Mandar Athalekar, Head-Market Development, Global Trade Management, Thomson Reuters, speaks on the current scenario in India’s pharma trade and measures to guard against market volatility, in an interaction with Raelene Kambli
Where does the Indian pharma industry stand vis-a-vis its global counterparts?
The Indian pharma market is the third largest in terms of volume and thirteenth largest in terms of value. Presently, the market size of the pharma industry in India stands at $ 20 billion. The highly fragmented Indian pharma industry is getting consolidated and is estimated to grow at 20 per cent compound annual growth rate (CAGR) over the next five years. It is expected to grow over 15 per cent per annum between 2015 and 2020 and will outperform the global pharma industry, which is set to grow at an annual rate of five per cent in the same period. India’s biotechnology industry comprising bio-pharma, bio-services, bio-agriculture, bio-industry and bio-informatics is expected to grow at an average growth rate of around 30 per cent a year and reach $100 billion by 2025. Biopharma, comprising vaccines, therapeutics and diagnostics, is the largest sub-sector contributing nearly 62 per cent of the total revenues at Rs 12,600 crore ($ 1.9 billion).
What are the loopholes in the Indian trade policies that need to be addressed?
Public health concerns demand that the manufacture of pharma products and their subsequent handling within the distribution chain both nationally and internationally must conform to prescribed standards and be rigorously controlled in order to ensure their quality, safety and efficacy. The need for manufacturers’ compliance with World Health Organization (WHO) guidelines on stringent norms of Good Manufacturing Practices (GMP), to provide all the necessary and important information on products considered for export including registration details and trade for pharma products lead to importers and exporters of pharma products being subjected to additional statutory or regulatory requirements. Regulatory framework of pharma relates to drug pricing, public health implications and accountability of regulatory agencies and procedures utilised by pharma companies for regulatory compliance to address the complex web of regulatory requirements, application processes, quality control and trade authorisations. In this complex web of regulatory requirements and authorities, the biggest loopholes are created by the need to balance the pricing and trade regulation on one hand and to facilitate distribution of the products to end consumers on the other. These loopholes are further widened by ambiguities in classification of pharma products, lack of updated information on the frequent amendments to policies and provisions governing trade. Divergent opinions between the industry, traders and policymakers also lead to delayed and ineffective implementation of these policies. These are some of the challenges which need to be immediately addressed.
What measures would you suggest to protect Indian pharma trade from market volatility?
Pharma industry is characterised by innovation. Developments in the regulatory environment over past years provide an opportunity to analyse the correlation between the three main driving forces behind demand supply dynamics of the pharma industry namely product innovation, trade facilitation and the corresponding market response. In the wake of these dynamics, exchange of information proves to be the most important factor influencing pharma manufacturing, trade and market success. Thus, integrating robust systems to organise and efficiently process public information such as patent application, publication, trade policies and pricing competitiveness with market strategy and stock market returns would have widespread influence in guarding against potential supply chain disruptions and losses due to market volatility.
How does Thomson Reuters help global corporations in the pharma industry to manage their international trade?
Thomson Reuters ONESOURCE Global Trade Solution helps global corporations in the pharma industry overcome all the various challenges related to international trade by providing access to content related to product classification, licenses and changes in foreign trade policy as well as process automation and document management. ONESOURCE Global Trade Solution is a cloud-based enterprise software solution for management of information, content, processes and documentation related to global trade. Built with world-class technology and backed by leading industry experts, ONESOURCE Global Trade simplifies the entire global trade management process by automating routine tasks and opening up the opportunity for professionals to focus on value-added activities. The solution comprises various modules viz. imports, exports, special programmes, restricted party screening and Free Trade Agreements encompassing all the aspects of global trade including transaction management, screening and compliance, document management, visibility and exception control, license management, reporting and analytics to help organisations achieve their objectives of operational efficiency and cost control.
If GST gets a green signal, how would it impact your business and what changes it would bring to the solutions you offer to your pharma clients?
Goods and Services Tax (GST) primarily applies to domestic taxation and its impact to business would largely be relevant for landed cost and warehousing model. Thomson Reuters ONESOURCE Global Trade Solution already has flexible features for adding or modifying any tax or duty charges consequent to changes in the tariff schedule, of which GST reform is just another example, albeit, a major one. Just as for clients in any other sector, even the pharma clients would benefit from the solution.