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India Wants to Be the Pharmacy of the World

Well-known Chinese news site NetEase (NASDAQ: NTES) recently reported that, according to Indian government data, India is now the world’s third-largest pharmaceutical manufacturer based on production rankings. At the same time, India is also one of the countries with the lowest pharmaceutical manufacturing costs in the world. As the world’s number one generic drug manufacturer, India’s share of generic drug exports accounts for 20 to 22 percent of the world’s total. In the U.S., one third of the tablets are made in India, while in the U.K., a quarter of the tablets are produced in India. However, before becoming the pharmacy of the world, India still needs to remove its dependence on China. India has embarked on an ambitious plan to reduce its dependence on China for key ingredients in its pharmaceutical industry. India wants to be self-sufficient in its journey to become the pharmacy of the world. Since the outbreak of COVID, India has become a key player in the world’s anti-epidemic action with its pharmaceutical production capacity. According to the Indian government, as of May 9, India has provided more than 201 million doses of COVID-19 vaccine to about 100 countries in Southeast Asia, South America, Europe, Africa and the Middle East through government projects and the COVID-19 Vaccine Access Facilities (COVAX). India leads the world in drug production, yet relies heavily on China for key active pharmaceutical ingredients (APIs). For cost reasons, about 68 percent of India’s APIs are imported from China. In terms of life-saving antibiotics such as penicillin, cephalosporins and azithromycin, India’s dependency on China is even as high as 90 percent. According to a policy called the “production linked incentive scheme” launched by the Indian government two years ago, starting in March this year, 32 factories across India have been producing 35 APIs. The plan aims to incentivize companies in various industries in India to boost their domestic manufacturing output by $520 billion by 2025. India’s pharmaceutical industry sees weaning its dependence on China as a priority. Blind “offshoring” has now become “friendshoring.” One country today will outsource operations to other countries with a similar political system and with whom it has historically had good relations.

Source: NetEase, May 27, 2022