Course Code : PCS 3105
Pharmaceutical
Policy 2002
Intended Learning Outcomes
At the end of this lecture, the student will be able to:
1. Indicate the reasons for the implementation of
Pharmaceutical Policy 2202
2. Recall the objectives of Pharmaceutical Policy 2002
3. Discuss the salient features of this policy
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Pharmaceutical Policy-2002
• The basic objectives of Government’s Policy relating to the drugs
and pharmaceutical sector were enumerated in the Drug Policy of
1986.
• The drug and pharmaceutical industry in the country today faces
new challenges on account of liberalization of the Indian
economy, the globalization of the world economy and on account
of new obligations undertaken by India under the WTO
Agreements.
• These challenges require a change in emphasis in the current
pharmaceutical policy and the need for new initiatives beyond
those enumerated in the Drug Policy 1986, as modified in 1994,
so that policy inputs are directed more towards promoting
accelerated growth of the pharmaceutical industry and towards
making it more internationally competitive.
Pharmaceutical Policy-2002 Contd….
• The need for radically improving the policy framework for
knowledge-based industry has also been acknowledged by the
Government
• The Prime Minister’s Advisory Council on Trade and Industry
has made important recommendations regarding knowledge-
based industry
• The pharmaceutical industry has been identified as one of the
most important knowledge based industries in which India has
a comparative advantage
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Pharmaceutical Policy-2002 Contd….
• The process of liberalization set in motion in 1991, has considerably
reduced the scope of industrial licensing and demolished many
non-tariff barriers to imports.
Important steps already taken in this regard are: –
• Industrial licensing for the manufacture of all drugs and
pharmaceuticals has been abolished except for bulk drugs produced
by the use of recombinant DNA technology, bulk drugs requiring in-
vivo use of nucleic acids, and specific cell/tissue targeted
formulations
• Reservation of 5 drugs for manufacture by the public sector only
was abolished in Feb.1999, thus opening them up for manufacture
by the private sector also
• Foreign investment through automatic route was raised from 51%
to 74% in March, 2000 and the same has been raised to 100%
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Pharmaceutical Policy-2002 Contd….
• Automatic approval for Foreign Technology Agreements is being given
in the case of all bulk drugs, their intermediates and formulations
except those produced by the use of recombinant DNA technology, for
which the procedure prescribed by the Government would be
followed
• Drugs and pharmaceuticals manufacturing units in the public sector
are being allowed to face competition including competition from
imports. Wherever possible, these units are being privatized
• Extending the facility of weighted deductions of 150% of the
expenditure on in-house research and development to cover as
eligible expenditure, the expenditure on filing patents, obtaining
regulatory approvals and clinical trials besides R&D in biotechnology
• Introduction of the Patents (Second Amendment) bill in the
Parliament. It, inter-alia, provides for the extension in the life of a
patent to 20 years
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Pharmaceutical Policy-2002 Contd….
• The impact of the policies enunciated, from time to time, by the
Government has been salutary. It has enabled the pharmaceutical
industry to meet almost entirely the country’s demand for
formulations and substantially for bulk drugs
• In the process the pharmaceutical industry in India has achieved
global recognition as a low cost producer and supplier of quality
bulk drugs and formulations to the world. In 1999-2000, drugs and
pharmaceutical exports were Rs.6631 crores out of a total
production of Rs.19,737 crores
• However, two major issues have surfaced on account of
globalization and implementation of our obligations under TRIPs
which impact on long-term competitiveness of Indian industry
• These have been addressed in the Pharmaceutical Policy-2002
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Pharmaceutical Policy-2002 Contd….
• A reorientation of the objectives of the current policy has also
become necessary on account of these issues:-
a. The essentiality of improving incentives for research and
development in the Indian pharmaceutical industry, to
enable the industry to achieve sustainable growth
particularly in view of anticipated changes in the Patent Law;
b. The need for reducing further the rigours of price control
particularly in view of the ongoing process of liberalization
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Objectives
The main objectives of this policy are:-
a. Ensuring abundant availability at reasonable prices within the
country of good quality essential pharmaceuticals of mass
consumption
b. Strengthening the indigenous capability for cost effective quality
production and exports of pharmaceuticals by reducing barriers to
trade in the pharmaceutical sector
c. Strengthening the system of quality control over drug and
pharmaceutical production and distribution to make quality an
essential attribute of the Indian pharmaceutical industry and
promoting rational use of pharmaceuticals
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Objectives Contd….
d. Encouraging R&D in the pharmaceutical sector in a manner
compatible with the country’s needs and with particular focus on
diseases endemic or relevant to India by creating an
environment conducive to channelizing a higher level of
investment into R&D in pharmaceuticals in India
e. Creating an incentive framework for the pharmaceutical
industry which promotes new investment into pharmaceutical
industry and encourages the introduction of new technologies
and new drugs
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• In order to strengthen the pharmaceutical industry’s research and
development capabilities and to identify the support required by
Indian pharmaceutical companies to undertake domestic R&D, a
Committee was set up in 1999 by this Department by the name of
Pharmaceutical Research and Development Committee (PRDC)
under the Chairmanship of Director General of CSIR
• To qualify as R&D intensive company in India, the PRDC has
suggested following conditions (gold standards) :-
1. Invest at least 5% of its turnover per annum in R&D
2. Invest at least Rs.10 Crore per annum in innovative research
including new drug development, new delivery systems etc. in
India
3. Employ at least 100 research scientists in R&D in India
4. Has been granted at least 10 patents for research done in India
5. Own and operate manufacturing facilities in India
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• The Pharmaceutical Research & Development Committee has
recommended in its report, submitted inter-alia, the setting up of
a Drug Development Promotion Foundation (DDPF) and a
Pharmaceutical Research & Development Support Fund (PRDSF).
Necessary action in this regard has been initiated
• As far as the question of price control is concerned, the span of
control has been gradually reduced since 1979. Presently, under
DPCO, 1995 there are 74 bulk drugs and their formulations under
price control covering approximately 40% of the total market
• The functioning of the Drugs (Price Control) Order, 1995, has
brought to light some problems in the administration of the price
control mechanism for drugs and pharmaceuticals.
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• Drug Development
Promotion Foundation
(DDPF) and
• a Pharmaceutical Research
& Development Support
Fund (PRDSF).
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• In order to review the current drug price control mechanism,
with the objective, inter-alia, of reducing the rigours of price
control, where they have become counter-productive, a
Drugs Price Control
committee, called the
Review Committee (DPCRC),
under the Chairmanship of Secretary, Department of Chemicals
& Petrochemicals was set up in 1999, which has given its report
• The recommendations of DPCRC have been examined and taken
into account while formulating the “Pharmaceutical Policy –
2002″
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• It has emerged that the domestic drugs and pharmaceuticals
industry needs reorientation in order to meet the challenges
and harness opportunities arising out of the liberalisation of
the economy and the impending advent of the product patent
regime
• It has been decided that the span of price control over drugs
and pharmaceuticals would be reduced substantially
• However, keeping in view the interest of the weaker sections
of the society, it is proposed that the Government will retain
the power to intervene comprehensively in cases where
prices behave abnormally
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• In view of the steps already taken and in the light of the
approach indicated in the foregoing paragraphs, the decisions
of the Government are detailed below :-
I. Industrial licensing for all bulk drugs cleared by Drug
Controller General (India), all their intermediates and
formulations will be abolished, subject to stipulations laid
down from time to time in the Industrial Policy, except in the
cases of
i. bulk drugs produced by the use of recombinant DNA technology
ii. bulk drugs requiring in-vivo use of nucleic acids as the active
principles and
iii. specific cell/tissue targeted formulations
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II. Foreign investment upto 100% will be permitted, subject to
stipulations laid down from time to time in the Industrial Policy,
through the automatic route in the case of all bulk drugs cleared
by Drug Controller General (India), all their intermediates and
formulations, except those, referred to in para 12.I above, kept
under industrial licensing.
III. Foreign Technology Agreements Automatic approval for
Foreign Technology Agreements will be available in the case of
all bulk drugs cleared by Drug Controller General (India), all their
intermediates and formulations, except those, referred to in para
12.I above, kept under industrial licensing for which a special
procedure prescribed by the Government would be followed
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IV. Imports of drugs and pharmaceuticals will be as per EXIM policy
in force. A centralized system of registration will be introduced under
the Drugs and Cosmetics Act and Rules made thereunder. Ministry of
Health and Family Welfare will enforce strict regulatory processes for
import of bulk drugs and formulations
V. Encouragement To Research And Development (R&D)
(a) In principle approval to the establishment of the Pharmaceutical
Research and Development Support Fund (PRDSF) under the
administrative control of the Department of Science and
Technology, which will also constitute a Drug Development
Promotion Board (DDPB) on the lines of the Technology
Development Board to administer the utilization of the PRDSF.
(b) (b) With a view to encouraging generation of intellectual
property and facilitating indigenous endeavours in pharma R&D,
appropriate fiscal incentives would be provided
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VI. Quality aspects The Ministry of Health & Family Welfare would
(i) progressively benchmark the regulatory standards against the
international standards for manufacturing,
(ii) (ii) progressively harmonize standards for clinical testing with
international practices
(iii) (iii) streamline the procedures and steps for quick evaluation and
clearance of new drug applications, developed in India through
indigenous R&D, and (iv) set up a world class Central Drug Standard
Control Organisation (CDSCO) by modernizing, restructuring and
reforming the existing system and establish an effective net work of
drugs standards enforcement administrations in the States with the
CDSCO as a nodal center, to ensure high standards of quality, safety and
efficacy of drugs and pharmaceuticals.
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VII. Pharma Education And Training
• The National Institute of Pharmaceutical Education and
Research (NIPER) has been set up by the Government of India
as an institute of “national importance” to achieve excellence
in pharmaceutical sciences and technologies, education and
training
• Through this institute, Government’s endeavor will be to
upgrade the standards of pharmacy education and R&D
• Besides tackling problems of human resources development
for academia and the indigenous pharmaceutical industry, the
institute will make efforts to maximize collaborative research
with the industry and other technical institutes in the area of
drug discovery and pharma technology development
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Summary
• Policy relating to the drugs and pharmaceutical sector were
enumerated in the Drug Policy of 1986
• The policy norms are directed more towards promoting accelerated
growth of the pharmaceutical industry and towards making it more
internationally competitive
• The process of liberalization set in motion in 1991, has considerably
reduced the scope of industrial licensing and demolished many non-
tariff barriers to imports
• The pharmaceutical industry has been identified as one of the most
important knowledge based industries in which India has a
comparative advantage