On 23 January 2020, the central government of China imposed a lockdown in Huawei and other cities in the Hubei province to contain the spread of the novel coronavirus that causes the infectious disease, COVID-19. A few days later, major Indian pharmaceutical companies expressed concerns that if the crisis continued, the country will face shortages in the supply of important production inputs.[1] After all, Hubei province alone is host to some 42 pharma manufacturing facilities, of which a large number produce inputs for medicaments or so-called Active Pharmaceutical Ingredients (APIs). The whole of China provides 70 percent of the raw materials that Indian companies use for the manufacture of pharmaceutical products.[2] In early February, the CEO of Cipla was quoted in the Financial Times as saying that there could be “huge unavailability across the chain” if the shutdown in China extended beyond February.[3]
Indeed, India’s pharmaceutical industry has relied significantly on inputs from China for many years. In 2018, a report by the Standing Committee on Commerce on the ‘Impact of Chinese Goods on Indian Industry’ observed that “in some cases, such as for life-saving drugs, the dependence on Chinese imports is 90%.” [4],[5]
India’s pharmaceutical industry was not alone with such worries.[6],[7],[8],[9],[10] In many parts of the world, health officials raised concerns about shortages in essential inputs to medicine production.
As a reaction to the pandemic, the Directorate General of Foreign Trade under the Ministry of Commerce and Industry released an export ban on 3 March 2020 banning the export of APIs (including Paracetamol) and formulations made from them. [11] Another notice on 4 April 2020 banned the export of hydroxychloroquine used for treating malaria.[12] Not too long after, these notifications were rolled back on April 6 and 7 respectively, due to the intense pressure prompted by the United States (US) and the concerns expressed by India’s pharmaceutical industry. The Indian Pharmaceutical Alliance (IPA), which represents the country’s biggest drug makers, and the Indian Drug Manufacturers’ Association (IDMA) wrote to the government seeking withdrawal of the notification that banned the export of the APIs as, according to them, the availability was in surplus to meet the global demand and such a restriction would adversely affect their image. [13],[14],[15], [16]
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However, the policy response to limit trade on goods deemed essential to the fight against Covid-19 goes beyond pharmaceuticals. The Ministry of Commerce and Industry had also prohibited the export of medical equipment such as ventilators, surgical masks, and textiles used to produce masks and coveralls.[17] Other countries have also implemented similar measures (some of which have been eased since).
Source: Observer Research Foundation
