India imported $4.6 billion
worth of pharma raw materials in 2012, up from $2.9 billion in the previous
year.
Mumbai: Indian
pharma firms nearly doubled imports of drug ingredients last year. Companies
said this was to make up for shortages in local production, while analysts said
it may have been aimed at cutting costs ahead of proposed curbs on drug prices,
especially as a chunk of the imports came from China.
India imported active pharma
ingredients (APIs) and drug intermediates worth $4.6 billion (about Rs.25,000
crore) in 2012, up from $2.9 billion in the previous year, according to data
available with customs at various ports. A break-up of country-wise imports
isn’t available at present.
While the exact value of the imports is
yet to be compiled by the Directorate General of Foreign Trade, industry
experts say the figure could be higher as some consignments have been
designated as general chemicals.
“In the last couple of years, the local
industry’s priority is to achieve maximum operational efficiency to mitigate
the financial impacts of the new policy regime,” said an industry consultant
who didn’t want to be identified. “In the pharmaceutical industry, material
cost is 30-35% of sales and any savings on this will make a big difference in
profitability.”
The government in December notified a
new pricing policy that will bring 348 essential drugs and their formulations
under price control, up from 74 bulk drugs earlier, and covering at least 40%
of the medicines sold in the market. Industry expects this to reduce profit
from India operations by at least 25%.
Several local drugmakers including Cipla Ltd, India’s largest by market share, have
declared significant savings in material costs in the last few quarters, their
results announcements show. Mint couldn’t, however, ascertain whether
these savings came from cheaper imported ingredients alone, as these companies
did not give a break up of material cost.
“There is a rise in imports of APIs in
the last couple of years, especially from China,” said Dilip G. Shah, secretary general, Indian
Pharmaceutical Alliance, a lobby group of the country’s top drug manufacturers.
He cited reasons other than cost.
“While there are several factors
together responsible for this trend, the first and foremost is the nearly
extinct penicillin production in the country,” he said. “Since penicillin and
its derivatives are the base products for a broad basket of anti-infective
drugs, local manufacturers have no option but to import them.”
Another reason, according to Shah, was
the closure of many API manufacturers in Andhra Pradesh and Gujarat due to
environmental regulations.
Earlier, the local industry used to
import ingredients largely for anti-infective medicines as the production of
these drugs in the country was inadequate, but it has now expanded to other
therapeutic segments as well, said Shah.
Unlike the developed markets, where
drug regulators such as the US Food and Drug Administration and the European
Medicines Agency strictly monitor quality compliance by drugmakers and the safety
of drugs in the market, in India, alerts on safety, recalls and bans are almost
unheard of, said industry experts.
Although Indian law requires a foreign
drug manufacturing facility to be registered with the Drug Controller General
of India (DCGI) for importing drug materials to India, importers often flout
the law.
Besides, Indian authorities do not have
the resources to inspect overseas units that send pharma ingredients to India.
India’s drug controller general G.N. Singh said the rise in imports hasn’t led to
a decline in quality.
“We are aware that the department has
limited resources to keep a strict vigil at all the ports,” he added. “But we
are in the process of increasing the number of inspectors, and also to give
more powers to the existing staff at key sea and air ports to eliminate the
entry of inferior quality material into the country.”
On average, prices of drug ingredients
and intermediaries manufactured in China are 50-60% lower than the cost of APIs
made in India, according to to an industry consultant.
“Cost saving is linked to the rising
imports of raw material,” said P.V. Appaji, director general, Pharmaceutical
Export Promotion Council of India, , a quasi-government body that promotes drug
exports, but added that the local industry can’t afford to compromise on
quality because of its reputation as a global manufacturer of quality generic medicines.
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