STRATEGIES TO ELEVATE PHARMACEUTICAL EXPORTS FROM TELANGANA: KEY RECOMMENDATIONS

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Saurav Deb

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Introduction

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The Indian pharmaceuticals sector is responsible for around 3.6% of global pharmaceuticals by value. India ranks 3rd worldwide for production by volume and 10th by value. Of the total Indian life sciences industry revenues of around USD 43 billion in 2020, Telangana accounted for USD 12.8 billion or nearly 30% of this revenues. The state even leads in life sciences-related exports in India. Further, the life sciences industry and the state of Telangana have had a symbiotic relationship over the years, paving the road to growth for one another. Nevertheless, there is significant potential not only to sustain the current momentum but also to expand further.

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RECOMMENDATIONS FOR BOOSTING PHARMACEUTICAL EXPORTS FROM THE STATE OF TELANGANA

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The country's pharmaceutical exports soared to around USD 21 billion in the nine months concluding in December 2022, with Telangana reportedly contributing 20-30% to this overall figure, as per media reports. While Telangana's significant role in boosting pharmaceutical exports is commendable, it raises the need to contemplate the following recommendations:

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Explore new export destinations:? Telangana plays a significant role in India's pharmaceutical exports. Telangana, which has the highest USFDA-approved facilities (214), exports vaccines and pharmaceutical products to more than 150 countries. While export performance in the US and Europe is commendable, attention is required in the African market, where improvements are needed. It is crucial to address negative trends and convey the message that Indian generics offer relevance to African countries in terms of both price and quality. Despite a 5% dip in India's pharmaceutical exports to Africa in FY23, there is a pressing need to rectify concerns about the quality of Indian drugs exported to countries like Gambia. Immediate action is necessary to safeguard both Telangana's and India's pharmaceutical exports as a whole. Also, it can be suggested to focus on semi regulated and unregulated markets as well for increasing exports. During the fiscal year 2021-22, pharmaceutical products constituted around 33.9% of Telangana's total merchandise exports, as reported by the Commerce & Export Promotion Department of the Government of Telangana in 2022. It could be recommended that there is an opportunity to increase the share of pharmaceutical exports to 50% of the total state exports by 2030.

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District-Centric Export Emphasis: According to the third edition of the 'Export Preparedness Index (EPI) 2022' by NITI Aayog, Telangana secured the 6th position with a score of 61.36. There is a crucial need to concentrate on developing an export action plan at the district level, expanding the number of free trade zones, and exploring avenues to reduce high tariffs on high-tension power to support industries. In the fiscal year 2021-22, Medchal Malkajgiri district emerged as the leading exporter, contributing 14.4% to the overall exports. This success is attributed to investments in various areas, such as pharmaceutical parks, ensuring no power deficit, establishing transport connectivity through cargo terminals, and providing cold storage and warehouse facilities. It is recommended that other districts adopt a similar approach.

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Active Pharmaceutical Ingredient (API): Although India holds the position of the third-largest producer, contributing 8% to the global API industry, the country continues to import diverse bulk drugs/APIs from various nations for pharmaceutical production. It is crucial to capitalize on initiatives like the Production-Linked Incentive (PLI) to attain self-sufficiency in API production, paving the way for significant exports. Encouraging companies in Telangana to actively participate in expanding the manufacturing of Key Starting Materials and Active Pharmaceutical Ingredients will contribute to a considerable enhancement in overall exports from the state. Furthermore, it may be suggested to focus on niche APIs.

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Biosimilars, Complex Generics, and Customized Medicine: The prospects driven by off-patent drugs are expected to diminish in the future. If the pharmaceutical industry remains fixated on traditional generics, India may face challenges ahead, given the rising competition from other countries in this sector. Drug manufacturers must pivot towards emerging areas like biosimilars, complex generics, and customized medicine to harness the substantial potential in the foreseeable future.

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Harness Technology and Innovation: The limitless potential of artificial intelligence (AI) in the Indian pharmaceutical industry promises transformative progress. AI stands poised to revolutionize drug discovery, significantly improving speed, precision, and cost-effectiveness. It is crucial for Telangana to capitalize on AI's capabilities. Additionally, emphasis should be placed on robotics and data analytics to boost productivity, efficiency, and quality control in pharmaceutical manufacturing. The state ought to actively support research and development in emerging technologies related to drug discovery and development.

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Boost life sciences sector with infrastructure, funding, and partnerships: Telangana should enhance its infrastructure to support start-ups in transitioning to the commercialization phase. Increase funding sources for both existing and emerging innovations. Foster connections for technology sharing and transfer between industry and academia. Take the lead in positioning the state as India's premier destination for clinical trials. In addition, given that Telangana is already home to more than 1,000 life sciences enterprises, it is recommended to set a goal of doubling the number of pharmaceutical companies operating in the state by 2030.

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Develop Research and Development Infrastructure: Telangana should provide incentives to pharmaceutical companies, encouraging them to allocate resources to research and development endeavours, fostering the generation of innovative and high-value products. Additionally, the state should establish collaborative research initiatives involving pharmaceutical firms, academic institutions, and research organizations. To compete in the global pharmaceutical market, Telangana's pharmaceutical industry needs to ascend the value chain and place a greater emphasis on innovation. It is crucial to establish a robust innovation pipeline, targeting a specific number of new molecular entities and innovation launches annually by 2047. Diversification into specialized pharmaceuticals and complex generics is recommended. The primary focus should be on new drug development, innovations, cell and gene therapy, and other areas centered around patient needs. The emphasis should not solely be on "Make in India" or "Make in Telangana," but rather on "Discover and Make in India" or "Discover and Make in Telangana.

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Prepare for the Patent Cliff: The imminent expiration of certain drugs creates a lucrative opportunity for astute pharmaceutical companies in Telangana to experience substantial export growth. According to a report from financial services firm Elara Capital, the Indian pharmaceutical industry is positioned to capitalize on the potential in the "small molecule patented drugs" sector, which is expected to open up for generics from 2023 to 2026. The report identifies a forthcoming patent cliff, similar to the last upcycle in the US generics market from 2011 to 2015, where generic competition emerged for numerous large pharmaceutical products. This new environment anticipates a wave of first generic competition, suggesting another patent cliff between FY23 and FY28. India's robust pipeline of generic drugs positions the country's pharmaceutical companies for significant growth during this upcoming cliff. Beyond pharmaceutical manufacturers, other participants in the Indian pharma ecosystem stand to benefit, as many pharma firms will likely outsource non-core activities to emerging markets. Telangana should be prepared to seize this opportunity. Key industry players should proactively file Abbreviated New Drug Applications (ANDAs) to harness the forthcoming opportunities in the small molecule patented drugs segment. The patent cliff, exposing large patented pharma products to generic competition, is projected to generate additional revenue and reduce price competition, ultimately benefiting the entire generic pharma industry, including smaller players.

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Streamline assistance to companies seeking approval for new drugs and vaccines: Telangana can collaborate with the Ministry of Health and Family Welfare to simplify the regulatory landscape for clinical trials. This can be achieved by granting decision-making authority to the CDSCO office in Hyderabad. Additionally, the state can enhance vaccine testing capabilities by facilitating the establishment of additional CDSCO-approved laboratory infrastructure in Telangana. To further boost regulatory capacity, there should be a focus on expanding training facilities.

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Establish a globally competitive life sciences ecosystem: Telangana has the potential to construct a top-tier Pharma City that nurtures an integrated healthcare ecosystem, surpassing the conventional concept of an industrial estate. Promote the growth of the equipment manufacturing industry in tandem with the sector's expansion. Draw in prominent multinational corporations as anchor tenants, spanning manufacturing, offshore operations, analytics, as well as med-tech and digital domains.

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Incentives to Boost Exports: Telangana has the potential to offer financial incentives for pharmaceutical exports, including tax incentives, subsidies, and export credits. Establishing a specialized support unit to aid companies in navigating export procedures would further enhance export promotion efforts.

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Conclusion

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In conclusion, to enhance its export performance, the state must align its business ecosystem with a robust export framework. This involves fortifying the existing policy environment through the development of District Export Action Plans. By strategically planning and setting measurable targets, the state can create an environment conducive to export growth. Initiatives like expanding Free Trade Zones, conducting capacity-building workshops, and re-evaluating high-tension tariffs can contribute to a more favourable landscape for exporters.

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Addressing the low proportion of businesses with Importer Exporter Code (IEC) is crucial. Telangana should invest in positioning itself as a global pharmaceutical hub, highlighting qualities such as quality, innovation, and sustainability to attract international partners. Encouraging collaboration, fostering industry-academia partnerships, expediting pharmaceutical product approvals, and securing increased international certifications for local companies are essential steps.

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The establishment of technology parks, facilitation of technology transfer, and collaboration with financial institutions for specialized products can further propel the state's pharmaceutical sector. Maintaining ongoing dialogue between government bodies and the industry is essential for addressing challenges and exploring opportunities.

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In light of India's shift from volume to value leadership, it is imperative for the pharmaceutical industry in Telangana to adopt a mantra of reinvention and innovation. This strategic approach is particularly vital given the emerging challenges of inflation and pricing pressures in the global markets.

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References:

§? Telangana Life Sciences. (2020). Telangana Life Sciences: Vision 2030. Retrieved November 23, 2023, from https://lifesciences.telangana.gov.in/wp-content/uploads/2020/12/Telangana-Life-Sciences-Vision-2030.pdf

§? Today, T. (2023, February 22). Telangana key player in pharma exports. Telangana Today. https://telanganatoday.com/telangana-key-player-in-pharma-exports

§? Mishra, A. R., & Das, S. (2023, June 6). Gambia death fallout: Pharma exports to African market slipped 5% in FY23. www.business-standard.com . https://www.business-standard.com/industry/news/india-s-pharmaceutical-exports-to-african-market-declines-5-in-fy23-123060600883_1.html

§? Planning Department, Government of Telangana. (2023). Telangana Socio Economic Outlook 2023. Retrieved November 23, 2023, from https://www.tsdps.telangana.gov.in/SEO_2023.pdf

§? Institute for Competitiveness & NITI Aayog. (2023). EXPORT PREPAREDNESS INDEX 2022. Retrieved November 23, 2023, from https://www.niti.gov.in/sites/default/files/2023-07/Export-Preparedness-Index-2022_0.pdf

§? Import and domestic production of APIs. (n.d.). https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1847446

§? India Brand Equity Foundation. (2023). PHARMACEUTICALS INDUSTRY REPORT. Retrieved November 23, 2023, from https://www.ibef.org/download/1700035735_Pharmaceuticals_August_2023.pdf

§? Sridhar, B. G. N. (2023, February 24). Hyderabad will be positioned as the ‘Health Tech Mecca’ of the world: Minister KT Rama Rao. BusinessLine. https://www.thehindubusinessline.com/news/national/value-of-pharma-life-sciences-ecosystem-in-telangana-to-touch-100-billion-by-2025-minister-kt-rama-rao/article66548463.ece

§? Sharma, N. C. (2023, July 10). Indian pharma industry poised to tap significant opportunity in US generics market. Business Today. https://www.businesstoday.in/industry/pharma/story/indian-pharma-industry-poised-to-tap-significant-opportunity-in-us-generics-market-388962-2023-07-10

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