THE Indian pharmaceutical sector, which has recorded a massive, nearly 30pc, growth in the current fiscal year, and a sharp rise in exports to the US, is however, gearing up to face resistance in America, where Donald Trump has just taken over as the President.

Last week, Trump indirectly lashed out at the Indian pharma industry, which exports substantial quantities of drugs to the US, and accused it of ‘getting away with murder’. He attacked the pharmaceutical sector for the high price of drugs in the US and for opting to manufacture products abroad.

Indian pharmaceutical majors have been expanding their presence in the US in a big way in recent years by exporting generic drugs and even acquiring American pharmacies. Indian pharma exporters account for nearly 25pc of the volume of the US’s drugs consumption.

For some drug manufacturers, the US accounts for nearly half their annual sales. Morgan Stanley has estimated that Indian drug makers could maintain their market share of 25-30pc in the US for another three to four years.

However, others have issued dire warnings and see a significant decline in exports to the US and Latin America. Crisil Research, India’s largest independent research house, had last year predicted a 10-12pc fall in export growth over the next five years, compared to a growth of nearly 20pc annually over the past decade.

“Sharper focus on innovation and R&D has become an imperative,” said Ajay Srinivasan, director, Crisil Research. “Our analysis of new drug applications approved by the US FDA reveals that Indian companies got approval for just 26 products between January 2006 and June 2015 – a fraction of the 840 garnered by global pharmaceutical companies.”

Currently, Indian pharma firms sell about $7bn worth of drugs in the US, accounting for 25pc by volume and 16pc in value terms in the generic drugs market.

The domestic drug industry had earlier cheered Trump’s victory in the American elections and many felt that he would not harm its interests, unlike his Democratic rival Hillary Clinton, who was seen opposed to the Indian pharma industry.

But last week’s surprise about-turn by Trump has horrified the Indian pharma industry. Shares of top drug exporters, including Sun Pharma­ceuticals, Glenmark Pharmaceuticals, Cipla Ltd, Dr Reddy’s Lab, Aurobindo Pharma, Lupin and Cadila Health, dropped sharply on the stock exchanges after Trump’s remarks.

Most Indian pharma exporters have been under pressure in the US, where there is a growing demand for even lower prices for generic drugs. Prices dropped by nearly 10pc last year.

In fact, many Indian pharma exporters have come under the pressure of the US government departments, in­cluding the Food and Drug Adminis­tration (FDA) and the US Department of Justice.

India’s largest drugmaker, Sun Pharmaceuticals, has faced problems with the Department of Justice, which had sought details about pricing and marketing of generic drugs. Other leading exporters including Lupin and Glenmark have also aced problems.

Pharmaceutical firms exporting to the Latin America have also faced problems in recent months. Venezuela, which was a big market for many Indian drug manufacturers, has turned out to be a nightmare with the government imposing restrictions on transferring out funds.

According to the Pharmaceuticals Export Promotion Council of India, more than Rs20bn has been stuck up in Venezuela. India sought an oil-for-drugs deal with the Latin American country, but the government there refused to bulge.

THE Indian government last week, however, came out vociferously in support of the pharmaceutical sector.

“The Indian pharmaceutical industry has witnessed a robust growth in recent years, growing from Rs1.77tr in financial year 2014-15 to Rs2.04tr in 2015-16,” said a government report under its Make in India initiative. This was a 29pc growth compared to the 12pc expansion witnessed in the previous fiscal.

According to the report, India is one of the largest producers of pharmaceutical products and a leading player in the global generics market, exporting nearly 50pc of its products.

Similarly, the country continued to attract foreign investments into the sector. Foreign direct investment inflows amounted to $2.25bn between April 2014 and March 2016.

Top FDI inflows were from Abbot Asia Holdings, UK ($447.48m), Mylan group of the Netherlands ($372.63m) and Hospira from Singapore ($301.61m).

The report noted that India was the largest provider of generic medicines globally; its exports add up to about 20pc of the global generics market. In 2015-16, India exported Rs1.06tr worth of drugs, pharmaceuticals and fine chemicals.

The Indian government now allows 100pc FDI through the automatic route for greenfield pharmaceutical projects and 74pc for brownfield projects.

Interestingly, India is expected to overtake China in terms of growth of its pharmaceutical industry over the next five years, with a CAGR of 10-13pc, according to a recent report. The Global Outlook for medicines (between 2016-2021), brought out by QuintilesIMS, a healthcare service provider, notes that India’s pharma sector will grow at double the rate of its Chinese counterpart over the next few years.

Global spending on medicines will touch nearly $1.5tr in 2021, growing at a slightly slower pace in 2016-2021 as compared to the 5.9pc growth in the previous five-year period. The report predicts that India will be the fastest-growing pharma market globally.

Last year, India’s pharma sector expanded at 11pc, higher than China and Brazil. PwC, an international consultancy, expects India to be a major global pharma market player by 2020, expanding at 15-20pc CAGR and touching $50bn and $74bn in the next decade.

Published in Dawn, Business & Finance weekly, January 23rd, 2017