From bulk-drug parks to active pharmaceutical ingredient (API) clusters, the pharma industry has been hearing of such ideas being floated for many years now.
But the next three to five years could indeed see an improvement on the production of APIs if the Centre implements its policies, says Sujay Shetty, PwC India Partner - Health Industries.
“There is genuine interest being shown by pharma companies poised to go into backward integration,” Shetty told
“Government intervention is required for land, power and other shared utilities such as effluent treatment,” he said, pointing to financial subsidies, pricing support and other solutions outlined by PwC in a report on reviving the API industry in times of Covid-19.
The report was done in March-April, says Shetty, when the Covid effect was seen on the supply and prices of APIs. “But after the Ladakh incident happened (with China), the need to have a local base for APIs has become much more important,” he said.
Dependent on China
The report says: “In the current context, if the situation aggravates, it can potentially lead to price volatility, impact exports for most pharma companies, and ultimately result in essential medicines becoming unaffordable and inaccessible to people. Our analysis based on critical APIs shows that 50 per cent of the critical APIs are being imported and almost all the imports are from China.”
The Centre has since come out with a policy to support the production of APIs, which would support drug companies looking to make them for the captive local market and exports, Shetty said. India had the skills for it, but because of a policy framework that was not supportive, he said, fortunes changed.
‘Lost competitive edge’
“It is significant to note that the percentage of API imports from China has spiked from around 1 per cent in 1991 to around 70 per cent in 2019, primarily backed by large-scale manufacturing incentives and state-driven subsidies offered in China to promote exports,” the report said.
Indian API manufacturers lost their competitive edge “in the manufacture of APIs at the lower end of the spectrum and fermentation technologies to countries like China, largely on account of factors like stricter implementation of pollution control norms, leading to higher costs of manufacturing APIs in India, issues in interpretation of the Drug Price Control Order (DPCO), 2013, no financial incentives like lower tax, cheaper utilities and land subsidy to lower capex requirement, lack of large-scale mega parks to manufacture bulk drugs, collapse of the fermentation industry in India,” the report said.