COVID–19 and its impact on India Pharma Inc

The Indian pharma sector is the third-largest in the world. It manufactures almost 60 per cent of the vaccines used globally, including important ones, such as those against diphtheria, tetanus, and pertussis required by the World Health Organisation (WHO). Furthermore, the country meets 90 per cent of the global demand for the vaccine against measles.
Millions across the world use generic drugs produced by Indian drug manufacturers. More than 250 factories in the country have been approved by the US Food and Drug Administration (FDA) as well as the UK Medicine and Healthcare Products Regulatory Agency (MHRA). These manufacture drugs for overseas markets, including the US and the UK.

India’s active pharmaceutical ingredient (API) industry is expected to generate $6 billion in revenues by the end of 2020.
Currently, generic drugs are playing a crucial role in the fight against COVID–19. India has been meeting more than 20 per cent of the world and almost 50 per cent of the US’s generic drug requirements. Unfortunately, Indian manufacturers rely heavily on China for key starting materials (KSMs), intermediate and APIs with China catering to nearly 70 per cent of Indian pharma companies’ requirements.

The Indian pharma sector is an important component of the global healthcare infrastructure and is instrumental in saving millions of lives every year. However, like all other sectors, it too has been affected by COVID–19 that has brought about various changes.

Trail of disruption

The COVID–19 pandemic has disrupted supply chains across the world. Every sector, including pharma, is suffering from supply chains coming to a grinding halt. Prices of raw materials have shot up amid limited supply, production schedules have been interrupted, factories have been shut down and shipping costs are sky-high in most countries. The impact on the Indian pharma sector is typically evident, given that most raw materials are procured from China, the epicentre of the outbreak.

With the movement of people and goods restricted amid lockdowns, manufacturers of generic drugs are unable to launch products or conduct clinical trials. As a result, timelines for drug filings have got stretched. Furthermore, cash flows from new generic drug launches have either been wiped out or delayed.
Indian drug manufacturers face other challenges as well. An Indian pharmaceutical facility can sell drugs in the US only after it has been inspected and approved by the US FDA. With the ban on international travel, inspection is naturally out of question, rendering it impossible for Indian drug companies to sell in the US and other overseas markets. The pandemic has also forced generic drug manufacturers, both contract and captive, to delay their plans for new product launches.

When product launches and clinical trials by large global pharma companies are delayed, the drug companies from which they source materials face the heat. Low sales, therefore, pose another major concern for Indian drug manufacturers supplying to international pharma giants.

Some Indian pharma facilities had to be shut as workers tested positive for COVID–19. Plants that are operational are producing less due to manpower crunch amid lockdown and social distancing measures. In short, production timelines have changed drastically.

Some good news
With China losing credibility on account of not disclosing information on the virus or the severity of the outbreak on time and thereby contributing to its development into a pandemic, government leaders and businesses are looking at other alternative low-cost nations to source supplies. India could directly benefit from this. The country has a robust pharma sector, with proven expertise in drug manufacturing and treatment. This got further highlighted when the country quickly ramped up production of Hydroxychloroquine, a key drug used in the fight against the virus.

Although India depends on China to meet its bulk drug requirement, steps taken by the Indian government to incentivise the production of APIs and KSMs under the ‘Make in India’ programme will help in reducing this dependence. The promotion of bulk drug parks under this initiative would help India become self-sufficient in drug manufacturing, from KSMs to generic formulations. The COVID–19 pandemic is changing the world order and power structure, compelling leaders across the globe to revisit their business and growth strategies. With its deep expertise in the manufacture of drugs, highly skilled scientists, and low-cost manufacturing, India definitely stands to gain from such a restructuring.