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PHARMACEUTICAL AND LIFE SCIENCES
OUR INDUSTRY EXPERTISE
The Indian Pharmaceutical industry is expected to grow up to USD 100 billion by the end of 2025The Indian biotechnology industry was valued at USD 64 billion in 2019 and is expected to reach USD 150 billion by 2025.India also has the largest number of manufacturing sites approved by the United States Food and Drug Administration (US FDA) outside of the United States.
The industry is typically involved in four types of businesses, namely - marketing of generic medicines, marketing of branded generic medicines, marketing of innovator medicines and manufacture and supply of active pharmaceutical ingredients, which are used as ingredients in medicines as well as finished formulations. The focus on development of new drugs began with introduction of new Patent regime in 2005 which permitted patenting of pharmaceutical products. However, compulsory licensing remains a concern.
The Pharmaceutical and Life Science Practice is an area of practice in which Nishith Desai Associates (“NDA” or the “Firm”) has built a significant expertise. At NDA we endeavor to combine our rich international experience and expertise in domestic laws/regulations with our research capabilities to devise innovative structures and provide strategic advice on undertaking business activities to pharmaceutical companies. While the industry is witnessing healthy foreign direct investment, amalgamations and collaborations (such as licensing, co- development, joint distribution and joint ventures) the domestic manufacturers are also looking to tap into international generic market with high margins. The Industry is witnessing a paradigm change as the focus is shifting from the manufacturing of generic drugs to drug discovery and development and with the launch of the New Drugs and Clinical Trial Rules, 2019, the clinical trial sector is also growing steadily with many choosing India as one of the trial sites when conducting global clinical trials.
SCOPE OF SERVICES
Strategic advice on Industry Law issues: The Firm advises on legal, strategic and compliance issues related to the laws governing the pharmaceutical and life sciences industry. The Firm provides practical solutions on the basis of the extensive domain knowledge of the industry including licenses, drug pricing, import and export and complex legal problems which arise in the industry.
Documentation: The Firm undertakes drafting and review of clinical trial agreements, marketing and product promotional material, merger and acquisition scheme related documents for pharmaceutical companies, consultation agreements, etc. to minimize the risks posed by non-compliance with applicable laws.
Regulatory advice: The Firm provides advice with respect to licenses and permits and various regulatory issues which may arise due to business models and transactions undertaken by the pharmaceutical companies which may have implications under the applicable laws.
Litigation: The Firm has a robust dispute resolution practice with members having skill and expertise to represent clients in different forums ranging from the NCLAT, CCI, High Courts to the Supreme Court of India.
REGULATORY AND LEGAL FRAMEWORK APPLICABLE TO THE INDUSTRY
Drugs and Cosmetics Act, 1945 and Rules
- Regulates manufacturing, import, distribution and sale of drugs (including medical devices) and cosmetics
- Prescribes product and labelling standards
- Regulates advertisements of drugs
Pharmacy Act, 1948
- Regulates pharmacy education, profession and practice of pharmacy in India
- Provides that an offense in a professional capacity by a registered pharmacist may lead to penal action under the Act to the extent of permanent deregistration
- Impersonation as a registered pharmacist is also punishable under the Act
The Drugs & Magic Remedies (Objectionable Advertisements) Act, 1954
- Regulates advertisements of drugs relating to diagnosis / cure / mitigation / treatment / prevention of certain prescribed diseases and conditions
- Diseases and conditions include AIDS, Asthma, Cancer etc.
Indian Patent Act, 1970
- Provides for product and process patent for 20 years
- Specific provision for compulsory licensing and prevention of ever- greening
Trade Marks Act, 1999
- Provide exclusive right to use registered trademark in connection with the specific goods and services in the territory of India
- Act extends protection to only registered trademarks. For infringement of an unregistered trademark, an action for passing- off will lie.
Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations 2002 (MCI Code)
- Regulates professional conduct of registered medical practitioners in India
- Prescribes that, inter alia, registered medical practitioners should must receive any gift from pharmaceutical or allied healthcare industry or their sales representative and that the practitioner must not endorse any drug or product publicly
- Makes recommendations to institutions (such as hospitals) regarding non-ethical nature of solicitation of patients
- Violation of MCI Code may amount to professional misconduct resulting in penal action to the extent of permanent disqualification to practice, over and above any other civil or criminal action which may lie under relevant law
Drugs Price Control Order, 1995 (DPCO)
- Regulates prices of notified drugs and formulations
- Regulates margins offered to dealers and retailers
- Imposes obligation to sell bulk drugs and formulations to dealer (conditionally) and consumer (unconditionally)
Uniform Code for Pharmaceutical Marketing Practices (UCPMP)
- Regulates marketing practices of pharmaceutical industry
- Imposes requirement of prior permission from Drugs Controller General of India for promotion
- Requires promotion to be accurate, fair, objective, verifiable and not be misleading
- Lays down standards for competitive product comparison
- Mandates that promotion should not involve exchange of gifts in any form
- Voluntary code with a condition that non-compliance may result in conversion to statutory code.
Information Technology Act, 2000 (IT Act) and Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011 (Data Protection Rules)
- Imposes a liability on such body corporate or person who deals with sensitive personal data or information for negligence in implementation and maintenance of reasonable security and procedures for securitization of such data, if such negligence causes wrongful gain or loss to any person
- Penalizes disclosure of personal information to a third person, if it is done without consent of the person to whom such information belongs or in breach of a lawful contract, and with the intention or knowledge that the disclosure may cause wrongful gain or wrongful loss
- Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011 define sensitive personal data or information to include medical records and history and such personal information relating to physical, physiological and mental health condition
- Impose several obligations on body corporate dealing with personal information and sensitive personal data or information
- Violation of Data Privacy Rules may lead to a penalty under IT Act
Food and Safety Standards Act, 2006 (“FSS Act”)
- The FSS Act regulates food, food businesses and food business operators in India.
- The FSS Act and the rules framed thereunder are administered and enforced by the Food Safety and Standards Authority of India (“FSSAI”) at the central level and designated departments (typically the State Food and Drugs Administration/State FDA) at the state level.
- The FSS Act also regulates sub-set of foods for special dietary uses or functional foods or nutraceuticals or health supplements as special foods and provides for various labelling requirements and legal compliances.
The Indian Pharmaceutical Industry has shown great potential and continues to grow consistently. While 2020 and 2021 brought with it numerous hurdles for the pharma industry such as rising prices, reduced demand for prescription medicine, unavailability of essential medicines, break in the supply chain, etc. It also provided new opportunities for growth to the Indian manufacturing sector. The pandemic has also highlighted the importance of self-reliance across the supply chain as foreign trade of goods was severely impacted by the pandemic. Following the 2020 pharmaceutical trends, developed countries show steady growth in spending on medicine in 2021 which is influenced primarily by innovative technologies and new products entering the market.
India now appears to be a go to for foreign companies looking to outsource their manufacturing. The Indian generic drug sector is robust and is establishing its presence in foreign markets as well. The new- drug sector is also expected to record a healthy growth owing to a significant industry-wise increase in R&D expenditure and proposed new drug launches. The companies who achieve success in the Indian pharmaceutical market are certainly those which are able to navigate issues that arise under India’s legal, regulatory and tax framework, effectively.
- Leading Indian Companies: Cipla, Ranbaxy Labs (subsidiary of Japanese pharmaceutical company Daiichi Sankyo), Dr. Reddy's Labs, Sun Pharma, Glenmark Lupin, Aurobindo Pharma, Piramal Healthcare, Cadila Healthcare, Zydus Cadilla, Wockhardt Pharma.
- Leading MNC Companies in India: GSK, Sanofi Aventis, Pfizer, Johnson & Johnson, Abbott, Takeda, Roche, Mylan Pharma
- Important industry associations: Organization of Pharmaceutical Producers of India (OPPI), Pharmaceutical & Allied Manufactures' & Distributors' Association Limited (PAMDAL), Pharmaceuticals Export Promotion Council of India (Pharmexcil), Indian Pharmaceutical Alliance (IPA), Indian Drug Manufacturers' Association (IDMA), Bulk Drug Manufacturers Association (BDMA), All India Organization of Chemists and Druggists (AIOCD)
 Indian Brand Equity Foundation, available at https://www.ibef.org/industry/pharmaceutical-india.aspx (Last accessed on January 18, 2022)
 Indian Brand Equity Foundation, available at https://www.ibef.org/industry/pharmaceutical-india.aspx (last accessed January 18, 2022)
Report by United States Food and Drug Administration on the State of Pharmaceutical Quality, available at HTTPS://WWW.FDA.GOV/MEDIA/125001/download (Last accessed on January 18, 2022)
 Available at: https://www.avenga.com/magazine/pharmaceutical-industry-trends/ (Last accessed on January 19, 2022)