The Transformation of the India Pharmaceutical Industry: Whither Africa's Supply?

Indian pharmaceutical firms are the leading suppliers of low-cost, affordable drugs to sub-Saharan Africa, hence the common references to India as “pharmacy to the developing world.” On account of increased competitive pressures in India, and new sources of demand for generic drugs in the US and Western Europe, however, leading India firms have re-oriented their production and export strategies toward selling more lucrative generics in regulated markets of US and the EU. What does this transformation imply for the supply of affordable drugs to Africa? One scenario is that leading firms continue supplying African markets while diversifying into more profitable regulated markets. A second scenario is that leading firms exit African markets but new firms emerge as suppliers. A third, and more worrying, scenario is that leading firms exit African markets and new firms fail to replace them, yielding a problem of under-supply. To assess these scenarios, the paper reports on data from a survey of 100 Indian pharmaceutical firms. We find significant variation in firms’ interests and capabilities to supply African markets depending on the age of the firm and the timing of their initial exports.