Pharma exports fail to meet FY20 target due to curbs

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Published: May 9, 2020 7:38 AM

Drug formulations and biologicals, which contribute to almost 72% of exports, have shown 9.5% growth in FY20. However, export of bulk drugs and drug intermediates posted negative growth.

India pharmaceutical industry, pharma in India, indian pharma exports, export restrictions on drugs India, Indian pharma exports 2020India has exported pharmaceuticals to 202 destinations during FY20 with North America as the largest exporting region.

India’s pharmaceutical exports have taken a hit by about $1.5 billion due to export restrictions on a few drugs and supply disruptions, resulting in $20.58 billion for FY20, against the estimated target of $22 billion. However, the industry reported a 7.57% growth as against $19.13 billion reported in the previous year, according to Pharmaceuticals Export Promotion Council of India (Pharmexcil) data.

“Combined with lockdown measures across the countries and export restrictions on some of the products, led to a downturn in export growth,’’ Udaya Bhaskar, director-general, Pharmexcil, said. According to him, pharma exports during February and March are usually quite brisk to an extent of 22-23%. “Having seen the good pace of export trend in first three quarters and price stabilisation in the US, it was estimated that FY20 exports would reach $22 billion. As the fourth quarter of FY20 brought in a negative growth, the overall exports fell to 7.57% from 11.5%.’’

Drug formulations and biologicals, which contribute to almost 72% of exports, have shown 9.5% growth in FY20. However, export of bulk drugs and drug intermediates posted negative growth (-0.73%), dragging down the overall performance. Vaccines and surgicals recorded 22% and 10.5% growth, respectively.

India has exported pharmaceuticals to 202 destinations during FY20 with North America as the largest exporting region with 34% share recording 15.11% growth. “About $6.7 billion worth of drugs was exported to the US with 15.8% growth. This has constituted almost 32.74% of our total exports followed by Africa with 17% share and Europe with 15% share. Our exports to China in FY19 was $230 million and this year, it is $228 million,’’ he said, adding India is still dependent on China to an extent of 60-70% of its needs of bulk drugs and has faced disruption in the supply chain due to Covid-19.

Meanwhile, understanding the over-dependence of Indian pharma industry on China for bulk drugs, key starting materials (KSM) and intermediates, Pharmexcil conducted a study with the support of commerce ministry on ‘Strategies to reduce import dependence of APIs, KSMs and Intermediates’ and gave a detailed project report (DPR) to the government in January 2020. The DPR has given inputs for framing the schemes for promotion of domestic manufacturing of critical KSMs, drug intermediates and APIs in the country.

The sanctioned schemes include promotion of bulk drug parks and production-linked incentive scheme.

“The proposal is to develop three mega bulk drug parks in partnership with states. While the government of India will give grants in aid to states with Rs 1,000 crore for each bulk drug park, a sum of Rs 3,000 crore is approved for this scheme for next five years. The scheme is expected to reduce manufacturing cost of bulk drugs in the country and dependency on other countries for bulk drugs,’’ Bhaskar said.

Further, a financial incentive is given for eligible manufacturers of 53 critical bulk drugs (26 fermentation-based and 27 chemical synthesis-based bulk drugs) on their incremental sales over base year 2019-20 for a period of six years. Towards this, a sum of Rs 6,940 crore has been approved for the next eight years. “This scheme intends to boost domestic manufacturing of critical KSMs, drug intermediates and APIs by attracting large investments in the sector to ensure sustainable domestic supply and thereby reduce India’s import dependence on other countries,’’ he said.

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