Indian pharma can become world’s alternative to China; but this must be done first

By: |
August 28, 2020 6:11 PM

Amid a rising anti-China sentiment in the aftermath of the coronavirus outbreak, countries are scrambling to find alternative suppliers across many industries with one such industry being pharmaceuticals.

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Amid a rising anti-China sentiment in the aftermath of the coronavirus outbreak, countries are scrambling to find alternative suppliers across many industries, with one such industry being pharmaceuticals. India may emerge as the winner in the race to become an alternative from where to source certain pharma products, given several issues are resolved first. “As formulators evaluate options to source from outside China, India can become a preferred supplier for certain products,” CLSA said in a recent research report. To help it materialize, hurdles around quality compliance, price volatility, and complex approvals must be overcome, the report added. The opportunity, for now, looks longer-term.

China has Dragon’s share in global API supplies

With the coronavirus hitting countries across the globe, diversifying supply chains of API and formulation suppliers has come to forefront. China dominates global API supplies with more than 40% share and the Dragon country has an even higher share in antibiotics and vitamin products. However, Indian government is now eyeing to make the best of the current opportunity, and the domestic pharma industry may gain with the production-linked incentive scheme for 53 critical bulk drugs. Small and mid-sized suppliers are more likely to benefit as compared to leading API producers, based on the CLSA interactions with industry players. Pharmaceutical players now need increased regulatory support to make significant strides.

Advantage India

Moreover, while India is already a dominant player in supplying affordable quality medicines globally, multiple other opportunities await domestic pharma companies. This includes rising per-capita spending on medicine in India due to factors such as aging population, building critical scale in emerging markets, and penetrating the US non-oral solids generic market, other than the gains that it can make from the shifting active pharmaceutical ingredients (API) sourcing from China. Indian pharma companies are positioned to advance and are expected to improve their earnings profiles in the next 3-5 years. The domestic market is expected to reach $30 billion at 8% CAGR by FY25.

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