Overview of the Industry

Growth over Last Few Years

The Indian pharmaceutical sector contributes about 2% to India's GDP and around 8% to the
country's total merchandise exports.

The Indian Pharmaceutical Industry has built on its strong performance in the previous Financial
Year by registering a healthy performance in 2021-22. The pharma exports in 2021-22 sustained
a positive growth despite global trade disruptions due to various factors like the Russia-Ukraine
War and the fall in demand for COVID-19 related medicines. Indian pharma companies enabled
by their price competitiveness and good quality, have made global mark, with 60 per cent of the
world’s vaccines and 20% of generic medicines coming from India. The trade balance continues
to be in India’s favour, with a surplus of USD 15175.81 Million with the current market size of
the Indian Pharmaceutical Industry being around $50 billion which has grown from $42billion in
2022. Generic pharmaceuticals, OTC medications, API/bulk drugs, vaccines, contract research &
manufacturing, and biologics & biosimilars are the major subsectors of the pharmaceutical
industry.

Indian Pharma ranks 3rd worldwide according to production by volume and 14th by value.
There are multiple pillars supporting the industry on which the success and growth of Indian
Pharmaceuticals stands and delivers. The first among them being Cost-Efficiency. India’s cost
of production is approximately 33% lower than that of the United States. Low costs and
investment into R&D have made India a favourable destination for mass producing medicines.
The ability to manufacture high quality medicines in large volumes and low costs has provided a
boost to the industry. Today, 60% of the world’s vaccines and 20% of generic medicines are
supplied from India. (Network, 2022) Our world-class manufacturing excellence, solid
infrastructure, cost-competitiveness, trained human capital, and innovation are the driving forces
behind India's success in the pharmaceutical industry. The 2nd factor responsible for the recent
growth in Pharmaceuticals is Economic Prosperity. Higher disposable incomes have led to
increased demand of OTC drugs and better healthcare infrastructure and medicines. There is also
an increased awareness and penetration with Health Insurance Schemes and Government
Initiatives. The domestic market is expanding as a result of the high disease load, strong
economic growth that has increased disposable incomes, improvements to the healthcare
infrastructure, and better healthcare finance

Government Policies

Another important factor driving the Pharma industry’s growth is proactive and supportive
stance of the government. There have been multiple policy decisions as well as significant
investment in medical infrastructure and R&D that has driven the growth of the Indian
Pharmaceutical Industry. This was evident from the rapid reaction and output regarding the
Covid-19 vaccine in 2020 and 2021. In the shortest amount of time and on par with highly
developed nations like the United States and the European Union, the Indian vaccine industry
created the Covid vaccine using indigenous technology in partnership with Indian research
institutions like ICMR and NIV. More than 97 countries received 115 million doses of vaccines
from India.

In 2020, the Government unveiled ‘Pharma Vision 2020’ with the objective of making India a
global leader in end-to-end drug manufacturing. The government acknowledged that the
pharmaceutical industry's current business model is unviable financially and is operationally
unable to produce new treatments as required by international markets. Due to the rising
prevalence of non-communicable illnesses, the healthcare sector is required to change its
emphasis from primary care to widespread prevention. Pharmaceutical firms must be ready to
provide the sector comprehensive healthcare plans. Modern in-life testing and live licencing
models, which will be carried out in cooperation with healthcare providers and regulators, will
soon replace the current linear phase research and development process in the pharmaceutical
industry. The vision is to substitute an innovative and sustainable sales approach for the
conventional blockbuster sales model. With the new revenue-generating model, the supply chain
function is also anticipated to undergo a redesign as it becomes a crucial component of the
healthcare packages. Additionally, the supply chain will play a crucial role in enabling access to
healthcare through new channels. The nation will have an advanced direct-to-consumer
distribution system, which will reduce the importance of wholesalers.
In June 2021, Finance Minister Ms. Nirmala Sitharaman announced an additional outlay of Rs.
197,000 crore (US$ 26,578.3 million) that will be utilised over five years for the pharmaceutical
PLI scheme in 13 key sectors such as active pharmaceutical ingredients, drug intermediaries and
key starting materials. (IBEF, 2022) India is the world's 12th largest exporter of medical
supplies. More than 200 nations throughout the world receive Indian medications, with the US
serving as the main market. The country is the world's leading supplier of generic medicines with
20% of global exports made up of generic drugs. In FY22 and FY21, Indian medication and
pharmaceutical exports totalled US$24.60 billion and US$24.44 billion, respectively. The
government has also supported domestic manufacturing of critical Key Starting Materials
(KSM)/Drug Intermediates (DIs) and Active Pharmaceutical Ingredients (APIs) funded with INR
6,940 crores to decrease the reliance on China for APIs. Under the scheme, financial incentives
will be given to eligible manufacturers of 41 eligible products (covering 53 APIs) for 6 years.
The government has also announced 100% Foreign Direct Investment (FDI) in the
Pharmaceutical Sector via the automatic route to attract foreign investors and further drive the
industry forward.

Major Investments, Mergers & Acquisitions

Sun Pharmaceuticals, Cipla, Dr Reddy’s Laboratories, and Alkem Laboratories are some of the
major players in the Indian Pharmaceutical space. This section will focus on the major
acquisitions, investments and mergers in the industry. (IBEF, 2022)

Sun Pharmaceutical Industries Limited launched Bempedoic Acid under the trade name Brillo in
India in May 2022 for the purpose of lowering low-density lipoprotein (LDL) cholesterol
through one of its owned subsidiaries.

In June 2022, Cipla announced the availability of a 4-in-1 antiretroviral medication for kids
living with HIV in South Africa in collaboration with the Drugs for Neglected Diseases project
(DND).

Dr. Reddy's Laboratories and HK Innovate Corporation have started working exclusively
together from May 2022 to sell the innovative molecule Tegoprazan in India and a few other
emerging markets.
Over the next ten years, India's healthcare sector might gain an additional $200 billion in
economic value thanks to the National Digital Health Blueprint.

Pharmaceutical and drug exports make up 5.92% of our total exports. Formulations and
biologicals continue to make up the majority of our exports, accounting for 73.31% of all
exports. Bulk medicines and drug intermediates came in second with shipments of USD 4.48
billion.

Foreign Direct Investment (FDI) in Pharmaceutical Sector:

Pharmaceuticals is one of the top ten foreign investment-attracting sectors in India. 100% foreign
investment is allowed in greenfield pharmaceutical and medical device projects under the
automated approach. While brownfield initiatives need government approval of at least 74% and
as much as 100%. After the Foreign Investment Promotion Board was abolished in May 2017,
this was decided. Additionally, the Department considers any FDI applications for the
pharmaceutical sector whose investors and ultimate beneficiaries are from nations bordering
India. The Department of Pharmaceuticals has approved 17 FDI bids totaling Rs. 1,512 crore for
projects utilising outdated pharmaceutical facilities in 2020–2021.

Impact Of Covid and Future Trends

The domestic pharmaceutical business has enormous potential going forward, driven by
favourable demographics, rising disposable incomes, increased access to healthcare facilities,
rising awareness of healthcare, and rising medical insurance coverage. Alkem Laboratories
believes that inflationary pressures and changing regulatory norms will be the main issues to
watch out for when the pandemic eases, and that the Indian pharmaceutical business will recover
to 8–11% growth rate with normalcy in activities. Alkem indicated that it intended to introduce
biosimilars to the US market through its subsidiary Enzene Biosciences. In order to increase its
market share in the US pharmaceutical industry, its knowledge base, and the range of its product
line, it will also proactively look for options for in-licensing, collaborations, and partnerships.

People were less involved in their healthcare as a result of the COVID-19-related quarantines
and closures, which delayed elective medical treatments around the world. In particular, this
caused delays in the diagnosis and treatment of asymptomatic disorders. The Indian
pharmaceutical market has a chance to dominate the acute segment thanks to its market-
dominating megabrands, extensive supply chain, and distribution network. Risks associated with
rising material and packaging costs, rising freight costs, and changing government rules
pertaining to the business will be the main things to keep an eye out for.

Future important growth drivers for the sector include the introduction of new medications and
sub therapies. With their regular product launches, biosimilars should keep filling portfolio gaps
and contributing to its expansion. In order to strengthen its capabilities and product portfolio and
expand its market share in the global pharmaceutical industry, it would also proactively consider
in-licensing options, collaborations, and partnerships. (Institute, 2022)

The need to bridge the gap between specialised grade drug manufacture and keeping it affordable
persists as the pharmaceutical industry develops. India has the ability to produce highly skilled
workers, knowledgeable scientists, and medical engineers that could guide the business toward
its anticipated aim in the upcoming years in order to meet demands and wants.

Source: (IBEF, 2022)

Major Players in Pharmaceutical Industry

Sun Pharma
Sun Pharma is a global leader in generic pharmaceuticals and a market leader in India. It serves
customers and patients in over 100 countries by providing high-quality, low-cost medicines. Sun
Pharma's global presence is supported by more than 40 manufacturing facilities spread across
five continents, as well as R&D centres worldwide.
Major Products
 i. Speciality Medications: Dermatology, ophthalmology, and cancer are the major segments
addressed by Sun Pharma in specialty pharmaceuticals.
ii. Over-the-counter medications - Notable OTC products include Faringosept (sore throat),
Revital (vitamins), and Volini (topical analgesics).
iii. Generic Medications - These medications are differentiated by technology and come in a
variety of dosage forms, including tablets, capsules, injectables, inhalers, ointments,
creams, and liquids. Psychiatry, anti-infectives, neurology, cardiology, orthopaedic,
diabetology, gastroenterology, ophthalmology, nephrology, urology, dermatology,
gynaecology, respiratory, oncology, dental, and nutritionals are among the therapeutic
categories addressed by their portfolio of approximately 2000 compounds.
iv. Pharmaceutical active compounds
v. The company provides a comprehensive range of WHO-prequalified ARV medications.

Production Facilities

Major production facilities are located in Gujarat, Daman & Diu, Maharashtra and Madhya
Pradesh.
Cipla

Cipla is India's third largest pharmaceutical company and a market leader in respiratory and
urology medicines. It is also ranked second in the chronic business overall. It remains the third
largest participant in the South African private sector, with a 7.5% market share that has grown
4.3% faster than the market. It is India's second largest exporter to emerging countries.

Products

Cipla has a diversified product portfolio of 1,500+ products in 50+ dosage forms and 65
therapeutic categories. In FY22, it launched 93 products across the globe. Some of the top
products include Oflox Ofloxacin,AZICIP, Abacavir,etc.

API Business

Cipla has created more than 200 generic drugs and sophisticated APIs, which are distributed to
62 nations globally. It is still the partner of choice for many significant generic pharmaceutical
companies. By switching to domestic suppliers for intermediates and key starting materials
(KSM), the API business has also made measures to reduce the risk in the supply chain for
Cipla's focus APIs. In regulated markets, it has a sizable pipeline of more than 75 APIs that are
in various phases of development.

Geographical Split Q1 FY23

India - 46%, North America - 22%

South Africa, Sub-Saharan Africa and Cipla Global Access (SAGA) - 15%

International Markets - 13%

Active Pharmaceutical Ingredients (API) - 3%

Others - 1%

Manufacturing Facilities

The Cipla's product pipeline is supported by 47 cutting-edge production facilities located across
six nations. Cipla operates five cutting-edge research and development centres in New York,
India's Maharashtra, and the United States's Karnataka. As of the end of March 2022, Cipla had
169 ANDAs and NDAs that were authorised, 19 that were conditionally approved, and 69 that
were still awaiting clearance for the US markets. The company filed 13 applications and got 38
patents issued to it in FY22.

Dr. Reddy’s laboratories

Dr. Reddy's Laboratories Ltd is a renowned pharmaceutical firm established in India that
provides a variety of goods and services, including Active Pharmaceutical Ingredients (APIs),
Custom Pharmaceutical Services (CPS), generics, biosimilars, and differentiated formulations.

Key Products

1. Global Generics Segment (~83% of revenues in FY22)

Dr. Reddy's Lab. By utilising its integrated processes, the company delivers over 400 high-
quality generic medications at competitive prices. The company's experience in active
ingredients, product development abilities, deep awareness of legislation and intellectual
property rights, and simplified supply chain are assets.

Top revenue contributors of the segment are nervous system drugs (14%), gastrointestinal (13%)
& anti-infective (10%)

In FY22, Dr. Reddy's Lab. filed 7 new ANDA’s with US FDA

3. Pharmaceutical Services & Active Ingredients (PSAI) (14% of revenues in FY22)

The firm is one of the world's major API makers. It collaborates with numerous major generic
formulator businesses to get their compounds to market first. Its API development also assists its
own generics business in being cost competitive and bringing products to market faster than
competitors. During fiscal year 22 (FY22), Dr. Reddy's Lab. 139 DMFs were filed globally, with
10 in the United States.

Cardiovascular (25%), anti-infective (18%), and pain management (14%), are the top revenue
drivers in the PSAI sector.

4. Other Products & Services (2% of sales)

This category focuses on developing differentiated formulations with considerably improved

effectiveness, simplicity of use, and resolution of unmet patient requirements.

Covid-19 medications

During FY21, the firm collaborated with many businesses and organisations to manufacture
several Covid-19 therapy medications such as Remdesivir, Avigan, Molnupiravir, Baricitinib,
and other important pharmaceuticals used to treat Covid-19. During fiscal year 22 (FY22), the
company released the Sputnik-V vaccination for COVID-19 in India.

Increased emphasis on niche products

The company is putting more emphasis on low-competition specialty goods, injectables, and
biosimilars, which are projected to enhance sales and profitability in the medium term.

Revenue

In fiscal year 22, the United States accounted for 37% of total revenue, followed by India (22%),
Russia (9%), and others (32%).

Manufacturing Facilities

The corporation now has 23 production plants across the world. It has nine API production
facilities and fourteen formulation manufacturing units.

It has international production sites in Mexico, the United Kingdom, the United States, and
China. The corporation conducts research and development through nine R&D sites located in
India, the United Kingdom, the Netherlands, and Malaysia.

AstraZeneca

AstraZeneca Pharma India Ltd is a company that manufactures, distributes, and markets
pharmaceutical goods. AstraZeneca plc is the company's promoter. It is a global pharmaceutical
and biotechnology firm based in the United Kingdom and Sweden. Its illness portfolio includes
cancer, cardiology, infectious, neurology, respiratory, gastrointestinal, and inflammation. It is
also one of the firms that has been successful in developing and producing COVID-19 vaccine
for global distribution under the brand name Oxford-AstraZeneca COVID-19 vaccine.

Products

Brilinta, forxiga, crestor, tagrisso, calquence, zoladex, and other pharmaceutical drugs are
available in India under the company's numerous names.

Areas of Treatment

Oncology, respiratory, inflammation and autoimmune, cardiovascular, renal, and metabolic

illnesses are the company's primary therapeutic areas. It is India's fastest growing and third
largest oncology brand.
Diabetes drugs accounted for 22% of sales in FY22, followed by cancer (46%), cardiovascular
(28%), and respiratory (3%).

Revenue

In FY22, traded goods accounted for ~56% of revenues, followed by finished/ manufactured
goods (38%) and sale of services (clinical trials) to related parties (~6%).

Geographical Revenue Breakup

In FY22, domestic sales accounted for ~94% of revenues and exports accounted for the rest 6%
revenues.

Manufacturing Facility: The company's only manufacturing facility in India is located in

Yelahanka, Bengaluru.

Financial Overview

Company Market Cap. Sales latest quarter EBIT NP

Sun Pharma.Inds. 213180.59 4932.88 3491.54 1050.09

Cipla 85912.72 5375.19 3624.40 2542.87

Dr Reddy's Labs 70917.09 5232.90 4084.80 2991.10

Macroeconomic Profile

Government regulation and policy changes related to the industry, and the impact of
economic reforms

1. India’s principal drug promotion law is being proposed for modification by the health
ministry.
On February 03, 2020 : The principal law controlling ads in India, the Drugs and Magic
Remedies (Objectionable Advertisement) Act, 1954 ("DMRA"), was proposed for revision by
the Ministry of Health and Family Welfare ("Health Ministry").

The Amendment Includes

(i) Changes the definition of "advertisements" to expressly include those produced for
use on websites, the internet, and digital media
(ii) Outlines a clause that allows the Ayurvedic, Siddha, and Unani Technical Advisory
Board—an organisation that advises on the different Indian medical systems—to be
consulted about the promotion of Ayurvedic, Siddha, and Unani pharmaceuticals.
(iii) Imposes harsher punishments for DMRA violations. The Proposed Amendment
further broadens the range of illnesses, disorders, or ailments that a medicine cannot
purport to treat, ameliorate, diagnose, or prevent.

Although significant, the proposed change to the term of "advertisement" is only clarifying in
nature and does not change the current legal situation. This is due to the fact that the current
definition of "advertisement" already includes promotional operations conducted via websites,
social networking sites, and electronic media.

2. The health ministry releases a notification to hold drug marketers accountable for the quality
of their products and legal compliance.

On February 11, 2020: The Health Ministry published a notification revising the D&C Rules so
that companies that market drugs are in charge of the product's quality and of adhering to all
applicable regulations ("Marketer Amendment"). On March 1, 2021, the Amendment went into
effect.

A "marketer" is anybody who adopts a medicine made by another manufacturer for sale and
distribution by attaching or labelling their name to the drug, according to the Marketer
Amendment. The Marketer Amendment further mandates that, as a prerequisite of such action,
producers and marketers enter into a contract for marketing the medicine. The name of the
marketer must be shown on the medicine label once such an agreement is in place. Both the
producer and the marketer will be held accountable in the event of a drug flaw or any regulatory
non-compliance related to the drug.

The firm marketing the drug is not currently held accountable under the D&C Rules for any
flaws in the drug or for any compliance gaps relating to the drug. As a result, a large number of
pharmaceutical firms have contracted with outside parties to manufacture their products, leaving
the pharmaceutical firm to focus solely on marketing the drug while the contract manufacturer is
solely accountable for the product's quality and other regulatory compliances.

3. In light of the COVID-19 epidemic, the health ministry approves medication doorstep
delivery.

In light of the COVID-19 epidemic, the Health Ministry has issued a notification under the
D&C Act allowing retail pharmacists to transport medications directly to patients' homes
("Doorstep Delivery Notification").

Notably, the Doorstep Delivery Notification was issued in accordance with Section 26B of the
D&C Act, which allows the Central Government to control the production, sale, and distribution
of drugs when doing so is in the public interest, such as in cases of epidemics or other natural
disasters.

In general, the Doorstep Delivery Notification allows retail pharmacies who have already
attained a retail sale license under the D&C Rules to deliver medications against prescriptions
received via email right to the customer's doorstep. Before prescriptions to be accepted via email,
the licensee's email address (in this case, the retail pharmacy) must be registered with the drug
controller. The Doorstep Delivery Notification does not apply to certain categories of antibiotics
or psychoactive drugs, which are included under Schedule H1 and X, respectively, of the D&C
Rules. Additionally, the Doorstep Delivery Notification specifies that prescriptions for chronic
conditions can only be filled if they are presented to the retail pharmacy within 30 days of the
date of prescription and within 7 days in the case of acute conditions. This is done to prevent
patients from filling the same prescription more than once.

Digital prescriptions were not recognized under the D&C Rules prior to the Doorstep Delivery
Notification, and it was unclear whether such a prescription would be regarded as valid. The
D&C Rules also made it challenging to implement home delivery models because a registered
pharmacist must dispense medications directly to the patient or caregiver. The duration of the
Doorstep Delivery Notification and the acceptance of comparable home delivery models
following the COVID-19 epidemic are still unknown.

4. Due to the COVID-19 epidemic, the drug regulator has relaxed several regulations.

The following public notices were released by the Central Drugs Standard Control Organisation
("CDSCO"), India's top drug regulator, reducing D&C Act compliance standards.

Import Relaxation

Medical device importers must apply to the CDSCO for an import license before bringing
medical devices into India in accordance with the Medical Device Rules, 2017 ("MDR"), a set of
regulations created under the D&C Act to control the clinical investigation, manufacture, import,
and sale of medical devices. The applicant must notarize and apostille specific papers as part of
the import license application.

In accordance with the Import Relaxation, applicants have the option of submitting these papers
after self-attestation with an agreement to produce the notarized/apostilled copies of the
documents after four months or as soon as the situation has "normalised," whichever comes first.
If the application as a whole is in order, the CDSCO may issue an import licence on a
provisional basis based on the self-attested documentation.

The Import Relaxation was given a further four months' extension to the end of 2020 in a second
public notice that was released on August 31, 2020.

GMP Relaxation

For the aim of registering Indian pharmaceutical products abroad so that Indian enterprises may
export their medicines, the CDSCO gives a Certificate of Pharmaceutical Product ("CoPP") in
accordance with the WHO-GMP certification process. The approved CoPP certifications are
good for three years. To ensure the continuance of crucial operations in the pharmaceutical
business, the GMP Relaxation extends this term by six extra months from the date of expiry for
CoPPs expiring between March 2020 and August 2020.
RC Notification

In response to complaints from pharmaceutical firms whose registration certificates were about
to expire, the RC Notification was published. The RC Notification seeks to mitigate any negative
effects that the COVID-19 pandemic may have on the medicine supply.

Holders of registration certificates must apply for a new registration certificate before the current
one expires in order to take advantage of the exemption provided by the RC Notification. Once
the application has been submitted, the current registration certificate will remain in effect until
either the application for the issuance of a new registration certificate is approved or until six
months after July 27, 2020.

The CDSCO issues a registration certificate to the medicine's overseas producer in order to
import the drug for sale or distribution, and an associated import licence to the importer situated
in India. To import pharmaceuticals into India, you must have both an import licence and a
current registration certificate.

Drug Import Notification

In response to claims made by pharmaceutical firms whose import permits were set to expire, the
Drug Import Notification was established. In light of the COVID-19 pandemic, the Drug Import
Notification strives to prevent negative effects on the supply of medications.

Import licence holders must apply for a new import licence prior to the expiration of the current
one in order to take advantage of the exemption provided by the Drug Import Notification. Once
the application has been submitted, the current import licence will remain in effect until either a
decision is reached about the request for the issuance of a new import licence or until it expires
six months from November 26, 2020.

The relaxations offer a much-needed tool to ensure that corporate operations continue during
these challenging times.

Draft regulations to change the clinical trial legislation allowing the import and manufacture of
unapproved pharmaceuticals for compassionate use are published by the health ministry.
For the treatment of "patients suffering from illness needing therapy for unmet medical need,"
including those who "suffer from disease that need therapy for unmet medical necessity," the
Health Ministry has prepared a set of draught regulations to update the CT Rules.

If the unapproved drug is conducting Phase-III clinical trials in India or any other nation, the
hospital or medical institution may import or have produced the unapproved drug after receiving
approval to do so from the CDSCO. The hospital or medical facility importing the medication, or
the manufacturer hired by the hospital or medical facility, would need to adhere to many rules,
such as not selling the medication on the open market and keeping documents of
import/manufacture.

Currently, the D&C Act allows hospitals and other medical facilities to import pharmaceuticals
that have received international approval in modest amounts for patient usage. Importing
medications that have not received approval in another nation is not permitted. The Draft CT
Amendment would close this gap and allow patients with life-threatening illnesses to get
experimental treatment if it were made known and put into effect.

Impact of Union Budget

While acknowledging the rapid advancement of the health infrastructure over the past couple of
years, the Union Budget 2022 placed a greater emphasis on enhancing the provision of mental
health care through the implementation of a "National Tele Mental Health Programme." The
International Institute of Information Technology-Bangalore (IIITB), which serves as the nodal
centre, and a network of 23 tele-mental health centres of excellence are included in this.

"Genomics and Pharmaceuticals" was listed as one of the dawn prospects in the Budget Speech
that was eligible for supporting policies, tax regulations, facilitative efforts to enhance domestic
capacity, and encouragement of R&D. The funds would be administered by commercial fund
managers, with a maximum government contribution of 20%. The funds will be promoted by the
government for blended financing. The launch of an open platform for the National Digital
Health Ecosystem, which includes digital registers of healthcare providers and facilities, unique
health identifiers, permission frameworks, and open access to healthcare facilities, is crucial for
the healthcare industry. It will accelerate the sector's ongoing digitalization and expand the
influence of health-tech companies.

GST (Goods and Services Tax) makes the taxation process easier as it replaces a number of The
Goods and Services Tax (GST), which replaced 8 different taxes and charges on this industry,
streamlined the taxation procedure.By combining all taxes into one uniform tax, the business
environment in the nation will improve. This will also decrease the cascading consequences of
having many taxes imposed on the same thing. The GST also improves operational effectiveness
by streamlining the supply chain, which might enhance the pharmaceutical industry's revenue by
2%.

The legislation also makes it possible for tax credits to flow smoothly, improving overall
compliance and creating a level playing field for pharmaceutical firms operating in the nation.
The reduction in overall transaction costs would be the firms' principal gain from the abolition of
CST (Central Sales Tax).

The reduction in technology-related gross expenditures is another advantage of the GST. The
cost of the technology and equipment that the healthcare sector brings into the country was fairly
high until recently. Additionally, a tax credit for the imposed duty was not allowed under the
previous tax legislation. GST, however, could alter this scenario. as it will recognise the tax
levied on the import of such machinery and equipment as a credit.

Life-saving drugs were excluded from excise and customs duties before the GST was
implemented. The GST changed the fact that some States taxed prescription drugs by 5%. One of
the primary problems the healthcare sector is dealing with is the inverted tariff structure, which
harms indigenous producers.

In other words, the cost of duty on raw materials is higher than the cost of duty on finished
goods, which deters businesses from making investments. To address this problem, the GST
system has an inverted duty structure statute in existence that also ratifies a return of the accrued
credit. It is expected to have the biggest impact on the healthcare industry and act as a catalyst
for growth.
When it comes to medical tourism, India unquestionably enjoys a competitive advantage over
the countries of the First World. The cost of a health care package in India, which includes hotel
and transportation, is between 30 and 40% less than the cost of an equal medical procedure or
treatment in a First World country, according to many studies.

India is one of the nations with the largest healthcare workforces, producing at least 50,000
doctors and nurses each year. In 2017, the nation's medical tourism industry experienced a boom,
boosting revenue for the healthcare industry. The amount of money the country earned from
medical travel climbed from $334 million in 2004 to $2 billion in 2021.

Impacts of TRIPS Agreement on Indian Pharmaceutical Industry

The TRIPS Agreement has presented a number of unexpected challenges for the Indian
pharmaceutical industry. The institutional conditions that had aided the industry's expansion
were altered by TRIPS (Trade-Related Aspects of Intellectual Property Rights), an amendment to
the Patent Act of 1970 by the WTO (World Trade Organization) to include product patents. It
was thought that the shift would hurt India and hinder the growth of its pharmaceutical industry
because India would no longer be able to manufacture or export drugs whose product patents
were still in place through reverse engineering or other methods. The Indian pharmaceutical
industry is looking for a new business plan in light of the TRIPS Agreement and forthcoming
modifications to the Patent Act, 1970. Even if they are increasing their R&D spending,
pharmaceutical companies have been engaging in the pharma GVC through global strategic
partnerships with multinational pharmaceutical organisations.

New and emerging technologies, innovations, disruptions

The start of the pandemic has drastically changed the situation, especially in light of the
pharmaceutical industry's slow embrace of technological advancement. The outbreak has
prompted the pharmaceutical industry to review its practises and boost their efficacy.

The industry is increasingly embracing cutting-edge technologies like artificial intelligence,

augmented reality, virtual reality, big data, and cloud computing to develop custom solutions,
accelerate R&D, and improve customer experiences in response to the difficulties and
disruptions caused by the COVID19 pandemic. As technology advances, it is anticipated that the
firm will continue to see substantial development and growth in order to meet the rising global
demand for healthcare services.

Below is a list of the technologies that are transforming the pharmaceutical sector.

Artificial Intelligent computer systems (AI)

According to a Grand View Research report, the global artificial intelligence for pharmaceutical
business is expected to reach $31.3 billion by 2025. AI is assisting the pharmaceutical industry in
accelerating the process of developing and producing medications. More companies are using AI
to automate and streamline the production process and develop effective business plans. The
analysis of consumer profiles and the evaluation of the efficacy of various treatments are
currently being done by pharmaceutical companies utilising AI and machine learning (ML).
Because of this, manufacturers may create treatments and remedies by understanding how they
function for specific individuals.

Data Analytics and Big Data:

The cost of R&D is one of the key barriers to the development of novel therapies or medications.
As a result, there is frequently insufficient medicine production and delivery.

However, by using big data and analytics, researchers may accelerate the development of new
therapies by reducing the cycle time. Big Data may also be used by pharmaceutical firms to
anticipate a drug's side effects, cutting down on the time needed for research trials.

Bioprinting:

Bioprinting is a technique that uses techniques similar to 3D printing to create replicas of human
organs and tissues. In experiments, these can replace the role of live subjects. The best thing
about this technology is that it can produce tissues and microscopic organs that react to new
medications in a manner similar to how the human body does.

Blockchain:
Blockchain technology can ensure data visibility by providing all parties with an accurate, real-
time perspective of the same throughout the whole supply chain. Blockchain can help remove
barriers between players in the pharmaceutical industry, ensuring the durability of the supply
chain and industrial processes.

References

Websites

● India's pharma exports grow by 103% since 2013-14. Press Information Bureau.
https://pib.gov.in/PressReleasePage.aspx?PRID=1821747
● India, P. T. of. (2022, July 11). Indian pharma industry may rebound to 8-11% growth
rate, says Alkem. Business Standard News.
https://www.business-standard.com/article/companies/indian-pharma-industry-may-
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Research Papers

● Annual Financial Reports: Sunpharma, Cipla, Dr. Reddy, AstraZeneca

● Atsuko Kamiike (2019)”The TRIPS Agreement and the Pharmaceutical Industry in
India” volume 32, issue 1