Despite challenges, the Indian pharmaceutical exports are poised to grow at 30-35 per cent next year, twice the present rate of close to 17 per cent, according to the Indian Drug Manufacturers’ Association (IDMA).
While the regulated markets have been the mainstay of the Indian drug exports, the opening up of unregulated markets in Africa and Latin America and the growing interest of global NGOs including the World Health Organization in affordable quality medicines from India would make this possible, said Daara B Patel, secretary general of IDMA.
According to him, the proven manufacturing credentials of Indian drug firms will spur export growth. “More markets are evolving and more NGOs are looking to India. Therefore, the government’s target of doubling pharma exports by 2014 is not an impossible task though some what difficult,” Patel said.
The government support is also expected to play a role in taking exports to the next level since the achievements of the domestic pharma sector thus far have been made mostly without any government support, according to Patel.
IDMA feels that despite the onslaught of the cheaper Chinese bulk drugs (APIs), Indian pharma companies will do well on global arena because of their expertise in formulations’ development.
Though competition is very high, with several global companies forced to halve the prices of their patented drugs, Indian companies continue to maintain their competitive edge in global market place, Patel said.
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He said, “Indian companies have a tenacity of operating at lower margins on the back of higher volumes and countries like Bangladesh, Indonesia or Thailand have not been able to compete with our companies in this respect.”
As far as bulk drugs are concerned, Indian companies are taking a heavy beating from China, as the low prices have taken precedence over the quality parameters in this area, according to him.
According to the projections of the task force constituted by Union Commerce Ministry, the India pharma exports are expected to touch $15.8 billion in 2013-14 as compared to $10 billion this year.
However, N R Munjal, the newly elected chairman of Pharmexcil, said the resolution of certain regulatory issues in export markets and increased participation from small and medium enterprises(SMEs) needs to be ensured by the government to achieve the targets.
Raising similar concerns, DG Shaw of Indian Pharmaceutical Alliance said attempts were being made in the US to take away the cost advantages of Indian pharma companies.
Changed Russian regulations are also expected to create major entry barriers for Indian pharmaceutical exports. “It is going to be an uphill task for Indian companies to do well in Russia,” said Dara Patel.
Russian government introduced new regulations according to which up to 70 per cent of drugs consumed in the country has to come from within. This is why some Indian companies are planning to locate their manufacturing operations in Russia.
FDI cause no problems
Acquisition of a few Indian companies by multinational corporations is not going to pose any threat to the inherent advantages of Indian drug industry, according to Patel.
“We produce over 15,000 formulations in the country. Hardly 4-5 buys can be expected even if 100 per cent FDI continued to be allowed and there is nothing to panic,” he said, while welcoming the ongoing debate of providing safeguards through Competition Commission.
Indian pharmaceutical sector is strong enough to reverse any attempt at increasing drug prices by global companies through their Indian acquisitions, he added.