Introduction: Medical Drug
We have experienced various global medical and health issues in recent times. This includes covid pandemic and other communicable and non-communicable diseases from time to time. We have witnessed the shortcoming of various medical supplies not only in India but in many countries worldwide. It did not only increase the demand for medical drugs but also indicated the need for all nations to come together globally and work on common issues to expeditiously find solutions to the problems hitting multiple nations at once. And that is why we need to have policies and rules for the easy import and export of medical drugs from one country to another. Hence many companies are trying to get into these lucrative business opportunities. If you are one of them, read this article till last because, in this article, we will discuss existing rules and regulations prescribed by the Government of India for the export of Medical Drugs from India to the USA (United States of America).
Table of Contents
- Introduction: Medical Drug
- Insights on Export of Medical Drugs from India to USA
- Who Can Export Medical Drugs from India to USA
- Role of CDSCO in Export of Medical Drugs from India to USA
- Role of PHAREXCIL in Export of Medical Drugs From India to USA
- Role of DGFT in Export of Medical Drugs from India to USA
- Registration of Drug in USA (Importing Country)
- Labelling on Drugs to Export from India to USA
- Freight Forwarding in Export of Medical Drugs from India to USA
- Other Documents Involved in Export of Medical Drugs from India to USA
- Custom Clearance
- Step-by-Step Guide to Export Medical Drugs from India to USA
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Insights on Export of Medical Drugs from India to USA
The USA is a huge importer of medical drugs from all over the world. Medical drugs import in the USA has increased by 29.2% from 2017 to 2021. In 2021 it imported $85.3 billion and topped the chart of biggest importers of Medical Drugs. It is 18.6 per cent of its total prescription drug import. Germany, Switzerland and Belgium stand next to it with $33.7 billion, $27.3 billion, and $25.4 billion respectively.
On the other hand, India is witnessing growth in terms of Medical Drug export to other countries. In the last three years, India’s Drug Formulations & Biological Export has increased by 19.26% while Bulk Drug & Drug Intermediates Export is increased by 15.62%. These statistics confirm that India is a lucrative option for other countries to import medical drugs and the USA is a rewarding market for Indian Medical Drug Manufacturers. India’s export of pharmaceutical products to the USA is already increased by 5.21% in the last three years.
Who Can Export Medical Drugs from India to USA
You must be a registered pharmaceutical company in India to export drugs from India to USA. Companies Act of 2013 deals with the provisions of registration as a company. If you are a company registered under the same provision and doing business in pharmaceuticals, then you can export medical drugs from India to the USA by following the appropriate process which we are discussing further in this article.
Role of CDSCO in Export of Medical Drugs from India to USA
A pharmaceutical company should first obtain a drug manufacturing licence from the Online National Drugs Licencing System (ONDLS) established in coordination with CDSCO (Central Drugs Standard Control Organisation). This organisation is responsible for CDSCO Registration and CDSCO licensing. In the case of a new drug, the manufacturer has to go through a strict and lengthy approval process of CDSCO Certification. And if the drug is already approved by CDSCO, the company can register the same through the SUGAM portal and obtain a certificate, which will further be used for the issue of Export NOC.
Manufacturers must then procure a No Objection Certificate from CDSCO. It can be easily obtained from the SUGAM portal established under Central Drugs Standard Control Organization (CDSCO). On the portal, manufacturers first have to choose a department in which they are submitting the application and form type. After this manufacturers can apply for the NOC after submitting the application type, the purpose of the application, the license number, and drug details. The following documents shall be required to submit the application:-
- Covering Letter
- Purchase Order from the Importer
- Copy of Manufacturing Licence
- Performa Invoice
- Registration Certificate from the Importing Country
- Export NOC Form
After successful submission of the form, the portal will provide a file number that can be used for reference later.
Role of PHAREXCIL in Export of Medical Drugs From India to USA
PHARMEXCIL stands for Pharmaceuticals Export Promotion Council of India. All the exporters of Pharmaceutical Products must have a valid Registration cum Membership Certificate issued by this council as per the DGFT notification. The application form is available online to apply for membership in the council. The form should be filled out online. One copy of the application form and three copies of RCMC duly signed and putting the company’s seal should be sent to the council along with all required documents for the issue of RCMC.
Pharmexcil has been set up by the Ministry of Commerce & Industry to promote exports of Pharmaceutical products from India while CDSCO is known for licencing, certification, approval and authorisation of drugs. The Council assist all the companies that have obtained membership of PHARMEXCIL in the following manner:-
- It organises trade delegations and buyer-seller Meetings abroad.
- It organises reverse buyer-seller meetings in India.
- It assists members to get their MDA (Marketing Development Assistance) and MAI (Market Access Initiative) claims refunded from the government of India.
- It issues the certificate of origin for the purpose of export.
- It organises periodical seminars and interactive meetings on export-related issues.
- It discusses trade inquiries received from abroad.
- It also suggests the Government of India on policy issues relating export of pharmaceuticals.
- It also makes representations to the Government of India and various agencies in India and abroad for the common problems of the industry.
Read Our Blog: How to Get RCMC from Pharmexcil
Role of DGFT in Export of Medical Drugs from India to USA
DGFT stands for Directorate General of Foreign Trade. This is an attached office of the Ministry of Commerce & Industry and is headed by the Director General of Foreign Trade. It is basically involved in the promotion and regulation of foreign trade. The Directorate General of Foreign Trade maintains an online portal for issuing RCMC (Registration Cum Membership Certificate) and IEC (Importer-Exporter Code).
Registration-Cum-Membership Certificate (RCMC) is a certificate that validates any exporter who is dealing with the products registered with an agency/ organization that are authorised by the Indian Government. While applying for RCMC, an exporter has to declare his primary business in the application. The exporter is required to obtain RCMC from the Council which is concerned with the product of his primary business which is the Pharmaceuticals Export Promotion Council of India in the present case.
The Importer-Exporter Code (IEC) is a very important business identification number. It is compulsory to obtain an IEC code for the business of import and export. DGFT prescribes that no person can make any import or export until they obtain an IEC code from DGFT and use it for the purpose of import and export. But in the case of services or technology, the IEC shall be required only when the service or technology provider is taking benefits under the Foreign Trade Policy or is dealing with specified services or technologies.
IEC can be obtained by applying on DGFT online portal. The following documents are required to file an application for IEC:-
- Valid Digital Signatures Token
- Valid PAN
- Valid Mobile Number
- Valid Email ID
- Valid Address Details of Branch Office
- Valid Bank Account in the name of the IEC Holder
- Valid Aadhar Card matching the details with PAN Card
Registration of Drug in USA (Importing Country)
The Food & Drug Administration of the USA regulates the registration of Drugs in the country. As manufacturers are required to submit this registration certificate of importing country while applying for the issue of Export NOC from CDSCO after CDSCO authorisation in India, it is necessary for them to register their drug with the FDA first. According to the FDA, it is required for the manufacturer of drugs to register their manufacturing establishments with the FDA and list all drugs being manufactured at such establishments.
Most establishments engaged in manufacturing, repacking, relabeling, or salvaging drug products for U.S. distribution are required to register with the FDA, with some exemptions. Exempted entities include pharmacies that operate in compliance with local pharmacy laws, hospitals and clinics that dispense drugs based on valid orders or prescriptions, licensed practitioners who manufacture drugs for their professional practice, entities that manufacture drugs for research or teaching purposes, manufacturers of inactive ingredients, carriers in their normal business operations, and storage facilities that do not engage in manufacturing. As manufacturers of medical drugs in India that want to export to the USA are not covered by the list of exempted entities hence you should proceed with the registration process.
When registering with the FDA, you must create and submit an establishment registration SPL (Structured Product Labeling) document. Make sure to keep a copy of your submission. The document should include the name of your establishment and your Dun and Bradstreet verification or Data Universal Numbering System (DUNS) number. You should also provide contact information for someone who will be responsible for receiving FDA communications related to your establishment. Additionally, make sure to include all applicable business operations that your establishment performs. Because your establishment is located in India, you should also provide the name and DUNS of a U.S. agent, as well as the names of all importers as per the guidelines of the FDA.
You can later check the status of your registration by visiting the online portal of the FDA and searching the name of your establishment in the list of registered entities. You will also be able to see the expiration date of your registration in that list. This date will be the last day of the next calendar year. Once the registration is successfully completed, you will be provided with a registration number.
Labelling on Drugs to Export from India to USA
Labelling on the boxes of drugs that are to be exported to the USA must comply with the rules of the United States in this regard but they must also have some labelling compulsorily as prescribed by the Drugs Rules of 1945. It includes the Name of the Drug, name & Address of the manufacturer, Licence Number of the Manufacturer under which this drug is manufactured, Batch or Lot Number, and Date of expiry. All these details have to be printed on the innermost container of the drug and every subsequent container that such box is placed into. This labelling has to be done in a place that is clearly visible.
Freight Forwarding in Export of Medical Drugs from India to USA
Freight Forwarding is like a middleman service provided by logistics companies or freight forwarders. It helps make it easier for goods and cargo to be moved from one place to another. They handle things like arranging transportation, managing paperwork, clearing customs, and getting insurance on behalf of the people who are sending or exporting the goods. Freight forwarders work with both the shippers and the carriers to make sure that goods are transported in the best and most affordable way, while also following all the rules and regulations. This makes sure that goods are moved in the best way, and safely.
Once all required documents are arranged and formalities are fulfilled, manufacturers may contact a reliable freight forwarding company to ship the drugs to the USA. Manufacturers should also sign an agreement with the freight forwarding company to safely deliver the medical drugs to the importer in the USA.
Other Documents Involved in Export of Medical Drugs from India to USA
Purchase Order: A purchase order (PO) is a formal document used by a buyer to request goods or services from a seller. It contains important information such as buyer and seller details, item descriptions, quantities, prices, delivery dates, payment terms, and other relevant terms and conditions. A purchase order acts as a legal agreement between the buyer and seller, outlining the agreed-upon terms for the purchase. It helps ensure that both parties are in agreement on the goods or services to be delivered and serves as a record of the transaction for reference and documentation purposes.
Pro Forma Invoice: A pro forma invoice in the context of exporting is like a preliminary bill or estimate that the exporter gives to the importer. It shows the details of the goods or services to be exported, such as what they are, how many there are, and how much they cost. This document is usually given to the importer before the goods are actually shipped. It helps the importer understand the pricing and other details of the export transaction. It's not a formal demand for payment, but rather an estimate that can be used for negotiation and confirmation of the export deal. It may also be used for customs clearance and other administrative purposes.
Commercial Invoice: A commercial invoice is a formal document used in international trade that provides important information about goods or services being sold and shipped between countries. It includes details like the price, quantity, and description of the goods, as well as payment and shipping information. The exporter creates the invoice when sending goods, and the importer uses it to clear customs and pay for the goods. It's a crucial document that helps ensure smooth international trade transactions by providing clear information about the goods being traded.
Difference between Pro Forma Invoice & Commercial Invoice: The difference between a Pro Forma Invoice and a Commercial Invoice is that the first is a preliminary estimate or quotation provided by the seller to the buyer before the actual sale takes place, while the second is a formal document used to request payment from the buyer after the sale has been completed. Pro Forma Invoice serves as a non-binding document that outlines the terms and conditions of the potential sale and it is not considered a formal demand for the payment.
On the other hand, a commercial invoice is a legally binding document that is used to request payment from the buyer after the goods have been sold and shipped. It includes detailed information about the goods, such as the quantity, description, and value, as well as payment and shipping information. The commercial invoice is used by the exporter to request payment from the buyer and is also used by the importer to clear customs and comply with import regulations.
Certificate of Origin: A Certificate of Origin (COO) is a document that declares the country in which goods in an export shipment are manufactured or produced. It is issued by PHARMEXCIL and indicates the nationality of the product. Customs officials require the COO for customs clearance, and it may also be needed by banks, importers, and other stakeholders for various purposes. It serves as evidence of the origin of the goods and is an important document in international trade to verify the origin of products and comply with customs regulations.
The steps for customs clearance include gathering relevant documentation, classifying the goods, submitting a customs declaration, paying duties and taxes, providing additional information if requested, undergoing inspection and clearance, and arranging for delivery or pickup of the goods once cleared. This process can be overwhelming due to the many requirements and paperwork involved. However, you don't necessarily have to deal with it alone. A customs broker can help by handling paperwork, navigating rules and regulations, and securing a customs bond if needed. They can also fill out customs forms accurately on your behalf, using their experience to simplify the process for you.
Step-by-Step Guide to Export Medical Drugs from India to USA
Although every aspect of the process is discussed above in detail, let me share a concise step-by-step guide with you about every process that is involved in the export of medical drugs from India to the USA. The following steps are involved in this export process:-
- First of all, the pharmaceutical company should be registered with the Registrar of Companies.
- It must have acquired an appropriate licence from the Central Drugs Standard Control Organisation for the manufacturing of medical drugs.
- It must be a member of the Pharmaceutical Export Promotion Council.
- It must have acquired RCMC (Registration-cum-Membership Certificate) from the DGFT portal as per the guidelines of PHARMEXCIL.
- It must have acquired Importer-Exporter Code from the DGFT portal.
- The drugs to be exported must be approved and received CDSCO Licence.
- A licence to market and distribute the subject drug must be obtained by the manufacturer.
- The medical drugs must be packed as per the guidelines prescribed by Drug Rules 1945 and kept safely for dispatch.
- It must have acquired Export NOC after submitting all required documents through the online portal operating under the Central Drugs Standard Control organisation which also provides a CDSCO license.
- It must have other documents required for the purpose of export including purchase order, proforma invoice, certificate of origin etc.
- The manufacturer must have registered itself with the regulating authority of the importing country, which is the Food and Drugs Administration of the USA in the present case.
- A reliable and responsible freight forwarding company should be assigned by the exporter for the delivery of the consignment.
- An agent must be hired for convenient custom clearance after the consignment is delivered to the importer country.
- After custom clearance, if the requested medical drugs are successfully delivered to the importer, the manufacturer should send the commercial invoice to the importer for the purpose of payment with respect to the exported medical drugs.
- The importer, on receiving the commercial invoice, should pay the amount mentioned in the commercial invoice.
The process of exporting medical drugs from India to the USA is a quite lengthy and complicated process but this particular export contributes billions of dollars to the Indian economy and is hence a very important issue to look around. The process must be made a little bit more simplified so more companies take interest in this business opportunity and get a chance to explore a new market. Not only from the business point of view but also in terms of social responsibility it is very important to have a streamlined process to complete all requisite formalities quickly and efficiently deliver the requested medical drugs to the USA or any other foreign country and fulfil any emergency need of medical supplies especially during unfortunate times of epidemics. Also, such exports at a big scale give rise to global competitiveness with respect to the pricing, efficiency and efficacy of medical drugs which ultimately help the Indian economy to prosper and touch new heights.
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This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not corpseed, and have not been evaluated by corpseed for accuracy, completeness, or changes in the law.
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