China’s loss is India’s gain in the Pharma Sector

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The ongoing trade war between America and China has taken an ugly turn after America imposed an additional duty of 15% on many of the consumer items like foot ware etc. China also reciprocated in similar manner by imposing an additional tax of 15% on American Imports.

The Coronavirus has further widened the gap as American and European companies have invested around Rs.3 lakh crores in the Wuhan province, which was known as Pharma Hub of China.

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In December 2019, Corona Virus started spreading in China. It reached to the peak level in January to February first week of 2020. Due to huge deaths of 3000+ people and 81,000+ people testing positive caused by Corona, the stock market in China collapsed heavily. Many American and European investors and owners sold their shares at a very cheap rate of 25% or less than that and left China as well.

Since then Americans were searching for alternative Pharma companies to export to the USA. Americans expressed their displeasure over the spread of Carona Virus. The American President Donald Trump has many a time expressed his displeasure and openly criticized China in the matter of Virus spreading. The displeasure and disbelief have also further widened the gap between the two countries.

Imports are permitted in the US only after the manufacturing plants are verified by the US Food and Drug Administration (USFDA) approves the standards in the companies manufacturing drugs. The necessity is more on Generic drugs (crossed Patent Period of 30 years) as America is producing only 70% of generic drugs used for Cold, cough, fever, pulmonology, heart care etc.

The USFDA started verification of four leading Pharma manufacturing companies in India from February 2020. Yesterday, as per information declared open to the public, EIR (Establishment Inspection Report) was issued to Lupin Pharma in Nagpur, Dr Reddy Labs In Hyderabad, Strides Pharma and Biocon in Bangalore by US Food and Drug Administration (USFDA) after all four plants testing and approved their standards of making.

As the US is facing a shortage of drugs in this crucial moment, at the same time not relying on Chinese products, approved EIR (Establishment Inspection Report) for our Indian firms, it is going to be a major breakthrough for Indian Pharma industry.

Yesterday Lupin Lab share jumped by 5% and Dr Reddy Lab share increased by 4% to close at Rs.3744. Now the regulatory hurdles for these four Pharma companies have been removed and their Generic medicines are permitted for export to America. The Pharma exports to the US may increase by Rs.20,000 crore to Rs.30,000 crore per year.

To meet the additional work orders from US more employees of around 2000 may be recruited by these companies. More products and some other Pharma companies are also seeking entry into the US market now’.

China may lose international market exports in Pharma sector heavily in the days to come with some of the Indian companies like Dr Reddy Lab, Aurobindo Pharma likely to emerge as an MNC in next four or five years.

Indian Pharma exports in 2018-19 were USD 19.39 billion, of which the USA got USD share of 5.39 billion. It is going to increase around USD 23 billion now in 2020-21.

Now, with these developments, the prospective industrialists in this distressing hour hoping that the developments will prove to be a boon to the country. A blessing in Disguise.