The Hindu Business Line : Pharma may trigger 3-fold rise in India-S. Africa trade: FICCI

New Delhi, Oct. 13 Triggered by the pharmaceutical sector, India-South Africa bilateral trade could rise three-fold to $12 billion by 2010, according to FICCI.

A paper brought out by the Chamber on the role of the pharma sector in promoting India-South Africa bilateral trade points out that the two countries enjoy several complementarities. Both have a diversified population, abundant labour supply and mineral wealth.

There are several major companies exporting generic pharmaceutical products to South Africa. Most of them have set up their offices there. Yet, Indian companies doing business with South Africa are bogged by several hurdles.

Registering pharmaceutical products in South Africa takes 24-36 months and the procedure is cumbersome, according to feedback received by the Chamber from drug companies. There is no single window clearance in South Africa either.

Sales exit price

Pharmaceutical companies have to sell at (SEP) Sales Exit Price similar to MRP (Market Retail Price) followed in India. However, some pharma companies in South Africa sell at lower than the fixed price through various means such as giving cash bonus to the distributors.

Foreign companies do not indulge in such practices and hence their sales are affected.

Even so, the South African pharmaceutical market holds promise, as it is the largest market in Africa. Current market size is estimated at about $2 billion. Exports are to the tune of $0.09 billion and imports are at $1.44 billion.

Imports of pharmaceutical products, mainly bulk drugs from India, are to the tune of $110 million and exports to India are miniscule.

Apart from market size, some of the main reasons for South Africa’s pharma lure are its well established and stable markets, and high turnover to investments. It is expected that the market will continue to expand at a rate of four per cent per annum.

The paper notes that the Indian market offers several advantages for South African pharma companies.

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