Indian API makers, beset by Chinese imports, accuse officials of pulling $660M in promised support


Thanks to a huge generic drug sector, India is widely regarded as the pharmacy of the world--and just a few years ago many of the ingredients going into those drugs were produced within the country.

But a plan to rebuild India's bulk drug sector is under threat, according to a report in The Pharma Letter, which says support for raw material manufacturers promised by the Indian government has been slashed from $750 million to just $90 million.

China's burgeoning active pharmaceutical ingredient (API) and intermediate industry has been steadily claiming market share from Indian companies, leaving several big players--including Arch Pharmalabs, Orchid Chemicals and Ind Swift Labs--under financial stress. 

Chinese bulk drug and intermediate imports are often cheaper than those made by India's domestic producers because they are highly subsidized by the Chinese government. With profit margins on raw materials small, Indian producers are being squeezed out of the market.

Citing Chemicals and Fertilisers Minister Ananth Kumar, TPL says the government has now decided against implementing a dedicated bulk drug policy. 

That means the government is abandoning an earlier pledge to fund bulk drug manufacturing parks. Instead, the onus will be on state governments to implement the bulk drug park strategy and support local producers. The funding decision also raises a question over plans to update regulations governing API and intermediate producers.

The measures were all part of a strategy to grow the domestic bulk drug industry's output to $200 billion by 2030 and reduce reliance on Chinese imports, which grew 5% in fiscal 2015 to $2.22 billion. Around 80% of all APIs used by India's drug producers now come from China, says the Indian Drug Manufacturers' Association (IDMA).

Issues of national competitiveness aside, India also wants to safeguard its API supply. Depending on imports can spawn unexpected problems: This month, for instance, the supply of China-sourced API D-penicillamine was disrupted, triggering within India a national shortage of drugs for Wilson's disease, a rare genetic disorder with no alternative treatment. 

India's Central Drug Standard Control Organisation (CDSCO) was forced to ask domestic manufacturers to step in to restore supply, years after they were driven from the D-penicillamine market by low-cost Chinese competition. In the meantime, the CDSCO is considering removing the API from price controls to help make production financially viable and ensure long-term supply.

But other meds could be at risk, too. India's Bulk Drug Manufacturers Association says the country depends on imports for at least 12 substances on the essential drugs list, and earlier events have exposed similar vulnerabilities.

During the Beijing Olympics in 2008, for example, several API plants were forcibly shut down to reduce environmental pollution. Several bulk drugs ran short after that, driving prices up 20% or more.

For its part, India's government insists it still wants to help the bulk drug industry, pointing to the removal of tax exemptions for certain APIs and intermediates. This week the Prime Minister's Office (PMO) called for wholesale changes to pharmaceutical policy that will support both the bulk and finished drug industries.

Details remain sketchy, but an Economic Times article suggests that the overhaul could relax licensing rules for manufacturing facilities, reduce the number of products covered by India's price control system, and remove red tape for medical research.

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