Japan trade pact talks move forward

The deal would allow Indian firms that make low-cost drugs to sell in Japan.

The negotiations for the India-Japan Comprehensive Economic Partnership Agreement (CEPA) have gained momentum with the two sides moving towards a deal on allowing Indian companies that make low-cost drugs to sell in Japan.

The Prime Minister’s Office is known to have had a brief discussion with select Indian drug-makers to sort out the issue as quickly as possible.

India is asking Japan to agree to a one-year time-frame for clearing applications from its drug companies. In turn, India may agree to the Japanese view that this one year should not include the time taken by Indian companies to respond to questions raised by the Japanese drug regulatory authority, say industry sources.

The talks on the pact had come to a standstill in the first week of October as Japan was unwilling to give preferential access to Indian drugs. It was also not willing to commit on allowing Indian banks to open branches on its soil. The Japanese trade envoys had said that drugs manufactured in India were not suitable for them as the Japanese belonged to a certain anthropological group, sources had earlier told Business Standard. Indian negotiators had pointed out that people belonging to the same anthropological group reside in many parts of the country, including north-eastern states like Assam and Arunachal Pradesh.

Japan, the world’s second-largest pharmaceutical market after the US, recently brought in policy changes to promote use of low-cost, off-patent medicines in place of costly patent-protected drugs.

Though many leading Indian companies are interested in tapping the Japanese market, India’s biggest drug-maker, Ranbaxy Laboratories, by virtue of being a subsidiary of Japanese major Daiichi Sankyo, is felt to be the front-runner.

According to industry representatives, the deadline to scrutinise the applications is essential to enter the $60-billion Japanese drug market, which has a stringent marketing approval process.

Medicine exports to Japan (nearly $180 million in 2007-08) constitute only 1.3 per cent of India’s drug exports. The island nation imports nearly $ 10 billion worth of pharmaceutical products every year.

“There are instances where Japanese authorities have taken several years to approve generic or low-cost off-patent medicines. This was proving to be the biggest entry barrier for Indian companies. So any decision, either to approve or to reject marketing licence, taken within a fixed period is welcome,” said an executive of an Indian drug company.