While Indian exports to China are $230 million, the opportunity for exporters is to reduce import dependency on active pharma ingredients (APIs) and intermediates which is about $2.5 billion.
Despite slowdown across industries, the Indian pharmaceutical sector is upbeat on exports following the signs of revival in the US market. Drug prices seem to have stabilised in the US market, which is the largest market for exports. Exports are likely to touch $22 billion in 2020 from $19.14 billion in FY19.
The next market opportunity for exporters is China which was recently opened up for generic drugs. R Uday Bhasker, director general, Pharmexcil, under the ministry of commerce and industry, tells BV Mahalakshmi that there is a huge opportunity to tap the Chinese market as there is a common procurement plan for all provinces. While Indian exports to China are $230 million, the opportunity for exporters is to reduce import dependency on active pharma ingredients (APIs) and intermediates which is about $2.5 billion. The domestic industry is seeking a clear manufacturing policy to reduce the import burden and assist the exporters. Excerpts:
Given the slowdown in the market, how does pharma exports look like?
The pharma industry during 2018-19 touched $40 billion which includes both domestic and exports. Exports during 2018-19 were $19.14 billion which comprise bulk drugs, finished dosage formulations, Ayush and herbals and surgicals contributing 5.79% of merchandise exports. Drug formulations and biologicals is the third largest principal commodity being exported by India.
In FY 2019, exports crossed $19.2 billion and registered a 10.72% growth compared to FY18. We have seen growth in almost all categories and drug formulations category achieved the highest by registering 12.13% growth. The US is a major export destination for pharma exports with a market share of 30%. Though we recorded negative growth of 8% during FY 2018, the US market revived and we have achieved 13.72% growth in FY 2019.
Exports to all other regions during FY19 also had good growth. Top three export regions — North America, Africa and EU posted a growth of 14.9%, 2.6% and 9.1%, respectively. Emerging markets like Asean, LAC and West Asia, have also grown, especially West Asia, where exports have grown more than twice the national growth, albeit the contribution is below 6%.
Given the positive trend, what is the forecast for 2020?
The global generics market is forecasted to grow by 4-5% in 2019. In July 2019, Indian exports already recorded 21.7% growth with $1,722 million. The cumulative growth of exports for April-July, 2019 is 13%. As of June 2019, the generic exports has grown almost 2.8 times faster than the market and hence we are expecting to touch $21 billion in the fiscal year 2019-20. For the first time, Australia and New Zealand have shown interest in Indian generic formulations, nutraceuticals and veterinary products and Pharmexcil is considering ways and means to help Indian exporters from this sector. During the first quarter, exports showed 11% growth in pharma exports with the total exports value about $5 billion. The US market is continuing its trend with 28% growth. Exports to China also increased by 37% and Japan at 32% in first quarter. Exports to Iran grew by 69% with $58.68 million.
What are the strategies to reduce import dependence of active pharmaceutical intermediates (APIs) and intermediates?
With the support of ministry of commerce and industry, Pharmexcil has conducted a study on understanding the imports of APIs and intermediates for developing a roadmap for making the country self-reliant in manufacturing APIs and thus reducing import dependence.
The study is aimed at identifying the products for which India majorly depends on imports and to develop the strategies and action plan to reduce import dependency.
Pharmexcil is in the process of finalising the study and the Detailed Project Report (DPR) will be submitted to the government shortly. According to estimates, about 45 products have been identified with a value of $2.5 billion imported from China.
The Chinese pharma industry is upgrading most of the plants to meet the The International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH) guidelines and this is the time to cash in on the opportunity.