Friday, 6 February 2015

Obama in India: Indo-US ties key to new global health paradigm

US President Barack Obama’s visit to India comes at a propitious time. Signs of strong economic revival in the US and India have created a conducive environment for both governments to go beyond diplomatic platitudes. The personal rapport between Obama and Modi also signals fruitful bilateral discussions.

Expectations are high that this Modi-Obama interaction would lead to important decisions in the coming days, which would invigorate trade ties between the world’s two largest democracies.

India’s total trade with the US currently stands at about $100 billion. The two countries want to raise that to $500 billion. To achieve this target, India and US need to address several issues. Apart from the Nuclear Energy deal, an area that needs close attention is healthcare, especially the pharma sector. This is crucial because the two economies have an unencumbered opportunity to partner and make an enormous difference to global healthcare.


Generic drugs of Indian origin account for 30% of US prescriptions. Despite this, India’s status as a strategic pharma partner has remained elusive primarily because of the contentious IPR issue.

There seems to be a perception in the US that India flouts trade norms, grants frivolous compulsory licenses (CLs) and lacks a credible appellate and redressal system for IPR disputes. This perception needs to be corrected. Not only is India fully TRIPS compliant, the country has till date granted only one CL. We also have a credible judicial system that allows resolution of IP disputes.

Statistics have shown that 65%-70% of patent-related cases in India are decided in favour of the IP owner. India needs to correct misconceptions as well as take a collaborative approach on the issue of IPR instead of a combative one.


The world-class Indian pharma industry has provided us a globally competitive advantage. Attracted by this, a number of US generic companies have invested in India. Though there is a lot of overseas interest in building manufacturing facilities, but deterrents like the current FIPB rules are preventing serious investments into India.

Just as the Modi government has allowed 100% FDI in the medical devices under the automatic route, it should allow automatic infusion of foreign equity of up to 100% in brownfield pharma projects. India should also strive to create an environment of fast-track project clearance to ensure that US pharma companies respond to ‘Make in India’ call.

India has earned the proud label of being the “Pharmacy of the World” by virtue of being the largest low-cost producer of generic drugs. The US has been christened the “Fountainhead of the World”, providing innovative solutions to address unmet medical needs. India and US are therefore natural partners in building a sustainable and affordable global healthcare paradigm. It is therefore important for bilateral discussions to recognize this important dimension and foster closer cooperation both at the government and business levels.

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