Drug firms' CEOs to file legal undertaking for exports NOC

Top executives at drugmakers must file legal undertakings detailing their products and manufacturing as well as promise their readiness for government inspections, in case they wish to ship their products overseas.

On 3 July, the Drugs Controller General of India (DCGI) wrote to drugmakers that henceforth, it will issue no-objection certificates (NOC) for exports only once the document is received.

In the legal undertaking, the chief executive or executive director must describe the name of the formulation, quantity being manufactured and exported, place of manufacturing, manufacturing licence and overseas customers, among others.

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Though exporters always had to submit detailed affidavits, this is the first time the regulator has directed top executives to file legal undertakings on stamp paper. The tightening of regulations comes two months after DCGI divested state licensing authorities of the powers to issue these NOCs. That decision was taken after the deaths of 84 children in Gambia and Uzbekistan were linked to poor-quality cough syrups from India.

Queries sent to a health ministry spokesperson remained unanswered.

Under quality control

The DCGI also directed that exporters must conduct quality checks as specified by the importing country.

“The batch to be exported shall be under quality control testing as per the specifications of the importing country and will comply with all the requirements of the importing country including quality standards,” said a DCGI guidance note seen by Mint.

Besides, medicines meant for exports cannot be diverted for sale in India. In case an export order is cancelled, the drug maker must destroy the entire stock in the presence of state licensing authority. The manufacturer must also maintain records of the transactions of the drugs.

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Besides this, company bosses will also allow the inspection of all the books and records as well as actual usage of drug by the inspector appointed under the Drugs and Cosmetic Act whenever required.

Submitting a legal undertaking will not help increase exports; rather, it will burden the industry and go against the ease of doing business, said Uday Bhaskar, former director-general of drug exporters body Pharmexcil.

Concerns over destroying drugs

Bhaskar also expressed concerns about having to destroy drugs that cannot be exported.

"Sometimes, these are high-value material. Instead of destroying the remaining stock, industry may be allowed to divert the stock to some other country and party. Destroying the product is a huge financial loss to the companies,” Bhaskar, who is also an honorary director general of All India Drugs Control Officers’ Confederation (AIDCOC).

As per Pharmexcil data, India’s pharmaceutical exports in FY24 were valued $27.85 billion, up 9.66% from $25.4 billion in FY23. While formulations and biologicals hold the major share, accounting for 73.75% during this period with a value of $20.54 billion, exports in this category have expanded by 11.33%.

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The second major category by value is bulk drugs and drug intermediates. In FY24, this segment grew marginally by 1.60%. The value of exports in this category was $ 4755.22 million.

India’s top 3 countries for pharma exports during FY23-24 were the US, UK and South Africa. Exports to US, which account for 31.35% of India’s exports in pharma products, have expanded by 15.66%.

Pharma exports to the US were valued at $8.7 billion during FY24. UK was the second largest destination, valued at $784 million with a growth of 21.12%.