Bid to Make ‘Made-in-India’ Drugs in Foreign Lands a Nonstarter

In move to boost India’s bulk drug production by shifting a sizeable part of the manufacturing capacity to foreign countries that offer generous incentives and tax breaks proves a nonstarter in the wake of a steep rise in active pharmaceuticals ingredients (APIs) sourced from China.
Uzbekistan, a former Soviet republic, recently approached the Central government with a proposal laced with incentives, while Tartarstan and Tyumen Region, members of the Russian Federation, had also evinced interest in setting up joint ventures with Indian manufacturers. Earlier this month, a high-level Uzbek business team visited New Delhi and interacted with Indian companies at an event organised by Pharmaceuticals Export Promotion Council of India (Pharmexcil). Following this, Commerce Minister Suresh Prabhu led a business delegation to Uzbekistan last week to scout for opportunities in various sectors including pharmaceuticals.
Despite these efforts, most domestic manufacturers continue to rebuff the idea to produce ‘made-in-India drugs’ at foreign locations and view the current price rise in active pharmaceuticals ingredients (APIs) imported from China as an opportunity to boost domestic industry. Pharmexcil executive director Raghuveer Kini, who visited the Uzbek capital Tashkent as part of a joint working group to discuss the proposal, says it is up to the industry to take the final call. “We are a promotional agency and our job is to facilitate drug exports. We’ve organised the session to enlighten our members about the Uzbek plan. The decision is theirs,” he told Pharmabiz in a telephone interview.
Currently, India imports over 60 per cent of its bulk drug requirement from China and the government has been looking for ways to promote the domestic industry– comprising around 1,150 units producing 350 APIs — to reduce dependence on the neighbouring country. Foreign states such as Uzbekistan, Tartarstan and Tyumen entered the scene at this juncture with enticing investment proposals. In exchange for Indian technical expertise, these countries are offering incentives including free land, 10-year tax holiday, faster environmental clearances and subsidised power and water.
However, a sudden and steep rise in price of Chinese APIs, triggered by a decisive push by Beijing to root out polluting industries across, has changed the market dynamics. “Indian pharmaceutical sector that depends heavily on APIs imported from China is now feeling the pinch. The price of some APIs has gone up by 40 per cent in the last few months in the Indian market and many firms are struggling to fulfill their contractual obligations,” Bihar Drugs and Pharmaceutical Manufacturers’ Association president Sanjiv Rai pointed out.
Domestic API makers are striving to turn this scenario to their advantage, and the Central government is also waking up to the need to promote the indigenous manufacturing sector. “This is not the time to look abroad, but to look inward and promote our firms. The success depends on how fast we bring in reforms to the regulatory environment,” says Indian Drug Manufacturers Association Bulk Drugs Committee chairman Yogin Majmudar.
Of late, the Department of Pharmaceuticals has adopted some new measures to boost the domestic bulk drug sector. A Centre-state financial aid initiative, with a budget allocation of Rs.200 crore, has been unveiled to develop common facility centres at bulk drug parks. A high-level task force was constituted to formulate a roadmap for API sector and study global manufacturing practices. But many of these initiatives remain on paper and there is little progress on the ground, say industry representatives.