Modi government has to do much more for India to truly emerge as ‘pharmacy of the world’

India’s progress in medicine and pharmaceuticals came to the limelight in the beginning of the outbreak of the conona pandemic when ‘quinine’ suddenly became a much sought after drug all over the word including the USA and several countries of the Europe. India emerged as the major source of supply of this drug, and this rekindled India’s hope to emerge as the ‘pharmacy of the world’.

The breakthrough in making two vaccines for COVID-19 further strengthened India’s position also as a major supplier of these vaccines to control the disease that has caused unprecedented devastation of the health and economy of the world. According to reports, seven other vaccines are in pipeline.

India has been nursing a hope of emerging to be ‘pharmacy of the world’ for quite some time. Even before the Modi government came to power in 2014, the country was almost self-sufficient in case of formulations. Imports were being made on quality and economic considerations and not necessarily due to non-availability from domestic sources. The value of imports of medicine and pharmaceuticals products in 2013-14 was Rs 17,944 crore while of exports were Rs 6,90,236 crore.

Modi government has had advantage in this affair but could not fully explore it in the last seven years of its rule. The pharmaceutical sector was contributing around only 1.72 per cent of the GDP in 2019-20, though Indian pharmaceutical industry was the third largest in the world in terms of volume and tenth largest in terms of value.

The total size of the industry, including drugs and medical devices, was of around $43 billion and having a growth rate of 7-8 per cent in drug sector and 15-16 per cent in medical device sector. Total exports were to the tune of $20 billion of which drugs formed around 90 per cent of the total exports. The imports amounted to around Rs 72,800 crore of which medical devices formed around 52 per cent.

How closer we have become to realize our dream can further be imagined in the fact that India has become the largest provider of generic drugs globally. Access to affordable HIV treatment from India is one of the greatest success stories in medicine.

India is also one of the biggest suppliers of low-cost vaccines in the world, apart from the newly introduced two COVID-19 vaccines made in India. It is because of low price and high quality that Indian medicines are preferred worldwide.

The only thing of great concern is that this government is very slow in exploring the full potential of the development in the sector already

achieved during the earlier rules. For example, during five years between 2010-11 to 2014-15, the pharma trade of the country registered around 50 per cent of growth from $10.23 billion to $15.13 billion.

However, it grew only to $18.75 billion in 2018-19. It stood at $20.72 billion in 2019-20. Total drugs and pharmaceuticals export during April 2020 to November 2020 was $15.87 billion, in which almost $2 billion was contributed in the month of November.

Though India is expected to rank among the top three pharmaceutical markets in term of incremental growth in 2020, it fails to realize its full potential. True, India is largest supplier of generic medicines globally which is 20-22 per cent of global export in volume, but it could have been done better, since the ground for it was already prepared by the earlier governments.

It just disheartens that India could export bulk drugs and drug intermediaries of only $3.89 billion in 2019-20, and $2.52 billion in 2021-22 by October 2020, though it was in advantageous position due to its lowest manufacturing cost in the world, lower than USA and almost half of Europe.

The Indian pharmaceutical industry is growing at only 15 per cent of the last five years which is less than the expected growth rate at CAGR 22.4 per cent to touch $55 billion by 2020. It is despite the significant growth opportunities that were before the government.

The reasons behind much less than expected performance are not too difficult to find out. We need longer-term stable policy environment for the pharmaceutical sector, as it has already been noted by the WTO and other organizations that frequent changes in policy and tariff make trade uncertainties. India must also ensure the world class quality of drugs both for domestic consumption and exports, and also create an environment for R&D to produce innovator drugs.

Pharmaceutical is among the top eight sectors of India attracting FDI. After the abolition of Foreign Investment Promotion Board in 2017, the government has introduced a new system by putting some on the automatic route and some are being processed by the government. However, only 25 FDI proposals worth Rs 2496 crore could be approved by March 2020.

The government must look into the matter to find out the reasons of such a small FDI inflow in this sector despite a great potential, especially when FDI inflow in this sector is registering significant decline since 2014-15.

Indian pharma sector and exports may grow faster than even before, but only if government takes right decision at right time. This government tends to take rash decisions and policy experiments, which it needs to put on hold for some time, and remove the all impediments to make India the ‘pharmacy of the world’ in the real sense of the term without further delay.

Ensuring growth and development of the Indian pharma Industry is thus imperative, and government must come out with big investment plans to promote its growth, innovation, and R&D.

(IPA Service)

(Views expressed are personal)