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THINK GLOBAL PEOPLE INDIA PHARMACEUTIC ALS


The pandemic is laying bare global reliance on China for drugs. As Canada abandons clinical trials of a Covid-19 vaccine, China is blocking shipment of some of its key active pharmaceutical ingredients (APIs). A Ghaswalla reports from India.


E


ager to bail out countries that have been caught up in China’s new export rules for APIs, India is looking to emerge as a reliable alternative. China is the global leader in the production


and export of APIs, accounting for around 20% of the world’s API production. The low cost of utilities and greater government support have helped buoy the pharmaceutical sector in China. But the Covid-19 pandemic and ongoing trade


wars have exposed the pitfalls of over-dependence on Chinese APIs. India is no exception. It currently has around 1,500


plants that manufacture APIs. Back in 1991, India imported only 0.3% of its APIs from China. Now over 60% of India’s pharmaceutical imports are APIs and intermediates, with almost 70% coming from China. In fact, some of the most important APIs, such as paracetamol, are Chinese imports. Aggressive government support programmes for


capex, subsidised interest and free land, electricity and water have resulted in reducing the cost of APIs by over 40% in China. A KPMG report suggests the Chinese API market


has now diversifi ed to over 2,000 API molecules and more than 7,000 API manufacturers, with the number of manufacturers increasing by fi ve times in the last fi ve years. Today, China’s pharma industry boasts an annual production capacity exceeding 2 million tonnes. In India, relaxation of licensing policies and implementation of the 2005 product patent law saw pharma companies importing APIs rather than producing domestically. Long manufacturing cycles and


strict quality standards that resulted in low margins dealt a further body blow.


INDIA’S PHARMA SUPPLY CHAIN India's reliance on pharma ingredient imports has risen over the past few decades due to the higher cost of domestic production. The price gap with China has reached as much as 20-30%, particularly for energy- intensive fermentation-based ingredients used in anti- infectives. For some life-saving drugs, including penicillin and ciprofl oxacin, import dependence is more than 90%. The Indian pharmaceutical industry is the third


largest in the world in terms of volume and fourteenth largest in terms of value. Offi cial data shows India’s pharmaceutical imports in 2018-19 was USD $10.43 billion (INR 76,303.53 crore) with exports of USD $19.27 billion (INR 1,40,961.31 crore). India continues to be one of the leading exporters of


formulations or generic medicines to the global market, but in the case of raw materials – intermediaries and APIs – China enjoys the number one position on the global stage.


CANADA CONUNDRUM Given the global pharma industry’s dependence on China for the raw materials and APIs needed to make medicines, many economies have faced severe issues in securing ingredients during the current crisis. The pandemic’s spread from one province in


China globally disrupted production across the world, highlighting how manufacturing in developed countries is reliant on international trade and supply chains –


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