AFRICAN DRUG PRICE WAR HITS INDIAN EXPORTERS

It is looking increasingly likely that the Indian government will intervene to halt a reported price war between Indian exporters of APIs and generic drugs to the US$5bn African drug market. The government has yet to disclose what actions can and will be taken, merely stating that "discussions" will take place with the leading exporters.

There are over 1,000 Indian drugmakers competing for the African market, and average prices for generic drugs have eroded by 20–25% in recent years. According to industry observers, competition between Indian firms is also driving down API prices, with pressure from low-cost Chinese exporters — which are stronger in bulk finished drugs — negligible in active principles.

Indian companies have been flooding the African market with drug exports owing to increased price pressure in developed markets such as the US and Europe. Africa's drug manufacturing industry is tiny, and the market is effectively controlled by multinationals.

As a result there has been high demand for low-cost medicines, which India's huge generics industry is keen to exploit. The Indian government is planning to hold a meeting with African ambassadors in Hyderabad in the near future in order to highlight the importance of the these markets.

However, in the wake of the current price war, it is widely expected that a number of Indian exporters will begin looking toward the markets in South America or South Asian countries such as Malaysia and Indonesia, where volumes and prices are higher. Another option in Africa could be to sell more branded drugs or form new product partnerships, as these have been relatively "insulated" from falling prices.