Pharmaceutical companies need time to switch sourcing from China to other countries as it will be costly, said Daara B. Patel, Secretary-General, Indian Drug Manufacturers Association to BOOM.
Patel said Indian companies are already facing a delay in sourcing raw materials as the consignments were stuck at Indian ports, post the India-China border clash at Galwan valley. India imports $3.5 billion worth of bulk drugs from China.
"We don't know more than what a few news reports and clearing agents have told us, that there was a rumour that China was trying to pump some narcotic products illegally into these raw pharmaceutical products we import," Patel said.
That's why the government has been extremely cautious and wants a physical inspection before giving a green signal. "Few consignments have started getting cleared since yesterday, the situation will improve in the next two-three days," Patel said.
Patel adds that a further delay can cause problems in the sector. "As of now, we have a 40-45 day stock of finished products. But if the material that is lying in the customs is not cleared in 5 to 8 days, there might be some hiccups. There will be a delay in getting paracetamol, antibiotics, and vitamins," he said.
Patel further elaborates that production has already been not at 100% capacity because of COVID-19 and the lockdown. Production has already been running at only 70%. But this is better from the situation in the complete lockdown in April and May when pharma manufacturing companies were only functioning at 20-30% capacity.
Given the rising tensions at the Indo-China border, and the government's decision to ban 59 Chinese apps, will the pharma sector also move away from importing raw materials from China?
While Patel thinks self-reliance from China is a possibility in a year's time, but pharmaceutical companies can't switch immediately because the sector is highly regulated with price controls, and switching to a different country means carefully testing how their raw materials are. Sourcing from China helps keep the prices down, but China has also increased prices in the last three-four months.
"We need material from China right now," Patel said.
The government has come up with a production scheme where the government has earmarked Rs 6000-8000 crore as incentives for existing suppliers who want to increase capacity, or if there's a new product or plant, the government will support the manufacturer. This might help the India pharma sector make it self-reliant in a year or three years' time.
"In the next year, we can bring down our dependency on Chinese products to 20-25%, and in three years' time there should be a change of strategy and we should be self-reliant as far as China is concerned," he adds.
Patel adds on the bid to be free from dependence on China. He said, "We have to wait and watch. In the next year, things will be clear if we can manufacture independently. This is a good thing, since its a war-like situation with China, what if they decide to stop supplying us? Self-reliance is the way forward."
Will this affect India's position as a large exporter of pharma?
Patel thinks the problem is temporary because of the delay of Chinese raw materials coming in late. "But once we become self-reliant, our export market will not be shaken up. In fact, despite this situation today, factoring in the lockdowns and COVID situation our exports are doing pretty well," said Patel.
Highlights:
-Indian pharmaceutical sector is highly regulated, so companies need time to switch sourcing from China to other countries.
-A delay in the shipment of raw materials can result in a delay in manufacturing a few drugs. Pharmaceutical industries are already functioning at 70% capacity because of the COVID-19 situation.
- The government has come up with a production scheme where the government has earmarked Rs 6000-8000 crore as incentives for existing suppliers who want to increase capacity, or if there's a new product or plant, the government will support the manufacturer.
-India can meet most of its pharma raw material requirements in a year's time without depending on China.
Catch the full interview on YouTube or click on the link here.