Pharma exports fall sharply during FY22
It’s time for both the industry & policy makers to look back and take stock. Govt should take some bold policy decisions to give pharma industry a boost to regain the growth momentum
Against the ambitious annual target of $29 bn, the exports of drugs and pharmaceuticals for FY22 ended March 31, 2022, stood at $24.47 bn as against $24.44 bn in the corresponding period last year
After registering an impressive growth of 18.19 per cent in the financial year 2020-21, export of pharmaceuticals has missed the annual target by a huge margin during the financial year 2021-22. Against the ambitious annual target of $29 billion, the exports of drugs and pharmaceuticals for the fiscal year 2021-22 ended March 31, 2022, stood at $24.47 billion. According to the preliminary data released by the Government of India, the exports of drugs and pharmaceuticals for the fiscal year 2021-22 ended March 31, 2022, was $24.47 billion as against $24.44 billion in the corresponding period last year. The overall export target for the financial year 2021-2022 for the pharmaceutical sector fell short in terms of annual target of $29 billion.
Exports of pharmaceuticals for the fiscal year 2021-22 registered a meagre 0.13 per cent growth compared to the previous year, and has missed the ambitious target set by the government at the beginning of the year by a huge margin. This has happened at a time when the country's overall merchandise exports have seen a 43.18 per cent increase to $417.81 billion as compared to $291.81 billion in the corresponding 12 months of the previous financial year.
During the pandemic year of 2020-21, the country's pharmaceutical exports witnessed an exceptional growth of 18.19 per cent to $24.4 billion, which is a kind of growth that happened after eight years. During this pandemic period, the main reason for India's exponential growth in export was because many developed countries, including the US and European countries, could not cope with the high demand for products used in the management of coronavirus. Fortunately, India rose to the occasion and could meet the most of the requirements. During this pandemic time, the most important challenge was running pharmaceutical companies with full capacity. As pharmaceutical units ran at decreased capacity, and factories became under-utilised after millions workers walked back home, with government's support the industry quickly recouped and the managed to work in full capacities with all Covid protocols. Another important challenge was disrupted supply chain. This hindered the availability of services such as raw materials and packaging resources at the initial period of pandemic. But quickly, the pharmaceutical industry managed to maintain the sufficient inventories ensuring non-disruption of the production cycles and supplies from respective units.
However, the pharmaceutical industry could not maintain the growth momentum during this current fiscal because of several reasons. During the current fiscal, there were several reasons that impacted the exports of pharmaceutical products which included the freight cost increase and a decline in exports to the US owing to the pending regulatory inspections on Indian sites by the US Food and Drug Administration. Some of the warning letters issued by the US drug regulator also impacted the exports to the US market. Besides, some of the manufacturers in Japan and Europe also revived their pharma business during the Covid-19 period and started supplying to the US, which is another factor that has impacted the Indian exporters.
The industry's export trend was very much visible from the very beginning of this fiscal year. It was crystal clear that the overall export target for the financial year 2021-2022 will fall short in terms of annual target of $29 billion given that the first nine months of the fiscal year could only achieve $18.18 billion exports. For the first nine months of this fiscal year till December 2021, the total exports of drugs and pharmaceuticals registered a marginal growth of 0.62 per cent to $18.18 billion as compared to $18.07 billion during April to December 2020. So, meeting the target of $29 billion for this financial year looked very unlikely as it was a herculean task to export almost $11 billion of pharma products in just one quarter. In the last seven months from September, the sector has registered a decline in six months, with the only growth being registered in December, 2021, at 5.2 per cent to $2.32 billion as compared to $2.2 billion in the same month of previous year.
Now, it is time for both industry as well as the policy makers to look back and take stock. The central government should take some bold policy decisions to give the pharmaceutical industry a boost to regain the growth momentum.
(The author is freelance journalist with varied experience in different fields)