The upcoming and mid-cap API manufacturers in the country increasingly favour trying the litmus test in the European capitals first before taking on the most lucrative and, of course, the most challenging US market. They prefer EU markets majorly due two reasons.

Firstly, it is it is easier to enter the world's third largest pharmaceutical market as the procedure to obtain a marketing approval from the European Directorate for the Quality of Medicines (EDQM) which is less stringent compared to that from US FDA. Unlike mandated by US FDA, the manufacturing facilities in India are rarely inspected by European inspectors for granting an approval. On the whole, the regulatory process of EDQM is much more lenient compared to the US FDA.

Secondly, the upstart manufacturers with little exposure in the global market prefer test waters in the EU countries to gain more experience that will aid them enter the dream market of US in a better way.

EDQM was formed last year primarily as an autonomous authority to approve and certify the import of APIs coming to Europe. Prior to its formation, the exporters had to gain approval from the drug regulatory authorities in respective European countries.

"It is easier to get an export approval from the EDQM authorities compared to US FDA, although you have to file a DMF for exporting an API to Europe. There has been no incidence of inspection from a EDQM inspector, even though inspection is mandatory as per its guidelines," said J C Saigal, executive director, International, Nicholas Piramal India Ltd.

"The rush towards Europe could be more on account of less strictness in the regulatory affairs of EDQM compared to US FDA," said Dr CB Rao, deputy managing director, Orchid Pharmaceuticals & Chemicals Pvt Ltd.

Essentially, most of the medium size Indian companies have now focussed towards increasing their API export thrust to Europe. Divis Labs, Alembic, FDC, MJ Biopharma, Intas and Orchid are examples of companies who export more to Europe compared to US.

However, officials agree that the ultimate destination of every exporter is US, which is the biggest market in terms of value and volume. So the European experience is used by the API exporter as a stepping-stone, which will enhance his image as a quality exporter and improves his chances of getting a quicker US FDA approval.

"While expanding his base in Europe, Indian exporter gradually gets ready to meet the US regulatory requirement. The fact that an Indian company is exporting APIs to regulated Europe itself acts as a certificate for a speedy approval from the US FDA for the same product," said Dr PG Shrotriya, director, technical, MJ Biopharm Pvt Ltd. Europe is very much a preferred destination for products like injectibles, said Dr. Shrotriya.

The US API market is estimated to be about $ 5 billion. The European (regulated) API market is about $ 3 billion.