India’s pharmaceutical industry could emerge from the pandemic stronger, as production of potential COVID-19 drugs goes into overdrive.
India plays a major role in the global pharmaceuticals sector. Of the $40 billion in revenue Indian pharmaceutical companies earned in 2019, half came from exports. One-tenth of the world’s pharmaceuticals by volume comes from India, including 50% of all vaccines, 40% of generic drugs sold in the U.S., and 25% of all medicines in Britain. In the generics segment overall, India reigns supreme.
The country was hit hard by COVID-19, and the economic impact reverberated through all industries. Pharmaceuticals was not immune. Drug manufacturing facilities saw output plummet as workers sheltered in place. Raw materials and other supplies grew scarce, and Chinese suppliers started inflating prices. Non-COVID treatments were limited, affecting sales.
Even before the pandemic, the industry was in some distress. McKinsey estimates that drug prices in India declined by 8% in 2018 and 5% in 2019. And, the U.S. Food and Drug Administration blocked distribution from 15 Indian firms, issuing “import alerts” over quality concerns in 2019 and 2020.
Things are picking up now, though growth has slowed from 18% in 2016 to 5% this year. The Economist posits that, depending on firms’ ability to quickly mass-produce coronavirus drugs, the pandemic could be an inflection point for India’s pharmaceutical industry.
Firms in India have started producing favipiravir, an antiviral drug developed by Japan’s Fujifilm, for treating COVID-19 patients. The world’s largest maker of vaccines by volume, Serum Institute of India is considered a frontrunner in the race to bring a vaccine to market. In April Serum announced plans to produce up to 60 million doses of a COVID-19 vaccine developed by researchers at Oxford University.
American firm Gilead has signed agreements with several Indian generic drug makers to ramp up production of its COVID-19 therapy remdesivir. One of these drug manufacturing partners is Cipla, which also produces favipiravir. Chairman Yusuf Hamied believes there will be more such tie-ups to come. Investors seem to agree, as collaboration could prove both life-saving and lucrative.
