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09 Dec 2021, 07:30 HRS IST
  • PTI
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Source:Arch for Samrudh Bharat Foundation through Mediawire
India must Reposition its Pharma Sector

India must Reposition its Pharma Sector

The Pharmaceutical sector must reposition India’s stronghold (as compared to China) in supply of Active Pharmaceutical Ingredients (API) and Intermediates to ably manufacture medicines that are critical for cure. The world’s dependence on Chinese pharma supplies must become much more balanced than it is currently. Here’s an insightful writing by Ashwani Mahajan, Professor at PGDAV College, University of Delhi on India’s pharmaceutical position today. 

India is called the Pharmacy of the World. It ranks fourth in the world in terms of value and third in terms of volume. India exports medicines to most of the countries and the share of Indian medicines in the US market is 34 percent.India manufactures medicines for a range of diseases like malaria, common infections, vitamin deficiencies, diabetes, cancer, asthma, HIV, heart diseases.

However, for the last few years, the Indian pharma sector has come under China’s shadow with the latter nearly capturing the supply chain. Due to this, there is heightened pressure of dependence on China, which may inadvertently affect health security status of India’s 135 crore people. It can also be a threat to affordable medicine provision by India to the world as supply chain costs are being governed by China. 


Prior to the Year 2000, there was a worldwide demand for Indian-made Active Pharmaceutical Ingredients (APIs). India was thriving in the field of basic chemicals, intermediate chemicals and APIs. After the Year 2000, though, India continued to be the source of ready-made medicines for the world but the manufacturing of API and intermediates started slipping from India and went into the hands of China.

Soon enough, China created an enormous production capacity for intermediate chemicals and APIs. It was then also able to ship them in the world market including India at less than half the normal market price. The Chinese Government has been an active collaborator providing low-interest loans, long-term moratorium on debt repayment, credit guarantees by the Chinese insurance company Sinosure, proactive research and development support, export promotion incentives, marketing incentives, cheap electricity and community facilities, and deliberately lax pollution regulatory laws. Incidentally, many provisions were also found to be not in adherence to WTO guidelines. 


For instance, 6-APA (6-Amino Penicillanic Acid, a derivative of Penicillin-G), the basic chemical building block for antibiotics, such as Ampicillin, Amoxicillin, Cloxacillin, Dicloxacillin, Flucloxacillin, Oxacillin among others. In 2005, India was completely self-sufficient for 6-APA as there were four manufacturers of Penicillin-G in India. Today, India, along with the world, has become almost fully dependent on China for this input.

Until 2001, before the Chinese market aggression, 6-APA was sold for an average price of $22 per kilo. Between 2001 and 2007, the Chinese suppliers crashed the 6-APA prices by less than half to an average of US$9 per kilo. Indiancompanies were forced to stop production as they could not sustain the losses. As soon as Indian companies went out of production, China started increasing the prices of Penicillin-G and 6-APA. The price of 6-APA has since increased to a peak of USD 35 per kg. 

China has thus established a monopoly in almost all types of Intermediates and APIs. With sound backing from China, this strategy has worked for Chinese suppliers who come together to exploit the situation by significantly hiking the prices of products they export. For example, the price of ‘DBA’, the key input for anti-malarial drugs, went up by 47 percent, ‘Erythromycin TIOC’, key input for Azithromycin, increased by 44 percent and that of ‘Penicillin-G’ by 97 percent.

As a result, India is gazing into a probable public health security crisis in case India’s medical supplies get affected by Chinese manufactured APIs. 


China has reportedly issued statements where there can be stoppage of drug supplies to the US and concerns are being expressed in the US. India's National Security Advisor Ajit Doval had also warned that India’s dependence on China for APIs could be a serious national security threat.

The Government of India has recently announced Production Linked Incentives (PLI) plan to encourage API production in the country, under which an amount of Rs 12,000 crore has been allocated. But that alone will not suffice. To be able to face China in the pricing strategy, the Indian Government must come forward to impose ‘Safeguard’ and ‘Anti-Dumping’ duties on all APIs.

In cases of API firms that are struggling for survival, Government’s support by way of funds could be allocated for upgradation of technology. The Government's support for the establishment of research and development facilities could be helpful. Easing environmental laws for API units and exemption from environmental laws may be appropriate strategy. Other incentives like reduction in import duty for testing equipment, allotment of land at cheaper rates, making it a pre-condition that Indian buyers of APIs and Intermediates are required to buy at least 50 per cent of their requirements from domestic manufacturers if those products are available from India, etc., could be some other steps to safeguard the national interest and possibly avoid an impending crisis. 

The writer - Ashwani Mahajan is Professor at PGDAV College, University of Delhi.

(Disclaimer: The above press release comes to you under an arrangement with Mediawire. PTI takes no editorial responsibility for the same.)

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