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Novel strategies needed to tap South Asian pharma market

Nandita Vijay, Bengaluru
Thursday, January 7, 2021, 08:00 Hrs  [IST]

Since South Asia provides huge potential for active pharmaceutical ingredients (APIs), biologics, biosimilars and vaccines, Indian pharma companies should devise novel marketing strategies to tap these markets, opine experts.

The region covers Afghanistan, Bangladesh, Bhutan, India, Pakistan, Nepal and Sri Lanka; Afghanistan and the Maldives. India is the leader in this region for pharma and healthcare.

According to Dr Dinesh Due, Chairman, Pharmexcil and Chairman, Entrepreneurship & Start Ups, CII North India, India is known as the pharmacy of the world. It exports to 211 countries and has gone several notches higher in the last few years in terms of supply value added drugs to these countries. So, the exports especially the generics will skyrocket this year. From US$ 20.5 billion to approximately with the current trends to US$ 25 billion, which means an increase of almost around 25 per cent. This is unparalleled in the history of Indian pharma.

Coming to South Asia, it is not a big market for Indian pharma, except Bangladesh and this country does not allow formulations to enter. They have created entry barriers to promote their own industry. They only allow the bulk drugs or APIs for which the business is going on extremely well. We will grow in Bangladesh at least by 15 per cent or more in the API side, Dua told Pharmabiz.

Now in the case of Pakistan, there is a combination of both direct and indirect exports. Direct exports are small because only particular molecules are allowed to be imported. But there is a significant amount of business which happens through Dubai. Typically, a Dubai company takes an order from India, changes the label and exports it to Pakistan which is indirect exports. This is going on exceedingly well. However, the market is small.

In the case of Nepal too, exports from India are a smooth take off for formulations. In the API side, there is competition from china which is frighteningly getting close to Nepal. However, it has not affected our pharma business in Nepal so far, but if the government of India does not take quick steps to go closer to Nepal, it would definitely affect us. As Chinese companies, with the help of their government give huge discounts, we may lose that business.

But that really does not matter for India as it is a small country so if even if a lose a million here or there does not really matter. They will suffer because they will never get the documentation and quality from China which we can provide. As far as the formulations are concerned, China cannot compete in quality and pricing and does not have the capability to supply particular oral formulations. So, China does not stand any chance in terms of supplies to Nepal as the business is small.

Sri Lanka is an interesting market.  It is predominantly a tender market and the main constraint in trading in the region is the need for an agent to operate in the island country. The Indian pharma is in good shape here as India controls 40 per cent of the market. But the main challenge is if the agent is unscrupulous and does not give the NOC, then it may hamper export. Therefore, access to an upright trading agent is a critical success factor.  So far Indian companies have good agents.

Since Maldives is smaller than Haryana, Indian pharma is not so keen but yet there are exports valued at US$ 40 million. But there are no specific drugs. Whatever is their requirement from Indian drug companies or suppliers is not much. They take it is a comfortable market both on the payments and the relationship that they have with India. This is an auto mode country where the distributors are importers in a regular manner from India and in fairly competitive prices.

Overall going forward, it would be strategic for Indian pharma to look at these markets, Dr Dua said.  Though Bangladesh is a good market, unfortunately they have created entry barriers in this market. They are also promoting APIs in a big way and also have incentive schemes for pharma companies to backwardly integrate. There is need for huge amount of documentation and hence cannot   displace India as pharma is a high-end market.

Summing up the whole scenario South Asia, Dr Dua said that even if South Asia does not field very prominently in formulations exports it is more API centric. This will continue as APIs cannot be manufactured overnight and India has the prowess in this area.

“With the productivity linked incentive (PLI) schemes coming in, at least within the next five or 10 years, it is hoped that India could become totally self-sufficient in the domestic market. We can successfully export to many countries and China cannot compete with us on documentation even it does on price.  The presence of China in APIs cannot be ignored in the South Asia region going by the funding doled out on road infrastructure for connectivity in the region. Obviously, its presence can affect India to an extent but it is still weak in the area of formulations” said Dr Dua.

According to Harish K Jain, general secretary, Karnataka Drugs & Pharmaceutical Manufacturers Association (KDPMA) and director, Embiotic Labs, South Asia response to Indian generic drugs is tepid except in Sri Lanka, Maldives and Afghanistan. However in this COVID-19 phase, India’s position in vaccine research and development cannot be underestimated. The world is looking at India for its generic formulations as the companies here are capable of producing quality medicines at affordable prices. The other area is for Covid-19 vaccine research and development.

At the start of COVID-19 pandemic, Indian pharma was not capable of producing N95 masks, PPE kits and other devices.  But now Indian industry is capable of manufacturing all these in adequate quantities. These were exported to the developed countries of the US and EU. Even if the demand from South Asia was low, now for the COVID-19 vaccines our abilities will come to the fore, said Jain.

Bangladesh and Pakistan have their own local industry. Therefore, Indian companies do not have much of an opportunity for formulations except for bulk drugs. One of the key reasons is that these countries have a good presence of pharma small molecule manufacturing and so bulk drug companies have made inroads into the region.

Particularly in Bangladesh, companies like ACI Group, Beximco Group and Square Group among others are even US FDA approved and compete with Indian in the global market for generics. The low cost of labour and access to raw materials gives them an edge in pricing. Moreover, the government in Bangladesh too does encourage indigenous manufacture. For pharma exporters, Nepal is proving to be important and so is Sri Lanka to certain extent, added Jain.


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