India’s pharma export shoots up amid coronavirus pandemic; ‘China plus one’ policy helps

India’s pharmaceutical industry significantly increased exporting drugs when the world was suffering from the coronavirus pandemic in the first half of the current fiscal year. The country’s formulation surged 18 per cent while the bulk drug exports rose 9 per cent on-year during H1 FY21, said a report by Crisil. During the full previous fiscal, the exports of formulation rose 11 per cent and that of bulk drug contracted by 1 per cent. A spike in demand for pharma products, induced by the Covid-19 pandemic, and hoarding of supplies by some nations in the wake of production disruptions have boosted the exports, the report added.

Another reason for the increased demand for active pharmaceutical ingredients (APIs) from India is the increasing customer diversification away from China and some countries adopting a ‘China plus one’ policy. The bigger markets such as the US and Europe have led to export growth due to increased demand for drugs. Furthermore, several Indian players have also inked agreements with Gilead Sciences to manufacture and export Remdesivir.

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Why global de-risking of supply chain is good for Indian bulk drug exports

The research stated that Chinese supply disruptions in early 2020 and persistent quality issues provide opportunities for Indian players as customers look at India as an alternative supplier of bulk drugs. Further, Indian API exporters have been able to garner good realisations on their exports during H1 FY21. Exporters of both formulations and bulk drugs are likely to help players maintain 7-8 per cent on-year growth this fiscal.

Meanwhile, the gradual easing of lockdown restrictions, coupled with demand for pharma products and bulk drugs in both exports and domestic markets, is expected to aid revenue growth. In addition, a ramp-up in specialty products and biosimilar exports, along with strong domestic sales will likely aid revenue growth in the next fiscal too.