Pills and Weapons; Indian and Japanese Relations

International relations are often bogged down with tireless debate over issues of free trade, moderately priced trade and expensive trade. As Hatoyama travels to India this week to meet Manmohan Singh, the Prime Minister of India, talks will center on trade: specifically on what India wants to trade and what Japan is unwilling to offer.

India wants to push Indian-made generic medication to a Japanese market. The talks on this issue have focused on reducing tariffs and essentially opening up a relatively closed market. Japanese drug makers are no doubt worried that an open market will collapse their profit margin, here in Japan. However, Japanese drug giant Takeda announced in early December that they are looking to enter a growing Indian market. The company is toying with the idea of making an acquisition to achieve this goal. Takeda has recently come under Government pressure in Japan to offer generic drugs in their portfolio. This news comes on the heals of Japanese firm Daiichi purchasing controlling interest in Ranbaxy last year for $4.6 billion.

"Domestic (Indian) drug makers like Cipla, Dr Reddy's Laboratories and Ranbaxy Laboratories are known for their ability to produce quality generic drugs at affordable prices," according to a recent article in Business Standard Online.
With Japanese pharmaceutical giants controlling the Indian producers of these generic drugs, the market is about to open in Japan. The pressure coming from the government to offer a wider selection of generic drugs means that Indian made medicine will become more prevalent in the coming years in pharmacies throughout the country.

However despite these private enterprise initiatives in the pharmaceutical industry the Japanese and Indian governments have been unable to close a free trade deal despite years of negotiations.

The problem rests in the fact that a fast growing Indian middle class is an attractive market for a range of Japanese businesses. If the domestic market opens here in Japan, so to will the Indian consumer market to Japanese goods. There is a great deal at steak for both countries and both economies, and some short term negative impacts on smaller drug producing firms domestically might smooth the way for a host of growth across the Japanese economy.

Hayotoma, has in the recent past met with Singh. The two spoke on the sidelines in October following an Association of Southeast Asian Nations conference in Thailand. Singh then pushed for increased relations on the exchange of Nuclear Technology between the two countries.

Japan’s Foreign Ministry has been hesitating on a Nuclear Energy deal with India, linked to India’s steadfast refusal to sign the Nuclear Nonproliferation Treaty. Due to these apprehensions, Japan was reluctant to jump behind an Indian/American deal struck in 2008, which opened up the gates to an increased transfer of Nuclear Technology.　The waiver offered to New Delhi in the Nuclear Suppliers Group (NSG) last year reopened global atomic trade for India after nearly 35 years. Singh will likely argue increased exchanges in nuclear power technology, citing the NSG agreement in his approach. As Hatoyama’s position vis-à-vis nuclear proliferation remains constant, he is unlikely to give any ground on the issue. His nuclear mantra goes something like the following, “Japan is the only nation to have suffered an atomic attack, but we will study the issue in more depth.”

India, as one of a handful of Nuclear weapons harbouring nations is considered a likely nuclear flashpoint when contentious relations with neighbouring Pakistan are considered. Increased instability in Pakistan due to growing militancy has made for increased pressure to downgrade the nuclear weapons capacity of both nations. The Japanese Prime Minister is likely to delay any transfer of Nuclear Technology out of Japan and into India indefinitely. Rightfully So.