With more and more companies going for global trials, companies in India along with their Chinese counterpart are making their presence felt in the international pharmaceutical fraternity.
The increasing market share, of these two countries in the global API market, has raised many eyebrows among the US and European API manufacturers to try and improve their market shares.
Majority of the multinational companies prefer India for manufacturing as the quality measures in products is comparatively higher than Chinese firms. On the other hand Chinese companies are preferred because they provide low cost drugs backed by economies of scale, lower tariffs and tax structure etc.
Why do you think that companies from US and Europe are coming to India?, asks Dr. S S Varaprasad, senior advisor to Bulk Drug Manufactures Association (India) Hyderabad. They want to have a share in these markets and benefit from low cost manufacturing and research. Also, losing business in a rapidly growing market does not make sense for any company. It is a simple case of huge domestic market which is hard to miss, he explains.
On import of low-cost drugs from China to India, BDMA is of the opinion that though the issue is sensitive for Indian industry there are other areas that have to be dealt with priority basis. There are a few companies that ventured into China, of these some are big enough to manage the fluctuation but others are regretting now.
The area of concern is human resources which the industry is losing rapidly. The attrition rates is high as an employee spends three to four years in a company he/she either hopes to be in an MNC or completely to a different segment, he makes a point. The cost of retaining an employee has also gone up by many folds in last few years. The annual pay of an employee, say, was somewhere between 75,000 and 1 lakh, couple of years back. Contrary to this, now even if he gets Rs.30,000 or Rs.35,000 per month, there is no guarantee that he will continue with the same company for longer period. This definitely has effect on productivity and is also contributing to increase in cost. This is a time for the industry to work out a plan to control such major crisis. The exodus of industries to tax free zones are also causing disturbance in overall activity in India.Though, over a period of time there has been a progress in technology and drug delivery, the productivity is comparatively less as against what Chinese companies produce.
According to Varaprasad, the industry in China say for example produces some 8 tonne capacity per batch, where as Indian companies produce just around 1000 kilo grams per batch.
Again there are strict labour laws in China that add to the working capacity as well as per head productivity. There is no such atmosphere in India.
There should be concrete measures from government to address the industrial concerns, so that we do not lose out completely to our neighbours in a bid to get global recognition. These are some of the factors that are affecting Indian API industry, besides anti dumping, says Dr. Varaprasad.