The Indian pharmaceutical industry has asked for a special export package to compete with its counterpart Chinese pharmaceutical industry under worsening global financial crisis.
A special export package for almost Rs.33,000 Crore (approx. $7 Billion) pharmaceutical industry of India is on the anvil. Drug exporters and manufacturers believe that this package will give some relief from mounting losses due to high costs of raw material, as reported by rttnews.
The Pharmaceutical Export Promotion Council of India had estimated the worldwide recession could reduce India’s pharmaceutical exports for 2008-09 to $8.25 Billion, lesser than the previous prediction of $8.97 Billion, with export growth of 13.89% as compared to the earlier estimated 23.87%.
Like other industries, the Indian pharmaceutical industry is also suffering from the slowdown and the consequent credit squeeze. Drug exporters and makers recognize that a special package may help in curbing losses owing to high raw material costs.
Industries sense a major decrease in the profit margins if the present product development plans are not given enough funds because the Chinese companies are increasing their production capacities. Pharmexcil has asked for more credit to exporters under the DEPB (Duty Entitlement Pass Book) scheme under which customs duty paid on imported goods is targeted against the exported product.
Further, slow economic growth and decline in the industrial production are the important factors leading to a decline in growth projections. This has resulted in offset the gains from weakening rupee against the dollar and also prompted the government to offer a special package to increase drug export.
In addition, cash crunch has affected drug importers in various parts of the US, Europe and other countries. Importers are asking the Indian drug exporters to stop shipments to clear their inventories and accounts, which, in turn, affect the export figures for 2009-10.
Further, the worldwide generic pharma market recorded double-digit gains in last few years. However, during 2008, there was a significant decline in sales figures as manufacturers compete in high price battles in most of the important markets of the world.
As per a Research Analyst at RNCOS, “Undoubtedly, recession has affected the Indian pharmaceutical industry, but this situation can be an opportunity waiting to be tapped. There is an effect of the recession on the industry, but not as much as other Industries. This is because Active Pharmaceutical Ingredients (APIs) and generics produced in India are more reasonable and affordable in comparison with those made in other parts of the world.”
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