Industry seeks exemption for drugs manufactured for only export purposes from export restrictions

Laxmi Yadav, MumbaiThursday, March 5, 2020, 08:00 Hrs  [IST]

Alarmed by restrictions imposed by the central government on export of 13 active pharmaceutical ingredients (APIs) and their formulations to avoid shortage of drugs in the country in the wake of coronavirus (COVID-19) outbreak which subsequently disrupted Chinese supplies, exporters have sought exemption for drugs manufactured for export purpose only from export restrictions.

The Directorate General of Foreign Trade (DGFT) in a circular on March 3, 2020 has put restriction on export of paracetamol, tinidazole, metronidazole, acyclovir, vitamin B1, vitamin B6, vitamin B12, progesterone, chloramphenicol, erythromycin salts, neomycin, clindamycin salts, ornidazole APIs and their formulations with immediate effect and till further orders.

The notification was issued by the DGFT following a direction from the Department of Pharmaceuticals (DoP). A high-level committee formed by the DoP to monitor supply of raw materials for drugs from China has recommended ban on export of these APIs and their formulations to curb any shortage in the domestic market.

Most of the manufacturers and exporters have manufactured these listed items before the outbreak of COVID-19 and have planned and committed to ship the consignments to their customers in agreed timelines. The notification imposing restriction on export of the listed items with immediate effect would severely impact exporters, as many number of consignments are already lined up for export in warehouses and ports, said Uday Bhaskar, director general, Pharmaceuticals Export Promotion Council of India (Pharmexcil) in a letter to DGFT.

Some of the orders for institutional supplies mandate the supply of all items committed in their contracts and non-supply of one item would result sometimes in cancellation of entire order for all other products resulting in blacklisting of the companies by the procurement agencies and imposes huge penalties. As a result, exporters not only suffer the monetary losses but also their credibility and reputation in international market is at stake because of failure of delivery of materials in agreed timelines. They may also face some legal issues with the buyers as per their contractual agreements. The image of India as "pharmacy of world”, would have dent as a result of this sudden restriction on export, said Bhaskar.

Further, formulations for domestic sale should comply with IP specification as per the regulatory requirements of the national regulatory authority and the formulations manufactured for exports as per the specific countries requirements (pharmacopeia specifications/labels/printing material used) cannot be diverted or utilized in domestic market and even the APIs manufactured with USP/BP specification cannot be utilized for manufacture of domestic formulations. Hence restriction on the exports of these manufactured drugs (APls/Formulations) would lead to wastage of the drugs manufactured and it will not meet the objective of imposing restriction, he added.

Pharmexcil has appealed to the DGFT to revisit the effective date of the notification and allow the free export of drugs manufactured before the date of issue of the notification i.e. 03/03/2020 and for goods lying at ports, as most of these drugs (eg: vitamins and hormones) have limited shelf life of 18-24 months and if the restrictions prolongs, buyers will not accept the material and the same formulations cannot be utilized for domestic consumption. It is also requested to examine the feasibility of exempting the "drugs manufactured for export purpose only" from the restrictions.

However, the permission can be granted by DGFT to export restricted items following submission of two copies of ANF- 2 N application form for export licence for restricted items along with a fees of Rs.1,500. The DGFT will take a call on applications for restricted export items on case to case basis. The entire process takes more than a month to complete thus hampering export by then, said a drug exporter on condition of anonymity.

Exporters find no merit in government order restricting export of certain APIs and their formulations as currently there is no shortage of export restricted bulk drugs in India and shipments from Chinese regions barring Hubei, the epicentre of coronavirus have already started.