The Hindu Business Line : End of Olympics brings no cheer to drug makers

Hyderabad, Sept. 12 The conclusion of Beijing Olympics has failed to cheer drug manufacturers as the expected reduction in prices of raw material imports appears to be a remote possibility.

On the contrary, the bulk drug industry, in fact, fears that there could be an upward revision of prices soon.

“Till the end of the games, we were told that the raw material prices would come down due to the withdrawal of Olympic cess on certain exports by the Chinese Government. Some restrictions on manufacturing in and around Beijing were also done away with. But there has been no indication of a downward revision of prices,” Mr M. Narayana Reddy, President, Bulk Drug Manufactures Association (BDMA), told Business Line.

Price revision soon

In fact, many Chinese suppliers are now pressing for an increase in prices citing higher crude oil prices, he added.

According to Mr P.V. Appaji, Executive Director, Pharmaceutical Export Promotion Council (Pharmexcil), the prices of raw materials from China (for Active Pharmaceutical Ingredients) had gone up by 50-300 per cent during the last six months.

This had an adverse impact on the Indian companies which were dependent on Chinese raw materials from 60 to 90 per cent depending on the product portfolio, he said.

“There was, however, little relaxation of export restrictions by Chinese authorities and supplies have improved by about 10 per cent in the last one month which eased the supply scenario to some extent. But the prices did not ease significantly,” Mr Appaji said.

The feedback from the industry did indicate that another upward price revision by Chinese suppliers was on the cards, he added.

Dr G.V. Prasad, Chief Executive Officer and Vice-Chairman of Dr Reddy’s Laboratories Ltd, also agrees. “The higher raw material cost is an issue for the industry. The high crude oil prices are pushing up costs coming not only from China but also globally,” he said.

The surge in raw material costs is hitting the smaller companies badly, said Mr K. Hari Babu, Managing Director, Anu’s Laboratories Ltd. “Very recently, there was a five per cent reduction in some categories of raw materials. But given the magnitude of recent increase, this is very marginal. It will be very difficult if they go up further,” he added.

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