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Although India is known as the “Pharmacy of the World”,as it contributes 20% of the world generics and 60% of the total vaccines in the world market, it is indeed a matter of pride for us that India caters 40-70% of the WHO demands for the vaccines. Moreover, the growth of the Indian pharma sector since last 5 years has been in double digit number.
Through Ayushman Bharat has been able to establish a high impact at the global level in the healthcare sector. India is the among the few countries in the world who has 665 US FDA approved plants outside US and has 44% global ANDAs.
Due to ongoing pandemic, DGFT (Directorate General of Foreign Trade) on 3rd March 2020 made changes in their export policy and they banned several formulations. Later, on 25th March 2020 again, this export policy was changed and the “wonder drug” -Hydroxychloroquine (which is considered in the treatment of COVID-19) too was included in the list. All this was done because the API which is used in the manufacturing of these formulations is imported from the global market especially China and due to Covid-19 the import of these API was badly affected, as these API were in short supply.
Indian bulk drug industry’s growth rate during the period 2016-20 has been between 8-9% and despite of Covid-19 too, it is expected that it will still hover around 8-9% and this is certainly good news for Indian pharma industry and through this, we can easily conclude the importance of the Indian Pharma sector at the global level. The total volume size of the Indian API market is around Rs.963billion (i.e.Rs.96, 300cr) and out of which Rs. 660 billion is for Indian market while the remaining Rs.303billion is exported.
In the API category,as far as India is concerned, there are many big, intermediate and small pharmaceutical companies. In the biggies list -SUN, Cipla, Zydus, Biocon, Dr. Reddy’s, Aurbindo Pharma are prominent ones. In the mid-size companies – Divis Pharma, Jubiliant, Concord Biotech are the major ones where as in the small size Virchow Pharma is prominent name.
Today, in the global API market, China is the undisputed leader, as volume wise China produces approx.20% of the world’s API production. China manufactures more than 2000 APIs and exports them. According to the Pharmexcil report, China exports API to nearly 189 countries which are mainly from Asia, Europe and North America.
In the early 90’s, India was among the leading producers in API category but over a period of time due to many changes in the manufacturing policies and regulations and with decreasing margins and stringent environmental norms, the Indian pharmaceutical manufacturers cornered themselves from the API manufacturing and it resulted in the closure of many pharmaceutical companies, whereas during the same period, China strengthened itself in the API sector and the result is now in front of us.
Today, India, which was among the leading manufacturers in the API once upon a time, now imports more than 70% of the API and intermediates from China and this is truly a matter of great concern for all us. India’s chief national security advisor Ajit Dobhal has already cautioned us in his 2014 report that importing API in such huge quantity and that too from only country -China, is certainly a “National Threat”.
Traditionally, it has been a global effort, with China being one of the largest suppliers of APIs to counties across the world with India being a crucial player in the global pharmaceutical supply chain. There has been mounting concern among a lot of pharmaceutical firms about the decreased production capabilities in China despite the recommencement of ocean freight. Back home, over two dozen APIs have been removed from the export list as health officials are yet to get a handle on how much will be needed to tackle the COVID-19 outbreak, in the face of statistical uncertainty.
With increasing global connectivity, an acute epidemic was just a matter of time. We could have followed the advice of epidemiologists and taken preventive measures to avoid a pandemic and yet here we are, struggling to contain a public health crisis while ensuring that the economy does not get destabilized. However, we need to swallow the bitter pill and acknowledge the long term impact the pandemic is going to have on the economy.
It is a little worrying to contemplate the effect of COVID-19 on the healthcare industry, especially on drug discovery and manufacturing.
Can India turn this into an opportunity?
Although India manufactures one third of the global supply of medicines, over 80 percent of the raw materials needed for the drug are imported from China. This gives our neighbour a virtual monopoly over supply and pricing to the point that there are no domestic producers for most medicines in India. The total import of drug intermediates and bulk drugs exceeds Rs. 25,000 crore and China accounts for over 67% of it. Considering India’s heavy dependence on imports, policies formulated by the central government to give more agency to indigenous manufacturers have only remained in paper so far.
India has also significantly increased the import of antibiotics from China in the recent years, and the trade is currently worth billions of dollars. If China decides to pull the plug on supply, it will lead to a huge public health crisis in India. Drug companies claim that low cost imports have forced a lot of manufacturers to shut up shop. A number of them have given up manufacturing ingredients for other drug makers and have started manufacturing complex formulations on their own. These are then exported to developed markets in first world countries. Difficulties in obtaining environmental clearances and red tape have made it quite uneconomical to manufacture raw materials indigenously.
However, it is not too late to start mass producing raw materials. This pandemic presents us with the opportunity to turn things around with government support. With the coronavirus outbreak restricting imports from China, the government has taken steps to ensure that there is a sufficient supply of medicines by limiting exports of 26 APIs and medicines, which account for 10% of our pharmaceutical exports. It would no doubt affect the availability of these drugs in countries that depend on both Indian and China.
We need right infrastructure
The government’s decision to set up a technical committee (Katoch Committee, 2015)to revive our lost capacity to manufacture crucial drug ingredients is a welcome move. The major recommendations like establishing Mega Parks for API and bulk drugs, separate environmental norms should be framed for API category, encouraging pharma scientists and professionals for developing innovative products, availability of Capex loan and Soft loans for API manufactures, income tax rebates, setting up advanced testing labs and infrastructure at major ports and single window clearance along with establishing API clusters in the states like Gujrat, Odisha, Tamil Nadu, Andhra and Telengana can definitely expedite the manufacturing process.
Among other things, the committee is evaluating the costs of setting up API manufacturing units to reduce our dependency on imports. The DCGI has identified 58 drugs for which we rely heavily on China and asked pharmaceutical associations to give updates on the raw material stocks needed for their manufacture. The list includes anti-retrovirals like Ritonavir and Lopinavir that have been approved by The Indian Council of Medical Research for treating COVID-19 patients.
The government must consider giving drug manufacturers free land, reasonable financing costs, and free utilities like steam, water and power. It should also relax policies to make it easier for research teams to conduct clinical studies. Most importantly, it should open up access to drugs that have already been approved outside the country. If we want to prevent a drug shortage like the one inflicted by the current pandemic, becoming self-reliant in drug manufacturing is the only way to go.
(Author is Associate Professor & Assistant Dean, School of Pharmaceutical Management, IIHMR University, Jaipur)
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