India has achieved a significant position in the global pharmaceutical market, and it has become a significant player in the manufacture and export of pharmaceutical products and related services which include generic drugs, over the counter (OTC) medicines, bulk drugs, vaccines, biosimilar and biologics, and contract research & manufacturing services. During 2020-21, the total pharma export was USD 24.35 billion as against the total pharma import of USD 6.66 billion, thus generating a trade surplus of USD 17.68 billion.
Amongst others, India’s advantage is its capability to supply affordable and low-cost generic drugs. This has resulted in the setting up of numerous pharma manufacturing facilities that are compliant with standards set by the United States Food and Drug Administration and the World Health Organization Good Manufacturing Practices.
The Covid-19 pandemic had an adverse impact on many industries, however, he pharmaceutical sector stayed firm and continued to grow during the most severe healthcare emergency in the span of a century. Various constituents of the pharma sector have scaled up their technological capabilities and adopted pandemic-driven regulatory reforms, and in a way, the pandemic has strengthened the pharma sector by accelerating its technical capabilities.
The pharma sector has exhibited compound annual growth rate (CAGR) of about 7.2% during FY17-FY21 and registered a growth of about 12% during the same period. With change in dynamics, the pharma sector is expected to grow even more. Key factors that will fuel growth include tech based innovation, digitization, and extensive deployment of local resources and capabilities.
The Government of India has executed a Comprehensive Economic Partnership Agreement (CEPA) with the Government of United Arab Emirates (UAE) in February 2022 and the same is likely to facilitate almost 90% of trade (import and export) between the two countries. Specifically with respect to pharmaceuticals, the CEPA contains a separate Annex (Annex 5A) for Bilateral Co-operation on Pharmaceutical Products. The CEPA will facilitate various concessions between both countries, including the grant of market authorization by each country to pharmaceutical products of the other country within a time frame of 90 days, without any inspections.
To be eligible for such fast-track market authorization, pharmaceutical products would have to be already approved by relevant regulatory authorities of Australia, Canada, European Union, Japan, the United States of America, or the United Kingdom, as the case may be. This will serve as a significant boost to India’s pharmaceutical exports, given that the UAE focuses on increased expenditure on healthcare, openness towards innovative drugs, and strategic investments in healthcare infrastructure. This is an outstanding opportunity for the Indian pharmaceutical exporters and the CEPA is expected to increase bilateral trade from the current USD 60 billion to USD 100 billion in the next 5 years.
Similarly, the Government of India has also executed the he India-Australia Economic Cooperation and Trade Agreement (ECTA) with the Government of Australia and the same also provides a separate Annex on pharmaceutical products. This will enable fast track approval for patented, generic and biosimilar medicines.
Pharma exports in 2021-22 sustained growth despite global trade disruptions and drop in demand for COVID related medicines. The trade balance continues to be in India’s favour, with a surplus of USD 15175.81 million. The pandemic helped enhance and accelerate pre-existing trends. One massive difference is the use of artificial intelligence (AI) and machine learning, and speeding up drug research and development process. Start-ups are experimenting with the use of these technologies to address numerous difficulties in the pharmaceutical sector such as manufacturing process automation and optimisation, as well as successful marketing and post-launch strategies.
The Russia-Ukraine war has also not significantly affected pharmaceutical export from India because Indian companies have not withdrawn from the region and Indian pharmaceutical companies continue to export their products to the region, including exporting COVID-19 vaccines.
It is of important that India takes charge of its current role in the global pharmaceutical industry, explore possibilities to consolidate and strengthen its position in light of geopolitical and economic shifts, and attain self-sufficiency as a globally competitive player in the pharma sector – with innovation as a guiding principle for future growth.
This article was originally published in The Economic Times on 22 June 2022 Co-written by: Arvind Sharma, Partner; Nikita Sayam, Associate. Click here for original article
Contributed by: Arvind Sharma, Partner; Nikita Sayam, Associate
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