Large scale imports of APIs from China worries Indian pharma industry

Over-dependence of Indian pharmaceutical industry on imported pharma raw materials from China to meet the growing requirements of drug formulations is a cause of concern for the industry as well as policymakers. 

India may have emerged as a key supplier of generic and affordable medicine for the world market, its overwhelming dependence on China for crucial raw materials, such as active pharmaceutical ingredients (APIs) and intermediates, to the extent of over 65 per cent of the requirement, has emerged as a main worrying area, according to an Assocham-RNCOS joint paper.

This is all the more disconcerting in the face of louder narrative against reducing trade gap with China which is well over $ 51 billion, added the study.

APIs and intermediates are key raw materials to manufacture pharmaceutical formulations such as tablets, capsules, syrups, etc. Rapid growth in new medical technologies is spurring the demand for generic drugs worldwide with the increased import of raw pharma ingredients from the emerging markets. Against this background, the policy makers have also raised concerns over India’s rising dependence on imports from China for many APIs that go into the making of a number of essential drugs.

Though the government has taken steps like withdrawal of exemption in customs duties, imports worth Rs 13,853 crore in 2015-16 or 65.29 per cent of the total imports of Rs 21,216 crore are not sustainable. “Over-dependence on China for APIs is likely to affect the bulk drug manufacturing sector, and subsequently have an impact on our population in plausible scenarios of drug shortages brought down by interrupted imports from single source country,” said D S Rawat, secretary general, Assocham, adding that over-dependence on such a crucial raw material on a single country is also not advisable from India’s overall strategic interests as well.

One of the main reasons for huge API imports from China is low cost of its manufacture and subsidy in China while India levies negligible import fee. “The import fees should be increased in line with other counterparts,” advocated the Assocham-RNCOS paper.

Presence of multiple regulatory authorities for the industry is also hampering the growth of the sector. The API manufacturers have to approach different authorities for renewal of licences that become a tedious affair. “Therefore, a single committee of various government departments should be formed to regulate the industry through a single window and audit of plants,” said Assocham.

Besides, the centre can focus on development of mega parks for APIs across the country. These parks should be provided with common facilities such as effluent treatment plants, testing, power plants, IPR management and designing. These facilities should be maintained by special purpose vehicles.

Several other countries like China provide incentives and subsidies for promoting the manufacture of essential pharmaceutical raw material. This significantly reduces their cost of production and ability to supply API to the world market at a huge discount to the global prices. This discourages new domestic investment in the sector.