For Quality, Essential, Generic Medicines
   
CHAPTER  4
Drug Marketing

Drug Situation in India

India has one of the best developed pharmaceutical industries among the developing countries with over 20,000 units producing between 60,000 to one lakh formulations. The drug industry in 1999-2000 had a turnover of more than Rs 15,000 crores in formulations and more than Rs 2,500 crores of bulk drugs. (1).

                                 Production and Export of Formulations and Bulk Drugs


Year
Production
Exports
  Formulations Bulk Drugs Bulk Drugs Formulations Bulk Drugs Total
  Rs. %age Rs. %age Rs. Rs. Rs.
  Million growth Million growth Million Million Million
1990-91 38400 12.3 7300 14.1 4134 3714 7848
1991-92 48000 25.0 9000 24.0 7226 5087 12311
1992-93 60000 25.0 11500 27.8 8566 5537 14103
1993-94 69000 15.0 13200 14.8 10296 7718 18014
1994-95 79350 15.0 15180 15.0 12607 9240 21847
1995-96 91250 15.0 18220 20.0 10980 12390 23370
1996-97 104940 15.0 21860 19.9      

Source : Annual Report (1996-97) of the Government of India, Ministry of Chemicals and Fertilisers, New Delhi.


Yet such large scale production has not had any significant improvement in the availability of drugs to meet the country's needs. One of the major reasons for this situation is that, as we have noted before, most of the formulations produced are unnecessary, being therapeutically ineffective, irrational and even dangerous.

It has been estimated that barely 20 per cent of the medicines available today are necessary to treat over 80 per cent of the prevailing diseases. But the government's lop-sided planning priorities have created an anomalous situation where essential and life-saving drugs useful for diseases like malaria, tuberculosis (TB), leprosy are in short supply while unessential products like tonics and anti-diarrhoeals flood the market. (2-6)

In 1975, the Hathi Committee which was appointed by the Government of India to analyse the Indian drug industry, recommended a restricted list of essential drugs and that measures be implemented to ensure their production, that a gradual shift be made from brand names to generic names, that price control measures be effected with the aim of making life-saving drugs and essential drugs affordable, that public sector play a leading role in drug production and certain drugs be reserved to encourage the growth of Indian drug companies. The Committee also recommended elimination of irrational drugs. The Committee decried the role played by MNCs and recommended immediate dilution of foreign equity in drug companies up to 40% and progressively to 26%. It had, in fact recommended the nationalisation of foreign drug companies. (See for more details: Hathi Committee, Report of the Committee on the Drugs and Pharmaceutical Industry, Ministry of Petroleum and Chemicals, Government of India, New Delhi, April 1975).

The 1978 drug policy and the 1979 Drug Price Control Order (DPCO) had incorporated some of the Hathi Committee recommendations. It aimed at making essential drugs affordable to the vast majority of people. The drug industry protested against the 1978 drug policy contending that drug production was unprofitable. Concerted efforts by health groups in 1985-86 to get the Government to formulate a rational drug policy incorporating the Hathi Committee recommendations failed dismally. The subsequent drug policies of 1986 and 1995 show a definite tilt in favour of the drug industry.

The following table proves baseless the drug industry's claims that the drug price controls made drug production unprofitable.


Sales & Profits of Top Drug Companies (in rupees crores)

Company
Year end
Sales
Net Profit
Dividend
EPS
(year/month)
(Rs. Cr)
(Rs.Cr.)
(%)
(Rs)
Ranbaxy
97/03
1065.70
149.60
80.00
30.30
Glaxo
96/12
699.95
42.07
40.00
7.00
Hoechst Mar.
97/03
386.90
20.26
40.00
8.80
Alembic
96/12
293.85
4.74
25.00
82.20
Cipla
97/03
451.89
70.56
35.00
35.30
Torrent Phar
97/03
326.70
33.20
60.00
15.80
A.Sarabhai
97/03
294.32
6.36
-
1.00
Pfizer
97/03
262.90
18.53
40.00
15.81
Lupin Labs
96/06
528.23
36.29
50.00
15.00
Dr Reddy's
97/03
249.94
33.53
30.00
12.96
Sun Pharma
97/03
169.49
49.07
35.00
33.16


Source: Express Pharma Pulse, March 12, 1998

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