Sudden restrictions on medical exports force companies to look overseas

AD HOC EXPORT restrictions on essential medical supplies, particularly since the onset of the pandemic early last year, are prompting several Indian manufacturers and suppliers of these products to explore the possibility of establishing additional manufacturing bases. outside the country to serve their customers.

Hindustan Syringes and Medical Devices (HMD), the country’s largest syringe manufacturer which owns the DispoVan and Kojak brands and exports to over 100 countries, is actively exploring establishing a manufacturing base outside of India to s ‘partially isolate sudden changes in policies that impact their client commitments, said a senior executive. Narang Medical Ltd, another Delhi-based medical equipment maker, plans to move locks, inventory and barrels overseas over the next 4-5 years.

The issue of political certainty is once again growing in importance, with the novel Omicron variant of the coronavirus being highly transmissible and demand for medical items, including syringes, likely to remain high. The World Health Organization has already paved the way for booster doses of the Covid-19 vaccine, with priority given to population groups most at risk of serious illness and frontline healthcare workers.

On October 4, 2021, to discourage outbound shipments, the General Directorate of Foreign Trade (DGFT) announced export restrictions requiring companies to obtain a government license or authorization to ship syringes overseas. A few days later, on October 9, the Ministry of Health clarified the restrictions on three categories of syringes essential for the vaccination program.

Rajiv Nath, Managing Director of HMD and Coordinator of the Indian Medical Device Industry Association (AIMED) told The Indian Express: “We have called on the government to lift the restriction on exports of insulin syringes. These syringes cannot in any case be used for Covid-19 vaccination and the Ministry of Health has supported our request to the DGFT (General Directorate of Foreign Trade); 8-10 million insulin syringes rest with us as backorders from countries like Thailand, Morocco, Myanmar and United Arab Emirates.

“It took us many years to build relationships. This disruption gives India a bad (name)… as a supplier of medical products, ”said Nath. Hence a “serious reflection” on the establishment of capacities outside India. “When the export ban came in, being a global supplier, we got invitations from many countries saying they were in short supply. Iran, Saudi Arabia, Oman, Uganda – they contacted us to set up a factory there, ”he said.

Explain

Political uncertainties are damaging the brand

To protect themselves from political vagaries, manufacturers of medical equipment are considering setting up manufacturing units abroad. The government says India is not alone in banning shipments, but companies say failure to meet commitments is damaging the brand.

“It’s something to definitely strategically see in the long term. You can’t do it in a month,” said Nath. HMD’s manufacturing units in India have a capacity of 1.5 billion AD syringes per year. , which the company plans to increase to 1.8 billion syringes per year by March 2022.

After several petitions, syringe manufacturers were allowed to increase their export quota for insulin syringes. Companies such as HMD expect to liquidate the backlog of orders by the end of December.

Earlier, in January 2020, as the global coronavirus epidemic intensified, the Center imposed a ban on the export of personal protective equipment such as masks and clothing. The restrictions were lifted over the months as India gradually expanded its domestic manufacturing capacity for these items, but the ban has put many traders of these products in difficulty.

“As soon as the pandemic hit, the prices of some essential items increased tenfold. Because we were receiving orders from our global customers, we purchased the items at inflated prices. We took payment from our customers and paid our suppliers as well. But suddenly, without notice, exports were banned (WHEN?), Delivering goods to us without export authorization. By the time the ban was lifted, prices cooled causing huge losses, ”said Parveen Narang, managing director of Delhi-based Narang Medical, a manufacturer and supplier of hospital furniture, orthopedic implants. , autoclaves, vacuum cleaners, with exports to around 80 countries. It also sells products such as masks, PPE kits, thermometers, oxygen concentrators, orthopedic implants, etc.

The company had established a subsidiary in Florida in 2015, which it operated during the export ban to meet its sourcing commitments in the Americas and Africa. “We were fortunate to have a business in the United States that gave us the ability to continue providing these essential Covid-19. Almost 90 percent of our business comes from exports to Latin American countries like Mexico, Argentina, Colombia, the Dominican Republic, in addition to African countries and Europe, ”he said. -he declares.

Narang said he has made plans to become a U.S. citizen and ultimately move his manufacturing base from Ghaziabad in Uttar Pradesh to Mexico or Colombia over the next 5-6 years. “We now employ around 250 people across the company, and except 25 in senior management, we had to lay off the rest,” he said.

While honoring supply commitments, any default is always difficult to redeem, Narang said. “In December 2019, we had taken large orders for a variety of medical equipment at a medical device event in Dubai, but were unable to deliver them to our customers. Next month (January 2022) I have to face these clients in Dubai again in another such exhibition, ”he said.

In April of this year, shortly after the second wave hit the country, the Center also abruptly halted the export of Covid-19 vaccines to speed up the vaccination campaign in the country. Soon after, the Pune-based Serum Institute of India, one of the world’s largest vaccine manufacturers, signed a pact with the UK to invest £ 240million to expand its vaccines business and there establish a new sales office. The restrictions, which had hit global initiatives like Covax, were lifted in November.

A senior government official, however, said India was not alone in banning the shipment of essentials. The bans imposed by the finance ministry or trade ministry were “time-limited and product-specific” given the emergency in the country, the official said.


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