Expensive and time consuming product registration and import drug license procurement together with lengthy customs procedures, tough banking formalities, lack of transparency of local markets, inadequate trade related information, unfamiliar intellectual property rights and language barriers are major deterrents for Indian active pharmaceutical ingredient (API) and intermediate majors to enter China.
Currently, 40 per cent of pharmaceuticals produced in India are for the developed markets and only 3 per cent is exported to China. According to the Federation of Indian Chamber of Commerce and Industry (FICCI), Indian pharma exports into China can be increased provided the non-tariff barriers (anti dumping measures and countervailing duties) are relaxed.
Several representations have been made to the government of India's Ministry of Chemicals and Fertilizers and the Ministry of Commerce to simplify the trading situation, stated Anjan K Roy, managing director, RL Fine Chem.
China in India
China dumps APIs, medical devices and other pharmaceutical products into India. This has stymied the domestic market opportunities for medium and small companies. It is the Union government's lackadaisical attitude to encourage imports from China at low registration fee of $2,000 per drug. On the contrary, China's non-refundable registration fee for Indian exports is $20,000 per drug. This disparity is biased, pointed out Roy.
According to FICCI, China is an important export destination for India in all sectors including pharmaceuticals. When Indian pharma companies have been able to make a mark in US, EU, Japan and Australia, it has been impossible to succeed in China because of the uncertainty, ambiguity and high registration fee, which makes it unviable to trade in the dragon country.
India-China trade scene
According to FICCI, China and India trade scene has not been conducive going by the 3 per cent exports as against 19 per cent increased earnings from the markets of US, Europe, Africa and South America.
Some of the leading Indian pharma companies present in China according to the FICCI list include Aurobindo Tongling (Datong) Pharma Co. Ltd., Lupin Ltd., Ranbaxy (Guangzhou China) Ltd, Kunshan Rotam Pharmaceutical Co Ltd (Dr. Reddys Lab), Jubilant Organosys Ltd and Vam Organic Chemicals.
The Indian pharma sector faces a lot of problems with APIs and intermediates imported from China. The suppliers from China are reluctant to disclose basic information on production practices to the Indian customers who need to assess the quality standards of the product. Rejection of substandard and low quality APIs and intermediates are common. A serious issue is that the imported poor quality APIs from China cannot be returned or compensated.
China success story
China is successful only because of its proactive, protective government polices in industrial development. Exports are encouraged and imports are discouraged. Industries are offered ample subsidies for utilities. The basic and industrial infrastructure is far superior giving the country an edge in volume production.
The dragon land is known for its high competence in vast-volume, efficient and cost effective production processes making the end-product offer at an attractive price. It also has a huge talent pool with sound knowledge of chemistry, strong arithmetic reasoning and analytical abilities. The scientific expertise at Universities works in close coordination with the pharma industry to focus on innovative research. It has API development know-how for statins, Methylcobalmin, Cefadoxil, cephalosporin, Oxfloxacin and Norflox.
"China is known for its highest litigations in patent disputes because of the unfamiliar Chinese civil lawsuit. In 2005, 13,424 cases were filed with Chinese courts compared to 10,905 cases filed in the US, " according to FICCI.
India powers ahead in formulation
However, Compared to India, China is way behind in the formulations and delivery systems. India is also strong on the regulatory front. It has the largest number of US FDA approved plants outside the US. There are more than 75 WHO GMP plants recognised for high quality pharma products. India is known for its accurate and systematically documented dossiers for international submissions. It is also strong in organic chemistry and is known for its expertise in non-steroidal anti-inflammatory drugs like ibuprofen, Beta lactum like cefasposirn, gastrointestinal drugs like Omiprozole and Pantoprozole.
It is high time Indian government capitalised on the strengths of the pharmaceutical prowess and stopped imports of cheap Chinese APIs and intermediates, which are already manufactured in India. RL Fine Chem is known for its expertise in the production of an anti malarial drug 'Pyrimathamine'. This same drug imported from China is duty free because it comes under the life saving category. As a local manufacturer, RL Fine is forced to shell out 8 per cent excise duty, which puts the company in an uncompetitive situation, added Roy.