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Laxmi Yadav, Mumbai June 22 , 2020
The Indian drug makers are facing headwinds due to the spike in prices of active pharmaceutical ingredients (APIs) and intermediates being imported from China.

On an average, prices of APIs imported from China have gone up by 20-30% from January 2020 till date thus leading to 4-5% decline in profit margin of drug makers, said a drug industry representative.

The prices of anti-infective APIs such as tinidazole, amoxicillin, ceftriaxone, clav avicel, diclofenac sodium, ofloxacin, clav syloid, clotrimazole, ciprofloxacin as well as anti-inflammatory API-dexamethasone sodium have hiked by 24% to 38% from January to April this year. The prices of erythromycin thiocyanate which is the raw material for preparing erythromycin derivative products, such as azithromycin, clarithromycin and roxithromycin have spiked by 20% from pre-COVID period till now.

Besides them, the prices of four APIs-- paracetamol, ornidazole, azithromycin and nimesulide have risen from 62% to 189% from January to April. The price of paracetamol has increased from Rs. 262 a kg in January to Rs. 425 per kg in April. Para amino phenol (PAP) used as a key starting material for manufacturing paracetamol has also witnessed 27% rise in prices.

Said Ashok Kumar Madan, executive director, Indian Drug Manufacturers’ Association (IDMA), “The demand for pain reliever and fever reducer paracetamol has gone up across the globe since the outbreak of coronavirus. A supply shortage combined with rising demand has led to steep rise in prices of paracetamol and its key starting material- PAP. There is a huge shortage of paracetamol in Europe due to rise in demand amid COVID-19 pandemic.”

Indian drug makers heavily rely on China for supply of PAP. There are a couple of PAP manufacturers in the country but they are hardly able to meet demand of drug manufacturers due to capacity constraints, said Madan.

Besides APIs, isopropyl alcohol (IPA) used in hand sanitizer and as a solvent in pharmaceutical manufacturing has also witnessed cent per cent rise in prices. Despite 100 per cent increase in prices, IPA imported from China has seen 10-15% rise in its import prices.

He cited growing demand for sanitizers as one of the reasons for rise in IPA prices.

It is learnt that 20,000 to 30,000 tonnes of IPA are used by Indian drug manufacturers per month.

IDMA executive director has attributed rise in logistics cost as well as spurt in production cost of Chinese units due to implementation of strict social distancing, sanitation and hygiene protocol post lockdown to hike in API prices.

Air freight charges have gone up from US$ 2 a kg to US$ 5- 6 per kg amid COVID-19 pandemic. The average cost of shipping a container from China to India has also increased from US$ 750 to US$ 1,200-1,300.

Echoing his view, Dara Patel, IDMA general secretary said, “The prices of certain Chinese APIs have gone up by 20-30% from January to till date as the production cost of Chinese manufacturers has increased due to implementation of safety and hygiene measures post lockdown.”

On 23 January 2020, China imposed a lockdown in Wuhan and other cities in Hubei in an effort to prevent the spread of coronavirus. After nearly three months of grim battle against the coronavirus since January, economic activity in China is back to normal. The APIs and KSMs started arriving in India from China by early March.

Patel has ruled out disruption in API supply from China in the wake of ongoing India-China border faceoff. “While India depends on China for pharma raw material, China also relies on India for formulation supply,” he added.

Sudarshan Jain, secretary general, Indian Pharmaceutical Alliance, said “On an average 20% rise in prices of Chinese APIs is affecting the financial viability of many of the formulations.”

Jain said the rise in API prices is attributed to a host of factors such as spike in logistics cost coupled with hike in manufacturing cost of Chinese units because of implementation of employees’ safety measures amid coronavirus pandemic and short supply of APIs. API supply is relatively less as a number of manufacturing units are not operating at full capacity due to shortage of manpower and raw materials, he stated.

Jain said despite rise in prices of raw materials, industry is focussing on ensuring availability of drugs to consumers.

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