Pharma firms in fix as call to boycott China goods gets louder

Vijay C Roy

Tribune News Service

Chandigarh, July 1

As call to boycott Chinese goods gets louder in the backdrop of India-China standoff, Indian drug makers which are heavily dependent on China for active pharmaceutical ingredients (APIs) are in a fix. According to them, it will take at least five years for them to become self-sufficient.

According to the industry, Chinese API manufacturers have an advantage over European countries in terms of cost competitiveness. The raw material sourced from European countries is 10% costlier than that from China.

In order to become self-sufficient, we have to start backward integration. Besides individual efforts, the government has to work shoulder-to-shoulder with the industry and if it happens, it will take at least five years to become self-sufficient in APIs. —Dr Dinesh Dua, chairman, Pharmaceuticals export promotion council of india

India’s annual API import is worth $3.6 billion and 70% of this comes from China. “Till 2000, India was number one in the world in the production of generic APIs. Then the Chinese government created a huge pharma park in around 25,000 acres. Their economic model was very different from India. Initially, incentives such as free land, zero rentals or lease for 20 years, free water and electricity and subsidy on raw materials were provided. Once the units got established, the government started charging subsidised amount from them. And after 10 years, they started charging them full,” said Dr Dinesh Dua, Chairman, Pharmaceuticals Export Promotion Council of India (Pharmexcil). According to the industry, this is phenomenal and has never been replicated anywhere. Today, China has a 20% market share of $150-billion industry or almost 50% share of the generic APIs.

“In order to become self-sufficient, we have to start backward integration. Besides individual efforts, the government has to become a partner with the industry. We have to do it in a phased manner as China is 20 years ahead of us. The government has to work shoulder-to-shoulder with the industry and if it happens, it will take at least five years to become self-sufficient in APIs,” Dua said.

“The government has shortlisted 53 APIs to encourage manufacturing by creating a bulk drug park. This will cut dependency on import,” said Rajesh Gupta, a pharma manufacturer in Baddi.

The northern region contributes 10% to exports from the country, with Uttarakhand, Himachal Pradesh, Punjab and Haryana as major centres. The Rs 40,000-crore pharmaceutical industry in Himachal accounts for every third drug in the domestic market.