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Representational image (Photo: Mint)
Representational image (Photo: Mint)

Can India still be 'pharmacy of the world' while reducing import dependence of APIs?

India is currently the largest producer of generic medicines with a share of 20% of total global production globally, catering to over 60% of world's demand

New Delhi: After Covid-19 pandemic, India's focus to reduce import dependence of Active Pharmaceutical Ingredients (APIs) and key starting material (KSM) for drug manufacturing might just affect the country's position as the 'pharmacy of the world'.

Concerns have been raised in the industry that the concentration may divert resources from finished products (drugs).

Pharma experts have said to secure its numero uno position in the world, the industry will need to tread with caution and long-term planning coupled with government support. India is currently the largest producer of generic medicines with a share of 20% of total global production globally, catering to over 60% of world's demand.

“Our import dependence for APIs, however, has been massive – up to 60%. The focus on self-reliance was triggered by the supply shock created due to the Covid-19 pandemic. However, self-reliance has also been necessitated due to the sharp rise in prices of APIs sourced from China in recent years," said Gurpreet Sandhu, President, Council for Healthcare and Pharma adding that given India’s dependence on China for some sensitive API items such as penicillin and streptomycin critical to public health security, it was high time that the country explored ways to develop inputs indigenously.

The fear, Sandhu said, that the focus on domestic API production will divert resources from finished products and somewhat entails an opportunity cost is unfounded. “In the long run, we definitely need a strong domestic raw material base. With the country undertaking clustering programmes coupled with offering production-linked incentives (for both fermentation-based and chemical processes-based) to domestic players, it is likely to strengthen its raw material base," said Sandhu.

Sandhu argues that if these are combined with further financial assistance in the form of tax exemptions, duty exemption for capital goods, capital subsidies and subsidised loans, as well as subsidised land, power and water with faster clearances, there is a lot that can be achieved. It is important to develop low-cost production technologies by way of facilitating industry-academia collaboration.

Health economists hold that the focus is unlikely to make any negative impact on the production capability, unless the manufacturers choose to substitute the current source/s of API completely with the APIs that will be produced in India at one go. “This is because APIs produced in India may take a little to scale and become available at cost in which manufacturers are currently procuring it. The same applies for KSMs. This is a time for Indian manufacturers to tread with care and caution. They may opt for a mix of APIs produced in India and the imported ones to ensure the cost doesn't increase sharply," said P.R. Sodani, Health Economist at IIHMR University, Jaipur.

“Gradually, they can increase the share of APIs produced in India to help the API makers scale healthily. This will ensure that the generics produced by India and supplied to the world is not affected by a sharp rise in price and at the same time, API manufacturing in India scales steadily," he said. Pharmaceutical industry believes that moving forward, while an increased level of self-dependency within India should certainly trend towards higher R&D spend towards APIs, there can always will be a continued focus on finished dosages to ensure the optimal utilization of these self-developed/ manufactured APIs via integration.

“That said, investing into developing every API out there without focus it is not necessarily the best use of investment. There will be a lot of new opportunities for smaller companies to work with the larger Pharma companies through strategic partnerships," said Priyanka Chigurupati, Executive Director of Granules Pharmaceuticals.

“With this, while the focus on FDs remains strong as ever, there will be multiple Channels through which there will be a strong supply Of API’s and intermediates, thereby strengthening the ability to supply the finished dosages without disruptions. Indian Pharma companies will emerge stronger with a higher value proposition for their finished dosages," she said.

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