India is seen as one of the primary destinations for pharma outsourcing and is developing extra capabilities in manufacturing, allied products and services and even in drug discovery and development. Though many Indian pharma companies have already spread their activities all over the world and they would explore many more markets in the coming years, the commissioning of Pharmaceutical Export Promotion Council (Pharmexcil), the recent initiative of Ministry of Commerce, Government of India, has invoked a fresh energy to the country's pharmaceutical exporters.
The Pharmexcil is likely to represent the pharma industry in the Board of Trade under ministry of commerce and industry and will regularly address the emerging issues. The Board constituting 25 government officials and 23 members from trade councils may include the chairman of Pharmexcil.
The proposal to include Pharmexcil into the Board of Trade has come at the right time when the ministry has announced that the Board would be revamped and given a clear and dynamic role. There would be continuous interaction between the Board and government in order to fulfill the objective of boosting exports. It is aimed at revitalising the Board, giving it due recognition and inducting experts on Trade Policy.
Pharmexcil is determined to organize interactive meetings for pharma industry with various trade bodies abroad, government agencies both locally and internationally and banks on export related matters from time to time. The Council has recently organized its first meet in this regard.
The chairman of Pharmexcil D B Mody recently stated that the growth of pharma industry is expected to be about 500 per cent in next five years and it is prepared to follow the patent regime and is well geared to take advantage of the emerging opportunities in the sector.
As part of its rigorous campaign to make the pharma exports competitive, Pharmexcil recently urged the Central Government that the extra cost burden on the exports like war surcharge and scanning fee on the air shipment of export goods have to be withdrawn with immediate effect.
The Council pointed out that at the time of announcement of the Foreign Trade Policy on August 31, 04 for the years 2004-2009, the commerce minister had said that unless the transaction costs were reduced, it would not be possible to meet the objective of reducing the costs and compete in the market.
Further, of late, due to congestion at the Nhava Sheva Port, a heavy backlog of goods pending for shipment has piled up. There also, the port authorities and the CFS operators are levying additional charges, which also adds to the cost. In view of the congestion, some exporters would like to divert the cargo by air to see that goods reach their customers in time. But the air freight rates are too prohibitive. Besides, the international airlines had introduced a war surcharge of Rs 7.00 per kg with the outbreak of Iraq war early this year. While the war ended in April, the war surcharge is still being continued by the international airlines, which is really hurting the export interests of the country.
In addition, the Airports Authority of India has levied a scanning fee of Rs 1.50/kg which is charged in the name of security. There is no justification for charging separate fee for scanning the export parcels as scanning should necessarily be covered under handling charges payable to Airports Authority of India. These two un-justifiable levies sap the competitive strength of pharma industry quite badly. Continuance with such levies could hinder the growth of Indian exports and make attaining of the national objective of reaching the level of exports equivalent to 2 per cent share of the global trade difficult, the council accuses.
Among other Industries, the Pharma Industry, which ships large volumes by air, happens to be the worst sufferer. The Centre should, therefore, intervene and withdraw the un-justified war surcharge and scanning charges levied by the International Airlines and Airports Authority of India respectively, they demanded.
At the advent of TRIPS compliance regime in the country and most of the prospective markets, the Council has also appealed to the union commerce ministry to include expenses incurred on patent registration in the Market Access Initiative (MAI) fund. The Council, which has organised a high profile foreign trade official-industry meet a couple of months ago, had taken the feedback from the exporters on various schemes under the MAI and Market Development Assistance (MDA) for further enhancing the scope of these export incentives.
It may be recalled that the union commerce ministry had recently asked Pharmexcil to submit its proposals for the Market Access Initiative (MAI) fund for the year 2004-'05.
The MAI fund, which is extended for export promotion projects including market research, product registration, studies to evolve strategies compatible with WTO norms, and other product development activities, has been recently revamped with much wider scope than the existing market development fund (MDA) by the government.
Early this year, the government had announced that it had decided to pump in nearly Rs 450 crore in the medium term for export marketing and sales promotion activities for various export sectors. For the revised MAI scheme, which is effective from April 1, 2004, the finance ministry has sanctioned Rs 140 crore during this financial year in total and it is learnt that a similar or higher budget is expected during the next couple of years too.
According to the Council officials, the revamped MAI scheme will focus on sustained export promotion efforts, rather than one-time projects like participation in an overseas trade fair.
"Moreover, funds will be spent only on focused markets and products that are identified by the commerce department. Assistance from the MAI scheme will be routed through government departments and organisations, export promotion councils, commodity boards and recognised industry chambers," they added.
The officials informed that the individual exporters could access the scheme for registration of pharmaceuticals, bio-tech products in select markets. Whereas, the rules for MDA, under which nearly Rs 25 crore per annum will be spent from '04-05 onwards, have been tightened to get a better value for money.
The MDA, which meant for small exporters with a turnover up to Rs 5 crore per annum, will now fund only promotion efforts aimed at the Latin American, African, CIS and Asean markets. However, participation in fairs in other countries will be promoted in a limited manner, it is learnt.
The Pharmexcil is to take care of Drugs and Pharmaceuticals including intermediaries, herbal, ayurvedic, unani and homeopathic medicines, Biotech and biological products, Diagnostics, surgicals, nutraceuticals, pharma industry related services, collaborative research, contract manufacturing and clinical trials and consultancy operations.
In August this year, the Netherlands-based KLM Cargo in alliance with European drugs distribution major OPG group has launched their integrated export services solution for Indian pharmaceutical exporters. The new integrated service ranging from managing the entire supply chain, drug registration to initial shipment until products reach end customers, would currently cater to the European markets. In order to familarise this concept and channel the services to the Indian pharma exporting community, this global cargo company has tied up with the Pharmaceutical Export Promotion Council (Pharmexcil). With the tie-up, KLM Pharma Cargo would offer the members of Pharmexcil cost effective and value added services.
As part of exploring global opportunities, the Council leads delegations different export markets. Recently, it lead delegations to Philippines and Algeria. These are to be the first major assignments to be taken up by the newly formed council.
According to Council sources, the plans for organizing the business trips were finalized after the requests from the Indian Embassies in these countries. It should be noted that a recent statement of the Philippines Department of Trade and Industry announcing their plans to abandon drug imports from India, had triggered lot of confusion among the industry circles. Pharmabiz had reported about the appeal made by the Pharmexcil to the Indian Embassy in Manila to intervene and convince the Philippines authorities of the quality and capabilities of Indian pharma sector.
The Council had also urged the Ambassador and the Indian commerce secretary to invite a high power health and trade delegation from Phillipines to India for assessing the real pharma situation here. The suggestion from the Indian Embassy in Manila to the Pharmexcil to take an industry delegation from India has come as a response to the requests made by the council, it is learnt.
The Council now claims that the industry response to the new export promotion body has been encouraging and in few month time it has been able to secure the memberships of more 800 members.
Interestingly, this is the first government-industry body that has taken up the venture of exploring new avenues of growth for the undisputed Indian pharmaceutical service capabilities. As part of its initiatives to promote the country's drug industry in the global arena, it has laid due emphasis on boosting the service capabilities including basic research, drug development and clinical research from this sector to new heights.
The Council is to develop a plan of action on various kinds of activities to encourage entrepreneurs and companies working in the area of pharmaceutical services to attract global projects into this country. The next three years would be very crucial for the Council as it is in the process of setting the export structure to enable the country to take the reap the potential at the optimum level, says Venkat Jasti, vice chairman, Pharmexcil.
Though China and Korea are also attracting pharma companies to outsource research services, India is still in the lead and will maintain that lead in future too. India has been placed at the top of the list by pharma companies looking for services all over the world, today. But still, the business environment needs to improve in India, he opined.
Indian CROs should avoid indiscriminate price-cutting and unethical competitive strategies. CROs needs to train the people, strictly adhere to norms and regulations, follow ethical practices, and at the same time Government should encourage the companies taking up contract research and create conducive atmosphere to do business.