Venezuela has reached out to the UN to help it buy pharmaceutical products, offering India an opportunity to supply vital drugs to the cash-strapped nation.
Venezuela has reached out to the UN to help it buy pharmaceutical products, offering India an opportunity to supply vital drugs to the cash-strapped nation. Indian companies have been a major supplier of medicines to the Latin American country and enjoys acceptance in the Venezuelan market due to quality and competitive prices. However, for the last one year the supplies have completely dried up as companies are facing payment issues with the outstanding amount rising sharply to over $100 million. Sources said if the UN assistance for supply of medicines to Venezuela comes through, the pharma trade could resume again with Indian companies such as Novartis and Dr Reddy’s being the biggest beneficiary.
The country’s second-largest player Dr Reddy’s Laboratories has bet heavily on Venezuela as they sought emerging market alternatives to slower-growing economies such as the US. But it had to write off $65 million in the March quarter of 2016 as payment was not coming through Venezuela. The amount is equal to the money it was owed from Venezuela.
“During meetings with Venezuelan officials, a payment mechanism had been proposed which would allow that country to repay some of the debt with oil. However, there has been no forward movement on that yet. If this channel is opened up, normalcy in medicine supply could be restored quickly as payment could be made under a barter arrangement in oil,” a source privy to the development said.
“They can import generics from India by simply increasing their shipment of crude oil to India by a few more tankers. They don’t need to pay in dollars, which they don’t have,” the source added.
Earlier this month, Venezuelan President Nicolás Maduro met with the UNDP director for Latin America and requested the UN’s assistance. The leader in a speech broadcast on national television had announced that it has approached the UN to seek medicine for its citizens. With Venezuela stuck in the fourth year of a deep recession, shortage of food and many essential goods, including medicine, has become rampant.
Venezuela has identified pharma as one of the priority industries, which has to be boosted domestically. But with little assistance coming from foreign companies and not a lot of money to spare, this has remained a dream so far.
Despite the problems, the Latin American country has remained guarded over its talks with UNDP. Sources indicated to FE that Venezuela has neither made a universal appeal for assistance, nor has the request for assistance from the UN been made at a high level (say to the UNSG). This is because that country does not want to give a signal that there is a humanitarian crisis in Venezuela whether of food or of medicines.
The Chamber of Pharmaceutical Industry of Venezuela recently said the Venezuelan government owes about $700 million in dues to pharma companies. Many foreign firms have stopped supplying medicines to Venezuela due to outstanding payments.
According to Unicef, India is already the topmost country in supplying medicines and medical equipment to countries in need. India topped the list of suppliers by providing such supplies worth $741 million, beating countries including Belgium, France and the US to the Unicef programmes, among others. India’s exports to Venezuela between April 2015 and February 2016 almost halved year-on-year to $125.5 million, compared with a year earlier. Most of that were pharma products.