy Group
• Diagnostics Dev. Hub • Assistant Chief Executive
• Experimental Drug Dev. Centre • Assistant Chief Executive • Assistant Chief Executive • Executive Director • Corporate
A*ccelerate Technologies • Director Executive • Executive Director, Research Communications
• National Metrology Centre
• National Robotics R&D
PTE Ltd. • Finance
Research Office
Programme Office BMRC Research Entities SERC Research Entities • HR
• Chief Executive Officer • Senior Director
• National Supercomputing • Leadership &
Centre A*Star Research Institutes A*Star Research Institutes Organisation
Industry Development Group Development
• Technology Centre for Joint Planning Hub
Offshore and Marine, • Bioinformatics Institute • Institute for Chemical & • Information
Singapore • Bioprocessing Technology Engineering Sciences Technology
• Group Director • Acting Group Director Shared Services
Institute • Institute of High & Chief Strategy
• Genome Institute of Singapore Performance Computing Officer • Information
• Institute for Infocomm Security
Horizontal Technology • Institute of Bioengineering & • Policy & Planning
Joint Institutions Programmes Nanotechnology Research Division • Enterprise Risk
• Institute of Materials Management
• Institute of Medical Biology • BMRC Planning
• Advanced Remanufacturing & AgriTech & Aquaculture Research & Engineering Directorate • Legal
• Institute of Molecular & Cell
Technology Centre • Institute of Microelectronics • Procurement
Biology • Corporate Group
• Skin Research Institute of Singapore
A*STAR Initiative for AI & • Singapore Bioimaging Consortium Planning Directorate • Digital
Singapore • Institute of Manufacturing Transformation &
Analytics • Singapore Immunology Network • Enterprise Planning
• InVivos Technology Directorate Innovation
• Singapore Institute for Clinical • Safety, Facilities &
• Singapore Biodesign Integrative Social Science Sciences • SERC Planning
Programmes, Platforms & Directorate Administration
• Singapore Institute of Food and Scientific Services
MedTech Biotechnology Innovation • A*GA Planning
Directorate
Robotics
• Singapore Aerospace • Research & Statistics
Programmes, Platforms & Programme Office
Scientific Services Unit
Urban & Green Tech • Pharma Innovation • Data Analytics Unit
Programme Singapore
• A*STAR Infectious Disease Labs • Futures Unit
• Biological Resource Centre
• NanoBio Lab
• p53 Laboratory
• Translational Laboratory in
Genetic Medicine
63
Source: A*STAR website

National Institutes of Health (NIH) and approvers of grants. The entire grant approval process
is transparent, and involves two levels of review. The
Another example of a unified governance structure for first level consists of peer review results in scoring of
research and development is the functioning of institutes applications, based on multiple parameters including but not
focusing on specialized areas under the NIH in the US. limited to significance, investigator, innovation, approach,
The NIH is the primary medical research agency of the US etc. The second level involves review by an Advisory Council,
responsible for biomedical and public health research. All after which a decision is reached on the approval / rejection
initiatives and research bodies/institutes involved in healthcare of a grant application. This process is standardized across
research come within the remit of the NIH. Some key aspects all NIH institutes, and aims to eliminate bias and variations
and activities of the NIH include: in the grant approval process. Similarly, the OTT division
provides details about licensing opportunities, information
• With more than US$40 billion worth investment annually, about royalty for inventors and licensees, and other polices.
the NIH is the largest public funder of biomedical research
globally. More than 80% of the funding is awarded for
(ii) Performance based criteria for funding
extramural research through almost 50,000 competitive
grants to more than 300,000 researchers at more than and support
2,500 universities, medical schools, and other research A central committee can be set up to coordinate national health
111
institutions across the US . and life sciences research policy and its implementation. This
• NIH also awards funds to Research Evaluation and committee should regularly monitor and periodically audit
Commercialization Hubs (REACH) designed to speed up the the performance and relevance of all initiatives (including
translation of biomedical discoveries into commercially- the performance of the R&D centers and clusters, efficient
viable diagnostics, devices, therapeutics, and tools to utilization of the incubators, accessibility to the grants,
improve patient care and enhance health. The REACH research projects, funding/grants, and so on) run by the
program merges the strengths of high-impact research different organizations.
institutions with product development expertise and
To make the incubator ecosystem more robust and outcome-
resources from federal and private-sector partners.
focused, there should be periodic assessment of the
• NIH has 27 Institutes and Centers, each with a specific performance of the companies nurtured by the incubator. The
research agenda, often focusing on particular diseases or incubators that are not performing well could be closed and
body systems. more funds could be diverted to high performing incubators.
• The agency has set up a comprehensive intramural and The aim for all incubators should be to self-finance their
extramural training and talent development infrastructure. operations over a period of time.
Its ‘Research Training and Career Development’ division
offers programs to help prepare individuals for careers in (iii) Non-public and collaborative sources for
biomedical, behavioral, social, and clinical research. ‘NIH infrastructure
Clinical Center’ offers trainings for translational and clinician
scientists. To further expand the availability of advanced infrastructure
and financing, the government could consider more private-
• NIH Office of Technology Transfer (OTT) connects the 113
public partnerships by leveraging CSR funding or using
inventive discoveries made in the Intramural Research
competitive tendering processes to select private partners for
Program (IRP), the CDC, and the USFDA to commercial
setting up joint incubators. Israel Innovation Authority’s (IIA)
partners that develop these technologies into products and
112 Technology Incubators Program is a very good example of PPP.
services that benefit public health .
The IIA makes the investment and then the private investors
• All Centers under NIH have detailed guidelines on procedures join in for running the incubator. These private investors are
and policies. For example, the NIH Center for Scientific selected on competitive basis. Similar model is now being
Review provides clear guidelines and criteria for applicants implemented in New Zealand and Argentina .
114
111
NIH website. Available at: https://www.nih.gov/
112
NIH website. Available at: https://www.ott.nih.gov/nih-and-its-role-technology-transfer
113
“Decoding contributions to technology incubators under Corporate Social Responsibility”, India CSR, July 2016. Available at: https://indiacsr.in/decoding-
contributions-to-technology-incubators-under-corporate-social-responsibility/
114
“Can Israel’s startup success be replicated elsewhere?”, Israel21c, March 2020. Available at: https://www.israel21c.org/can-israels-startup-success-be-replicated-
elsewhere/
(iv) Set up big parks and clusters Academia

Parks and clusters provide a very good opportunity for Academia can play a big role in facilitating entrepreneurs since
increased collaboration between all the different stakeholder they have the required infrastructure (space, labs, instruments,
groups — academia/research institutions, hospitals/medical etc.), expertise (teachers, mentors, etc.), networks
institutions, start-ups, big pharma — which is very important (connections with industry, government support, etc.) and
for setting up the innovation ecosystem. In addition, the financing from public and private sources. Several examples
companies and institutions can also benefit by economies of of successful on-campus incubators have emerged globally,
116 117
scale in procuring all material (refer to the Massachusetts such as Harvard iLab , Northeastern University’s IDEA ,
118
innovation ecosystem case study, figure 23). To gain efficiency and The Garage at Northwestern University . Activities in
and reduce costs, a centralized system can be set up at a this direction can be seen in some Indian institutions as well,
cluster level to provide support services, such as testing and such as the IITs and IISc. Some global universities are now
validation services, legal support for intellectual property and also setting up off-campus, remote incubators within other
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patenting, and so on. innovation ecosystems . This encourages more networking
and integration within the ecosystem.
Big pharma Another interesting new trend is ‘co-location’ — academic
The big pharma/biopharma companies can play a larger role in research facilities bringing small companies within their own
supporting and integrating with the innovation ecosystem. We walls. A good example is the BioFrontiers Institute (University
saw the example of J&J in the previous section. Most global big of Colorado) which has designated space to lease to industry
pharma companies have incubators or entrepreneur support partners, allowing local and national biotech companies to
programs across the world. bring scientists and resources on-site and work with university
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students and researchers .
We are seeing initial developments in this area in India. In early
2020, as a part of its corporate social responsibility (CSR) Another advantage of housing incubators in academia is the
initiative, Agilent announced funding support for IIT Delhi to difference in innovation mindset and end objective. While, for
set up an incubator site for bioanalytical science. The set up the entrepreneurs the idea of innovation may focus on return
will support incubated start-ups at IIT Delhi to advance efforts on investment, within academia innovation may be able to
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in biotherapeutics . More such initiatives can be taken up by focus more on experimenting, which is critical for coming up
Indian pharma companies and should prove mutually beneficial with disruptive ideas and products. Hence, academic incubation
to them and the aspiring entrepreneurs. centers in collaboration with industry, can serve as the
nurturing grounds for some of the most innovative ideas.
Academic researchers do not see failure, they see challenge, while an entrepreneur sees failure as a loss of
money – so the perspective and focus are different.
Many entrepreneurs drop research because of early failure. This can be taken care of by strong partnership
with academia. Failure could be taken up as an academia challenge while the industry could utilize successes
and take them forward.
Director of a leading Indian pharma company
115
“Agilent and IIT Delhi sign MoU to set up incubator site for bio-analytical science in Delhi”, Pharmabiz, February 2020. Available at: http://www.pharmabiz.com/
NewsDetails.aspx?aid=121027&sid=2
116
Harvard innovation labs website. Available at: https://innovationlabs.harvard.edu/harvard-i-lab/
117
IDEA website. Available at: https://www.northeastern.edu/idea/about-us/
118
The Garage website. Available at: https://thegarage.northwestern.edu/
119
“Academic Incubators Think Beyond Campus Borders to Spark Innovation”, The National Law Review, September 2018. Available at: https://www.natlawreview.com/
article/academic-incubators-think-beyond-campus-borders-to-spark-innovation
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“Biotechnology building debuts state-of-the-art E-Wing”, August 2017. Available at: https://www.colorado.edu/biofrontiers/2017/08/31/biotechnology-building-
debuts-state-art-e-wing
Access to data for research and innovation 2. Financing the complete cycle from
Along with advanced instruments and labs, medical research idea generation to market launch
also requires a huge amount of data. Government can play
a very important role in generating and providing access to Along with infrastructure support, the government is also
data required for research. The government could provide playing a significant role in financing research and innovation
platforms for safe sharing of data from different sources, such in the country. Several government agencies provide financial
as epidemiological databases, patient registries, and historical support for research and innovation activities to academics,
clinical trial data, among others. With strong data protection start-ups, small and medium enterprises (SMEs) in several ways
and sharing infrastructure, the recently launched National such as grants, low interest loans, equity shares, etc.
Digital Health Mission (NDHM) can provide a large amount of BIRAC provides financing support for biotech research and
useful data required for advancing research and innovation. innovation across the product life cycle and stakeholder
Drug companies should also, without compromising intellectual types (e.g., start-ups, academia, students, SMEs). Below is a
property, contribute historical drug discovery data and summary of some key schemes across the product life cycle:
chemical libraries in the form of open repositories or through • Ideation to early stage:
federated learning models.
• Biotechnology Ignition Grant (BIG): largest early stage
One example of this kind of open innovation is a global pharma biotech funding program in India. Funding grant of up to
company that provides free and open access to selected pre- INR 5m (as grant-in-aid) over a duration of up to 18-month
clinical compounds for non-clinical investigation purposes. period to young start-ups and entrepreneurs to build and
The molecules have been designated either as Molecules to refine idea to proof-of-concept (PoC). INR 250 crore is
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Order (with no associated cost) or Molecules for Collaboration. committed under BIG . The scheme had supported ~400
Scientists interested in Molecules for Collaboration are invited projects (including 112 new projects during FY18-19),
to submit a research proposal. If the proposal is chosen, the resulting in the creation of more than 100 start-ups and
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research is developed together with the company scientists. filing of more than 100 IPs till FY18-19 .
Federated learning case study: European project MELLODDY • Other schemes include ‘Students Innovations for
— MachinE Learning Ledger Orchestration for Drug DiscoverY, Advancement of Research Explorations’ or SITARE (to
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a drug-discovery consortium — was established in 2019 support innovative student projects ) and ‘Encouraging
under public and private partnership between ten leading Youth for Undertaking Innovative Research through
pharmaceutical companies (Amgen, AstraZeneca, Astellas, Vibrant Acceleration/E-YUVA (to promote a culture of
Bayer, Boehringer Ingelheim, Servier, GSK, Janssen, Novartis, applied research and need-oriented entrepreneurial
Merck), top European universities (KU Leuven, the Budapest innovation among young students and researchers).
University of Technology and Economics), four start-ups, and • Ideation to late stage (Intensifying the Impact of
an Artificial Intelligence (AI) computing platform provider. The Industrial Innovation or i4): for pulling translational ideas
platform aims to eliminate the tradeoff between data sharing from start-ups, SMEs and Limited Liability Partnerships
and security by using federated learning and blockchain. (LLPs) past PoC to validation, scale-up, demonstration and
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Blockchain offers a method to decentralized machine learning pre-commercialization of products and technologies .
in which chemical libraries continue to be stored securely with • Small Business Innovation Research Initiative (SBIRI):
respective pharma companies and the machine learning based launched in 2005 to boost Public-Private-Partnership
algorithms travel between data sets for training. With access (PPP) efforts. Provides early stage funding for high risk
to over a billion data points relevant to drug development, the innovative research in SMEs – up to 50 lakhs of 100%
platform can more quickly and accurately predict promising grant to primary + collaborating company (if any). For
compounds for development, all without sacrificing the data projects more than INR 50 lakhs, grant provided is INR
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privacy of the participating companies . 50 lakhs + 50% of the cost exceeding INR 50 lakhs .
126
SBIRI had supported 217 projects till FY18-19 leading to

the creation of 27 IPs and validation/development of 38
products / technologies.
121
“The MELLODDY project”, FierceBiotech, October 2019. Available at: https://www.fiercebiotech.com/special-report/melloddy-project
122
BIRAC website. Available at: https://www.birac.nic.in/big.php
123
BIRAC Annual Report 2018-19. Available at: https://www.birac.nic.in/webcontent/1576450800_birac_annual_report_english.pdf
124
BIRAC website. Available at: https://www.birac.nic.in/desc_new.php?id=581
125
BIRAC website. Available at: https://www.birac.nic.in/birac_i4.php
126
• Biotechnology Industry Partnership Programme (BIPP): • Accelerating Entrepreneurs (AcE) Fund: an equity
a government partnership with industries for support on "Fund of Fund" exclusively for Biotech start-ups. AcE
a cost sharing basis for path-breaking, high-risk research daughter funds are SEBI registered private funds to
on identified national priority areas. It supports validation, invest equity in start-ups. AcE Fund makes a maximum
demonstration and pre-commercialization of product capital commitment of up to INR 30 crores or up
and technologies. Funding of 50% of the total project to 30% of the total aggregate capital commitment
is provided irrespective of the amount with focus on IP amount in each AcE daughter fund. Funding of INR
creation and ownership retained by the Indian industry 7 crores is provided to a start-up against equity. The
127
and collaborating scientists, wherever relevant . BIPP AcE daughter fund invests at least twice the amount
st 131
had supported 214 projects till 31 March, 2020 leading contributed by the AcE Fund .
to creation of 31 IPs and validation/development of 52 • Product Commercialization Program Fund (PCP Fund):
products/technologies. provides financial support for test-validation in targeted
• Promoting Academic Research Conversion to Enterprise markets and large-scale commercialization once the
132
(PACE): supports academia to develop technology/ technology/product is market ready .
product of societal/ national importance up to PoC stage • Intellectual Property (IP) and Technology Transfer (TT):
and its subsequent validation by an industrial partner. Patent Assistance Funding Scheme provides assistance
• Academic Innovation Research (AIR): promotes for IP protection.
development of PoC for a process/product by Financing incentives and aids for research and innovation are
academia with or without industry involvement. also provided by other government bodies such as DST, CSIR,
• Contract Research Scheme (CRS): aims at validation DSIR, etc. Challenge grants are also becoming popular, such
of a process or prototype developed by the academia as ‘Grand Challenges India’ for healthcare solutions for poor is
128
by the industrial partner . funded jointly by the Bill & Melinda Gates Foundation and DBT,
133
PACE had supported 71 projects till FY18-19 leading and implemented by BIRAC . Like BIRAC, the pharmaceutical
to creation of 2 IPs and development of 7 products / industry needs more funding options.
technologies. While the government’s role as a benefactor through direct
• Equity funding: benefit transfers (DBTs) for R&D is key to unlocking an
innovation mindset in India, it is critical that all funding
• Sustainable Entrepreneurship And Enterprise
initiatives are disbursed keeping highly qualified criterions set
Development (SEED) Fund: funding support of INR
out by a panel consisting of senior government authorities,
200 lakhs to selected incubators under BIRAC's Bio-
industry veterans with proven expertise in evaluating such
NEST Scheme. These incubators then provide equity
projects. Financial experts should minutely track outcomes and
support of up to INR 30 lakhs to the most innovative
KPIs to ensure that the entire money allocated in the form of
start-ups in the incubators until they are able to raise
grants or funds is completely accounted for.
investments from angel/VC or loans from commercial
129
banks /financial institutions .
• Launching Entrepreneurial Driven Affordable Products
(LEAP) Fund: funding support of INR 5 crore is
provided to selected BioNEXT Bioincubators. The
Bioincubator uses the fund to invest up to INR 1
crore per start-up against equity and equity linked
instruments. The aim is to enable the selected most
innovative start-ups to pilot/ commercialize their
130
products/technologies .
127
128
129
BIRAC website. Available at: https://www.birac.nic.in/seedFund.php
130
BIRAC website. Available at: https://www.birac.nic.in/leapFund.php
131
BIRAC website. Available at: https://www.birac.nic.in/aceFund.php
132
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BIRAC website. Available at: https://www.birac.nic.in/grandchallengesindia/program.php?pid=5
Innovative funding mechanisms and advice from an independent Advisory Committee

comprising of veterans from the business and investment
Long gestation period, excessive risk and uncertainty are the sectors, professionals and academics. The government
key reasons for limited financing by private investors in life and each VC fund invest in an approximate ratio of 1:2.
sciences research and innovation, especially during the initial
A similar initiative, VentureEU — a €2.1 billion funds-of-
phase of research. The threat of binary risk in the late stages in
funds program, was launched by the European Investment
terms of regulatory approvals adds an extra layer of risk.
Fund (EIF) and European Commission (EC) in 2016
To ensure that the life sciences start-ups/entrepreneurs
Israel’s Yozma, was another similar successful initiative
and smaller firms sustain the entire research and innovation
established by the Israel government in 1993. Yozma
period, it is important to adopt some innovative financing and
invested around $80m for 40% stake in 10 new VC funds.
risk-sharing mechanisms. To further increase the availability
To further attract foreign investors, the program offered
of financing from public and private sources for research
them insurance covering 80% of the downside risk and
and innovation, especially for truly innovative and high-risk
gave them the option to buy out the government’s share
projects, the government should explore and consider some
at a discount within five years (which was later exercised
funding models leveraged by other developed and developing 135
in eight of the funds) .
countries. The section below discusses a few of such practices.
• Guarantee programs to mobilize private investment: an
• Financing options beyond simple grants
example is the European Fund for Strategic Investments
• Convertible grants: can be in the form of repayable grant (EFSI) – a €21b guarantee program launched in 2015
or innovation credit. The repayment is conditional on the by the European Investment Bank (EIB) and European
success—either technical or commercial—of the innovation Investment Fund (EIF) to trigger €315 billion of additional
project. In another approach, grant can be converted into investment in a three-year duration (till mid-2018).
a loan if the project is successful — for example under the With EFSI support, the EIB Group provides funding for
134
Malaysian Cradle Fund . economically viable projects, especially those with a
136
• Crowdfunding: a mechanism through which the general higher risk profile than usually taken on by the bank .
public can financially support nascent ideas and After exceeding the initial goal and getting extension of
entrepreneurs. Crowdfunding can be in the form of two years, EFSI 2.0 has now also exceeded its second
donations, loans or equity. Between 2014 and 2015, target of supporting €500 billion in investment by
137
equity crowdfunding increased by 295% in the UK. 2020 .
In 2015, US$150b was generated globally through • Encourage public/private investment in highly innovative,
crowdfunding. Capital Cell is Europe’s First Dedicated Life high-risk, long-term ventures
Sciences Crowdfunding Platform. It supports early stage
• Patient capital: it is used to fund early-stage high-risk
companies, with seed stage investment up to £1m.
technology companies, including those involved in
• Initiatives to boost private investment healthcare research, with a more long-term view. The
138
• Co-investing with private entities in venture funds: an UK already has several patient investors . The UK
example is HK$2b Innovation and Technology Venture Treasury, in fact, launched the Patient Capital Review in
Fund (ITVF) launched by the Innovation and Technology 2017 to provide insights on applicability of such models
Commission (ITC) of Hong Kong in 2017 to encourage VC on developing clusters. In 2018, British Patient Capital
fund investment in local I&T start-ups. Local or overseas (BPC) was launched under British Business Bank (BBB)
VC funds can become ITVF co-investment partners. with £2.5b to invest over 10 years to enable long-term
VC funds are selected based on a number of criteria investment in high growth potential companies across
134
“Financing Business Innovation – A Review of External Sources of Funding for Innovative Businesses and Public Policies to Support Them”, World Bank Group.
Available at: https://openknowledge.worldbank.org/bitstream/handle/10986/23140/91713.pdf?sequence=2&isAllowed=y
135
“What Makes Israel's Innovation Ecosystem So Successful”, Forbes, January 2017. Available at: https://www.forbes.com/sites/davidyin/2017/01/09/what-makes-
israels-innovation-ecosystem-so-successful/?sh=4574025370e4
136
EIB website. Available at: https://www.eib.org/en/efsi/what-is-efsi/index.htm
137
EIB website. Available at: https://www.eib.org/en/efsi/index.htm
138
T. Hickson, “Patient Capital: A new way of funding the commercialisation of early-stage UK science. Available at: https://www.imperial.tech/media/uploads/files/
Patient_Capital_UK_Science_Funding.pdf
139
the UK . Within a year of its launch, BPC had already aims to incentivize innovative micro, small and medium
collected >£1b and delivered to private VC firms to invest enterprises (MSMEs) and stimulate commercialization of
140
on its behalf . Another aim of BPC is to encourage R&D. The grant under the program covers a maximum of
more investors in this asset class by demonstrating that 70% of total project costs for micro and small enterprises
a long-term patient capital investment strategy can and a maximum of 60% of total project costs for medium
produce attractive financial returns. BPC is also working sized enterprises, up to a total budget of €300,000 of
alongside institutional investors to unlock an additional the budget for a two-year period. The minimum of 30%
£5b of patient capital investment, making the total corpus of the total budget is provided by the grant recipient.
141
a £7.5b . Royalty payments are made by the company in the event
With much more patient capital at hand, Sovereign Wealth of successful outcome of funded project (i.e., the project
146
Funds (SWFs) are best suited to invest in firms with results in any generated revenue) .
longer incubation times, including healthcare. SWFs are • Innovation procurement: can drive innovation from the
also contributing to the effort of de-risking innovation. demand side. It is primarily of two types —
Examples include the Russian Direct Investment Fund, the pre-commercial procurement (PCP) and public
Ireland Strategic Development Fund, and the Abu Dhabi procurement of innovation (PPI). PCP is a way of
Investment Authority, which are playing a pivotal role in procuring R&D services aimed at developing innovative
142
implementing their government’s innovation policies . solutions in areas where no commercial solutions yet
exist. PPI is a way of procuring solutions that are close
• Evergreen VC funds: unlike most VC funds, evergreen VC
to the market (R&D is not required) and the public sector
funds have no fixed-term closing date. Syncona (owned by
acts as launching customer/early adopter. In addition to
the Wellcome Trust) in the UK is an example of this model,
the benefits of getting first customers with shared risks
alongside many corporate-owned VC funds such as by
and benefits, shorter time to market, faster growth and
Roche, J&J, GSK and Pfizer. They invest for strategic and
economics of scale, the innovator also benefits by getting
financial reasons, such as, access to the ‘next big thing’,
143 more financing from private investors as the PCP acts as
horizon scanning etc .
a signaling device about the quality and future market
• Venture debt: a long-term financing provided to an potential (including government) of a firm’s innovation
early-stage, usually venture-backed company. For project. The policymaker, while promoting innovation and
example, EIB offers venture debt to support small, high- economic development, also benefits by getting better
risk, highly innovative companies in sectors such as life solutions to existing challenges at lower cost and with
sciences, biotech, software, 3D printing, robotics, clean reduced risk.
144
technologies and artificial intelligence . In addition
An example is the Small Business Innovation Research
to being a source of non-dilutive funding for innovator
(SBIR) — a PCP scheme introduced in the US in 1982. SBIR
companies, this is also seen by other investors as a quality
145 mandates use of 2.5% of the federal R&D budgets from
stamp helping the project attract additional investors .
all government departments and agencies with large R&D
• Risk-sharing schemes: for example, Serbia has a matching budgets to contract R&D services from SMEs. According
grant program with option for royalties in case of success. to a study by Lerner (1999) on the impact of the SBIR
The program, sponsored by the Serbian government, program, the SBIR awardees performed better one
139
British Private Equity & Venture Capital Association (BVCA) website. Available at: https://www.bvca.co.uk/Policy/Political-Engagement/Patient-Capital-Strategy
140
“UK taxpayers pour £1bn into venture investments via BPC”, Private Equity News, November 2020. Available at: https://www.penews.com/articles/uk-taxpayers-
pour-1bn-into-venture-investments-via-bpc-20201109
141
BBB website. Available at: https://venturecapital.news/british-business-bank/british-patient-capital/
142
“Global Innovation Index 2020”, WIPO. Available at: https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2020.pdf
143
T. Hickson, “Patient Capital: A new way of funding the commercialisation of early-stage UK science. Available at: https://www.imperial.tech/media/uploads/files/
Patient_Capital_UK_Science_Funding.pdf
144
“EIB becomes the largest venture debt investor in Europe”, March 2018. Available at: https://www.eib.org/en/press/all/2018-070-first-eib-venture-debt-summit-eib-
becomes-the-largest-venture-debt-investor-in-europe
145
EIB website. Available at: https://www.eib.org/en/products/equity/venture-debt.htm
146
Innovation Fund website. Available at: http://www.inovacionifond.rs/programs/matching-grants-program/public-call-for-the-matching-grants-program
decade after their involvement in the program (in terms of work towards the development of the University and nurturing
147 152
employment and sales growth) than unsupported firms . innovation (including scholarships) . The fund will be powered
UK also has Small Business Research Initiative (SBRI) by donations from alumni, industry and philanthropy. The
148
PCP under Innovate UK . SBRI NHS is specifically for program has been developed after studying the existing
accessing innovative solutions to solve healthcare related endowment systems of US Universities and other leading world
149
unmet needs . European commission also has a huge institutes. Similar endowment funds may soon be launched by
153
focus on innovation procurement under PPI and PCP. other esteemed Indian institutions as well .
Horizon 2020 — the biggest EU Research and Innovation
Big pharma should also play a larger role in supporting and
program with €80b of funding between 2014-2020 —
enabling the innovation ecosystem. We have discussed earlier
provides funding to start innovation procurements. This
in the chapter about the VC arms and incubators set up by
funding is targeted at potential buyers of innovative
most of the global life sciences companies.
solutions: groups of public procurers, possibly together
with other types of procurers that are providing
services of public interest and have similar procurement
150 3. Government support – policy and
needs (e.g., private, NGO procurers) . The European
Commission has also launched European Assistance For regulations
Innovation Procurement to provide local assistance to
Several steps can be taken to further strengthen the regulatory
public procurers to start new innovation procurement and
framework and expedite the development and launch of new
to promote good practices and reinforce the evidence
151 drugs.
base on completed innovation procurements .
(i) Establish an overarching regulatory body
Role of academia/research institutions and Consideration should be given to restructure the existing drug
approval process in India in line with other mature regulatory
big pharma
systems, for example, the US.
In addition to grants from the government, academia and
In the US, the US Food and Drug Administration (USFDA) is the
research institutions can also aim to self-finance a portion of
government agency within the US Department of Health and
the research and innovation activities by generating money
Human Services (HHS) responsible for reviewing, approving
through selling/licensing of in-house innovation, or working in
and regulating medical products, including pharmaceutical
collaboration with pharma companies for research in a specific
drugs and medical devices. It also regulates various other
area. Other innovative ways can also be explored, for example
products, including food, cosmetics, veterinary drugs,
IIT Delhi’s Global Alumni Endowment Fund launched in 2019.
radiation-emitting products, biological products
The endowment model aims to achieve a target corpus of 154
and tobacco .
US$1b over a period of seven years (starting 2019) and will
147
“Financing Business Innovation – A Review of External Sources of Funding for Innovative Businesses and Public Policies to Support Them”, World Bank Group.
Available at: https://openknowledge.worldbank.org/bitstream/handle/10986/23140/91713.pdf?sequence=2&isAllowed=y
148
“Innovate UK funding competitions”. Available at: https://www.nibusinessinfo.co.uk/content/small-business-research-initiative-sbri
149
SBRI healthcare website. Available at: https://sbrihealthcare.co.uk/
150
European commission website. Available at: https://ec.europa.eu/research/participants/docs/h2020-funding-guide/cross-cutting-issues/innovation-procurement_
en.htm
151
EAFIP website. Available at: https://eafip.eu/about/
152
“IIT Delhi Launches Global Alumni Endowment Fund” PR Newswire, November 2019. Available at: https://www.prnewswire.com/in/news-releases/iit-delhi-launches-
global-alumni-endowment-fund-875239256.html
153
“Now, all IITs, IIMs will launch endowment funds to tap successful alumni for donations”, ThePrint, March 2020. Available at: https://theprint.in/india/education/now-
all-iits-iims-will-launch-endowment-funds-to-tap-successful-alumni-for-donations/374137/
154
HHS website. Available at: https://www.hhs.gov/
Figure 31: United States Food and Drug Administration — structure
Department of Health and Human Services (DHHS)
Food and Drug Administration (FDA)*
Center for Center for Drug Center for Devices Oncology Office of Center for Office of Office of Policy Office of
Biologics Evaluation & & Radiological Center of Clinical Policy Veterinary Regulatory Legislation & Operations
Evaluation & Research Health Excellence & Programs Medicine Affairs International
Research (CDER) (CDRH) (OCE) (OCPP) (CVM) (ORA) Affairs (OPLIA)
(CBER)
Offices of: Offices of: Offices of: • Facilitating Offices of: Offices of: • Conducting all Offices of: Offices of:
the FDA field
• Management • Communications • Communication & development • Good Clinical • Management activities. • Legislation • Equal
• Compliance & • Compliance Education and clinical Practice • New Animal • Congressional Employment
• Inspection of
• Management review of • Combination Drug Appropriations Opportunity
Biologics Quality • Executive regulated
oncology Products Evaluation products and • Ethics & Integrity
• Blood Research Programs • Policy • Global Policy &
products – manufacturers
& Review • Generic Drugs • Product • Orphan • Surveillance & Strategy • Facilities,
• Uniting Products Compliance • Sampling & Engineering &
• Vaccine • Management Evaluation & • Policy
scientific Development testing of Mission Support
Research & Quality • Research
• Medical Policy experts regulated
Review • Science & • Paediatric • Minor use & • Finance, Budget
across the products
• Tissues & • New Drugs Engineering Therapeutics Minor Species & Acquisition
FDA’s product
Advanced • Pharmaceutical Laboratories centers to • Patient • Reviewing • Human Capital
Therapies Quality (OPQ) conduct Affairs imported Management
• Strategic products
• Regulatory • Regulatory Policy Partnership expedited Staff • Information
review offered for
Policy • Strategic & Technology Management &
of drugs, entry into
• Strategic Programs Innovation Technology
biologics, and the US
Programs • Surveillance and • Planning &

devices.
• Biostatistics Epidemiology Evaluation
and • Translational • Security &
Epidemiology Sciences Emergency
• Communication, Management
Outreach and
Development
* In addition to the above 9 Centers / Offices, there are other Centers / Offices within the USFDA whose focus is not drugs or devices. These include: (1) Center for Food Safety & Applied Nutrition
(CFSAN), (2) Center for Tobacco Products (CTP), (3) Office of External Affairs (OEA), (4) Office of Food Policy & Response (OFPR), (5) Office of Minority Health & Health Equity (OMHHE), (6) Office of the
Chief Scientist – National Center for Toxicological Research (NCTR), and (7) Office of Women’s Health
Cater to external stakeholders Cater to internal stakeholders

71
Source: US FDA website

India should consider establishing a single Central Drug Regulatory Authority (CDRA) with overall ownership of all regulatory
functional responsibilities. Consider restructuring State Drug Regulatory Authorities (SDRAs) as Regulatory Affairs and
Enforcement Divisions of the CDRA across states, reporting directly to the Head of the CDRA, who is a technically competent
individual, as represented below:
Figure 32: Consideration for restructuring drug regulatory setup in India — illustrative structure
Ministry Single Ministry (for example Ministry of Health & Family Welfare or any other relevant Ministry
Regulatory Central Drug Regulatory Authority (CDRA) headed by a technically competent individual
authority
Functional Biologics & Medical

Regulatory New Drugs & Drugs
areas recombinant devices &
Affairs & Clinical Trials
within the biotechnology diagnostics
Enforcement products
regulatory a
uthority • Manufacturing • Developing • Drug products • Recombinant • Device
License regulations for (pharmaceuticals) and other evaluation
• Zonal, sub- clinical trials biotechnology • Diagnostic
zonal & State • Registration of products, evaluation
offices investigating sites, including
biosimilars • Imports
• Interstate ethics committees
& investigators • Vaccines & • Licensing &
issues Enforcement
• Regulating Sera
• Drug Recalls
inspection of • Blood &
• Investigations clinical trial sites, Blood
• Regulation of sponsor sites & Products
advertising ethics committees
• International • BA/BE studies
Co-operation Approval
• Exports • Efficacy & Safety
evaluation of IND
applications
• Screening of
existing drugs
& formulations,
including fixed
dose combinations
(FDCs)
• Evaluation of
new chemical
entities (NCEs),
new biological
entities (NBEs),
complex generics,
veterinary drugs,
and borderline
products
Source: EY analysis
Imports & Pharma- Quality Legal & Training & Organizational

Registration covigilance Control Consumer Upskilling Services
Affairs Affairs
• Registration • Safety • Managing • Court cases • Planning & • Administration

of overseas monitoring all testing • Parliamentary forecasting • Accounting
manufacturing of drugs & laboratories Affairs • Training
devices at Central & • Planning &
• Overseas • Public evaluation finance
inspection • National State level & impact
complaints • Information
• Import Pharma- • Monitoring assessment
covigilance State & • Website technology
licences
Advisory private • Licensing • Other
• Quality Committee laboratories information Supporting
assessment functions
of imported • Audits & • Press & public
products accreditation relations
• Managing • Drug • Publications

Port offices Standards • Consumer
• Indian information
Pharmacopoeia
• Harmonization
Cater to external stakeholders Cater to internal stakeholders

Consideration needs to be given for restructuring drug State Drug Regulatory Authorities (SDRAs) report directly to
regulatory setup in India across the pharmaceutical the CDRA as a part of the Regulatory Affairs and Enforcement
value-chain from Development & Product Registration to Division of the CDRA across states. This will lead to
Pharmacovigilance. The entire value chain can come under harmonization of the application of drug regulatory standards
one Ministry with Central Drug Regulatory Authority (CDRA) across the country. Importantly, one envisages uniformity
and National Pharmaceutical Pricing Authority (NPPA) as in enforcement actions taken across the country, unlike at
independent regulatory bodies under the said Ministry. All present where disparity exists regarding enforcement across
states. This is represented in the figure below:
Figure 33: Consideration for restructuring drug regulatory setup in India – illustrative structure
Development & product Drug

Manufacturing Drug pricing Supply chain Pharmacovigilance
registration Promotion
Single Ministry (for example Ministry of Health & Family Welfare or any other relevant Ministry)
Central Drug Regulatory Authority (CDRA) • National • Central Drug Regulatory

Pharmaceutical Authority (CDRA)
Pricing Authority
(NPPA)
• New Drugs & • Regulatory Affairs • Regulatory Affairs
Clinical Trials & Enforcement & Enforcement
• Regulatory Affairs & Pharmacovigilance
• Drugs Enforcement
• Biologics & • Imports & Registration
recombinant
biotechnology
products
• Medical devices &
diagnostics
• Imports &
Registration
• The CDRA will report directly to only one Ministry. All State Drug Regulatory Authorities (SDRAs) will report directly to the CDRA.
• Harmonization of the application of drug regulatory standards across the country.
• Uniformity in the enforcement actions taken across the country, unlike at present where disparity exists in regard to enforcement
across states.
• Advisory Board will comprise Academia represented by national and international experts in various fields of life sciences and
pharmaceuticals, and Industry represented by players in the realm of life sciences, healthcare, devices, technology, manufacturing,
engineering, IT, and other areas deemed as relevant at the national level.
Source: EY analysis
(ii) Develop a formal, well-defined framework regulatory authority and sponsors/ stakeholders. This would
not only result in saving time and money but will also reflect the
for collaboration between product
overall efficiency of the drug approval system.
developers and the regulatory authority
Mature regulatory jurisdictions have a formally-defined
It is necessary that clear and detailed guidelines are developed mechanism in place for discussion with the sponsor prior
reflecting the expectation of the regulatory authority in terms to the sponsor making their submissions. For example, the
of information to be provided in different kinds of regulatory USFDA released detailed guidance in 2017 on improving the
submissions. Established timelines should have provisions agency’s interactions with product developers. Guidance on
for limited extension of time for submission of information by ‘Best Practices for Communication Between IND Sponsors and
the applicant / sponsor. There should be a process in place USFDA During Drug Development’ describes best
for formal well-defined pre-submission meetings between the
practices and procedures for timely, transparent and effective for clinical trials and guidance on the conduct of clinical
157
communication. It includes details about the scope of trials of medical products during the COVID-19 pandemic .
appropriate interactions between the agency’s review staff and There is dedicated office and staff for evaluation of clinical
IND sponsors, the types of advice sponsors can seek from the trial documents, and to conduct inspections at investigator /
USFDA, general expectations for the USFDA’s response time, sponsor sites, and ethics committees. They have the requisite
and best practices, appropriate methods and frequency of manpower with necessary competencies across the above
USFDA-sponsor interactions. Guidance has also been provided multi-functional domains.
about whom the sponsor should consult in case timely feedback
155 India should also consider providing clear and detailed guidance
is not received on inquiries .
on clinical trials, covering various age groups and product
categories, in addition to general guidance on clinical trials.
Special training should be provided to enhance personnel
competencies to facilitate efficient conduct of regulatory
duties. Selected manpower from existing staff can be upskilled
Most developed regulatory agencies provide a for this activity, while also looking to actively recruit personnel
mechanism for a formal pre-submission scientific with requisite competencies. Global experts and industry
discussion with the sponsor. This is especially true veterans can be included in review committees to bring in a
for products for rare diseases where it is really a joint global perspective.
development between the regulatory body and the
sponsor, not financially but from regulatory, strategic, (iv) Create detailed guidelines for drug
and scientific perspective.
development process and submission
Working jointly with the regulatory body reduces the requirements
chances of misalignment on the requirements during
As more companies start building their pipelines with
the submission process. This is currently lacking in
biosimilars, the regulatory body should come up with guidance
India.
on the most appropriate methodology for developing drugs
and presenting the evidence needed to support the approval.
R&D head of a leading Indian pharma company For example, the Office of Generic Drugs (USFDA) publishes
Product-Specific Guidance for Generic Drug Development to
share the USFDA’s current thinking, and requirements for
(iii) Establish regulatory process and 158
generic drug development in specific therapy areas . Recently
capabilities for end-to-end management the regulatory body has come up with similar initiatives for
complex generics as well, and also launched master protocols
of clinical trials
for efficient clinical trials, intended to expedite development of
Jurisdictions with highly developed regulatory systems cancer drugs and biologics .
159
proactively provide guidance on the conduct of clinical

India should set up expert committees to deliberate on the
trials. For example, the USFDA provides guidance on various
specific nuances that would need to be taken into consideration
considerations to be taken while conducting clinical trials,
for complex generics and biosimilars to provide required
such as but not limited to: general considerations, statistical
evidence to obtain regulatory approval.
principles for clinical trials, choice of control group and related
156
issues in clinical trials , and more recently, considerations
155
“Best Practices for Communication Between IND Sponsors and FDA During Drug Development” report on the USFDA website. Available at: https://www.fda.gov/
media/94850/download
156
USFDA website. Available at: https://www.fda.gov/regulatory-information/search-fda-guidance-documents/clinical-trials-guidance-documents
157
“FDA Guidance on Conduct of Clinical Trials of Medical Products during COVID-19 Public Health Emergency” report on USFDA website. Available at: https://www.fda.
gov/regulatory-information/search-fda-guidance-documents/fda-guidance-conduct-clinical-trials-medical-products-during-covid-19-public-health-emergency
158
USFDA website. Available at: https://www.accessdata.fda.gov/scripts/cder/psg/index.cfm
159
“FDA issues 34 new and revised product-specific guidances”, Regulatory Affairs Professional Society, November 2020. Available at: https://www.raps.org/news-and-
articles/news-articles/2020/11/fda-issues-34-new-and-revised-product-specific-gui
Practices during COVID-19

During the existing COVID crisis we have witnessed the rapid approval and marketing of COVID drugs by Indian companies
in the domestic and international markets. This has been possible due to the collective objective of the industry and the
government to protect the population from the pandemic. The Central Drugs Standard Control Organization (CDSCO) released
the regulatory pathway to accelerate the R&D of COVID-19 drugs and vaccines.
This pathway accelerated development and launch by:
• expediting reviews and approvals for drugs and vaccines already approved in other countries
• ensuring speedy permissions for clinical trials
• enabling processing of applications to import a drug for test and analysis within seven days
• allowing abbreviated data requirements or waivers for animal toxicity study, clinical study and safety study (assessed on a
case-by-case basis)
• ncouraging the approval of applications to manufacture or import drugs and vaccines for test and analysis within seven
e
days
• f acilitating parallel application for the conduct of clinical trials during preclinical studies and abbreviated pathway for
COVID-19 vaccine development
• providing guidance for regulatory pathway for COVID products
This is expected to expedite the drug approval reform process. In May 2020 a high-level panel to reform drug regulatory
system was initiated by the government to fast-track approvals. The committee set up by the Ministry of Health and Family
Welfare panel comprises of bureaucrats from the Department of Pharmaceuticals and Department of Biotechnology, experts
from Indian Pharmacopoeia Commission, Indian Council of Medical Research and All India Institute of Medical Sciences in Delhi,
and representatives from industry bodies. The panel aims to leverage some of the best practices that have emerged during the
pandemic to reform the drug regulatory system in India in normal times.
Sources:
“Coronavirus pandemic: DCGI to expedite approvals of COVID-19 drugs, vaccines”, Moneycontrol, March 2020. Available at: https://www.money-
control.com/news/business/companies/coronavirus-pandemic-dcgi-to-expedite-approvals-of-covid-19-drugs-vaccines-5078651.html
“Covid-19: Govt panel considers measures to hasten drug approval process”, Mint, May 2020. Available at:
https://www.livemint.com/news/india/covid-19-govt-panel-considers-measures-to-hasten-drug-approval-process-11590168701458.html
(v) Achieve harmonization with global India is presently participating as an observer in the
International Council for Harmonisation of Technical
regulatory standards
Requirements for Pharmaceuticals for Human Use (ICH), a
The Pharmaceutical Inspection Co-operation Scheme (PIC/S) forum which brings together regulatory authorities and the
is a co-operative arrangement between Regulatory Authorities pharmaceutical industry to discuss scientific and technical
165
in the field of Good Manufacturing Practice (GMP) of medicinal aspects of drug registration . India should also explore
products for human or veterinary use. It is open to any opportunities of participating in global networks such as
authority having a comparable GMP inspection system. PIC/S PIC/S and ICMRA. India should consider adopting a more
has 54 members from all over the world (Europe, Africa, stringent system such as the PIC/S, in place of the existing
160
America, Asia and Australasia) . Brazil is a recent applicant Schedule M of the Drugs and Cosmetics Act, as this will help
for joining PIC/S, and as one of the pre-requisites for becoming India in its journey of streamlining its existing drug regulatory
a member, it has upgraded its existing national regulation framework(s) by adopting international leading practices at
on good manufacturing practices (GMPs) for medicines by the national level. This will also act as a stimulus for the export
adopting a new regulation in 2019, which are in line with PIC/S of drug products considering the global acceptance of PIC/S
161
requirements . standards.
Developing countries like Brazil, China, Mexico, Nigeria and
South Africa are members of the International Coalition of Develop a stable pricing policy and strong
162
Medicines Regulatory Authorities (ICMRA) . The ICMRA
works on multiple initiatives, inter alia, crisis management,
patent protection enabling long term
innovation, pharmacovigilance, and supply chain integrity investment decisions
163
(interoperability of track & trace systems) . An example of Frequent and unexpected changes to the domestic pricing
crisis management considering the present COVID-19 scenario, policy create an uncertain environment for investments and
ICMRA members discuss international alignment on COVID-19 innovation. The government and other industry stakeholders
164
policies in strategic meetings held every two weeks . These need to develop a framework that ensures availability and
also focus on: accessibility of affordable drugs for citizens, while ensuring
• pragmatic approaches to COVID-19 response a reasonable return on investment for pharmaceutical
companies. Reducing the frequency of policy revisions and
• regulatory flexibility in the context of the medical emergency
agreeing upon the timeline for future revisions should also be
• extraordinary measures applied to address common considered.
challenges during the pandemic
Strong IP laws provide innovators with the necessary
• regulatory considerations related to COVID-19 clinical trial
confidence and motivation to invest in high-risk research and
management
innovation projects. Several earlier IPR challenges in India
• prevention/mitigation of supply issues were addressed with the 2016 National IPR Policy. Steps
Further, ICMRA is also holding international regulatory could further be taken such as improvement in the patent
workshops on important topics to allow for in-depth discussions enforcement and resolution mechanism, detailed guidance
and to agree on common approaches. In addition to delegates on registration requirements and technology transfer, etc.
representing 28 medicines regulatory authorities globally, (discussed in the earlier section of the report ‘R&D challenges')
participants also include experts from the World Health
Organization (WHO) and the European Commission (EC).
160
PIC/S website. Available at: https://picscheme.org/en/picscheme
161
“Brazil’s ANVISA is approved for pharmaceutical inspection co-operation scheme – PIC/S”, Global Regulatory Partners, December 2020. Available at: https://
globalregulatorypartners.com/brazils-anvisa-is-approved-for-pharmaceutical-inspection-co-operation-scheme-pic-s/
162
ICMRA website. Available at: http://www.icmra.info/drupal/en/participatingRegulatoryAuthorities
163
ICMRA website. Available at: http://www.icmra.info/drupal/en/home
164
ICMRA website. Available at: http://www.icmra.info/drupal/en/covid-19
165
“ICH to Bring India On Board”, FDA News, March 2020. Available at: https://www.fdanews.com/articles/196280-ich-to-bring-india-on-board
(i) Full deduction in respect of revenue expenditure and

capital expenditure on R&D
(ii) Weighted tax deduction in respect of in-house R&D facility

5 S framework for regulatory reforms: approved by Department of Industrial and Scientific
Research. This deduction was earlier allowed at 200%
X Simplification: all procedures and processes should be since 2010 and was reduced to 150% from 2017 and
simpler and faster further reduced to 100% from 2020
X Scientific: everything has to be science based to remove (iii) Further, amount paid to an approved research
subjectivity association, college or university for scientific research
was eligible for deduction @ 150% from 2010 and has
X Safety: safety of product and safety of patients should
been reduced to 100% from 2020
be assured
(iv) Amount paid to an approved company for scientific
X S
peed: speed of action and decision making in a
research was eligible for deduction @ 125% from 2009
competitive world becomes very important
which has been reduced to 100% from 2018
X S
tability: regulatory and policy stability is critical, it is
Further, earlier pharmaceutical companies, including
difficult to do business if there are frequent changes
companies carrying out R&D, were eligible for certain tax
holidays under section 10A, 10AA, 10B, 80-IA, etc. which are
discontinued. At the same time, the corporate tax rate has in
general been reduced from ~ 34% to ~ 25% .
Managing Director of
We have provided below, a few suggestions/ areas that need
a leading Indian pharma company
attention when it comes to incentives to pharmaceutical
companies and particularly around research and development.
The government of India announced a PLI Scheme for 53 APIs/
Incentives for the industry KSM/intermediates earlier this year, to increase production of
APIs in India and to reduce reliance in import of APIs from other
The government support and favorable policies is a must to nations. Recommendations take into account, the vision and
establish R&D and innovation ecosystem in a country. The objective of the government under Atmanirbhar Bharat for the
government of India has provided various tax incentives to pharmaceuticals sector. Industry wide consensus has been that
foster innovation in the country. along with the policy changes and Production Linked Incentives
(PLI), tax related incentives specific to pharma sector would go
These incentives are available with respect to revenue and a long way in realizing the objective of the government for self-
capital expenditures incurred by entities for carrying out R&D sufficiency in manufacturing of APIs for life saving and other
activities in relation to their businesses, and in respect of their critical drugs.
contributions to various institutions for carrying out scientific
research. Exemption is also provided from customs duty on
imports made by industry for R&D projects.
Areas that need attention

Tax incentives for pharma companies
One of the many ways in which the government has supported
pharmaceutical companies in the past and could continue
to provide support in the future is by way of appropriate
tax incentives particularly for expenditure on research and
development such as:
R&D related tax incentives When compared to the tax rates and R&D tax regimes in certain
other developed and developing countries, India still has
R&D Deductions distance to cover around R&D tax incentives. Many of these
jurisdictions discussed below offer tax rates which are lower
Most off-patent products have been copied in India. The real
than or equal to tax rates in India and yet continue to offer R&D
next growth for the industry whether in India or globally will
tax incentives in various forms. It is therefore highly desirable
come from innovators. Like in API where adequate focus was
for India:
not given, other parts of the world took India’s place, if India
does not focus on innovation, it will lose its current status very • to continue R&D tax incentives to promote India as R&D
soon. The new areas include not just NCEs but also biological Innovator hub beyond the contract R&D and clinical trials
and other areas of innovation. These areas of innovation have carried out in India
a much higher cost of R&D compared to creating different • to provide weighted average deduction for R&D and
process for existing patents. For corporates to fund this contribution to scientific research institutions, universities,
innovation and for India to attract global MNCs to invest in etc. in the range of 150% to 300% depending on type of
this area of innovation, it is not just talent but tax incentives activity
which play a very large role. That is the reason why even the
• to provide R&D incentives even to companies who opt for
developed world like the US, UK, etc. and the more nimble but
new tax regime under section 115BAA of the Act thereby
growing economies like Singapore, etc. have ensured that tax
availing tax rate of ~ 25%
incentives are there to attract creation of innovation in the
country. Tax incentives range from patent box regime where • current R&D regime does not specifically include cost of R&D
global profits are eligible for very concessional rates of tax, outsourced for calculation of R&D incentives. Outsourced
and weighted tax deduction for costs of R&D are provided. R&D costs should be specifically made eligible for R&D
Some countries provide both. While technically India can claim incentives
that they provide the benefits, in reality the concession is very
narrow and therefore not benefiting the country. For India,
in addition to becoming a part of the innovation chain, the
creation of R&D centers would also lead to more manufacturing
facilities for the innovator products (currently our share is not
prominent amongst the NCEs in this area).
Industries in India have benefited from lowering of corporate

tax rates from ~ 34% to ~ 25%. In parallel government has
scaled down quantum based weighted average R&D expenses
and currently India allows 100% deduction in respect of capital
and revenue R&D expenses from 200% weighted deduction in
the past.
For the purpose of comparison, we have tabulated below, the tax rates in some of the developed and developing countries and
R&D incentives available in such countries.
Parameters USA Singapore Thailand Ireland Switzerland UK

Corporate tax ~ 21% (Federal ~ 27% 20% 12.5% Ranges from 19%
rate tax) (Development 12-24%
and Expansion
Incentive
companies can
have tax rate of
5% - 10%)
R&D benefit • Provides R&D Weighted R&D Weighted Regular R&D Additional R&D Tax
tax credit deduction deduction @ credit @ 12.5% R&D deduction Credit @ 12%
depending on @ 250% of 100% to 300% plus additional maximum upto of qualifying
incremental qualifying of qualifying R&D credit @ 50% R&D spend
R&D spend expenditure R&D spend 25% resulting in in addition to
effective R&D deduction @
• Currently, credit of 37.5%. 100%
R&D spend is Cash refund
deductible, and transfer
but proposed of credit to
to be key scientists
permitted
amortized
over 5 years
from 2022
Period of R&D Continues to be 2019-2025 No sunset No sunset 2019 onwards From 2013
benefit available pre clause found clause found
and post tax
reforms in 2017
Outsourced R&D 65% of amounts Expenditure R&D or Outsourced 80% of expenses
paid to third on R&D work outsourced R&D expenses for R&D carried
parties for contracted within Thailand are considered out by third
research to R&D or carried out subject to parties or group
services eligible organization in cooperation certain limits companies in
considered for with research Switzerland are
deduction to the and education considered
extent of 60% of institution
such payment abroad is
considered
Additionally, there are other organizations/ arrangements We suggest that the patent box regime be made more inclusive,
related to R&D, taxation of which may also need attention: comprehensive and robust to make it attractive for the pharma
companies. Having regard to the patent box regime of some of
• Taxation linked encouragement for global pharmaceutical
the developed and developing tax jurisdictions, the following
companies having R&D centers in India
changes may be desirable in the patent box regime:
• C
ROs conducing contract research and clinical trials for
foreign MNC • Currently, patent box regime only includes income from India
registered patents. It should be broadened to include patents
• M
onetary incentivization to collaboration agreements
registered outside India and exclusive licenses in respect of
between Indian companies and foreign pharmaceutical
foreign patents should be eligible for patent box regime.
companies for co-development, co-licensing, etc. products
aimed at being launched in Indian market • Widening the scope of patent box regime to include:
Innovator organizations should be allowed appropriate benefit • Income by way of capital gains
for R&D related activities carried out. For example, Singapore • Income from infringement of patent rights
allows R&D incentives even in respect of Cost Sharing • Income from sale of goods manufactured by exploiting
Arrangements (CSA), wherein the eligible R&D expenditure is patents, should be eligible for patent box regime. In case
deemed to be 60% of the payments under CSA. Thailand and of sales income, the income attributable to patent box
Vietnam currently allow certain tax exemptions to R&D Service regime may be calculated by appropriate formula for
Providers/ contractors. calculating residual profits after eliminating return on
marketing activities, etc.
Patent Box Regime • If IP is used in house, notional income may be considered

eligible for patent box regime
Patent box tax regime (PBR) was introduced in 2016. Under
• Typically, in case of a patent, there is heavy expenditure
this, tax concession is given on the income from the licensing
incurred upfront on R&D, clinical trials and registering
of the patents. The legislative intent for introducing PBR is
the patent. Therefore, it seems desirable that deduction
to encourage R&D and make India a Global Hub, incentivize
be allowed to the income from exploitation of patents
companies to locate high value jobs associated with
and therefore income from patent box regime should be
development, manufacture and exploitation of patents in India.
calculated on net basis by clearly defining the qualifying
Under the PBR, specified royalty income derived by an eligible
income and qualifying expenses. The R&D expenses
assessee from patents is subjected to a beneficial tax rate of
and expenditure incurred on outsourcing towards third
10% plus applicable surcharge and cess. Some of the limitations
parties and towards group companies within India should
with the current PBR are:
be considered to be a qualifying expenditure. Further,
• PBR may not be beneficial to taxpayer for whom net basis as mentioned since R&D cost will be incurred in initial
taxation results in taxes less than 10% of gross receipts. years whereas revenue from patents will be generated in
• Strict condition of development in India and registration in subsequent years – the period of carry forward and set off of
India. Companies with exclusive license for patents in India initial losses/ deductions should be sufficiently long so that
and other jurisdictions and commercially exploiting the same the losses are effectively set off against the income under
cannot avail the benefit of patent box regime. the patent box regime in subsequent years.
• Creation of IP is a time and money intensive process. Still, • IP development costs (R&D) should still be allowed for patent
no expenditure for producing IP can be claimed against the box regime and may be allowed to be set off against patent
income of IP which is taxed only at 10%. box eligible income.
• Currently, the patent box regime only covers royalty income

— other types of income earned out of patent exploitation
such as capital gains, income from sale of products
manufactured using patents, etc. are currently not covered.
We have tabulated below, a brief overview of Patent Box regime in certain other competitive developed and developing nations:
Parameter UK Ireland Switzerland Singapore

Tax rate 10% 6.25% Net profits from domestic 5 to 10%
and foreign patents and
similar rights are to be taxed
separately with a maximum
reduction of 90% (rate at
cantonal discretion ranges at
10% or 50% in some cantons)
Eligible Income Apart from Patent • Income from • The profits attributable to Qualifying IP income refers to
licensing income and managing, developing, the patent box can include royalties or other income receivable
royalties, following maintaining, royalties, capital gains by the approved company as
income is eligible: protecting, enhancing from the sale of the patent consideration for the commercial
or exploiting of exploitation of qualifying IP rights
(i) income from • Embedded IP income from
intellectual property
sale of patent the sale of products.
(including activities
rights; damages
leading to invention or
and infringement
creation of intellectual
income
property)
(ii) Sales income
from the patent or
• Income from sale of
goods or the supply
patent protected
of services that derive
products
part of their value from
(iii) Notional royalty activities described
in respect above
of patented
technology used
within business
Conditions • Patents owed or Available in respect of • Patents include patents No sunset clause found
on patent exclusive licenses/ patents and pending as defined by European
ownership rights to the patents as being novel, Patent Convention, Swiss
patents are eligible. non-obvious and useful Patents Act; and Foreign
Patents granted by patents equivalents
the UK Intellectual
• Available in respect of
Property Office,
patents and pending
the European
patent inventions that are
Patent Office or
certified by the Controller
certain European
of Patents, Designs and
patent offices are
Trademarks as being novel,
considered.
non-obvious and useful
• Patents which are
applied for may be
eligible
Other conditions Eligible income to be Companies carrying on Income from qualifying assets • Eligible income to be calculated by
on development calculated by applying qualifying R&D activities attributable to domestic applying modified nexus approach
and quantum, nexus ratio (R&D in Ireland or outsources R&D costs is eligible. Income depending on R&D expenditure
etc. cost incurred in UK + to unrelated third parties eligible to be calculated by incurred by the approved company
R&D cost incurred by outside Ireland (but not applying nexus ratio ( ratio of (including outsourced third-party
subcontracted third to related parties) are qualifying R&D costs related R&D and R&D undertaken by the
parties divided by eligible to R&D activities performed in company itself)
total R&D cost) to net Switzerland by the MNE and
• substantive commitments in
income from each IP by unrelated parties) to the
areas of business spending, fixed
stream (inclusive R&D total R&D costs
assets expenditures, skilled jobs
to connected parties)
and the requisite qualitative
aspects such as contributing to the
advancement of capabilities and
other ancillary economic spin-offs
for the wider Singapore economy
The R&D tax incentives and widening of the patent box regime even manufacturing profits would go a long way to promote
are likely to be in line with the vision of Atmanirbhar Bharat culture of innovation coupled with commercialization of such
and “Make in India”. Widening of patent box regime to include innovation through manufacturing by innovators.
Future considerations and way forward

Accelerating research and innovation
1 Take a focused approach to intensify research & innovation activities
Define overall pharma / biopharma research and innovation ambition
Stakeholders Action items
Government, • Identify top 4-5 focus areas based on country's public health priorities and achieving global industry
industry competitiveness
Government • Align the entire ecosystem — including the academia, hospitals, and start-ups — with the focus areas
Industry • Provide support to the external ecosystem to move innovation from development to commercialization
2 Establish a strong research and innovation ecosystem

(i) Strengthen talent and research base
Strengthen the higher education system
Improve the quality of education and infrastructure in higher education institutions (HEIs)
Government • Consider launching more programmes like EQUIP and RISE, and ensure effective and timely implementation
• Increase number of public institutions offering postgraduation and PhDs
Set up more national and international mobility programs to foster collaboration and sharing of perspective
Government, • National and international rotation programmes of researchers and scientists between private and public
academia/ institutions
institutions, • Faculty or researchers from a university could work in a corporate for some time, and vice versa
industry
Promote innovation/entrepreneurial mindset in the HEIs and research institutions
Government, • Integrate topics on entrepreneurship and innovation mindset in the curricula

academia/ • Incentivize students and faculty members engaged in their own research activities or mentoring students
institutions
• Permit academia/institutions to directly gain commercial benefit from IP created within the institute
Developing industry ready talent
Increase industry-academia collaboration
Government, Government
academia, • Incentivize industry and academia collaboration for holistic development of students
industry
• Enable alignment between academia research priorities and industry
• Enhance overall curriculum in alignment with industry specific requirements
Industry
• Design specific programmes as part of the curriculum to develop future skills (soft skills and tech capabilities)
• Have more forums for establishing engagement and exposure between students and industry:
• short/one-day programmes (e.g., webinars, speaker series), internships, scholarships, research fellowships, etc.
Prevent brain drain (brain drain to wisdom gain)
Launch initiatives to bring back talent
Government • Create more opportunities / incentives to encourage talented people to returnees to the country (e.g., as in China)
• Provide infrastructure, financing and other enablers to develop idea and start business for returnee; ensure the
returnees do not have to deal with bureaucratic and regulatory barriers and experience ease of doing business
• Employ intellectual returnees in suitable government roles; enable collaboration with industry and academia
Note: refer to the chapter for further details and relevant examples/cast studies
Establish mechanism for brain circulation/ brain exchange
Government • Develop a national repository of expatriates by industry / domain / achievement category, etc.
• Facilitate channels for connections between public and private organizations with relevant expatriates for sharing
of knowledge / best practices and working in partnership / collaboration
(ii) Augmenting clinical research capabilities
Improve the quality of clinical research training and experience in the institutions
Government, • Integrate formal, clinical research / clinical trial training curriculum into the medical under- and post-graduate
academia/ curriculum
institutions • Introduce financial and non-financial incentives to motivate medical students and physicians to conduct research
• Increase collaboration between medical institutions and research institutes on high priority research projects
Expand the pool of technically qualified clinical researchers
Government, • Introduce more dual-degree programs such as MD–PhD or MD–MsC and clinical fellowships
academia/ • Provide opportunities to pursue clinical research along with clinical practice for holistic learning and experience
institutions
(iii) Leverage technology to make R&D faster and more cost effective
Use advanced technology across the R&D life cycle
Industry • Leverage technology to improve productivity and speed during the drug discovery phase
• Digitize clinical trials to improve efficiency and experience
(iv) Set up advanced infrastructure

Make efficient use of existing infrastructure; expand the existing infrastructure; set up new infrastructure
Government Gaining efficiency in utilization

• Ensure alignment and collaboration between all the government organizations providing support for life sciences
and health specific research, both in terms of research focus and allocation of funds
• Establish performance based criteria for funding and support
Expanding the infrastructure
• Establish incubators, parks and clusters specifically for pharma sector
• Explore PPP by leveraging CSR funding or using competitive tendering processes to select private partners for
setting up joint incubators
Academia • Large institutions can provide space for co-location of start-ups with similar research priorities or innovation ideas
• Make groups of experts to provide mentoring and establish units enabling tech transfer
Industry • Provide funding to research institutions and incubators under CSR activities
• Set up incubators and mentoring teams for start-ups
(v) Financing the complete cycle from idea generation to market launch
Leverage or enable more innovative financing models beyond grants
Government, Government
industry, • Set up some grants specifically for R&D in the pharma sector; ease the process of getting grants and funding
academia support, especially for the grassroot companies
• Leverage or enable different/novel financing models: e.g., convertible grants, crowdfunding
Academia
• Aim to self-finance a portion of the research and innovation activities by generating money through selling/
licensing of in-house innovation, or working in collaboration with the pharma companies
• Establish innovative ways to secure money (for e.g., the IIT Delhi’s Global Alumni Endowment Fund)
Industry
• Provide funding through venture arms, innovation challenges, grants and scholarships for students / researchers
Launch initiatives to boost private investment
Government • Co-investment with private entities in venture funds; guarantee programmes
Encourage public/private investment in highly innovative, high-risk, long-term ventures
Government • Patient capital, evergreen funds, venture debt, risk-sharing schemes, innovation procurement
(vi) Enabling policy and regulatory frameworks
Establish an overarching regulatory body
Government • Consider establishing a single Central Drug Regulatory Authority (CDRA) with overall ownership of all regulatory
functional responsibilities
• Consider restructuring drug regulatory setup across the pharmaceutical value-chain:
• The entire value chain can come under one Ministry with CDRA and National Pharmaceutical Pricing Authority
(NPPA) as independent regulatory bodies under the said Ministry
• All State Drug Regulatory Authorities (SDRAs) report directly to the CDRA as a part of the Regulatory Affairs
and Enforcement Division of the CDRA across states
Adopt a collaborative role with the drug/product developers throughout the drug development process
Government • Come up with guidance on the most appropriate methodology for developing drugs and presenting the evidence
needed to support the approval
• Develop a formal framework for collaboration between product developers and the regulatory authority
Establish regulatory process and capabilities for end-to-end management of clinical trials
Government • Develop clear and detailed guidance on clinical trials, covering various age groups and the product categories
• Provide special training to enhance personnel competencies to facilitate efficient conduct of regulatory duties
• Include global experts and industry veterans in review committees to bring in a global perspective
Achieve harmonization with global regulatory standards
Government • Consider adopting a more stringent system such as the PIC/S
Provide tax incentives and other benefits
Government Tax incentives

• Provide weighted average deduction for R&D and contribution to scientific research institutions, universities, etc. in
the range of 150% to 300% depending on type of activity
• Provide R&D incentives also to the companies who opt for new tax regime under section 115BAA of the Act
thereby availing tax rate of ~ 25%
• Include outsourced R&D costs in the eligibility criteria for the R&D incentives
Patent box regime
• Make the patent box regime more inclusive, comprehensive and robust
• IP development costs (R&D) should still be allowed for patent box regime and may be allowed to be set off against
patent box eligible income
03
Chapter
Achieving equitable and

sustainable healthcare
Equitable access to healthcare The launch of Ayushman Bharat India’s ambition of providing
has been a consistent challenge program demonstrates India’s universal healthcare access
for India for long. commitment to provide equitable can be achieved by expanding
healthcare access to all. healthcare coverage,
establishing robust digital
and physical infrastructure,
increasing the healthcare
workforce and focussing on
disease prevention – technology
should be ingrained as an
enabler across all these streams.
India ranked 145 among 195 PMJAY*, coupled with the Currently India does not meet
countries on the healthcare improvement in penetration of the WHO recommendations
access and quality (HAQ) index private health insurance, has for healthcare workforce (e.g.
1
2016 increased the proportion of number of physicians, nurses)
insured population to 52% in and infrastructure (e.g. hospital
2
2017-18, from 37% in 2014-15 beds) and lags other BRIC
3
nations
* PMJAY: Pradhan Mantri Jan Arogya Yojana

1
“Measuring performance on the Healthcare Access and Quality Index for 195 countries and territories and selected subnational locations: a systematic analysis from
the Global Burden of Disease Study 2016’, published in ‘The Lancet’ in June 2018 - Volume 391, ISSUE 10136, P2236-2271. Available at: https://www.thelancet.
com/journals/lancet/article/PIIS0140-6736(18)30994-2/fulltext
2
“EY FICCI Report, Re-engineering Indian Health care, September 2016, IRDAI handbook, IRDAI Annual report, National Health Profile, Individual state insurance
website, EY analysis
3
WHO website
Opportunities for improving health care delivery

1. Achieve universal healthcare access improvements on the HAQ Index from 1990 to 2016, it is still
behind all the other BRICS countries and some of the Asian
Achieving equitable and sustainable healthcare access is a
countries like Bangladesh, Sri Lanka and Bhutan. Although
must for a country to achieve economic growth. Being the
India's score improved from 24.7 in 1990 to 41.2 in 2016,
world’s second most populous country, India faces unique
but it is still below the mid-point of the 0-100 point scale. The
opportunities and challenges in the healthcare space. On the
country's highest and lowest scores for States also widened
healthcare access and quality (HAQ) index, in 2016 India
in this period (23·4-point difference in 1990, and 30·8-point
ranked 145 among 195 countries. Although India did make 4
difference in 2016) .
Figure 34: Health access and quality index
96 58 145 48 127
17.3 11.9 16.5 35.3 9.6
75.1 77.9
63.8 63.1 62.5
50 55.3 53.3
46.5 49.7
41.2 42.6 40.1 40.9
24.7 28.0
1990
2000
2016
1990
2000
2016
1990
2000
2016
1990
2000
2016
1990
2000
2016
Brazil Russia India China South Africa
HAQ index rank, 2016 Improvement in score, 1990-2016
Source: GBD 2016 Healthcare Access and Quality Collaborator
India also lags its peers in pubic healthcare spending, which population lives in rural areas which have access to less than
is evident from the shortage of healthcare infrastructure. 30% of the country’s healthcare infrastructure. Public health
Currently India does not meet the WHO recommendations for facilities, which provide the majority of healthcare in the rural
the number of physicians, nurses and hospital beds per 10,000 areas, are mostly limited to primary care centers that provide
people and lags other BRIC nations on these key performance basic services. A majority of the secondary, tertiary and
indicators. quaternary care institutions are run by the private sector and
are concentrated in the tier I and tier II cities.
The healthcare infrastructure availability gap is further widened
5
due to urban-rural disparities. More than 65% of the Indian
4
“Measuring performance on the Healthcare Access and Quality Index for 195 countries and territories and selected subnational locations: a systematic analysis from
the Global Burden of Disease Study 2016’, published in ‘The Lancet’ in June 2018 - Volume 391, ISSUE 10136, P2236-2271. Available at: https://www.thelancet.
com/journals/lancet/article/PIIS0140-6736(18)30994-2/fulltext
5
“World Bank” website. Available at: https://data.worldbank.org/indicator/SP.RUR.TOTL.ZS?locations=IN
Figure 35: Healthcare resources
Beds per 10,000 population Nursing and midwifery personnel Medical doctors per
per 10,000 population 10,000 population
101.2 37.5
81.6 85.4
21.6
19.8
40.2
26.6 9.0
21.13 17.3 8.6
13.1
4.8
2000 2010 2016 2000 2010 2018 2000 2010 2018
For a few countries latest figure was for 2017 *Russia: latest figures are for 2015
Source: WHO
2. Reduce disease burden Social health indicators (e.g. infant and maternal mortality,
overall life expectancy at birth) have improved over the last five
India faces a double burden of disease, with continued high
years. However, they are still below the global benchmarks and
prevalence of communicable and malnutrition-related diseases
World Health Organization (WHO) recommended norms. This
and steadily increasing non-communicable diseases (NCDs).
is driven by the large disparity in healthcare delivery across
states, with the most populous states being the laggards.
Figure 36: Social health indicators
Under 5 mortality rate Maternal mortality rate Life expectancy at birth

(per 1,000 live births) (per 100,000 live births)
178
69 72
55 67
130
39
70
11
2011 2016 2010-12 2014-16 2007-11 2012-16
India WHO norms India WHO norms India World average
Source: United Nations Inter-Agency Group for Child Mortality Estimation (UN IGME) 2018, NITI Aayog data for Maternal Mortality Ratio, World Bank
Data – Life Expectancy at Birth (years), Sample Registration System, Office of Registrar General & Census Commissioner
Contribution of NCDs to total ‘disability-adjusted life years’

Figure 37: Contribution of major disease groups to total
(DALYs) has almost doubled in the last three decades in India
DALYs in India
— from ~30% in 1910 to >55% in 2016. According to a WHO
report in 2015, about 5.8 million people die from NCDs (heart Injuries 8.6% 11.9%
and lung diseases, stroke, cancer, and diabetes) in India every
year. This means that roughly 25% of Indians are at risk of Non-communicable
6 30.5% 1.8 times
dying from an NCD before the age of 70 . diseases
increase
The burden of most communicable and associated diseases 55.4%
dropped during the same period, but about half of the 10
leading causes of disease burden still belong to this group.
Communicable
maternal, neonatal, 60.9%
nutritional diseases
32.7%
1990 2016
Source: NSSO 71st round Key Indicators of Social Consumption in India:

Health, Jan-June 2014, NSSO 60th round Morbidity, Health Care and
the Condition of the Aged, Jan.-June 2004, India: Health of the Nation’s
States 2017, EY analysis
Key challenges in achieving equitable and sustainable healthcare access

1. Limited healthcare funding
As a percentage of GDP, India is one of the lowest spenders on total and public healthcare, including when compared to other
BRICS countries.
Figure 38: Healthcare financing
Health expenditure Government expenditure Government health expenditure

as % of GDP as % of GDP as % current health expenditure
9.5
4.4 57.1
4.0 56.7
8.1 53.7
3.1
2.9
41.9
5.3
5.2
1.0 27.1
3.5
2000 2010 2017 2000 2010 2017 2000 2010 2017
Source: WHO
At the current rate of investment, India’s public healthcare The government aims to increase the spend to 2.5% of GDP by
capacity and delivery will continue to be sub-optimal. As such, 2025. This is expected to boost the healthcare infrastructure
greater than 70% of capacity and ~60% of inpatient care is overall in the country.
7
being served by the private healthcare system in India .
6
“WHO website”. Available at: https://www.who.int/features/2015/ncd-india/en/
7
S. Zodpey et al, “Universal Health Coverage in India: Progress achieved & the way forward”, published in IJMR in April 2018 - 147(4): 327–329. Available at:
2. Focus on sick care instead of ago. For adults, there is no government policy on vaccination
yet.
healthcare
Focus on sick care rather than healthcare has been the cause of Adding to the burden, there are misaligned incentives in how
burgeoning health expenditure and increasing disease burden care is reimbursed. Currently insurers cover in-patient therapy
across the world, including India. or procedures; payments for consultations or routine check-
ups are the responsibility of the consumer. Because they
As discussed in the earlier section, there is a huge disparity in must carry this cost burden, many consumers avoid regular
the availability of healthcare infrastructure between urban and check- ups, which are critical for early identification of disease
rural areas. Such a disparity has compelled India to neglect and its control. In addition to cost, in many parts of India, low
disease preventive, health promotive, and public health awareness of good health and disease prevention practices is
measures. For example, most rural areas have poor primary another significant challenge — the current mentality of visiting
care infrastructure, resulting in increased risk of NCDs. a doctor when the symptoms become severe or intolerable
Immunization levels for children remain low in the country ultimately leads to care being costlier.
despite the launch of an immunization program four decades
Way forward: improving healthcare delivery in India

According to primary research, telehealth and robust primary supply side of healthcare delivery, and focus on prevention
and secondary/tertiary care infrastructure are important is important to reduce overall healthcare demand over time.
enablers for improving the state of healthcare delivery in India. This section focuses on healthcare delivery enablers and best
Sustainable healthcare financing is required to strengthen the practices.
Figure 39: Health care delivery enablers
80% 60%
Telehealth Long term healthcare financing Focus on preventive healthcare
Enablers from government: • Health savings account (e.g. • Awareness in masses
Medisave account in Singapore)
• Infrastructure and connectivity • Digital tools & solutions to prevent/
100% • Policy for data privacy,
• Health cess (small amount) manage disease
insurance coverage, ethical • Sin tax, e.g., on tobacco, alcohol • Policy intervention (e.g. OTC
usage (in Philippines) guidelines)
• Training for efficient usage • Basic cover + top ups • Coverage by insurance
• Co-pay (tiered model)
• Impact investment (e.g., Utkrisht or
Maternal & New-born Health DIB^)
• Financing under CSR activities
Robust primary and secondary / 60% 40% 20%

tertiary care infrastructure
• Primary: fully equipped HWCs EHRs & PHRs^ linked with healthcare Gatekeeping at primary Adult
schemes care level (adopted in Vaccin-
80% • Secondary/tertiary: suggested
many countries) ations
models to boost infrastructure • NDHM^ will capture EHR & PHR
include PPPs, special healthcare Basic cover + top ups
zones, sovereign funds, private • Data generated can advance drug
equity HWCs and PMJAY^
discovery & innovative outcome- 20% under same Ministry
based healthcare delivery models
Telehealth Financing & infra (physical + digital) Primary & preventive healthcare
#Healthcare delivery section has been covered to the extent it impacts the pharma industry
^HWC: Health& Wellness Centre; PMJAY: Pradhan Mantri Jan Arogya Yojana; DIB: Development Impact Bond; EHR: Electronic Healthcare Record;
PHR: Personal Healthcare Record; NDHM: National Digital Health Mission; NCD: non-communicable disease
*Percentage reflects number of responders referring the enabler; N=5 (‘n’ includes most comprehensive responses in terms of coverage of key
themes, a few other participants also provided similar inputs on some of these themes)
India needs a three-pronged approach to provide healthcare to in 2018, the Indian Government demonstrated its strong
the entire population: commitment to providing healthcare for all, aligned to the SDG
1. access to sufficient healthcare infrastructure and resources 3 goal established by United Nations. The flagship public health
in the remotest of the areas in the country; initiative has been internationally recognized as a significant
2. improved ability of the masses to afford healthcare services step towards achieving universal coverage in the country.
through public and/or private insurance; The scheme is completely tax funded and the cost is shared
3. reduction in disease burden using education campaigns that between the Central and the State Governments in a 60:40
create awareness and empower individuals to take control of ratio respectively (with a few exceptions).
their own health.
Ayushman Bharat has two complementary schemes: 1) health
Figure 40: Healthcare delivery approach and wellness centres (HWCs) to deliver comprehensive primary
healthcare (PHC) services, free essential drugs and diagnostic
Accessibility services to the entire population; and 2) Pradhan Mantri Jan
Access to sufficient healthcare Arogya Yojana (PMJAY) for improving access to hospitalization
resources and infrastructure services at secondary and tertiary level health facilities for
bottom 40% of the population (~100 million families). We will
discuss the HWCs in detail in the section on ‘preventive health’.
PMJAY aims to provide financial risk protection to poor

families by covering up to INR 500,000 per family per year for
secondary and tertiary health services, from inpatient to post-
hospitalization care. The scheme has defined 1,350 medical
packages covering surgery, medical and day care treatments
8
including medicines, diagnostics and transport .
Affordability Awareness
Currently a large part of these services are delivered by
Ability to pay/avail for Patients are aware of
private healthcare systems, which are paid at pre-decided
healthcare services and their role in preventing,
reimbursement rates. There have been concerns about a
products (drug, diagnostics, controlling and
large gap between the actual procedure costs compared
medical devices, etc.) managing diseases
to the reimbursement rates offered under the Ayushman
Source: EY analysis
Bharat scheme. Thailand and Indonesia also use diagnostic
case-based group (CBG) tariffs for paying for inpatient and
The following sections provide details about various ways to outpatient services at secondary and tertiary care providers.
address healthcare accessibility, affordability and awareness The approach followed by Indonesia for deciding tariffs can
9
challenges. be considered by India (refer figure 41) . Efforts should also
be made to improve efficiency in public and private hospitals
1. Achieving universal health coverage (refer to the Universal Healthcare case studies on page 100 for
10
model adopted by Thailand ), e.g., by making payments based
(UHC) on quantity and quality of services provided (in patient and out
In 2017, the Government formulated the National Health Policy patient).
(NHP) and set a target to increase the healthcare spend to 2.5%
of the GDP by 2025. With the launch of ‘Ayushman Bharat’
8
“National Health Portal” website. Available at: https://www.nhp.gov.in/ayushman-bharat-yojana_pg
9
R. Agustina et al., “Universal health coverage in Indonesia: concept, progress, and challenges”, published in ‘The Lancet’ in January 2019 - Volume 393, ISSUE
10166, P75-102. Available at: https://www.thelancet.com/journals/lancet/article/PIIS0140-67361831647-7/fulltext
10
V. Viroj Tangcharoensathien et al., “Health systems development in Thailand: a solid platform for successful implementation of universal health coverage”,
published in ‘The Lancet’ in March 2018 - Volume 391, ISSUE 10126, P1205-1223. Available at: https://www.thelancet.com/journals/lancet/article/PIIS0140-
6736(18)30198-3/fulltext
Figure 41: Indonesia: Payment for secondary and tertiary care services
Dynamic approach of frequent updating of the CBG tariffs, and recognising variability and heterogeneity
• Health system attributes, hospital capability, quality, and costs are variable. Hospitals are
Recognizing paid according to the class of hospital (class A, B, C, or D)
variability
• Tariffs for class A hospitals are the highest. National class A referral hospitals are paid with
special CBG tariffs, higher than for other class A hospitals, and academic hospitals have
higher tariffs than general hospitals.
• Tariffs are differentiated into five regional tariffs based on the consumer price index
Recognizing
• Overall, tariffs for private hospitals tend to be 3% higher for inpatients and 5% higher for
heterogeneity
outpatients than for public hospitals, which receive additional government funds
• First tariffs were developed in 2006 from a small number of claims from 15 hospitals
Frequent
• The tariffs were subsequently refined three times on the basis of costing data from
updating
governmental and private hospitals and claims data collected by the Ministry of Health
• The refinement is done to enable more flexibility and payment accuracy considering the
variance across regions and PCPs, thereby enabling mass customisation
There is a need to compensate hospitals basis the care they are providing.
Director, Leading Global Pharma Company
We should think of a system where public and private are treated the same, and even the public health system
has to earn or work for their referral — so they get a notional reimbursement rate, they balance their budgets,
and grow from there.
Joint MD, Leading Indian Hospital Chain
Expanding the healthcare coverage Cover if Ayushman Bharat expands to include middle class (by
increasing coverage from 45% to 65% of population, with the
PMJAY, coupled with the improvement in penetration of rest of the population under private insurance and employee
private health insurance, has increased the proportion of schemes). By expanding the coverage to include the middle
the insured population to 52% in 2017-18, from 37% in class, the Government will also get the benefit of scale in
2014-15. Coverage is projected to grow close to 70-75% negotiating with hospitals. Hospitals, on the other hand, can
by 2025. By 2030, India can achieve full Universal Health benefit by providing treatment to more patients.
Figure 42: Expanding healthcare coverage
Population coverage Changing payer mix: individual to institutional
Commercial insurance 6% 10% 19%-20%
Employee schemes (CGHS, ESIS) 6% 10% 10%-15%
Government schemes 25% 32% 40%-45%
Uncovered population 63% 48% 20%-30%
2014-15 2017-18 2025P
Source: EY FICCI report, Re-engineering Indian Healthcare, September 2016, IRDAI Handbook, IRDAI Annual Report, National Health Profile,
individual state insurance websites, EY analysis
Two important aspects of expanding healthcare coverage include – i) steady and sustainable healthcare financing/funding (ii) ease
of implementation and usage.
(i) Healthcare financing: increase in coverage is possible by identifying new steady and
sustainable sources of financing healthcare coverage — a few
The Government cannot cover the entire set of population examples have been provided in the figure 44.
with the current level of funding (refer to the figure 43). The
Figure 43: Pradhan Mantri Jan Arogya Yojana
Funding requirement analysis Actual spend in the first year of launch (Sep 2018-2019)²
Families to be covered Total hospital

10 crore 46.5 lakh
(PMJAY ambition) admissions
Funding required (Annual Patient penetration

INR 50,000 crores <1%^
premium @INR 5,000*) rate
Funding provided in¹ FY2020-21 Average cost per

INR 10,667 crores ~INR 16 thousand
(central+state @60:40 share) admission
Funding gap ~INR 39,333 crores Cost paid for treatment INR 7,490 crores
of less than 1% of covered
population
3
* Assumption based on Neeti Aayog’s estimates in 2018 (premium of INR 1,000 to 1,200 per family per annum) and current private insurance
premium rates (varying between INR 10,000 to INR 40,000 depending on the number and age of people covered)
^ 46.5 lakh of 50 crore people to be covered under the scheme
1
”Allocation to Ayushman Bharat flat, no increase due to low utilisation”, BusinessLine, February 2020. Available at: https://www.
thehindubusinessline.com/economy/budget/allocation-to-ayushman-bharat-remain-flat-no-increase-due-to-low-utilisation/article30713169.ece
2
”Government revises packages under Ayushman Bharat Pradhan Mantri Jan Arogya Yojna”, Hindustan Times, September 2019. Available at:
https://www.hindustantimes.com/india-news/government-revises-packages-under-ayushman-bharat-pradhan-mantri-jan-arogya-yojna/story-
JnDJ9BbuHAUt3j97xjW45H.html
3
”India’s challenges with Universal Health Coverage”, Healthworld, August 2018. Available at: https://health.economictimes.indiatimes.com/news/
industry/indias-challenges-with-universal-health-coverage/65515072
Figure 44: Options for financing healthcare and expanding coverage
Impact funding Health savings account

Example: Utkrisht Impact bond, a development impact bond (DIB) to Example: in Singapore all people deposit part of their salary into
improve the quality of maternal and child care in Rajasthan³ ‘national health savings account — MediSave‘. This money is used
to pay for insurance premiums & medical expenses. Unused
money stays in the account and fetches interest¹
Corporate Social Responsibility (CSR)
Allow corporates to contribute to
healthcare financing under CSR activities
Co-pay
Healthcare cess
Tiered model with free insurance for below
Example: INR 50 or 100 per month per
poverty section and co-pay for remaining
employee and equal contribution by the
population
employer
Sin tax Top ups from private

Example: tax from tobacco, alcohol and other products Provide basic coverage and allow
that lead to health deterioration. Philippines has used self paid top ups from private
sin tax to finance the expansion of UHC²
1
“Superb Healthcare At Ultra-Low Prices? How Singapore Does It“, Forbes, May 2020. Available at: https://www.forbes.com/sites/
steveforbes/2020/05/26/superb-healthcare-at-ultra-low-prices-how-singapore-does-it/?sh=6f500c9e3add
2
“Can sin taxes on tobacco solve funding challenges in healthcare system?”, Business Standard, April 2019. Available at: https://www.business-
standard.com/article/b2b-connect/can-sin-taxes-on-tobacco-solve-funding-challenges-in-healthcare-system-117011000828_1.html
3
“Innovative health financing models for universal health coverage in Kenya”, Intellecap.com. Available at: https://www.intellecap.com/wp-
content/uploads/2019/02/Innovative-Financing-Models-for-achieving-Universal-Health-coverage-in-Kenya_March-2019_Final_Print.pdf
For subsidy, there needs to be a cross subsidy.
Today we stop at life insurance. All people should have health savings account – this can be incentivized in
several ways so people start saving for healthcare.
To sustain good quality care the middle of the pyramid needs to be covered. Government should support by
providing a basic cover for a set of diseases and then gradually build up and provide more advanced covers.
Co-pay can also be considered as an option. Impact investing is another good mechanism – it is evidence-
based approach to bring better outcomes in the population. This is an extremely powerful way to bring a
significant change.

(ii) Ease of implementation and usage healthcare coverage category, e.g., below poverty line,
middle-income group, high-income group. We can consider
As the healthcare coverage expands to cover the entire Indian
the example of Singapore. The country has a mix of public and
population there is a need to develop a system that enables
private healthcare providers, as well as different tiers of care.
ease of implementation at the healthcare provider (hospital)
There are five classes of healthcare tiers — A, B1, B2+, B2 and
end and ease of usage for the patients and their families.
C — that range from 100% privately paid and personally chosen
There should be a mechanism by which patients are able to service to the most publicly paid, standard service, for which the
go to any healthcare system in India and receive treatment government pays up to 80% of the costs. While clinical care is
without the need for any approvals or provide information not affected by ward class, the type of facilities do vary between
about healthcare coverage type/category or medical history. the five classes. For example, “A” class gets a private room
National Digital Health Mission (NDHM) is a step in the right with bathroom, air-conditioning and other facilities, while “C”
direction (discussed in detail later in this chapter) towards class gets an open ward with seven or eight other patients and a
11
achieving this goal. Electronic Health Records (EHR) and shared bathroom .
Personal Health Records (PHR) developed under the NDHM
should be interoperable so that they can be easily and
securely shared across all public and private hospital systems. The next decade is crucial for India to establish required
Legislation on the security and privacy of EHR and PHR should infrastructure and ensure availability of healthcare
be developed, including reporting requirements in case of a workers to achieve the ambition of universal health
breach. coverage in the true sense. Refer to the UHC case
Another feature that could be introduced in this entire system studies for Thailand and Indonesia (page 100). As
is linkage of Aadhar Card with the healthcare coverage type. India expedites its UHC journey, both countries have
We can consider this like a system to color-code the Aadhar some similarities and some differences in the overall
Card by the category of coverage that enables automatic demographics and healthcare delivery model, and can
services getting delivered to patients according to their provide good reference and best practices.
11
“What Makes Singapore’s Health Care So Cheap?”, New York Times, October 2017. Available at:
https://www.nytimes.com/2017/10/02/upshot/what-makes-singapores-health-care-so-cheap.html
Universal healthcare coverage (UHC): case studies
Thailand Indonesia
With the launch of the Universal Coverage Scheme National Health Insurance System (NHIS) or Jaminan
(UCS) in 2002, the country has three government- Kesehatan Nasional (JKN) launched in 2014
UHC details run insurance programmes to achieve UHC: by unifying various health insurance and social
• Civil Servant Medical Benefit Scheme (CSMBS) assistance schemes into a single public entity, Social
for civil servants Security Management Agency for Health (SSAH)
• Social Health Insurance (SHI) for organised
sector employees
• Universal Coverage Scheme for the rest
Entire population is covered in one of the three • All residents are required to register
Coverage of government-run insurance programmes • Two types of memberships:
population • contributing members: self-employed, formal
sector employees, employers, and retirees
• non-contributing members: people living in
poverty, near poverty, and disabled
• With 203 million members in Oct 2018, the NHIS
became the largest single-payer system in the
world
A comprehensive benefit package that has continued • Primary care: medical consultation (155 medical
Coverage of to expand over the years, and now also includes conditions) and procedure fees, basic medical
services long-term home and community care for elderly, and diagnostics and pharmaceuticals; family planning
home- & community-based psychiatric care services; some preventive services
• Secondary and tertiary care: 289 groups of
outpatient care and 786 groups of inpatient
care services, including medical consultation
and procedure fees, laboratory work, radiology,
drugs, and medical supplies
General tax revenue is used to finance the CSMBS • Governmental contributions from income
and the UCS; equal tripartite contributions from a tax and tax from cigarette and other tobacco
Financing payroll tax paid by employers, employees, and the products; district-level payments; grants from
government fund the SHI overseas development agencies; contribution
from contributing members (employees and
employers)
• Private insurance can be used by members for
excess or additional coverage of services not
included in the JKN
• Closed-end payment (capitation and diagnostic- • Primary care providers (PCPs): two mechanisms
related groups payment within a global budget) is (i) capitation, an advance payment per member
Payment the main mode for >90% of payments; remaining per month including consultation, simple
payments are based on fixed-fee schedules for laboratory tests, and drugs for acute care; drugs
certain services such as dialysis and other high- for chronic diseases covered separately (ii) claim,
cost interventions for services falling outside capitation
• Per capital budgets are based on unit cost and • Secondary and tertiary care providers: payment
utilisation rates of different types of services based on case-based groups
Best practices
Financial accountability framework

• National Health Security Office (NHSO) purchases services from public and private provider networks through annual
contractual agreements using the dual payment system of capitation and diagnostic-related groups
• Funding is based on requirement (e.g. number of people registered, proportion of chronic diseases managed) and the
allocation to health facilities is flexible
• Generation of revenue through provision of services encourages public providers to be responsive to patients
• Payment of same rates for public and private sector provides a level playing field, leading to increased collaboration
from the private sector
• Robust grievance management and disputes settlement system, and annual public hearing for UCS members increases
provider accountability
Accreditation based quality assurance

• Quality is ensured by relying on a step-wise quality improvement process guided by a healthcare accreditation institute
(instead of consumer choice and competition based)
• By 2012, almost all hospitals in Thailand were accredited or had quality assurance processes in place
Civil Registration and Vital Statistics system

• Mandates the registration of all births and deaths and assigns a unique citizen ID number to each citizen
• Facilitates the transfer of members between the three public insurance schemes for seamless continuity of health coverage
Thailand
Evidence based budgets

• Health Intervention and Technology Assessment Programme prioritises the inclusion of new medicines into the National
List of Essential Medicines and new interventions into the UCS benefit package, enhancing health systems’ efficiency
“Continuum of Care” design

• Periodic health examination, used as a risk stratification tool, prevents onset of disease or provides warning of an existing
disease
Robust public infrastructure

• Adequately staffed district health system (consisting of health centres and a district hospital), is the backbone of health
development
• In 2014, >80% of beds were in Ministry of Public health (MOPH) or public facilities
Health workforce development

Several efforts to improve the availability of health workers in underserved areas and strengthen primary health care:
• Three year mandatory rural health-service placement for all medical and nursing graduates (and subsequently dentists
and pharmacists) in public and private schools; provision of financial and non-financial incentives
• Special track programme for rural recruitment and home-town placement; strengthened regional hospitals as clinical
training centres for students in years 3–6 of the special track
• Established nursing and midwifery colleges; nursing licensing examination to ensure adequate competencies
• Public health schools train other paramedical personnel mostly on 2 year diploma (now increased to 4 years)
• Additional workforce of ~14 lakh community health volunteers, each paid about 600 baht, equal to INR 1,200, per month.
Operated by SSAH, single quasi-government entity

• Provides flexibility in management and staff recruitment
• The SSAH has legal authority to collect and manage NHIS funds and enforce contributions from employers and employees
• SSAH can directly contract primary care providers (PCPs) and hospitals, and provide payments
Regulated gating mechanism to improve efficiency and quality

• Patients are required to initiate care with PCP
• To regulate PCP capability, the Indonesian Medical Council has established standard care competencies for the most
Indonesia
common 144 diagnoses and 11 medical conditions, beyond which the PCP must refer patients to a specialist (a cap of 5%
is placed on referrals to discourage misuse)
• Referral by the PCP is first to a lower-class hospital (class D, C, or B), from where referral to a top tertiary hospital (class
A) can be made if needed
E-tender platform to procure cheaper medicines

• To assist PCPs and hospitals to procure cheaper medicines, the government established the e-catalogue, an electronic
tender platform in which all pharmaceutical companies submit competitive bids for drug prices
• To assist pharmaceutical companies in calculating appropriate bids, the Ministry of Health provides estimated volumes
needed for each type of drug by province
While there is definitely a need to expand healthcare coverage bring in more efficiencies by leveraging technology. Effort also
and delivery capacity by establishing new infrastructure (e.g., should be made to reduce the demand for health care services
number of hospitals, beds, etc.) and increasing the number by shifting towards preventive healthcare, which is the next
of healthcare workers at all levels, there is a huge scope to section of our report.
2. Boosting self-care and prevention
Figure 45: Top 10 causes of total number of deaths in 2019 and percent change 2009–2019 (all ages combined)
2009 ranking 2019 ranking % change 2009-2019
Ischemic heart disease 1 1 Ischemic heart disease 40.8%
Diarrhoeal diseases 2 2 COPD 35.4%
Neonatal disorders 3 3 Stroke 28.4%
COPD 4 4 Diarrhoeal diseases -21.2%
Stroke 5 5 Neonatal disorders -34.0%
Lower respiratory infect 6 6 Lower respiratory infect -13.5%
Tuberculosis 7 7 Tuberculosis -10.9%
Cirrhosis 8 8 Diabetes 54.2%
Road injuries 9 9 Cirrhosis 14.3%
Self-harm 10 10 Falls 35.1%
Diabetes 11 12 Road injuries 4.9%
Falls 13 14 Self-harm 2.5%
Communicable, maternal, neonatal, and nutritional diseases Non-communicable diseases Injuries
Source: Global Burden of Disease Study, available at: http://www.healthdata.org/india
Majority of the diseases causing deaths in India are preventable or treatable.
The burden of some preventable diseases is rapidly primary care is critical for India to achieve the aspiration of
increasing because of changing lifestyle and other factors universal health coverage.
such as pollution. Given the large majority of the population
Even the most well-funded healthcare systems of the world
needing public support for healthcare, increasing burden of
are now shifting focus from disease treatment to prevention,
communicable and non-communicable diseases, and the limited
and that is how any country can provide sustainable health
capacity of the government for health expenditure, robust
solutions to its citizens.
Acute healthcare is never going to be a solution for India. The solution lies in primary and preventive care.
Preventive care awareness needs to be in the masses in India. The segments where we see more awareness
is among the educated middle class, but that is not enough. Where healthcare is becoming debilitating
financially is for the poor people.
The number of people requiring acute intervention or having lifestyle diseases is constantly increasing.
While communicable diseases have reduced, they still constitute a significant proportion of the disease
burden India. At this rate, beds are never going to be enough and the cost of treatment will be huge. This
is the time to break the chain. At this point, we must invest in tertiary care, but it cannot be an either-or
situation. We need to strengthen both tertiary and primary care over the next decade or so.
MD and CEO, Leading Indian Hospital Chain
2.1 Strengthening primary care the health system – into Health and Wellness Centers (HWCs)
by 2022. By March 2020 about 39,000 HWCs were operational
Ayushman Bharat aspires to raise awareness about health
across India. The objective of the HWCs is to achieve
care and reduce disease burden by promoting preventive and
preventive, promotive, curative, diagnostic, rehabilitative and
promotive healthcare services, particularly in the rural areas
palliative care across a range of indications (see Figure 46). In
where 70% of the population resides. Its Health and Wellness
addition to comprehensive health care services, these centers
Centers initiative aims to revamp 150,000 existing Sub-Centers 12
also provide free essential medicines and diagnostic services .
(SCs) and Primary Health Centers (PHCs) – the lowest tier of
Figure 46: Health and wellness centres: scope of services
Scope of services Additional scope of services
Family planning, maternal health Communicable disease ENT, Opthal, Oral
Non-communicable Elderly and

Child health
disease palliative care
National health programs: CD, NCD Mental health Emergency services
Source: Ayushman Bharat – Comprehensive Primary Health and Wellness Centres, Operational Guidelines; EY analysis
12
C. Lahariya, “Health & Wellness Centers to Strengthen Primary Health Care in India: Concept, Progress and Ways Forward”, Indian J Pediatr, July 2020. Available at:
If developed as per the ambition, these health and wellness severity and reduce hospital admissions. Studies indicate that
centers can play a critical role in expanding access to primary the hospitalization ratio in a district is negatively correlated to
care, serving as the foundation of healthcare for all, across the primary care usage, a 10% increase in primary care usage leads
country. But to realize this ambition, India needs thousands to a 6% reduction in hospitalization.
of more care providers, including nurses, primary care
physicians, and specialists. Indeed, a large proportion of the Key priorities for developing strong primary care
country’s SCs, PHCs, and CHCs are understaffed. The HWCs infrastructure
should also have good physical infrastructure, e.g. advanced
1. Availability of appropriate funds
diagnostic tools and machines, etc. to provide all services
that they are designated to provide. These HWCs should, over Government should allocate enough funds annually required to
time, be able to manage most primary care requirements for revamp planned number of SCs and PHCs to HWCs during the
communicable and non-communicable diseases, and should year and run the active HWCs. HWCs should be equipped with
act as gatekeepers for all referrals to secondary and tertiary all the physical infrastructure, healthcare delivery staff, and
care (refer to the Thailand and Indonesia UHC case studies on medical supplies (including medicines and diagnostics) to fulfil
page 98). This will reduce capacity requirement in hospitals the entire scope of services (including disease coverage) as per
and the burden on specialists, and also limit health care costs. the plan. Only then can the HWCs act as effective gatekeepers
In addition, managing diseases early on with a robust primary for referrals to secondary and tertiary services.
care provision will also reduce chances of increase in disease
Figure 47: Number of health and wellness centers
Actual HWCs
Planned HWCs
40,000
40,000
40,000
38,595
30,000
Cumulative as of
FY2020-21 FY2021-22 Apr-Dec 2022 FY23-24 onwards
FY2019-20
Funding required
6,712 9,800 12,200 9,000
(INR crores)*
Funding provided (central

2,667
+state @60:40 share)
Funding gap
4,045
(INR crores)
*Note:
1. Calculated as sum of ‘Funds required for upgrading and running planned HWCs for the year @INR 14 lakh / annum)’ and ‘Funds required for
running active HWCs at the start of the year @INR 6 lakh per annum’
2. Inflation rates not applied over the years; does not include cost of free medicine and diagnostics
Source: EY analysis; “Ayushman Bharat – Comprehensive Primary Health Care through Health and Wellness Centers”, NHSRC. Available at: http://
nhsrcindia.org/sites/default/files/Operational%20Guidelines%20For%20Comprehensive%20Primary%20Health%20Care%20through%20Health%20
and%20Wellness%20Centers.pdf
2. Addressing healthcare workforce availability gap to introduce more workforce. Focussed training programmes
should be developed to enhance the skillset and role of the
A holistic approach is needed to address the healthcare
existing workforce — e-modules leveraging advanced technology
workforce availability gap in HWCs. The number of seats in
such as augmented reality/virtual reality can be a cost-efficient
institutions should be increased across all roles and levels
way to train primary care givers and provide additional
flexibility so that India can achieve scale on this metric more 2.2 Reducing the burden of non-communicable
quickly. Like several other countries (e.g., Brazil, Turkey, the
diseases through effective prevention and
US, etc.), new roles of family medicine practitioners can be
created (e.g., physician assistants) to ensure that all primary disease management
care needs of the population are met within these HWCs. Under the Sustainable Development Goal 3.4, the Government’s
target is to reduce by one third premature mortality from NCDs
Refer to the Thailand UHC case study for attracting and
by 2030 through prevention and treatment, and promoting
retaining rural health workers through a successful multi-
mental health and well being.
pronged strategy including decentralized education, compulsory
rural service, financial incentives and the creation of a The increasing incidence and mortality of NCDs has led to greater
supportive ecosystem. awareness for wellness and health among all generations of
people. The government of India has also launched initiatives,
3. Leveraging technology to increase competence and such as the “National Programme for Prevention and Control of
efficiency Cancer, Diabetes, Cardiovascular disease and Stroke” (NPCDCS),
Technology should be leveraged to further increase the with the aim to increase awareness of risk factors, set up
competence and efficiency of the workforce — e.g., interactive infrastructure (like NCD clinics, cardiac care units), carry out
symptom screening algorithms, tools for diagnosis and screening at primary health care levels for early diagnosis and
monitoring, point of care devices, and artificial intelligence promote proper treatment and disease management.
based clinical decision support. Several tools are already The following measures should be adopted to prevent and
available in India such as ViScope, a handheld device for effectively manage NCDs.
improving diagnosis of cardiac problems and iBreastExam,
an ultraportable wireless device to detect small breast 2.2.1 Leveraging technology for creating
abnormalities without any pain or radiation. awareness and effective disease management
4. Providing telehealth facility and infrastructure The government has leveraged social media for health promotion.
Mobile apps, such as mDiabetes and mCessation, have been
Telehealth, with the required infrastructure (e.g., high-
launched to increase awareness about prevention and control of
speed data, advanced tele consult platform enabling video
NCDs. While these apps are useful, more can be done to increase
consultation, remote diagnosis, sharing of results, etc.), should
awareness in the masses about the availability and benefits of
become an essential feature of HWCs for enabling consults
using such apps.
with specialists from larger hospitals in the cities — this can
further reduce the need for referrals and enable treatment of
individuals in rural areas where demand for trained physicians No more tension
mDiabetes mCessation
outstrips supply. Support for
For diabetes To help quit
mental stress
5. Establishing a governance process control tobacco
management
A strong governance process should be established to improve
the utilization of primary care centers and reduce the load on
More technology-based solutions can be made available for
specialists. A gatekeeping strategy would improve the efficiency
empowering patients, and enabling physicians and care delivery
of specialists and control the escalations in healthcare spending.
teams to effectively diagnose and manage chronic diseases.
Many other developed and developing countries (e.g., Thailand)
have very effective gatekeeping mechanism at the primary care An innovative digital solution for non-communicable disease
level. prevention, control and care is Mexico’s CASALUD that has
been incorporated as public policy into the National Strategy
Governance in primary care involves a strong commitment to
for the Prevention and Control of Pre-obesity, Obesity and
minimizing disease burden through prevention, early detection,
Diabetes of the Federal Government since 2013. The CASALUD
and effective management of disease. To achieve this, detailed 13
model is based on five pillars .
guidelines should be laid out about the expected roles and
responsibilities of health workers at each level. The scope of
services to be provided by the HWCs should be clearly defined,
explaining conditions or diseases that should be managed in
the HWCs and those that should be referred for specialty care.
Performance evaluation criteria for healthcare providers at all
levels should also be an important section in the governance
process.
13
R. Tapia-Conyer et al., “Enablers and inhibitors of the implementation of the Casalud Model, a Mexican innovative healthcare model for non-communicable disease
prevention and control”, July 2016. Available at: https://health-policy-systems.biomedcentral.com/articles/10.1186/s12961-016-0125-0
• The first pillar is the proactive prevention and detection of then prescribe lifestyle changes and the most appropriate
NCDs, and includes two systematic risk assessment tools:ꟷ pharmacological treatment.
(i) MIDO health-carts located at easily accessible public
• The third pillar is continuous monitoring of medication
locations including supermarkets, transportation hubs,
community centers and schools (ii) MIDO backpacks, a supply chain through AbastoNET — an online information
portable module with wireless connectivity that can enable system that standardizes metrics for stock management at
screening in households. The MIDO integrates patient health primary health clinics (PHCs).
assessment equipmentꟷ including devices for measuring • The fourth pillar is capacity building through continuous
blood pressure (BP), blood glucose, urinary proteins, medical education, and is executed through the Online
height and weightꟷ with a digital patient health screening Interactive Platform for Health Education – PIEENSO in
questionnaire enabling mass screening and identification of Spanish. The platform confers two degrees with academic
individuals at a pre-disease stage. The screening is followed endorsements of national and foreign universities. The
by personalized treatment in case a disease is diagnosed first degree is a 110-hour Online Certificate to increase
and/or counselling and lifestyle recommendations at the physicians’ knowledge about NCDs. The second is a 40-hour
healthy or pre-disease stage. practical course where physicians solve real-life cases and
• The second pillar is evidence-based chronic disease test their knowledge in practical settings.
management, and includes Chronic Disease Information • The fifth pillar is patient engagement and empowerment,
System (SIC) and a Digital Portfolio for healthcare including assessment of the knowledge, confidence and
professionals. Physicians can capture patient data on skills to prevent and manage chronic diseases, plus tools to
NCD care on SIC, and can also access their lab tests and implement related behaviours.
other results, and SIC analysis, based on which they can
Figure 48: Mexico’s CASALUD — digital solution for NCD prevention, control and care
Location:
Tests
Public spaces such
conducted:
as transportation
1 hubs, supermarkets,
BP, blood glucose, 2
urinary protein,
community centers
height, weight
schools
Mobile cart/
Portable
backpack
Supporting
Unique offering:
apps:
Enables mass
Vive Sano to self Reports Digitized
screening and lifestyle
6 assess cardiovascular generated to MIDO patient
recommendation at a 3
risk; Diabediario for guide HCP* questionnaire
"pre-disease
diabetic treatment
stage"
compliance
Risk assessment software

on laptop to process data
Goal
Outcomes:
achievement:
Increased follow-
80% of screening of
up consultations,
target population of
5 1.4 million
enhanced detection 4
of patients at risk of
complete by
developing chronic
November
conditions
2018
*HCP - Health Care Professional

Source: GSMA, Carlos Slim Foundation
CASALUD began its pilot phase in 2009 in seven Mexican neither the public healthcare system nor its users/beneficiaries
states. Within seven years (by 2016), it had been implemented incur any additional costs.
in 130 PHCs in 25 out of the 32 Mexican states through a
The pharma industry can also play a core role in enabling
public–private partnership arrangement between Carlos Slim
people to prevent and manage disease better by providing
Foundation (FCS) and federal and state governments. The
beyond product solutions — an example of such an initiative by
entire model is developed and financed through the FCS —
a global pharma major is referenced below (figure 49).
Figure 49: A comprehensive personalized disease management program by a global pharma major
Diabetes 101:
Get the Why diabetes changes? Which number to watch
Diabetes myths and facts information about type 1
facts Why medication changes? and where you stand
and type 2 diabetes
Eat right (GoMeals app),

Blood sugar tracker to Starting and staying on
Get a plan maintain fitness, keep Living with diabetes
track diabetes medicines
scores, achieve goals
Case study
Diabetes specialist and coaches/champions:

Get help Have loved ones as part of Diabetes Care Team
share experiences, advice, encourage
On social Helpful resources

Other Connect with Diabetes Online Community: Share a Diabetes websites (e.g., ADA) for people with
resources pic, pick up a tip, feel connected to people facing diabetes and for their loved ones, friends, and
similar challenges care partners
Company reports, EY analysis
E-consulting, E- Pharmacy, E- diagnostics will address the NCD awareness with AI driven digital solutions.
2.2.2 Policy enhancement to enable collaborative & magic remedies for diagnosis, prevention and treatment
efforts for increasing awareness and of diseases. A set of mandatory, legally-binding guidelines
or codes could be developed focusing on drug promotion,
empowerment of the masses
marketing and advertising. Currently, the pharmaceutical
The government can also collaborate with the industry industry is only voluntarily required to adhere to “Uniform Code
and NGOs to spread more awareness among the masses of Pharmaceutical Marketing Practices” (UCPMP).
about health and wellness, disease prevention and disease
Another important area requiring policy intervention is in the
management. This can be achieved by developing systematic
over-the-counter (OTC) space. The ongoing pandemic has
promotional strategies for key diseases in collaboration with
brought a lot of awareness about self-care and wellness. Issuing
other stakeholders. There is also a need to revisit certain policy
OTC guidelines will empower people and pharmacists to make
interventions that were issued decades back. For example, the
informed decisions about health and wellness supplements
Drugs and Magic Remedies (Objectionable Advertisement) Act
and medicines for common ailments. Usage of OTC products
was issued in 1954. It prohibits advertisement of certain drugs
and medicines has huge potential to reduce overall health care
costs. Take the case of the US for example, where OTC drugs geographies where OTC is regulated. The guidelines should
result in annual savings of nearly US$185 billion (refer figure also include requirements for the marketer to provide relevant
50 for details). To reap the benefits of OTC consumption, details and tools for consumers to self-diagnose small ailments
detailed, evidence-based guidelines should be rolled out and identify the right OTC product or the need to consult a
after considering the best practices and loopholes in other doctor.
Figure 50: OTC as a category helps in reducing healthcare costs while broadening access
OTC drugs create substantial value for the US healthcare

system annually, US$146 billion in savings due …and US$39 billion due to
to alternative treatment availability… better access and process
Savings from Savings from

clinical office visits drugs
US$52 b Savings from Savings from
Doctor’s US$95 b increased access to US$5 b US$34 b reduced losses
Less expensive ~27 m consumers* in productivity
appointment and
OTCs vs. Rx drugs
diagnostics avoided
Three therapy areas comprise 61% of total OTC savings
Medicated skin
Lower gastrointestinal
Upper gastrointestinal
*Consumers who would not seek medicines if they were available as Rx instead of OTC
Source: CHPA report, March 2019
2.2.3 Upgrading insurance products to cover been enhanced, e.g., insurers can offer discounts on premiums
health & wellness and outpatient services or increase the sum assured at the time of renewals based on
the wellness regime of policyholders in the preceding policy
The Insurance Regulatory and Development Authority of period. These improvements over time mean that insurance
India (IRDAI) Regulations encouraged insurers to reward products are slowly shifting from securing oneself against big
policyholders for wellness and preventive aspects for the first illnesses requiring hospitalization to providing care for daily
time in 2016. Since then, some of the big insurers in India health needs.
have started incentivizing healthy behaviours and preventive
healthcare by giving reward points of up to 10 to 30% of 2.2.4 Vaccination for preventable diseases
annual premium. In November 2019, IRDAI released ‘draft In 1978, India first launched its major immunization
on guidelines on wellness and preventive features/benefits’. programme for protection of children from preventable life-
Guidelines suggested insurers to offer in the product outpatient 15
threatening conditions . The current universal immunization
14
consultations or treatments and health check-up diagnostics . programme (UIP) provides free coverage against 12 vaccine
These benefits will encourage policyholders to go for routine preventable diseases. Nine are covered at the national level and
check-ups instead of deferring them for the fear of high three others — rotavirus diarrhea, pneumococcal pneumonia
cost. This will result in earlier diagnosis, or sometimes even 16
and Japanese Encephalitis — are covered regionally . Plans are
prevention of disease, hence saving all the potential higher currently underway to expand use of both the rotavirus and
costs of treating the disease. Guidelines for wellness have also pneumonia vaccines.
14
“Irdai calls for wellness features in health insurance plans”, Financial Express, November 2019. Available at: https://www.financialexpress.com/money/insurance/
irdai-calls-for-wellness-features-in-health-insurance-plans/1765196/
15
C. Lahariya, “A brief history of vaccines & vaccination in India”, April 2014. Available at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4078488/
16
National health mission website. Available at: https://nhm.gov.in/index1.php?lang=1&level=2&sublinkid=824&lid=220
Figure 51
After four decades of immunization programme in India…
UIP became part of UIP became an integral

Launch of ‘Expanded ‘Child Survival and Safe part of National Rural
Programme on Immunization’ Motherhood Programme’ Health Mission
1978 1992 2005
1985 1997 2014
Program renamed to Included under ‘National Mission Indradhanush

‘Universal Immunization Reproductive and Child Health launched; goal is to increase
Programme (UIP)’ with Programme’ full immunization coverage
expansion beyond urban areas to 90%
… coverage has still not reached the desired level
…about 1 of 4 of these
~1 million children still die Only ~65% of children receive full immunization during
deaths are caused by
before 5 years of age… the first year of their life
pneumonia and diarrhea
Source: EY analysis
A child is said to be fully immunized if the child receives all make a huge difference in reducing disease related morbidity
required vaccines in the first year of life as defined by the and mortality. Only one vaccine is nationally recommended
national immunization schedule. The two major milestones for adults — tetanus toxoid (TT) during pregnancy for the
of UIP have been the elimination of polio in 2014 and protection of newborns against tetanus. To improve overall
maternal and neonatal tetanus in 2015. However, despite the uptake of the vaccines, there is a need to create more
immunization programme running for the last four decades, awareness in the masses about the importance of vaccination,
only 65% of children are fully immunized on time. About one and possibly to fund initial programmes, especially for high-risk
million children still die of vaccine preventable diseases in India groups, as has been done for immunization programmes for
every year before their fifth birthday, with a quarter of these children. Coverage of adult vaccination by insurance products
17
due to pneumonia and diarrhoea . can also boost its uptake.
There is also more work to be done on adult immunizations. Whether it is NCDs, communicable diseases, or vaccine-
Several adult vaccines are now available and can provide preventable diseases, the Indian population has to take more
protection against some critical diseases such as tetanus, accountability of their own health. COVID-19 has resulted
human papillomavirus (HPV), hepatitis, typhoid, Japanese in greater awareness among people about the need for
encephalitis, meningococcal disease, pneumococcal disease prevention of disease, e.g., frequently washing hands, wearing
18
and influenza . People with chronic diseases (such as diabetes, masks, etc. for protecting themselves from the infection.
heart disease, chronic kidney diseases, etc.) and the elderly are It is time to ensure that this consciousness about disease
more at risk of infectious diseases and are highest vaccination prevention continues and expands. The government should
priorities. promote physical wellbeing by shaping individual health-related
behaviour and prevent the development of key risk factors of
Effective adult vaccination programmes can not only save
chronic diseases.
a lot of money for healthcare systems and families, but can
17
Unicef website. Available at: https://www.unicef.org/india/what-we-do/immunization
18
CDC website. Available at: https://www.cdc.gov/vaccines/schedules/downloads/adult/adult-combined-schedule.pdf
Figure 52: Burden of vaccine preventable diseases in India
Cervical cancer Rubella Hepatitis B Diphtheria Influenza/flu

nd
• 2 most common • 40-45% of women • ~300,000 new • US CDC data • During monsoon,
nd
cancer and 2 in the childbearing cases each year indicates that in 20% of all hospital
leading cause of age susceptible to • ~205,286 deaths countries with last admissions have
cancer death in India Rubella annually related to diphtheria booster influenza positivity
• ~97,000 women • >2 lakh babies born chronic hepatitis before age 6 years, • ~40,000 deaths
diagnosed each year with birth defects about half of all occur due to
because of Rubella diphtheria cases are Influenza annually
• ~60,000 (60%
infection during in people more than
mortality rate) of
pregnancy 15 years of age.
them die
This prevalence is
highest in India
Source: A. Rathi et al., “Vaccine Preventable Diseases in Indian Adults-Burden & Prevention”, Infect Dis Diag Treat, 2017; R. Dash et al., “Towards
adult vaccination in India: a narrative literature review”, 2019
S. Kolhapure, "Towards adult vaccination in India: a narrative literature review", December 2019. Available at: https://www.tandfonline.com/doi/
full/10.1080/21645515.2019.1682842
Some positive changes have come out of COVID: increased focus on healthcare by people and government.
Prevention has become important, especially when there is no better cure than wearing mask, social
distancing, how to cough, where not to spit
Top official at an Indian Regulatory body for Hospitals
3. Embracing telehealth as an enabler Kerala Oncology Network or the Onconet-Kerala, which

launched in 2001, is another one of the most successful
to bridge the healthcare demand and telemedicine projects in India. This initiative uses telemedicine
supply gap to detect, diagnose and treat cancer; services linked to pain
Globally, India is one of the fastest technology adopters with management and follow-up show how telemedicine can support
significant mobile and internet penetration. India holds the the whole patient journey.
second spot (after China) on various dimensions of digital Teleconsultation holds the promise to provide healthcare
adoption, such as mobile phone and internet subscriptions. access even to the remotest regions in the country, while also
In addition, people in India are now more aware and involved bridging the gap between healthcare infrastructure availability
in their own health and disease management. This presents a and demand. However, pre-COVID these initiatives were being
huge opportunity for India to expand digital health. explored in pockets. The need for physical distancing as a result
of frequent lockdowns has led to an emergence of telehealth
Telehealth emergence due to COVID-19
globally and in India. To avoid going to hospitals or clinics,
Telehealth is not a new concept. In India, Apollo Telemedicine patients are now willing to consult physicians online for acute
Networking Foundation (ATNF) is the oldest and largest and chronic diseases. Healthcare providers have integrated
19
multispecialty telemedicine network . The Sankara teleconsultation platforms and scaled–up their existing digital
Nethralaya and the Aravind Eye Hospitals in Tamil Nadu and offerings. For e.g., Fortis Healthcare has witnessed a shift
the Tripura Vision Centre in Tripura also have successfully in outpatient department (OPD) consultations with 10% of
used telemedicine to conduct screening of eye diseases (tele– pre–COVID-19 consultations moving to the teleconsultation
20
ophthalmology) in rural areas among the general population. platform .
19
V. Mohan, “Tele-diabetology to Screen for Diabetes and Associated Complications in Rural India”, J Diabetes Sci Technol. - 8(2): 256–261, March 2014. Available at:
20
“Telemedicine is the new call for action at the moment”, Indian Express, May 2020. Available at: https://indianexpress.com/article/lifestyle/health/in-telemedicine-
virtual-healthcare-future-scope-india-mindsets-doctors-6421192/
Figure 53: Rise in teleconsultations during pandemic
India
Even when COVID goes, telemedicine is here to
stay. Doctors in India were stymied by the lack of
500% 300% clarity – whether I can, or I cannot, and if they would
be taken to the court. But on 25 March 2020 the
Medical Council of India amended the ethics part of
500% 60+% rules and the telemedicine practice guidelines were
issued – it has certain lacunas, but I am sure they will
get better over time. But I think the dissemination
167% of the knowledge that telemedicine is legal has not
th
reached the n degree. So its potential is not being
fully harnessed. But over time telemedicine consults
US
will become a regularity
60-90% 50% Top official at an Indian Regulatory body for Hospitals
China
900%
Chunyu Doctor 100% Similar trends were observed in the US where health systems
reported 50-170 fold increases in the number of virtual
healthcare visits as compared to the period before COVID-19
Ding Xiang Hua 215% active users
emerged. In the UAE, six telemedicine solutions were approved
for use in late April. Private hospitals in the UAE are doing 150-
22
300 consults per day . Similarly, leading platforms in China
Globally, virtual primary care consultations increased from 23
also witnessed a massive growth in telemedicine usage .
5% to 95% between January to May 2020. Practo reported
that five crore Indians accessed healthcare services online Telehealth potential to improve healthcare
during the first phase of lockdown between March 2020 and
access
May 2020. On an average, a typical user consulted a doctor
online twice a month which led to a drop of 67% in in-person Technological advancements in the recent past have paved
visits. Eighty percent of these telemedicine patients were the way for healthcare professionals to communicate with
21
first-time users and 44% came from non-metro cities . Leading their patients, breaking down the barriers that can impede
healthcare chains in India are doing 200-500 tele-consults per patients’ access to medical care. Teleconsultation has opened
day with a few star doctors doing 8-10 consultations. Platforms doorways to access healthcare in multiple ways. It is expected
have seen up to a 500% increase in the number of online to revolutionize the dynamics of the clinical practice.
consultations post-COVID-19.
21
“The role of telemedicine in an evolving healthcare environment”, Insights by Practo. Available at: https://s3-ap-southeast-1.amazonaws.com/www.practostatic.com/
marketing/images/pdfs/Practo_Insights_Report.pdf
22
“UAE opens access to new telemedicine applications and facilitators”, Healthcare IT News, April 2020. Available at: https://www.healthcareitnews.com/news/emea/
uae-opens-access-new-telemedicine-applications-and-facilitators
23
“As the Coronavirus Spreads, Healthcare Goes Digital”, February 2020. Available at: https://www.bain.com/insights/as-coronavirus-spreads-healthcare-goes-digital-
snap-chart/
Teleconsult is a positive move for both doctor-patient and the industry. It is economic for both patients and
physicians, and especially useful for chronic diseases and for follow ups
MD, Leading Indian Pharma Company
There is still some way to go for teleconsulting, but it is going to be useful for improving access to remote/
underserved areas, and for follow-ups.
MD & CEO, Leading Indian Hospital Chain
Through telehealth, patients in remote or rural areas can to the hospital or physician’s clinic every few days – this can
get consultations with specialists in cities. A virtual visit also minimize re-hospitalizations and reduce cost of care.
provides patients with access to specialized healthcare at
Doctors also benefit from telemedicine as they are able to
their convenience without making it essential for them to
provide assistance to existing patients online while increasing
be physically present at a doctor’s clinic. Elderly patients,
their reach to new patients within the same geography or
terminally ill patients and patients with chronic diseases can
new geographies. Another advantage is the ability to manage
better manage their disease by consulting physicians virtually
records digitally and the facility of e-prescriptions.
in a timely manner at a lesser cost and without having to travel
Figure 54: Virtual healthcare has the potential to support the burdened healthcare industry
More efficient Reduced Less clinician More clinical

output healthcare cost burnout contribution
Follow-ups
Shortened
Increase in in chronic cases Lower mortality
length of
outreach and for elderly rates
in-clinic stays
patients
Source: EY analysis
Potential barriers that can limit telehealth should not be used as a means to increase the purchase of
medicines on e-pharmacy.
adoption
According to EY primary research, patients’ major concern is
To reap the true benefit from telemedicine, some barriers need
the lack of trust on virtual care and data privacy issues. For
to be addressed. Many physicians, especially senior specialists,
doctors, they want platforms that follow ethical practices and
and consumers in the rural areas are not technology-savvy and
do not uberize them. Doctors are not comfortable maintaining
may need support initially to get familiar with the platform.
patients’ data privacy and confidentiality.
Another challenge is the genuineness of teleconsults – these
It is an inflection point. Teleconsult is a very powerful enabler for rural India. In a country where we not
only have shortage of specialists and doctors, but a significant geographic skew in that 80% of these doctors
are in the top 20 cities, teleconsult is a very powerful scenario.
What we should not see happening is people using the legislation on teleconsult as a mechanism to get
people to buy pharmacy medicine.
Second is data privacy. A good architecture of protection of patient privacy if put in place and followed
overcomes the problems, and the benefits of the systems far outweigh some of the risks.
These barriers can be overcome by establishing technically also have an integrated mechanism to pay for the consultation
advanced and secure teleconsultation platforms and policy either by self or through insurance.
interventions.
1. Establishing teleconsultation ecosystem

integrating all stakeholders involved in care
delivery
Telemedicine is part of digital transformation of
To sustainably scale teleconsultations and achieve its potential, healthcare in India.
there is a need to build a teleconsultation ecosystem that
integrates all key stakeholders digitally. The stakeholders One, it will require dissemination down the line, and
include service providers such as doctors and paramedics, second it will require a payment mechanism that is
fulfilment centers such as pharmacies and diagnostic labs, easier than present.
and payers such as patient–consumers or insurance agencies.
The teleconsultation platform should link these stakeholders
digitally and enable exchange of data by mutual consent Top official at an Indian Regulatory body for Hospitals
through standardized digital registries. The platform should
Figure 55: Teleconsultation ecosystem
Providers Payer Fulfilment centers
• Doctors • Patients • Offline pharmacies
• Insurance companies • E-pharmacies
• Government • Labs and diagnostic centres
Platform provider
Government, NGOs, private bodies, pharma companies, hospitals
Source: EY analysis
We are witnessing an explosion in teleconsultation platforms 2. Enablers for sustainability and scalability:
by health-tech start-ups, NGOs, pharmaceutical companies, governance and policy, technology,
e-pharmacy companies and hospitals. In the future, multiple
infrastructure
agencies are likely to play the role of platform providers.
In response to the growing need for teleconsultation, Connected smartphones coupled with sensors can capture
pharmaceutical companies are also proactively engaging with an ever–expanding range of data for disease diagnosis and
teleconsultation platform providers to enable doctors and management.
patients to connect. EY surveyed the top 12 pharmaceutical
In India, the Ministry of Health and Family Welfare (MoHFW) in
companies in India. About 80% of the companies interviewed
collaboration with Niti Aayog, the Board of Governors (BoG)
had already tied–up with one or more marketplace
and the Medical Council of India issued the latest telemedicine
teleconsultation platforms, 8% had launched their own 25
guidelines in March 2020 . This has enhanced the purview of
platforms, while the rest were evaluating different means to
telemedicine and reduced some concerns among doctors and
adopt teleconsultation.
patients. Importantly, the guidelines allow the use of artificial
As one of the key pillars of the health ecosystem, intelligence (AI) and machine learning (ML) tools to assist a
pharmaceutical companies have a strong and significant medical practitioner in counselling a patient. The guidelines
influence on shaping the teleconsultation maturity cycle. By specifically permit doctors to provide teleconsultation for
engaging with teleconsultation platforms, pharma companies prescribing medicines, provide counselling and impart health
are providing a channel for doctor and patient connects. In the education to patients from any part of India. Further, in May
long run, the transaction data securely captured in the platform 2020 the Insurance Regulatory and Development Authority of
can help pharma companies in developing strategic insights for India (IRDAI) declared that all insurers offering an outpatient
fostering revenue growth. department cover must pay for the costs of telemedicine as
well. In addition, National Accreditation Board for Hospitals
Figure 56: Reasons for pharmaceutical companies to set & Healthcare Providers (NABH) has initiated work on digital
up their teleconsultation platform health standards for accreditation of telehealth providers.
In another recent move, the Prime Minister of India announced

the government’s National Digital Health Mission (NDHM) on 15
26
August 2020 . The programme is a part of the Government’s
National Digital Health Blueprint aimed at using technology to
Enable doctors Provide Develop improve health care delivery.
to safely alternate synergies
continue their consultation for growth NDHM is a digital health ecosystem under which every citizen
practice channel to of pharma will have a unique health ID (containing details of their diseases,
patients companies medical history, physicians consulted, diagnostic reports,
medication etc. in a common database), digitized health
Source: EY analysis records, registry of doctors and health facilities. This ID will be
applicable across states, hospitals, diagnostic laboratories and
India will soon transition to 5G with Long-Term Evolution pharmacies and will allow secure sharing of data. Complete
(LTE) 4G accounting to 64% and 5G accounting for 18% of ownership of the records will remain with the patient.
24
the subscriptions in 2025 . 5G is expected to provide better
The INR 144 crore NDHM will be led by the National Health
speed, capacity, security and decongest perpetually strained
Authority and will be integrated with other Government
networks. This may facilitate better connectivity for innovative
health programmes, such as the Ayushman Bharat and the
5G healthcare applications.
24
“Ericsson Mobility Report”. Available at: https://www.ericsson.com/49da93/assets/local/mobility-report/documents/2020/june2020-ericsson-mobility-report.pdf
25
“Covid-19: Health Ministry, NITI Aayog release guidelines for telemedicine amid”, BusinessLine, March 2020. Available at:
https://www.thehindubusinessline.com/news/covid-19-health-ministry-niti-aayog-release-guidelines-for-telemedicine-amid/article31173424.ece
26
“India takes first step towards universal health coverage with Digital Health Mission launch”, ThePrint, August 2020. Available at: https://theprint.in/health/india-
takes-first-step-towards-universal-health-coverage-with-digital-health-mission-launch/482258/
tuberculosis programmes. This is an important step in putting all). All stakeholders will benefit in different ways. Citizens will
together a digital health ecosystem in place that will support get improved access to healthcare at a lower cost. Physicians
universal health coverage and achieving of the UNSDG goal 3.8 and hospitals will be able to better manage patient load and
(the SDG goal 3.8 includes: achievement of universal health will get access to entire patient records. The entire database
coverage, including financial risk protection, access to quality thus generated can further be utilized to advance innovative
essential health-care services and access to safe, effective, healthcare research, thus improving public health.
quality and affordable essential medicines and vaccines for
Figure 57: National Digital Health Mission
Six building
blocks Health Facility Personal Health
HealthID DigiDoctor e-Pharmacy Telemedicine
Registry Records
Personal Health Records Electronic Medical Records Electronic Health Records

enable patients to compile, systems used within a hospital contain records for a patient
Three layers of
update and keep a copy of their or a clinic to support patient across multiple doctors and
data
records to better manage diagnosis and treatment and are providers within a Healthcare
their care transaction focused system
Hospitals / other
Connected Insurance
Citizens Doctors healthcare Pharmacies
stakeholders companies
providers
Citizens Physicians/hospitals Public health (potential

• Improved access and • Access to entire patient benefits of database)
affordability records • Establish drug efficacy and
• Convenience (e.g., booking • Potential to use tech outcomes
Improvements
appointments, making (e.g., AI) to improve and • Future new drug research
in the healthcare
payments, etc.) personalize diagnosis and • Real-time data access
delivery*
• Transparency treatment and analytics identify
• Data analytics to increase emerging disease trends and
efficiency, quality of delivery, population at high risk
etc.
*The list is indicative and not exhaustive

Source: EY analysis
Digital is a run-time application that no organization can go without, and all the more so for healthcare.
So, the foundational stuff is really the national digital health mission, which is collected data in a clean
structured semantically interoperable manner. From that foundation you then begin to build layers and
layers of analysis.
Personal health record (PHR), in addition to electronic health record, is critical for person-centric care.
From PHRs you build the continuum of care and from there you build the models of appropriate care.
Telemedicine is like the first stepping stone for that vision of connected care. You use blockchain to ensure
data security and you use artificial intelligence-based models to ensure clinical efficacy. Data modelling and
standards are the foundational building blocks, and bandwidth and connectivity are the enablers.
If you take this even further, the combination between the genotype and phenotype will be where in the
next five years India can be. If we get there then we do not have to worry about 1.3 billion population, we
th
can pick vulnerable populations and treat them at 1/10 the cost using a preventive route.
India can become the frontrunner in creating islands of this future model, it could be significantly
transformational. This is a long-term story, but in 3-5 years horizon we can show that the incidence of
disease in the selected cohort is lower than the overall disease incidence because of the following:
• Level 1 is improving the social determinants of health – clean drinking water, sanitation, vaccination,
other basic amenities.
• Level 2 is compliance to medication, blood pressure, diabetes etc.
• Level 3 is dividing the population and finding those with propensity to these diseases so that you then
proactively care for them and reduce the disease burden
• Leven 4 is to phase 1 detections. About 62% of cancer patients come to us in India in stage 2 and 3. Story
is equally bad in cardiac – all angioplasties are 2-vessels, 3-vessels, 4-vessels, we should have found them
when the first vessel was slightly blocked.


Achieving equitable and sustainable healthcare
1 Achieving universal health coverage
Increase the percentage of covered population/ achieve full universal healthcare

Government • Consider tiered model for providing healthcare coverage, e.g., free insurance to the below poverty line section and
co-pay model for the remaining population
• Provide basic insurance, and allow self-paid top-ups from private insurance
Consider new sources for financing health care
Government Examples of sources of financing:

• Health savings account
• Corporates allowed to contribute to health care financing under CSR activities
• Sin tax, especially from tobacco, alcohol and other products that lead to health deterioration
• Healthcare cess: can be a small amount (e.g., INR 50 or Rs 100 per month) per employee and equal contribution to
be made by the employer
• Impact funding
Reconsider the payment process for secondary and tertiary care service to public and private hospitals
Government • Conduct periodic assessment and revision of reimbursement tariffs for the secondary and tertiary services.
Revision of tariffs should consider important parameters such as health system attributes (quality, capability, etc.),
regional variances in the consumer price index, etc.
• Bring more parity in the payment mechanism and amount of tariffs for the same type and quality of service
between private and public institutions
Establish efficient and simple process for receiving and providing healthcare as healthcare coverage expands
Government • National Digital Health Mission is expected to be an important enabler

• In addition, linkage could be made to Aadhar card about the category of health care coverage to enable automatic
delivery of services to the patients without the need for patients
2 Boosting self-care and prevention
(i) Strengthen primary care

Establish a milestone-based plan to achieve the goal of revamping the 150,000 Sub-Centers (SCs) and Primary Health Centers
(PHCs) into fully functional Health and Wellness Centers (HWCs) by 2022
Government • Allocate requisite funds on an annual basis to revamp planned number of SCs and PHCs to HWCs during the year
and run the active HWCs. The HWCs should be equipped with the requisite physical infrastructure, healthcare
delivery staff, medical supplies (including medicines and diagnostics) to fulfil the entire scope of services (including
disease coverage) to be delivered as per the goal
Develop required healthcare workforce for staffing the HWCs
Government • Increase the number of seats in the institutions to introduce more workforce at all levels
• Increase local training programs to increase the number of paramedics and nurses in rural areas
• Develop focused training programs to enhance the skillset of the existing workforce. E–modules leveraging
advanced technology such as augmented reality/virtual reality can be a cost efficient way and provides the
flexibility to the people to do these trainings according to their pace and schedule
• Set up programs in public hospitals for a few compulsory postings for all physicians and medical staff (e.g., first
posting or at least one posting) in the rural areas or tier 2/3 cities
• Consider introducing new roles of family medicine practitioners (e.g., physician assistants) to ensure that all
primary care needs of the population are met within the HWCs
Use technology to increase efficiency and competence of healthcare workers

Government • Provide tools and training to the paramedics and nurses to improve efficiency and competence, e.g., symptom
screening algorithms, tools for diagnosis and monitoring, point of care devices, and clinical decision support
• Artificial intelligence / machine learning based algorithms can be leveraged for segregating patients into high and
low risk categories to enable provision of care to the high risk population on a priority
Set up telehealth facility and infrastructure in every HWC
Government • Telehealth, with the required infrastructure (e.g., high-speed data, advanced tele consult platform enabling video
consultation, remote diagnosis, sharing of test results, etc.), should become an essential feature of HWCs for
enabling consults with specialists from larger hospitals in the cities
Establish strong governance process and gateway mechanism for effective delivery of primary care services
Government • Develop detailed guidelines about accountability (expected roles and responsibilities, scope of services to be and
not to be provided) and performance evaluation criteria for the entire healthcare workforce in the HWCs (e.g.,
community workers, Auxiliary Nurse & Midwifes, nurse practitioners, pharmacists, medical officers, etc.)
• These HWCs should over time act as gatekeepers for all referrals to secondary and tertiary care
(ii) Reduce the burden of NCDs through effective prevention and disease management
Leverage technology for spreading awareness and enable effective disease management
Government, • Develop digital solutions that empower consumers and patients to prevent, screen and manage chronic diseases.
hospitals, • Industry and hospitals should provide tools and services to empower patients to take care of their own health
industry
Launch initiatives that expedite shift from sick care to health & wellness and disease prevention
Government, • Collaborate with the industry, patient organizations, non-government organizations, etc. to expand and expedite
industry efforts for increasing awareness in masses about health and disease prevention
• Provide detailed guidelines for over-the-counter medicines to enable people and pharmacists to make informed
decisions about health and wellness supplements and medicines for common ailments
Spread more awareness about the importance of vaccination for preventable diseases
Government • Infant vaccination: Increase awareness about the need to adhere to the vaccination schedules; use digital tools for
reminders
• Adult vaccination: Increase awareness about the benefits of adult vaccination: diseases with high prevalence can
be prioritized in the beginning, and slowly the other vaccine preventable diseases can be targeted
Consider upgrading all insurance products to cover health & wellness and outpatient services
Government, • Design all health insurance products to encourage and incentivize healthy behaviors, preventive healthcare and
insurers early diagnosis
3 Embrace telehealth to bridge the healthcare demand and supply gap
Establish secure teleconsultation ecosystem integrating all stakeholders involved in care delivery
Government, • Establish reliable teleconsultation platform that brings all stakeholders together and allows sharing of information
industry, ensuring data protection and privacy; the platform should also have an integrated mechanism to pay for the
hospitals consultation either by self or through insurance
• Provide training to physicians, paramedics, healthcare delivery personnel and patients to use teleconsultation
platform, especially in the rural areas
Set up enablers for sustainability and scalability: governance and policy, technology, infrastructure
Government, • Develop detailed guidelines to address the remaining challenges and queries about the usage of telemedicine post
hospitals, the issue of telemedicine guidelines in March 2020
industry, insurers • Establish strong architecture to ensure patient data privacy; define accountabilities and penalty for non-adherence
• Include details to define ethical teleconsultation practices and penalty for non-adherence
• Consider providing guidelines for coverage of telehealth in the insurance products.
04
Chapter
Strengthening
manufacturing and
supply base in domestic
and global markets
India is known as the “pharmacy India has established a large India can aim to further
of the world”. network of pharmaceutical strengthen its position by
manufacturers who cater to garnering a larger share in world
demand across the world. pharma trade by manufacturing
value-added products.
India supplies over 60% of global India has more than 10,500 The Indian government is actively
demand for vaccines, 40% of pharmaceutical manufacturing encouraging private sector to
generic demand in the US and facilities catering to demand take up manufacturing across
25% of all medicine demand in from more than 150 the pharma value chain. It has
the UK¹. countries in the world, with recently introduced active
many that are compliant and pharmaceutical ingredient (API)
certified on U.S. Food and Drug schemes, such as, bulk drug
Administration (USFDA), World parks, PLI schemes, etc.
Health Organisation – Good
Manufacturing Practice (WHO-
GMP), Medicines and Healthcare
products Regulatory Agency
(MHRA), etc.².
¹ 'Invest India' website. Available at https://www.investindia.gov.in/sector/pharmaceuticals

² “Invest India – National Investment Promotion and Facilitation Agency” website. Available at https://www.investindia.gov.in/sector/pharmaceuticals
Opportunities to improve manufacturing and supply chain

Manufacturing and end-to-end supply chain management opportunity in the information technology sector. It was able
are critical components in the pharmaceutical industry. In to attain world leadership on the strength of its knowledgeable
today’s competitive world, success is defined by managing workforce. However, in case of the pharmaceutical industry,
manufacturing operations and supply chain costs most plenty of challenges remain. First and foremost being capital
optimally to keep the cost to serve and inventory levels lowest and technology intensive industry, and the advancement
while maintaining highest levels of service. In addition to these in thought capital led by the developed world. Secondly,
three difficult to balance levers, managing product quality, pharmaceuticals is an old industry and developed countries
compliance to relevant regulatory frameworks, and safety of have set up very sophisticated infrastructure. India would
products, assets and people are additional responsibilities that need to catch up with the best in the world in this regard.
leaders of supply chain and manufacturing in pharmaceutical Thirdly, pharmaceutical manufacturing requires acquiring land,
firms need to meet. construction and commissioning of plant and machinery, all of
which requires significant amount of capital, that is a scarce
The COVID-19 crisis has created significant amount of
resource for a country like India. Finally, manufacturing in India
disruption in the pharma supply chain, both on the demand and
is not a sought after field for the best talent in the country.
the supply side. Key impacts were felt in terms of manpower
With all the above factors and more, for the country to achieve
availability, packaging/ancillary material availability and
the target, a well thought out strategy needs to be executed in
logistics operations continuity. Discontinuation of international
a proper manner over the next decade.
passenger traffic reduced availability of flights to North
America and Europe, making the pharma industry to rely on To realize the potential, there is a need for Indian pharma
freight operations alone. Availability of APIs sourced from companies aided by the government and regulatory bodies
countries like Italy, Spain and China, who were strongly to concentrate on their supply chain and manufacturing
affected during the start of the pandemic, was also a sporadic operations, amongst other areas. However, the current
concern. However, with proactive measures from the central government realizes the importance of manufacturing in the
government as well as state and local authorities, operations economy and over the last five to six years, a lot of focus
have mostly come back to normal with large part of the has been dedicated to the sector to provide jobs to our vast
industry operating with activity similar to pre-COVID-19 level. workforce. Pharmaceutical industry is well poised to fulfil that
promise. It has already employed an estimate of 2.7 million
Over the last few decades, India has done exceedingly well
people4, most of them deployed across a massive network
in the pharmaceutical industry by developing an impressive
of thousands of plants within the country. The industry is
manufacturing infrastructure especially for the formulations
therefore perceived as a potential job creator. Though the
segment. We have achieved a good scale and competitive cost
shop-floor would need to become much more productive and
to serve within the global industry. However, the industry is
leaner in terms of manpower deployment, but given the growth
at a cusp today wherein not only would we need to protect
ambition, manufacturing would still hold lots of promise to
and continue to strengthen our position in the formulations
fulfil the “Make in India” initiative. In order to cater to India’s
business but also regain our strength in the API business.
growth ambition of US$130b by 2030, there would be a need
India has set an ambitious target to increase the pharma to augment the supply side by:
industry’s size to US$130b by FY2030 from the current
• Setting up additional infrastructure: Setting up of large
value of US$41.7b (FY 2020). This indicates a CAGR of ~12%
scale plants (both API and formulations) would be of
wherein it is expected that the domestic market will grow by
paramount importance for India to help achieve its target by
7%-8% and exports by 15%-16% to achieve this target³. The
2030. The country also needs to set up its manufacturing
pharmaceutical industry can therefore emulate the information
facilities and logistics infrastructure to handle movement of
technology sector or the textiles and apparel sector and
goods across borders and within the country with ease. It
become one of the success stories to drive India’s growth to
also needs to provide for skilled and capable manpower that
become a powerful nation economically in the time to come.
understands pharmaceutical operations (from a GXP point
While for a completely new industry and one that did not of view related to manufacturing, quality, maintenance,
require huge amount of assets or capital, India could seize the utilities, engineering, etc.).
3
Please refer executive summary chapter of this report
4
The Indian pharmaceutical alliance position papers – The Indian Pharmaceutical Industry – the way forward, June 2019. Available at https://www.ipa-india.org/wp-
content/uploads/2020/10/indian-pharmaceutical-industry-way-forward.pdf
• Moving up the value chain: Manufacturing drugs can also • Productivity improvement and operational excellence: It
pump up India’s growth ambition. These drugs have better includes measures that would allow existing and new plants
realizations which can reduce the gap between India’s to produce more from current manufacturing ecosystem
th
ranking in volume (third in the world) and value (14 in — machines, materials, manpower and space. This aspect
5
the world) . This can be achieved by addressing the right is often ignored but would be of paramount importance
categories/dosage forms and picking up the right markets as setting up additional infrastructure in pharmaceutical
and customers across the world. This aspect also ties up industry is time consuming, given that processes involved
very well in terms of the focus on R&D (covered in in acquiring land, commissioning machinery, recruiting
Chapter 2 of this report). It is but logical that we build up manpower and obtaining validations are long.
our manufacturing expertise and capability to support
planned enhancement in our pharmaceuticals R&D setup.
Opportunities that beckon Indian pharma industry

1. Build scaled up API capability to Bulk drugs would continue to form the backbone of a robust
and self-reliant pharmaceutical industry in India. While in the
improve self sufficiency as well as past, India was quite self-reliant in bulk drugs, since 1990s,
achieve competitive suppliers of the scenario has changed completely leading to potential
key APIs and key starting materials vulnerabilities in our drug security regime. In 2018-19, India
imported ~70% of the API requirements from China which is
(KSMs) globally largely antibiotics and vitamins. In 2018-19, India had imported
6
bulk drugs and intermediates worth US$2.4b from China .
Figure 58: API imports from China
30,000 69.5%
25,000 69.0%
68.5%
20,000
INR crore
68.0%
% share
15,000
67.5%
10,000
67.0%
5,000 66.5%
0 66.0%
2016-17 2017-18 2018-19
Import of bulk drug/drug intermediates (INR crore) Chinese share (INR crore) % share
Source: Technology Information, Forecasting and Assessment Council (TIFAC) API report released in July 2020
An important strategic imperative for the country is to revive in continuing their businesses because of their dependence on
and significantly grow API production that would go a long imports. Prices of APIs rose rapidly given geopolitical shifts
way in achieving self reliance (Atmanirbhar Bharat) within the that have happened making Chinese suppliers anxious about
next few years. During the COVID-19 pandemic, the world has future demand. To eschew such risks in time to come, it would
witnessed huge disruptions in the overall supply chain. A lot of require us to set up facilities to manufacture APIs that are cost-
Indian formulation manufacturers have also faced challenges efficient and this opportunity is here and now.
5
“Invest India – National Investment Promotion and Facilitation Agency” website. Available at https://www.investindia.gov.in/sector/pharmaceuticals
6
“Trade promotion council of India” website. Available at https://www.tpci.in/indiabusinesstrade/blogs/api-dependence-indian-pharmas-health-hazard/
2. Grow existing pharma manufacturing many countries realizing the importance of self reliance
and therefore, the tone going forward has to be on building
infrastructure in the areas of capabilities in complex and synthetic drugs, bio-similars, cell
branded generics, speciality pharma, and gene therapies, etc. Given the existing momentum and
biosimilars and innovator drugs for capabilities built, there are ample opportunities for us to
further grow the formulation supply of drugs in the world.
unfulfilled needs
India has created a formidable infrastructure for manufacturing 3. Re-organization of supply chains
finished dosage forms (FDF). It has the distinction of having worldwide
the largest number of U.S. Food and Drug Administration
Supply chain has to run as a well-oiled machine that brings in
(USFDA) compliant pharma plants (more than 262 including
all complexities associated with global supply chain to serve the
APIs) outside of the US and has more than 2,000 World Health
patient at most optimal costs. Pharma supply chain has become
Organisation – Good Manufacturing Practice (WHO-GMP)
7 completely globalized over the past two decades mostly driven
approved pharma plants .
by cost optimization and other efficient measures. However,
It is a clear leader in providing generics to the world with the pandemic has led to new concerns and fears related to
8
almost a 20% market share . Another notable aspect is a third availability and supply security in the minds of public health
of all vaccines produced in the world originate from India. officials, regulators and politicians across the world. It has
This stupendous success has been largely built on the basis forced the stakeholders to re-organize the existing supply
of significant cost advantage in producing drugs in India. With chains to de-risk dependence on one country and broad base
the geopolitical shift that the world is witnessing, this is the suppliers. This presents a very good opportunity for Indian
time when India needs to reconsider its position and push for companies to garner a larger share in the global trade by
an even larger role in the global formulations trade based attracting/incentivizing companies that want to relocate their
on the value and not the cost play. While the opportunity plants and broad-base their supply bases in an attempt to
beckons India to take further lead, there are threats with reduce dependence on a single country.
Key challenges faced by manufacturing and supply chain

1. World scale API facilities rely on 2. Pharmaceutical companies
abundant supply of water and cause have costly input factors and
massive pollution underwhelming operational efficiency
While we build out a vibrant API supply base at world scale Like any other industry, pharmaceuticals industry requires
levels, it is important to be cognizant that such large scale various inputs in order to produce the required drugs. These
plants would require abundant sources of water supply as one include raw materials, power and fuel, labour costs and
of the inputs and also generate huge quantities of liquid, solid productivity, setup costs in terms of land, buildings, plant
and air pollutants. While India plans to put up capacities in API, and machinery, logistics costs, efficiency, etc. While India
there is a need to deal with adequate provision for effluent has made rapid strides in matching the quality of inputs in
treatment and safe discharge to meet environmental needs. terms of quality and costs, the country has a long way to go
The government is visualizing a few bulk drug parks which compared to the best in world. The cost of most of the inputs
would help API players and perhaps other chemical producers for an overseas manufacturer located out of China or the
in the cluster. This would require a closer examination of the ASEAN countries is much lower as compared to India. This
treatment facilities in order to de-risk the threat of pollution. definitely puts our manufacturers at a loss. Moreover, when
There is also a need to roll out innovative technologies to it comes to plant operations, Indian companies are lagging
minimize pollutants, convert effluents into less harmful behind in extracting the best out of their machines (in terms
substances and ensure their disposal so that they do not of fully loaded overall equipment effectiveness - OEE), people
deteriorate the environment. productivity or other input factors such as specific consumption
of utilities, costs incurred on maintenance, etc.
7
8
3. Cost escalations in raw materials and purchases within the country. About 40% of the generics
demand in the US and 25% in the UK is supplied by the Indian
logistics pharma industry. Also, more than 60% of the vaccine demand
During the pandemic, the entire industry witnessed escalations from all around the world is also fulfilled by the Indian pharma
10
in set of costs pertaining to: market . In 2019, India exported ~30% of total formulation
11
export to the US . Some initial estimates suggest a significant
(i) API and certain other input material (e.g., solvents) prices
portion of the essential medicine supplies can be brought back
(ii) freight costs (both air and sea) to the US in the longer run. If this assessment is true, Indian
pharma companies will be negatively impacted as a smaller
(iii) operating costs due to enhanced safety and social
proportion of their plants are in the US as compared to other
distancing norms
global majors who have a larger proportion of their production
This increase in cost is much higher than cost savings realized capacities from plants based out of the US.
due to reduction in travel and other overhead costs during
the pandemic. China raised prices of KSMs and APIs imported 5. Logistics and supply chain challenges
by India by 20%-30% during the pandemic. This increase is As India aspires to grow its the pharmaceutical industry, it
likely to cause a decline in profit margin by at least 4%-5% over would need to revamp its complete logistics infrastructure to
the year even when some of these escalations were passed move and store its raw materials and finished goods across
9
on to the customers . Given the disruption across the world, the country, lest it becomes an impediment. A category
pharma industry would need to deal with cost increases by of pharmaceutical products (liquids, injectables, vaccines,
implementing various improvement techniques, such as, complex drugs) require specialized storage and transportation
operational excellence, digital interventions and innovation. facilities across the end-to-end shipment with temperature
and humidity requirements as prescribed by the regulatory
authorities.
While India is vast in terms of geographical spread, our

infrastructure in terms of storage and transportation of
Cost of transportation is too high in India. India does
goods is inadequate as compared to the developed world or
not have its own shipping vessels. There is a need for even some of the emerging markets such as China, Malaysia,
a different system for the same. Philippines, Vietnam and South Korea, to name a few. Our
ports, airports, railways, roads and waterways are lagging
far behind as compared to global standards of facilities,
Vice president of a global pharmaceutical company automation and above all, speed of movement. Availability
of cargo vessels, containers, storage, trans-shipment and
warehousing facilities demand major augmentation to run
4. Localization and repatriation of supply a streamlined supply chain. As pharmaceutical and other
industries in the economy would grow in size and volume over
base
the next decade, it would place a huge stress on every element
Some governments are already demanding and incentivizing of the supply chain. Apart from the infrastructure across the
local/national supplies of key medicinal products and devices. length and breadth of the country, even within the four walls
The US government has already started awarding contracts of a plant, management of inward/outward logistics, loading/
to local companies on essential medicines and some activities unloading, warehousing, movement within a plant, freight
are ongoing in Europe as well. The US government is intending planning and transportation need improvement in order to
to shift back its generics supply chain and this trend can achieve end-to-end efficiencies that would otherwise reduce
have strong impact on Indian pharma companies as the US attractiveness and growth of the sector.
government controls/influences almost half of pharmaceutical
9
News article – Steep rise in prices of Chinese APIs hits Indian drug makers on “Pharmabiz” website June 22, 2020. Available at
http://pharmabiz.com/NewsDetails.aspx?aid=129007&sid=1#:~:text=On%20an%20average%2C%20prices%20of,said%20a%20drug%20industry%20representative
10
'Institut Montaigne' website. Available at https://www.institutmontaigne.org/en/blog/indian-pharma-global-leader-under-pressure#:~:text=Indian%20pharma%20
fulfills%20over%2050,USD%2020.03%20billion)%20in%202019.
11
Refer to chapter Indian Pharma Industry : current scenario & future potential
Way forward
According to EY primary research, top focus areas include creating an API backbone and augmenting our formulations
infrastructure.
Figure 59: Manufacturing and supply chain enablers
64% 52% 36% 24% 20%

Rapid expansion of API Formidable infrastructure that caters Improve plant operations Need for eco-friendly and Quality and
and KSM capacities to the world using process excellence sustainable mindset compliance focus
become self reliant and • Use of existing capabilities to move • Improve asset • Stricter norms
to make the PLI policy up the value chain productivity to follow good
lucrative manufacturing
• Setting up of concentrated • Enhance manpower
• Set up plants manufacturing ecosystem efficiency on shop practice
equivalent to world- floor • Adherence to
• Setting up water/power hubs for
class infrastructure standards
API manufacturing • Arrest leakages in
with government
• Identification of clusters utilities chain • Enhancement of
support to provide
• Address safety
low-cost utilities
manufacturing losses
• Focus on tech
capability and cost 20% 12% 12%
competitiveness
Portfolio management Inclusion Focus on
• Incentivize the USFDA of tax Indian-
compliant plants Preference to large
customers, regulated incentives made
• Long bond markets for large plants to enable pharma
investments by investment capital
and nimble, innovative
government with goods
set-ups to cater to smaller in
clear exit strategy
40% 28% markets manufac- Locally
turing sourced
Automation and digitization Additional support
expansion machines
from the government
• Leveraging IOT, ML and AI in order at lower
and industry bodies to
to improve yields, and for asset cost
enhance ease of doing
utilization and logistic planning
business
20%
• Predictive maintenance of Efficient supply chains
• Provide clear and
important assets
• Automatic storage and retrieval
consistent regulations build world-class Talent focus 12%
• Reduced response infrastructure and foster • Collaboration
system in warehouses quick movement of goods between pharma
time and clearances
• Implementing advanced energy within the country companies and
• Offer help to MSMEs to
management systems to reduce engineering/B.
get foreign approvals
consumption of utilities Pharm colleges
• Pharma curriculum
to involve industrial
tours
Government Industry Government and industry Government, industry, academia
*Percentage reflects number of responders referring the enabler; N=25

Source: EY primary analysis
Manufacturing utilities that are mostly owned by the government have

enabled overseas firms to achieve cost efficiencies that were
1. Strengthening primary care unimaginable in the past. Apart from utilities, the comparative
It is ironical that at one time, India was the leading API cost of setting up a plant, sourcing raw materials, employing
manufacturer. But over the years, it lost its edge to Chinese labor, inward and outward logistics management, etc. is
counterparts due to cost-effective technologies and large relatively more expensive in India compared to China. India
scale of operations which has helped China get a competitive needs to examine and address these issues on an urgent basis
advantage. Large scale pharmaceutical parks having common with support from the government.
China has created a blueprint of success in manufacturing While India has inherent strengths in manufacturing in terms
that is rooted in its large-scale plants that are supported by of vast geographical spread, availability of talent at attractive
world-class infrastructure and support from their government. price points, one of the largest population of English-speaking,
Some of the countries in South East Asia like Vietnam, the science, technology, engineering and mathematics (STEM)
Philippines, Indonesia, and Malaysia are replicating this graduates and presence of a reasonably large manufacturing
model to attract multi-national companies (MNCs) to shift sector, there are other structural factors that hinder the
their factories from China to their countries. This poses a growth of manufacturing sector. To be cost-competitive, India
threat to India’s ambition to attract global majors to set up would need to do a lot before becoming a preferred source of
manufacturing plants in India. APIs to satisfy domestic as well as global demand.
The whole value chain is very critical, including APIs and intermediates. Globally, we all have relied on
China for KSMs, intermediates and to some extent for APIs. That has to change. The government can roll out
policies to help promote some part of it. Even with or without it, a lot of investment will continue to happen in
India for these materials so it becomes self-reliant. From industry prospective, there is great room for industry
to improve on APIs and intermediates.
Managing director of a leading Indian pharmaceutical company
1.1 Strategic priorities for growing APIs in India manufacturers to encourage their interest in the API sector.
There is a realization to build current capabilities in both.
The government should set up large infrastructural facilities To fulfil this objective, the government has introduced the
such as bulk drug parks, Special Economic Zones (SEZs) that following initiatives:
have common facilities and land availability. They should
provide incentives and infrastructural facilities to domestic
Figure 60: Government initiatives for augmenting domestic manufacturing*
Scheme for promotion of bulk drug parks Production-Linked Incentive (PLI) Scheme
• Construction of three API parks with common facilities • Innuendo of INR6,940 crores over a period of eight
years
• The grant-in-aid will be 90% of the project cost in case
of north-east and hilly states and 70% in case of other • Forty-one eligible products for which the PLI Scheme is
states. The maximum grant-in-aid for one bulk drug proposed covers 53 APIs which have been approved by
park is limited to INR1,000 crore the government
• The states interested in setting up the parks will have to • The objective of the scheme is to ensure self reliance
ensure assured 24*7 supply of electricity and water to and reduce import dependence in critical KSMs/DIs/
the bulk drug units located in the park and competitive API. Financial incentives would be granted under the
land lease rates to bulk drug units in the park scheme to successful applicants based on committed
investment and other conditions mentioned in it
• There have been recent clarifications/amendments in
the guidelines under the PLI Scheme which address
certain concerns that the industry had with respect to
initial guidelines issued by the government
*’Production Linked Incentive (PLI) Scheme for promoting domestic manufacturing of medical devices’ not covered in the scope of this report
Source: Press release on 27 July 2020 on Press Information Bureau website
Basis the available information, Indian manufacturers of APIs

would need to drive significant cost optimization to be able
to stand up to the competition and be successful. This would
involve coordinated action from the government and the
pharma industry on some of the following measures:
Overall infrastructure should be improved, like
setting up of common effluent systems, providing
1.1.1 Setting up large scale API plants long lease to industries, tackling pollution problem,
India has second highest number of FDA-approved API plants government providing R&D support to universities.
12
outside the US (2019) . Also, the cost of setting up of a manufacturing plant
in India is very high.
Figure 61: % of API manufacturing facilities for all drugs
2% Vice president of a global pharmaceutical company

13% USA
28% EU
13% India 1.1.3 Ensure the supply of essential raw materials
China With the production linked incentive (PLI) scheme in place,
RoW companies are likely to set up facilities to manufacture the
18%
26% identified APIs. To ensure this, the next bottleneck would be to
Canada
make essential raw materials, such as, key starting materials
(KSM), drug intermediates (DI), and APIs available at a price
that can match import prices. India is heavily dependent on
Source: FDA website. Available at https://www.fda.gov/news-events/
congressional-testimony/safeguarding-pharmaceutical-supply-chains- the import of KSMs which are used in the manufacturing of
global-economy-10302019 life saving drugs — cephalosporins, azithromycin and penicillin,
to name a few. Therefore, there would be a need to look at
The dynamics of API manufacturing demand large scale the end-to-end value chain for the measures to be successful.
facilities. A successful global firm would have an API plant The government should also consider introducing another
that has a production capacity of 5000 MT-8,000 MT annually PLI scheme for pharma industry to identify other products
whereas, in India, an average size plant has a capacity between (KSMs/APIs/intermediaries, etc.) to boost our ability to ensure
13
500 MT-800 MT . Apart from lower capacities, another factor un-interrupted supply of quality bulk drugs and to upscale
that contributes to inefficiency is plant utilization. Most of the manufacturing capacity thereof. This would be important
API production units in India run at 30%-40% of their capacity, for India to become ‘pharmacy of the world’ in a true sense.
whereas the capacity utilization of world-class API plants is It would also help the country avoid disruption in supply of
14
around 70% . drugs and would also benefit the drug security of the country.
It would further enhance self reliance (Atmanirbharta) in
1.1.2 Size of bulk drug parks manufacturing of drugs.
The average size of SEZs in India is smaller than that of a
typical SEZ globally. There is a need to identify availability of
large parcels of land that is situated near ports (for easy global
trade) for setting up large parks to enable the creation of an
infrastructure that matches global scale.
12
“U.S. Food and Drug Administration” website. Available at
https://www.fda.gov/news-events/congressional-testimony/safeguarding-pharmaceutical-supply-chains-global-economy-10302019
13
Based on secondary research
14
“Trade Promotion Council of India” website. Available at https://ibt.tpci.in/blogs/the-api-paradox-of-indias-pharmaceutical-industry/
We really need to be around places where there are existing clusters. Instead of going to Odisha, we need
to focus on places like Indore, Aurangabad, Gujarat and Ahmedabad that need to be pushed further for
manufacturing. When we are looking at infrastructure, we need to understand that there will be a huge
movement of foreign workers and if we are not able to make the infrastructure accessible for foreign workers,
the multinationals will not decide to set up their companies. Please look for cities which have aero and
international connectivity instead of trying to build something completely from the scratch.
Director of a private equity firm
While API manufacturing is important to be set-up, there are a • Water availability: The very nature of API manufacturing
few risks associated with the process that need to be called out demands the availability of clean and large amounts of
and addressed. These are: water to carry out chemical synthesis of processes. Bulk
drug parks not only need to be located near water bodies
• Environmental impact: It is known that every one unit
but conservation of water would need to be a key theme.
of API produced generates anywhere between 10-20
times more effluent that has been a deterrent even for • Demand uncertainty: While API capacity would be ramped
15
Chinese manufacturers . There were disruptions in API’s up and companies would decide the portfolio of products
supply during 2019, due to the blue-sky plan aimed at to be manufactured, a solid sense of demand linked to local
limiting pollution in China. While setting up the bulk drug and global disease burden would have to be kept in mind to
parks, government should provision for adequate effluent ensure long term success.
treatment facilities (for liquid, solid and air pollutants) to
enable the success of the scheme.
15
EY internal research
2. Continued focus on formulations 2.1 Leveraging the next patent cliff

India is very poised to further strengthen its position in As per estimates, about US$252b worth of drug sales are likely
the world’s formulations business given the formidable 16
to get off patent by 2026 . Some of the Indian companies are
infrastructure that already exists. There are some noteworthy now well placed to capture this opportunity as shown by the
developments that are on the anvil that would help the country graph and table below.
in this objective. Some of these are:
Figure 62: Worldwide patent expiration for drug sales worth about US$252 billion (2020-2026)
63
54
50
36
21
US$252b
16 Total worldwide
12 drug sales expected
to go off-patent
2020 2021 2022 2023 2024 2025 2026
Source: Evaluate Pharma – World Preview 2020
Names of Indian companies receiving tentative approval to

Drug Use Patent expiry manufacture post expiry of patent
Perforomist Asthma, COPD 2021 Cipla
Tarceva Lung and pancreatic cancer 2019 Natco Pharma
Bystolic High BP 2021 Micro Labs
Truvada HIV 2021 Cipla, Aurobindo Pharma, Micro Labs, Glenmark Pharma, Alembic
Pradaxa Atrial fibrillation 2021 Glenmark Pharma, Alembic
Emtriva HIV 2021 Aurobindo Pharma, Micro Labs
Vimpat Epilepsy 2022 Sun Pharma, Glenmark, Zydus, Hetero, Aurobindo Pharma
Viagra Erectile dysfunction 2020 MacLeod's, Dr. Reddy’s
Source: Article in The Print on 3 September 2019 – “Lucrative drugs like Viagra, Humira to lose patents but Indian pharma unlikely to gain”
While we not only have to capture the formulations market, it is pertinent to think through backward integration and a plan for API
and KSM requirements well in advance.
16
“Evaluate Pharma World Preview 2020” report
2.2 Manufacturing of new drug forms A key theme would be to encourage and facilitate large chunk
of companies owning contract manufacturing plants to do
India needs to systematically garner a higher value share in the development work and file new drug applications (NDAs) in
worldwide drug trade and it has the potential and proficiency various target markets so that they can start manufacturing
to achieve this by moving up the value chain. To achieve this drugs that they own.
objective, the country needs to have a two pronged strategy.
Also, most of the companies are over-dependent on one or two
2.2.1 Penetrate in other dosage forms within manufacturing units which cause risks to business continuity.
generics Hence companies should invest in expanding to build capacity
for future growth which will also alleviate supply chain risks.
Having come off the patent cliff in the last few years, Indian
companies have grown multifold in the last few years in the 2.4 Low-cost manufacturing of branded drugs
generics segment. As of now, India’s formulation strength and repurposing of formulations
is largely through oral solid dosage (OSD) and vaccine
manufacturing. There is a substantial opportunity in semi- Indian generic companies have taken the effort to develop new
solids, liquids, powders, other injectables and within OSD and molecular entities (NMEs) and incremental innovation drugs.
a higher contribution from potent forms. There needs to be a These efforts can drive Indian pharma companies to achieve
focussed effort in this direction and it is the larger firms who growth in the branded pharmaceuticals market. This will
have to lead this initiative by opening up the demand from require the companies to upgrade their workforce. Eventually,
these segments and thereby putting up the required facilities in this might even attract global pharma companies to shift their
place to cater to this demand. units for branded drugs to India. Formulation repurposing can
offer positives like low development cost, lower turn around
2.2.2 Larger contribution from value-added drugs time (TAT) and high success rate.
Given India’s existing capabilities in fomulations, the time To achieve cost competitiveness, a consolidation among
is now ripe to start penetrating into the value market by smaller plants is required while balancing the need to support
manufacturing complex and specialty generics and even small and medium enterprises. India would also need highly-
bio-similars. A few companies have started taking some skilled employees in medical-technical, pharma-technical and
significant steps in this direction, however, it needs to become engineering backgrounds.
a larger movement and the government can help companies
in this direction. Important considerations here would be the The following are some of the challenges that India needs to
availability of highly-skilled manpower and infrastructure like overcome to sustain cost competitiveness in case of generic
cold chain management and temperature controls as biologics formulations:
and plasma are highly-sensitive molecules. • Increased number of SKUs which makes the supply chain
Companies need to invest in building manufacturing capabilities complex and low on volumes, further disturbing their
in biosimilars. Manufacturers should focus on upscaling and productivity and costs
enhancing capabilities in this area to achieve a strong cost and • Pressure on margins has increased due to price regulation
capacity position against the global players. For further details,
refer to biosimilars opportunity section in chapter 2 - R&D of • Companies in developed markets are enhancing their
this report. productivity to beat India’s conversion cost, these
companies are being preferred as they are near global
2.3 Upgrade and expand already existing customers
manufacturing units • Other countries like China are expanding from APIs to
India also has more than 10,500 plants that manufacture formulations, moving up the value chain by way of opening
17
drugs . However, most of these plants are contract their markets through expedited approval corridors,
manufacturers for not only Indian companies but also for the acquiring critical technologies on the way
world. To gain a more substantial market share in the world,
India would need to incentivize these plants to achieve scale.
17
"Invest India" website. Available at https://www.investindia.gov.in/sector/pharmaceuticals
3. Enhancing manufacturing attractiveness Figure 63: Cost of borrowing in emerging markets

While both API and formulations sectors are growing, certain
common elements that need to be borne to facilitate the
Malaysia
growth of the industry as a whole would be:
3.1 Input factor costs

China
To address cost competitiveness, the government is actively
fostering the cluster approach wherein amenities like power,
steam, compressed air, air-conditioning, effluent treatment, Thailand
etc. are set up in large pharmaceutical parks and it acts as
a service provider to private firms that set up large scale
Vietnam
manufacturing plants. This model would enable control of input
factor costs thereby translating into lower and competitive
prices of the end product. The government can look into the India
substitution of imports in a detailed format by setting up a task
force that will identify the feasibility, complexity and process
0 2 4 6 8 10
technology required to manufacture APIs in India at a price
comparable to imports. Cost of borrowing (% lending rate)
3.2 Capital equipment Source: Bank lending rates have been considered for India (Dec 2020),
Malaysia (Oct 2020), China (Dec 2020), Thailand (Oct 2020) –
A world-class pharmaceutical plant requires cutting-edge
tradingeconomics.com; Vietnam (2020) – theglobaleconomy.com
machines that manufacture products at high speed with
precision and reliability that is consummate with quality and
compliance standards. Such machines are available from During the disruption due to COVID-19, interest rates in the
European (Italy, France and Germany) or South Korean Indian economy have reduced significantly. Through better
manufacturers. The import duties taxes on these machines are policies (fiscal and monetary) and finance management, these
in the higher slab and when pharmaceutical plants are set up, rates need to be sustained.
manufacturers end up importing these machines resulting in
4. Improve plant operations
three to five times higher cost of capital equipment. Therefore,
fixed costs are already bloated even before a product has been Indian pharmaceutical manufacturing has come a long way
manufactured. For the country to produce drugs at competitive and over the years, has cultivated a very impressive all-round
prices, this issue needs to be addressed steadily. Indian capital capability for manufacturing of drugs in India.
goods manufacturers could be encouraged for technological At this juncture, the most important aspect to continue its
tie-ups with leading pharmaceutical equipment providers leadership in formulations would be to continue providing drugs
or foreign companies could be encouraged to set up capital of the highest quality at attractive price points. While, there
machine manufacturing facilities in India. are structural factors in terms of higher land prices, higher
capital costs and lower availability of cheap utilities that push
3.3 Financing institutions and cost of borrowing
up the cost of manufacturing drugs, the Indian pharmaceutical
To set up large scale plants, companies would require capital industry can do well to further improve the operations of the
that is available at attractive terms. In the past two decades, plant to world-class levels of utilization and productivity that
developmental financial institutions in India have wound up could counter and balance the increase in fixed and operating
leaving a gap in financing of large-scale projects that have a costs.
long lead time for commissioning and commercialization. Our
Typical fully loaded overall equipment effectiveness (OEE),
retail banks do not have appetite for a longer moratorium on
productivity (both asset and labor), specific consumption
term loans that hamper the financial feasibility of greenfield
of utilities, yields, expenses on repairs and maintenance,
and brownfield projects. Even where rupee or foreign currency
stores, consumables, etc. even in professional set ups are way
denominated loans are available, the effective cost of
behind the world-class standards. True OEE for Indian plants
borrowing is relatively high, leading to further burden on the
is between 30%-50% whereas for world-class plants, would be
financial performance. 18
more than 60% .
18
EY internal study and benchmarking
The mindset in manufacturing and top leadership in an 4.3 Other shop-floor improvement areas
organization needs to undergo a huge change and we need to
adopt world class manufacturing standards in India. Manufacturing conversion cost encompass - utilities, repairs
and maintenance, salaries and wages, stores and consumables,
4.1 Overall equipment effectiveness etc. In all these cost heads, there exists a significant potential
to improve the efficiency thereby making an impact on the
There has to be a clear roadmap to achieve 75%-80% of OEE
bottomline.
levels in critical manufacturing segment as compared to 40%-
19
50% that we typically witness in India . While on one hand, For example, each of the utilities circuit needs to be examined
a company needs to tie up on the demand side (forecasting, at three levels — generation, distribution and consumption
demand aggregation, sales and operations planning (S&OP) to tackle wastage and operational efficiencies. In a typical
processes and supply planning) to reduce the planned idle plant, energy losses are pegged at 30% due to inefficiencies
22
time and the number of changeovers, even on the supply side, in generation and leakages in distribution . There is also a
there are adequate tools and techniques available that could be tendency to over design from a consumption point of view by
adopted to systematically improve the OEE. Even for some of provisioning a larger amount of utilities to carry out a process.
the best formulation plants, almost 30%-40% of the time is lost Understanding the real energy requirements by conducting
in idle time, changeovers and planned downtimes and another mass and energy balance both on the demand and supply
15%-20% is lost in unplanned downtime and inability to operate side of utilities could curtail the overall power and fuel bill in a
machines at their highest possible speed/performance because company, which contributes considerably to the manufacturing
20
of lacunas in maintenance practices . Most of the SKUs are run conversion cost.
on speeds that are closer to lower end of the validated range
Similarly, maintenance requires a good understanding of
and not close to the highest attainable speeds. During the runs,
machines and their various sub-sections, assemblies, parts and
there are several unplanned stoppages (minor and micro stops)
components. Having a technical mastery over the functioning
that typically take a few seconds to 15 to 20 minutes to rectify
of an equipment requires a few years and capabilities that
that constrain from attaining world-class levels of OEE. In this
need to be developed inhouse to ensure that both maintainers
regard, pharmaceutical industry could do well to adopt the best
and operators understand machine related anomalies early
practices from consumer goods industry.
by tracking various parameters. These pertain to wear and
4.2 Productivity of people tear, current signature, heat, noise, vibration, oil analysis (as
applicable) and taking corrective and preventive actions using
A typical shop-floor labour spends almost 50%-70% of their sophisticated root cause analyses.
21
shift times on non-value added (NVA) activities and essential
non-value added (ENVA) activities due to shift shrinkages There also has to be a well thought out manufacturing
and lack of simple automation, apart from having significant strategy that embraces best practices in asset care,
waiting times and delays due to motion and transportation. engineering, process control and optimization, data and
Labor productivity could be improved by two to three times fact-based management, continuous improvement and
over the course of three to four years by eliminating NVAs and quality management systems. Most of these dimensions are
ENVAs. Over the last few years, there has been a substantial not explored in the context of manufacturing and render the
shift in having contract labor on the shop-floor. The industry performance on the shop-floor to very basic levels. Indian
has adopted this transition without realizing the true cost companies should strive to reach world-class maturity levels in
and adverse impact of having non-permanent employees plant operations.
even if that is to handle non-core areas of manufacturing. Ultimately, given the vast footprint of manufacturing in a
For this strategy to be successful in delivering gains, process pharmaceutical company, any gains in operational excellence
orientation and standard operating procedures have to be would increase financial performance thereby counterbalancing
very minutely written and imbibed in the permanent and non- higher costs due to other structural factors related to higher
permanent workforce. Efforts have to be made to finalize work capex, input costs, etc.
standards and rate the labor force as per the defined standards
in order to match the productivity standards in a shop-floor
environment. Some best practices could be leveraged from
auto-mobile original equipment manufacturers (OEMs) in terms
of the definition of line balancing and work standards that are
prevalent in the industry.
19
20
21
EY People Advisory Practice estimates
22
EY internal study across plants
5. Upgradation of manufacturing technology To ensure cost effectiveness, process technologies that have
already been developed need to be identified and scaled up
To be able to garner a larger share of the market, there would
for industrial use. For example, the University of Calicut found
be a need to change the perception and ensure that India
a method to produce Penicillin using waste fruits by applying
is known for manufacturing high-quality drugs. This would
solid state fermentation technology instead of the submerged
require our manufacturing plants to be best in class in terms of 23
fermentation technology .
technological infrastructure. This means that they should have
latest machines and stable, consistent, predictable, compliant, Emerging technologies in the realm of Industry 4.0 is
and verifiable processes. This may require large and medium revolutionizing the shop-floor by leveraging Industrial Internet
scale companies to modernize their plant and machinery in of Things (IioT), Artificial Intelligence and Machine Learning
a bid to continuously attract more demand from India. With algorithms, three dimensional (3D) printing, machine vision,
majority of stakeholders re-aligning themselves in the supply advanced physical robotics and parametric optimization for
chain across the world post-COVID-19, India would need to improvement. Pharmaceutical industry needs to evaluate
emerge as a destination for manufacturing drugs with high Smart Factory related advancements like the other sectors
precision and consistency. Additionally, to fulfil better share have done in India and not lag behind in its adoption lest we
in value-added drugs, there is a need to enhance companies’ lose the edge in manufacturing.
manufacturing capability. Complex drugs require sophisticated
Condition based predictive maintenance (CBPM) uses
machinery for micronization, encapsulation, etc.
artificial neural networks to improve reliability and OEE while
In light of the above, India would need to automate and digitize decreasing life-cycle cost by optimizing planned stops and cost
existing plants to not only adhere to the required standards but of maintenance. Smart maintenance uses augmented reality
also to meet precise control and predictability of the quality of and sensors which enable the operator to identify equipment
product. and get all the relevant technical details. Manufacturing
energy management system (MEMS) connect all utility
Transformation is taking place around technology up-gradation
consumption and costs through IoT with production and
on the shop-floor worldwide. India is missing out on it due to
provides a detailed view of consumption by site, crew, shift,
inordinate focus on the front end. The mindset in the country
equipment and product. This enables site level investigation of
needs to be changed, and manufacturing and operations need
utility cost saving opportunities through supply renegotiation
to be elevated so that it is not relegated to a position of non-
or alternative energy approaches. It also enables accurate
significance. While the back-end would continue to be a cost
budgeting and forecasting of utility’s usage and cost and
center, the realisation of capabilities in this space would give a
validation of energy bills.
huge and lasting competitive edge to companies, industry and
India.
23
"Express Pharma" website. Available at https://www.expresspharma.in/guest-blogs/reducing-indias-import-dependence-on-apis-a-possible-way-out/
Figure 64: Role of advanced technologies in making pharma manufacturing

and supply chain patient centric, agile and self learning
Artificial Intelligence Augmented Reality and Virtual Reality

• Preventive/predictive maintenance, demand planning, • Improve workforce efficiency
inventory management, quality control/management • Enhance employee training experience
• Automated synchronization, prediction and scenario • Provide remote assistance to on-site workers
simulation
• Prescriptive analytics and execution
Wearables and sensors Blockchain

• Track and manage remotely • Tracks and verifies drug quality
• Improve workforce efficiency and safety • Helps in label management
• Monitor assets in real time • Provides chain of custody for individualized
therapies
Cloud-based platforms 3D printing

• Storage and management of data • Print personalized dosages
• Enable integrated manufacturing and supply
chain network
Online platforms RPA*

• Online pharmacies • Automates areas of manual intervention
• Direct to consumer delivery of medicines • Develops end-to-end autonomous networks
• Provide supply chain safety information exchange • Enables automated decisions and execution
across geographies
Tomorrow: evidence of initial use cases and

Today: already in use
expected to become commonplace in near future
Source: EY analysis; * Robotic Process Automation

This list is indicative and not exhaustive
6. Focus on quality and compliance emphasis on assurance. We are at a crossroad where Indian
firms have to adopt the principles of “quality by design” and
For India to become a major hub in pharmaceutical
therefore move towards having processes that are predictable,
manufacturing, quality orientation is of utmost importance.
robust, compliant and consistent so that testing requirements
Hitherto, Indian made goods have been cast as poor quality,
could be reduced without impacting product quality.
but there have been wheels of change with some industries
leading the way — auto/auto-components, information Some of the major quality challenges could be resolved using
technology, information technology enabled services (ITES), advanced analytics. Recurring quality issues can be studied
gems and jewellery. Though the examples are sporadic, but by root cause analytics. Predictive maintenance can be used
selectively, even some goods produced in heavy engineering to predict breakdowns during operations and can also be
industries are making their way into global markets notably. used for real-time monitoring and error corrections. This can
These include the industries in capital equipment, heat majorly help in improving the overall quality of pharmaceutical
exchangers and defence equipment, to name a few. Perhaps products during manufacturing. Companies can deploy quality
time is now ripe to make “Made in India” a mark to be respected management systems to identify risks from insights collected
in the world for quality and the pharmaceutical industry can from lab reports, logs, etc. These can be addressed by putting
lead this transformation for the country. a governance in place. Digital has also enabled employees to
coordinate with each other using messaging apps to reduce
To achieve this, the pharmaceutical industry has to recognize
machines' downtime. For instance, a company has introduced
that quality orientation can provide competitive advantage
an app for its employees to raise any quality concerns. In
vis-a-vis other players. While a lot of focus is already given
essence, this would translate into reduced cost of quality/
to quality within the sector, Indian players have to improve
compliance which can help improve its financials while ensuring
their strategic understanding of the same. On the shop-floor,
that Indian products are rated highest in quality across the
the predominant approach is still quality control and reduced
world.
7. Focus on talent Similarly, the pharmaceutical industry should set up academic

institutes, including collaboration with the industry to
In order to be effective in manufacturing, it is important for
orient students early on with the operational aspects of
the operations workforce to be capable and high performing.
pharmaceuticals – both APIs and formulations – in areas
The main issues that the workforce faces in pharmaceutical
of manufacturing, quality assurance, quality control,
manufacturing are:
maintenance, supply chain, process engineering, technology
• Lack of preparedness at the entry level transfer and project execution. Academia alignment with the
industry has been discussed in detail in the R&D chapter.
• Manufacturing is not an attractive proposition for best
students While the academic institutions would need to provide
appropriate inputs and prepare the workforce to adapt to the
• Gap in industry-readiness of students coming out of
shop-floor, the industry would need to identify upskilling and
academic institutions due to low familiarity with the shop-
training courses for its employees with technical process and
floor
technological inputs. They may also set up dedicated support
• High lead time for on-boarding and training for new joinees systems near the manufacturing hubs for specific skills like
quality, maintenance, environment, health and safety (EHS),
• Lower top-down focus on cost efficiency as compared to
etc.
auto-mobile, consumer goods industries
• Pharma hubs are in areas with not enough facilities; hence,

the industry fails to attract talent
In this context to attract the best talent and that too in large
numbers, the pharmaceutical industry needs to create a similar Mindset and culture needs to change to attract more
appeal that the information technology (IT) industry did about talent to manufacturing instead of management.
20-25 years ago. India’s success in IT came from the country’s Artificial Intelligence, augmented reality should now
ability to strategize and create a pioneering ecosystem that be a part of manufacturing. This will promote people
fostered growth at scale. This ecosystem has largely rested on to join manufacturing. Salaries need to be increased,
the capability of the workforce that has made India significantly
the management needs to see manufacturing as a
better than most other countries in IT sector.
profit center rather than a cost center
Vice president of a global pharmaceutical company
Figure 65: Examples for focus on talent
Cipla Technical Academy Lupin’s ‘Learn and Earn’ initiative
• Collaboration of the Government of Goa and CIPLA • Collaboration of Yashwantrao Chavan Maharashtra
Open University and Lupin
• Launched in 2018
• Conceptualized in 2010
• Skill development programme for 10th and 12th
standard students, classroom training + hands-on • It is a three-year program for students who have passed
training 12th standard and have financial constraints
• Aseptic Techniques Programme for freshers who are • This initiative is taking place in Goa, Tarapur and
pursuing B.Sc., M.Sc., diploma, B. Pharm etc. Six-month Aurangabad in Maharashtra, Indore in Madhya Pradesh
training at the academy, followed by on-site training and Sikkim
Source: “Rohan Khaunte” website – Launch of CIPLA Technical Academy ; Article in Express Pharma on Sep 14, 2018 “Lupin Learn and Earn
programme to train 1000 graduates by 2020”
8. Additional support from the government bring in transparency on regulatory approvals. Through ‘Invest
in India’, the Indian government can reach out to probable
and regulators
investors and endorse Indian pharmaceutical space. India
Setting up manufacturing facilities in India continues to be a ranked 63rd in 2019 in the World Bank’s ease of doing business
challenge more so in comparison to other countries. 24
rankings . Different states in India have varied approval
processes which is perceived as a major challenge for investors
8.1 Ease of doing business
who want to set up manufacturing facilities. This issue can be
It is the most important parameter for India to attract not only addressed by the establishment of an overarching body (Refer
foreign investment but also to make the existing industry cost to R&D chapter). Some of the key challenges faced by the
competitive to invest in plant and buildings. The government players are procedures and time required to start a business in
could incorporate export incentives, easier duty structures and India. The same is depicted through charts given below:
Figure 66: Ease of doing business comparison with other countries
Number of procedures Number of days
166
22
18
120
113
111
106
15
14
13
10
10
8.5
53.5
9
58
53
53
8
6
37
35
33
32
31
5
5
30
16.5
17.5
24
4
4
4
18
16
3
2
9
9
9
India China Malaysia Vietnam Thailand Philippines India China Malaysia Vietnam 6
Thailand Philippines
Registering property Getting electricity Dealing with construction permits Starting a business
Source: “doingbusiness.org” website. Available at https://www.doingbusiness.org/en/reports/global-reports/doing-business-2020
8.2 Encourage foreign MNCs to set up large 8.2.1 Security of assets

scale plants in India India’s country risk has been perceived to be higher due to a
Post the COVID-19 pandemic, many MNCs are looking to few reasons -threat of terror attacks, civil unrest, and political
diversify sourcing and shift their operations to other countries. and industrial strikes. Industrial assets have not been targeted
India is politically stable with good political and trade relations much, and the country has made rapid strides in arresting
with leading markets around the world such as Japan, the US, industrial strikes. However, this is an area that would need
etc. India is also one of the world’s fastest growing economies long term addressal by building India’s image of being a safe
25
with growth rate of 7% to 8% in the past few years . The center country to invest. The government and industry has to work to
has set up a committee of joint secretaries from different create a congenial and safe environment across large industrial
ministries and departments to analyze how to attract foreign belts that are free from any strife and other backlash that may
investment. Tamil Nadu Chief Minister Edappadi K Palaniswami hamper law and order situation.
has set up a task force and is trying to get companies from
26
Japan, Taiwan, Singapore and the US .
24
“Global Market Estimates” website. Available at https://www.globalmarketestimates.com/market-report/india-api-industry---market
25
“The Conversation” website. Available at https://theconversation.com/indias-economy-how-the-worlds-fastest-growing-nation-went-off-the-rails-129714
26
"The Hindu Business Line" website. Available at
https://www.thehindubusinessline.com/economy/as-mncs-head-for-the-exit-door-in-china-india-has-to-make-its-move/article31484219.ece
8.2.2 Security of IP 8.2.3 Taxation and judiciary

Many global MNCs are shy of investing in India due to the Global MNCs are also wary of the archaic taxation laws in India.
perception of losing their intellectual property or thought The country’s image had been tarnished by a few notable
capital, given the local laws related to IP protection. While the judgements wherein taxation was applied retrospectively. Such
laws have been updated in the past, their communication and instances always escalate risk perception. Besides, the system
execution on ground has to be widely publicized across the of metting out justice through our courts and legal system is
world to address this area to build confidence amongst the too slow to build any assurance within the global community
global giants that India is a safe place to invest. to come forward and invest in the country. Government
authorities need to take up industrial disputes and perhaps
build a fast track mechanism, when it comes to laws and
regulations related to corporates.
Finalize the RoDTEP scheme to bring clarity on incentives available

Recently, the government has substituted the Merchandise Export Incentive Scheme (MEIS) with the Remission of Duties
or Taxes on Export Products Scheme (RoDTEP) in a response to notifications from the US government and the World Trade
Organization (WTO) in relation to the export schemes under dispute to make them more compliant with the provision of the
Multilateral Agreement on Subsidies and Countervailing Measures (SCM Agreement). However, due to the COVID-19 pandemic,
the exact working and rate calculation mechanism under the RoDTEP has not been finalized. Since the pharmaceutical industry
has been a beneficiary from the MEIS scheme, there are apprehensions that the new scheme might not be able to equalize the
benefits to the industry which would affect the profitability of pharmaceutical companies.
It is recommended that the government should work expeditiously to bring clarity on the mechanism and rate calculation. It
should also clarify the rates for reimbursement under the RoDTEP scheme and find avenues to equalize the earlier benefits for
pharmaceutical industry in line with the MEIS while being compliant to the WTO.
9. Standards specific to the pharmaceutical • Shop-floor standard on the kind of data that should be
available from machines
industry
Government along with industry bodies need to define • Protocols should be defined for the integration of
pharma-specific industry standards on the lines of telecom manufacturing and ERP systems. This is a major threat to
and information technology industry. This will induce cyber security
standardization and harmonization across the industry and help • Requirements from quality management systems in terms
the MSME sector to improve the quality and compliance levels. of quality control and quality assurance
Standards could be defined in various other areas, such as:
• Standards could be identified and clearly defined for key
equipment manufactured
Supply chain countries are higher, the remuneration and stability of

demand is also higher making it an attractive proposition. In
1. Need to create a strong market-facing this respect, government and industry bodies can help Indian
supply chain firms to spot opportunities in regulated markets for specific
drugs and other medicines by channelizing them so that the
The COVID-19 crisis has exposed the fault lines in the globally
industry can tap the potential. For businesses’ growth and their
integrated supply chain. The existing capital light model with
seamless expansion, Indian embassies and consulates have the
continuous replenishment from plants based out of India
potential to open pharma helpdesks to encourage the potential
may need to give way to a stronger supply chain at the end
customers to get information about availability and capabilities
market. With the end of the COVID-19 crisis being uncertain,
of Indian pharmaceutical firms.
and high possibilities of intermittent outbreaks and movement
restrictions, it is imperative to create an inventory and asset- In order to cater to small markets and orders, innovative/
heavy market to face supply chain. For the important export nimble solutions should be implemented. The suggested model
markets like the US, the EU, etc., this may lead to investing in for pharma companies is to have a combinatorial model where
people, processes and working capital to create a larger safety there could be many plants configured to serve large markets
buffer in case of eventualities and adverse scenarios. and one or two smaller plants or sub-plants to serve smaller
orders efficiently.
2. Strategic portfolio management to realize
overall efficiencies 3. Enhancing logistics and supply chain
For Indian companies to realize efficiencies in the overall cost While bigger gains are likely to come by improving
to serve, there has to be a well thought-through go-to-market manufacturing operations and through better portfolio
strategy. Indian pharma companies have grown phenomenally management, others can be achieved by managing supply
and have created capabilities to serve all kinds of markets chains more effectively and efficiently. Industry has to
(North America, Europe, Japan, Russia, Africa, rest of the consciously look for ways and means to run streamlined
world (RoW), etc.) and that too in diverse dosage forms. supply chains that use larger truck sizes, higher load-ability
However, orders are still taken on an opportunistic basis. and inventory optimization. The government needs to play
Going forward, there needs to be a strategic focus on which the crucial role of developing the infrastructure of airports,
products, markets and customers that the companies need to ports, roads, railways and waterways to move goods within
serve. For realizing overall efficiency in the end-to-end supply the country in a fast and cost-effective manner. Since most of
chain, focus should be on serving markets on an in-depth these sectors are largely controlled by the government, there
analysis of the actual/real cost to serve, thereby focusing on is a need to accelerate the pace of development in building
markets with stable demands for the longer term. this infrastructure especially around some key trunk routes
in Telangana, Gujarat, Himachal, North East and Maharashtra
With the focus on moving up the value chain, pharma
from a pharmaceutical industry perspective. Apart from
companies need to evaluate which new products need to be
transport infrastructure, India requires warehousing and trans-
added, i.e., are they complex generics, bio-similars, or cell
shipment capabilities to store products in cold chain.
and gene therapies. This has to be in collaboration with the
recommendations in the R&D section, chapter 2 of this report, 4. Leverage automation and digitization of
wherein Indian firms need to research on molecules apart from
supply chains
generics and also move up the value chain. Additionally, even
from the customer side, marketing and sales functions need Pharma supply chains in India are very complex for generic
discipline in customer relationships to ensure larger order sizes companies. While sourcing of raw materials, lab chemicals,
and continuity of order pipeline in order to reap the benefits of consumables, etc. is from multiple countries, sales are targeted
scale in the supply chain. Ensuring order sizes that are large to multiple countries besides meeting domestic demand. Given
for customers who are with suppliers for a long term, would lead time for conversion from raw materials to finished goods,
enable the backend functions to run larger campaigns, source both within APIs and formulations, supply chain management
APIs in larger quantities (and therefore ensure security), needs to match world-class standard with the latest digitized
achieve better results of larger batch sizes and the associated tools and best practices. Supply chain processes like demand
supply chain benefits (lesser machine idle time, changeovers, sensing, demand aggregation, running S&OP processes, supply
yield losses, power and fuel cost). All this may contribute to a planning and monitoring require sophisticated logics and
significant end-to-end improvement of fixed and variable costs. optimization techniques to bring in the required efficiencies.
Apart from these measures, our industry needs to penetrate

further in regulated markets. While the quality requirements
in markets like the US, the UK, Japan and other developed
5. Promote India and knowledge management The pharma desk should also actively solicit foreign MNCs
in important countries to set up and expand manufacturing
To achieve India’s ambitious target of increasing the market
facilities in India.
size by 2030, there needs to be a push from all stakeholders.
However, it is equally important to change the perception 5.2 Identify opportunities
of India in the minds of the world. All stakeholders in the
ecosystem need to collaborate and promote our already- The pharma desk should also liaise locally and determine
established network of pharma companies. While large potential opportunities for fostering pharmaceutical trade
companies can spend on promoting their products, smaller in that country by understanding its healthcare system
companies would need government’s support in this area. and other key players, such as pharmaceutical companies,
local governing bodies, and how the drugs are sourced and
North America, the EU (Italy, Germany, Spain and France), disseminated. This knowledge can potentially identify important
the UK, Japan, Russia and South Africa are easily the most stakeholders with whom connections could be made by Indian
important markets in terms of their size and attractiveness players. The disease burden in respective countries has the
(realization/unit) for the Indian pharmaceutical sector. Indian potential to help understand the demand for various drugs that
Government has presence in these countries and together with could be made available back in India for companies to cater to,
industry bodies, there is a need to systematically build on the and develop and manufacture products accordingly.
following three critical aspects:
There is already a precedent wherein during COVID times,
5.1 Promote “Brand India” Indian missions abroad have gleaned such information as the
worldwide supply chains witnessed major disruptions and there
The Government of India and various industry associations
was shortage of essential and desirable items across countries.
need to open a pharma desk in the target countries and
Such approaches and practices need to be continued, going
disseminate the capabilities of Indian companies in a concerted
forward.
manner. The desk could consider conducting industrial tours
regularly to facilitate potential client companies to visit 5.3 Knowledge management
Indian companies to cover width and depth of manufacturing
capabilities across dosage forms for value-added products. It is important to understand the best practices, technologies
and advancements related to pharmaceuticals in the target
It is also important to have links with the regulatory authorities markets. Emphasis should be given on innovation and
in these countries. These include the US Food and Drugs discoveries from a technical standpoint. Additionally, there
Administration, the UK Medicines and Healthcare products is a need for government bodies to understand the latest
Regulatory Agency, Health Canada, Therapeutic Goods advancement in plant and machinery in the developed world,
Administration Australia, European Medicines Agency, and especially in Germany, Italy and France, where a lot of capital
Federal Institute for Drugs and Medical Devices (Germany). The goods are being sourced from.
pharma desk should also work actively with local regulators
to understand their expectations from drug manufacturers in Besides these steps, the government should take the lead to
India and accordingly disseminate information freely for them develop Centres of Excellence that glean the best practices
to access it. from other countries and disseminate to Indian companies
(more importantly the MSME sector) to help them grow and
India can also promote “Brand India” by publicizing pharma become more efficient.
specific events that are taking place in the country around
the world to allow participation from foreign companies.

Strengthening manufacturing and supply base in domestic and global markets
1 Manufacturing
(i) Focus on API
Achieve cost leadership & sustainability

Government • Support setting up of large SEZs/Parks, provide cost efficient utilities and incentivise through schemes (API, PLI
etc.)
• Facilitate growth through targeted schemes for API and PLIs to incentivise the industry
Industry • Set up plants at scale (especially existing large firms)
(ii) Continued focus on formulations
Moving up the value chain and retain cost leadership
Government • Enable the industry (SMEs in particular) by providing research and financial assistance
Industry • Invest in capabilities to manufacture value added drugs for long term sustenance
(iii) Enhancing manufacturing attractiveness
Capital equipment
Government • Encourage setting up of capital equipment industry in India
Development of financial institutions
Government • Set up financial institutions that support setting up large projects — higher moratorium and variable interest rates
(iv) Improve operations of a plant
Improve productivity
Industry • Focus on operational excellence techniques and improve margins to counterbalance cheaper imports
(v) Manufacturing technology upgradation
Cutting edge technology
Industry • Upgrade to latest technology to provide superior products
(vi) Quality & compliance focus
Quality assurance rather than quality control
Industry • Incorporate quality by design principles and analytics to reduce cost of compliance and cost of quality
• Cultural transformation for greater awareness and commitment to quality and compliance
(vii) Talent focus
Preparedness at entry level
Industry, • Collaboration with the industry and academia to orient the students early on with the operational aspects of
academia, pharmaceuticals
government
Improve attractiveness of pharma manufacturing

Industry • Lessons learnt from the success of the Indian IT industry in attracting and retaining talent at scale
• Bring Indian talent back from developed world to lead operations of large corporates
(viii) Additional support from government
Setting up of manufacturing units
Government • Further streamline ease of doing business and encourage MNCs to increase manufacturing footprint
Industrial tours
Government, • Organise country-specific industrial tours — for customers, for large manufacturers to invest in India and for local
industry suppliers to visit target markets
2 Supply chain
(i) Strategic portfolio management to realize overall efficiencies
Product portfolio
Industry • Supply Chain strategy needs to target regulated markets, value added products and large customers with stable
demand
Agile and innovative solutions
Industry • In order to cater to small markets and orders, incorporation of innovative solutions, e.g., apart from mega plants,
there can be 1-2 small, agile plants with a lower cost to serve, etc.
(ii) Enhancing logistics and supply chain
Logistics
Industry • Build efficient logistics that will lower costs and provide end to end integration and digitization
Government • Improve transport infrastructure and warehousing facilities to allow quick movement of goods and optimise costs
• Encourage private sector and MNCs to invest in building logistics infrastructure
(iii) Promote India and knowledge management
Promote brand India
Government, • Set up pharma desks in target countries and disseminate the capabilities of the Indian companies in a concerted
industry manner
• Pharma specific events in India need to be publicised abroad for foreign companies to participate
Knowledge management
Government, • Set up knowledge management hubs to helps disseminate trade, technology and sector knowledge
industry
05
Chapter
Improving access to
medicines
Access to medicines (essential With the objective to Further enhancements can

and innovative) is low and improve access to medicines, be made in supply chain
uneven in India due to government has launched management and tendering
affordability and availability Pradhan Mantri Bhartiya process for PMBJP. There is
challenges. Janaushadhi Pariyojana also a need to use innovative
(PMBJP) and pricing controls approaches to improve access to
for essential and lifesaving medicines beyond price controls.
medicines.
According to estimates from Jan Aushadhi Kendra is one The chapter explores best
different sources, 50-80% of such retail initiative of the practices from developed and
the Indian population is not able Indian government to improve developing geographies for
to access all the medicines they availability at every part of the tender process and innovative
1
need . country, at most competitive approaches to improve access.
prices. It is one of the biggest
retail pharma chains globally with
more than 6,200 outlets as
2
of March 2020 .
1
M. Rituparna et al, “Essential Medicines: An Indian Perspective”, Indian J Community Med. 2015. Available at: https://www.ncbi.nlm.nih.gov/pmc/articles/
PMC4581141/
2
“1,000 Jan Aushadhi outlets by 2024: Minister”, The Times of India, March 2020. Available at: https://timesofindia.indiatimes.com/city/patna/1000-jan-aushadhi-
outlets-by-2024-minister/articleshow/74541839.cms
According to the United Nations Development Programme (UNDP), global access to medicines is: "Having drugs
continuously available and affordable at public and private health facilities or drug outlets that are within one hour's walk
3
of the population" .
In India, access to essential medicines remains limited and inequitable. In this chapter, we will discuss current opportunities and
challenges, and way forward to improve access to essential and innovative medicines in India.
Opportunities for improving access to medicines

1. Improve overall access to essential 2. Improve availability of medicines in
medicines rural areas
According to World Health Organization (WHO), “essential Despite the presence of more than 850,000 retailers overall,
6
medicines are those that satisfy priority health care needs of about 60% of the Indian market remains underserved . The
the population; these are intended to be available at all times in situation is even worse in rural areas where people lack
adequate amounts, in appropriate dosage forms, with assured medicines beyond those to treat acute conditions such as
quality, and at a price the individual and community can common cold. According to EY’s primary survey, physicians
4
afford” . based out of tier 2 and tier 3 cities highlighted the absence
of crucial diabetic medicines such as sitagliptin, teneligliptin
India is the pharmacy of the world, but its own populace doesn’t
or even insulin. As a result, they are limited to prescribing
get to benefit entirely due to inherent structural and systemic
medications as per availability, which delays treatment process
reasons. According to estimates from different sources, 50%-
and contributes to the chronic disease burden.
80% of the Indian population are not able to access all the
5
medicines they need .
Challenges
1. High out of pocket expenses About 55 million Indians are pushed into poverty annually due
to unaffordable healthcare, and about 60% of this (33 out of 55
As discussed in the earlier chapter, India has an extremely high 10
million) is due to expenditure on medicines alone . In addition,
out-of-pocket (OOP) expenditure as a proportion of current
7 high OOP expenses may result in non-adherence to prescribed
health expenditure – at 61% , India is far behind the world
8 medicines thus adversely impacting patients’ health, especially
average of 20% (WHO data for 2016) .
those with chronic diseases.
The scenario is similar at the state level as well, with
One reason of high OOP expenditure on health in India is that
households bearing the burden for health expenses. In Bihar
most insurance schemes do not cover daily medical expenses.
and Uttar Pradesh (country’s most populous state), OOP
Other challenge is low availability of medicines in public health
expenses represent 80% and 75%, respectively, of the total
facilities because of which patients are forced to buy medicines
health expenditure. Some states do relatively better, such as
on their own.
Karnataka, Himachal Pradesh and Gujarat, but even their OOP
9
expenses constitute half of the total health expenditure .
3
“Indicators for Monitoring the Millennium Development Goals”, UNDP. Available at: http://mdgs.un.org/unsd/mdg/Resources/Attach/Indicators/HandbookEnglish.pdf
4
WHO website. Available at: https://www.who.int/medicines/services/essmedicines_def/en/
5
PMC4581141/
6
“e-pharmacies: Need to remove policy vacuum”, Policy Circle, October 2020. Available at: https://www.policycircle.org/economy/industry/e-pharmacies-need-to-
remove-policy-vacuum/
7
“Patients spend double of what the govt does on them”, Business Line, March 2019. Available at: https://www.thehindubusinessline.com/economy/patients-spend-
double-of-what-the-govt-does-on-them/article26449603.ece
8
P. Singh et al, “Medicines in India: accessibility, affordability and quality”, Brookings India, March 2020. Available at: https://www.brookings.edu/research/medicines-
in-india-accessibility-affordability-and-quality/
9
“Do poor people in the poorer states pay more for healthcare in India?”, BMC Public Health, July 2019. Available at: https://bmcpublichealth.biomedcentral.com/
articles/10.1186/s12889-019-7342-8
10
“15 Healthcare schemes in India that you must know about”, Oxfam India, December 2018. Available at: https://www.oxfamindia.org/blog/15-healthcare-schemes-
india-you-must-know-about
2. Low availability of medicines in public An earlier survey revealed that the median availability of a
basket of essential medicines was 0%-30% in the public sector
health care facilities 11
in six locations in India . Similar other studies and surveys
The goal of the public healthcare facilities is to provide access carried out in different Indian states such as Maharashtra and
to medicines at lower costs or for free, and hence, they play Bihar have revealed unavailability or insufficiency in stocks of
an important role especially for the poor patients. Hence, it is essential medicines in primary health centers (PHCs). Another
critical to ensure that public healthcare facilities have sufficient survey on the expenditure pattern of state government on
stocks of all essential medicines. medicines shows wide-ranging differences from as little as less
12
than 2% to as much as 17% .
Way forward
According to EY’s primary research, about 80% of the respondents highlighted the need to adopt innovative approach for drug
pricing in India to improve access to medicines. Jan Aushadhi and e-pharmacy were also identified as potential enablers in
improving access to medicines.
Figure 67: Market access enablers
77%* 31%
Innovative drug pricing approach beyond E-pharmacy
• Pricing mechanism beyond DPCO • Policy intervention (including ethical usage)
• Outcome based pricing/risk sharing agreements • Quality assurance
• Tiered/dual pricing (e.g., differential pricing in New Zealand and Australia)
• Direct purchase from manufacturers
• Quality/innovation/therapeutic value rating
• International price referencing
• Spending caps/ budget caps
• Special pricing agreements (e.g., in Australia, New Zealand for generics)
• Subsidized medicine (e.g., one subsidized medicine in each class in New
Zealand)
• Managed entry schemes for innovative drugs (e.g., in South Korea, 23%
Thailand, etc.)
• Products made available by pharma companies under innovative Innovative solutions for Jan Aushadhi
commercially viable business models (e.g., MSD’s Project Sambhav, • Quality assurance (4 drugs, 27 batches
Novartis’s Arogya Parivar) recalled in 2018-2019)
• Tender process: simplification and
improvement, shift from L1 based process
(e.g., multiple criteria decision analysis or
MCDA in Indonesia, Thailand, etc.), bulk
contracts for top drugs to build scale (e.g.,
framework agreements in the US)
*Percentage reflects the number of responders referring the enabler; N = 15

11
PMC4581141/
12
PMC4581141/
Jan Aushadhi Pariyojna to improve access to medicines

The Jan Aushadhi scheme was launched in 2008 with the aim kinds of medicines and 174 kinds of surgical items covering
of making quality medicines available at affordable prices for all all therapeutic areas. The government aims to increase the
and to reduce out of pocket expenses, particularly for the poor number of stores to 10,000, medicines to 2000 and surgical
15
and disadvantaged. The scheme was revamped in September items to 300 by 2024 .
2015 as 'Pradhan Mantri Jan Aushadhi Yojana' (PMJAY),
More than 1.25 crore people across the country buy medicines
and again renamed as "Pradhan Mantri Bhartiya Janaushadhi
13 from Jan Aushadhi stores (data as of March 2020). Total sales
Pariyojana" (PMBJP) in November 2016 .
of these stores crossed INR 390 crore in FY 2019-20 leading to
Jan Aushadhi Kendra is the biggest retail pharma chain globally total savings of approximately INR2,200 crore to the citizens
with more than 6,300 outlets as of March 2020 across 726 as these medicines are 50%-90% cheaper than the average
14 16
districts in the country . These outlets sell more than 900 market price .
Figure 68: Pradhan Mantri Bhartiya Janaushadhi Pariyojana

Vision
To bring down the healthcare budget of every citizen of India by providing quality generic medicines at affordable prices.
• Create awareness among public regarding generic medicines.

• Create demand for generic medicines through medical practitioners.
Mission
• Create understanding through education and awareness programmes that high price need not be synonymous with high quality.
• Provide all commonly used generic medicines covering all therapeutic groups.
• Provide all related health care products too under the scheme.
Launch of Jan Aushadhi scheme to • Revamped as 'Pradhan Mantri

make quality medicines available at Jan Aushadhi Yojana' (PMJAY) Renamed as "Pradhan Mantri
affordable prices for all and reduce • Vision and mission statements Bhartiya Jan Aushadhi Pariyojana"
out of pocket expenses formulated (PMBJP)
Nov Sep Nov

2024
2008 2015 2016
10,000
10,000 2,500
and surgical items
Number of stores
Number of drugs
8,000 6,200 2,000

6,000 1,500
4,000 3,041 1,000
2,000 112 794 500
133
0 0
2008-2012 2015-2016 2016-2017 2017-2018 Mar-20 2024 (E)
Number of stores Number of drugs Number of surgical items
Source: Bureau of Pharma PSUs of India (BPPI) Jan Aushadhi Annual Reports, EY analysis
The scheme initially did not pick as per the plan and ambition. realized its ambition of making medicines affordable and
While the uptake has improved in the last few years, both in reducing out of pocket expenses due to challenges outlined
terms of number of stores and product basket (number of below.
medicines and surgical items), the initiative hasn’t yet fully
13
“Pradhan Mantri Bhartiya Janaushadhi Pariyojana” website. Available at: https://www.india.gov.in/spotlight/pradhan-mantri-bhartiya-janaushadhi-pariyojana
14
"PMJAK pharmacists deliver essential services & medicines at doorstep of patients, elderly to fight COVID-19", All India Radio News, April 2020. Available at:
http://www.newsonair.nic.in/Main-News-Details.aspx?id=385061
15
“1,000 Jan Aushadhi outlets by 2024: Minister”, The Times of India, March 2020. Available at: https://timesofindia.indiatimes.com/city/patna/1000-jan-aushadhi-
outlets-by-2024-minister/articleshow/74541839.cms
16
“Prime minister Narendra Modi to interact with Jan Aushadhi Kendras through video conferencing”, PIB Delhi, March 2020. Available at: https://pib.gov.in/PressRe-
leasePage.aspx?PRID=1605513
Key challenges and steps taken Number of drugs Number of

Year recalled batches recalled
Figure 69
2016-2017 8 8
Availability
2017-2018 21 31
2018-2019 19 40
2019-2020 4 27
Source: “Several drugs at Jan Aushadi Kendras recalled over quality

test”, Deccan Herald, February 2020. Available at: https://www.
deccanherald.com/state/top-karnataka-stories/several-drugs-at-jan-
aushadi-kendras-recalled-over-quality-test-804507.html
Awareness Assurance
1. Awareness I don’t know what my patient will get if I write a

There is a need to promote generic medicines, both among
generic drug. I can trust the name of a good brand if I
17
people and physicians. As per surveys , the general public is know it is being manufactured by a good company. I
not aware of generics or of their cost savings via this program. need to know that the right drug is in the capsules.
Initiatives to increase awareness A top official at an Indian regulatory body for hospitals
The government recently launched the Jan Aushadhi campaign
to educate people about generic medicines’ potency. Jan
Aushadhi Divas, started on 7 March 2019, is now celebrated Initiatives to ensure high drug quality
every year to create awareness about the scheme and generic
18 Several procedures are in place to ensure quality, starting
medicines . Jan Aushadhi Sugam app was also launched in
19 from stringent quality assurance criteria for applying for
August 2019 . The app helps to locate nearest PMBJP kendra
20 the tender to testing of samples. To ensure high quality,
and check the availability of medicines with their prices .
medicines are procured from WHO GMP (Good Manufacturing
2. Assurance (quality) Practices), cGMP and Central Public Sector Undertakings
(CPSU) manufacturers. Each batch of drugs is randomly tested
Many who are aware of generic medicines are wary of buying by National Accreditation Board for Testing and Calibration
them as they associate high cost of the drug with high quality Laboratories (NABL) accredited laboratories to ensure their
and efficacy. Physicians are also reluctant to prescribe drugs quality and conformance with required standards. However,
by generic names as they feel that a low-quality drug might recent recalls highlight that there are still gaps that need to be
impact the health of their patients. Frequent drug recalls (refer 22
addressed .
to the table below) are further strengthening this perception.
Drugs produced under the Jan Aushadhi scheme go through
quality tests. However, several high-profile product recalls have
21
perpetuated their stigma as lower quality .
17
V. Thawani et al., “Why the Jan Aushadhi Scheme Has Lost Its Steam in India?” J Pharmacol Pharmacother, 2017. Available at: https://www.ncbi.nlm.nih.gov/pmc/
articles/PMC5642129/; “A Study on Awareness of Jan-Aushadhi Medical Store”, Available at: https://www.scribd.com/document/420965292/A-Study-on-Aware-
ness-of-Jan-Aushadhi-Medical-Store; S. Sadiq et al., “Knowledge, attitude, and practices towards Jan Aushadhi scheme”, 2017. Available at: http://www.njppp.com/
fulltext/28-1493609998.pdf; N. Johnson et al., “Perception toward low-cost generic medicines and their usage among dental patients visiting community outreach
programs in the peripheral areas of Bangalore South: An exploratory cross-sectional survey”, 2020. Available at: https://www.jiaphd.org/article.asp?issn=2319-
5932;year=2020;volume=18;issue=4;spage=308;epage=312;aulast=Johnson;type=0
18
“Jan Aushadhi Divas: A day to create awareness about generic medicines” Jagran Josh, March 2020. Available at: https://www.jagranjosh.com/current-affairs/jan-
aushadhi-divas-a-day-to-create-awareness-about-generic-medicines-1583555755-1
19
“Mobile application-“Janaushadhi Sugam” launched for locating outlets and searching Generic medicines”, August 2019. Available at: https://pib.gov.in/Pressrelease-
share.aspx?PRID=1583141
20
“Over 325000 people are using “Janaushadhi Sugam” Mobile App to access Janaushadhi kendras”, DD News, April 2020. Available at:
https://pib.gov.in/newsite/PrintRelease.aspx?relid=202663
21
“Several drugs at Jan Aushadi Kendras recalled over quality test”, Deccan Herald, February 2020. Available at: https://www.deccanherald.com/state/top-karnataka-
stories/several-drugs-at-jan-aushadi-kendras-recalled-over-quality-test-804507.html
22
“Pradhan Mantri Bhartiya Janaushadhi Pariyojana” website. Available at: https://www.india.gov.in/spotlight/pradhan-mantri-bhartiya-janaushadhi-pariyojana
3. Availability ii. Improve tender/procurement process

Many reports in the last few years have highlighted shortage Several studies suggest the usage of Most Economically
of medicine and stock-outs. There have also been concerns Advantageous Tender (MEAT) or Multiple Criteria Decision
around the supply-demand gap — the demand for some Analysis (MCDA) approach for tender appraisal. This approach
medicines exceeds supply while in other cases, supply outstrips requires assessment to be based on a number of criteria
demand. instead of being based primarily on lowest price of the drug.
The criteria can be defined by the involved stakeholders as
Some of these mismatches arise from India’s complicated
appropriate and effective in the setting of a specific country.
tendering process. The tendering process itself is a time-
Most European countries now follow MEAT approach. Many
consuming activity, sometimes resulting in delays. There are
countries such as Indonesia, China, Thailand, and Egypt are
also issues around replacement of expired stocks — while the
adopting MCDA for procurement. (refer to the case study on
branded generics are replaced, the generic medicines are not 23
page 152 for details) .
replaced to the pharmacy.
Initiatives to improve availability

To address some of these issues, the government is taking a
more active role in stock management and supply. A central
warehouse in Gurgaon and additional regional warehouses Tender processes should integrate new-age practices,
have been set up. Each store is connected with real-time for e.g., outcome-based model can be used instead of
tracking software system to ensure availability of supplies, with
L1 models.
the goal of holding six months’ worth of stock for fast-moving
drugs, four months for average-moving drugs, and two months MD of a leading global pharma company
for slow-moving drugs. Systems Applications and Products
in Data Processing (SAP) based end-to-end supply chain
management system has also been implemented.
Another good practice based on a study is to use framework
While these new improvements are promising, a lot more needs agreements or long-term contracts that provide terms and
to be done considering the magnitude of current challenges conditions under which smaller repeat purchasing orders
24
and the aggressive ambition of the government (refer the may be issued for a defined period of time . Framework
figure 68 for the targets set for 2024). agreements benefit the procurement body by saving time
and resources, and ensuring good quality of drugs and supply
Further interventions security. The manufacturers, in turn, are incentivized to invest
in assets (for example, equipment, increased manufacturing
i. Leverage technology to streamline
capacity, personnel training, administrative/operating
demand and supply management procedures), specifically tailored to better serve government
There is a need to establish transparent, connected and orders and achieve efficiencies of scale. (refer to the case study
25
agile networks to track end-to-end drug movement. It is also on page 153 for details) .
important to leverage advanced technology (e.g., blockchain) These best practices for tender process can also be leveraged
to track quality and avoid any possibilities of counterfeit. to improve the national- and state-level programs for procuring
The system should be able to track and alert about potential medicines for public healthcare systems. In addition, joint
shortages, as well as identify excessive stocks of medicines and bulk procurement mechanisms should be promoted, e.g.,
nearing expiry. Determining desirable stocks for each medicine Tamil Nadu Medical Services Corporation, which has also been
by locations, and implementing automated synchronization, adopted by some other states such as Rajasthan.
prediction and scenario simulation for increasing forecast
accuracy may help in addressing supply-demand gaps.
23
N. Maniadakis et al., “Shaping Pharmaceutical Tenders for Effectiveness and Sustainability in Countries with Expanding Healthcare Coverage”, Appl Health Econ
Health Policy, October 2018. Available at: https://pubmed.ncbi.nlm.nih.gov/29987759/
24
L. Arney et al., ”Strategic contracting practices to improve procurement of health commodities”, Glob Health Sci Pract, June 2014., Available at: https://pubmed.
ncbi.nlm.nih.gov/25276589/
25
L. Arney et al., ”Strategic contracting practices to improve procurement of health commodities”, Glob Health Sci Pract, June 2014., Available at: https://pubmed.
ncbi.nlm.nih.gov/25276589/
Mexico is another good example of centralized procurement. As power. Consolidated purchasing through CCNPM and other
a result of increasing costs due to universal health coverage, in pharmaceutical procurement reforms have led the government
2008, the Mexican government decided to centralize drug price to save 7%-15% annually. In addition to financial gains,
negotiation process for single-source or patented medicines introduction of CCPNM has also led to overall improvement of
for all public institutions. In this context, the Coordinating the procurement process. The industry has also benefited from
Commission for Negotiating the Price of Medicines and Other the organized and more unified process, increased exchange
Health Inputs (CCPNM) was established that allowed the of information, and greater certainty regarding sales volume,
26
government to reap benefits from the combined bargaining which in turn facilitates planning .
WHO’s* definition of tender:

“Any formal and competitive procurement procedure through which offers are requested, received and evaluated for the
procurement of goods, works or services, and as a consequence of which an award is made to the tenderer whose tender/offer
is the most advantageous”.
The WHO notes that tendering should be conducted with the goal of purchasing high-quality, consistent and effective products;
therefore, the decision on which supplier(s) is awarded the contract should not be based solely on the price.
Similarly, a 2010 report from the European Parliament noted that prioritizing lowest-cost offers over those that are the most
economically advantageous can weaken innovation and global competitiveness.
*World Health Organization collaborating centre for pharmaceutical pricing and reimbursement policies
26
“Mexico’s coordinating commission for negotiating the price of medicines and other health inputs”, July 2016. Available at:
https://publications.iadb.org/publications/english/document/Breve-14-Mexico-Coordinating-Commission-for-Negotiating-the-Price-of-Medicines-and-Other-Health-Inputs.pdf
Findings from ‘systematic literature review’ – Study I*
Study objective
While tenders can reduce acquisition costs, they may also expose the healthcare system to risks, including drug shortages, quality trade-offs, and
ultimately, compromised patient health outcomes.
The literature study was conducted to examine the effectiveness and impact of tendering in different healthcare settings to establish good tender
practices and develop guidance for countries with expanding healthcare coverage (CEHC).
Findings and recommendations for ‘developed geographies’
into account
id ered be
ns yo
Price shall not be sole or over-riding factor in decision- co nd
s p
making process. The Most Economically Advantageous or Qualitative,
ct
Principles of NHS
ri
Tender (MEAT) approach should be used in tender
procurement
ce
technical,
Fa
appraisal. Providers should be required to demonstrate
After-sales aesthetic and
that their services offer the best possible value for
service functional
money. This assessment must be based on a number
characteristics of
of criteria for evaluation. These include price, quality,
product
sustainability, innovation and technical merit ('Principles
of NHS procurement').
MEAT
Trading and
includes best
delivery Accessibility
price to quality
European Union
conditions
regulations
ratio
MEAT approach has been recommended across all
sectors in the European Union regulations
Social,
Total lifecycle environmental
benefits and innovative
characteristics
While lowest price was the prevailing award criterion, some
countries have advanced to select the MEAT approach.
Findings and recommendations for CEHCs
The survey revealed specific behaviours or characteristics of Literature review and survey recommendations: clear principles should
procurement through tenders in CEHCs, which may elevate the risk for guide pharma tenders in CEHCs to foster a sustainable and affordable
the occurrence of undesirable side effects supply with minimum risk of unwanted side effects
Public healthcare products are procured Costs including acquisition costs

through tenders without differentiation and any additional cost that could
concerning value characteristics differ between the alternatives
1 1 Outcomes
Mostly single Lowest price documented by
winner tenders criterion defines the evidences on
6 2 Quality standards
Prevalent tender winner Suggested effectiveness of the
in manufacturing 5 2 product for the target
tender related criteria for
and approval
procurement inclusion in population (e.g.,
characteristics the tenders in patient reported
High frequency and in CEHCs Tendering systems CEHCs outcomes)
5 3
short duration of are applied for on-
tenders and off-patent drug 4 3 Other benefits such as
4 segments patient preferences,
No consideration for Broader impact on society in terms of
product related
product quality or meeting local health policy priorities: local
value-added services
manufacturer reliability investment, employment, distribution
(application forms,
and accessibility, risk management,
devices, support services)
manufacturer supply track record
Criteria can be defined by involved stakeholders as appropriate and effective in the setting of a specific country. Indonesia has defined such
multiple criteria decision analysis (MCDA). Usage of MCDA in decision making for off-patent medicines is also emerging in several other countries
such as China, Thailand, Egypt, etc.
*Systematic literature review details: relevant reports published between 1995 and December 2017 were retrieved through electronic searches (performed
in August 2017 and January 2018) in PubMed, Google Scholar, and the Cochrane Library databases. An online survey was also conducted between March
2017 and July 2017 by individual experts in CEHCs (such as Algeria, China, Egypt, Indonesia, Lebanon, Malaysia, Pakistan, the Philippines, the Republic of
Korea, Russian Federation, South Africa, Thailand, Turkey, Ukraine, the United Arab Emirates and Vietnam) to describe tender practices in CEHCs
Source: EY analysis; Nikolaos Maniadakis et al., ‘Shaping Pharmaceutical Tenders for Effectiveness and Sustainability in Countries with Expanding Healthcare
Coverage’, July 2018
Findings from ‘semi-structured literature reviews and interviews’ – Study II
Study objective
• Identify strategic procurement and contracting practices of the U.S. Department of Defense and the U.S. Department of Veteran
Affairs that may be suitable for public procurement systems in developing countries.
• Review key characteristics of these strategic practices as well as case studies of their use by other national governments and
multilateral agencies.
Findings and recommendations for ‘developing countries’
Current challenges in tendering process of developing

Suggested best practices
countries
• Public-sector entities continue to use archaic procurement • Framework agreements used by the U.S. federal
methods for essential medicines and health commodities. government is a strategic procurement practice that may
• Reliance on inflexible forecasts and current practice of also be suitable for global health supply chains.
floating tenders multiple times a year contributes to long • Such agreements are common in the U.S. and the United
lead times, stock-outs and commodity insecurity. It also Nations procurement systems and in other developed
hampers manufacturers’ ability to plan and respond to the countries and multilateral organizations.
government’s needs.
Definition of framework agreements Type of framework agreements
Long-term contracts that provide terms and conditions under Long-term agreements (LTAs), task-order contracts, indefinite-
which smaller repeat purchasing orders may be issued for a quantity contracts, call-off contracts, umbrella contracts, rate or
defined period of time. running contracts, system contracts, general service agreements,
blanket purchase agreements, and standing offers.
Two stages of framework agreement process
Single-supplier Multi-supplier
A single contract is awarded to one supplier through a A contract for the same good or service is signed with
First stage competitive procurement. multiple suppliers.
Multiple call-off orders are placed directly against the Different ways – secondary bidding process for
Second stage contract throughout the duration of the agreement. each call-off order, ranking of suppliers according
to preference or capacity, rotation of orders among
suppliers, or assigning fixed order amounts to each
supplier in the initial contract.
Advantages of framework agreements
Procurement/healthcare body Manufacturer
Manufacturers are incentivized to invest in assets (for example,

Significantly saves the procurement time and resources by
equipment, increased manufacturing capacity, personnel
avoiding repetition of all steps for each purchase.
training, administrative/operating procedures), specifically
tailored to better serve government orders.
Benefits of centralized purchasing through demand aggregation,

with flexibility in purchase quantities and delivery schedules.
Supply security, as a shortfall by one supplier can be

compensated for or replaced by another supplier on the contract.
Source: L. Arney et. al., ‘Strategic contracting practices to improve procurement of health commodities’, Global Health: Science and Practice 2014 |
Volume 2 | Number 3
Drug pricing mechanisms to improve affordability

India’s drug prices are among the lowest in the world. Act. In 1966, the provision was framed into the Drugs Prices
However, they are still out of reach for a large percentage (Display and Control) for new drugs developed by research
of the population due to high out-of-pocket expenditure. To outside the ambit of price control. From 1970, Drug Price
tackle affordability issues, price control mechanisms have Control Orders (DPCO) were issued in accordance with the
been in place since 1955 when the government first imposed Essential Commodities Act, 1955. Several amendments have
28
price ceilings under Section 3 of the Essential Commodities been made to the DPCO in the past five decades . Different
27
Act . The early drug price controls were enacted by the Drugs mechanisms are used for pricing control of scheduled and non-
(control of prices) Order in 1963 under the Defence of India scheduled drugs.
Pricing control is required in Indian context, but there should be more consensus-based flexibility and
room for innovation-led pricing.
Director of Corporate Services of a leading Indian pharma company
Figure 70: History of drug price regulation in India

Essential
Commodities Display of Price Drug Policy 1986, Drug Policy 2003
Act Order, 1962 DPCO 1987
Drug Policy 1994,
DPCO 1966 DPCO 1978 DPCO 1995 NPPP 2012
1955
1957
1959
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
DPCO 1963 [under DPCO 1970 Drug Policy and DPCO 1991 Drug Policy 2002 DPCO 2013
Defense of India Act] DPCO, 1979
NPPP 2011
Source: E. Boswell Dean, “Who Benefits from Pharmaceutical Price Controls? Evidence from India”, Center for Global Development, Working Paper
509, April 2019. available at: https://www.cgdev.org/sites/default/files/who-benefits-pharmaceutical-price-controls-evidence-india.pdf
29
Pricing control of Schedule I medicines 354 drugs) . The NLEM is revised every few years to align
with changing healthcare needs in the country due to evolving
(essential medicines) disease burden. The NLEM 2011, and subsequently NLEM
With the aim to satisfy the country’s priority health care needs, 2015 were included as Schedule I in DPCO 2013. The latest
30
the first National List of Essential Medicines (NLEM) in India one, NLEM 2015 includes 376 drugs and 857 formulations .
was developed in 1996 covering 279 drugs. The NLEM was The government appointed an experts’ committee in 2019 to
31
then revised and published after seven years in 2003 (covering prepare a new NLEM to tackle emerging diseases .
27
The Essential Commodities Act, 1955. Available at: http://legislative.gov.in/sites/default/files/A1955-10.pdf
28
“The genesis of drug price control”, Pharmabiz, January 2008. Available at: http://pharmabiz.com/printarticle.aspx?aid=42905&sid=9
29
PMC4581141/
30
“Health ministry to conduct first stakeholders meet for revision of NLEM 2015 on July 25”, Pharmabiz, July 2019. Available at:
http://pharmabiz.com/NewsDetails.aspx?aid=117114&sid=1
31
“Industry welcomes revised NLEM list to tackle emerging diseases”, Pharmabiz, November 2019. Available at: http://pharmabiz.com/NewsDetails.aspx?aid=119158&sid=1
The National Pharmaceutical Pricing Authority (NPPA) was set unlikely to improve access to medicines in India, especially
32
up in 1997. It enforces the provisions of DPCO . The price of in the rural areas where it is most desirable. The study also
all Schedule I drugs is controlled by fixing the ceiling prices, i.e., highlighted that keeping the prices below market value cause
by limiting the highest price companies can charge for the drug. suppliers to withdraw from the market, thus negatively
The ceiling price policy has been in place for more than two impacting supply of medicines and decreasing their competitive
decades now. Market-based pricing methodology is currently intensity. A 75% decline in new launches post 2011 was also
35, 36
followed where ceiling price is calculated by taking the average identified . Similarly, an IIM Ahmedabad research paper
price for all branded generics and generic versions with 1% on the impact of price controls on drug sales volume strongly
or above market share of the drug formulation. The prices of suggests that there was a significant decrease in sales volume
33 37
the drugs can only be increased annually . This policy is not post-price control, indicating decreased access for patients .
applicable for indigenously-developed patented new drugs and
Another study reported the following theoretical and empirical
fixed-dose combinations (FDCs).
effects of price ceiling placed on essential medicines in India
38
Before 2013, the DPCO followed a cost-based pricing between 2013 and 2014 :
mechanism. The drug prices were then fixed by the
• Prices declined amongst both directly-impacted and
manufacturers based on their manufacturing costs plus
competing products. But this was accompanied by a
reasonable profit margins. The shift to market-based pricing
reduction in the sale of price-controlled and closely related
was done to make it more sustainable, both in terms of ease in
products, preventing trade that would have otherwise
developing and implementing the ceiling prices, and allowing
occurred.
drug companies to earn reasonable profit.
• The sale of small, local generics manufacturers was most
Challenges associated with drug price impacted registering a 14.5% decrease in market share
controls and a 5.3% decrease in sales. These products tend to be
inexpensive but are also of lower average quality.
There has not been any detailed systematic study to measure
the impact of pricing controls on improving access in India • There was differential impact by consumer types. The
or other developing countries. However, a few articles and benefits were largest for quality-sensitive consumers, while
literature review do provide some view of the overall impact of poor and rural consumers, who were already suffering from
pricing controls. low access to medicines, were negatively impacted.
A study spanning 19 developed countries over a 13-year period

(1992 to 2004) found that regulations significantly reduced
pharmaceutical revenues, with direct price controls having the
34
biggest impact of them all . Legislations led to reduced drug
costs in the short-term, but they had a negative impact on
A lot can be done in pricing. Need to go beyond
future innovations and led to delays in launch of new drugs.
pricing — perceived as deterrent to growth.
In 2015, IMS Health released a study on the impact of price
control. The study was based on extensive quantitative data MD of a leading Indian pharma company
analysis of growth and volume trends, and in-depth qualitative
interviews with industry stakeholders and policy makers. The
study suggests that regulations that push for price levels are
32
NPPA India website. Available at: http://www.nppaindia.nic.in/wp-content/uploads/2018/10/1766E.pdf
33
“All you wanted to know about: DPCO”, Business Line, September 2014. Available at: https://www.thehindubusinessline.com/opinion/All-you-wanted-to-know-about-
DPCO/article20876551.ece
34
N. Sood et al., “The Effect Of Regulation On Pharmaceutical Revenues: Experience In Nineteen Countries”, Health Affairs, 2008. Available at:
https://www.healthaffairs.org/doi/full/10.1377/hlthaff.28.1.w125
35
“Price control unlikely to improve access to medicines in India: IMS study”, Pharmabiz, July 2015. Available at:
http://pharmabiz.com/NewsDetails.aspx?aid=89417&sid=2
36
“Price-control as a regulatory philosophy fundamentally dents the image of a country”, ETHealthWorld, June 2018. Available at:
https://health.economictimes.indiatimes.com/news/medical-devices/price-control-as-a-regulatory-philosophy-fundamentally-dents-the-image-of-a-country/64633212
37
A. Sahay et al., “Does Pharmaceutical Price Regulation Result in Greater Access to Essential Medicines? Study of the impact of drug price control order on sales
volume of drugs in India”, Indian Institute of Management Ahmedabad, India – January 2016. Available at: https://web.iima.ac.in/assets/snippets/workingpaper-
pdf/2217512512016-02-01.pdf
38
E. Dean, “Who Benefits from Pharmaceutical Price Controls? Evidence from India”, Center for Global Development, April 2019. Available at:
https://www.cgdev.org/publication/who-benefits-pharmaceutical-price-controls-evidence-india
In addition to the above study, several articles have reported Pricing for non-scheduled drugs
the following challenges and industry’s response regarding the
There is no price cap for non-scheduled drugs, i.e., the
same:
marketers can fix their own prices. Once the price is fixed, an
Business profitability-related considerations annual increase in price of 10% is allowed keeping in view the
annual inflation. The increase in drug prices is monitored by the
a) I nability of manufacturers to increase the price of the drug 39
NPPA . In some cases, only a 10% increment in annual price
in proportion to the increase in the cost of a raw drug
has been a concern for the industry. For example, if the price of
material and skilled human resources, leading to continued
a drug is already on the lower side or if there is relatively higher
decrease in margins over time.
increase in the manufacturing costs (e.g., due to increase in the
b) I n other instances, small-scale manufacturers that are price of active pharmaceutical ingredients or bulk drugs).
selling drugs at prices much lower than the ceiling price
In addition to the check on annual increase in price, the
have faced significant profitability challenges due to
government has special powers under Para 19 of the DPCO
inability to increase price beyond 10% per annum.
2013 to bring any item of medical necessity under price
40
c) M
anufacturers face challenges related to permissions controls . In 2014, prices of 50 diabetic and cardiovascular
required to withdraw an essential drug from the market. drugs (108 formulations), not included in the NLEM, were
41
In some cases, as pharma companies stopped production fixed in public interest , followed by fixing the prices of knee
42
of drugs under control because of lower margins, there implant systems and cardiac stents in 2017 . In 2019, the
was a dominance of substandard and spurious drug government placed a trade margin cap of 30% on 42 anti-
43
manufacturers in the category. cancer medicines .
General behavioural response by manufacturers Approach for innovative drugs
a) S
topped promoting essential drugs, as a result, the According to the DPCO 2013, patented drugs except those that
sales declined for the medicines with capped prices and are indigenously-developed, come under price control if they
increased for other medicines. are included in the NLEM. The indigenously-developed patented
b) S
tarted promoting fixed-dose combinations (FDCs) or drugs do not come under the purview of price controls for
other dosages (non-standard dosages) that are not a period of five years from the date of commencement of
44
included in the NLEM. commercial production of the product . The NLEM 2015
included the following patented medicines, namely, entecavir,
45
raltegravir, sofosbuvir and trastuzumab .
However, the following revisions have been made as per the

DPCO 2019:
Government should buy directly from the industry • Drugs by foreign MNCs that are patented in India will be
through a tendering process and then distribute it in exempt from price control for a period of five years, starting
any form that they see fit. from the day of commercializing the drug in the country
46
(same as the indigenously-developed patented drugs) .
Director of corporate services of a leading
• Drugs for orphan diseases have also been exempted from
Indian pharma company the price control with the aim to incentivize R&D efforts in
the space.
39
NPPA website. Available at: https://nppaimis.nic.in/nppaprice/newmedicinepricesearch.aspx
40
“NPPA invokes Para 19 of DPCO to cap knee implant prices, may face challenge in court”, Moneycontrol, December 2020. Available at: https://www.moneycontrol.
com/news/economy/policy/nppa-invokes-para-19-of-dpco-to-cap-knee-implant-prices-may-face-challenge-in-court-2364017.html
41
“Prices of 108 diabetes, cardiac formulations fixed: NPPA”, The Economic Times, July 2014. Available at: https://economictimes.indiatimes.com/industry/
healthcare/biotech/pharmaceuticals/prices-of-108-diabetes-cardiac-formulations-fixed-nppa/articleshow/38372299.cms?from=mdr
42
“After cardiac stents, government now caps knee implants price, cuts prices by up to 69%”, The Economic Times, April 2017. Available at: https://economictimes.
indiatimes.com/industry/healthcare/biotech/healthcare/after-cardiac-stents-government-now-caps-knee-implants-price/articleshow/60088338.cms?from=mdr
43
“NPPA caps trade margins to 30% for 42 anti-cancer drugs”, BusinessLine, February 2019. Available at: https://www.thehindubusinessline.com/companies/nppa-
caps-trade-margins-to-30-for-42-anti-cancer-drugs/article26390238.ece
44
“Patent experts welcome DoP's decision to deregulate prices of patented orphan and innovative drugs”, Pharmabiz, January 2019.
http://www.pharmabiz.com/NewsDetails.aspx?aid=113316&sid=1
45
“National List of Essential Medicines 2015”. Available at: https://www.nhp.gov.in/NHPfiles/NLEM%2C%202015.pdf
46
“Patent experts welcome DoP's decision to deregulate prices of patented orphan and innovative drugs”, Pharmabiz, January 2019. http://www.pharmabiz.com/
NewsDetails.aspx?aid=113316&sid=1
Another recent step to motivate innovation is the flexibility to • Set up innovative contracts for bulk procurement (e.g., as
increase the annual price by 15%-20% for the drugs that are done in the UK) of essential medicines.
relaunched with incremental innovations such as reduced side
• For example, negotiate directly with the manufacturers
effects, or user-friendly administration techniques such as skin
to provide discounted medicines for public consumption
patches. This will also be applicable for drugs included in the
47 through government and allow free pricing in the market
NLEM .
(driven and controlled by market competitiveness).
Need to explore new ways of improving • Set up long-term contracts for large volumes (for e.g.,
access to medicines ~50% of total consumption of the drug) of top essential
drugs with top manufacturers (for e.g., top five of them)
Pharmaceutical pricing is an important consideration for
and distribute the remaining volume to MSMEs. This
all countries, especially in the context of making essential
will allow the top manufacturers to invest in building
medicines affordable to the entire population. This is also
capacity and achieve benefits of scale, while also
critical to encourage innovators to price drugs to recover the
ensuring that there is enough competition from other big
due costs of discovery and substantial risks undertaken to
and mid-size manufacturers in the market.
invest in unmet needs and new diseases.
• Set up government/public manufacturing capacity for
some of the most critical drugs, starting from key starting
The World Health Organization (WHO) holds that
materials and active pharmaceutical ingredients to finished
‘affordable and fair’ price is one that can reasonably
formulations.
be funded by patients and health budgets and
simultaneously sustains research and development, • Establish managed entry schemes (MSAs) (e.g., in South
48
production and distribution within a country . Korea and Thailand) or value based contracts (VBCs) (e.g.,
in the US and European markets) for innovative patented
50
drugs or drugs for rare diseases (refer to examples from
To achieve sustainable affordability in India, the government other countries in the figure 71).
may consider the following measures:
• Follow a consensus-based approach between industry

and government. For example, the prices of branded
prescription drugs have been regulated in the UK since
1957, in accordance with a voluntary agreement called New-age concepts of pricing models are required
the Pharmaceutical Price Regulation Scheme (PPRS).
in India. There are lot of examples globally – tiered
The agreement is between the Association of the British
Pharmaceutical Industry (ABPI) and the UK Department
pricing, outcome-based pricing, etc.
of Health, and applies to all branded, licensed prescription
MD of a leading Indian pharma company
drugs available to the National Health Service (NHS). PPRS
aims to secure reasonable prices for the NHS while ensuring
that the industry can achieve a fair return on its investment
49
in R&D .
I am a strong believer in pay for performance. Even
for drug pricing, it needs to be performance based.
• Use approaches such as special pricing agreements (as
used in Australia), differential pricing (as used in New Senior Vice President, Global Medical Affairs of a
Zealand and Australia), bundling (as used in New Zealand), leading Indian pharma company
specialized medicine by class (as used in New Zealand)
(refer figure 71).
47
“Modi govt allows 15-20% price hike in medicines that have ‘innovations’”, The Print, December 2019. Available at: https://theprint.in/health/modi-govt-allows-15-
20-price-hike-in-medicines-that-have-innovations/337346/
48
WHO website. Available at: https://www.who.int/teams/health-product-and-policy-standards/medicines-selection-ip-and-affordability/pricing-financing
49
L. Hannah, “Is the Current UK System of Pharmaceutical Price Regulation Working”, February 2017. Available at: https://www.hausfeld.com/news-press/is-the-
current-uk-system-of-pharmaceutical-price-regulation-working
50
N. Verghese et al., “Government pharmaceutical pricing strategies in the Asia-Pacific region: an overview”, J Mark Access Health Policy, 2019. Available at:
Figure 71: Best practices from other countries for drug pricing and procurement
Generic medicines Innovative medicines

Special Pricing Agreements (SPAs) China’s strategy to reduce cost of patented drugs
• Australia: manufacturers can set higher public list price that • In 2017, China cut costs of patented medicines by ~70% as
is offset through rebates to government based on pre- a precondition for their eligibility for government insurance
determined criteria such as volume. schemes, without tampering the process of granting
patents. This improved the affordability of drugs, while
• New Zealand: the country practices bundling whereby the
protecting the revenues of pharma companies.
government offers subvention for a particular drug if the
manufacturer agrees to discount prices on one or more
of its other marketed medicines in the formulary list. This Managed entry schemes (MES)
allows the government to attain price reductions for mature
These are forms of SPA that enable access to and/or
products and release funding for new therapies.
reimbursement for medicines subject to specified conditions.
These agreements address uncertainty about medicines’
Subsidized medicines by class in New Zealand performance, uptake and health outcomes.
• There is at least one fully-subsidized medicine in each Types of MES include price-volume agreements (PVAs), refunds
medicine class. Patients pay additional costs if the price of if medicines do not work as expected, and performance/
another medicine in the class is higher than the price of the outcome-based/value based risk-sharing agreements (RSAs).
subsidized medicine.
Countries such as South Korea, Taiwan, Thailand and New
Zealand practice MES in one or more forms.
Differential pricing in New Zealand and Australia • South Korea: PVA related price cuts require several
• The government reimbursement is capped based on the conditions to be met. For instance, if consumption of a drug
reference price (based on the lowest-priced medicine for is 30% higher than predicted, the manufacturer provides
the group), but manufacturers are free to charge any price the local drug subsidizing agency, National Health Insurance
in the market. System (NHIS), a price reduction of up to 10%.
• South Korea: use contract-specific risk-sharing agreements
that rely on metrics such as total sales, per patient cap, etc.
• South Korea and Thailand: performance based risk-sharing
for medicines to treat cancer and rare diseases, where
clinical benefits of a drug in each patient are monitored and
costs are covered by the manufacturer if the drug fails to
demonstrate effectiveness.
• Thailand: a maximum volume threshold is calculated for
high-cost on-patent medicines by estimating the number of
eligible patients and the duration of the intervention. Costs
exceeding the threshold are covered by manufacturers.
Note: the list of best practices and examples is indicative and not exhaustive
Source: ‘Government pharmaceutical pricing strategies in the Asia-Pacific region: an overview’, Journal of market access and health policy, 2019,
Vol. 7
Another factor that contributes to increase in overall drug • Remuneration/mark-up regulation can be used to provide
prices is the complex supply chain starting from the stockist to incentives for supplying specific medicines (e.g., generics,
the retailer. Rationalizing trade margins can be another way to low volume medicines, reimbursable medicines) or to
improve affordability. A WHO report recommends regulating protect specific patients or population groups (e.g.,
distribution and retail chain mark-ups as part of the overall vulnerable groups, remote populations).
51
pharma pricing strategy .
• Mark-ups that include a regressive component (i.e., a lower

mark-up for higher-priced products) have been found to
result in better outcomes than fixed percentage mark-ups.
51
“WHO guideline on country pharmaceutical pricing policies”, 2015. Available at: https://www.who.int/medicines/publications/pharm_guide_country_price_policy/en/
Role of the pharma industry in improving an important social need, while it simultaneously, allowed the
52
company to create a market in place which was missing .
access to medicines
In addition to the efforts by the government to achieve Novartis also initiated ‘Arogya Parivar’ or ‘Healthy Family’
sustainable affordability, some companies have also launched in 2007 to improve rural reach. The program builds local,
innovative initiatives that are designed to promote access sustainable capabilities for healthcare, including education,
using commercially-viable business models. For example, infrastructure and products, for people living at the base of
Merck Sharp & Dhome (MSD) launched Project Sambhav the pyramid. This program quickly demonstrated the feasibility
(Project Penny) in India in 2013. This is an innovative micro- of approach by breaking even 30 months after launch and
financing program, in partnership with financing institutions in increasing sales by nearly 300 times in 10 years. After the
India, which allows patients to pay for treatment costs for the success of the program in India, similar programs were rolled
hepatitis C drug ‘Pegintron’ over an extended period of time. out in Vietnam and Kenya (adapted to the local needs and
53
In addition, there is also a component of disease education disease patterns) . Refer to the case studies for details.
and management for the patients. Project Sambhav addressed
Case study: MSD’s Project Penny (Project Sambhav) for Hepatitis C product, Pegintron
Pilot launched in Pegintron’s

Treatment Punjab in 2013 access in Punjab*
Merck India Adherence
Counseling
Transmission
prevention Expanded to 11
cities across 4 2% 45%
Patient
states in 2014
Treatment
Subsidies
course for six
for financing
months
Microfinance treatment
company
EMIs over 2 years
*Patients with limited or no insurance coverage

Source: Company report, available at: https://www.msdresponsibility.com/wp-content/uploads/2015/10/MRK_Executive_Summary_2014.pdf
52
A. Sood et al., “Impact of “Sambhav” Program (Financial Assistance and Counselor Services) on Hepatitis C Pegylated Interferon Alpha Treatment Initiation in India”,
Int J Health Policy Manag, 2018. Available at: https://www.ijhpm.com/article_3540_95096ce36d6180eb8bc74a83c95d2fd5.pdf
53
Company website. Available at: https://www.novartis.com/our-company/corporate-responsibility/expanding-access-healthcare/novartis-social-business/healthy,
https://www.novartis.com/sites/www.novartis.com/files/2017-healthy-family-report.pdf
Case study: Novartis’s Family Health (Arogya Parivar launched in 2007 in India)
Social impact
Impart awareness to • Operating in 15 states
community across India covering
Awareness: Health educator Patients 15,000 villages
diseases (usually a woman) • In 2017, ~7m people
treatment attended ~150,000
Evaluated on:
options and health education
number of
Social
prevention Refer patients to

education meetings
doctors
sessions and • Employs ~500 people
participants who and works with
start accessing Health camps >60,000 doctors
independent
Form partnerships Health camps for
healthcare
with local NGOs treatment: mobile
professionals
clinics, provide
access to:
Arogya
Parivar • screening
Business impact
(Healthy • diagnoses
Family) • Launched in Vietnam
• therapies
and Indonesia (2012),
Collaborate with and Kenya (2013)
Sales supervisor doctors, hospitals • Achieved break even
and NGOs
Commercial
(local sales force) within 30 months of

launch
Doctors, pharmacists • As of 2017, the
Evaluated on: Interact with (Started a Healthy Family product
sales related pharmacies and telemedicine initiative portfolio in India,
Training/ performance goals educate pharmacists with Tech Mahindra Vietnam and Kenya has
technical as the IT partner, in grown to 51
skills 2016)
• Increased sales by
~300 times in 10 years
Source: Company reports

E-pharmacy has the potential to improve access of medicines

E-pharmacy holds the potential to improve accessibility of The need for social distancing during the pandemic has
medicine to even the remotest corners of the country. The first strengthened the adoption of e-pharmacies globally. Online
online pharmacy was started in the US in late 1990s. In India, pharmacies across the world, including India, have reported a
the e-pharmacy space is still at a nascent stage. The market significant increase in orders during the lockdown period.
54
was estimated at US$0.5b in 2019 with companies such as
NetMeds, PharmEasy, Medlife and 1mg dominating the market.
It is projected to reach US$4.5b in 2025 at a CAGR of 44% for
the period 2019—2025, representing about 10%-12% of the
55
pharmaceutical sales (up from 2%-3% levels in 2019) .
Figure 72: Increased adoption of e-pharmacy during pandemic
US UK India
20% in volume 20% in 50% in delivery

1 3
delivered prescription orders
2
nominations 50% in delivery
3
60% in orders
10x in home
1 prescription 40% in delivery
deliveries 2 3
nominations orders
Sources
1
https://www.pharmacist.com/article/mail-order-drug-delivery-rises-during-coronavirus-lockdowns
2
Increase in prescription nominations from last week of March’20 to first week of June’20; https://www.chemistanddruggist.co.uk/news/
prescription-nominations-online-pharmacies-rise-covid-19-coronavirus-eps
3
https://www.livemint.com/news/india/the-coming-of-age-of-e-health-platforms-11590324836814.html
E-pharmacies offer a convenient and an affordable way to pharmacies’ stocks are limited. Given the access, doctors are
purchase medicines. Coupled with teleconsultations, they able to prescribe a wide range of medicines, which enable
can provide quick access to quality healthcare for patients in them to provide better care. Both the pharma companies and
remote areas. Some e-pharmacies have expanded their reach the government benefit by getting access to digital data and
and serve at least 90% of the pin codes in India. The distribution increasing reach to the patients. Some pharma companies are
time in remote locations can vary between seven to ten days. leveraging e-pharmacy platforms with patients as a channel
E-pharmacies offer strong value proposition to doctors in rural to increase awareness about diseases and their management.
areas and tier-3 cities. During primary interactions with EY, The following snapshot sums up the value proposition that
many doctors from rural areas mentioned that they encourage e-pharmacies offer to stakeholders in the value chain.
patients to purchase medicines from e-pharmacies as local
54
“Mitsui & Co. Global Strategic Studies Institute Monthly Report”, March 2019. Available at: https://www.mitsui.com/mgssi/en/report/detail/__icsFiles/afield-
file/2019/05/17/1903_sakai_e.pdf
55
EY survey, June 2020
Figure 73: E-pharmacy: value proposition to the stakeholders
Consumers Medical professionals

• Wide selection at competitive prices • Customer / patient acquisitions
• Authentic products • Patient management
• Convenience • E-prescription software
• Consumer education
• Anonymity for patient
Retail pharmacies e-pharmacy Marketplace sellers

• Superior tech infrastructure value • Additional source of revenue
• Procurement efficiency proposition • Strong tech infrastructure helps
in managing listings, orders, etc.
• Online promotion
Pharmaceutical companies Government

• Transparency and efficiency in • Data analytics can help the government
distribution analyse disease patterns and accordingly
• Business insights on consumer they can draft public policy
purchase pattern and feedback • Additional source of revenue for
government through fees and taxes paid
Source: EY analysis
Current challenges Stakeholder expectations
The e-pharmacy space faces challenges related to operational According to EY’s primary research, all stakeholders — patients,
management and stakeholder expectations. doctors and pharma companies — agree that e-pharmacies
provide access and convenience benefits. However, they
Complex supply chain and counterfeit
also have concerns related to data privacy, prescription
The pharma supply chain in India is complex with several genuineness, medicine substitution, quality, stock availability
carry and forwarding agents (CFAs), and more than and timely delivery. The table below captures the concerns by
8,50,000 retailers. A large number of stock keeping units stakeholder type and the response of e-pharmacies regarding
(SKUs) (>250,000) further increase the complexity of stock the same.
management, especially with variation in brand preference
across geographies. For e-pharmacies, holding inventories
56
of 2.5 lakh SKUs across geographies is a challenge . With
fragmented and unorganized supply chains, chances of the
product being counterfeit becomes higher.
56
EY survey, June 2020
Figure 74: Stakeholders’ views on multiple issues highlighted in the EY survey
Data privacy Substitution Operating model Private labels Discounts Reach

• Unclear • Strong • Procurement • Not • Conflicts • Most orders
regulatory concern through concerned with offline from metros
guidelines certified about channel • New localisation
Pharma Co channels competition models
• Concern • Some prefer • Medicine • Preference • Primary • Delivery time

Concerns
about doctor authenticity to known driver is higher

prescription prescribed is a major brands in
Patients privacy vs low cost concern consumer
alternatives segments
• Concern • Prefer to be • Concerned • Not • Not • Increased reach
about data consulted about concerned concerned in rural areas
sharing by before prescription
Doctors platforms substitution abuse
• Secure • Substitution • Procured • Medium to • Discounts to • Some players

platform; in case of from certified long term rationalize: serving all pin
POV
Prescription stock-outs; distributors 15-17% vs codes

E-Pharma data safe no ghost 20-25% in
prescriptions past
Source: EY analysis
Potential solutions The government has been working on providing a governance

structure and regulations to address all these concerns.
Use of technology and partnerships to resolve supply chain
The government is expected to pass draft regulations on
and access related issues
e-pharmacies in the next few months. This will create a
E-pharmacies are leveraging technology to optimize inventory favourable environment for e-pharmacy operations and attract
using strong analytics of purchase orders and sales data. funding to scale up the segment. Lack of necessary guidelines
These also provide real-time visibility of secondary data to around patient data privacy and sole liability on doctors to
pharmaceutical companies along with sales analytics at regional protect their data is a major issue as per the EY survey. We
levels. expect the stakeholders to share liability with regards to patient
data. Once regulations around substitution are strengthened
To address issues related to access, e-pharmacies are
and doctors’ consent becomes mandatory, equity among the
partnering with local medicine stores. Region-wide partnerships
stakeholders — doctors, patients, pharmaceutical companies
with brick and mortar stores is expected to begin by 2021.
and e-pharmacies will improve.
Some e-pharmacies are also extensively focusing on acquiring
distributors and turning them around to gain supply chain We also expect the creation of digital infrastructure in the long
efficiencies. Adopting a click and mortar model with offline run to streamline the operation of e-pharmacies. The following
stores has the potential to further reduce the delivery time to initiatives are expected to be rolled out:
serve the acute customer segment as well. • Access to prescription through Digilocker, a centralized
Government regulations and strong governance can help in registry
addressing data privacy and drug quality concerns • Creation of a centralized electronic medical record (EMR)/
electronic health record (EHR)
The e-pharmacy sector needs regulatory and policy
interventions. Pharmaceutical companies have been cautious to • Digital trail of transactions with batch numbers to manage
partner with e-pharmacies even though they believe that online counterfeits
sales may represent 10%-12% of the medicine sales in the next • Audit trail to manage abuse of prescriptions
57
five years .
57
EY analysis

Improving access to medicines
1 Achieve drug affordability sustainably
Improve overall efficiency and sustainability of Jan Aushadhi Pariyojna

Government Tendering process for drug procurement
• Consider shifting from lowest price-based decision criteria to Most Economically Advantageous Tender (MEAT)
or Multi-Criteria Decision Analysis (MCDA) approach based on several criteria, formulated on value driven
characteristics, e.g., product related value-added services, quality and supply track record, investment in
innovation, etc.
• Use framework agreements or long-term contracts. This can help the procurement body by saving on time and
resources and ensuring good quality supply security. The manufacturers, in turn, are incentivized to invest in
assets, specifically tailored to better serve government orders and achieve efficiencies of scale
• These tendering practices can also be leveraged to improve the national and state level programs for procuring
medicines for public healthcare systems. In addition, joint / bulk or centralized procurement mechanisms can be
considered
Government Use technology to bridge demand and supply gaps

• Establish transparent, connected and agile networks to track end-to-end drug movement. The system should be
able to track and alert about potential shortages, as well as identify excessive stocks of medicines nearing expiry
• Determine desirable stocks for each medicine by locations, and implement automated synchronization, prediction
and scenario simulation for increasing forecast accuracy
Government Quality assurance

• Procure medicines from reliable manufacturers based on prior track record
• Keep penalties for not meeting quality standards and supply commitments (e.g., timelines, quantities)
• Use technology, such as blockchain, to track quality of medicines and avoid any possibilities of counterfeit
Consider other options of improving affordability of essential drugs instead of only price controls
Government Best practices followed by other countries
• A consensus-based approach between industry and government. For example, regulation of the prices of branded
prescription drugs in the UK based on voluntary agreement called 'Pharmaceutical Price Regulation Scheme'
between the Association of the British Pharmaceutical Industry and the UK Department of Health
• Special pricing contracts/differential pricing: buy drugs from manufacturers through tendering process or at
discounts/rebates for poor population or for public consumption through government schemes and allow free
pricing in the market (e.g., in Australia, New Zealand)
Other considerations
• Direct purchase from manufacturers: long-term contracts for large volumes (e.g., ~50% of total consumption of
the drug) of top essential drugs with top manufacturers of the drug (top five manufacturers) and distribute the
contracts for the remaining volume to MSMEs. This will allow the top manufacturers to invest in building capacity
and achieve efficiencies of scale, while also ensuring competition from other big and mid-size manufacturers
• Setup government / public manufacturing capacity for some of the most critical drugs, starting from KSMs/APIs to
finished formulations
Improve access to innovative medicine
Government • Establish managed entry schemes, such as price-volume agreements, contract-specific or performance-based risk
sharing agreements, payment for pre-agreed maximum value threshold, etc.
Government • Procure drug at discounted prices for government insurance schemes while allowing normal process for granting
patents and free pricing in the market
Industry • Become partners to the government in improving affordability, especially for medicines for high prevalence
diseases. Introduce innovative programs with commercially viable business model that build local, sustainable
capabilities for healthcare, including education, infrastructure and drugs, for people living at the base of the pyramid
2 Improve drug accessibility in tier 2/3 cities and remote areas

Develop e-pharmacy model along with physical retail pharmacies
Government • Develop detailed guidelines for the working of e-pharmacies, including end-to-end operating model, ethical
practices, quality assurance, patient privacy, etc.
Acknowled
Acknowledgements
Special thanks to Pharma industry leaders Functional area experts
Shri. Mansukh Mandaviya S. Sridhar Dilip Jose

Minister of State (Independent Charge) Managing Director, Pfizer Ltd. Managing Director and CEO, Manipal
for Ministry of Ports, Shipping and Health Enterprises Pvt. Ltd.
Waterways and Minister of State for Kiran Mazumdar-Shaw
Chemical & Fertilizers Dr. Narottam Puri
Executive Chairperson, Biocon Limited
Hony prof. And Advisor, Indian Medical
Smt. S. Aparna Association
Mehul Shah
Secretary, Department of Board Member & Chairman, Appeals
Pharmaceuticals Managing Director, Encube Ethicals Pvt. Committee, NABH
Ltd.
Dr. P. D. Vaghela Dr. Sangita Reddy
Dr. Murtaza Khorakiwala
Former Secretary, Department of Joint Managing Director, Apollo
Pharmaceuticals Managing Director, Wockhardt Limited Hospitals Enterprise Ltd.
Dr. Eswara Reddy Dr. Sharvil P. Patel Upasana Arora

Jt. DCG(I), CDSCO Managing Director, Cadila Healthcare Director, Yashoda Super Speciality
Ltd. Hospitals
Mr. Sumit Garg
Dr. R Ananthanarayanan Dr. Shekhar Bhirud
Director, Department of Pharmaceuticals
Managing Director & CEO, Strides C
‎ EO, Akums Drugs and Pharmaceuticals
Pharma Science Limited Ltd.
Project Management Cell
Department of Pharmaceuticals Sanjiv Navangul Puja Thakur
MD and CEO, Bharat Serums & Vaccines VP Finance & CFO India, GlaxoSmithKline
Limited Pharmaceuticals Limited
Ashok Nair Milind Patil

Managing Director & General Manager CFO, Pfizer Ltd.
Primary Care, Abbott Healthcare Pvt.
Ltd.
Rajesh Dubey
Annaswamy Vaidheesh President & Chief Financial Officer,
Alkem Laboratories Limited
Chief Executive Officer, North star Asia
LLP
Shyam Pattabiraman
Sudarshan Jain Vice President & CFO, Jubilant
Therapeutics Inc.
Secretary General - Indian
Pharmaceutical Alliance
Raju Krishnaswamy
K G Ananthakrishnan R
‎ egional Supply Chain Head for South
Asia, GlaxoSmithKline Pharmaceuticals
Director General - Organisation of Limited
Pharmaceutical Producers of India (OPPI)
Sreekanth Muttineni
Namita Thapar
President and Global Manufacturing
Executive Director, Emcure Head, A
‎ lkem Laboratories Ltd.
Pharmaceuticals
Pompy Sridhar
Director, MSD Pharmaceuticals Pvt. Ltd.
dgements
Kulbhushan Gupta Vishal Goel

Global Head and VP, Dr. Reddy's Partner, Cerestra Advisors Ltd. Kanwaljit Singh
Laboratories AGM Policy - India and Emerging
Ramesh Khaitan Markets, Mylan
Durai Pandi Srinivasan Sr. Vice President and Global Tax Head,
V
‎ ice President, Global Procurement Lupin Limited Nickil Baswan
Head, A
‎ lkem Laboratories Ltd. Vice President & Group Head, Corporate
Bob Bauer Affairs & Policy, Cipla Ltd.
Prakash Gupta Director, Kinaxis
P
‎ resident (Global Supply Chain and Prachi Garg
Generics Business), Wockhardt Ltd. Christian Sobb National Policy Lead, Roche Products
Vice President, Kinaxis (India) Pvt. Ltd.
Subramanyam Maddala
President API, Aurobindo Pharma Sharad Goswami Ransom D'Souza
Limited Director - Govt Affairs, GlaxoSmithKline
Senior Director, Public Affairs/Corporate
Affairs, Pfizer Ltd. Pharmaceuticals Limited
Vinay Aggarwal
Vice President, Global Manufacturing, CV Venkatraman Ravikiran Veligati
Piramal Healthcare Sr. Manager, Corporate Affairs,
Director, Government Affairs, Lupin
Limited Glenmark Pharmaceuticals Ltd.
Arno Tellmann
Head Global Drug Development India, Azadar Khan Sanjay Koul
Novartis Director, Product Management, Mankind
Vice President - Human Resources, Sun
Pharmaceutical Industries Limited Pharma
M E Kannan
Head, R&D (PTC), Zydus Cadila Abhishek Sahay Satish Arora
Head, Govt Affairs, GlaxoSmithKline Deputy General Manager - Corporate
Sadhna Joglekar Pharmaceuticals Limited Relations, Sun Pharmaceutical Industries
Senior Vice President, Global Medical Limited
Affairs, Sun Pharmaceutical Industries Anuj Mathur
Limited Umang Chaturvedi
Head, Govt Affairs, Abbott India Ltd.
Head of Policy - India & Emerging
Atanu Roy Markets, Mylan
Khomba Singh
Group CIO, Biocon Limited
Director, Government Affairs, Abbott
India Ltd.
Edsel Pereira
Group Vice President - IT, Glenmark Chetan Gupta
Pharmaceuticals Ltd.
VP, Corporate Affairs, Emcure
Pharmaceuticals
Ganesh Ramchandran
Global CIO, Alkem Laboratories Ltd. Nakul Verma
Sr. Director, Sanofi India Ltd.
Ulhas R Dhuppad
P
‎ resident R&D, Alkem Laboratories Ltd. Dr. Akhilesh Sharma
P
‎ resident and Chief Medical Officer,
Divya Maheshwari Alkem Lobaratories Limited
Director, Azatrius Pharmaceuticals
Private Limited Jyotsna Ghoshal
Sr. Director, Corporate Affairs, MSD
Pharmaceuticals Pvt. Ltd.
Acknowled
Acknowledgements
FICCI Team EY Team Contributors
Dilip Chenoy Farokh Balsara Muralidharan M Nair

Secretary General, FICCI Partner & National Director, Healthcare Leader, EY
Consumer Products & Health Services,
Dr. Sangita Reddy EY Pankaj Bhandari
Immediate Past FICCI President & Jt. MD, Compliance and Regulatory Leader, EY
Apollo Hospitals Enterprise Ltd. Sriram Shrinivasan
National Health Sciences Leader, EY Kaivaan Movdawalla
Pankaj Patel Healthcare Leader, EY
FICCI Pharma Mentor & Chairman, Cadila Hitesh Sharma
Healthcare Limited National Health Sciences Tax Leader, EY Pramod Sudhindra
Digital & Innovation Leader, EY
Gagan Singh Bedi Ashit Saxena
FICCI Pharma Chair & MD, AstraZeneca Leader — Manufacturing, Life Sciences, Dr. Rajesh Krishnan
Pharma India Limited EY
Compliance and Regulatory Expert, EY
S. Sridhar Smriti Mishra
Saikat Ghosh
Immediate Past FICCI Pharma Chair & Advisor, Health Sciences, EY
Managing Director, Pfizer Life Sciences Supply Chain Leader, EY
Rajni Sadana
Praveen Mittal Shantanu Gharpure
Health Sciences & Wellness Leader,
Senior Director, FICCI EY knowledge Life Sciences Strategy, EY Parthenon
Swati Aggarwal Praveer Moharikar Ellen Licking

Consultant, FICCI Life Sciences Consulting, EY Analyst Team Lead, Health Sciences and
Wellness, EY
Ria Manglani
James Evans
Life Sciences Consulting, EY
Senior Analyst, Health Sciences and
Wellness, EY
Vallabh Gokhale
Tax Expert, EY
Sidharth Kamat
Tax Expert, EY
Neeraj S Bang
Tax Expert, EY
Shobhna Mishra
Life Sciences Team, EY
Rumy
Life Sciences Consulting, EY
Aisha Saldanha
Life Sciences Intern, EY
dgements
Editing Marketing and Communications Design Team
Vikram D Choudhury Rohila Dhiman Rajeev Birdi

Brand, Market & Communications Brand, Market & Communications Brand, Market & Communications
Arif Jamaal
Brand, Market & Communications
Notes
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Indian Pharmaceutical

Industry 2021: future

Indian pharma industry:

Indian pharma industry landscape

Figure 1: Last two decades of Indian pharma industry

Overall 17.4 14.4 10.9 6.2

Exports 12.0 12.2 10.5 6.2

Domestic 27.9 17.1 11.4 6.2

*CRAM: Contract Research and Manufacturing

Figure 2: Indian pharma industry

Indian pharma industry

Indian pharma Global pharma

Source: Pharmexcil, available at: https://pharmexcil.com/uploads/tradestatistics/Countrywiseexports201819.pdf, EY analysis

In some regions a structured government intervention by way of

pharma companies to leverage such markets with customised

regulatory bodies like International Council for Harmonisation

of Technical Requirements for Pharmaceuticals for Human

Use (ICH) and Pharmaceutical Inspection Convention and

Pharmaceutical Inspection Co-operation Scheme (PIC/S) would

also facilitate access to these markets.

Further in the vaccine market, India exports vaccines to

The Indian domestic pharmaceutical market size has reached

*MAT: Moving annual total; CNS: Central Nervous System

Figure 6: Vitamins, minerals and nutraceuticals market (US$m)

Several vaccines are already under clinical trials in India.

COVID 19 impact: geo-economic shift and evolving healthcare and life

Figure 8: World Economic Outlook growth projections (% change)

BRICS countries G7 countries

-4.1 -4.5 -4.3 -5.3

India: preparing to lead in the post-pandemic world

¹ The Department of Pharmaceuticals’ website. Available at: https://pharmaceuticals.gov.in/pharma-industry-promotion

Figure 9: First time ANDA approvals

2016 2017 2018 2019 June 2020

India United States Netherlands Ireland Israel Italy UK

% India’s share % United State's share

Source: USFDA website, EY analysis

Figure 10: Approval of biosimilars in the US and Europe

TNF alpha inhibitors

*mAb: monoclonal antibody, TNF: tumor necrosis factor

*Company update, available at: https://zyduscadila.com/public/

Source: WHO survey

Biocon, in 2019-20, generated a revenue of INR1,951 crores Vaccines

Biocon has entered the US market (in collaboration with Mylan)

Novel drug development promises high returns, but it

(Novartis’s Kymriah and Gilead’s Yescarta)

Prohibitively high Complex manufacturing Lack of a system to Excessive costs due to

therapy costs process connect all stakeholders skilled talent requirement

CGT companies for and engineering expertise to become global manufacturing

Source: Clinicaltrials.gov, EY analysis

2. Establish India as the global innovation hub

Key challenges in achieving research and innovation potential

Figure 14: Reasons for limited clinical R&D in India

Clinicians overburdened Time bound faculty promotions

Higher regards and

Paucity of funds for Lack of training curriculum in

international students originating from the country). More than 10.30%

Head of drug development center India, of a leading global pharma company

President R&D of a leading Indian pharma company

2. Complex regulatory approval process Intellectual property (IP) regime in India