A Booming Market Beckons

The Indian healthcare sector presents a tantalizing prospect for foreign Multinational Corporations (MNCs).A burgeoning population, rising disposable incomes, and an expanding market base paints a picture of a market ripe for harvest. India is characterized as an international manufacturing, importing and exporting hub for the products in the healthcare sector which has led to multiple MNCs setting up their presence via wholly owned subsidiaries or through strategic joint ventures with Indian companies. However, this potential is tethered to a complex web of regulations, legal frameworks, and socio-economic considerations. The healthcare sector in India is a highly regulated sector and includes advertising and marketing laws for promotion of pharmaceutical and medical device products to the consumers. This article highlights the key regulatory and legal requirements that global marketing and advertising teams of foreign MNCs should adhere to while releasing any promotional content/material in the Indian jurisdiction or global content which may require adherence to Indian local laws.

It has been increasingly seen that many a times these MNCs roll out global marketing and advertising campaigns made on an international scale in a multitude of countries without paying heed to the applicable local laws. This can lead to these MNCs being liable to pay heavy fines and penalties which will further tarnish their reputation and goodwill in the market. Another important facet of an MNC includes is having global policies and code of conducts. These documents are the essential framework under which these MNCs operate worldwide. It has been increasingly seen that MNCs do not customize or amend these documents as per local laws and begin/ continue operations in countries such as India which ultimately leads to legal and regulatory hurdles on account of their breach of the applicable local laws.

It has also been noticed that promotional content being released by these MNCs on social media channels or mass media forums targets consumers widely. The local entities of these MNCs are sometimes unaware of these global marketing and advertising content floating around in the local market which can lead to legal liability from local regulators that undoubtably creates issues for these local entities. It should be noted that some of the above-mentioned issues have also been seen by MNCs in the pharmaceutical and medical device sector as the Indian regulators take marketing of pharmaceutical and medical device products to the consumers and the interaction with healthcare professionals very seriously and resolutely and therefore, highly regulate the same.

As there are a lot of MNCs already operating and proliferating in India, and with the number of these companies bound to increase, it becomes imperative for the global marketing and advertising teams along with legal and compliance teams of these companies to ensure that regional/local laws of the country, where these marketing and advertising campaigns are to be released, are complied with and relevant changes are made to the marketing/promotional campaign materials, collaterals, documents etc. before their release in the local market.

A Maze of Regulations: Ensuring Compliance

Quite recently, there have been a multitude of legal enactments that have further regulated promotion in the healthcare sector of India which includes the promulgation of Uniform Code of Pharmaceutical Marketing Practices, 2024[1] which was initially enacted in 2014 as a voluntary code and then re-introduced as a mandatory code in 2024. Some of the important stipulations put forth under the same includes submission of an annual declaration by the chief executive officer of the pharmaceutical and/or medical device company every financial year to showcase that their company is compliant with all the stipulations of the extant code, and ensuring that claims for the usefulness of a drug[2] is based on up-to-date of all available evidence etc. Another recent legal enactment that has impacted the healthcare industry is the annual self-declaration requirements for advertisers/ advertising agencies releasing advertisements for food and health sector to showcase compliance with laws against misleading claims and other applicable regulatory guidelines[3]. However, there are other various codes, regulations, judicial precedents that lay down important legal facets to be complied with by these MNCs that they may not know about which can lead to extensive legal and financial liabilities. The problem with non-compliances with these applicable local laws generally stem from lack of awareness on part of these MNCs.

Despite the allure, the Indian healthcare sector presents a labyrinthine regulatory environment for foreign entities. The marketing and advertising of pharmaceutical and medical device products in the country are regulated by a plethora of laws which are including but not limited to the Drugs and Cosmetics Act, 1940; Medical Device Rules, 2017; Drugs and Magic Remedies (Objectional Advertisements) Act, 1954; Uniform Code of Pharmaceutical Marketing Practices, 2024; Consumer Protection Act, 2019; Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022; Advertising Standards Council of India’s – The Code for Self-Regulation of Advertising Content in India and so on and so forth.

The MNCs should ensure to keep abreast of all legal and regulatory changes being enacted daily to prevent any future legal liabilities and maintain their market reputation and goodwill. Additionally, adapting policies and documents to Indian laws demonstrates a commitment to operating ethically and responsibly in the country. Indian consumers are increasingly conscious of corporate social responsibility and ethical business practices. By complying with local laws and regulations, MNCs can build trust with customers, employees, and stakeholders, and continue enhancing their reputation and credibility in the Indian market. Moreover, adjusting policies and documents to Indian laws can help MNCs navigate cultural and social differences effectively. India is a diverse and complex market with unique cultural nuances and consumer preferences. By customizing their policies and documents to align with local laws, MNCs can better understand and cater to the needs of Indian consumers, gaining a competitive edge in the market.

Complying with applicable local laws as portrayed above presents a multifaceted advantage in terms of sustainable growth, enhanced brand image, limitation of liability, and building consumer trust. Strict and effective compliance shall repose further faith and belief in the Indian consumers towards these global MNCs to ensure success. MNCs can take several steps to ensure effective compliance and the same includes:

  • Seek Expert Guidance: Partner with legal and regulatory consultants with strong expertise in Indian healthcare law. They can provide guidance on navigating the legal framework and interpreting regulations specific to their products and marketing strategies.
  • Develop a Compliance Culture: Integrate compliance into the company’s overall culture. Train staff on relevant regulations and ensure clear communication channels exist to report any potential compliance concerns.
  • Invest in Systems and Processes: Implement robust systems and processes to manage promotional materials, track interactions with healthcare professionals, and ensure data security.
  • Regular Audits and Reviews: Conduct regular internal audits and reviews of marketing practices to identify and address any potential compliance gaps.
  • Stay Updated: The Indian healthcare regulatory landscape is constantly evolving. MNCs should stay updated on changes in legislation and adapt their compliance strategies accordingly.

The Indian healthcare sector presents a compelling opportunity for MNCs, but the journey is fraught with regulatory complexities. A well-defined strategy, coupled with a deep understanding of the legal landscape, is critical for success. By adopting a collaborative approach, focusing on permissible avenues, and adapting to local legal needs, MNCs can navigate the labyrinth around marketing and promotion of pharmaceuticals and medical devices and further contribute to India’s burgeoning healthcare ecosystem. The recent legal developments offer a ray of hope, indicating a potential shift towards a more liberalized market.

Author: Pradnesh Warke and Tanay Jha

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Footnotes

[1] Issued by the Department of Pharmaceuticals on March 12, 2024

[2] Medical devices come under the purview of drugs with effect from April 1, 2020, as per Notification No. SO 648(E), dated 11th February 2020, issued by the Ministry of Health and Family Welfare

[3] Issued by the Ministry of Information and Broadcasting on July 03, 2024

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