India-China trade in raw materials comes under scrutiny
Concern over growing trade imbalance and growing reliance on Chinese suppliers
By A Nair, Asia Correspondent
The Indian pharmaceutical sector's growing dependence on China for raw materials, including the critical penicillin, has come in for scrutiny with the Indian government initiating a process to reduce China's control on most anti-infective drugs.
The crackdown on Chinese drug firms exporting medicines to India has been in the offing for some time, and especially over the last two years, when 10 Chinese bulk drug manufacturing companies have been inspected. The registration certificate of one firm and 16 import licences have been cancelled.
Currently, more than 45% of bulk drug exporters registered in India are located in China.
Commerce Minister Anand Sharma asked the Organisation of Pharmaceutical Producers of India, which is a nodal body catering to multinational and domestic drug majors, to submitted a list of the bulk drugs whose production has either shifted to China or whose manufacture in India has become dependent on imports from China.
India fixes the retail prices of drugs that are made from 74 active pharmaceutical ingredients. Though the $12bn Indian drug industry ranks among the global players in finished drugs, it has to rely on China for raw materials.
Though double digit growth pushed Indian bulk drug exports through the $1bn barrier in 2010, China still holds a formidable lead. China's API exports to India touched $3.3bn early in 2011, while the export value of Indian drugs to China struggled to reach $500m. This is despite the fact that Indian companies boast several USFDA approved facilities, and export to more than 170 countries across the globe.
Most anti-infective drugs, accounting for about 20% of the Indian drug market, are made using two derivatives of penicillin, Pen G or 6APA. Last year, India's commerce ministry was unsuccessful in recommending the imposition of antidumping duty on penicillin imported from China and Mexico.
Ironically, just last year, India had made a strong pitch to push drug exports to China. India-China bilateral trade hit a record $73.9bn in early 2012, but the ballooning trade deficit in Beijing’s favour rose to more than $27bn, raising concern among Indian authorities.
The bilateral trade registered a $12.2bn increase in 2011, taking the total to $73.9bn as against $61.7bn in 2010, according to official trade figures for the last year. Trade between India and China is likely to reach the $100bn mark by 2013, two years ahead of the target set in 2009 by the governments of the two countries.