India-China begin talks for a reverse-trade model for drugs

This would unlock export potential of $6 billion for Indian pharma companies

- SANKET KOUL

India has begun talks with China on a reverse-trade model under which bulk drugs imported from China would be converted into finished dosage forms (FDFs) and exported back.

This is a move industry experts believe could unlock about $6 billion in drug product exports against China’s $4 billion bulk drug supplies to India, the Pharmaceutical Exports Promotion Council (Pharmexcil) said.

China's tightly-regulated drug market is slowly opening up to Indian pharmaceutical firms with drug approvals and tender orders under its volume-based procurement (VBP). This comes at a critical time when tariff uncertainty pushes India to look beyond the United States (US).

The important shift in strategy is, however, for exploring opportunities for collaboration rather than competition.

China is more focused on key starting materials (KSMs), intermediates, and drug substances, whereas India’s core strength lies in FDFs.

“India began discussions with China on a reverse-trade model, where whatever bulk drugs we import, we propose to trade back through FDF partnerships. We would add value to the drug substance and export it back to China,” Namit Joshi, chairman, Pharmexcil said.

He claimed that the potential identified for such arrangements stands at approximately $6 billion worth of drug products, which China could import against its $4 billion export of drug substances to India.

This creates an opportunity wherein both nations can maximise trade in pharma through collaboration. “As a result, we saw great value in collaborating with China on reverse trade in pharmaceuticals,” another analyst said.