TEXT OF SPEECH

By
Lalit K. Jain,
Vice-Chairman, SME Pharma Industries Confederation (SPIC) at
INDIA PHARMA SUMMIT
Held at
Mumbai, India
On Nov 30, 2009
India Pharma – Status and Opportunities for Production, Investment & Trade

Respected Secretary of Department of Pharmaceuticals, Ladies and Gentlemen:

SME Pharma industries confederations is a apex body of small and medium scale
formulators and bulk drug manufacturers of medicines. We have over 2,346 active
members besides 3,000 associate members, which when coupled with other small scale
SME associations add to a total of over 7,000 members out of total 10,563 licensed
manufacturers in India. We account for 87% production by volume and 40% share by
value in the market.

The founder of our nation Sh. Mahatma Gandhi not only give us freedom of speech,
democracy but also give us freedom from economic dependence from foreign goods of
the British. In a short Span of 62 years Indian Pharmaceutical Industry has grown many
fold and produce medicines of highest quality and affordability not for India alone but for
the whole human mankind whether in developed countries all in developing countries.
We are in a way self sufficient in our requirements of medicines.

Prices of medicines in India are one of the lowest priced and still this is because we have
one of the lowest per capitals income in the world.

Not only a large number of people cannot afford medicines but often have to pay
comparatively significant amounts of their wages or money taken on loan or purchase
medicines that they can ill afford. Also the majorities of medicines used are not
accessible through public health outlets and so have to be out of pocket expense.

In markets where perfect competition works, the most bought is the cheapest brand.
Competition brings down prices. Sellers and buyers are equally well-informed about the
product before making a purchase. However, in pharmaceutical trade the purchase
decision is not of the consumer.

Therefore, the most popular brand of a drug is also often the highest priced. (In terms of
cars, this would mean a majority buys Mercedes and not Suzuki 800.)

The purchase decision here rests entirely with the doctor which the SME sector funds
difficult to tap.

Pharma is the only sector in India (and probably in the world) where government tender
procurement prices are 1-3% of the retail market prices! This if anything indicates the
level of overpricing by MNC & large firms. An example: for the Tamil Nadu
Government, a drug company bids to supply Albendazole 400 mg tablets, a medicine for
worms, at a mere 1 cent per tablet, while brands of this drug sell for 40 cents in the
market.

Today the choice of reliability, quality and affordability of medicines are the need of
human mankind all over the world. Often it is thought that medicines at lower prices can
not be of highest quality and it is often said that how is it possible that India with in a
span of 62 years against pharmaceuticals companies in the west which have been in
existence for more than 200 years, could give the human mankind quality medicines at a
fraction of the prices. The apprehensions are raised in media reports prompted by
multinational and large firms as their competitiveness is threatened by reasonable pricing
of SME units in India.

I will now take up the quality issue:

1) No manufacturing unit in India is licensed to manufacture drugs and medicines

without being GMP complied.

2) The Indian GMP standards are more stringent than some of the so called
standards laid down by the developed countries in infrastructure requirement,
validatiory procedures and Good Laboratory Practices etc.

3) Large scale media reports had tried to project India as a destination of nearly
40% spurious medicines in the world. These reports are base less and without
any evidence and proof. The Indian drug regulatory authority picks up around
40,000 to 50,000 samples of medicines every year and only 0.03% of the
samples have found to be of doubtful quality SEARO, WHO report also put the
figures of doubtful medicines at 0.29%. Due to media onslaught the Indian drug
 control authorities picked in 2009 up over 24,000 samples of medicines as per
independent scientific plan of the Indian Stastical institute, Hyderabad and only
11 samples were found to be of doubtful quality which is 0.004%. In every
country there are dandestine manufacturers of fake products like watches,
electronic goods etc., however in India, if there are a few such persons the total
percentage of doubtful medicines is till 0.004%.

4) USA based companies in India are meeting 89% of their requirements from
SME sectors. The top US based companies in India like Pfizer, Wyeth,
Sehering Plough, Novartis, Sanofi Aventis are getting manufactured their
medicines from the SME sectors in India and are likely to increase their share
of procurement from SME sector Pharma companies further for export to USA
and Europe to counter the medicines exported by Indian large companies to
their home countries?

5) All medicines, whether branded, branded generics or pharmacopoeial generics

are manufactured as per strict standards laid down in pharmacopeias of USA,
EU, India or Japan. The myth that branded medicines offer one a superior
medicine is floated to support unethical high promotional and administrative
expenses, when all medicines are manufactured as per pharmacopeias, it is
wrong to say branded generics or pharmacopoeial generics are inferior in any
way. I would openly throw a challenge to prove that pharmacopoeial standard
medicines have proved to be fatal to the patient or inferior to branded medicine.

6) Indian SME Pharma sector has dedicated centre known as SMPIC centre at
NIPER, Mohali and have access to sophisticated analytical instruments like 400
MHz FT – NMR (Bruker), MALDI TOF-TOF (Ultra Flex, Bruker), Linear Ion
trap LC-MS/MS (Thermo LTQ-XL), Ion trap LC – MS/MS (Finnigan Mat)
GC-MS with Auto Sampler (Shimadzu), GC MS/MS with Auto Sampler
(Thermo), GC with Head Space (Shimadzu), Powder XRD (Bruker), Capillary
Electrophoresis (Beckman), FT-IR with ATR (Nicolet), FT-IR with
microscope, ATR, Hot plate, SMS system (Perkin Elmer), UV-VIS
Spectrophotometer etc. The 333 PhD Thesis, 17,848 bound scientific journals
SciFinder (STN) facilities and services of 109 PhD students and 275 MS
students are also available to SME sector in India in their quest to improve in
house specifications over and above the pharmacopoeial specifications along
with research for new molecules.

Now I would like to enlighten this August gathering has to how the quality medicines are
affordable:
 1) India has over 300 recognized colleges and 250 unrecognized colleges which
churns out nearly 30,000 to 40,000 B. Pharma students every year besides 3,000
M. Pharm / MS students, chemical engineers, biologist, Biotechnologist and
thousands of MBA students for the pharmaceuticals industry in India. These
professionals are available at 10% of the cost of a similar professional in USA.
The part of these professionals every year even migrate to the pharmaceutical
industry of USA and the majority of the same talented professionals prefer to
stay in the country.

2) Around 354 based API medicines in India have been identified to be essential
medicines, which meet over 90% of the medicine requirement of a patient.
India capability to produce this medicines is exhorting and we have still spare
capacity to meet further requirements at reasonable prices, much cheaper then it
would cost in USA, EU and the developing countries.

3) The SME Pharma sector in India has a talented pool of pharmacist,

entrepreneurs who practice spot management rather than remote control
management as in the multinationals and large Pharma firms and therefore keep
their costs down benefit of which is transferred to the patient.

4) We have a well established excipients industry, Empty Gelatin capsule units,

packaging industry which even caters to units abroad.

We in the SME Pharma sector in India feel that providing quality medicines at affordable
prices is our social commitment to our people rather than using the suffering of human
mankind to fill the offers on way of high promotional and administrative expenses in by
resorting to the Maximum Retail Prices of medicines by illusionary and unethical
practices. We offer to the world quality and affordable medicines with made in India
label at fractional cost at which it is available in their country.

Non tariff barriers like free trade agreements, regulatory measures and campaigns like
counterfeit and falsified medicines are being advocated to crush the competitiveness of
Indian Pharma industry.

Opportunities

1) Opportunities exist for investment in these small and medium scale enterprises.
Due to their scale of operation smaller investments can result in faster success
rates.
 2) Opportunities exist for companies abroad to procure and source their
requirements from the SME sector which shall not only result in bringing down
their cost but also ample availability and lower patient to expenditure in their
country while ensuring quality.

3) Joint venture

4) Upcoming markets can source their technology requirements from the SME
sector in India.

Challenges

At the same time the sector poses to be a challenge because the industry requires
tremendous capacity building in terms of awareness building, guidance, project
preparation, implementation, technological intervention and monitoring.

I request the August audience from the government to accord SME Sector in
pharmaceutical industry a thrust status.