Competitive formulation pricing by Chinese firms peeves domestic players.
After flooding the Indian market with cheap bulk drugs (raw material for medicine), Chinese companies are now eyeing the formulation (final product) market in the country.
The quotations from the Chinese firms indicate that the Indian pharmaceutical companies will find it difficult to match the highly-competitive prices offered by them.
According to sources, the Chinese rates may work out to about half of the current ex-factory prices for several key medicines. The range of products being offered from China includes hundreds of finished medicines in tablet, ointment, and capsule forms, traditional medicines, medical instrument, medical dressing and healthcare products.
The only solace for the Indian companies is that the Chinese enquiries, for the time being, are focused not on the branded retail sale segment, but on the bulk supply market, which caters to the dispensing needs of practising doctors. While the branded medicine market is controlled by the major drug companies, bulk supplies to dispensing clinics, estimated to be worth over Rs 5,000 crore, are primarily small scale business.
While the current ex-factory price for bulk supplies of commonly used antibiotic Tetracycline capsules (250 mg) is Rs 355 for 1,000 tablets in India, the same quantity has been offered for $4.85 (Rs 194) by the Chinese firms. “Even if we add 25 per cent extra as freight costs and taxes, the dealer price for Chinese tetracycline will be below Rs 250. Indian manufacturers, especially the small scale players, which depend upon bulk sales of such medicines, will be severely hit,” said Jagdeep Singh, secretary general, Small Pharma Industries Confederation (SPIC).
Similarly, the comparative prices offered by Chinese firms for commonly used medicines like chloramphenicol (250 mg capsule) and metronidazole (250 mg tablet) will work out to Rs 450 and Rs 90, respectively, for 1,000 units. The same medicines are currently having an ex-factory tag of Rs 657 and Rs 170, respectively.
According to Singh, SPIC has already alerted the secretary, chemicals and fertilisers, on the Chinese threat. “We have written to the secretary and also attached the price list offered by the Chinese firms. We feel an urgent need for devising timely strategies to counter this threat to the pharmaceutical industry in India,” Singh added.
The import of medicines, both bulk as well as formulations, are controlled by the Central Drugs Standard Control Organisation (CDSCO) of the health ministry.
The CDSCO carries out site inspections to ensure the quality of the manufacturing units before import approval for specific products are allowed.
While CDSCO data is yet to indicate approvals for import of formulations from China, nearly half of the import of bulk drugs — 41 out of the 97 bulk drug import approvals issued during January-November 2007 — were from Chinese companies.
The effect of low-cost import of Chinese bulk drugs was best illustrated through the plight of Indian penicillin makers, the majority of which got shut down due to intense pricing pressure in the recent past.
On the flip side, the Pharmaceutical Export Promotion Council (Pharmexcil) feels that despite high cost the demand for Indian bulk drugs may increase in future due to the growing concerns over the quality of products made from Chinese raw materials in the developed nations.
