Hurdle all the same

TRADE ZONE/ INDUSTRY VIEW

Non-tariff barriers are a deterrent for pharma trade.

India's pharmaceuticals exports are strategic for the country's export basket as they are expected to reach $30 billion by 2009. Currently, India represents just $6 billion of the $550 billion global pharmaceutical industry, but its share is increasing at 10 per cent a year, compared to 7 per cent annual growth for the world market overall.

The sector represents 8 per cent of the global industry by volume (13 per cent by value), putting it in fourth place worldwide. Non-tariff barriers (NTBs) have emerged as a major impediment to the healthy future for Indian pharmaceutical exports. Table below captures some of the recent example of NTBs which Indian companies are facing. For instance, apart from China, the African context is very crucial as Indian pharma-exports to that region are significant in volume.

The NTBs (reported Dec 2005 & Feb 2007) have included the banning of Indian exporters due to stringent registration requirements to protect domestic industry, Nigerian authorities consider all unregistered drugs as spurious. Meanwhile, for GCC countries (Jan'07) their regulator mandate that at least three drugs should be listed in the European Union's approved list of 22 drugs before entering the GCC market.

The above discussion shows that NTBs can be broadly classified into the following areas:Import registration systems at the destination countries, multiple licensing requirements, Stringent Good Manufacturing Practice (GMP) requirements, tougher Good Laboratory Practice (GLP) requirements, Disparate regulatory laws for drug testing, destination government's policies on price control of drugs, domestic problems (like porous borders of the destination country) leading to legal action (like black-listing) against Indian firms.

Therefore, strategies that will help Indian industry alleviate the impact of such NTBs, should be designed by using legitimate tools in the realm of WTO/FTAs. 

Recent NTBs against Indian exports
Country/ region where NTBs have been reported	Date of Reportage	Product sub-category affected	NTBs details
Kingdom of Saudi Arabia	Jan-06	Prescription drug	Marketing of a drug in Saudi Arabia only allowed if it has received a marketing Saudi Arabia drugs approval specifically in the EU and the US.  The formulation to be exported to Saudi Arabia has to be the same and it has to be manufactured from the same site where the product meant for export to  the US or UK is manufactured. Drugs originating from within GCC members are accorded marketing permission with less stringent conditions. Indian firms are forced to quote a price that is at part with the domestic price of the product.
China	Jan-07	Broad category wide effect	Expensive and time consuming procedures for product and company registration and for procuring Import Drug License.  Long customs procedures, re-inspections and discriminatory packaging  and labeling regulations. Tough and tedious remittance procedures for foreign players. Distribution hurdles within China Lack of transparency in information about Chinese markets and trade statistics. IP disputes

The author is chief economist at Economic Laws Practice, Advocates & Solicitors