Impact of COVID-19 on the Indian pharmaceutical industry

Pharma Industry in India


Indian pharmaceutical industry is the world’s third-largest drug producer by volume manufactures 60 percent of vaccines globally. India provides affordable and low-cost generic drugs to millions of people around the globe. COVID-19 gave a great jolt to the pharmaceutical industry in India. The lockdown triggered by coronavirus has caused disruptions in all sectors. The supply chain of active material was disrupted, projects were delayed. Import and export became a major challenge for the pharma industry in India.

Every pandemic teaches a lesson and COVID-19 is no exception. Read more to know how did COVID-19 impact the pharma industry in India.

1. Supply chain disruption

Covid exposed the Indian pharma industry’s dependency on China for its API procurement. When China faced the Corona outbreak, it adopted several quarantine policies in response to Corona which resulted in manpower shortages in China and thus the supply chain was disrupted, and product exportation restrictions from India further deteriorated the supplies. The government of India has announced in April 2020 INR 10000 crore of investment to incentivize production of API’s in India posts the API supply jolt in India caused by the pandemic.

2. Impact on cash flows of the pharma industry

Impact on cash flows has led many pharma companies to impose a freeze on the hiring process but unlike other industries, the pharma industry is expected to see a positive impact on an overall basis. However, like other industries, pharma companies are also deploying methods of ‘’trimming the fat’’ i.e. revisiting capital expenditure, looking at renegotiating rentals, looking for new sources of income from owned assets as well as using the digital mechanism for meetings and conducting business.

3. Restrictions on movement

Prices of raw material shot up, shipping costs skyrocketed during the COVID-19 pandemic. The movement of goods and people was restricted, manufacturers of the pharma industry were unable to launch products or conduct clinical trials. These restrictions made it difficult for the Indian pharmaceutical industry to sell drugs in the US as inspection and approval of USA FDA is required to sell drugs in the USA which was not possible to conduct due to ban on international travel.

4. Indian pharmaceutical industry growth slow-down

COVID-19 resulted in the economic slow-down at the global level and this will possibly lead to pharma industry growth slow-down which are sensitive to country economic growth. This slowdown in market growth is more due to the entry of newer medicines because of the changed priorities of the pharmaceutical companies in their portfolio. However, it is worth noting that in the previous recessions, there were cases in which the health industry was less sensitive to slowing economic growth and did not always follow this trend.

5. Pharma industry is under pressure and changing consumption trends

Several trials are taking place and new emerging therapies are publicized, drug companies are now under pressure to show their compassion regarding drug development royalties. Also, the reputations of pharmaceutical companies are on the line in this time of global health fears because their impact on the fight against the virus will not be easily forgotten. Also, the consumption trend is changing in health-related products. Currently, the public is concerned with personal hygiene maintenance, using mainly nose/mouth protection, hand sanitizers, etc. Due to the extended period of the pandemic, this consumption may remain in behavioral acts of the public, globally and locally.

6. Moving towards self-sufficiency in the pharma industry

China’s non-cooperative behavior on account of not disclosing the information on the virus or the severity of the outbreak on time has made it lose its credibility on a global level allowing government leaders and businesses to look for alternative low-cost nations to source supplies. India is an appropriate nation for them as we have a robust pharma sector, with proven expertise in drug manufacturing and treatment. This was further highlighted when the country was quick in ramping up its production of Hydroxychloroquine which was used as a key drug to fight against the coronavirus.


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