💊 Why Does India Need a Drug Park?
India's position as a leading manufacturer of medicines is at stake. Unless it builds a Drug Park. Here's how things are set to change.
Amusement parks, water parks, and tech parks are commonplace. It’s time to get ready for a drug park.
Yes, India is building its very own drug park in Hyderabad (no, not those kinds of drugs that you are thinking of).
This park is so huge (spread across 19,000 acres) that it can be called a pharma city.
But what’s the need?
The Need For A Pharma City 🏙
Ever had that one topper in class that beat you in every field? The ones your parents compared you with?
No matter how good your grades were or how great your performance was, theirs was always slightly better?
China is that person for us.
India is called the "pharmacy of the developing world."
We are the third-largest producer of pharmaceuticals in the world by volume and the largest manufacturer of generic medicines (medicines that are not patented and are usually sold without a prescription).
Not just that, we have the highest number of FDA-approved drug plants outside the US.
Despite all of this, we are still dependent on China in the pharma sector.
How?
Medicines are made out of two ingredients: Active Pharmaceutical Ingredients (API) and base ingredients.
If your medicine was nimbu paani then lemon would be the API (the essence of the nimbu paani) and water and salt, the base ingredients.
Now, India has the base ingredients. But we don't have the APIs, which are crucial.
So, even to create the most basic of medicines like Crocin, we need to import these APIs (like paracetamol) from China.
We import around 70% of our APIs from China and 90% of our APIs in the case of life-saving drugs.
And it's not just us who are dependent on China.
Several countries across the world, including the US, are also on this list.
You see, China has cracked the code to develop these APIs for cheap.
In fact, Chinese API manufacturers have it much easier. They get cheaper land, cheaper finance, and cheaper electricity.
Thus, drugmakers from across the world order these cheap APIs to reduce their production cost.
So, isn't this a good thing? Everyone's getting what they want for much cheaper.
Well, no. In 2020, when the pandemic hit the world, China shut down its borders, halting the trade of these APIs.
This caused API costs to rise over 100% and taught us a valuable lesson: Never rely on imports.
So, India is taking several steps towards solving this problem and boosting the manufacturing capacity of APIs.
Why Doesn't India Manufacture APIs? 🤔
Back in the day, India did manufacture APIs. But after the Drug Price Control Order Act was introduced in 1995 to lower medicine prices, this was no longer viable.
You see, manufacturing APIs is an expensive process. It requires costly machinery and a lot of electricity over a long period of time.
Before 1995, manufacturers would still bear these costs as they could transfer them to customers. But with the government now fixing the prices of drugs, manufacturers could no longer do that.
Also, the emissions by the pharmaceutical industry is on the higher side. Now, India's environmental laws meant that manufacturers could not get land easily.
So, the manufacturers sought the easy way out: import cheaper APIs.
To solve this problem, the government has now launched several product-linked incentive schemes that give manufactures monetary incentives to create APIs again.
Not just that, Telangana government is setting up a 19,000-acre pharma city, giving land to several leading drug manufacturers to set up plants and create APIs.
The ambitious project is set to attract investments worth $8.4 billion and generate employment for over 5,60,000 people.
With this new drug park in place (and possibly two more on the way) we could also export APIs to other countries unwillingly dependent on China: a move that would help our economy grow further.
But the picture is not so rosy.
Just creating a park will not solve all our problems.
We need to bring down the price of these APIs to make their manufacturing sustainable.
For this, we need to develop technology and crack the process just like China has.
This will require a lot of work.
Plus, providing cheap and constant electricity in India could be a problem.
Big players like Reliance and Adani Group have promised to offer cheap green energy very soon but until that happens, our dream of producing our own APIs could remain just a dream.
These parks are a step forward in the right direction but India needs to do much more to actually be "aatmanirbhar."
In a line: India's status as a lead exporter of drugs is threatened by its dependence on China for raw materials but a new pharma city being built in Hyderabad is trying to reduce our imports.
Food for Thought: India has been playing catch up with China in many sectors be it green energy or pharma. So, how is it that China is identifying and cracking upcoming sectors before us and the rest of the world?
Quick Question: What can be India’s ace to takeover China in the pharma space?
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