An opportunity for a booster dose for Indian pharma industry

India can play a big part in collaboration with the Biden Administration in bolstering the production of high-quality products for the U.S. market. Partnering with their educational institutions, bringing traceability into the supply chain and ramping up investments into the sector are some of the strategies that the two countries can explore to shed their dependence on China for pharmaceutical products.

• White House’s recent report stresses that a robust pharmaceutical supply chain has at least three critical features: 1) the ability to manufacture high-quality products for the U.S. market; 2) diversification of the drug supply chain, such as relying on a geographically diverse set of manufacturers; and 3) redundancy of the supply chain.
• India, seen as the pharmacy of the world, can play a big part in collaboration with the Biden Administration in bolstering all three pillars mentioned above in the pharmaceutical sector. This is the only sector where India can step into China’s shoes with help from the US.
• Indian institutions can collaborate with US Universities and institutions to commercialize the technology in India. Efforts must also be made to incorporate transparency into the supply chain.
• The US (and even EU) cannot compete with India in manufacturing affordable & quality medicines but is a world leader in R&D, while India has poor R&D infrastructure. A cooperative joint strategy can go a long way in achieving the objectives of both countries.

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This month, an important report Building Resilient Supply chains, Revitalizing American Manufacturing and Fostering broad-based Growth was released by the White House. This report was the result of one of the first Executive Orders (EO) signed by President Biden. This EO directed the Administration to launch an immediate 100-day review and strategy development process to identify and address vulnerabilities in the supply chains of four key product sectors, which are semiconductors, large-scale batteries, critical mineral & materials, and pharmaceuticals.

It stressed that a robust pharmaceutical supply chain has at least three critical features:

1) The ability to manufacture high-quality products for the U.S. market;

2) Diversification of the drug supply chain, such as relying on a geographically diverse set of manufacturers; and

3) Redundancy of the supply chain, such as the existence of multiple manufacturers for each product and its precursors.

The study notes that the generic drug market, which successfully provides access to reasonably priced medications to the American public, faces several challenges: low volume and margins for many generic drugs result in difficult economic conditions for new entrants; anticompetitive actions may be used by certain countries to procure market share, and contracting practices for distribution may cause consolidation through sole-source contracting. It adds that in order to be resilient, the sector must focus on improving supply chain transparency and increasing the economic sustainability of the concerned drug manufacturers.

Reading through the report, I find that India can play a big part in collaboration with the Biden Administration in bolstering all three pillars mentioned above in the pharmaceutical sector. India is a reliable partner of US and a member of QUAD, which has taken up the pharma supply chain as a major agenda and can address the concerns of the US government.

This would be a win-win proposition for both countries. It is unlikely that total reshoring is possible or even desirable as noted in the report, but skewed dependence on China can be reduced substantially in the pharma space. This is the only sector where India can step into China’s boots with help from the US. The US gets reliable supply from a diversified China+1 source and India can obtain advanced technology for pharmaceutical production.

Stepping into China’s boots

Taking cues from the report, India can present its multi-pronged strategy to partner with the US.

1. The report recommends investment in the development of new pharmaceutical manufacturing and processes and states, “We recommend the Department of Health and Human Services, the Department of Defense, and other agencies increase their funding of advanced manufacturing technologies to advance continuous manufacturing and the biomanufacturing of APIs.”

This is a great opportunity for India as continuous manufacturing is evolving and would enter the pharma space in a big way. Indian institutions can collaborate with US Universities and institutions to commercialize this technology in India. India is already ahead of China in API technology, except antibiotics, and has the capability to co-develop the new technology.

2. The report also suggests improving transparency throughout the pharmaceutical supply chains. It states that “HHS should develop and make recommendations to Congress on providing the department with new authorities to track production by facility, track API sourcing, and require API and finished dosage form sources can be identified on labeling for all pharmaceuticals sold in the United States. Currently, there is little transparency into the origins of API within generic drugs, which represent, 90 percent of all pharmaceuticals consumed in the United States.”

Traceability is already becoming a fact of international trade in the agricultural and food industry. Extending it to pharmaceuticals would bolster India’s case of a reliable partner for manufacturing of quality medicines. As more APIs will be produced within the country in the coming years, it would also help in providing a sturdy traceability road map.

3. Lastly, it advocates promoting international cooperation and partnering with allies. It states, “domestic production is only one aspect of driving resilience in the pharmaceutical supply chain, since it is not feasible, desirable, or realistic to expect every drug needed for American patients to be produced on American soil. As such, and with the growing dominance of competitor nations, the United States must work with its like-minded regulatory partners to develop a secure and resilient supply chain that is not overly reliant on materials or manufacturing from countries that lack a shared interest in mutually beneficial supply chain arrangements.”

India has been dragging its feet in joining international regulatory bodies such as the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH) and Pharmaceutical Inspection Co-operation Scheme (PIC/S). Not only India can substantially increase its exports but also take a lead over China which has shown no desire to join these bodies. It would also give greater confidence in regulated markets in the quality of our products.

The European Union has also circulated the draft of its Pharmaceutical Strategy for Europe and is likely to announce the policy in 2022. It has similar provisions as the US. The US (and even EU) cannot compete with India in manufacturing affordable but quality medicines but is a world leader in R&D while India has poor R&D infrastructure. A cooperative joint strategy can go a long way in achieving the objectives of both countries.

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Suhayl Abidi is Research Advisor, GOG-AMA Centre for International Trade & Consultant, Centre for VUCA Studies, Amity University, Views are personal.