The Novel Coronavirus epidemic in China, with its epicentre in Wuhan, capital of Hubei province, threatens to starve India’s pharmaceutical industry of key inputs. India is massively dependent on imports of active pharmaceutical ingredients (API), the bulk drugs that give medicines their therapeutic value, largely from 30-40 units in Hubei. India has to proactively boost output of API and other key starting materials for the drugs industry here in India itself.
India is often labelled as the “pharmacy of the world”, with the largest number of US Food and Drug Administration-approved manufacturing facilities outside the US. But with reliance on API imports from China running to well over 60 Percent for most drugs, India’s claim to be a world leader in pharmaceuticals is heavily compromised.
It has been reported that India is contemplating a ban on export of face masks and drugs to avert a local shortage of such products. This is precisely the kind of response that India should work to avoid. If every country suddenly clamps down on export of everything from drugs and face masks to toilet paper (panic buying of which has been reported from Hong Kong), we would have local surpluses in some countries coexisting with local shortages of essential goods in others. The effort should be to step up production, not to ban exports.
The way ahead is to set up an enabling environment for mega bulk drugs parks in the cluster approach to reap economies of scale and scope in the public-private partnership mode. The Draft Pharmaceutical Policy 2017 needs to be operationalised without further delay and dither, with focused policy attention for stepped-up output of cost-competitive API. The Indian pharma industry was quite self-reliant in most APIs well into the 1990s. But rigidities in the Drug Price Control Order (DPCO) of circa 1995 did lead many producers to opt out of the API segment.
The 2017 draft policy did propose long-overdue corrective action, such as preference for government procurement for formulations produced from indigenous API. Specifically, paragraph 16 of the DPCO was supposed to be amended to clarify that any change in the wholesale price index shall be reflected by adjusting the ceiling price of drugs. A drugs price index would surely make sense: We do need to boost healthy price competition in drugs.
The Wuhan virus is a global health emergency and not yet an official pandemic. It has global economic consequences that are becoming clear every passing day. Hyundai’s car plant in South Korea cannot produce cars for want of parts to come from China. India faces a shortage of active pharmaceutical ingredients, which are mostly imported from China. The world faces a shortage of face masks.
This is an occasion for world leaders to show some leadership and seek coordination in national responses to the crisis. India should live up to its claim to a spot at the world’s high table by, for example, seeking a meeting of the UN Security Council or of the G20 to work out a coordinated response among major nations.
Oil prices have been pushed down by the prospect of a slump in the wake of the viral outbreak. India would do well to build up its reserves of oil before Opec imposes production cuts and pushes price up again. The virus calls for strategic thought and action. ECONOMIC TIMES, INDIA