menonsstocks /
15 June 2017AsiaKirit Javali

Life sciences regulation in India: the need for evolution

The life sciences industry has traditionally been classified as consisting of pharmaceuticals and healthcare. The area of biotechnology has evolved as an important contributor to the pharmaceutical, agricultural and industrial sciences industries, and serves both medical and non-medical markets. The medical market includes human therapeutics, human diagnostics as well as applications in veterinary medicine. Within the non-medical markets there is a split between agriculture and industrial applications.

"India offers advantages in multiple areas including cost, skilled scientific manpower (engineers, scientists, and doctors), large population, and increasingly world-class healthcare infrastructure."

The Indian life sciences industry is attracting global attention. It is at the threshold of tremendous growth, and India is emerging as an important player in the global sector. Why is India important? India offers a dual benefit in the life sciences space, as both a prospective market and a low-cost manufacturing, operations and research base.

With a large untapped market, India has significant growth potential in healthcare and pharmaceuticals due to the low penetration level of, and low per capita expenditure on, drugs and healthcare. With the evolving health insurance industry in India, expenditure on healthcare (and pharmaceutical) related items is expected to rise significantly.

A resource base for global markets, India offers an abundant supply of technical expertise and significant cost-competitiveness and is thereby attempting to position itself as an excellent outsourcing destination for contract manufacturing, contract research and clinical trials in the biopharma, pharmaceutical and healthcare industry. Outsourcing business in areas such as medical transcription, healthcare claim processing and services outsourcing, electronic health and clinical data management is becoming increasingly important for companies looking to reduce costs.

Additionally, India offers advantages in multiple areas including cost, skilled scientific manpower (engineers, scientists, and doctors), large population, and increasingly world-class healthcare infrastructure. These advantages position India favourably towards becoming a global hub for bio and pharmaceutical manufacturing, medical tourism and tapping business opportunities in contract research services.

Legislative and regulatory regime

The Department of Biotechnology was established in 1985, emerging as a separate department from an earlier incarnation as a small unit with the Ministry of Science and Technology.

The Ministry of Environment and Forests under the Environment (Protection) Act of 1986 has notified the rules for the manufacture, use, import, export and storage of hazardous microorganisms, or genetically engineered organisms or cells. As per these rules, biological materials are regulated from the R&D stage to their release in the environment. The Institutional BioSafety Committee ( IBSC), Review Committee on Genetic Manipulation ( RCGM) and the Genetic Engineering Approval Committee ( GEAC) monitor rDNA research, product development and commercialisation.

The  ISBC functions as the nodal point for interaction within the institution for the implementation of the rDNA biosafety guidelines. The  RCGM essentially monitors the safety-related aspects of activities involving genetically engineering organisms or hazardous microorganisms. The  GEAC undertakes the responsibility of approval of activities involving large-scale use of genetically modified/hazardous microorganisms and products thereof in research and industrial production, and their safety in terms of environmental protection.

In India, drug manufacturing, quality and marketing is regulated in accordance with the Drugs and Cosmetics Act of 1940 and Rules 1945. The 1940 act provides for approval of pharmaceutical biotechnology products. For example, a genetically engineered product in the pharmaceutical field has to be cleared by the Drugs Controller governed under the act.

This act has witnessed several amendments over the last few decades. The Drugs Controller General of India ( DCGI), who heads the Central Drugs Standards Control Organization ( CDSCO), assumes responsibility for the amendments to the acts and rules. Other major related acts and rules include the Pharmacy Act of 1948, the Drugs and Magic Remedies (Objectionable Advertisements) Act of 1954 and Drug Prices Control Order ( DPCO) 1995, and various other policies instituted by the Department of Chemicals and Petrochemicals.

The Bio-Medical Waste (Management and Handling) Rules, 1998 require the concerned biotechnology company or person involved in research work to take all the necessary steps to ensure that the biotechnology waste is handled without any adverse effects to human health and the environment. The biomedical or the biotechnology waste is a hazardous waste under the Hazardous Wastes (Management and Handling) Rules, 1989.


There are challenges in the sector—including regulatory hurdles to be overcome if the industry is to realise its full potential.

The primary challenge in the field of agri biotech is to assess the safety of genetically modified crops. Other impediments for India’s biotechnology sector include a recent Supreme Court suspension of clinical trials for new drugs being developed by pharmaceutical companies.

India’s regulatory system is somewhat complex as it involves multiple ministries and departments under them. There is the Ministry of Health and Family Welfare, which looks after issues concerning public health, and the Ministry of Chemicals and Fertilizers, focusing on policy matters.

However, the key authorities are the DCGI, a department of the CDSCO, which functions under the Ministry of Health and Family Welfare, the National Pharmaceutical Pricing Authority (NPPA), and the Department of Pharmaceuticals.

For the last five years, the pharma and medical devices industries in India have been facing challenges from the main regulatory agencies, the CDSCO and NPPA. The recent developments are from the CDSCO/DCGI on clinical trials, followed by fixed dose combination drugs and price caps on drugs and medical devices from the NPPA.

Clinical trials

For the pharmaceutical industry, clinical trials are crucial for the development of new products. Prior to 2013, several gaps in the regulatory framework allowed clinical trials to be conducted against the spirit of good clinical practices and ethical standards. This forced the Supreme Court to step in, suspending all clinical trials in the country until all gaps in the framework had been satisfactorily covered. Many sponsors decided to move the trials away because Indian trials were part of global trials and they could not afford to lose time. Others decided to suspend clinical trials because of the draconian nature of the law.

With time, however, these gaps were filled in by the regulators, and continuing efforts are going a long way to revamping the clinical trial space. As with many other areas, the Indian government is currently reworking its regulations in order to bring about ease in conducting clinical trials.

The regulatory environment is now more conducive to doing clinical trials than ever before. The cap on the number of trials that an investigator can participate in has also been relaxed, along with the approval procedures for the addition of clinical trial sites.

Medical device industry

The medical device industry has reaped the benefits of an improving regulatory framework. One of the most significant changes that will govern the medical device industry is the new Medical Device Rules, 2017, coming into effect from January 1, 2018. The regulators have been actively revising the framework in order to benefit the industry.

The new rules have eased norms for obtaining licences and conducting clinical trials, and also reduced the manufacturer-regulator interface by promoting a digital platform.

The government has heeded to the industry’s nearly decade-long demand of separating it from the pharmaceutical industry so that the same stringent laws that regulate drugs are not applicable to medical devices.

Until now medical devices were regulated as drugs but now the two have been separated and rules specifically catering to the medical devices industry have been formed.

The government’s segregation of the medical devices industry from pharmaceutical regulations may finally stimulate growth in the domestic industry, which has been a goal for the government since it  opened the industry up to 100% foreign direct investment in 2015.

The clarity which the government brought into the drug price control framework has also saved the pharmaceutical industry a lot of compliance challenges.

However, some issues remain, in terms of conducting business in India, for example a change in the constitution of a company. As the law reads today, a licence holder under the Drugs and Cosmetics Act, 1940 and Rules, 1945 who undergoes a ‘change in constitution’ is required to immediately inform the licensing authority, and the existing licence is valid for three months from the date of change in constitution unless a fresh licence is issued before the expiry of the three months. In an industry that sees many mergers and acquisitions, there are numerous issues with this provision of law.

This problem seems to have been addressed under the new medical device rules, with existing licences being valid until the application for a fresh licence is either granted or rejected. An amendment to the Drugs and Cosmetics Act and Rules is therefore essential.


India’s regulatory environment surrounding pharmaceuticals and medical devices needs to evolve to unlock the sector’s true potential. While there have been a host of changes and forward-looking amendments to the current law, many issues that need to be ironed out still exist.

Kirit Javali is a partner at Jafa & Javali. He can be contacted at:

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