India Seeks Easier Access To Export Unbranded Drugs.

India wants easier rules to export unbranded drugs to Japan during ongoing negotiations on an economic agreement between Asia’s second and third largest economies.

Indian drug makers want a more relaxed access to Japan, the second largest drug market after the US with a current value of $64 billion (`2.9 trillion), after the island nation opened doors for cheaper generic drugs in 2007 to trim healthcare costs in one of the world’s most rapidly aging society.

The bilateral trade accord is likely to be signed during Prime Minister Manmohan Singh’s Tokyo visit in March, according to two people familiar with the negotiations, who spoke on condition of anonymity.

But a stringent drug regulatory regime has made it difficult for Indian firms to establish themselves in the Japanese market.

“The Indian side may stick to its demand that Japanese regulatory norms to clear generic drugs should do away with the US FDA (Food and Drug Administration) plus provisions, which makes the compliance difficult for even quality manufacturers from India,” said one of the persons.

Indian generic drug makers want the Japanese drug regulator to allow applications for drug approvals in English, relaxation in mandatory trials of every drug on the local population and more transparency and speed in the approval process, said Dilip G. Shah, secretary general of industry lobby group Indian Pharmaceutical Alliance.

The Japanese drug market, dominated by expensive branded drugs from innovator companies, has had an insignificant presence of generic drugs till recently.

Japan’s ministry of health, labour and welfare is responsible for the final approval of drugs to be sold in the country, but the actual review is done by the Pharmaceuticals and Medical Devices Agency.

“At present, generic drugs manufactured in India even as per US FDA norms are often unable to clear the approval standards set by the Japanese regulatory body,” said Kensuke Kubo, an economist at the Institute of Developing Economies, a research institution affiliated with Japan External Trade Organization. “Indian firms must develop their products specifically for the Japanese market.”

The Japanese government, in turn, wants India to cut import duty on auto components and finished vehicles from Japan, said a commerce ministry official familiar with the talks, the second of the two persons cited earlier. “The negotiations with the Japanese trade authority are going on, and the official positions may be out soon,” said the ministry official.

Siddharth Singh, joint secretary, ministry of commerce and industries, who leads the Indian side on the discussions, could not be reached for comments despite several calls made to his office.

In 2007, Japan said it wanted to increase the use of low-cost generic drugs to at least 30% by 2012. The government expects to save as much as 500 billion yen ($5 billion) in healthcare expenses by switching to generic drugs.

The share of generic drugs was about 5% before the government’s policy changed. To take advantage of the rule change, some big pharmaceutical companies in Japan also started manufacturing generic drugs by joining hands with local firms.

The generic drugs introduced by the big pharmaceutical companies were priced closer to the branded ones, arresting price erosion. The reluctance of Japanese doctors to prescribe generic drugs has also hampered entry. It has made a local tag necessary for Indian companies exploring that market.

“Even APIs (active pharmaceutical ingredients) exported from India are often reprocessed in Japan and a large margin is paid to Japanese API manufacturers, who only carry out the last step of processing, before being sold to Japanese formulation manufacturers,” said Kubo.

Ranbaxy Laboratories Ltd was the first Indian drug maker to enter the Japanese market through a joint venture with Nihon Pharmaceutical Industry Co. Ltd in 2002. The venture could introduce only a few products successfully. The joint venture was terminated in 2009.

Daiichi Sankyo Co. Ltd, Japan’s third biggest drug maker, acquired a controlling stake in Ranbaxy in 2008.

Ahmedabad-based Torrent Pharmaceuticals Ltd, too, had to withdraw from the Japanese market two years after it entered the country in 2006.

Dr Reddy’s Laboratories Ltd and several other generic drug makers are also currently struggling to make their presence felt in the Japanese market on their own, or through local partnerships. So far, only Mumbai-based Lupin Ltd met with success in the Japanese market after it bought local drug maker Kyowa Pharmaceutical Industry Co. Ltd.

The scrutiny of drugs is stringent in Japan and involves both scientific as well as non-scientific criteriasuch as colour codes and labelling details; the average time taken for approving a drug product is at least three years from the date of application.

“If certain regulations can be rationalized, or if they can become more science-based, thereby making the health ministry standards closer to the US FDA’s, then it will become easier for Indian firms to sell their products in Japan,” said Kubo.

The reduction of import duty for Japanese auto parts may have little impact because of the high level of localization in India, according to S. Maitra, an executive director at carmaker Maruti Suzuki India Ltd.

Source : livemint.com