Home / Industry / Manufacturing /  Chinese scare looms over India’s bulk drug industry

New Delhi: Early on this year, the government declared 2015 as the year of bulk drugs or Active Pharmaceutical Ingredients (API) in a bid to promote its Make in India initiative.

The year is nearly over but self-sufficiency in bulk drugs remains a distant dream as India remains import dependent with over dependence on China even for the essential drugs. However, a bulk drug manufacturing policy is expected to be out by the fiscal year end.

Bulk drugs or APIs are the active raw materials used in a drug that gives it the therapeutic effect.

“We should develop a conducive environment for the bulk drug industry to develop in India. We are over-dependent on China for imports of bulk drugs as more than 75% of bulk drug imports come from China," pharmaceuticals secretary V.K. Subburaj said in an interview.

In India, there are 300 large companies and over 10,000 medium and small-scale companies in the sector. About 77% of them make formulatins and 23% APIs.

The bulk drug manufacturing policy will be based on the recommendations made by a committee under former secretary (health research) V.M. Katoch, which has suggested ways to reduce the country’s dependency on China.

The panel has called for the revival of public sector units to start manufacturing select essential critical drugs, like penicillin and paracetamol. It also suggested tax-free status and cluster development for revival of the industry.

To be sure, there are five pharma sector PSUs—Karnataka Antibiotics and Pharmaceuticals Ltd (KAPL), Rajasthan Drugs and Pharmaceuticals Ltd (RDPL), Hindustan Antibiotics Ltd (HAL), Bengal Chemicals and Pharmaceuticals Ltd (BCPL) and Indian Drugs and Pharmaceuticals Ltd (IDPL). Out of these, HAL, BCPL and IDPL have been declared sick by the Board for Industrial and Financial Reconstruction (BIFR).

A study by the Boston Consulting Group and the Confederation of Indian Industry (CII) conducted in 2013 says total imports of APIs and advanced intermediates have risen at a compound annual growth rate (CAGR) of 18% from $800 million in 2004 to $3.4 billion in 2013.

The survey took a list of medicines, including antibiotics (semi–synthetic penicillins, semi–synthetic cephalosporins, macrolides, fluoroquinolones), analgesics (paracetamol, ibuprofen), cardiovascular drugs (Sartans), anti–diabetic drugs (Metformin) and other widely used mass therapies ( Vitamin C, Ranitidine) under consideration, for most of which India was heavily dependent on China.

“For antibiotics such as Ofloxacin and Levofloxacin (used to treat infections, India is heavily reliant on imports for both the API as well as the key intermediates. Moreover, most of the imports, over 90% in most cases, are concentrated in China," the study added.

Union chemicals and fertilisers minister Ananth Kumar told the Parliament last year that India was largely dependent on China for imports of drug ingredients of 12 essential drugs which are in the National List of Essential Medicines (NLEM).

The BCG-CII survey took the case of Penicillin–G (Pen–G), which it noted that till early 2000s, the government of India controlled its production through licenses. As a result, the total manufacturing capacity remained below the country’s demand. By the time India decided to increase its capacity on Pen-G, China’s capacity had tripled, with Chinese producers catering to approximately 35% of global Pen–G demand.

“This led to an overcapacity in the global supply of Pen–G, resulting in China often dumping its production in the Indian market at a price below the economic cost of production," the study said.

According to lobby group Bulk Drug Manufacturers Association general secretary R.K. Agrawal, the major threat for India from China is in the form of raw materials. “If China decides to stop supply of starting materials and raw materials, we are in trouble. The government should come up with more pharma parks to boost investment in this sector," Agrawal added.

One of the ways to improve domestic production and reduce the dependency on China is to strengthen public sector undertakings, said pharmaceuticals secretary Subburaj. The government now has plans to leverage the assets of the sick pharma PSUs to make them financially viable.

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