India’s government has been told that it must do more to protect the nation’s drugmakers from the threat of takeover by multinational firms.

Since India introduced its new intellectual property regime on January 1, 2005, its drugmakers have become more vulnerable to such threats, according to the final report of a task force set up by the Ministry of Industry and Commerce to propose ways to increase the nation’s drug exports.

India’s pharmaceutical industry is currently “fragmented, with small balance sheet sizes,” and takeovers by global drugmakers would “adversely affect the health interests of the nation” says the task force. There is, therefore, “a case to promote internal consolidation and develop stronger companies that have width and depth in market access, manufacturing and R&D.”

India is already “undisputedly an acknowledged leader in the global pharmaceutical industry – other than drug discovery,” says the report, but “several untapped business segments and markets exist, and the room to enhance the country’s pharmaceutical exports is vast.” For example, if the domestic industry were to seize even a conservative 15% share of the $123 billion-worth of sales of drugs set to lose patent protection by 2013, this would translate to an $18.4 billion opportunity for the sector, it says. Moreover, India and China could together potentially account for 35%-40% of the world market for outsourcing of active pharmaceutical ingredients (APIs), finished dosage formulations and intermediates, and the clinical trials sector could be worth $300 million to India by next year. Already, a “brand India” is developing around these segments, and this needs to be strengthened, it says.

Moreover, third world countries are increasingly looking to India as an alternative source of affordable medicines to solve their growing healthcare costs and, with its significant advantages of low costs of innovation, capital requirements and running costs, plus its well-established manufacturing processes and R&D infrastructure, the nation is strategically well-position to emerge as the “health keeper” of the world, the report adds.

But India also needs a very strong pharmaceutical industry if it is to provide affordable medicines for its over one billion people. A lack of strong drug discovery capabilities would put the country “at the mercy” of foreign multinationals for the future supply of innovative drug drugs, the task force warns, and it emphasises that the coming decade will be crucial for developing “a viable strategy to maintain the current dominance in chemistry, develop biology and to create drugs that could help the nation.”

India’s pharmaceutical industry has already travelled a significant distance, and its achievements now need to be protected and developed in order for it to develop as “an alternate power in the global health sector,” the task force concludes.

- Indian pharmaceutical exports grew at a compound annual rate of 17.8% during the five years to 2008, and the domestic market is expected to increase by an annual average of 9.9% to 2010, decreasing slightly to 9.5% until 2015.