As the US tries to reduce dependence on drugs from other countries, especially essential generic drugs, demand issues can arise for Indian exporters. The local industry in India, however, feels that creating indigenous capacity to manufacture drugs would take time, and also prove to be expensive for the US.
President Donald Trump's administration awarded a contract worth nearly $812 million over ten years to a newly incorporated US company called Phlow Corporation to manufacture drugs and even active pharmaceutical ingredients (APIs) in the US to fight Covid-19.
US is one of the major export destinations for drugmakers in India, accounting for roughly 33 per cent of the country's drug exports. In 2019-20, exports to US clocked a 16 per cent growth rate to $6.7 bn. Indian drug makers account for almost 30 per cent of the market for generic drugs in the US.
A leading exporter to the US that draws over 40 per cent of its overall revenues from that market said that it was not a cause for immediate concern. Another drug maker said that it would take time for the company to scale up manufacturing capacities.
Pharma industry lobby groups in India said that they were studying the development and did not have anything concrete to say at present.
"Manufacturing in the US would be expensive when compared to sourcing from India. At a time when the countries are going through economic crises, it looks unlikely that Americans would want to shell out more for their drugs," said an industry veteran, who did not wish to named.
A government official, meanwhile, said, given the current times, this is going to be the trend. "Every country would try to become self reliant in essential goods. The Covid-19 crisis has exposed our vulnerabilities," he said adding that they would monitor the situation. Meanwhile, an exporter added that the list of drugs used for Covid-19 is not too long and hence would not impact India's overall exports to US in a big way.
On its website, Phlow says that more than 80 per cent of APIs (used in US) are produced overseas and that manufacturing of generic drugs in the US is vulnerable to disruptions in foreign drug supply chains. This has been made more pressing by the recent trade wars and the Covid-19 pandemic, the website said. Only recently, Trump pressured India for banning exports of hydroxychloroquine that is being used as prophylactic for healthcare workers.
According to reports, Phlow has already started manufacturing APIs and formulations for about 12 medicines that are needed to treat hospitalised coronavirus patients. These include medications for pain management, blood pressure support, antibiotics and sedation medicines. The company is building a manufacturing facility in Virginia.