Despite regulatory roadblocks, the Indian pharmaceutical industry, to a large extend, is able to meet the stringent demands of the CIS nations. However with constant and dynamic regulatory changes internationally, time has come for the Indian pharma players to change their business models and the government to streamline its policies in accordance with the international dynamics. ‘Sans, regulatory hiccups, Russia and CIS region hold a huge potential for the generic manufacturers in India,” says N.S. Viswanathan, C.F.O of Neuland Laboratories.
Given the fact the pharmaceutical industry in Russia and Commonwealth of Independent States (CIS) is highly regulated, the recent policy changes which focuses on ‘containing imports and encouraging local industry’ has become a cause of concern for the Indian generic exporters to these countries.
“Every country has its own regulatory framework and it becomes tough for the pharma industry to adapt and mould accordingly. There should be a common international standardized framework for all the countries so that it will help the exporters to carry out smooth trade without any regulatory hiccups,” he added.
According to Dr. P.V. Appaji, Director General of Pharmaceutical Export Promotion Council of India (Pharmexcil), the recent changes in the Russian policy are discouraging for the Indian exports to that country. They are also seeking very high standards and imposing huge fees for registration of products. Even the situation in countries like Azerbaijan looks to be unstable due to political reasons. Their government has stopped giving permission for approvals to the Indian companies. Kazakhstan is also becoming rigid and it is expecting USFDA level documentations for approvals. Countries like Ukraine which have so far been dependent on Indian companies are also slowly moving towards regulated markets.
The recent policy changes brought in by the Russian government seems to be the major challenge for Indian firms that could hit exports to Russia. The new policy intends to bar all the pharma and biotechnological imports from India. The Russian government is encouraging the local manufacturers and has set a target of reaching 70 per cent of self sustainability by the end of 2016.
Though, the new policy has yet affected imports from India, experts are worried it may impact Indian exports in the next few years.
As Russian government prefers local manufacturing to imports, Indian companies may have to change their strategy from exporting to setting up world class manufacturing facilities in Russia/Georgia. The recent changes in the Russian policy are discouraging the Indian exports to that country. Russian regulatory agency is regularly updating their regulatory standards at a very fast pace and the India players are slow to catch up due to the language barriers.
The Pharmexcil is taking up various initiatives to promote ‘Brand India Pharma’ in the CIS region. As part of its promotional campaign, the council had organized a huge pharma specific pavilion in India Show being organized by FIEO in September this year.
As per statistics provided by the council, India’s formulations exports are steadily increasing, but the bulk drugs have shown a down fall. The bulk drugs accounted to $ 27 million in the year 2010 had fallen down to $ 11 million in the year 2011 and from there it is slowly picking up. The year 2012-13 has recorded an increase of $ three million in bulk drug exports to Russia. The exports of formulations have also increased from $ 399 million in 2010 to $ 543 million in the year 2012-13.
“Russia and other countries in CIS region hold huge potential. Russia, during the year 2013-14 was the second largest partner of India. With the change in policy towards manufacturing of formulations in Russia there will be huge surge in demand for APIs. Herbal and Ayush products too have huge potential for exports in Russia and other CIS countries. We are planning to improve our trade with CIS countries. We have been sending delegates from India to visit three counties Kazakhstan, Kyrgyzstan and Uzbekistan and to understand the CIS markets, their needs and requirements," said Appaji.
According to a recent forecast, Russia is poised to be among the top five global pharmaceutical markets in terms of value in the next five years. Today, Russia stands at the threshold of becoming a major force in the global pharmaceutical market.
Regulatory process in CIS
Russia is a member country of CIS. The CIS was founded in 1991, which is a regional organization whose participating countries are former Soviet Republics, formed after the dissolution of the Union of Soviet Socialist Republics (USSR). The regulatory processes in CIS countries are led and supervised by regulatory agencies closely collaborating with or operating within the respective ministries of health.
Each of the CIS countries has established individual registration guidelines. Registration in Russia is a national procedure. Estimated duration of procedure is up to 24 months. Documentation is done in Russian language in format compliant with Russian requirements. Recommended submission of a bioequivalence study is carried out in certified research organizations within the Russian Federation's territory. Original and generic products pass the same stages of registration. Original products must pass through all registration procedures while the generic products are exempted from some of them. For example, original product must undergo clinical trials in Russia. For generic products, bio-equivalence studies can be conducted in any other countries and not only in Russia.
Growth prospects in CIS
Though the regulatory regimes are becoming tougher, the CIS nations are fully aware of the huge business prospects India offers. They have reckoned the growing salience of India in the field of pharmaceuticals and biotechnology on the global stage. Particularly in the areas of knowledge sharing and business partnerships, the CIS nations are keenly exploring opportunities for building trade relations with India. The Indian government is also equally interested in building a long-term relation with the CIS nations.
It is estimated that pharmaceutical sector in Russia and other CIS nations will have a double digit growth of around 10 to 11 per cent during the year 2012-2016. At present there is no national drug provision insurance system in Russia and CIS countries. This means that 60-70 per cent of all pharmaceutical sales are paid out of individual pockets. Large, locally-owned pharmacy chains account for most of the market, but there are still a substantial number of small, independent pharmacies, particularly in the small and medium-sized cities.
The Pharmexcil is carrying out various activities to improve exports to the CIS region. This year again, as part of its promotional activities, the council had organized buyer-seller meets and even led a delegation to the CIS countries including Russia, Belarus, Moldova and Turkmenistan during first half of December.
Among the CIS nations, India’s pharmaceutical exports have been spread across Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan and Ukraine.
Relations between India and the CIS nations have remained close and cordial since the Soviet era. However, bilateral trade and commercial relations have not grown commensurately with these newly formed countries. At present CIS constitutes only 1.2 per cent share in India's total exports. The main reason for this can be attributed to factors like distance, language barrier, inadequate transport facility and lack of information about business opportunities. Among the major trading partners, Russia, Ukraine, Kazakhstan, Uzbekistan, Kyrgyzstan and Belarus constitute more than 90 per cent of India's total bilateral trade with the CIS countries.
Recently, the Gujarat-based mid-sized pharmaceutical companies have also visited CIS to enhance their export potential to the East European region. Chirag Doshi, chairman of the Gujarat State Board of the Indian Drug Manufacturers Association (IDMA) informed that exports of pharmaceuticals from Gujarat to CIS region is on the rise. Currently 20-25 per cent of pharma exports from Gujarat are going to CIS countries. Exports to the CIS nations are growing at 15-18 per cent per year and this is higher than the rate of growth to other parts of the globe, as CIS is still an emerging market for Indian pharma companies According to industry estimates, Gujarat had exported pharma products worth Rs 12,000-13,000 crore last fiscal, and during the first half of the current fiscal the state has exported pharma products worth Rs 7,000 crore.
As per statistics from Directorate General of Commercial Intelligence and Statistics (DGCIS), pharma exports from India to Armenia has increased from Rs 2.7 crore in 2010-11 to Rs 5.21 crore in 2012-13. Similarly, exports to Georgia and Uzbekistan have increased from Rs 25.86 crore to Rs 38.98 crore and Rs 155.5 crore to Rs 219.8 crore respectively during the same period.