what Canadian officials described as “hostage diplomacy.” Apart from Canada, relations with Beijing have hit a

new low in several other countries. The intensifying US- China conflict and worsening diplomatic relations across the region are forcing countries to reconsider whether they can continue doing business in China as before. Last October, Janet Woodcock, of the US Food and

Drug Administration’s Center for Drug Evaluation and Research, told a House of Representatives subcommittee on health that the number of facilities in China supplying APIs had more than doubled since 2010 to 13% of all those serving the US market. In December, a delegation of the European Fine Chemicals Group (EFCG), an association representing API manufacturers, informed EC commissioners about measures needed to support the repatriation of pharmaceutical chemical production from China back to Europe. The EFCG estimates that over 80% of chemicals

used to make drugs sold in Europe tend to originate from China and India. Amid growing security and transparency concerns,

the US and Australia have already entered into an ambitious agreement to create what’s being called a “China-free” supply chain for rare earth materials. Japanese Prime Minister, Shinzo Abe, following

the Covid-19 outbreak, has already instituted a USD $2 billion fund to help Japanese companies shift back from China. India, Japan and Australia have also started working

on a supply chain pact to counter China's dominance. The three nations are to build a “supply chain resilience initiative”. The initiative, first proposed by Japan, is now taking shape, with dates being worked out for sessions with the commerce and trade ministers of the three countries. Japan, through its Ministry of Economy, Trade

and Industry, had approached India, highlighting the urgency to take the supply chain initiative forward. Tokyo is reportedly in favour of launching the initiative this November.

INDIA: MAKE FOR THE WORLD The proposal has struck a chord with the Indian government, especially in the light of China’s aggressive moves on the Line of Actual Control (LAC) in Ladakh. Sino-Indian tensions shot up in June this year after a violent brawl between Chinese and Indian soldiers along the LAC in the Galwan Valley in eastern Ladakh in which 20 Indian army personnel and an unspecified number of Chinese were killed. With India looking to emerge as an alternative to

China, the issue was one of the key themes of Indian Prime Minister Narendra Modi’s Independence Day speech on August 15, where he said that businesses have started viewing India as a possible “hub for supply chains” and that the time is ripe now for India to also “make for the world”. As Indian Pharmaceutical Alliance Secretary General,

Sudarshan Jain, points out, all countries are trying to diversify from imports of Chinese APIs and intermediaries. “It is not in the national interest to depend on one single source for something as crucial as medicines. India has adopted a right approach – to find alternative sources in the immediate term and to develop domestic capabilities in the medium to long term,” he said.


BACKED BY INVESTMENT The end of July saw the Indian government's announcement to set up three bulk drug parks for USD $410 million (INR 3,000 crore) and the approval of a USD $949 million (INR 6,940 crore) production- linked incentive package for the promotion of domestic manufacturing of critical intermediates and APIs. Following the announcement, officials of the

Federation of Indian Chambers of Commerce and Industry (FICCI), an association of business organisations in India, said the scheme would help promote self-reliance in APIs and key starting materials (KSMs). Dilip Chenoy, Secretary General, of the FICCI,

said the move was very important, especially from the perspective of “Atmanirbhar Bharat” (self-sufficient India) and the push to “Make in India”, and would strengthen the supply chain to make India the true “Pharmacy to the World”. “While it will also result in significant generation

of jobs, the government policy will encourage the fermentation-based industry to help build self-reliance as China has gained importance in fermentation-based APIs, namely antibiotics and vitamins,” said Chenoy. FICCI has termed it a first step towards a sustained

effort to help create a thriving API industry in the country, as well as helping India emerge as a hub for global exports. While the pandemic has accentuated issues like

re-shoring and near-shoring key industries and shortening supply chains, it also has provided an open market place for India to dig its heels in and make good on its promise of being the “Pharmacy to the World”.


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