Pharma sector reels as coronavirus rages in China

The outbreak of coronavirus in China could severely impact the Indian pharma sector, with firms warning of drug shortages if the communist nation, which is the major supplier of pharmaceutical ingredients to India, doesn’t resume exports.

With major parts of China under lockdown, there has been a 20-30% rise in the prices of key raw materials, even as Indian pharmaceutical companies are now close to exhausting their supply of raw materials such as active pharmaceutical ingredients (APIs).

Typically, Indian pharma companies keep inventories of approximately 45 days of the bulk drug required in formulation. India sources about 65-70% of APIs and close to 90% of it from China.

In Karnataka, as many as 301 drug manufacturers — who have contracts with domestic clients and various state governments to supply medicines — have been crippled, as manufacturing has come to a halt due to shortage of raw materials from China.

Several big drug manufacturers have been unable to procure pharmaceutical ingredients for Mintelukast, used for asthma, pain medication Nimesulide, and Amoxicillin, Ofloxaicin and Chloramphenicol, which are used to treat bacterial infections, and antibiotic Metronidazole.

Sunil Attavar, President, Karnataka Drugs and Pharmaceuticals Manufacturers’ Association, said firms usually keep additional stocks due to the Chinese new year holidays in January.

“If the situation does not improve till March, there will be a major shortage. Small and medium enterprises will be most affected as they depend on traders and keep lower inventory,” Attavar said and shared the list that had 61 drugs that could face shortage.

Harish Jain Manawat, Director of Embiotic Laboratories, located in the Kumbalgodu Industrial Area on Mysuru Road, had a similar lament.

“We are supposed to supply deworming tablet Albendazole for kids in the national deworming programme to the Tamil Nadu government. But I am unable to do so since the lockdown in China has cut off supplies for pharmaceutical ingredients for eight to nine medicines that form 50% of my business,” said Manawat.

He said that unless China resumes supply, he would not be able to fulfill the contracts. “We cannot procure the raw material from Europe as it takes a minimum of one year to get the licence,” he said, adding that in February alone, “his company suffered a loss of Rs 24 lakh”.

But these drugs are under price control and, like other essential drugs that are under the National List of Essential Medicines, prices cannot be increased.

Jatish Sheth, Director, Srushti Pharmaceuticals Pvt Ltd in Peenya, said production of an anti-arthritis drug had almost come to a standstill for the past two weeks.

“We have trouble procuring Doxycycline Hyclate. The price of this pharmaceutical ingredient has gone up from Rs. 6,300 to Rs. 7,500. We also have trouble getting amino acids. Its price is rising and is in short supply.”

Though India is one of the top formulation drug exporters, the pharma industry relies heavily on imports of bulk drugs (APIs and intermediates that give medicines their therapeutic value).

Kiran Mazumdar-Shaw, Chairperson and MD of Biocon, said pharma companies had bulk drug supplies for up to about three months. “But they will need to take urgent steps to prevent any serious fallout from the lagged impact of supply outages of Chinese APIs,” Mazumdar-Shaw told DH.

“Given the excessive dependence of global drug supply chains on China for a number of drug intermediates and APIs, there is heightened concern around the impact of the coronavirus outbreak. Wuhan is itself a big production hub for many of these drug intermediates and APIs,” she said.

Indian Pharmaceutical Association officials said that there has been a sharp increase of 20-30% in the prices of raw materials used in the medicines like Amoxicillin, Paracetamol.

“We still don’t know whether this increase in the prices is owing to the coronavirus or Chinese New Year. But if this continues, there is going to be huge issues in supply then,” said J Jayaseelan, Vice-President, Indian Pharmaceutical Association.

Indian drug manufacturers are facing a paucity of key ingredients in the medicines used to treat worm infestation and asthma. For many critical antibiotics and antipyretics, dependency on imports from China is close to 100%.

“These APIs require large capacities of fermentation boilers, a USP of Chinese manufacturers, giving an upper hand to Chinese manufacturers. The value addition in India is mainly through formulation, packaging and distribution. Indian pharmaceutical companies typically keep inventories of approximately 45 days of the bulk drug, required in formulation,” the CII said.

(With inputs from Furquan Moharkan)