Reasons why India is the pharmacy to the world

The year: 2001. Africa was facing a major health crisis. Sub-Saharan Africa alone had 22.5 million HIV-positive people. The disease was assuming epidemic proportions. The price of patented drugs supplied by western drug companies was a prohibitive $10,000 per patient per year – way out of reach of the average patient.

Enter Cipla, an Indian pharmaceutical company, with a generic version of the same drug. The price: $400 or one-twenty-fifth of what the western drug major was charging.

Cipla’s entry, which was followed by several other Indian generic drug companies, saved hundreds of thousands of lives in Africa and the led to an 18-fold increase in the number of AIDS patients being treated between 2003 and 2009.

It has been estimated that Africa now spends about $2 billion every year on treating millions of AIDS patients. “If we didn’t have India… there’s no way we could have accessed this treatment at $2 billion,” UNAIDS executive director Michel Sidibé has said. The cost would have been closer to $150 billion.

It is not only anti-retroviral drugs that Indian generics companies supply at a fraction of the cost charged by western Big Pharma companies. Indian companies are also the largest supplier of anti-malaria and tuberculosis drugs in Africa. Needless to add, these cost much less than drugs supplied by US and European drug majors.

Several experts from all over the world have hailed Indian drug companies. It is now widely accepted that without the likes of Sun Pharmaceutical, Ranbaxy, Dr Reddy’s Laboratories, Cipla and dozens of smaller Indian companies, many African countries would not have been able to cope with the public health challenges they face.

No wonder India is called the “pharmacy to the world”.

India exported pharmaceutical products worth about $4 billion to Africa in 2015. This is expected to grow to more than $10 billion by 2020.

The African generics drug market is growing at 25-30 per cent per year and it is dependent largely on imports. It offers a major opportunity especially for small and mid-sized Indian pharmaceutical companies that do not meet the stringent standards imposed by US and European authorities. In Africa, South Africa, Nigeria, Rwanda, Madagascar, Zimbabwe, Mozambique, Tanzania are the major importers of Indian drugs.

In recent times, Indian drug companies have begun facing competition from Israeli, Japanese and Chinese drug companies and is facing a renewed attack and intense lobbying from Big Pharma companies over alleged patent violations.

The government is under massive pressure to bring its patent laws in line with those of the US and EU. This would hurt Indian drug companies and severely impair its ability to produce generic versions of patented drugs at a fraction of their cost.

As a result, even western charities such as Doctors Without Boundaries have strongly opposed any changes in India’s patent regime.

However, Indian companies do face some critical problems when exporting drugs to Africa. Many Indian banks are reluctant to discount letters of credit opened by banks in Africa as most are not registered for the purpose with the Reserve Bank of India. This discourages some smaller exporters from exploiting the full potential of the African market.

Indian pharma exporters, thus, depend on the line of credit extended by the Exim Bank and on various UN-sponsored schemes.

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