Weak IP regime clouds pharma growth despite GST cuts, says BMI report

BMI warned India's weak IP protections deter global drugmakers, limiting access to innovative therapies, even as GST cuts on 33 lifesaving drugs lower costs and boost affordability

Weak intellectual property (IP) protections remain a major barrier to India’s pharmaceutical growth, discouraging multinational investment and delaying patient access to innovative therapies, according to a new report by BMI, a Fitch Solutions company.

 

The report noted that while the government’s recent move to cut goods and services tax (GST) on 33 lifesaving drugs from 12 per cent to zero is set to make medicines more affordable, the benefits may be blunted by systemic challenges. The exemption, announced on September 4, covers treatments for cancer, spinal muscular atrophy and kidney disease.

 

Industry players, including the Indian Pharmaceutical Alliance, have welcomed the step, which is expected to reduce out-of-pocket costs for patients and provide a short-term boost to drug spending.

 

BMI forecasts India’s pharmaceutical market to grow at a compound annual growth rate (CAGR) of 5.9 per cent in local currency terms and 3.6 per cent in US dollar terms, from Rs 2.7 trillion ($32.6 billion) in 2024 to Rs 3.6 trillion ($38.9 billion) by 2029. Growth prospects are further supported by proposed regulatory reforms that would halve approval timelines from 90 to 45 days and ease norms for bioavailability and bioequivalence studies of certain drugs.

 

However, BMI cautioned that India’s inadequate IP enforcement framework continues to deter global drugmakers. Patent disputes are often unresolved during the patent term, regulatory data protection remains weak, and biologics enjoy limited safeguards.

 

According to the World Intellectual Property Organization, India scores 38.6 per cent in the International IP Index, significantly lower than China at around 57.8 per cent, Japan at 91.2 per cent and South Korea at 84.9 per cent.

 

This weakness, BMI said, discourages the launch of innovative medicines in India. Only 6 per cent of new drugs introduced globally since 2014 have been launched in India, with patients waiting an average of 40 months for access. Earlier this year, the Pharmaceutical Researchers and Manufacturers of America (PhRMA) placed India on the US Trade Representative’s “Priority Watch” list, flagging the country’s weak patent enforcement and regulatory data protection as key obstacles.

 

While tax cuts and regulatory streamlining are likely to accelerate growth in the near term, BMI warned that without stronger IP protections, India risks losing out on multinational investment and delaying the availability of breakthrough therapies for its patients.