The woes of the pharmaceutical industry are likely to continue at least for the next couple of weeks, despite curtains being drawn over Beijing Olympics.
No signs of API prices coming down
MUMBAI: The woes of the pharmaceutical industry are likely to continue at least for the next couple of weeks, despite curtains being drawn over Beijing Olympics.
Before the Olympics, Chinese authorities had clamped down on manufacturing units as a pollution-control measure, which led to a sharp spike in pharma raw material prices.
Brokerage First Global estimates, India imports as much as 80% of its raw material for making drugs — which includes intermediates and active pharmaceutical ingredients (API) or bulk drugs from China.
That’s because importing from there is 10-40% cheaper than making it in India.
“The Chinese government had stopped exports of APIs from units not adhering to pollution control norms because of which several units shut shops and the remaining producers hiked their prices,” said Tapan Ray, director general of industry body
Organisation of Pharmaceutical Producers of India.
Says Daara Patel, secretary in chief, Indian Drug Manufacturers Association (IDMA),
“There is no relief in the situation at present. Raw material prices are still 20-50% higher than before.”
Ranjit Shahani, vice chairman and managing director of Novartis India, said things wouldn’t change in the foreseeable future.
“The spotlight is on China to reduce particulate pollution. Hence it will not be possible for China to revert to polluting plants going back on stream steadily.”
Also, manufacturers in China will take at least another two to three months to restart their units, said J S Shinde, honorary general secretary of All India Organisation of Chemists and Druggists.
“So to start production, it will take another month or so. We feel that only by say January 2009 would the production start in proper scale,” says Shinde.
The price of an APIs such as erythromycin, which is used in the treatment of throat infections, has shot up by as much as 30-50% in the last few months and is expected to continue in the same vein for at least few more months, said Shinde.
Prices of other key bulk drugs such as atenolol (for cardiovascular diseases and hypertension) stand at Rs 1,200 per kg, up from Rs 950 per kg earlier in the year.
For Indian pharma companies, raw material amounts to 40-60% of total cost. Big companies such as Ranbaxy, Dr Reddy’s and Cipla import as much as 52%, 37%, and 42%, respectively, of their total raw material requirement, according to analysts.
g_priyanka@dnaindia.net
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