Cementing the gap
While trade associations act as a catalyst in boosting the growth of the Indian pharma industry, they are also trying hard to bridge the gap between the industry and the Government. Arshiya Khan analyses the role of these associations… (Extracted from Express Pharma, 1-15 August 2008)
The Indian pharmaceutical industry has been the hallmark of resilience, coping admirably with evolving global dynamics. It has been able to capitalised on opportunities like the outsourcing boom. But if the Indian pharma industry is to evolve higher up the value chain, and make the full transition from supplier to strategic partner to innovator, this highly fragmented industry will need to grow up fast. With over 23,000 manufacturers competing for the same pharma pie, in-fighting and unfair practices abound. There is a constant tug-of-war between indigenous companies and Indian subsidiaries of foreign companies. Another pain point is Government policy. With the nation’s disease burden and socio-economic status, the Government is duty bound to control or monitor prices of essential commodities like medicines, especially life saving ones.
Addressing these contentious issues requires skill, diplomacy and perseverance. And these are the characteristics of trade bodies and associations that have come to represent and in some cases, define the face of the Indian pharma industry. Ever imagined what would have been the scenario of the industry in the absence of trade bodies such as Indian Drug Manufacturers Association (IDMA), Organisation of Pharmaceutical Producers of India (OPPI), (Confederation of Indian Industry (CII), Federation of Indian Chambers of Commerce and Industry (FICCI), Bulk Drug Manufacturers Association (BDMA), Confederation of Indian Pharmaceutical Industries (CIPI), Indian Pharmaceutical Alliance(IPA), Pharmaceutical Export Promotion Council (Pharmexcil), All India Organization of Chemists and Druggists (AIOCD) and many other regional associations? Each company would have approached the government with their own issues and concerns and created havoc. Big established companies would have got their queries answered, but for small scale manufacturers it would have become a problem. Just as every small apartment/building needs to have a co-operative society to address their grievances both among themselves and with the larger populace, these trade bodies offer an official platform for discussion and problem solving. Individual companies within the industry cannot fill such vacuum as there will always remain the doubt of self interest. Underscoring the role of such trade bodies, in their absence the industry will have to take the issues and problems on an individual platform and an individualistic approach may not be fruitful, feels Sasikant Misra, Deputy Director, CII. In the absence of these associations the stakeholders of the industry would be denied of this voice to get and give a holistic view of the macro-economic issues at stake. Also the policy makers, in that situation, would find it difficult to create an environment for their global competitiveness.
Making their presence felt
Daara Patel, Secretary General, IDMA
The adage, ‘united we stand, divided we fall’ best exemplifies the raison d’etre of these trade bodies. This also applies in the case of Indian pharma industry. This is because trade bodies can achieve what no one company with all its might can all by itself. They serve as a united front to represent the problems faced by the industry. “Especially when the player on the other side is as worthy as the Government of India itself, it requires expertise and unity to put a point across, avers, T S Jaishankar, Chairman, CIPI and Managing Director, Quest Life Sciences. Therefore there is a pooling of talent, resources and skills, as these associations can call for expert opinions within the members. Wherever necessary they take external legal opinion and finally prepare the necessary documents. The association then calls on Government officials and wherever required meets the Ministers concerned. This modus operandi is common to most associations, with minor modifications.
Generally the Government gives a receptive hearing to the cause of the association and is always aware of the effort put by the association in putting together the facts and figures. But it can also be the other way round. The recent example is of the pricing policy wherein the industry has a divided opinion. Being a highly sensitive issue, CEOs of companies are tightlipped about the same as they fear being targeted by the lawmakers. But someone has to raise the alarm. So trade associations become the self-appointed crusaders, who dare to take the plunge, because it’s not a one man army that can be boxed into the corner, it’s the power of the many members who make up the association.
Why do we need them?
T S Jaishankar, Chairman, CIPI and
Managing Director , Quest Life Sciences
An industry association acts as the united voice of the industry. Because of the highly fragmented nature of the industry, it becomes difficult for them to come together on small issues, and this is precisely what the association does: serve as a channel between the industry and the government. At times they lobby hard on the various industry issues with policy makers. “While they counsel and guide the members of the organisation, they also make sure that there is no monopoly”, remarks Daara Patel, Secretary General, IDMA.
Various trade bodies have their own agendas reflecting the needs of their representative constituencies. Explaining this Misra points out that OPPI predominantly represents ‘research-focussed’ MNCs and IDMA takes up the cause of domestic companies. But it is the onus of bodies like CII and FICCI, especially since they are considered quasi-government, not to differentiate along these lines. “CII being a larger association we don’t differentiate between an MNC and a domestic company,” he states.
The occasions where trade bodies interact with each other and make a common representation to government are more or less the same. The simple example Misra cites is of the annual budget. CII coordinates with all trade bodies like IDMA, OPPI, BDMA, CIPI etc. and elicits their views, further shortlists the key points and presents it to the government in an appropriate manner. CII has a broader agenda and hence such a presentation is heard in a different light. Other recent occasions where associations came under one roof include discussions on the implementation of pharma policy, formulation of the Central Drug Authority, Drug Price Control Order, disparity in excise concessions in Himachal Pradesh, Uttaranchal and North Eastern States etc., reduction of excise duty from 16 percent to eight percent, clarification of fixed dose combination (FDC), export-import (EXIM) policy matters and those related to AIOCD etc. These are common and hence a holistic approach works here.
But when it comes to pricing and key regulatory like Intellectual Property Rights (IPR) issues the industry is tight lipped due to the nature of the subject. This is one example where the industry seems to be divided over opinion and lacks uniformity of views. Similarly, uniformity may not be there in issues like ‘patents’ because of its controversial nature. In such cases association representatives try and see that individual associations take it to the government separately, as there is a conflict of ideas because MNCs may offer a different view compared to domestic companies.
In such cases industry bodies have to work in a way that they maintain a balance of interest between the industry and the Government, and the Government does not divide and rule, avers Patel. He cites an example. There have been times where OPPI and IDMA offer different views, but we have tackled that. Jaishankar cites another example. The availability of spurious drugs in the market has been largely attributed to the small scale industry (SSI) sector and has direct impact on CIPI, as it is a body exclusive for SSI pharma industries. CIPI has been fighting hard to convince the Government that spurious drug manufacturers are not licensed manufacturers and probably manufacture under cover in obscure places and can only be controlled at the retail level. “Our association has brought this to the attention of media and the government periodically,” points out Jaishankar.
Another case in point is that of OPPI. Since the business model of predominantly research-based and generic pharma companies are different, there are some areas, where OPPI has key concerns like Section 3d of the Patents Act, protection of data submitted for regulatory approval, pre-grant opposition, compulsory licensing, and proper enforcement measures of the Indian Patents Act 2005.
Considering these conflicting points of view, it is not always possible to have uniformity in the thoughts and ideas of pharma companies of all trade bodies put together. The fact is that several trade bodies exist because they represent different priorities and issues of various factions of the industry. It is not unusual to have some difference of opinion with the government on some issues. And they can be resolved only through continuous robust data based dialogue with the government. “In the absence of solid data, such discussion may turn out to be the Government’s perception versus the industry’s perception with no resolution of conflict,” remarks Tapan Ray, Director General, OPPI.
Time to prioritise
There is a misconception that being a whistleblower, trade bodies sometimes also look for their own benefits and growth. People tend to misconceive a trade association as a strong body trying to lobby its way through a policy decision. But this is restricted to some extent. Agrees Jaishankar, “There is no disagreement over the fact that diplomacy is one of finer traits of what an industry organisation should have. But it is not true that all they have is a bunch of arm twisting strategies.” He reasons that the majority of our bureaucrats and ministers are well trained and knowledgeable on functioning in a democratic fashion. In his opinion, there are very knowledgeable people in the Ministry and he does not think they will allow arm twisting.
Going by the nature of these bodies, each one of them has their own priorities. While Government is tilted towards public welfare, industry would consider personal growth as a priority. And the responsibility of binding them with a common thread rests with the trade bodies. In spite of the fact that trade bodies are formed to represent the industry, they are in a delicate position wherein they can neither oversee the public good nor the industry interests. The association by far does take charge of such areas individually and tries to present a picture to the government in such a way, that, the authority is compelled to take a decision which is conducive to the growth and prosperity of the industry while satisfying the actual needs of the masses. Industry associations try to inspire change within their members by putting certain standards in place. Organisations like CIPI have come up with various means of self regulation like in the case of implementation of current Good Manufacturing Practices (cGMP) and Good Clinical Practices (GCP). GMP which started off as a standard went on to become a mandate as a part of Schedule M. The organisation is also looking at various other codes like good distribution practices, highlights Jaishankar.
Filling the gaps
To prevent the widening of the gap between policy makers (Government) and the policy affected (ie. the industry), it is becoming more and more imperative for companies to unite and be heard by the Government. And this is where trade bodies play a crucial role. Trade bodies represent the members’ interest at the highest levels of government and provide them with immediate updates on government policies. They also advise them as to how this may impact member’s businesses. They take care of the interest of the members and also ensure that people’s interest is not jeopardised. The trade bodies provide a balanced view between the members and the industry, as well as the Government and the people. “For example IDMA was not against patents. We have put patients’ interest before patents. At the same time we do not want the innovators to not have patents. But in a crisis situation where the patients need medicines immediately, it should be made available to them at an affordable cost,” avers Patel.
Acts of Nature also unite the industry and rising above all corporate differences, trade bodies shoulder the responsibility of channeling donations. In case of natural calamities, these organisations provide free medicines and work closely with the Government, NGOs, and social organisations. For example, CIPI’s members contributed over Rs 50 lakh worth of medicines during the 2004 tsunami from all over India. These trade bodies can also serve as information dissemination nodes. CII hosts seminars, on ‘Leadership’ and ‘Learning’ events and conferences. This brings the industry on par with the global players, who are also a faculty at these seminars. This is yielding results says Misra, companies have approached us for investing in the Indian pharma and biotech sector, and we have provide them with the desired information. Besides, this platform also offers trading opportunities for the players, he adds. Overseas companies venturing into an unfamiliar country would tend to trust an association rather that a single company, at least in the initial stages. CII is also looking at the pharma SME sector which they feel is a neglected area.
Trade bodies thus are a mirror of the sector they represent. Their role will only become more pivotal as competition mounts and the Indian pharma industry sets out to satisfy its global appetite.