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.


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 –


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58