Sudden restrictions on medical exports force companies to search overseas


AD HOC EXPORT restrictions on essential medical supplies, especially since the pandemic started early last year, are causing several Indian manufacturers and suppliers of these goods to explore the possibility of setting up alternative manufacturing facilities outside of the country to serve their customers.

Hindustan Syringes and Medical Devices (HMD), the country’s largest syringes manufacturer, which owns the DispoVan and Kojak brands and exports to over 100 countries, is actively looking into building a production base outside of India in order to protect itself, in part, from sudden political adjustments that commitments affecting their customers, said a top manager. Narang Medical Ltd, another Delhi-based medical device manufacturer, is considering moving locks, warehouses and kegs overseas in the next 4 to 5 years.

The issue of political security is regaining importance as the new Omicron variant of the coronavirus is highly transmissible and the demand for medical items, including syringes, is expected to remain high. The World Health Organization has already paved the way for booster doses of the Covid-19 vaccine, prioritizing the populations at greatest risk for serious illness and frontline health workers.

On October 4, 2021, the General Directorate for Foreign Trade (DGFT) announced export restrictions requiring companies to obtain a license or government approval to ship syringes abroad in order to prevent outbound shipments. Just days later, on October 9, the Ministry of Health cleared restrictions on three categories of syringes that are essential to the vaccination program.

Rajiv Nath, Managing Director, HMD and Coordinator of the Indian Medical Device Industry Association (AIMED) told The Indian Express: “We have asked the government to lift the export restriction on insulin syringes. These syringes cannot be used for the Covid-19 vaccination anyway and the Ministry of Health supported our request to the DGFT (General Directorate for Foreign Trade); We have 8-10 million insulin syringes as pending orders from countries such as Thailand, Morocco, Myanmar and the United Arab Emirates. “

“It took us many years to build relationships. This disruption gives India a bad (name) … as a medical device supplier, “said Nath. So there was a “serious thought” about building capacity outside of India. “When the export ban came in, we as a global supplier received invitations from many countries where there was a shortage. Iran, Saudi Arabia, Oman, Uganda – they turned to us to set up a plant there, ”he said.

Explained

Political whims harm the brand

To isolate themselves from political whims, medical equipment manufacturers are planning to set up manufacturing facilities abroad. The government says India is not unique in banning supplies, but companies say failing to meet commitments harms the brand.

“In the long term, this should be seen strategically. You can’t do that in a month, ”said Nath. HMD’s manufacturing facilities in India have a capacity of 1.5 billion syringes per year with automatic deactivation, which the company plans to ramp up to 1.8 billion syringes per year by March 2022.

After several petitions, syringe manufacturers were granted an increased quota for the export of insulin syringes. Companies like HMD expect to be able to reduce their backlog of outstanding orders by the end of December.

Previously, in January 2020, as the global coronavirus outbreak deepened, the center had imposed an export ban on personal protective equipment such as masks and clothing. The restrictions were lifted over the months as India gradually built up domestic manufacturing capacity for these items, but the ban put several distributors of these products in trouble.

“As soon as the pandemic broke out, the prices of certain essential items rose tenfold. Since we received orders from our worldwide customers, we procured the items at inflated prices. We took payment from our customers and paid our suppliers too. But suddenly, without prior notice, the export was banned (WHEN?), Which overwhelmed us with deliverable goods without an export permit. When the ban was lifted, prices cooled, resulting in huge losses, ”said Parveen Narang, Wholetime Director at Narang Medical based in Delhi, a manufacturer and supplier of hospital furniture, orthopedic implants, autoclaves, suction machines, with exports 80-odd countries. It also sells products such as masks, PPE kits, thermometers, oxygen concentrators, orthopedic implants, etc.

The company founded a subsidiary in Florida in 2015, which it used during the export ban to meet delivery obligations in America and Africa. “We were fortunate to have a company in the US that gave us the ability to continue delivering these Covid-19 fundamentals. Almost 90 percent of our business comes from exports to Latin American countries such as Mexico, Argentina, Colombia, the Dominican Republic, as well as African countries and Europe, ”he said.

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

Failure to meet delivery commitments is always difficult to make up for, Narang said. “In December 2019, at a medical device event in Dubai, we received several large orders for various medical devices, but we were unable to deliver to our customers. Next month (January 2022) I will have to face this customer again in Dubai at another such trade fair, ”he said.

In April of this year, shortly after the second wave hit the country, the center had also abruptly stopped exporting Covid-19 vaccines to speed up the vaccination campaign in the country. Shortly thereafter, the Pune-based Serum Institute of India, one of the largest vaccine manufacturers in the world, signed a pact with the UK to invest £ 240 million to expand its vaccines business and set up a new sales office there. The restrictions imposed by global initiatives like Covax were lifted in November.

However, a senior government official said India is not an isolated case when it comes to banning the supply of essential goods. Bans imposed by the Ministry of Finance or the Ministry of Commerce were “time-bound and product-specific” in order to keep an eye on the emergency in the country, the official said.


Comments are closed.