Home / Politics / Policy /  Govt for reducing imports of pharma raw materials

New Delhi: Six years back when China shut factories making drug ingredients to reduce pollution levels before Beijing Olympics, Indian bulk drug makers which depend on them suffered.

Now, India has decided to frame a policy which will incentivize local manufacturing of raw materials and bulk drugs, and discourage Indian pharmaceutical firms from importing them.

Raw materials are basic chemicals and intermediates used to make bulk drugs which are also known as active pharmaceutical ingredients (APIs). Currently, most raw materials and some APIs are imported from countries such as China and Israel, as they are cheaper to import than buy locally.

“The department of pharmaceuticals has asked Indian Council of Medical Research to submit a report with their recommendations on how government can strengthen the bulk drug industry in India. At present, it’s not in a good shape, as most of these are imported from countries like China," said a senior official who requested anonymity.

Imports form a big portion of many common drugs such as painkillers like aspirin and paracetamol, first-line diabetes drug Metformin and antibiotics such as Erythromycin, said D.G. Shah, president of the Indian Pharmaceutical Alliance, a lobby group for Indian drug firms.

“India had self-sufficiency in manufacturing finished pharmaceutical products and bulk drugs, but somewhere, it lost that advantage of manufacturing bulk drugs to China," said Sakhtivel Selvaraj, senior health economist with Public Health Foundation of India (PHFI).

This was largely due to policies which did not aid growth in the sector and China making cheaper products.

“The raw material and bulk drug industry declined because of bad policies like small scale industry reservation, fragmentation of capacity and penalizing efficiency," Shah said. According to Shah, drugs such as paracetamol were reserved for small scale manufacturing, preventing large Indian players from making them. But small scale producers could not compete with larger Chinese manufacturers which had economies of scale.

“These drugs also cost more to manufacture in India because of factors like poor infrastructure, high costs of land, power and utilities and lack of incentive for research and development."

However, even with these factors, India managed to produce complex APIs and complex intermediates.

“India is known for complex intermediates and APIs while China always had an advantage when it comes to base chemicals and intermediates. The concern now is that China has gone up the value chain and becoming more competitive in APIs and complex intermediates as well," said Sujay Shetty, leader, life sciences, consulting firm PwC India.

There are also concerns about the quality of imports, which need not keep to current good manufacturing practices.

“There is a major concern about the quality of these imports as MNCs have been questioning the quality of generic drugs manufactured in India. These raw materials are used to make these generic drugs," PHFI’s Selvaraj said.

The other concern is the growing dependence on China.

“The health security of the nation is as important as defence security of the nation," said Ramesh Adige, policy expert and former executive director with Ranbaxy. “It is worrying to see growing dependence of Indian pharmaceutical companies on imports of raw material and bulk drugs," says Adige, pointing to the 20% hike of Chinese API prices in 2008. “India had no alternative since China has a near-monopoly in several APIs."

Adige says a large portion of intermediates used in manufacturing of various antibiotics, anti-hypertensive drugs, anti HIV/AIDS drugs and anti-TB drugs are imported from China. Similarly, APIs such as various anti-retro virals (Lamivudine, Nevirapine, Zidovudine, Efavirenz); antibiotics (Amoxicillin, Ampicillin, Cloxacillin, Cephalexin, Ciprofloxacin) and combination with antibiotics like Potassium Clavulanate among others are largely imported from China.

“There is a need to revive public sector units, not necessarily to compete with China, but to provide an assured manufacturing base for intermediates and APIs. We should encourage public sector units to get back into business. This is to meet national health security needs."

The centre is looking at various initiatives to boost domestic bulk drug manufacturing, from bringing down the price of input costs to providing infrastructure to boost the bulk drug industry.

Recently, the Indian Pharmaceutical Alliance asked the centre to set up mega parks for manufacturing these intermediates and base chemicals.

“These parks could cost around 1,500 crore and the government could recover their cost by lending out the facilities to Indian pharmaceutical companies," said Shah.

Another government official said the government was considering a uniform pricing structure for imported drug ingredients.

“In uniform pricing, the government will set a minimum price for imports, beneath which drugs could not be bought. This would make sure that cheap imports do not kill the raw material and bulk industry in India," said another government official familiar with the development.

But PHFI’s Selvaraj doubts such steps will succeed in a liberalized world.

“We must take calibrated steps and avoid inviting retaliatory measures by China to prevent generic formulations being exported from India into China. China is, after all, one of the biggest markets for formulations," Adige said.

According to the government official cited above, the prime minister’s office has asked for a report from the department of pharmaceuticals in the next three months to come out with a policy to address this issue.

“The government is looking at this seriously and will come out with something definitive soon," the official said.

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