Till the early 1980’s, dominant foreign companies dominated pharmaceutical manufacturing in India. Today the dominant ones are Indian owned. The then Indian patent laws helped this transformation.

Until recently India recognised only process patents. Reverse engineering by Indian pharmaceutical chemists enabled Indian companies to replicate popular foreign drugs through different processes and market them in India.

Since some foreign companies delayed introducing newer drugs because they thought they could make more money out of older ones, Indian copies could be made and earned substantial revenues. Indian companies like Ranbaxy and others, also used profits from such copying to invest in excellent development and production facilities as well as in R & D.

As some drugs came off patents overseas, Indian companies started exploring markets for the same drugs overseas, as ‘generics’.  Indian pharmaceuticals became multinational, with manufacturing or just assembly in other countries, the bulk drugs being exported from India. Ranbaxy led this effort. There are many other such Indian companies today, many with their R & D and the ability to introduce new drugs as well as to produce and market generics. Generics are much cheaper than branded drugs.

For example, “Tylenol” in the US (it is not sold in India), a product by Johnson & Johnson, is a preferred analgesic in terms of lack of side-effects as compared to those (as  in India), using aspirin or paracetamol as active ingredients. “Tylenol” uses acetaminophen. A bottle of 100 Tylenol tablets might sell at $4 or so, in many US chemist shops. Bottles that looked like ‘Tylenol’ without the name, the active ingredient being the same, sold at half the price of the branded product.

Generic products as substitutes for many brands have become available to the consumer in the US. They do the job of the branded product but are much cheaper. The American consumer can choose between branded and generic products. In India, there are practically no generic drugs on sale in the market. Yet, Indian companies are already large in the generic drug markets overseas, and set soon to dominate them. 

The Jaisukhlal Hathi Committee had studied the operations of multinational drug companies’ vis-à-vis indigenous companies and public sector undertakings. It  recommended in 1975: nationalization of multinational units, diluting foreign equities of companies coming under the Foreign Equity Regulations Act; earmarking some drugs for public sector undertakings; strengthening R&D activities; abolishing brand name drugs; issuing licenses for formulations of only 117 drugs which the committee considered sufficient for the treatment of the majority of diseases in India; measures for drug quality control; disseminating unbiased drug information to those who prescribed medicines; monitoring  adverse drug reactions, etc.

It also recommended differential mark-ups for essential and non-essential drugs. The WHO has also for years argued for a list of essential drugs; use of generic names of drugs; criteria for drug registration based on safety, efficacy, quality, health needs and cost; regulation, control and monitoring of drug prices and drug promotion. 

Neither Hathi nor the WHO has made much impact on Indian policy. Many of the recommendations that were accepted failed in their intent. Public sector companies like IDPL declined, as did even initially successful ones like Hindustan Antibiotics Ltd. The sensible proposals to focus on essential drugs relevant for the majority in India, improve quality, encourage better product information dissemination, etc, were either not  implemented or very badly done.

India’s drug manufacture has little relationship to its most endemic diseases. Production is poorly supervised, with many thousands of small enterprises being permitted to manufacture drugs. This has led to much sub-standard drug production, poor bio availability and perhaps the largest percentage of fake drug production of any country, estimated at 40 per cent.

Drug prices were controlled for many years and yet permitted substantial profits by manufacturers. The drug price control policy has been severely diluted in recent years and drug prices have risen manifold. Indian manufacturers like their foreign counterparts  in India have made big profits. They have invested in R & D in India. They have also made common cause with the foreign companies in avoiding generic drugs for Indian markets and insisting on product patents.

Bangladesh has actively encouraged generics in pharmaceuticals in consumer interest. There is as yet no pressure on manufacturers to offer generic drugs to the domestic market. If there are trustworthy generic drugs, Indian pharmaceutical companies will lose branded sales and profits to generics. Obviously they would like to avoid this. But they fight hard to sell their generics to customers in overseas markets.

The domestic pharmaceuticals market is poised to accelerate to grow at 13.6 percent in 2006-10. It is expected to become a $9.48-billion industry by 2010. In the last five years its cumulative annual growth was 9.5 percent with turnover in March 2006 of $5.7 billion. Now that India has diluted drugs price control, government must ensure cheaper drugs by insisting on marketing generic drugs.