New Delhi: Confederation of Indian Industry (CII) has suggested looking at underutilised brownfield units manufacturing bulk drugs in India amid fears that cornonavirus may disrupt supply to the domestic pharmaceutical industry, which relies heavily on imports from China.
After analysing the impact of coronavirus on various Indian industries including pharmaceutical, CII submitted a report to the Ministry of Finance and Ministry of External Affairs on Tuesday.
The domestic pharma industry depends on imports of bulk drugs, or active pharmaceutical ingredients (APIs), and intermediates that give medicines their therapeutic value. India imported around ₹249 billion worth of bulk drugs in 2019 that accounted for about 40% of the overall domestic consumption. This is an increase of around 30% from 2018.
“There are a large number of brownfield API units or firms where capacity utilisation is only 40%. These firms may be permitted to produce APIs, which are being imported. Environment permission should be given to manufacture any API on submission self- certification to comply with the pollution load requirement," CII said in its report.
“This process can help yield immediate results in the least possible time to combat the situation arising out of likely supply disruptions caused by the coronavirus outbreak. Allow production in closed units due to pollution order to re-open and commercial production of API," it said.
Typically, Indian drug makers keep inventories of approximately 45 days of bulk drug. The industry wants to ensure adequate amount of APIs for essential drugs in case supplies from China are indefinitely halted.
Imports from China have been on a steady rise over the years due to low-cost advantage enjoyed by Chinese manufacturers. In 2019, India imported ₹174 billion worth of APIs from China and exported merely ₹16 billion worth of the ingredients. With India’s API imports from China averaging almost 70% of its consumption by value, importers fear supply disruptions and unexpected price movements. Dependency on Chinese APIs is nearly 100% for many critical antibiotics.
“These APIs require large capacities of fermentation boilers, USP of Chinese manufacturers giving an upper hand to Chinese manufacturers. Though Indian players have the technical capabilities, they been more focused on value added products or formulations and have been unable to compete with China due to cost disadvantage. The value addition in India is mainly through formulation, packaging and distribution," CII said.
Certain pharma importers have claimed that they are facing challenges in securing supplies of a critical raw material for paracetamol intermediate. This can only be sourced from central China. Indian pharma companies have placed orders but are unclear on the status of delivery. The industry has shown concern that any stock out may worsen the situation of paracetamol availability in India.
CII said though the local industry has a stock of 30-40 days in hand, the government should take active measures by procuring Key Starting Materials (KSMs), APIs, intermediate or basic chemicals to safeguard national security, at least for National List of Essential Medicines.
“India needs to build capacities for manufacturing its own KSMs to strengthen eventual APIs production. PSUs (public-sector undertakings) can help in securing the supply chain for critical APIs. The Indian government should take proactive steps by leveraging its own manufacturing units for meeting the demand of critical APIs and intermediaries that cannot be addressed by the private sector due to their commercial non-viability," CII said in the report.