Legal Environment

Indian Pharmaceutical Industry

Overview: Legal Environment, India

Laws are generally formulated to

solve one or more of the following
purposes:

§To protect companies from

unfair competition
§To protect consumers from
unfair business practices
§To protect the interests of society
from unregulated business
Structure:
Structure Indian Legal
System
Pharmaceutical Industry:Legal Aspects
Evolution over the years

§Early years: Indian market share was dominated by the presence of

foreign companies.
§99% of all drug related patents were by foreign companies.

§The Turning Point, 1970: The introduction of Government control in the

industry via the Indian Patent Act (IPA) of 1970.
§Scrapped product patents altogether.
§Resulted in massive growth of local pharmaceutical companies.

§1995 – WTO and the TRIPS Agreement: Introduced global minimum

standards for protecting and enforcing nearly all forms of intellectual
property rights (IPR), including those for patents.
§Reintroduced product patents & extended protection periods to 20
years.
§End of reverse-engineering , the core competence of the industry.
§Increase in prices of Life Saving Drugs.
Major Laws & Regulations
 Indian Laws influencing Marketing Practices

◦ The Drugs and Magic Remedies (Objectionable Advertisements) Act 1954

◦ The Indecent Representation of Women (Prohibition) Act, 1986
◦ Consumer Protection Act, 1986

 Drug Laws Prevailing in India

◦ The Drugs and Cosmetics Act 1940

◦ The Pharmacy Act 1948
◦ The Drugs and Magic Remedies (Objectionable Advertisements) Act 1954
◦ The Narcotic Drugs and Psychotropic Substances Act, 1985
Marketing Processes & Challenges

 In the pharmaceutical and healthcare industries, a complex web of

decision-making determines the nature of the transaction for
which the direct customer of pharmaceutical industry (i.e. doctor)
is responsible.

 Use of medical representatives for marketing products to

physicians and to exert some influence over others in the
hierarchy of decision makers has been a time-tested tradition.

 Aggressive marketing i.e. showering medical practitioners with

expensive gifts, in return for them prescribing their drugs to
patients.

 Unethical practices are rampant due to the absence of any

government agency to deal with this problem.
Trends-Current and Future

 After the implementation of the WTO-Trips Agreement, the

Indian Pharmaceutical Industry has made a move to
increase their R&D effort to remain competitive in the post-
TRIPS environment.
 Indian pharmaceutical companies are also moving in new
markets aggressively, e.g. Africa & South America by the
means of mergers, acquisitions & associations.
 Realizing that they stand at a disadvantage w.r.t
International Pharma giants in the new patent regime,
Indian companies have actively started to form alliances
with international pharmaceutical companies to minimize
the effect of new patent regime on their drug portfolios.
Future Perspectives

Source: Global Insight, VCI: Forecast: DB

Research
Firm Focus – Cipla
 Cipla have realized huge opportunity in Generic drug
market as Governments are under pressure to curtail
escalating healthcare expenses.
 Major target market is rural India, given the low prices of
drugs such as for AIDS that are available at half the price of
their international versions.
 Strong promotion drives in Rural India can ensure huge
profits for Cipla.
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