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Owing to a global slowdown in demand coupled with stiff competition from cheaper bulk drugs from China, exports of active pharmaceutical ingredients (API) or bulk drugs from Gujarat has slowed down this fiscal, and is likely to register a dip of around 3 per cent over last year.
Two senior Indian Drug Manufacturers Association (Gujarat chapter) officials confirmed that exports from the state have indeed slowed down adding that official figures are yet to be collated. R S Joshi, executive secretary, IDMA, Gujarat State Board said, "There are about 40-50 bulk drug making units in Gujarat, and together they export a few hundred crores of bulk drugs overseas. Gujarat has only a 3-4 per cent share in national bulk drug exports, the lion's share lies with Hyderabad."
Industry insiders estimate net bulk drug exports from the state to be around over Rs 300-400 crore. The state also houses major bulk drug players like Dishman Pharmaceuticals and Chemicals.
A senior official at Dishman admitted on grounds of anonymity that Chinese bulk drugs are extremely competitive. "As a strategy, we are trying to focus on niche segments in bulk drugs where the competition from cheaper Chinese counterparts is less," he added saying that Dishman operates in regulated markets and in long-term contracts.
"Most of the companies which have been impacted by slowdown in demand export to countries like Africa, Gulf and East European countries," he said.
An Ankleshwar based manufacturer of bulk drugs who also exports through traders said that in Chinese APIs have made significant inroads in African countries, and as a result, the demand has slowed down from those countries. Chinese APIs are on an average 15-20 per cent cheaper than Indian APIs.
A Mumbai-based analyst further explained, "The reason why Chinese bulk drugs have gained popularity and have given a tough competition to Indian bulk drugs is not only because of the pricing, but also due to ready availability. Many of the small and medium API units actually export through traders, and other channels, and do not focus on securing long term contracts. They would manufacture on the basis of spot orders, and hence at times, there are delays in deliveries."
IDMA sources too indicated that the small and medium players in the state should focus on securing long term contracts in order to insulate themselves from global demand fluctuations. Also, as bulk drugs are considered to be a polluting industry as it uses several chemicals and intermediates, the growth of the industry in Gujarat has also been on a slow lane, with most units concentrating in the Ankleshwar, Vapi, Panoli belt.
