Pharma exports post marginal growth in dollar terms

However, the bulk drugs and drug intermediates continued in the declining trend

Pharmaceutical exports from India posted a marginal growth of 1.79 per cent for the April-June quarter in 2014-15 in dollar terms while bulk drugs and drug intermediates continued the declining trend.

The situation was no different even in the subsequent months of the current financial year, said PV Appaji, director general of Pharmaceutical Export Promotion Council of India (Pharmexcil), while attributing the near stagnation in dollar earnings by domestic pharma players to their own actions triggered by the internal competition.

“The Union commerce ministry is a little worried over the situation as the pharmaceutical sector is one of the major foreign exchange earners for the country,” Appaji told Business Standard.

Data available up to June in the current financial year show exports at $ 3.92 billion as compared with $3.85 billion in the April-June quarter of the last financial year. Only formulations managed to grow at a little over 10 per cent while other categories, including bulk drugs, posted a negative growth during the period.

Even for formulations, which form the bulk of exports, the growth almost halved compared with an 18.1 per cent increase for the full year 2013-14 and 26.8 per cent growth registered in the previous year. The value of exports of bulk drugs declined 14 per cent to $3.9 billion last year over $4.54 billion in the previous year. The value of the total pharma exports grew only 1.49 per cent at $ 14.9 billion in 2013-14.

Appaji said several initiatives, including sensitising domestic companies on regulatory regimes of various countries, were being taken up for improving compliance and thereby enhancing exports to those countries. Pharmexcil is creating a separate division for dealing with drug regulatory issues, according to him.

While there could also be other causes behind the price erosion of generic drugs in the international markets such as impact of consolidation of retail network in the US market, industry associations are citing even the domestic policy issues as a cause for price erosion of Indian products overseas.

Indian Drug Manufacturers Association (IDMA) deputy director general T R Gopalakrishnan said price controls imposed in the domestic market also had its impact on the prices of these products in the international markets.

“The importers of Indian drugs started keeping the prices fixed by the National Pharmaceutical Pricing Authority (NPPA) as a reference price as they demand parity on export prices of similar drugs,” he said, adding those who had invested heavily in quality manufacturing standards were losing export orders and thereby also domestic business.

It may be recalled the NPPA had recently withdrawn its decision to cap the prices of 108 medicine that are outside the essential medicines list (NELM). The government already has brought 348 drugs under the drug price control order, 2013. According to Gopalakrishnan, the government needs to take more proactive steps to support the domestic industry that would also help in the growth of exports.

Export of bulk drugs and drug intermediates from India has been shrinking in recent times as the dependence on cheaper Chinese imports by the domestic formulations industry has become a double whammy for the bulk drug manufacturing, said industry observers. Value of bulk drug exports in the April-June quarters showed a negative growth of 9.34 per cent at $ 859.43 million as compared with $ 948 million in the corresponding quarter last year, according to Pharmexcil.

According to Gopalakrishnan, the Centre was working on a package of incentives and other support for the growth of the industry.