Thursday, November 19, 2015

Latin America: a billion dollar destination for Indian pharma exports

Pharmaceutical exports of India to Latin America crossed the billion dollar milestone in 2014-15 ( April to March - India's financial year) reaching 1063 million dollars. 

Brazil is the largest destination of exports with 374 million dollars, followed by Venezuela-146 m, Mexico-126 m, Colombia-67 m, Chile –56 m, Peru-49 m, Argentina-41 m, Dominican Republic –27.6 m,  Guatemala – 27.1 m  and  Haiti – 26.9 m.
Pharma exports were 7.7% of India's total exports of 13.7 billion dollars to Latin America in 2014-15.
Latin America accounted for seven percent of India's global pharma exports of 15.3 billion in 2014-15. The pharma exports to Latin America have increased by 12 % from 949 m in 2013-14, while India's global exports have shown only a marginal increase of 2.6%. 

The exports to the region have steadily increased from 826 m in 2011-12 to 916 m in 2012-13 to 943 m in 2013-14 and to 1063 million dollars in 2014-15 despite the slow down in the growth of the region since 2011.

In the past, India exported more bulk drugs (raw materials and intermediates) and less finished formulations to Latin America. But this trend has reversed since 2012-13. Out of the total of 1063 m in 2014-15, formulations were 680 million dollars and bulk drugs 350 m. The bulk drug exports have declined from 426 m in 2011-12 to 350 m in 2014-15 reflecting the trend of growing value addition by Indian exporters. The export of finished formulations have shown a remarkable increase from 393 m in 2011-12 to 680 million in 2014-15. Exports of formulations to Brazil have almost doubled from 113 m in 2011-12 to 222 m in 2014-15 despite the more stringent inspection procedures of ANVISA, the Brazilian drug regulator. In the case of Venezuela, most of the exports are formulations. Mexico is a contrasting case where finished formulations accounted for just 20 m  while bulk drugs were 100 m. 

There is scope for india to increase the exports in the future. The pharma market of the region, estimated to be around 80 billion dollars, is expected to reach 100 billion in the next five years. The governments of the region are promoting generic medicines to cut the cost of health care in their budget as well as for the consumers. The governments (majority of them centre-left) are spending more on health care as part of their inclusive development agenda. Millions of people are coming out of poverty, thanks to the pro-poor policies of the governments and this new lower middle class can afford to buy medicines. The governments and the consumers in the region have come to realize the value of affordable Indian generic medicines. In fact, the governments of Brazil and Chile had taken initiatives in the last decade to invite and encourage the Indian pharma entry into their countries to put pressure on the MNCs and local drug makers to increase the availability of generics and reduce the cost of medicines. The Indian pharmaceutical companies have established their image and brands in the region. The long distance factor has kept out the small unscrupulous Indian traders and it is only the reputed Indian exporters and manufacturers who have invested in the entry into Latin America. 

India's export of generics to Mexico, Chile and Peru will, however, face some challenges when these three countries ratify the just-concluded Trans Pacific Partnership (TPP) which is said to be more MNC-friendly with stricter patent protection.

Some Indian companies such as Reddy Labs, Lupin, Ranbaxy, Torrent, Cellofarm and IPCA Labs have local production facilities in the large markets of Brazil and Mexico. Glenmark has a plant for oncological products in Argentina. Some of these Latin American units are also used for exports. 

In a seminar organized at the National Autonomous University of Mexico in the first week of October 2015 ( in which I had also participated as a speaker) a Mexican expert on pharma patents made a comparison between the pharma patent regimes of Mexico and India. According to him, Indian and Mexican pharma companies had the same levels of scale, technology and growth till the eighties. The government of Mexico had adopted the patent regime of the developed world under pressure from US and the European Union with whom it has signed FTAs. This has favored the domination of the multinational drug makers at the expense of the Mexican domestic firms who have failed to grow like the Indian pharma firms. The Mexican expert expressed admiration for the policy of the government of India which has helped create a formidable Indian pharma industry. 
The growing popularity of Ayurveda in the region has opened up opportunities for export of Ayurvedic medicines and preparations too. There are some Latin American universities and institutions which give regular courses in Ayurvedic system. The Indian government needs to extend support to these Latin American initiatives and facilitate collaborations and exchange programmes with the Indian Ayurvedic institutions. 

Financial Express of 20 November 2015 published this article

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