Coronavirus | Pharma stocks: Drug makers must convert China crisis into an opportunity: Kiran Mazumdar Shaw

There is a very high dependence on APIs and intermediates from China. In fact, most companies have a dependence of between as low as 20 per cent but as high as 80 per cent. If the coronavirus crisis does not get resolved within the next few months then we are in danger of affecting and impacting global healthcare. India supplies a very large chunk of generics that is going to be a very very alarming situation not just for India but globally. We need to take immediate steps to convert this crisis into a state of preparedness and an opportunity for Indian pharma. The industry has made many recommendations. It itself talked about implementing the Katoch Committee recommendations of 2015 wherein the Committee did recommend a change in environmental and pollution control norms where any change in product mix can be automatic approval. It is the simplest part of the recommendation but there are many other measures that can be taken. There are plants that have not been in operation for long. We have seeded our position to China for years in terms of antibiotics and APIs simply because we were not competitive enough to match the Chinese incentives that the Chinese pharma companies were getting from their government. This is something that we discussed with the government in the past and this is the right time and the opportune to really implement many of these incentives.

Before India would run out of inventory…

Well, I understand there are many companies who are talking about running out of inventory within the next three to four months and that is sort of an average. I would say after three to six months there will be a problem. We have an opportunity within the next six months, it is a very narrow window but we must pull out all stocks to see how much of indigenous manufacturing can we do without the kind of regulatory constraints that will prevent us from doing it expeditiously.

When you speak to some peers in China, what is your understanding? How soon do you think factories will start?


I do not think anyone can predict at this point in time when the normalcy will return because unless the coronavirus starts receding and China is willing to open its doors to both exports and imports, it is going to be very tough to make those forecasts.

We are not in control of this kind of natural calamity because you cannot control viruses. The only way is to take a number of measures that China has already taken. India is also ensuring a good and rapid response if there is an eventuality of the virus getting to India. Everyone is doing their bit but we need to be realistic about the fact that in case the coronavirus is not contained sooner then we might be heading for a problem and it is always important to prepare for an eventual or possible crisis.

There is no point in adopting a ‘wait and watch’ approach. This is a time for us to introspect and say how do we bring back a lot of the production to India after all we do have a Make In India agenda? The pharma sector is the best Make in India for the world story which has been ignored for many years. This sector is an unsung hero, it has to be supported with incentives. We have slammed this industry with too many regulations, price controls and what have you and we have weakened the structure of the pharma sector which needs to be strengthened now and this is an opportunity which we must not lose.

If the cost will go up massively will India have to manufacture APIs or import from other countries besides China?

Look the differential between Indian APIs and Indian antibiotics and Chinese antibiotics and other intermediates was an order of about 30-40 per cent. This is not a huge gap and with our understanding of new technologies and government support, we can get the production lines going. And if they support the sector with infrastructure, investment then I think we can do it faster.