Pharma co.s invest big in the US

追加: 2026-05-13

[00:00:00]We we have a huge industry. They wanted to diversify. They wanted to consolidate their position globally. They will manufactured in US in developed countries. We are going to have the global footprint. That may be the strategy of the Indian pharmaceutical industry.

[00:00:20]>> Hello and welcome to macro decode.

[00:00:22]Indian companies made a record investment commitment of $20.5 billion in the United States during the recently held select USA investment summit 2036.

[00:00:34]A major portion of the investment over $19.1 billion will come from India's pharmaceutical sector. The development raises several questions. How viable are these investments and how will outbound investments impact our farmer manufacturing and export earnings? Rabi Udaskar, former director general of farmil is joining us to share more insights on this development. Welcome to the show sir.

[00:01:03]>> Uh thank you Sangeita.

[00:01:05]>> Uh can you briefly tell us about the investment commitments by Indian farmer pharmaceutical companies in the US? Is it the first time we are seeing the sector making such large investments in the US?

[00:01:18]>> Uh this is the first time such a kind of a hu huge investments are being made.

[00:01:24]Indian pharmaceutical industry grown from uh small companies to multinational companies. Out of 20 global generic companies, six are from India.

[00:01:34]>> Correct. So uh the the recent uh acquisition of organon by sun pharma for 11.75 billion and byon acquiring varies most of the companies are focusing on biologics bio similars and high value products and contract drug research and development. This is not a new phenomena. Even 10 years back the Indian companies u established their facilities in uh US but at that point of time uh their approach is very conservative and to focus more on uh generics and distribution.

[00:02:12]>> Why are Indic farmer companies suddenly accelerating manufacturing investments in the US? India's generic pharma industry was not placed under the tariff regime. Then why there is a hurry in investing in the US? I can't I can't say it's a hurried invest no more you can call them as in Indian companies confined only to manufacture uh the low cost generics that's >> true >> the generic market US itself is 115 million >> that's true >> so we are exporting only 9 billion >> so there is a huge potential uh particularly in the US >> and once you are manufacturing in US you will have a different kind of a footing globally if you take the MA mutual recognition agreement between US and EU.

[00:02:59]UE is also 143 billion. So without any inspections Europe will recognize the US inspections.

[00:03:08]>> So there are so many trade barriers they can avoid and they can avoid multi- inspections and all. So Indian pharmaceutical industry is looking at a broader perspective.

[00:03:19]>> Okay. But even now when uh we are manufacturing for the US market even for European market we get the USFD approval for our manufacturing facilities as well as for our products they come and inspect the facility and give us the permission to manufacture. So we don't have to actually go and manufacture in US to get to the US FDA approval. So uh is there any additional competitors if you are making it in US? Definitely there's an additional advantage. If you wanted to supply drugs from India to US, >> you should have a facility which is having a US FDA approval. If you wanted to export to EU, again EU regulators has to inspect. So if you establish a facility in US >> you can uh supply from US facility to the Europe you can avoid the trade barriers and you can avoid that reg multiple regulatory audits etc. >> India is largely a generic drug uh producer. So are this investment meant for manufacturing of generics specialtity drugs or patented drugs? If you see the recent transaction they are working on bioimilars, biologics, speciality drugs. So entirely the generic manufacturing activity will not be shifted because okay >> the the labor costs and is much more uh than India. If if they wanted to manufacture a particular drug uh in US, it costs almost 30% more than if it is manufactured in India.

[00:04:57]>> That's true. But when it comes to the complaints cost, >> yeah, >> more or less will be the same.

[00:05:03]>> Generics are not the major uh idea.

[00:05:07]>> Even if the manufacturer generics also, it's going to be a big market for uh Indian pharmaceutical industry. The the global generic industry is uh more than 500 500 billion. We are exporting only 31 billion. So still there is a huge uh potential globally. India can also focus on other emerging markets and particularly the Latin America serious countries. We are not leaving that game just like that what we have did '90s leaving the API industry completely and focusing only on generic formulations.

[00:05:44]That kind of an approach is not there now. The companies are focusing on innovation and research and development biosimilars and high value products and complex generics.

[00:05:55]>> Even in if you look at biosimilars and specialty drugs cost is one of our major strongholds. We always do reverse engineering and control the cost. Will they have that cost advantage if they shift their production to the US? How will the US market be willing to pay higher prices for locally manufactured generates or even speciality drugs? If you you have a manpower, you have a different kind of skill sets particularly manufacturing the biologics, bioimilars and these drugs are very expensive. So you know that definitely the other companies are manufacturing at a higher price and we are also going to manufacture in that level and these people are focusing on the companies which are very much established and they are having their operations in 131 140 countries. So they will give the access to these countries.

[00:06:48]India will come out of low cost generic manufacturer kind of a brand. That doesn't mean that doesn't mean Indian companies are not intelligent enough to leave these uh generic uh formulations.

[00:07:03]>> So US has been having a lot of issues with regards to trade uh and tries.

[00:07:08]Could these investment become financially unviable if trade policies change after a new administration comes in? How risky are these investments?

[00:07:19]>> The present administration is the worst administration. If the present regime changes also, it's not going to have any serious impact on us because because the the US saved uh particularly 219 billion by purchasing Indian pharmaceuticals in the year 2022 and from 2009 they have saved trillions in this healthare system. Once you become a US company, you are more or less governed by the US laws. What happens once another government comes in and it it finds that you know the tariffs and are actually hurting its own uh you know market its own consumption as far as you know speciality drugs as well as patented drugs are concerned that if they think that we can probably get it at a cheaper rate from outside will these investments become a liability >> actually it's a it's a very hypothetical uh the questions it's all depends on the geopolitical issues and the logistics. India having a very strong pharmaceutical industry. That is one. [clears throat] The the other the other point is that as long as we manufacture the quality drugs at this price naturally our price will be definitely lower than even if the American companies manufacture in their own uh countries. because the Indian companies can produce uh a large number of uh patented medicines or R&D activities they the Indian companies are playing the safe game that's what uh I I feel there >> the investment by the Indian companies in our market in their own pharmaceutical manufacturing facilities here will that come down if they if they are going and investing in the US >> no Indian pharmaceutical industry is very huge in size you know we have 3,500 facilities how many people can go and establish their facilities in US when when we are discussing about these big companies but there are huge population they need medicines at the same time there are huge number of companies the growth is going to be a continuous process >> now we look at make in India the PLI schemes that has been announced by the government how is this going to be affected Like in the PLI scheme actually we also had a scheme for APIs because BAPIs we are still buying from China there we need a lot of self-sufficiency going ahead uh will there be adequate investments in the pharmaceutical sector how about the making Indian PL schemes >> the PLI scheme was a good idea scheme is not to replace the entire API imports it is to reduce the dependence of critical APIs and location they have already invested 41,000 cr something before the the targeted timelines >> but my my my my point is that even after this if you see our imports 70% of our imports we are getting from China not only India >> most of the world is dependent on China the Chinese have mastered the art of manufacturing uh uh APIs, basic chemicals and key starting materials in in high high capacities. That is their expertise. Manufacturing formulations is our expertise. In PLA policy, the major companies got the advantage. They would have extended this scheme to all the companies with the minimum criteria and to whoever manufacturing those identified products they can give that incentives to them. Instead of that big companies are doing that they are monopolizing. In PLA policy we have not discussed anything about price. If X product is supplied lower price than Indian price by Chinese, Indian companies will buy from them including the person who is got PLI scheme. Right?

[00:11:30]>> So pricing is very much uh important in this process. At the same time they would have extended to all the industry.

[00:11:38]So now imports are almost more than 9 billion. There is a growth of uh 7%. Our export growth was in this financial year it's only 2%.

[00:11:48]>> That right? So out of 31 billion our imports are 9 billion. So more than 30% we are importing >> right.

[00:11:55]>> So we need to bring more people into this net encourage the Indian MSM particularly who who manufacture these identified APIs or a basic chemicals or intermediates or whatever it may be.

[00:12:12]>> Right. You have made a very valid point.

[00:12:14]Actually when the PLI schemes were announced they should have given it to everyone micro small medium everyone should have been given the same incentive because you know the production is important it's not the size of the company and and now uh when we look at uh the investment that is going to US if more value added pharma manufacturing is shifting to the US what will happen to India's export earnings uh will India lose its position as the pharmacy of the world >> out of global to 550 billion generate market even if you what is our share >> we are exporting to most of the countries in the world the reason is that we manufacture quality drugs at a very affordable price some companies in uh Europe one company's turnover or business is much more than our entire Indian pharmaceutical market. So the the so there's a huge potential in other countries. We need to work on extending our market to the other countries particularly focusing on the poor and uh the emerging markets. The our generic drugs are very much relevant to them because of our cost effectiveness.

[00:13:39]>> Right? We played a very very important role in saving uh millions of population particularly from the dreaded diseases like uh HIV, tuberculosis, malaria and that is the reason India is identified as a pharmacy of the world but if you see in terms of export value it's not very much relevant to that tag. is yeah precisely that's what I was intending to say that you know when we have a hold on generic medicines we should have actually gone up in the higher in the value chain like you know going ahead with specialty drugs and painted rather than investing in other countries can't we make it in India itself like you know we have done reverse engineering and drawn pharma into our country can't we do it in the case of higher value products as well so that manufacturer here employment generation will go up and our export earnings will also go up.

[00:14:36]>> We have we have a huge industry. They wanted to diversify. They wanted to consolidate their position globally.

[00:14:44]That is the that is the plan of the Indian pharmaceutical industry. They're not going to desert uh the India or Indian population if they stop it costing is going to play a role. Indian consumer can't afford to pay that much of money but at the same time they can have the good money if they manufacture uh in US or Europe >> right lastly uh will India get any benefit out of such outbound investments >> it's a portfolio diversification and uh speciality growth that is uh the the the one benefit >> and the other one is that direct access >> to the regulated market as 50% of our uh exports are going to EU and US that will that will give an access to the regulated markets and bypass trade barriers and it will reduce the timelines as well as the costing also. So in India it takes lot of time for the USfd inspectors to come. They may go for a tech transfer also to their Indian uh companies. This kind of an advantage is very much needed to consolidate uh consolidate our position.

[00:16:13]>> Right. Right. So that was Mr. Rabi Hasker. He finds that the Indian pharmaceutical companies going to US will probably help them um bypass many of the compliances. The tarist pressure also would be low on them. But we also hope that you know they will continue to invest in the Indian market. Bring the technology from there and our pharmaceutical industry will keep growing. Our exports will keep growing and we will remain the pharmacy of the of the world not just for generic drugs but also for specialtity and high value uh drugs as well. Thank you for joining me on the show sir.

[00:16:52]>> Thank you man. Thank you so much.