Wednesday November 4, 03:03 AM

Source: Indian Express Finance

India plans tit for tat as Argentina bars pharma cos

By Soma Das
Wary that Argentina s insistence on blocking Indian generics could come in the way of the Indian pharma industry s plans in Latin America, the Centre is keen to resolve the issue. A similar block by Kenya had ruined the country s pharma plans in Africa. The government fears that just as the Kenyan anti-generics policy had influenced the policies of neighbouring countries, Argentina, by not letting in Indian drugs, could also set an example for other countries in the region. The stubborn attitude of the Argentine government was reflected in not letting the Indian pharma industry enter its $6-billion pharma market, despite several attempts by the Indian government. This has now led India to contemplate blocking the Latin American nation s fruit exports to its domestic market. In other emerging markets the Indian pharma industry is battling it out with big pharma firms and it is suspected that these firms are colluding with local governments to spoil the game for low-cost Indian generics. The case in Argentina, however, is different. Here, the country, also the third-largest pharma market in the region after Brazil and Mexico, has partially succumbed to a powerful local lobby of branded generic players, according to Indian pharma players. If Indian players are allowed to enter the Argentine market, they could wean away a significant market share of local players by offering the same drugs at competitive costs. Also, the low prices of Indian drugs could force generic players to reduce the costs of drug, thus affecting their margins and profitability significantly. Under the Argentine presidential decree, imports are allowed from two sets of countries enlisted in separate annexures. Annexure-I contains a list of matured markets with established regulatory systems such as USA, Japan, Sweden, Switzerland, Israel, Canada, Austria, Germany, France, UK, Holland, Belgium, Denmark, Spain and Italy. The second annexure names eleven countries, including Australia, Mexico, Brazil, Cuba, Finland, Hungary, Ireland, China, Luxembourg, Norway and New Zealand, from which imports are allowed if the plants of firms from these countries are approved by one of the countries included in Annexure I. For all other countries outside these two annexures, there is a complicated procedure which makes it virtually impossible to import from them, said a government official, who is also a part of the Indian team negotiating the removal of the trade barrier with Argentina. Since India is not a part of either annexure, Indian firms are unable to export to Argentina. Argentina is the only country in the entire Latin American region which has excluded India from supplying drugs. The fact that India exports to all matured markets included in the first annexure implies that Indian drugs meet the stringent quality standards of their regulatory framework. India also has the largest number of US Food and Drug Administration-approved laboratories outside of USA, and this speaks volumes about India s standing in the global pharma order. We have taken up the matter at all levels for the last few years, saying that India should be included in either Annexure I or Annexure II. But the Argentine side, while making friendly statements and gestures, has shown no will to remove this non-tariff barrier, added the official. Argentine pharma companies earn around $2.5 million through their exports to India. This figure includes the export from Indian drug firm Glenmark s subsidiary in Buenos Aires. Surprisingly Argentina is significantly dependent on India for pharma raw material. Also, Indian drugs find their way to Argentina through indirect channels. For instance, vaccines supplied by the Serum Institute of India are bought by the Pan-American Health Organization in Panama and is distributed in Latin American countries, including Argentina. India s stance is supported by independent market analysts. In a recent report, Business Monitor International noted Argentina has started imposing trade tariffs on imports from outside the Mercosur trade bloc, with additional regulations that will favour domestic drug firms. According to the UN Commodities Trade Statistics Database, Argentina s pharma imports touched $1.14 billion in 2008, a 109% jump from 2004. The imports are projected to touch $ 1.25 billion in 2009 and $2.01 billion by 2014, with a CAGR of 10%. Pharmaceutical imports, mainly comprising raw materials from India, witnessed a decline from $6.8 million in 2005 to $3 million in 2008. Indian pharma goods have held a declining share of Argentina s pharma imports, from 0.85% in 2004 to 0.30% in 2008.