Growth is bulky

The bulk drug (active pharmaceutical ingredient) manufacturing sector continues to be the highest revenue generating segment for the Indian pharmaceutical industry. It accounts for production worth Rs 12,000 crore ($2.6 billion) and contributes about 36 per cent of the total pharma export revenue.

Official figures show that India produces over 400 bulk drugs through its 1,300 licensed bulk drug units that cater to almost the entire domestic bulk drug requirement.

According to the latest figures, the export of bulk drugs was approximately worth Rs 9,700 crore in 2005-06. The corresponding figures in 2004-05 and 2003-04 were Rs 8,036 crore and Rs 6,845 crore respectively.

The major bulk drugs and its derivatives exported during 2004-05 were Cefadroxil (Rs 207.91 crore), Menthol (Rs 187.5 crore), Amoxycilline (Rs 126.84 crore), Erythromycin (Rs 118.88 crore), Cephalexin (Rs 99.49 crore), Sulphame Thozazole (Rs 63.99 crore), Ranitidine (Rs 56.19 crore), Ampicilline (Rs 55.26 crore), Ibuprofen (Rs 48.4 crore) and Ciprofloxacine (Rs 41.03 crore).

Though the number of new players entering the segment is less, investments in the bulk drug sector continue to be high. The investments are primarily made by the major bulk drug players whose revenues come from the high value drug exports to the markets of the US and the EU where regulatory norms and plant and machinery specifications are stringent.

The high value bulk drug exports to the regulated markets will drive the segment, as price competition is severe in less regulated markets. Even in India, Chinese imports are threatening the very existence of low value bulk drug producers.

This is evident from the fact that the Chinese domination in bulk drug imports is continuing with more imports being registered in recent years.

The Chinese imports of drugs (mostly bulk drugs) touched Rs 1,563.53 crore between April 2005 and March 2006, as against Rs 908.57 crore between April 2004 and March 2005.

The changing trends in the bulk drug sector has caught the government's attention. The working group on pharmaceuticals, instituted by the Planning Commission had noted that the bulk drug manufacturers of anti-infectives were facing a serious threat on account of dumping of these drugs by some countries.

The panel felt that since some of these drugs have strategic importance "� being cost effective and largely needed by the general public "� a consultative mechanism was needed to look into specific and general issues.