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Management Practices: The small firms are known for their disinclination to invest in upgrading the managerial skills. This has especially affected areas like financial management and budgeting. Often, working capital is used for investing in capital equipment. Or, although cent per cent depreciation is available, ETP facility is rarely used. Similar is the problem with inventory management. The disinterest of small firms arises from both a general lack of knowledge about modern concepts and practices of management and also due to lack of resources. But in the emerging situation where MNCs and large domestic companies would make a significant presence, even at the local level, the small firms need to put emphasis on strengthening management. Further, the customer profile is also changing fast. The buyer now demands timely delivery, proper communication, etc, and the movement of business depends crucially on meeting these.
Research & Development: The R&D investment in the country never exceeded 2 per cent of the sales. The industry estimates that this share has to be increased to 5 per cent . This means that the annual R & D outlay should be Rs. 15000 million as against the current outlay of Rs. 3200 million. There should also be an increasing presence of research while development has to be further built on. The government has recently taken some important positive steps in the direction of promoting pharmaceutical R & D. These include a decision to exempt R & D expenditure from tax for ten years and a proposal to create a R & D fund of about Rs.1500 million. The Government has set up a Drug Development Promotion Foundation.
PHARMA INDUSTRY: STRATEGIC OPTIONS
Trained Personnel: To meet the requirements of man power, the current education policy needs to contribute more in the new environment. The pharmacy institutions, especially the government funded ones desire more administrative co-operation and long term planning for such results, especially for those related to industry- academia cooperation.
Develop analogue molecules: As compared to basic research, analogue research is focused around a particular compound hence relatively less costly and less risky. Indian pharma industry can capitalize on the reverse engineering expertise to develop new processes. These can then be sold/licensed out to the original drug manufacturer, who will need process patents to discourage generic manufacture, once the drug comes off- patent. Example of success is partial PPAR (Peroxisome Proliferation Activated Receptors) gamma agonist Glitazones now called Balaglitazone developed by DRL. They licensed the molecule to Novo Nordisk of Denmark.
Any drug with a sales potential of less than $300 million a year would be uneconomical for the multinationals to commercialize, Indian pharma industry can take advantage of this fact & develop those molecules. Examples include treatments for diseases (such as tuberculosis) prevalent in low-price markets.
One of the concerns for analogue research is lack of qualified research personnel, as new research areas will require new skills. Pharma Industry in India should act as magnets for talent from large pharmaceutical companies. Some of the companies should try to solve this problem by setting up research bases in USA as lack of a research environment makes it difficult for the company's to hire researchers in India.
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