Indian drug sales to US suffer

The economic downturn in the US has hurt the pharmaceuticals industry worse than any other export sector in the Indian economy.

Indian exports of pharmaceuticals products to the US fell almost 40 per cent in the five months between October last year and the end of February, a study by the Federation of Indian Chambers of Commerce and Industry has shown.

The second-worst performer was the gems and jewellery sector, which had expanded almost without check for 20 years.

Some of the drop in pharmaceuticals exports is likely to have come from the import ban imposed last year on Ranbaxy products by the US Food and Drug Administration. But executives at Indian pharmaceuticals groups say liquidity problems have also affected their industry.

The trend is likely to disappoint analysts. India’s pharmaceuticals industry was touted as a sector that could weather the global financial crisis and attract foreign investors.

Given worldwide pressure to reduce health costs, there were hopes that producers of cheaper generic drugs would perform well. The Indian industry is highly fragmented, with hundreds of small manufacturers.

However, Ficci’s research shows that Indian companies have been losing relative share to emerging market competitors in the US market.

“In pharmaceuticals, exports from China, Israel and South Korea [to the US] moved up by 27 to 41 per cent as compared with a significant decline of 37 per cent in India’s exports to the US,” Ficci said.

The Indian Drug Manufacturers’ Association said overall exports fell 1 per cent over the past fiscal year. Its forecast had been for 16 per cent growth.

Exports were Rs307bn ($6.25bn) in 2008-09, down from Rs311bn the previous year. Imports rose 21 per cent to Rs67bn in the past fiscal year.

The IDMA is sticking to a bullish forecast for 2009-10. “Even in such turbulent times, we are expecting a growth rate of 16 per cent,” said R.S. Joshi of the IDMA’s Gujarat chapter.

“Wellness products are the most likely to see an increase during recession,” said Kamlesh Patel, chief executive of West-Coast Pharmaceutical Works. “Also, drugs from India are cheaper and in popular demand as people abroad prefer cheaper drugs in times of recession.”