NishithDesai-印度制藥工業(yè)-監(jiān)管、法律和稅務(wù)概述（英）

MUMBAISILICONVALLEYBENGALURUSINGAPORENEWDELHINEWYORKGIFTCITY

Research

TheIndian

PharmaceuticalIndustry

Regulatory,LegalandTaxOverview

August2024

?NishithDesaiAssociates2024

Research

TheIndian

PharmaceuticalIndustry

Regulatory,LegalandTaxOverview

August2024

DMSCode:30670.1

?NishithDesaiAssociates2024

Rankedasthe‘MostInnovativeIndianLawFirm’intheprestigiousFTInnovativeLawyersAsiaPacificAwardsformultipleyears.Alsorankedamongstthe‘MostInnovativeAsiaPacificLawFirm’intheseeliteFinancialTimesInnovationrankings.

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?NishithDesaiAssociates2024

TheIndianPharmaceuticalIndustry—Regulatory,LegalandTaxOverview

Disclaimer

ThisreportisacopyrightofNishithDesaiAssociates.Noreadershouldactonthebasisofanystatementcontainedhereinwithoutseekingprofessionaladvice.Theauthorsandthefirmexpresslydisclaimallandanyliabilitytoanypersonwhohasreadthisreport,orotherwise,inrespectofanything,andofconsequencesofanythingdone,oromittedtobedonebyanysuchpersoninrelianceuponthecontentsofthisreport.

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Acknowledgements

TanyaKukade

tanya.kukade@

VarshaRajesh

varsha.rajesh@

EshikaPhadke

Eshika.phadke@

Dr.MilindAntani

Milind.antani@

?NishithDesaiAssociates2024Provideduponrequestonly

Contents

3

ExecutiveSummary1

Introduction

5

IndiaEntryStrategies

A.InvestmentClimateinIndia5

B.GovernmentProductionLinkedIncentives6

C.India’sPost-TripsIntellectualPropertyEnvironment6

D.FormofTheIndianEntity6

E.CorporateGovernanceinIndia9

F.Anti-CorruptionFramework10

11

LegalandRegulatoryRegimeinIndia

A.OutlineofLegalandRegulatoryFramework11

B.RegulatoryFramework11

C.ProposedLawonRegulationofPharmaceuticalProducts14

D.ManufacturingaDruginIndia14

E.ImportingaDrugintoIndia15

F.Manufacture/ImportofNewDrugs16

G.ClinicalTrials16

H.ProductStandards18

I.OTCandPrescriptionDrugs18

J

.Pharmacy19

K.E-Pharmacy19

L.Labeling20

M.ShelfLife20

N.GoodManufacturingPractices(GMP)21

O.PricingofDrugsandDrugPriceControlOrder,201322

P.AdvertisementandSalesPromotion23

?NishithDesaiAssociates2024Provideduponrequestonly

29

TheAnti-TrustRegulatoryFramework27

IntellectualPropertyLandscape

A.PatentProtection29

B.Trademarks32

36

TaxRegime

A.DirectTaxes36

B.IndirectTaxes48

50

KeyIssuesandChallengesinIndianPharmaIndustry

A.Promotionandadvertisement50

B.PriceControl50

C.Labelling50

D.EnvironmentalDiligence51

E.GMPRelatedNon-CompliancesandSafetyConcerns51

F.FixedDosecombinations51

G.OverlapwithotherIndustriessuchasBio-PharmaandMed-Tech52

53

Conclusion

54

AnnexureA

ListofDrugLicensesUnderDCA54

58

AnnexureB

TargetedTimelinesforApprovalofLicenseApplications58

?NishithDesaiAssociates2024Provideduponrequestonly

ExecutiveSummary

TheIndianPharmaceuticalindustryhasgainedmomentuminthepastyearandhaswitnessedanincreasedfocusonencouragingresearchanddevelopmentandinnovation.Pharmaceuticalcompaniesarefocussingtheirresourcesonbiotechstartupsandpushingforinnovationtoaimforcontinuedgrowthinthesector.1

TheindustryisexpectedtogrowuptoUSD130billioninvaluebytheendof2030.2Thedomesticpharmaceuticalmarketgrewby6.8%in2023.3InFY2023–24,India’sdrugandpharmaceuticalexportsshowedanotableincreaseof9.67%reachingUSD27.9billion.4IndiaalsohasthelargestnumberofmanufacturingsitesapprovedbytheUnitedStatesFoodandDrugAdministration(USFDA)outsideoftheUnitedStates5whichisanimportantfactorinboostingtheglobalconfidenceinthedomesticallymanufactureddrugsandpharmaceuticalproducts.

Theindustryistypicallyinvolvedinfourtypesofbusinesses:marketingofgenericmedicines,marketingofbrandedgenericmedicines,marketingofinnovatormedicinesandmanufactureandsupplyofactivepharmaceuticalingredients,whichareusedasingredientsinmedicinesaswellasfinishedformulations.

ThefocusondevelopmentofnewdrugsbeganwiththeintroductionofamendmentstoIndia’spatentregimein2005whichpermittedpatentingofpharmaceuticalproducts.Thus,whilemanydomesticcompaniesareinvestingsubstantialamountsindrugresearchanddevelopment,Indiaisstillnotaninnovator’smarket.

TheIndianPharmaceuticalindustryiswitnessinghealthyforeigndirectinvestment,amalgamationsandcollaborations(suchaslicensing,co-development,jointdistributionandjointventures).Domesticmanufacturersarelookingtotapintotheinternationalgenericmarketwhichprovidehighmargins.

ThenumberofAbbreviatedNewDrugApplications(ANDA)totheUSFDAisalsoincreasingeveryyear.TheIndustryiswitnessingaparadigmshiftasthefocusisshiftingfromthemanufacturingofgenericdrugstodrugdiscoveryanddevelopment(Glenmark,SunPharma,CadillaHealthcareandPiramalLifeSciences,hadappliedforconductingclinicaltrialsfornumerousnewdrugs).WiththepassageoftheNewDrugsandClinicalTrialRules,2019(“CTRules”)theclinicaltrialsectorisalsogrowingsteadilywithmanychoosingIndiaasoneofthefavourabletrialsiteswhenconductingglobalclinicaltrials.Reportedly,India’sclinicaltrialsmarketisexpectedtoreach$3.15billionby2025.6

1TheEvolutionofIndianPharmaceuticalIndustryin2023,UNIMARCK,January29,2024,accessibleat:

/the-growth-of-indian-pharma-industry-in-2023-insights-and-statistics/,

(LastaccessedonApril22,2024).

2Indianpharmain2023:Industryexpertsgivebigthumbsuptothesector;here’swhattheyaresaying,BusinessToday,availableat:

https://www.businesstoday.in/industry/pharma/story/indian-pharma-in-2023-industry-experts-give-big-thumbs-up-to-the-sector-heres-what-

they-are-saying-357290-2022-12-21

,(LastaccessedonFebruary10,2023).

3Pricepush:Domesticpharmamarketgrewby6.8%in2023,showsdata,BusinessStandard,availableat:

/

industry/news/domestic-pharmaceutical-market-grew-by-6-8-in-2023-shows-data-124011100758_1.html

,(LastaccessedonFebruary10,2023).

4India’spharmaexportsreachUS$27.9bninFY24,EconomicDiplomacyDivision,April24,2024,accessibleat:

.in/indias-pharma-exports-reach-us-27-9-bn-in-fy24/#:

~:text=In%20the%20fiscal%20year%202023,3%25%20dip%20in%20total%20exports,(LastaccessedonMay16,2024).

5ReportbyUnitedStatesFoodandDrugAdministrationontheStateofPharmaceuticalQuality,availableat:

https://WWW.FDA.GOV/MEDIA/125001/download

,(LastaccessedonFebruary10,2023).

6FortuneIndia,Indianowprimedestinationforbigpharma’sglobalclinicaltrials,:

/enterprise/india-now-prime-destination-for-big-pharmas-global-clinical-trials/107141

,

(LastaccessedonFebruary10,2023).

?NishithDesaiAssociates2024Provideduponrequestonly1

TheIndianPharmaceuticalIndustry—Regulatory,LegalandTaxOverview

ExecutiveSummary

Thepharmaceuticalindustry,likeallindustriesrelatedtothehealthcaresector,isheavilyregulated.Rightfrommanufactureofdrugstoadvertisementandpromotion,eachstepinthedrugmanufacturingandmarketingprocessisregulated.India’spatentregimealsocontainsspecificprovisionsregulatingpharmaceuticalpatentsandthesectorhasseensomesignificantanti-trustissuesonthesubjectofretailsaleofdrugs.

Thecomingdecadeisexpectedtobringnewhighsforthepharmaceuticalsector.Backedbystrongintellectualpropertyandregulatoryframework,coupledwithproductionlinkedincentivestheIndianpharmaceuticalindustryseemspoisedontheedgeofsuccess.

?NishithDesaiAssociates2024Provideduponrequestonly2

TheIndianPharmaceuticalIndustry—Regulatory,LegalandTaxOverview

Introduction

TheIndianpharmaceuticalindustryhasbeenwitnessingsignificantgrowthoverthepastfewyearsandisexpectedtogrowtoUSD130billioninvaluebytheendof2030.1Generics,overthecounterdrugs,biosimilarsandbiologics,aresomeofthekeysegmentsgainingtractionintheindustry.ThebiosimilarsmarketisestimatedtogrowataCAGRof22%tobecomeUSD12billionby2025.2

ForaglobalpharmaceuticalcompanyseekingtoentertheIndianpharmaceuticalmarkettoday,theopportunitiesareexciting,andthepotentialistremendous.SeveralfactorsattractglobalpharmaceuticalcompaniestoIndia:

Lowcostofproductionduetoavarietyoffactorsincludingrelativelylowerlabourcostsandrawmaterialcosts;

Diversemarketnotonlyforlifesavingdrugsbutalsoforlifestyledrugs;

PotentialforconductingresearchanddevelopmentactivitiesinIndia–Indiahasmorethan300medicalcollegesandover20,000hospitals;

Existingmanufacturingcapabilitytoproduceactivepharmaceuticalingredients(APIs)aswellasintermediatesatlowercostwhilemaintainingqualitystandards;

IndiahasamaximumnumberofUS-FDAapprovedplantsoutsidetheUS;

EaseofconductingclinicaltrialsandbioavailabilityandbioequivalencestudiesduetoIndia’sabilitytoprovidespeedierandlessexpensivetrialswithoutcompromisingqualityandtheavailabilityofavast

patientpool.

Indiahasalsowitnessedakeeninterestonbehalfofglobalpharmaceuticalcompanies,seekingtoeitherestablishoperationsinIndiaforresearchanddevelopment,manufacturingordistributionortoenterintocollaborationsforthesame.India’slow-costresearchanddevelopmentabilitieshelpcompaniesoptimizecostsinashrinkingeconomy.

Co-developmentarrangementsbetweenIndianandmultinationalpharmaceuticalcompanieshavecreatedabusyatmosphereinresearchlaboratoriesinIndia.TheIndianpharmaceuticalmarketiswitnessingariseincollaborationswithglobalcompaniessuchasGlenmarkPharmaceuticals,GlaxoSmithKline(GSK),MerckandEliLilly.In2018,withinaspanofamonth,GlenmarkannouncedanexclusivelicensingagreementwithAustraliancompanySeqirusforanallergydrugandanotherwithChinesebiopharmaceuticalfirmHarbourBiomedforitsoncologymolecule.PiramalLifeScienceLtd(PLS)andEliLillyandCompanyhavesignedalandmarknewdrugdevelopmentcollaboration.Separately,RanbaxyandGSKhavelaunchedaNewDrugDiscoveryResearchteamtoadvanceintopre-clinicalinvestigationinthechronicobstructivepulmonarydisease(COPD)andotheranti-infectivestherapeuticareas.PLSalsoinitiateddrugdiscoveryeffortswithMerck&Co.todiscoveranddevelopnewdrugsinoncology.ZydusLifesciencesenteredintoanewdrug

discoveryanddevelopmentagreementwithEliLillytodeveloppotentialnewdrugstocurecardiovasculardisease.Indiaisalsobecomingahubforlate-phaseresearch.

1BusinessToday,Indianpharmain2023:Industryexpertsgivebigthumbsuptothesector;here’swhattheyaresaying,availableat:

https://www.businesstoday.in/industry/pharma/story/indian-pharma-in-2023-industry-experts-give-big-thumbs-up-to-the-sector-heres-what-

they-are-saying-357290-2022-12-21

,(LastaccessedonFebruary10,2023).

2IBEF,PharmaIndustry,accessibleat:

/industry/pharmaceutical-india

,(LastaccessedonJune10,2024).

?NishithDesaiAssociates2024Provideduponrequestonly3

Introduction

Johnson&Johnson(J&J)announceditsplanstomakeIndiaaglobalhubforlate-phasedevelopmentofitsnewdrugs.Withthisinitiative,allfuturenewdrugsandcompoundsfromJ&Jwillundergofinalpre-productiontestinginIndia.Recently,Torrentannouncedenteringintoanon-exclusivepatentlicensingagreementwithTakedaforsaleofitsdrugVonoprazaninIndia.3Domesticcompaniesaregettingmoreinvolvedinsuchcollaborativearrangements.

Foratrans-nationalentityseekingapresenceinIndia,whetherdirectlyorthroughcontractualarrangement,structuringoftheinvestmentarrangementfromataxandregulatoryperspectiveisverycritical.ThisisespeciallytruebecausetheIndianpharmaceuticalmarkethasbecomethehotbedofM&Aactivity.ThepastyearwitnessedasurgeinM&Adealsgiventhesaturationofpatentingopportunitiesandmostpatentsofpharmaceuticalcompanieslikelytoexpireinthenextfewyears,bigpharmacompaniesarelookingtomaximizetheopportunitiesthroughdealmaking.Thesectorwitnessedover116M&AdealsworthUSD191billioninthepastyear.4SomeofthenoteworthyonesarethemergerofBristol-MyersSquibbandCelgeneCorporationleadingtothecreationofthelargestbiopharmaceuticalcompanyglobally;acquisitionofBioverativbySanofiinthebiopharmaceuticalspacegiventhatthecompanyisfocusedonrareblooddisorders;etc.

Furthere-commerceopportunitiesinthepharmaceuticalsectorareontherisebringingwithinitsambittheonlinesaleofpharmaceuticalproductsandcreatinganattractivestreamforinvestmentsandbusinesses.Doorstepdeliveryofmedicinespavedthewayfore-pharmaciesinthecountrywhichatpresent,runparalleltobrick-and-mortarpharmaciesuntilalegislationinthisregardisintroducedinthecountry.

Onthesurface,Indianlawappearstobeacomplexsetofregulations,notificationsandapprovalrequirements.However,withstepsthatIndiahasalreadytakentohonoritsWorldTradeOrganization(WTO)commitments,combinedwiththeliberalizationandtherelaxationoftheimport-exportpolicy,foreigncompaniesseekingtoenterthisspacewillexperiencethatmostoftherestrictionsthatexistedonissueslikepricingandlicensinghavenowbeenrelaxedtotheextentthatthereisnowalevel-playingfieldforglobalandIndiancompaniesintheIndianmarket.

Inthispaperwehaveoutlinedtheentitystructures,thetaxregime,bothdirectandindirect,affectingthestructuringofIndianoperations,theregulatoryaspectsandtheintellectualpropertyissuesthataffectthepharmaceuticalandlifesciencesindustry.

3TorrentPharmasignsnon-exclusivepatentlicensingpactwithTakedaPharmaforVonoprazan,ET,June5,2024,(LastaccessedonJune10,2024).

4Howlifesciencescanmaketherightdealsinatimeofchange,EY,January8,2024,accessibleat:

/en_gl/insights/life-sciences/mergers-acquisitions-firepower-report

,(LastaccessedonJune10,2024).

?NishithDesaiAssociates2024Provideduponrequestonly4

IndiaEntryStrategies

AbasicunderstandingoftheIndianlegalsystemisapre-requisitetodobusinessinthepharmaceuticalsectorinIndia.InternationalpharmacompaniesorinvestorsseekingtomakeinvestmentsinIndianpharmacompaniesshouldstructuretheiractivitiesonthefollowingthreepillars:

StrategyLawTax

Observingtheeconomicandpolit-icalenvironmentinIndiafromtheperspectiveoftheinvestment

ExchangeControlLaws:Primarily

theForeignExchangeManagementAct,1999andnumerouscirculars,

notificationsandpressnotesissuedundertheact.

DomesticTaxationLaws:TheIncomeTaxAct,1961;GoodsandServices

Taxandcustoms,etc.

Understandingtheabilityofthe

investortocarryoutoperationsinIndia,thelocationofitscustomers,thequalityandlocationofitswork-force

CorporateLaws:Primarilythe

CompaniesAct,2013andthe

regulationslaiddownbythe

SecuritiesandExchangesBoardofIndia(“SEBI”)forlistedcompaniesinIndia

SectorSpecificLaws:Drugs&

CosmeticsAct1940andtheDrugsRules,1945,ThePatentsAct,

1970andotherlegislations,regu-lationsandguidelinesthatimpactthepharmaindustry

InternationalTaxTreaties:TreatieswithfavorablejurisdictionssuchasMauritius,SingaporeandtheNetherlands.

A.InvestmentClimateinIndia

ByandlargeforeigndirectinvestmentsarenowpermittedinalmostallthesectorsinIndiawithoutobtainingpriorregulatoryapprovals(i.e.underthe“automaticroute”)barringsomeexceptionalcaseslikedefense,housingandrealestate,printmedia,etc.(commonlyreferredtoasthe“negativelist”).Iftheinvestmentisnotinaccordancewiththeprescribedguidelinesoriftheactivityfallsunderthenegativelist,priorapprovalmustbeobtainedfromtheconcerneddepartment(“approvalroute”).

Incaseofthepharmaceuticalsector,foreigndirectinvestmentispermittedupto100%throughtheautomaticroute.ForBrownfieldpharmaceuticalprojects,anFDIofupto74%isallowedthroughtheautomaticroute,beyondwhichanapprovalisrequiredtobesoughtfromtheDepartmentofPharmaceuticals.Itmustbenotedthatanon-competeconditionwiththeexistingshareholdersisnolongerallowedexceptinspecialcircumstancesatthediscretionofthegovernmentregulator.TheCentralGovernmentalsohastherighttoaddnewconditionstoaninvestmentiftheinvestorproposestoacquiremorethan74%ofanexistingpharmaceuticalcompany.However,thereisnopriorpermissionrequiredtoincorporateawhollyownedsubsidiaryinIndia.

?NishithDesaiAssociates2024Provideduponrequestonly5

IndiaEntryStrategies

B.GovernmentProductionLinkedIncentives

Intherecentpast,giventheincreasedfocusondomesticinnovationandmanufacturing,theGovernmenthasintroducedvariousproductionlinkedincentive(“PLI”)schemes.In2020,theGovernmentannouncedthePLISchemeforPromotionofDomesticManufacturingofcriticalKeyStartingMaterials(KSMs)/DrugIntermediatesandActivePharmaceuticalIngredients(APIs)intheCountrywithafinancialoutlayofapproximatelyUSD841milliontoboostIndia’smanufacturingcapacity,elevateinvestmentanddiversifyproductofferingsinthesector.

Further,in2022,theGovernmentlaunchedtheSchemeforStrengtheningofPharmaceuticalsIndustrywithanobjecttoaddressdemandsofsupportrequiredtoexistingPharmaclustersandMicro,SmallandMediumEnterprisestoimprovetheirproductivity,qualityandsustainability.ThisschemehasafinancialoutlayofUSD61million.

C.India’sPost-TripsIntellectualPropertyEnvironment

InMarch2005,India’spatentlawwasamendedtoincorporateIndia’sobligationsunderWorldTradeOrganization(WTO)regulationsand,specifically,theTradeRelatedAspectsofIntellectualPropertyRightsAgreement(“TRIPS”).PriortotheadoptionofTRIPS,protectionofintellectualpropertyrights(IPRs)inIndiawasofconcerntoglobalpharmaceuticalcompaniesseekingtoenterIndia.Post-TRIPS,Indiahaswell-establishedstatutory,administrative,andjudicialframeworkstosafeguardIPRs.

Apatentedinvention(includingproducts)isnowgiventwentyyearsofprotectioninIndia.Well-knowninternationaltrademarkssuchasVolvoandWhirlpoolhavebeenprotectedinIndiathroughjudicialdecisionsevenwhentheywerenotregisteredinIndia.Computersoftwarecompanieshavesuccessfullycurtailedpiracythroughcourtorders.Computerdatabasesandsoftwareprogramshavebeenprotectedundercopyright.ComputerprogramshavingtechnicalapplicationstoindustryandcomputerprogramsincombinationwithhardwarecannowbepatentedinIndia.Thoughtradesecretsandknow-howarenotprotectedbyanylegislation,theyareprotectedunderthecommonlawandthroughcontractualobligations.Thecourts,onthegroundofbreachofconfidentiality,accordprotectiontoconfidentialinformationandtradesecretsuntiltheProtectionofTradeSecretsBill,2024ispassedbytheparliament.

India’spatentlawisalsowellplacedtoprovideprotectionforpharmaceuticalproductsdevelopedandmanufacturedthroughinnovativeprocessessuchas3Dprinting.Thisisbecause,Indiarecognizesbothproductandprocesspatentsforpharmaceuticalproducts.

D.FormofTheIndianEntity

DependingupontheproposedoperationsinIndia,theforeignpharmacompaniesmayconsidersettingoneofthefollowingentities,whichmayeitherbeunincorporatedorincorporated.

?NishithDesaiAssociates2024Provideduponrequestonly6

IndiaEntryStrategies

I.UnincorporatedEntities

AforeigncompanycanuseunincorporatedentitiestodobusinessinIndiavia‘offices’ofcertaintypes.Theseoptionsareasfollows:

A.LiaisonOffice

Settingupaliaisonofficeinasectorinwhich100percentFDIisallowedundertheautomaticrouterequiresthepriorconsentoftheAuthorizedDealer(“AD”).1Fortheremainingsectors,RBIgrantsitsapprovalafter

consultationwiththeMinistryofFinance.AliaisonofficeactsasarepresentativeoftheparentforeigncompanyinIndia.

However,aliaisonofficecannotundertakeanycommercialactivitiesandmustmaintainitselffromtheremittancesreceivedfromitsparentforeigncompany.TheapprovalforsettingupaliaisonofficeisgenerallyvalidforthreeyearsandcanbeextendedbymakinganapplicationtoADbeforethedateofexpiryofvalidity.ItisanoptionusuallypreferredbyforeigncompaniesthatwishtoexplorebusinessopportunitiesinIndia.

B.BranchOffice

Similartoalia