As the COVID-19 crisis continues in India, there are questions about the normal functioning of the pharmaceutical industry in the country. India is the largest maker of generic drugs and vaccines in the world.
The impact of the pandemic has led to disruption in supply of pharmaceutical supplies and vaccines to other countries. Last week, German Chancellor Angela Merkel told a meeting of the European Commission that she expected India to "honour its promises" in delivering COVID-19 vaccines to the EU.
Merkel was quoted by the British publication Express as saying, "Since we have a situation in India because of the dramatic pandemic situation over there, we are concerned whether they can export pharmaceutical products to us." Referring to continuity of pharmaceutical exports from India, Merkel said, "We expect it to honour its promises. And if it can't, we will have to rethink [reliance on India].”
Late on Tuesday, China's state-run Global Times tabloid claimed pharmaceutical companies in China were considering bypassing suppliers in India to avoid disruption.
Global Times quoted a research note from brokerage firm Orient Securities as saying "pandemic situation in India is likely to cast shadows on the global pharmaceutical industrial chain as a shortage of active pharmaceutical ingredients (APIs) worsens". Orient Securities warned the disruption could cause challenges in sectors such as electronics and textiles. Following the note, shares of Chinese API makers saw a surge on Monday and Tuesday.
Explaining the significance of China's ties with India in the pharmaceutical sector, Global Times reported, "China and India together account for 21 per cent of the global API market. Companies from the two countries sometimes use a cooperative partnership to export drugs to a third market, usually a Western country."
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The Global Times quoted the representative of an API company based in Zhejiang province as saying, the "company is looking at the possibility of directly exporting to third markets such as the US and European countries instead of through India to fend off potential disruptions to the supply chain". However, the representative conceded that bypassing Indian partners would be difficult as "Other countries do not have such advanced and complete production lines like those in India at the moment."
Global Times reported "some Chinese companies are sensing opportunities to seize new market share in the global pharmaceutical supply chain as clients in Western countries ditch India for alternative suppliers". Global Times quoted a manager of an API exporting company in Shandong province as saying, "orders coming directly from third markets increased in the past two weeks by about 10 percent after India's epidemic situation worsened".
The manager added, "Many clients from the West and countries in South America and Southeast Asia who used to import goods from India now tend to come to China or Bangladesh, where the API production industry has developed rapidly... We sense that clients are somewhat concerned about imports from India at the moment [due to the virus]."
