While India is a leading exporter of generic drugs across the world, two-thirds of its active pharmaceutical ingredient (API) needs, also called bulk drugs, are fulfilled by China.
With supply chains from China disrupted, paracetamol prices have jumped by over 40%, while azithromycin, an antibiotic used for treating several bacterial infections has risen by 70%.
While this situation has plunged the country into a crisis mode, it is also a much-needed wakeup call for the pharma industry for course correction.
Overview of India’s pharma sector
India is a major supplier of affordable low-price drugs all over the world, and is often known as the ‘pharmacy of the world’.
It ranks third worldwide for pharmaceutical production by volume, 13th by value and accounts for about 10% of the world’s production by volume and 1.5% by value. 50% of the United States’ generic drug needs are met by India.
The Indian pharma industry aspires to become the world’s largest supplier of drugs by 2030.
The current scenario
India’s pharma industry is pulling out all stops to ensure production of medicines critical to tackling coronavirus, do not suffer. All major companies have come together to help one another with knowledge and sharing resources.
Alebic has a formulation plant that is operating at 80% capacity, while its API plant is functioning at around 60-70% capacity. The company is also prioritising the manufacturing of drugs that are in high demand now, like azithromycin.
Similarly, Zydus, a leading producer of hydroxychloroquine (HCQ) has already increased its capacity to make both the API and the formulation manifold.
A few weeks ago, Prime Minister Narendra Modi cleared HCQ supplies from India to countries like the US, Brazil and Israel.
Challenges plaguing the industry
Despite strong credentials, India’s pharma industry has been heavily dependent on China for APIs like paracetamol and aspirin, used in making antibiotics and other essential drugs. That’s not all – India also relies on China for primary key starting material (KSM) that form the basic building block for drug formulations.
In some specific bulk drugs, the import dependence is 80 per cent to 100%. This, despite the fact that at least some of them are available locally, too.
In fact, over two decades ago, everything was produced in India, but the way Chinese products became cheaper in due course of time, their production in India became totally unviable.
Now with factory shutdowns in China, the industry is learning tough lessons. The over dependence on China has increased the threat to the nation’s health security as some of these critical APIs are crucial to mitigate India’s growing disease burden.
India has significantly lost out on the API manufacturing owing to the inadequate government support in API focused infrastructure. Complexity in getting approvals for setting up a manufacturing plant, delayed pollution clearances, high cost with low availability of utilities, regulatory and price control regime are some of the key challenges faced by the bulk drug industry.
Taking stock of the situation, the government has decided to incentivise manufacturing of APIs and KSMs for drugs under Make in India.The government has approved the scheme on Promotion of Bulk Drug Parks for financing Common Infrastructure Facilities in three Bulk Drug Parks, with financial implication of Rs. 3,000 crore for next five years.
It has also approved the Production Linked Incentive Scheme, under which financial incentive will be given to eligible manufacturers of identified 53 critical bulk drugs on their incremental sales over the base year (2019-20) for a period of 6 years. A sum of Rs. 6,940 crore has been approved for this scheme.
These steps by the government should help in reviving the API industry in the country and regain its lost glory. While it is hard, this crisis could be a blessing in disguise for the development of India’s pharma industry.