Given the magnitude of the pandemic and its spread, it appears to be almost certain by now how a post-coronavirus world will observe a much different (re)ordering of the global economic and political system of preferences and commitments than the one existing before. The 2008 crash made many countries more unified in ensuring collective banking and financial sector reforms (to save a contagious spread in the financial sector). The 2020 global pandemic might make global commitments and priorities for most nations to become more skewed towards ensuring greater public-health security for its citizenry, seeking more cooperation from partners there.
So far, as the crisis is still unfolding, many critical multilateral arrangements in place- whether it is the G20 or G7 have played a limited role in presenting a unified front, or, in reassuring and providing effective measures of relief to most affected nations. The G2 ‘Great Powers Club’ i.e. the U.S.-China have both faced criticism for displaying weak global leadership, as the pandemic has infected one nation after another.
The United States’ own domestic scenario (seeing the second largest number of reported deaths from COVID19) and the state of leadership, under President Trump, has showcased a weak international position for its efforts in bringing nations together in fighting the virus, or even offer necessary aid/relief to many developing and less-developed countries. Rather, under Trump, it has been engulfed in undertaking more protectionist measures to restrict exports and supply of essential medical equipment to neighbouring countries (and close allies) like Canada and is now considering restricting its contribution(s) to the WHO.
The Chinese state, on the other hand, has utilised the opportunity to push its propagandistic narrative internationally, while emerging as a ‘costly’ supplier of medical equipment for nations (including the U.S.). Despite its effort in providing for the increased short-term demand for medical supplies, it has continued to receive severe criticism for pursuing virus-censorship, keeping most countries in the dark (including the WHO) on the virus and its contagious spread, especially in months of January-February (2020). Japan has now even offered financial support to its firms for withdrawing their operations from China. And in a post-coronavirus economic scenario, many developed nations (in Europe and North America), especially those with a higher trade/economic exposure to China, may (re)consider disentangling direct trade relations with China and/or pursue a decoupling of supply-chains (those heavily reliant on China).
But, what about India? How can India utilise this crisis as an opportunity to reorder its global commitments and emerge as a significant actor to allow more nations to become interdependent and associate with a large developing market?
This is an opportunity because in relative comparison to other countries, say, the United States, China or Eurozone, India has been both fortunate and cautious, in preventing the contagious spread of the virus in its domestic territory, and taking the necessary precautions ahead, may come out on the better side (with lesser deaths) of the crisis. It has also taken larger efforts to send across medical supplies and drugs (including hydroxychloroquine) to other nations in the past few weeks.
In a post-coronavirus global order, India’s comparative advantage, can rely heavily on becoming a major provider for global public-goods and services (i.e. in healthcare, education and tech-support capacity for innovation), given how the demand for these are likely to go up in years to come. Here, we discuss the prospects in healthcare as a case in point.
India’s existing advantage of production to scale in pharmaceuticals (being one of the major export industries) allows it to significantly leverage its soft-power by investing in an outward growth of its healthcare-sector in other nations by: a) ramping up exports in pharmaceuticals; b) becoming, in the global context, a preferred medical tourist destination for those seeking affordable treatment in quality secondary/tertiary health services, and c) pursue medical diplomacy by providing medical training and technical expertise to many other developing nations (whose healthcare systems are much worse than India).
Boosting pharma exports
According to the Indian Brand Equity Foundation (IBEF), pharmaceutical exports of India from the financial year 2012 to 2019 have steadily grown from $10 billion to $19 billion. As per recent estimates, India accounts for about 10% of world’s pharmaceutical production by volume and 1.5% by value. Indian pharmaceutical industry is the world’s largest supplier of generic drugs and controls around 18 percent of the global market. It is also a leading producer of vaccines in the world and caters to about 50% of global vaccine demands. This is due to an already high demand for Indian drugs because of cheaper pricing, making these more affordable to both developing and developed nations.
Source: India Brand Equity Foundation (IBEF) 2020-21 Report
Source: Pharmexcil’s 2019 report on Indian exports to various countries in FY 2018-2019
The country wise data on Indian pharmaceutical exports (in Figure 2) also indicates how many nations—now most affected by Covid-19—are the primary export destinations for Indian pharmaceutical industry. Drugs like paracetamol, ritonavir are massively exported to some of these nations. Even with the breakout of the COVID19 pandemic, many private Indian pharma manufacturers have reportedly expressed their desire to increase their supply of required drugs—like hydroxychloroquine—to these nations.
Not only states, but many international NGOs and public health non-state actors have been using generic Indian drugs for affordable treatment in countries within Africa, parts of Latin America over the last decade. For instance, Doctors Without Borders—a humanitarian organisation, estimates that treatment of AIDS using generic Indian drugs is two to three times cheaper as compared to treatment using branded drugs. Consequently, UNICEF, UNITAID too rely heavily on generic drugs manufactured in India for their aid programs.
There is therefore, a much greater potential for India’s pharmaceutical sector now to increase trade partners both regionally and in other parts of the world. The government can encourage this by investing in more R&D for drug and pharma research within India (public medical colleges and universities can be used for this purpose) and provide for more incentives to the private sector to enhance its production for export channels.
Encouraging medical tourism into India:
Over the last few years, particularly since 2014, the number of people coming to India for medical treatment has grown annually at about 55% (see Figure 3). According to Ministry of Tourism, the medical tourism space was valued at around $3 billion (US$) in 2015 and at $9 billion in 2020. The Indian Government has also promoted India as a better medical tourist destination by issuing fast-track medical visas and rapid airport clearances for those visiting as medical tourists. Although, most key players in the medical tourism space are those in the private sector but it is clear that this is a space for the Indian government to develop much more capacity in years ahead.
Source: Ministry of Tourism (here)
Source: International Medical Travel Journal Data (2017)
From Figure 4, the data available on countries with higher representation of medical tourists into India, shows the highest representation from nations in West Asia and South Asia. Though, in terms of medical expertise and quality of public health care, countries like South Korea, Taiwan, Singapore, Malaysia and Indonesia offer competition to India, but in terms of affordability of tertiary services (dentistry, skin related treatments, cardiovascular ailments etc.) India has been a preferred destination.
The way forward: pursue medical diplomacy
Despite India’s huge strides in medical-value tourism and in growth of pharmaceutical exports, it still has a long road ahead to leverage its potential at a global level. India’s own public-healthcare system seems in poor shape (barring some of the states in the Southern and North-Eastern part of the country). It has one of the lowest doctor-to-population ratios in the world. The gains accrued have largely been due to the asymmetric, privatised nature of healthcare system in India-which has allowed the private sector to make inroads to other regional/and international partners (in West Asia).
To project itself as a country practicing medical diplomacy through soft-power, if there is one country from which the Indian state can particularly learn from, is Cuba.
Despite being a small-nation with much lower per-capita income (as seen for many developed nations), Cuba’s public healthcare system is one of the best in the world. The Cuban state has practiced a humanitarian goal of medical-internalisation as part of its diplomatic mission and earned wider reputation and praise by providing doctors and medicines at times of health-emergencies in many countries in need. It’s medical teams -sent in by the state, have maintained a longer presence in health crises prone areas around the world with about 500,00 doctors stationed abroad by 2018. In the recent past too, Cuba sent the largest team of medical doctors to West Africa during the Ebola epidemic.
The communist state also adopted a diplomatic strategy of making bilateral agreements with nations like Venezuela and Argentina, to pay for provided medical services, while also ensuring medical aid to nations like Haiti and Algeria in times of war and other emergencies. Consequently, this arrangement by the year 2018 brought about $11 billion in (medical) exports from Cuba while also financing its humanitarian efforts.
In a post-coronavirus world, healthcare would emerge as a major focal point of attention for many nations across the world. In a reordered view on globalisation, global public goods like healthcare security will attract nations to seek partners with more comparative advantage in providing for: essential drugs; medical expertise for treatment, and in state capacity-building for medical-aid and service to other nations (as required). India has the potential to do tremendously well in the first two of these areas (given its comparative advantages in pharma-based exports and in medical tourism), for the third- in embedding state-diplomacy with medical-diplomacy and outreach, there needs to be a radical (re)orientation in our global (diplomatic) priorities and commitments.
Views are personal.
Deepanshu Mohan is Associate Professor and Director, Centre for New Economics Studies, O.P. Jindal Global University. Samarth Gupta is a Research Analyst with Centre for New Economics Studies.