Indian pharma cos may soon find a way to the lucrative Chinese market

“They will follow the dossier  whatever written in the Drug Master File (DMF), and if everything is found alright they will then expedite approval without ifs and buts,” Dua said.

Dua said Pharmexcil had meetings with CFDA, Chinese Chamber of Commerce and other industry bodies. Soon a delegation from CFDA is expected to visit India to provide more clarity and educate industry on expectations of the Chinese drug regulator.

“The ground work has started, China is our top focus for exports,” Dua added.

Multi-billion dollar opportunity

Currently presence of Indian drug makers in Chinese market is miniscule.

Commerce Ministry data shows that India exported around USD 27.11 million worth of pharmaceutical products to China during FY17, while its total Indian pharma exports during the same period stood at USD 16.84 billion.

On contrast India imported close to USD 2 billion worth of active pharmaceutical ingredients and intermediates in FY17 from China.

Dr Reddy’s manufactures and sells drugs in China through joint venture with Canada’s Rotam group. Cipla has exited two ventures in the past, and has been looking to re-enter the market with respiratory portfolio. Sun Pharma and Torrent Pharma too have exited the market. Granules India manufactures APIs through JV in China.

According to the International Trade Administration (ITA) of the US Department of Commerce, Chinese pharmaceutical market is forecasted to grow from USD 108 billion in 2015 to USD 167 billion by 2020. Generic drug sales constitute about 64 percent or USD 68 billion of total sales.

Total public and private healthcare expenditure reached USD 640 billion in 2015 and is expected to almost double to USD 1.1 trillion by 2020.

A study done by IMS Health and Pharmexcil on “Enhancing Indian Exports of Pharmaceutical products to China” had suggested India companies to form joint ventures with local companies to avoid tariff and quota issues, to gain more focus and control of product distribution and service in China.

The study also suggested for setting up of a local Indian CDSCO (Central Drugs Standard Control Organisation) office in China having Indian representatives for all policy and regulatory recommendations; and increasing understanding on differences that exists in provincial procurement of hospital medicines.

"Chinese are opening up their market, they have a separate track to approve products filed from US FDA approved facilities," said Sriram Shrinivasan , Leader, Global Life Sciences Emerging Markets & Generics, EY.

"There is rush among Chinese companies to acquire US FDA compliant manufacturing sites, India with largest number of US FDA compliant facilities outside US should take advantage of the opportunity," Shrinivasan said.

Chinese market is currently dominated by MNC pharma companies.

Regulatory restructuring

China had undertook a massive restructuring of its drug regulator early this year to improve oversight and raise quality standards of drugs sold in the country.

The drug regulator which was insisting on local bio-equivalence studies and technology transfers – had done away with those policies to speed up approvals.

Now China accepts data from clinical studies conducted outside the country, specifically US and EU to support marketing applications for medicines.

To enhance quality standards – CFDA is giving fast track approvals to products filed from US FDA compliant facilities – wherever in the world.

It’s even pushing Chinese companies to comply with US standards.

Another major entry barrier is the exorbitant fee charged by China for registering a product. China imposes USD 145,960 for registering a product, while India levies an extremely low registration fee of USD 1,000 per product for Chinese pharmaceutical companies. To be sure there wasn’t any assurance from China on reducing the registration fee.

DG Shah, Secretary General of industry lobby group Indian Pharmaceutical Alliance (IPA) points out to another non-tariff barrier wherein Chinese authorities take 3-5 months to clear a consignment of imported drugs, while pharmaceutical products typically expire by 18 months.

“These are indirect barriers that China erected to forestall entry of India companies – to ensure the cost of filing was humongous, that’s the reason why nobody want to get into China,” Dua said.

China early last month had lifted import duties on as many as 28 medicines, including certain cancer drugs as it tries to ease the financial burden of patients and their families.

Chinese Ambassador to India Luo Zhaohui called it good news for India’s pharmaceutical industry and medicine exports to China.

“I believe this will help reduce trade imbalance between China and India in the future,” he tweeted.

To be sure it wasn’t India specific exemption, but Indian drug makers are widely seen to benefit from the move as they supply and market much of those products across the world at substantially lower cost and high quality.

Interestingly the Chinese government announcement came just a few days ahead of Prime Minister Narendra Modi and Chinese President Xi Jinping bilateral summit at Wuhan that was intended to reset the ties – after they have hit rock bottom during Doklam standoff between June and August of last year.

The Chinese side, as part of certain confident building measures, is said to have promised to address widening trade deficit with India, which has touched USD 63.12 billion in 2017-18.

India is asking China for greater market access to sell its pharma products with a view to bridge the trade deficit.