Low Chinese imports hit bulk drug makers

Indian bulk drug manufacturers are facing intense heat of short supply from China. The volume of Chinese imports has shrunken drastically as the country has decided to give more priority to its domestic industry.

In India, paracetamol prices have skyrocketted, up by Rs 50 per kg from Rs 140 two months ago. Ciprofloxacin prices, too, have surged abruptly, up to Rs 1,300 per kg as against the normal market prices in the range of Rs 900-1,000 per kg.

"The whole industry depends on the supply from China. When prices go up there, it has a cascading affect on the Indian industry. With prices rising there, it hardly takes a day to see a similar rise in the Indian industry. But when prices go down there, it takes months for prices to see a fall in the domestic markets," said Kiran Waghela, owner of Chamunda Pharma, a leading Mumbai-based broker.

Chamunda Pharma has taken part in a number of bulk drug and pharmaceutical trades and other related dealings between Indian and Chinese traders.

In fact, a whopping rise in prices of intermediates, including crude oil and chemicals, has led to an enormous jump in prices of bulk drugs.

The volume of Chinese imports has shrunken with the country stressing the need in its domestic industry, which has increased production of pharma products including tablets.

Levofloxacin prices have doubled from Rs 2,100 per kg two months ago to Rs 4,200 per kg now, as supply of this drug from China has been completely disrupted.

"Chinese traders are currently not interested in supplying to India, as they now want to supply to the country's domestic industry first. The government, too, has put emphasis on the domestic industry. Further, the traders there want to cash in on the emerging opportunity without any risks," Waghela said.

"Booking in China is mounting gradually. Therefore, we expect the supply constraint to prevail at least for the next two months," he said.

Usually the pharma industry witnesses a slack period in the winter season - from December to February - in which demand is generally less from the urban as well as the rural India.

But, this year, the downturn period is expected to squeeze, as diarrhoea and other diseases have spread in several parts following massive floods, and this has created a huge demand of drugs and medicines.