Dr. P.V. Appaji, Director General of the Pharmaceutical Export Promotion Council of India (Pharmexcil), which was set up to promote Brand India across the globe, in an interview with A Raju, speaks about the tremendous potential Andhra Pradesh holds to become the pharma hub of India if the SMEs could tap the opportunities available in the state. Excerpts:
As Andhra Pradesh is known for its bulk drug production in India, how do you view the evolution of pharma sector in state and where do you place the state in terms of production of formulations and generic drugs in the country?
Andhra’s presence in bulk drugs is substantially good but the state seems to be lagging in formulations. As per the data available with us, Maharashtra is leading in formulations, while Gujarat and Haryana are closely contesting with AP to grab the second position.
Coming to bulk drugs , AP is recognized as a pharma hub of the country. Day by day the volume of bulk drugs and generics is increasing in the state. Due to lower costs, the demand for generic medicine is very high. Today, the international market for bulk drugs is approximately 20 per cent and the rest 80 per cent is for generic medicines.
In formulations, though Andhra is second in India, only a very few companies are involved in this sector. It is contributed by a few big companies. Unfortunately, we are not focusing more on formulations. Gujarat is taking a lead in this sector and had stabilized its market strength. They have expanded in the global market. And it is obvious that AP is lagging compared to the progress in Gujarat.
The SME sector in Gujarat is the main contributor for its growth, while the same is not the case in Andhra. Here the SMEs have been badly affected mainly by their frequent shifting to Haryana and other states for availing tax benefits. As the SMEs are small capital firms, they could not probably organize and maintain themselves properly which had cost them dearly. At the same time, big companies which had shifted to Haryana and Himachal Pradesh could survive because of their large capital reserves.
Coming to the evolution of bulk drug industry in Andhra , the main feature that helped the state in becoming a leader in bulk drugs is because of the drug policy of India. AP had manufactured bulk drugs right from basic stage. It did not depend on other markets for help. Its import component in bulk drugs was very little between 1980s and 1990s.
After liberalization, because of open markets and because of relaxation of restriction on imports, we were completely dependent on China for the drug intermediaries. China is very strong in exporting drug intermediaries and our over dependence on them is not good for the future of pharma industry of the country. We need to produce our own intermediaries and should be capable of supplying it to other countries.
What initiatives are being taken up by government of India to reduce imports from China and improve our exports to the Chinese markets. What are the hurdles the government is facing in resolving the trade issue with the China?
Coming to imports from China, our country has been very liberal to Chinese firms especially the API firms. While India has been liberal in granting product registrations for bulk drugs firms , the same was not reciprocated by the Chinese government.
Our firms have negligible presence in Chinese markets while we are totally dependent on them for APIs. If the situation prevails further for some more years, our industry will be affected by any disturbance in the Chinese markets.
To avoid this, the Ministry of Commerce, government of India has taken up the issue seriously and had talked to their Chinese counterparts to look in to the matter for promoting equitable trade relations between the two nations.
Though China had agreed in principle to look in the matter, so far it had not liberalized its rules for product registrations and issuing license for the Indian firms.
The Chinese are following double standards for scrutinizing applications for domestic and overseas firms. They are liberal for domestic firms and impose very strict standards for the overseas firms. What India is demanding is to make a uniform standard for both domestic and overseas firms so that it will promote equitable trade between the countries.
The commerce ministry has even sent a team to china to inspect the manufacturing companies in that country. Based on the teams report, India too is going to draft strict rules for Chinese firms in the coming days.
How is the state government supporting the pharma sector and what are the future prospects for the industry to grow in Andhra Pradesh?
Though the state government is always in favour of developing the industry, the bulk drug industry feels the government is unfair in restricting the production in the name of pollution control norms. The industry is forced to bear additional costs because of the strict regulations.
But from government point of view, environment safety and effluent treatment is also an important issue which the bulk drug industries should adhere to. So there are issues on both sides, which can be sorted out by joint meetings of PCB, DCA and the industry leaders.
Due to the problems, chances of the bulk drug industry shifting their base to other states like Himachal Pradesh, Haryana and Gujarat are very high. Moreover since the state is known only for bulk drugs manufacturing, the formulations industry is very small. This does not augur well for the future.
Taking into consideration all these aspects, if the government can come forward even with small initiatives, the industry can flourish again in the state. So the government should come up with incentives to fill the widening gap between the bulk drug production and formulations. If SMEs are encouraged, we can easily beat Gujarat and Maharashtra in the formulations sector.
However one good thing about AP is that, it is known for its quality products. The international drug market has identified AP as the best quality drug producer in the country. Many companies in the state are known for their quality products and it is evident from the fact they have been approved by the USFDA in America and EDQUM in Europe.
Some of the bulk drug companies in the state enjoy global monopoly for certain special products like Virco Sulpha Oxazole, Randitine anti ulcer drug, Ibupufrene, Ciprofloxine etc.
A large number of companies in AP are producing anti-HIV drugs and exporting them to western worked and African countries. Aurobindo and Hetero are some the top world renowned pharma companies from the state. Dr. Reddy’s is equivalent to any MNCs like Pfizer or GSK. So over all the industry has a bright prospect for future growth in the state.
According to you, which are the best pharma companies of the state?
Every company has its own uniqueness, but coming to exports only a hand full of them are listed among the top 50 in the country. There are about 400 registered pharma companies in the state. Among these 217 companies are exporting different pharmaceutical products to various countries in the world. There are more than 20 companies in the state whose export turnover had crossed more than Rs. 45 cores during the year 2008-09. Dr. Reddy’s Laboratories Ltd is among the leading pharma companies with export turnover crossing more than Rs. 2000 crores.
Aurobindo Pharma Ltd is racing next to Dr. Reddy’s labs in the state. During the year 2008-09 the company has shown a record export turnover of Rs. 1.746.65 crores. Apart from these two majors, Matrix Laboratories and Divi’s Laboratories have also crossed their export turnovers more than Rs. 1000 cores during the year 2008-09.
Other pharma majors whose contribution towards exports crossed more than Rs. 100 crores in the state include Shanta Biotechnics, Neuland Laboratories, Granules India, Gland Pharma, Virchow laboratories, Suven Life Sciences and Natco Pharma.
What is the role of Pharmexcil and how do you view the performance of the council during the past one year?
Keeping in view the dynamic growth of Indian pharma industry and recommendations of four major pharma associations made the Ministry of commerce and Industry to realize the need for separate export promotion council, Pharmaceuticals Export Promotion Council was set up in the year 2004. It has been remained as export promotion council of India this year with an objective to promote Indian pharma sector across the globe with a brand India logo.
Pharmexcil is the sole agency to issue RCMCs to all pharma exporters in the country. The activities of the council are administered by committee of Administration consisting of representatives from major pharma industries in India.
The role of the council is to issue RCMC, organizing trade delegations/buyer-seller meetings abroad, organizing reverse buyer-seller meetings in India, assisting members to get their MDA/MAI claims refunded from government of India, issue of certificate of origin, organizing periodical seminars/Interactive meetings on exports related issues and make suggesting to Government of India on policy issues relating to pharma exports.
The council also plays a vital role in making representations to Government of India and other agencies in India and abroad to get amicable solutions for the common problems of the industry.