India: From a Meager Beginning to the "Pharmacy of the World"

INDIA Meagre beginning to THE WORLD'S PHARMACY: Several countries got Independence from British along with India and some later. India's pharmaceutical industry has gained international recognition as the "Pharmacy of the World," particularly for its imperative role in supplying vaccines, essential medicines, and medical supplies during the COVID-19 pandemic and beyond.

A WALK DOWN MEMORY LANE ON PHARMA INDUSTRY IN INDIA : At the time of independence 1947, the bulk drug industry in India was in the infancy stage with a meager investment of Rs. 10 crore and a production worth just Rs. 26 crore. Most of the bulk drugs and formulations were imported. The 1962 Chinese aggression of India left us with a speculation of rise in Drug prices.

Pre independence there was a statutory control of Drug prices. Post Chinese aggression, Drugs (Control of Prices) Order, 1963 were just promulgated. the Drugs Prices (Display and Control) Order of 1966, it was made obligatory for the manufacturers to obtain prior approval from the government before increasing the prices of any formulation. Then Drugs (Prices Control) Order, 1970 was introduced. DPCO WAS A DIRECT CONTROL ON THE PROFITABILITY OF A PHARMACEUTICAL BUSINESS, and an indirect control on the prices of pharmaceuticals. The government stipulated that a company’s pre-tax profit from its pharma business should not exceed 15% of its pharma sales (net of excise duty and sales tax). These MNCs were hardly affected by the relatively mild form of DPCO and continued operating in the domestic market. Then came the FERA (Foreign Exchange Regulation Act )which came in mid 70’s to curb the Repatriation of profits and exorbitant prices of raw materials from MNC’s (Bulk drugs imported at exorbitant prices from parent organisations.). It is then that the Indian pharma companies prospered from 1970 . Licensing made easy and we saw a Boom in Pharma production

Catagorisation of drugs and differential profits : In 1979 there came stipulation ceiling prices for controlled categories of bulk drugs and their formulations. In fixing the price, the government continued to advocate the profitability ceiling and an upper limit was put on the return on net worth or capital employed for pharma companies. Essential drugs I , Life saving drugs II, Drugs for rare diseasesIII was common drugs for fever aches diarrhea. Category II was antibiotic cough syrups. like The retail prices of controlled formulations were decided by applying the concept of MAPE (Maximum Allowable Post manufacturing Expenses).

The 1979 DPCO
Category MAPE %
I 40%
II 55 %
III 100 %
IV 60 %
The 1979 DPCO put 370 drugs under price control. These drugs were segregated into categories, having different MAPE for each . Higher margin if given for cat. III
The DPCO, 1987 : The MAPE for Category I and Category II was increased from 40% and 55% respectively to 75%. . The MAPE(Maximum Allowable Post manufacturing Expenses). for Category IV was increased from 60% to 100%.
Category MAPE
I 40- 55%
II 60 -100%
Even the new drugs that were brought under price control got a liberal 75% MAPE. Category MAPE I 75% II 100%
This gave financial relief for the Pharma companies and their workers.

DPCO : (Drug Price Control Order)
MAPE(Maximum Allowable Post manufacturing Expenses).
NPPA: (National Pharmaceutical Pricing Authority)
FORMULLATIONS : Final product to the consumer at the counter.

Exemption from the price control regulations for 5 years (from the date of marketing) is offered to a drug maker who brings in an innovative patented drug

Drugs for treating rare or “orphan” diseases (RARE DISEASE )too will be exempt from price control, with a view to encouraging their production.

I was spurred to write this article by the post “ Jan aushadi medical stores l, fraction of a cost?” in Transform India. more