India bans the export of 26 pharmaceutical products including paracetamol
India is the world’s largest manufacturer of generic drugs. It accounts for approximately 20 percent of the world’s generic drug supply,2 and accounted for almost 25 percent of U.S. imports in 2018, according to the U.S. Food and Drug Administration.3
As our March 6, 2020 client alert explained, on March 3, 2020, India’s Directorate General of Foreign Trade (DGFT) announced that it had restricted the export of 26 pharmaceutical products, including paracetamol and several antibiotics, to protect India’s domestic supply in the face of active pharmaceutical ingredient (API) shortages from China.4 At the time of the announcement, the DGFT stated that the restrictions would continue “till further orders” were issued.5
India bans hydroxychloroquine exports, but allows limited exceptions
As our April 6, 2020 client alert explained, on March 25, 2020, India banned exports of the antimalarial drug hydroxychloroquine (HC). India is home to some of the largest HC manufacturers in the world,6 and the move was seen as a response to global supply pressures caused by the significant attention that HC has garnered as a possible treatment for reducing the duration and/or severity of COVID-19 in less severe cases.7
The HC export ban that India announced on March 25, 2020 was not absolute, however, and permitted HC exports to continue in three instances: (1) to fulfill existing contracts where the buyer had made advance payment arrangements; (2) if made from special economic zones in certain circumstances; and (3) if made with government approval for humanitarian reasons.8 Those exceptions to India’s initial HC export ban were seen as significant, because they would have allowed limited commercial exports to continue, particularly from economic free zones.
India eliminates all exceptions to the HC export ban
On April 4, 2020, India withdrew the three exceptions to the HC export ban that it had previously allowed and rendered “[t]he export of [any] hydroxychloroquine and formulations made from hydroxychloroquine . . . prohibited, without any exception.”9 India’s April 4, 2020 announcement therefore forbade any further HC exports, including those from economic free zones and those made “against full advance payment.”10
The total HC export ban generates negative political backlash
While the actual global impact of India’s total HC export ban was unclear, particularly because manufacturers had already taken steps to ramp up HC production outside of India,11 India’s announcement nevertheless generated significant political backlash from the United States. In fact, it was widely reported that only hours after India announced the total HC export ban, President Trump called Indian Prime Minister Narendra Modi to ask to have the ban lifted – at least for the United States.12
India’s foreign ministry announces that the HC and paracetamol bans would be lifted
On April 6, 2020, and only two days after it imposed the total HC export ban, India’s Foreign Ministry announced that India would allow “appropriate quantities” of HC and paracetamol to be exported to “neighbouring countries” and “nations who have been particularly badly affected by the pandemic.”13 India did not clarify what appropriate quantities meant, but the phrase was presumed to mean that India would only export amounts that remained after domestic supply needs were met.14
The DGFT lifts export restrictions on 24 pharmaceutical products
On April 6, 2020, the DGFT also issued a notice that removed all export restrictions on 24 of the 26 pharmaceutical products that had been restricted from export on March 3, 2020.15 Absent from that April 6, 2020 notification, however, was any mention of paracetamol, which was banned by the March 3, 2020 notification, leading to questions about what paracetamol exports would be allowed.
The current state of play
While India’s Foreign Ministry has said that export restrictions on HC and paracetamol would be lifted and that exports in “appropriate quantities” would be allowed, India has not clarified what appropriate quantities means, and excluded paracetamol from the DGFT’s April 6, 2020 notification lifting the export restrictions imposed on March 3, 2020. Accordingly, while India has stated that it will allow HC and paracetamol exports to “meet the demand” from other countries, it remains to be seen what that actually means, and whether shipments will be allowed to private companies.
Moreover, questions remain about India’s API supplies from China, which could limit India’s ability to export beyond its domestic market needs, at least at the current time.16 In short, if API supplies from China remain strained, any desire to allow exports may be of limited significance for the time being.
Accordingly, while India’s most recent supply announcements would appear to alleviate concerns at first blush, the situation remains an uncertain one, particularly for private companies. Pharmaceutical companies reliant on impacted products from India must therefore follow developments closely to ensure that their commercial interests are protected.
“India Allows Limited Exports of Anti-Malaria Drug After Trump Warns of Retaliation,” Reuters (April 6, 2020).- “India Restricts Exports of Common Drugs on Fear of Coronavirus Shortages,” Fortune (March 3, 2020); “India Restricts Exports of Common Drugs on Fear of Coronavirus Shortages,” Bloomberg (March 3, 2020).
- “Coronavirus: Drug Shortage Fears as India Limits Exports,” BBC News (March 4, 2020).
- “India to Restrict 10% of Medicine Exports Due to Coronavirus,” European Pharmaceutical Review (March 4, 2020).
- Notification No. 50/2015-2020, Indian Ministry of Commerce & Trade (March 3, 2020).
- “India Bans Export of Malaria Drug Trump Touted as Coronavirus Treatment,” Fortune (March 25, 2020).
- “Novartis, Mylan and Teva to Supply Tens of Millions of Chloroquine Tablets to Fight Covid-19,” FiercePharma (March 20, 2020).
- Notification No. 54/2015-2020, Indian Ministry of Commerce & Trade (March 25, 2020).
- Notification No. 01/2015-2020, Indian Ministry of Commerce & Trade (April 4, 2020).
- Id.
- “Mylan Ramps Up U.S. Manufacturing of Hydroxychloroquine Sulfate Tablets to Meet Potential COVID-19 Patient Needs,” Mylan Newsroom (March 19, 2020).
- Trump Leans on India to Export His Unproven Coronavirus Drug of Choice – But It’s China that Determines Supply, Fortune (April 7, 2020).
- “India Allows Limited Exports of Anti-Malaria Drug After Trump Warns of Retaliation,” Reuters (April 6, 2020).
- “After Reverse on Hydroxychloroquine Export Ban, India Says ‘Only Meeting the Demand,’” NPR (April 9, 2020).
- Notification No. 02/2015-2020, Indian Ministry of Commerce & Trade (April 6, 2020).
- “Trump Leans on India to Export His Unproven Coronavirus Drug of Choice – But It’s China that Determines Supply,” Fortune (April 7, 2020).
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Client Alert 2020-236
