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Pharma Exports: Global Potential and Errors – IMPRI Impact and Policy Research Institute

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Pharma Exports: Global Potential and Errors - IMPRI Impact and Policy Research Institute

T N Arun

When the going gets tough, the tough get going. When the going gets tough, the Indian pharma industry bleats, “somebody, stop me”. This cannot continue. The industry and the government must get together to implement tough measures to ensure quality control in the industry and, particularly, in its exports. One tough measure would be to restrict pharma exports to companies with a turnover of at least Rs 1,000 crore. Another is to institute a mechanism to check random samples of export consignments for quality at labs recognized by India’s NABL and the World Health Organization. A third is to publicize these measures across India’s current and prospective export markets.

The latest instance of Indian pharma companies hitting the headlines for all the wrong reasons has been that of US health authorities indicting India-made eye medication for causing blindness, irritation and even, in one case, death. Earlier, children had died after consuming cough syrup exported from India, in Gambia and Uzbekistan.

The response of the Indian authorities, so far, has been pathetic. The Drugs Controller General of India went so far as to issue a clean bill of health to Maiden Pharma, whose cough syrup export to Gambia killed 70 children in that country, according to the World Health Organisation, laboratory examinations conducted by which found toxic solvents in the cough syrup. DCGI issued its certificate of probity after finding no contamination in the samples it took from the company’s premises.

Shifting Blame

We have heard of that bit of foolery where a man loses his ring in the dark but comes to a well-lit place to search for it, on the ground that he could at least see in the light. DCGI’s conduct amounts to this foolery in reverse: if we cannot find the ring under the streetlamp, it must not have been lost in the first place! Based on this logic, DCGI wrote a letter to the WHO, admonishing the body for damaging India’s reputation for quality pharma products.

As media commentary on the subject has already pointed out, there are several possible explanations as to how the WHO’s finding of toxic ethylene glycol and diethylene glycol in the Gambia samples it got tested can coexist with the samples collected in India being free of such contaminants. One is that the samples came from different batches of the medicine. Another is that India’s rivals in the pharma export business resorted to skullduggery to substitute toxic samples for the blameless, healing fluids contained in the actual drug bottles in Gambia, in order to tarnish the reputation of India’s drug exports.

A third is that the local manufacturer passed off a reputable company’s pristine product as a sample from its own plant, following in the footsteps of Ranbaxy, as exposed by a whistleblower in 2013. It was irresponsible for the DCGI to have exonerated Maiden Pharma without having investigated and ruled out these contingencies.

Growing Potential

The stake for Indian pharma is truly huge. The size of the global pharmaceutical market is measured in trillions of dollars. India’s pharma exports right now are worth about $25 billion. The potential upside is huge, especially in the emerging biotechnology-derived sectors. Indian pharma is capable of going beyond the generics and biosimilars segments, and graduating to new drug discovery, including genetic therapies, given the new focus of the industry in emerging areas and India’s potential skill advantage in the area.

The employment potential of the pharma industry in India is also enormous, ranging across the spectrum of skills and educational qualifications. Right now, the field is estimated to employ some five lakh people. This number could increase dramatically, with the right focus on innovation, quality control in manufacturing, storage and transportation and marketing. All this is at stake when reports emerge of India-made drugs killing or maiming innocent lives abroad.

That is why pharma exports are like weapons of mass destruction, whose export has to be tightly regulated. The difference is that pharma exports that go wrong would wreak mass destruction in the domestic economy, killing off a potentially large and profitable industry for India, while actual WMD exports stand to do their damage only abroad.

Fragmented Industry

The Indian pharma industry is highly fragmented: with 3,000 odd companies and 10,000 odd manufacturing units that together had a revenue of about Rs 3.36 lakh crore in 2021. Of this, the top 50 accounts for 75 percent of the revenue. That left 2,950 companies with an average revenue of Rs 85 crore a year. Pharma is a demanding business calling for a heavy commitment to and investment in quality control and good manufacturing practices. It is tempting for those who do not have such commitment or investment to ride on the goodwill created by the companies that strive to achieve and maintain quality, and make a quick buck. This should not be allowed.

This is why a turnover cutoff is desirable for a company to be allowed into the export market for drugs. They have the incentive to protect their reputation, crucial for future growth.

Does this mean that there is no place for the small guy in pharma manufacture? Not at all. Let them supply stuff for export to the big guys, who would make sure what they buy from small suppliers maintains quality. Once the small suppliers build up volumes large enough to cross the qualifying threshold, they could export directly.

India’s drug quality regulation is fragmented, with different states following different standards and different levels of efficacy. This must change, with harmonization and uniformly stringent quality control through detailed, repeated and diligent checks and tests.

The giant potential of Indian pharma cannot be allowed to be killed off by some stonehearted, smallminded operators looking for a fast buck.

This article was first published by The Money Control as Pharma exports as weapons of mass destruction on February 14, 2023.

Read more by the author: The Air India Deal: A Tale of Government in Corporate Affairs.

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