Growth in India’s pharmaceutical market has slowed to 9.8% this year after increasing 16.6% in 2012, according to a new report.

This slowdown can be attributed to India’s new drug pricing policy and a number of “regulatory interventions” over the last year, says the study, which is published by the Confederation of Indian Industry (CII) and PricewaterhouseCoopers (PwC).

The industry is also experiencing other challenges, such as delays in clinical trial approvals, uncertainties over India’s Foreign Direct Investment (FDI) policy, a uniform code for sales and marketing practices and compulsory licensing, says the report, which also notes that the number of new products launched annually on the market declined from around 1,900 in 2010 to 1,700 in 2012.

Treatments for chronic conditions now account for 30% of sales, from 27% in 2010, outperforming the market for the last four years and, with annual growth averaging 14%, growing faster than therapies for acute conditions such as respiratory, pain and gynaecological disorders and anti-infectives, which have been rising around 9.6% annually. “This essentially translated to an overall slowdown in 2013,” the study notes.

India is perceived as an attractive destination for clinical trials, but has been marred by “genuine concerns,” it goes on, and calls on the clinical trials sector to “work closely with the government to create a regulatory mechanism that allows scientifically sound and ethically correct trials to be conducted, so that the benefits of clinical trials can be brought to patients in India.”

It also points out that Indian drugmakers are facing stricter regulations on manufacturing and quality practices in the domestic as well as the international markets. It cautions that, as they drive their major share of exports from the US, they must improve compliance with US Food and Drug Administration (FDA) regulations.

And implementation of India’s 2012 National Pharmaceutical Pricing Policy has reduced retailers’ margins from 20% to 10%, while stockists’ margins have declined from 16% to 8%. This latter decrease has led to “significant uncertainty among many stockists regarding the feasibility of staying in business, due to lower profitability post the margin reduction,” say CII and PwC.

The authors also report that all leading Indian drugmakers are now investing hugely in R&D, and they propose a convergence of the four key SMAC technologies – social networking, mobile computing, cloud computing and analytics – in order to drive innovation.