India exported 651 million dollars of pharmaceutical products to Latin America as against China's 404 million in 2016. India has consistently beaten China in the last five years in pharma exports to Latin America, as seen from the tables below. What is even more interesting is the fact that India imports bulk of its raw materials from China, converts them into finished formulations and exports them.
Exports in 2016 in millions of dollars
Export figures in millions of dollars
India's exports are the less expensive generics in contrast to the costly patented products supplied by MNCs. This has given rise to a positive perception of India among Latin American governments and people as an important contributor to their objective to reduce the cost of health care. In fact, the governments of Brazil and Chile had taken initiatives to invite and encourage the entry of Indian pharma companies 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.
India is also a major supplier of bulk drugs (pharmaceutical raw materials called as API) to the Latin American manufacturers of pharma products. The export of bulk drugs are over 300 million dollars. This helps the Latin American manufacturers to reduce their cost of production, thanks to the low cost inputs from India. Indian pharmaceuticals are not considered as a threat to Latin American industry which has been hurt badly by the flooding of Chinese manufactured products in many sectors.
Some Indian pharma companies have set up manufacturing plants in Brazil, Mexico and Argentina. Besides supplying to the local markets, these units also export to US and other countries outside the region. The Glenmark plant in Buenos Aires has become the company's global hub for the manufacture and export of oncological products to over twenty countries including US.
The success and positive perception of Indian pharmaceuticals have helped in enhancing the image of other Indian companies as well as India in Latin America. The Latin American trust in the Indian medicines has helped in increasing their confidence in the quality of other Indian products.
India's pharma lead over China is true not only in Latin America but also in the rest of the world. India's global export of pharmaceuticals are double that of China. In 2016, India's exports were 13 billion dollars, as against Chinese exports of 7 billion. India is the tenth largest pharma exporter in the world while China's rank is 16th.
India is the fourth largest supplier of pharma to US with 5.1 billion dollars while Chinese exports to US were just 1.1 bn in 2016. Indian companies account for 30% of the generics imports of US. It is also creditable that India has the largest number (over 200 ) of US FDA approved pharma units outside US. Some Indian firms such as Sun pharma, Lupin, Reddy Labs and Cipla have established manufacturing units in US.
India leads China in exports to European Union as well. In 2016, India's exports were 1.56 billion dollars as against China's 1.36 billion. Even in Africa, where the Chinese have spoiled the market with massive credit and some non-transparent practices, India's exports to Africa were 2.8 billion dollars as against 618 million of China in 2016.
UK is the second largest market for Indian pharma exports which stood at 464 million dollars in 2016. Exports to other developed markets in 2016 were: Australia-220 million, Germany-161m, France-145m, Netherlands-143m, Canada-143m and Belgium-125m.
India exports half of its total production of pharmaceuticals. Exports to US and other rigourously-regulated western markets account for over fifty percent of India's global exports. This has given the quality stamp to Indian pharmaceuticals adding to the confidence in Indian medicines in Latin American and the rest of the developing world.
India is the largest exporter of generics (by volume) in the world, accounting for 20% of global export volume. The low cost of production and the large and strong base of scientific and technical human resources have given Indian exporters of generic medicines a competitive advantage. The world has recognized India's role as the main contributor to the lowering of cost of health care including in the developed countries like US and UK. Western NGOs was well as foundations such as Bill and Melinda Gates Foundation, Doctors without Borders and Clinton Foundation buy Indian generics for use in their healthcare work in Africa.
There are, of course, many challenges the Indian pharma exports face. S
ome Indian companies including Ranbaxy had been caught and fined or their products banned by US FDA and its EU counterpart for violations of quality standards and authenticity of data. There is shortage of qualified pharma scientists for the research and development work. While the exports are dominated by a few large players, there are many small and medium companies which need technological and infrastructural support. There is need for strengthening of the Indian regulatory system and training and skill development of human resources for the industry in collaboration with the educational institutions. The Indian companies have profited by mass producing those products whose patents have expired. But they need to move beyond this business model and become innovative with more investment in research. The Government of India should also keep up its solid stand against pressures from US to change Indian patent laws.
Pharmaceuticals are not a big deal or focus for China for whom it is the 39th largest export item. But China has started catching up fast. But for India, pharma assumes more importance as the fifth largest export item. Given this significance and the competitive advantage which India has, it is time for the government of India to give special focus to the pharma exports just as it has done successfully for IT. The government and the Indian pharmaceutical industry should work out a comprehensive strategic policy to increase the exports in the future. According to a June 2016 study by Assocham, India's pharma exports could reach 20 billion dollars by 2020.
While the large exports of IT and diamonds face downturn due to unfavorable global trends and economic situation, the exports of generic medicines offer a brighter prospect ahead in the short as well as long term. Both the developed as well as the developing world are concerned with the high cost of healthcare and the expensive patented medicines. They are keen to use more generics to cut down the cost of health care. This is an unmissable opportune time for India.
The success of the pharma exports should be an inspiration for Indian exporters of other manufactured products who complain about and suffer from Chinese competition.
Source of data: International Trade Centre, UN, Geneva