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Health Security At Stake

India’s dependence on China for medicine ingredients is a matter of concern.

Written by Sachin Chaturvedi |
August 25, 2016 12:45:17 am
india, china, india china, india dependence on china, china india, india china medicines, indo china, india china relations,  active pharmaceuticals ingredients, API, india dependence on API, national security advisor, CIPLA, Y K Hamid, pharma ibndustry,  pharmaceutical sector, india  pharmaceutical sector, Patent Act, Bengal Chemical and Pharmaceutical Limited, BCPL, overcome dependence, indian express opinion, opinion In 1991, Chinese ingredients accounted for only 0.3 per cent of the bulk drug imports, by 2012 their share had gone up to 47.61 per cent. (Representational image)

During the last session of Parliament, members expressed much concern over the country’s increasing dependence on China for active pharmaceuticals ingredients (APIs). During the debate, the government informed MPs that the National Security Advisor had warned it about the matter. The issue has implications, not just for India’s pharmaceutical exports, but also other key areas — especially in matters pertaining to access to medicine. Y. K. Hamied, the chairman of the generic manufacturing company, CIPLA is not off the mark, when he says, “if China decides, one day, to stop exports to India, the pharma industry’s output would be zero.”

In 1991, Chinese ingredients accounted for only 0.3 per cent of the bulk drug imports, by 2012 their share had gone up to 47.61 per cent. The latest figures show that this share stands at almost 66 per cent.

India has attached high priority to the pharmaceutical sector since Independence. The adoption of the Patent Act, 1970 opened the doors for greater participation of Indian firms in the production of pharmaceuticals. The pharmaceutical sector is a major player in the manufacturing landscape of the country. The founding of Bengal Chemical and Pharmaceutical Limited (BCPL) at the beginning of the last century marked the industry’s inception and by the early 1990s, it had more than 6,000 units. After that, however, the number of units declined and people lost jobs, but somehow industry performance remained at a level that did not demand the policymakers’ attention.

In 2015, the Indian pharmaceutical sector accounted for about 1.4 per cent of the global pharmaceutical industry in value terms and about 10 per cent in terms of volume. Its share in global generic exports is around 20 per cent. Its diverse portfolio is a major strength of the Indian generic industry. With almost 60,000 generic brands across 60 therapeutic areas, the sector has a huge requirement. India’s strength lies in formulation production, or processing bulk drugs into finished products. Bulk drug production, the production of active ingredients, has not received enough attention.

In a globalised economy, closing markets or overlooking cost-effective ingredients is not a feasible option. But there are policy choices which should be leveraged at the earliest, because the overdependence on China for APIs threatens India’s dominance in generic medicines. There are four major ways by which we can overcome the reliance on China.

First, domestic production of APIs should be encouraged. An inter-ministerial committee headed by secretary, department of health research had recommended several measures for rejuvenating API production in the country. It had advocated specified pharmaceutical zones. The government should work on this recommendation and revive closed units of enterprises like the Indian Drugs and Pharmaceutical Limited (IDPL). At a time, when more jobs are needed, smart strategies to kickstart improvements in operational efficiencies are extremely important. We should not forget that enterprises like the IDPL were not established with the objective of making profits; health security drove the decision-making process.

Second, despite several opportunities and incentives, established Indian pharmaceutical firms have not stepped up R&D measures to fulfill their needs for ingredients. Some policy measures are now needed to press for enhancing the use of domestic content by this sector.

Third, diversification of sources of imports should be seriously explored. In this effort, key industry partners should be consulted and their concerns should be taken on board.

The fourth area that needs addressing is data discrepancy. The Research and Information Systems for Developing Countries used the chapter on pharmaceuticals of the Directorate General of Commercial Intelligence and Statistics (DGCIS) — as reported by the Centre for Monitoring Indian Economy — to calculate India’s dependence on pharmaceutical imports from China. These calculations showed that the imports from China in 2014-2015 did not exceed $ 122 million, a mere 0.2 per cent of the pharmaceutical sector’s total imports. One needs to add imports of chemicals, organic and inorganic, in this list of pharmaceuticals. Once they are added, the volume of the pharmaceutical sector’s imports from China goes up by a whopping 62 times from that reported by the DGCIS.

The writer is director general, Research and Information Systems for Developing Countries. Views are personal

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