The Reserve Bank of India (RBI) said that the COVID-19 pandemic has placed the US$1 trillion global medical exports market at the centre stage of the global growth recovery. The central bank highlighted the pandemic's impact on Indian pharmaceuticals exports going forward in its annual report 2020-21.
According to RBI, the World Health Organisation (WHO) suggested that a substantial portion of the world population needs to be vaccinated to develop herd immunity against COVID-19. On a conservative estimate of an average price of US$ 8 per vaccine, export opportunities to the tune of US$ 31 to US$ 36 billion are estimated to open up at the global level. By undertaking research and development (R&D) activity at an unprecedented speed, vaccines have been developed in a record nine months. New groundbreaking (mRNA) techniques have also been employed, which reportedly will have the potential to cure many incurable diseases like cancer and Parkinson’s, opening up new revenue streams for the pharma sector.
At present, India’s pharma sector contributes around 2% to GDP and 6.6% to total merchandise exports. India is the 12th largest exporter of medical goods in the world and India’s pharma exports grew faster than world exports during the last two decades. Furthermore, India is a major supplier to the least developed and developing countries.
Further, RBI stated that Indian pharmaceutical firms have already started rolling out the COVID-19 vaccine by leveraging on existing infrastructure and a skilled labour force. As of March 15, 2021, India had supplied a total of 586.4 lakh COVID-19 vaccines to 71 countries comprising grants (81.3 lakh), commercial exports (339.7 lakh) and under the COVAX platform (1 65.5 lakh).
However, RBI said, "following the second wave and the pressing need to upscale vaccination in India, some moderation in its exports is expected in the short-term."
RBI said that India’s pharma export sector relies heavily on imports of Active Pharmaceutical Ingredients (APIs), especially in the case of bulk drugs and this is corroborated by the empirical findings which suggest that import intensity is statistically significant.
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