$1.5 billion impact! Coronavirus lockdown, supply disruptions badly hit pharma exports

KEY HIGHLIGHTS

• Pharma exports growth slipped to 7.7 percent and -23.24 percent in February and March

• India exported $20.58 billion worth of medicines as against estimates of $22 billion

• Export of bulk drugs and drug intermediates de-grew

• Govt sanctions two schemes to reduce import dependency on key raw materials

Indian pharmaceutical exports have taken a $1.5 billion hit in FY20 as the last quarter (Jan-Mar) registered negative growth, pulling down pharma exports to $ 20.58 billion instead of an estimated $22 billion. For the whole year, pharma exports registered a growth of 7.57 percent as against 10.72 percent in FY 19.

According to figures declared by the Pharmaceutical Export Promotion Council of India (Pharmexcil), pharmaceutical exports registered a growth of 11.21 percent during the first quarter of FY20. For the second quarter and third quarter it was 8.69 percent and 14.64 percent, respectively. Exports in January (11.72%) were also on par with the average of first nine months (11.5%). However, due to COVID-19 related supply chain disruptions, export bans and lockdown in key markets, the growth rates in February and March slipped to 7.7 percent and -23.24 percent, respectively, resulting in negative growth of - 2.97 percent in the fourth quarter.

"India being dependent on China to an extent of 60-70% of its needs of bulk drugs has suffered disruption in the supply chain with the outbreak of COVID-19. Our imports of bulk drugs went down significantly in February. Combined with lockdown measures across the countries, and export restrictions on some of the products, have contributed to the situation of downturn in export growth," Udaya Bhaskar, Director General, Pharmexcil, said.

"Usually Indian pharma exports during February and March are quite brisk. Having seen the good pace of export trend in first three quarters and price stabilisation in the United States, it was estimated that in FY20 exports would reach $22 billion," he added. Drug formulations and biologicals, which contributed to almost 72 percent of exports, showed 9.5 percent growth in FY20. However, exports of bulk drugs and drug intermediates, the second largest category grew -0.73 percent. Vaccines and surgicals recorded 22 percent and 10.5 percent growth, respectively.

Bhaskar also said that the government has approved some promotional schemes suggested by Pharmexcil to reduce import dependency on bulk drugs and other key raw materials. The first scheme is to develop three mega bulk drug parks in partnership with states. Central government will give grants, in aid to states, amounting to Rs 1,000 crore for each park in the next five years under the scheme.

The second scheme provides financial incentive for eligible manufacturers of 53 critical bulk drugs (26 fermentation-based and 27 chemical synthesis-based bulk drugs) on their incremental sales over base year FY20 for a period of six years. A sum of Rs 6,940 crore has been approved for the eight year period, Bhaskar said.

Also read: Coronavirus: 8 vaccines in human trials, 100 in preclinical stage

Also read: Coronavirus outbreak propels pharma funds forward; should you invest?